[Federal Register Volume 62, Number 84 (Thursday, May 1, 1997)]
[Proposed Rules]
[Pages 23724-23731]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11256]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 3

RIN 2900-AI70


Monetary Allowance Under 38 U.S.C. 1805 for a Child Born with 
Spina Bifida Who Is a Child of a Vietnam Veteran

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend the Department of Veterans 
Affairs (VA) adjudication regulations to provide for payment of a 
monetary allowance to a child born with spina bifida who is a child of 
a Vietnam veteran. The intended effect of this amendment is to 
implement legislation authorizing VA to provide such benefits. A 
companion document (RIN: 2900-AI65) concerning a proposal for the 
provision of health care for such children is set forth in the Proposed 
Rules section of this issue of the Federal Register.

DATES: Comments must be received by VA on or before June 30, 1997.

ADDRESSES: Mail or hand deliver written comments to: Director, Office 
of Regulations Management (02D), Department of Veterans Affairs, 810 
Vermont Ave., NW, Room 1154, Washington, DC 20420. Comments should 
indicate that they are submitted in response to ``RIN 2900-AI70.'' All 
written comments received will be available for public inspection at 
the above address in the Office of Regulations Management, Room 1158, 
between the hours of 8 a.m. and 4 p.m., Monday through Friday (except 
holidays).

FOR FURTHER INFORMATION CONTACT: John Bisset, Jr., Consultant, 
Regulations Staff, Compensation and Pension Service, Veterans Benefits 
Administration, 810 Vermont Avenue, NW., Washington, DC 20420, 
telephone (202) 273-7230.

SUPPLEMENTARY INFORMATION: Section 3 of the Agent Orange Act of 1991, 
Public Law 102-4, 105 Stat. 11, directed the Secretary of Veterans 
Affairs to seek to enter into an agreement with the National Academy of 
Sciences (NAS) for a series of reports to review and summarize the 
scientific evidence concerning the association between exposure to 
herbicides used in support of military operations in the Republic of 
Vietnam during the Vietnam era, and each disease suspected to be 
associated with such exposure. In its most recent report, entitled 
``Veterans and Agent Orange: Update 1996,'' which was released on March 
14, 1996, NAS noted what it considered ``limited/suggestive evidence of 
an association'' between herbicide exposure and spina bifida in the 
offspring of Vietnam veterans.
    Since VA did not have the statutory authority to provide benefits 
to children of veterans based on birth defects, the Secretary announced 
on May 28, 1996, that he would seek legislation to provide an 
appropriate remedy and submitted proposed legislation to Congress in 
July of that year. Section 421 of Public Law 104-204 added a new 
chapter 18 to title 38, United States Code, authorizing VA to provide 
certain benefits, including a monthly monetary allowance, to children 
born with spina bifida who are the natural children of veterans who 
served in the Republic of Vietnam during the Vietnam era. This document 
amends existing VA adjudication regulations and adds a new section to 
title 38, Code of Federal Regulations, to implement this new authority.
    Section 1805(c) of title 38, United States Code, specifies that 
receipt of this allowance shall not affect the right of the child, or 
the right of any individual, based on the child's relationship to that 
individual, to receive any other benefit to which the child, or that 
individual, may be entitled under any law administered by VA, nor will 
the allowance be considered income or resources in determining 
eligibility for, or the amount of, benefits under any Federal or 
federally assisted program. We propose to amend 38 CFR 3.261, 3.262, 
3.263, 3.272, and 3.275 to reflect this statutory provision as it 
applies to VA's income-based benefit programs.
    Section 1806 of title 38, United States Code, provides that the 
effective date of the monetary allowance to a child under new chapter 
18 will be fixed in accordance with the facts found, but will not be 
earlier than the date of receipt of application. The effective date of 
section 421 of Public Law 104-204 will be October 1, 1997, unless other 
legislation is enacted to provide for an earlier effective date. VA is 
proposing to amend 38 CFR 3.403 to reflect these statutory provisions.
    VA is also proposing to amend 38 CFR 3.503 to specify that this 
monetary allowance will terminate the last day of the month before the 
month in which the death of a child occurs. This date is consistent 
with the termination provisions of 38 U.S.C. 5112(b) applicable to 
compensation, pension, and dependency and indemnity compensation 
benefits administered by VA, and there is no indication in the statute 
that Congress intended that VA administer this benefit in any different 
manner. Due to the amendments to 38 CFR 3.403 and 3.503, we are 
proposing technical amendments to each cross-reference following 38 CFR 
3.57, 3.659, 3.703, 3.707, and 3.807.
    VA is also proposing to amend 38 CFR 3.105 to specify that, where 
there is a change in disability status warranting a reduction of the 
monetary allowance, such reduction in evaluation will be effective the 
last day of the month following sixty days from the date of notice to 
the recipient (at the recipient's last address of record) of the 
contemplated reduction. This is the date stipulated by 38 U.S.C. 
5112(b)(6) for reduction of disability compensation benefits under the 
same circumstances. We are not, however, proposing to incorporate an 
additional 60-day notice such as that provided before reductions of 
compensation awards under the provisions of 38 CFR 3.105(e). Since 
reduction of this monetary allowance would generally be based on 
private medical evidence that the claimant had authorized to be 
released to VA, and since the rating criteria for this benefit are 
generally less complex than those for rating compensation claims, in 
our judgment, 60 days is enough time for claimants to submit evidence 
showing that the monthly allowance should not be reduced. We are 
proposing to apply the provisions of 38 CFR 3.105(h) concerning the 
opportunity for a predetermination hearing to reductions of this 
monetary allowance.
    Section 3.158 of title 38, Code of Federal Regulations, describes 
the circumstances under which VA will consider a claim abandoned. Where 
evidence requested in connection with a claim is not furnished within 
one year after the date of request, the claim will be considered 
abandoned and further action will not be taken unless a new claim is 
received. Should entitlement be established on the basis of this new 
claim, benefits are awarded effective not earlier than the date of the 
filing of the new claim. Where benefit payments have been discontinued 
because a payee's present whereabouts are unknown, payments will be 
resumed effective the day following the date of last payment if 
entitlement is otherwise established, upon receipt of a valid current 
address. In view of the similarity between this benefit and other 
monetary benefits which VA

[[Page 23725]]

administers, and, in order to maintain consistency with respect to the 
administration of these benefits, we believe it is appropriate to apply 
these provisions to the monetary monthly allowance for children with 
spina bifida, and we are proposing to amend 38 CFR 3.158 accordingly.
    Pursuant to 38 U.S.C. 1805(b)(3), the amount of the monthly 
monetary allowance payable to a child with spina bifida will be $200, 
$700, or $1,200, based on the individual's degree of disability. 
Section 1805(b)(3) also specifies that these amounts are subject to 
adjustment under the provisions of 38 U.S.C. 5312, which provide for 
the adjustment of certain VA benefit rates whenever there is an 
increase in benefit amounts payable under title II of the Social 
Security Act (42 U.S.C. 401 et seq.). We propose to amend 38 CFR 3.27 
to reflect that statutory provision.
    We propose to add a new Sec. 3.814 to title 38, Code of Federal 
Regulations, to implement additional provisions of 38 U.S.C. 1805. If a 
child with spina bifida is the natural child of two Vietnam veterans, 
new Sec. 3.814 would make clear that that child may receive only one 
monthly allowance. This limitation is consistent with the provision of 
38 U.S.C. 5304(a)(1) that limits a person to not more than one award of 
pension, compensation, emergency officers, regular or reserve 
retirement pay based on his or her own service. Such a limit is 
appropriate in this instance because a child establishes entitlement to 
this benefit in his or her own right due to being afflicted with spina 
bifida, and awarding more than one monthly allowance based on the 
existence of the same disability would constitute a duplication of 
benefits similar to that prohibited by 38 U.S.C. 5304(a)(1).
    We propose to require an applicant for the monetary allowance to 
furnish certain information contained on a VA form entitled 
``Application for Spina Bifida Benefits'' which is set forth in full in 
the text portion of proposed Sec. 3.814(b). The information requested 
is necessary for making determinations regarding eligibility for 
monetary allowances. Furnishing the Social Security numbers of the 
natural parent(s) and the child on whose behalf benefits are sought is 
not mandatory, given the absence, under current law, of statutory 
authority that would authorize VA to require this information. 
Nevertheless, voluntary submission of such Social Security numbers 
would be helpful to VA in establishing an individual's eligibility for 
the monetary allowance authorized by law. VA would use the Social 
Security numbers to: (1) Verify that the child's natural parent was a 
veteran who served in Vietnam during the specified period; (2) identify 
medical records; and (3) ensure that awards to deceased beneficiaries 
are terminated in a timely manner to avoid creation of overpayments.
    The term ``Vietnam veteran'' is defined by the statute as a veteran 
who performed active military, naval, or air service in the Republic of 
Vietnam during the Vietnam era. We propose to adopt the statutory 
language for purposes of new Sec. 3.814. We also propose to define the 
term service in the Republic of Vietnam to include service in the 
waters offshore and service in other locations if the conditions of 
service involved duty or visitation in the Republic of Vietnam. This is 
consistent with the definition of service in the Republic of Vietnam 
that appears at 38 CFR 3.307(a)(6)(iii), which sets forth the 
conditions under which VA presumes that Vietnam veterans were exposed 
to a herbicide agent during active military service. Since the purpose 
of this rulemaking is to provide for payment to the children of those 
same veterans if the children are born with spina bifida, it is 
appropriate to recognize the same area in which veterans are presumed 
to have been exposed to herbicides.
    The statute defines the term ``child'' as meaning a natural child 
of a Vietnam veteran, regardless of age or marital status, who was 
conceived after the date on which the veteran first entered the 
Republic of Vietnam during the Vietnam era. In general, the statutes 
authorizing VA benefits recognize a legitimate child, a legally adopted 
child, a stepchild who is a member of the veteran's household, or an 
illegitimate child either acknowledged in writing by the veteran or 
judicially decreed to be the child of the veteran, as the child of the 
veteran (See 38 U.S.C. 101(4)(A)). 38 U.S.C. 1801, however, establishes 
a stricter requirement; in order to be eligible for this benefit a 
child must be the natural child of a Vietnam veteran. We therefore 
propose to require that, in order to establish entitlement to this 
benefit, a claimant must provide the types of evidence specified in 38 
CFR 3.209 and 3.210 sufficient to demonstrate, in the judgment of the 
Secretary, that the child on whose behalf benefits are sought is the 
natural child of a Vietnam veteran.
    38 U.S.C. 1805 (b) authorizes VA to make monthly payments at one of 
three levels based on the degree of disability suffered by the child, 
as determined in accordance with a schedule for rating such 
disabilities to be prescribed by the Secretary. Spina bifida is a 
developmental anomaly characterized by defective closure of the bony 
encasement of the spinal cord, through which the cord (myelocele), 
meninges (meningocele), or both (meningomyelocele) may (spina bifida 
cystica) or may not (spina bifida occulta) protrude (Dorland's 
Illustrated Medical Dictionary, 27th ed. 1988, 1560, and The Merck 
Manual, 16th ed. 1992, 2077). Neurological deficit is the main 
determinant of disability for an individual with spina bifida (Long-
term Outcome in Surgically Treated Spina Bifida Cystica, Isao Date, 
M.D., Yasunori Yagyu, M.D., Shoji Asari, M.D., and Takshi Ohmoto, M.D., 
Surg. Neurol. 1993, 40:471-5). In our judgment, the neurological 
manifestations that best define the severity of disability are 
impairment of: Functioning of the extremities; bowel or bladder 
function; and intellectual functioning.
    We propose to designate levels of disability identified as Level I, 
II, or III, based on an assessment of these neurologic manifestations 
in eligible individuals. Each of these neurologic manifestations 
exhibits three clearly identifiable levels of impairment that can be 
used in determining levels of payment. Functioning of the lower 
extremities can be assessed from least to most impaired based on (1) 
the ability to walk without braces or other external support; (2) the 
ability to walk only with braces or other external support; or (3) the 
inability to walk. Functioning of the upper extremities can be assessed 
from least to most impaired based on (1) absence of sensory or motor 
impairment; (2) existence of sensory or motor impairment not precluding 
the ability to grasp a pen, feed one's self, perform self care; and (3) 
existence of sensory or motor impairment severe enough to preclude the 
ability to grasp a pen, feed one's self, or perform self care. Bowel or 
bladder function can be assessed from least to most impaired based upon 
whether an individual is (1) continent of urine and feces; (2) requires 
drugs or mechanical means to maintain proper bladder or bowel function; 
or (3) is completely incontinent of urine or feces.
    Intellectual function is ordinarily assessed through the use of any 
of several standardized tests that determine the intelligence quotient 
(I.Q.). The average or normal I.Q. range is generally considered to be 
90 to 110 (``Comprehensive Textbook of Psychiatry'' 497 (Harold I. 
Kaplan, M.D., and Benjamin J. Sadock, M.D., eds., 5th ed. 1989)). The 
American Association of Mental Deficiency considers an I.Q. of 69 or 
less to indicate mental retardation. Between these ranges falls an 
intermediate group with an I.Q. between 70 and 89, considered to be in 
the range

[[Page 23726]]

of dull-normal to borderline mental retardation.
    Section 1805(a) authorizes VA to pay a monetary allowance for any 
disability resulting from spina bifida. We have concluded that any 
person who has spina bifida, other than spina bifida occulta, suffers 
some degree of disability. Accordingly, we propose to rate individuals 
suffering from spina bifida at Level I (the lowest level of disability) 
if they are able to walk without braces or other external support 
(although gait may be impaired), have no motor or sensory impairment of 
the upper extremities, have an I.Q. of 90 or higher, and are continent 
of urine and feces. Provided that none of their disabilities due to 
spina bifida are severe enough to meet the requirements of Level III, 
we propose to rate individuals at Level II (the intermediate level of 
disability) if they are ambulatory, but only with braces or other 
external support; or, if they have motor or sensory impairment of the 
upper extremities but are able to grasp a pen, feed themselves, and 
perform self care; or, if they have an I.Q. between 70 and 89; or, if 
they require drugs or intermittent catheterization to maintain proper 
urinary bladder function, or mechanisms for proper bowel function. We 
propose to rate individuals at Level III (the highest level of 
disability) if they are unable to ambulate; or, if they have motor or 
sensory impairment of the upper extremities severe enough to preclude 
grasping a pen, self-care or self-feeding; or, if they have an I.Q. of 
69 or less; or, if they are completely incontinent of urine or feces. 
For a child with spina bifida to be evaluated at Level I, each of any 
existing neurological disabilities would have to fall into the least 
impaired range described above. If at least one of the claimant's 
neurological impairments falls into the middle range, the individual 
would be rated at Level II. Furthermore, if at least one of the 
disabilities falls into the highest level of impairment, the individual 
would be rated at Level III.
    Children who are less than one year of age, regardless of whether 
they suffer from spina bifida, are essentially helpless, incontinent, 
unable to walk, and too young for I.Q. to be measured. Therefore, the 
above-noted criteria we are proposing are not readily applicable as 
determinants of disability at that age. We therefore propose that 
children under the age of one be rated at Level I, unless a pediatric 
neurologist certifies that, in his or her medical judgment, there is a 
neurological deficit present that will prevent the child from 
ambulating, grasping a pen, performing self-care, or feeding him or 
herself because of sensory or motor impairment of the upper 
extremities, or that will make it impossible for the child to achieve 
urinary or fecal continence. In our judgment, pediatric neurologists 
are the only physicians with the expertise in this highly specialized 
area necessary to assess neurological deficits and their likely 
prognosis in children under the age of one. If such a deficit is 
present, we propose that the child be rated at Level III. We also 
propose to require that VA reassess the level of disability in each 
child at the age of one year, at which time the effects of spina bifida 
can more readily be determined.
    In some cases, symptoms due to spina bifida do not become manifest 
for several years. Even if the limbs initially appear totally 
paralyzed, early training and the use of appliances may allow 
ambulation in childhood (Brain's Diseases of the Nervous System, 
revised by John N. Walton, M.D., D.Sc., F.R.C.P., 8th ed., 1977, 777). 
However, children with lesions at the second lumbar level or higher, 
even if they become ambulatory in childhood, usually will require 
wheelchairs in the teenage period. Despite initial bowel or bladder 
incontinence, most older children, with training and the use of 
medication or appliances, are able to achieve continence (Diseases of 
the Nervous System, Arthur K. Asbury, M.D., Guy M. McKhann, M.D., and 
W. Ian McDonald, Ph.D., F.R.C.P., eds., 1986, 712).
    VA will reassess the level of disability due to spina bifida 
whenever it receives medical evidence indicating that a change is 
warranted. Nevertheless, we propose to require that VA reassess the 
level of disability due to spina bifida at intervals of not more than 
five years until the child has reached the age of 21. Required 
reassessments will assure that the appropriate level of disability is 
assigned during the period of time when changes in the disabling 
effects of spina bifida are most likely to occur. Thereafter, we 
propose to reassess the level of disability only if we receive medical 
evidence indicating a material change in the level of disability or 
that the current rating may be incorrect. By the time a child is age 
21, the condition has generally stabilized and, in our judgment, 
required reassessments beyond that age will no longer be necessary.
    Because VA medical facilities generally provide examination and 
care only to veterans, VA lacks pediatric examiners, pediatric 
neurologists, and other pediatric specialists who might participate in 
the evaluation and care of children with spina bifida. We therefore 
propose to accept statements from private physicians, as well as 
examination reports from government or private institutions, for the 
purpose of rating spina bifida claims without further examination, 
provided they are adequate to permit the evaluation of the effects of 
spina bifida under the criteria proposed above. Because of the critical 
need to obtain this information in order to assure assignment of an 
appropriate rating level, we propose to require that individuals 
seeking or receiving benefits under this provision authorize the 
release of pertinent medical records to VA and that children for whom 
VA schedules an examination, whether at a VA facility or by a private 
health-care provider under contract, report for that examination. 
Individuals who fail to authorize the release of pertinent medical 
records or fail to report for examination would be rated at Level I.

Paperwork Reduction Act of 1995

    The Office of Management and Budget (OMB) has determined that 
proposed 38 CFR 3.814 would contain collections of information under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). Accordingly, 
under section 3507(d) of the Act, VA has submitted a copy of this 
rulemaking action to OMB for its review of the collections of 
information.
    OMB assigns a control number for each collection of information it 
approves. VA may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number.
    Comments on the proposed collections of information should be 
submitted to the Office of Management and Budget, Attention: Desk 
Officer for the Department of Veterans Affairs, Office of Information 
and Regulatory Affairs, Washington, DC 20503, with copies mailed or 
hand-delivered to: Director, Office of Regulations Management (02D), 
Department of Veterans Affairs, 810 Vermont Ave., NW, Room 1154, 
Washington, DC 20420. Comments should indicate that they are submitted 
in response to ``RIN 2900-AI70.''
    Title: Application for Benefits Eligibility.
    Summary of collection of information: The provisions of proposed 38 
CFR 3.814 would require applicants for the monetary allowance to submit 
certain personal identifying information of the child and natural 
parents, medical status of the child, veteran status of the natural 
parents, and incompetency details (if applicable and the child is over 
18 years old). The types of evidence specified in Secs. 3.209 and 3.210

[[Page 23727]]

would be sufficient to establish that a child is the natural child of a 
Vietnam veteran.
    Description of the need for information and proposed use of 
information: VA needs the information to determine eligibility for 
obtaining the monetary allowance and the appropriate level of payment. 
Although submission of Social Security numbers is not mandatory, 
pending the enactment of specific legislation, VA would use the Social 
Security numbers to: (1) Verify that the child's natural parent was a 
veteran who served in Vietnam during the specified period; (2) identify 
medical records; and (3) ensure that awards to deceased beneficiaries 
are terminated in a timely manner to avoid creation of overpayments.
    Description of likely respondents: Individuals seeking the monetary 
allowance for a child born with spina bifida who is a child of a 
Vietnam veteran.
    Estimated number of respondents: 600-2,000.
    Estimated frequency of responses: 1.
    Estimated total annual reporting and recordkeeping burden: 335 
hours.
    Estimated annual burden per collection: 10 minutes.
    Title: Acceptance of Released Statements from Private Physicians or 
Institutions for the Purpose of Evaluating Spina Bifida Claims.
    Summary of collection of information: The provisions of the 
proposed 38 CFR 3.814(d) would permit VA to accept statements from 
private physicians, as well as examination reports from government or 
private institutions, for the purpose of evaluating spina bifida claims 
without VA examination provided that they are adequate to evaluate the 
effects of spina bifida under the criteria proposed in the regulation, 
and would require individuals seeking the monetary allowance to 
authorize the release of pertinent medical records to VA.
    Description of the need for information and proposed use of 
information: Because VA medical facilities generally provide 
examination and care only to veterans, VA lacks pediatric examiners, 
pediatric neurologists, and other pediatric specialists who might 
participate in the evaluation of children with spina bifida.
    Description of likely respondents: Individuals seeking the monetary 
allowance for a child born with spina bifida who is a child of a 
Vietnam veteran.
    Estimated number of respondents: 600-2,000.
    Estimated frequency of responses: 1.
    Estimated total annual reporting and recordkeeping burden: 335 
hours.
    Estimated annual burden per collection: 10 minutes.
    The Department considers comments by the public on proposed 
collections of information in--
     Evaluating whether the proposed collections of information 
are necessary for the proper performance of the functions of the 
Department, including whether the information will have practical 
utility;
     Evaluating the accuracy of the Department's estimate of 
the burden of the proposed collections of information, including the 
validity of the methodology and assumptions used;
     Enhancing the quality, usefulness, and clarity of the 
information to be collected; and
     Minimizing the burden of the collections of information on 
those who are to respond, including responses through the use of 
appropriate automated, electronic, mechanical, or other technological 
collection techniques or other forms of information technology, e.g., 
permitting electronic submission of responses.
    OMB is required to make a decision concerning the collection of 
information contained in this proposed rule between 30 and 60 days 
after publication of this document in the Federal Register. Therefore, 
a comment to OMB is best assured of having its full effect if OMB 
receives it within 30 days of publication. This does not affect the 
deadline for the public to comment on the proposed regulations.
    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 (RFA), 5 
U.S.C. 601-612. The reason for this certification is that these 
amendments would not directly affect any small entities. Only VA 
beneficiaries could be directly affected. Therefore, pursuant to 5 
U.S.C. 605(b), these amendments are exempt from the initial and final 
regulatory flexibility analysis requirements of sections 603 and 604.
    There is no Catalog of Federal Domestic Assistance program number 
for this benefit.

List of Subjects in 38 CFR Part 3

    Administrative practice and procedure, Claims, Disability benefits, 
Health care, Pensions, Veterans, Vietnam.

    Approved: March 21, 1997.
Jesse Brown,
Secretary of Veterans Affairs.

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

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:

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

    2. In Sec. 3.27, paragraph (c) is redesignated as paragraph (d), a 
new paragraph (c) is added, and newly redesignated paragraph (d) and 
its authority citation are revised to read as follows:


Sec. 3.27  Automatic adjustment of benefit rates.

* * * * *
    (c) Monetary allowance under 38 U.S.C. 1805 for a child born with 
spina bifida who is a child of a Vietnam veteran. Whenever there is a 
cost-of-living increase in benefit amounts payable under section 215(i) 
of Title II of the Social Security Act, VA shall, effective on the 
dates such increases become effective, increase by the same percentage 
the monthly allowance under 38 U.S.C. 1805 for a child born with spina 
bifida who is a child of a Vietnam veteran.

(Authority: 38 U.S.C. 1805(b)(3))

    (d) Publishing requirements. Increases in pension rates, parents' 
dependency and indemnity compensation rates and income limitation, and 
the monthly allowance under 38 U.S.C. 1805 for a child born with spina 
bifida made under this section shall be published in the Federal 
Register.

(Authority: 38 U.S.C. 5312(c)(1), 1805(b)(3))

    3. In Sec. 3.105, paragraphs (g) and (h) are redesignated as 
paragraphs (h) and (i), respectively; in paragraphs (d), (e), (f) and 
newly redesignated paragraph (h) remove ``paragraph (h)'' each time it 
appears and add, in its place, ``paragraph (i)''; in newly redesignated 
paragraph (i)(1) remove ``paragraphs (d) through (g)'' and add, in its 
place, ``paragraphs (d) through (h)''; in newly redesignated paragraph 
(i)(2) introductory text, remove ``paragraph (d), (e), (f) or (g)'' and 
add, in its place, ``paragraph (d), (e), (f), (g) or (h)''; in newly 
redesignated paragraph (i)(2)(ii) remove ``paragraph (f)'' and add, in 
its place, ``paragraphs (f) and (g)''; in newly

[[Page 23728]]

redesignated paragraph (i)(2)(iii) remove ``paragraph (g)'' and add, in 
its place, ``paragraph (h)''; and add a new paragraph (g) to read as 
follows:


Sec. 3.105  Revision of decisions.

* * * * *
    (g) Reduction in evaluation--monetary allowance to a child with 
spina bifida under 38 U.S.C. 1805. Where a change in disability level 
warrants a reduction of the monthly allowance currently being made, a 
rating proposing the reduction will be prepared setting forth all 
material facts and reasons. The beneficiary will be notified at his or 
her latest address of record of the contemplated action and furnished 
detailed reasons therefor, and will be given 60 days for the 
presentation of additional evidence to show that the monthly allowance 
should be continued at the present level. Unless otherwise provided in 
paragraph (i) of this section, if additional evidence is not received 
within that period, final rating action will be taken and the award 
will be reduced effective the last day of the month following sixty 
days from the date of notice to the payee of the proposed reduction.

(Authority: 38 U.S.C. 501)
* * * * *


Sec. 3.158  [Amended]

    4. In Sec. 3.158, paragraphs (a) and (c) are amended by removing 
``or dependency and indemnity compensation'' and adding, in its place, 
``dependency and indemnity compensation, or monetary allowance under 
the provisions of 38 U.S.C. 1805''.
    5. In Sec. 3.261, paragraph (a)(40) is added to read as follows:


Sec. 3.261  Character of income; exclusions and estates.

* * * * *
    (a) * * *

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Pension; old-law (veterans,        Pension; section 306                                   
               Income                     Dependency  (parents)         Dependency and indemnity         surviving spouses and       (veterans, surviving spouses               See             
                                                                         compensation (parents)                children)                    and children)                                       
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(40) Monetary allowance under 38     Excluded......................  Excluded......................  Excluded.....................  Excluded.....................  Sec.  3.262(y)               
 U.S.C. 1805 for children born with                                                                                                                                                             
 spina bifida who are children of                                                                                                                                                               
 Vietnam Veterans.                                                                                                                                                                              
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

* * * * *
    6. In Sec. 3.262, paragraph (y) is added to read as follows:


Sec. 3.262  Exclusions of income.

* * * * *
    (y) Monetary allowance under 38 U.S.C. 1805 for a child born with 
spina bifida who is a child of a Vietnam veteran. There shall be 
excluded from income computation any allowance paid under the 
provisions of 38 U.S.C. 1805 to a child born with spina bifida who is 
the child of a Vietnam veteran.

(Authority: 38 U.S.C. 1805(d))

    7. In Sec. 3.263, paragraph (g) is added to read as follows:


Sec. 3.263  Corpus of estate; net worth.

* * * * *
    (g) Monetary allowance under 38 U.S.C. 1805 for a child born with 
spina bifida who is a child of a Vietnam veteran. There shall be 
excluded from the corpus of estate or net worth of a claimant any 
allowance paid under the provisions of 38 U.S.C. 1805 to a child born 
with spina bifida who is the child of a Vietnam veteran.

(Authority: 38 U.S.C. 1805(d))

    8. In Sec. 3.272, paragraph (u) is added to read as follows:


Sec. 3.272  Exclusions from income.

* * * * *
    (u) Monetary allowance under 38 U.S.C. 1805 for a child born with 
spina bifida who is a child of a Vietnam veteran. Any allowance paid 
under the provisions of 38 U.S.C. 1805 to a child born with spina 
bifida who is the child of a Vietnam veteran.

(Authority: 38 U.S.C. 1805(d))

    9. In Sec. 3.275, paragraph (i) is added to read as follows:


Sec. 3.275  Criteria for evaluating net worth.

* * * * *
    (i) Monetary allowance under 38 U.S.C. 1805 for a child born with 
spina bifida who is a child of a Vietnam veteran. There shall be 
excluded from the corpus of estate or net worth of a claimant any 
allowance paid under the provisions of 38 U.S.C. 1805 to a child born 
with spina bifida who is the child of a Vietnam veteran.

(Authority: 38 U.S.C. 1805(d))

    10. In Sec. 3.403, the introductory text and paragraphs (a)-(e) are 
redesignated as paragraphs (a), and (a)(1)-(a)(5), respectively, and 
paragraph (b) is added to read as follows:


Sec. 3.403  Children.

* * * * *
    (b) Monetary allowance under 38 U.S.C. 1805 for a child born with 
spina bifida who is a child of a Vietnam veteran (Sec. 3.814). An award 
of the monetary allowance under 38 U.S.C. 1805 to a child with spina 
bifida who is the child of a Vietnam veteran will be either date of 
birth if claim is received within one year of that date, or date of 
claim, but not earlier than October 1, 1997.

(Authority: 38 U.S.C. 1806, 5110(n); sec. 422(c), Pub. L. 104-204, 
110 Stat. 2926)

    11. In Sec. 3.503, the introductory text and paragraphs (a)-(j) are 
redesignated as paragraphs (a), and (a)(1)-(a)(10), respectively, and 
paragraph (b) is added to read as follows:


Sec. 3.503  Children.

* * * * *
    (b) Monetary allowance under 38 U.S.C. 1805 for a child born with 
spina bifida who is a child of a Vietnam veteran (Sec. 3.814). The 
effective date of discontinuance of the monthly allowance under 38 
U.S.C. 1805 to a child with spina bifida who is the child of a Vietnam 
veteran will be the last day of the month before the month in which the 
death of the child occurred.

(Authority: 38 U.S.C. 501)

    12. Section 3.814 is added to read as follows:


Sec. 3.814  Monetary allowance under 38 U.S.C. 1805 for a child born 
with spina bifida who is a child of a Vietnam veteran.

    (a) VA shall pay a monthly allowance based upon the level of 
disability determined under the provisions of paragraph (c) of this 
section to or for a child born with spina bifida who is a child of a 
Vietnam veteran. Receipt of this allowance shall not affect the right 
of the child, or the right of any individual based on the child's 
relationship to that individual, to receive any other benefit to which 
the child, or that individual, may be entitled under any law 
administered by VA. If a child with spina bifida is the natural child 
of two Vietnam veterans,

[[Page 23729]]

he or she is entitled to only one monthly allowance under this section.
    (b) Applicants for the monetary allowance under this section must 
submit an application to the VA regional office and include the 
information mandated on the following VA form entitled ``Application 
for Spina Bifida Benefits'':

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    (c) Definitions.
    (1) Vietnam veteran. For the purposes of this section, the term 
``Vietnam veteran'' means a veteran who performed active military, 
naval, or air service in the Republic of Vietnam during the Vietnam 
era. Service in the Republic of Vietnam includes service in the waters 
offshore and service in other locations if the conditions of service 
involved duty or visitation in the Republic of Vietnam.
    (2) Child. For the purposes of this section, the term ``child'' 
means a natural child of a Vietnam veteran, regardless of age or 
marital status, conceived after the date on which the veteran first 
served in the Republic of Vietnam during the Vietnam era. 
Notwithstanding the provisions of Sec. 3.204(a)(1), VA shall require 
the types of evidence specified in Secs. 3.209 and 3.210 sufficient to 
establish in the judgment of the Secretary that a child is the natural 
child of a Vietnam veteran.
    (3) Spina bifida. For the purposes of this section, the term 
``spina bifida'' means any form and manifestation of spina bifida 
except spina bifida occulta.
    (d)(1) Upon receipt of competent medical evidence that a child has 
spina bifida, VA shall determine the level of disability suffered by 
the child in accordance with the following criteria:
    (i) Level I. The child is able to walk without braces or other 
external support (although gait may be impaired), has no sensory or 
motor impairment of upper extremities, has an IQ of 90 or higher, and 
is continent of urine and feces.
    (ii) Level II. Provided that none of the child's disabilities are 
severe enough to be evaluated at Level III, and the child: is 
ambulatory, but only with braces or other external support; or has 
sensory or motor impairment of upper extremities, but is able to grasp 
pen, feed self, and perform self care; or has an IQ of at least 70 but 
less than 90; or requires drugs or intermittent catheterization or 
other mechanical means to maintain proper urinary bladder function, or 
mechanisms for proper bowel function.
    (iii) Level III. The child is unable to ambulate; or has sensory or 
motor impairment of upper extremities severe enough to prevent grasping 
a pen, feeding self, and performing self care; or has an IQ of 69 or 
less; or has complete urinary or fecal incontinence.
    (2) Provided that they are adequate for assessing the level of 
disability due to spina bifida under the provisions of paragraph (d)(1) 
of this section, VA may accept statements from private physicians, or 
examination reports from government or private institutions, for the 
purpose of rating spina bifida claims without further examination. In 
the absence of such information, VA will schedule an examination for 
the purpose of assessing the level of disability.
    (3) Unless or until VA is able to obtain medical evidence adequate 
to assess the level of disability due to spina bifida, it will rate the 
disability of a person eligible for this monetary allowance at no 
higher than Level I.
    (4) Children under the age of one year will be rated at Level I 
unless a pediatric neurologist certifies that, in his or her medical 
judgment, there is a neurological deficit that will prevent the child 
from ambulating; from grasping a pen, feeding him or herself, or 
performing self care; or from achieving urinary or fecal continence. If 
such a deficit is present, the child will be rated at Level III. VA 
will reassess the level of disability of each child to which this 
provision is applied at the age of one year.
    (5) VA will reassess the level of disability due to spina bifida 
whenever it receives medical evidence indicating that a change is 
warranted. For individuals between the ages of one and twenty-one, 
however, it will reassess the level of disability at intervals of not 
more than five years. Thereafter, it will reassess the level of 
disability only if evidence indicates there has been a material change 
in the level of disability or that the current rating may be incorrect.

(Authority: 38 U.S.C. 501, 1805)

    13. The Cross-Reference following Sec. 3.57 is amended by removing 
``Sec. 3.403(a)'' and ``Sec. 3.503(c)'' and adding, in their places, 
``Sec. 3.403(a)(1)'' and ``Sec. 3.503(a)(3)'', respectively. Each 
Cross-Reference following Secs. 3.659 and 3.703 is amended by removing 
``Sec. 3.503(g)'' and adding, in its place, ``Sec. 3.503(a)(7)''. Each 
Cross Reference following Secs. 3.707 and 3.807 is amended by removing 
``Sec. 3.503(h)'' and adding, in its place, ``Sec. 3.503(a)(8)''.

[FR Doc. 97-11256 Filed 4-30-97; 8:45 am]
BILLING CODE 8320-01-U