[Federal Register Volume 62, Number 189 (Tuesday, September 30, 1997)]
[Rules and Regulations]
[Pages 51274-51281]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25663]



[[Page 51273]]

_______________________________________________________________________

Part IV





Department of Veterans Affairs





_______________________________________________________________________



38 CFR Parts 3, 17 and 21



Monetary Allowance Under 28 U.S.C. 1805 for a Child Suffering From 
Spina Bifida Who Is a Child of a Vietnam Veteran; Final Rule



Provision of Health Care to Vietnam Veterans' Children With Spina 
Bifida; Final Rule



Provision of Vocational Training and Rehabilitation to Vietnam 
Veterans' Children With Spina Bifida; Final Rule

  Federal Register / Vol. 62, No. 189 / Tuesday, September 30, 1997 / 
Rules and Regulations  

[[Page 51274]]


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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 Suffering 
From Spina Bifida Who Is a Child of a Vietnam Veteran

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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

SUMMARY: This document amends the Department of Veterans Affairs (VA) 
adjudication regulations to provide for payment of a monetary allowance 
to a child suffering from 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.

DATES: Effective Date: October 1, 1997.

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, 
Pub. L. 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. VA submitted proposed legislation to Congress in 
July of that year. Section 421 of Pub. L. 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 suffering 
from spina bifida who are the natural children of veterans who served 
in the Republic of Vietnam during the Vietnam era. VA published a 
proposal to implement section 421 of Pub. L. 104-204 in the Federal 
Register of May 1, 1997 (62 FR 23724-23731). Interested persons were 
invited to submit written comments on or before June 30, 1997. We 
received a total of thirty-two comments from: the Vietnam Veterans of 
America, Inc.; the Vietnam Veterans of America (Illinois State Council 
Service Program); a combined comment from the National Veterans Legal 
Services Program (NVLSP), the Spina Bifida Association of America, and 
the National Alliance of Veteran Family Service Organizations; the 
Veterans of Foreign Wars of the United States (VFW); The American 
Legion; the Paralyzed Veterans of America (PVA); Senator Tom Daschle; 
Senator John D. Rockefeller IV; and twenty-four other concerned 
individuals.
    A number of commenters specifically recommended changes to the 
statutory language of title 38, United States Code, chapter 18. Others 
recommended that in the regulation we change the amount of the monetary 
allowance associated with the three levels of disability; add 
additional payment levels for the monetary allowance; pay the monetary 
allowance retroactive to dates prior to October 1, 1997; provide 
automobile adaptive equipment or an automobile allowance and specially 
adapted housing to children with spina bifida; pay the benefit to 
children with spina bifida occulta; pay the benefit to grandchildren of 
Vietnam veterans; and pay the benefit to the children of certain 
individuals who do not meet the statutory definition of the term 
``veteran.'' No changes are made based on these comments. VA has no 
legal authority to make any of these changes.
    One commenter suggested that in the regulation VA use the term 
``biological child'' of a Vietnam veteran rather than ``natural 
child.''
    Section 1801(1) of title 38, United States Code, defines the term 
``child'' for purposes of this benefit as meaning, among other things, 
a ``natural child'' of a Vietnam veteran. The term ``natural'' as used 
in the statute means relating naturally rather than by adoption 
(Webster's New World Dictionary, Third College Ed., 1988, 903), so in 
our judgment the terms ``natural child'' and ``biological child'' are 
synonymous. Using a term in the regulation that is inconsistent with 
the statutory language might imply a difference that we do not intend. 
Therefore, we make no change based on this suggestion.
    One commenter stated that a child with spina bifida who is the 
legally adopted child of a Vietnam veteran should be eligible for this 
benefit.
    The statute clearly defines the term ``child'' as used in 
determining eligibility for spina bifida benefits as meaning the 
natural child of a Vietnam veteran (see 38 U.S.C. 1801 (1)). Since VA 
has no authority to expand that statutory definition, we make no change 
based on this comment.
    We proposed to terminate the monetary allowance effective the last 
day of the month before the month in which the beneficiary dies. A 
commenter suggested that we terminate not only this benefit, but 
benefits to veterans and survivors as well, effective the first day of 
the month following the month of death.
    Because 38 U.S.C. 5112(b)(1) requires VA to discontinue 
compensation, dependency and indemnity compensation, or pension 
payments on the last day of the month before the death of the 
beneficiary, we have no discretion with respect to these benefits. 
Although Pub. L. 104-204 is silent on the issue of effective dates for 
discontinuing the monetary allowance, there is no indication in chapter 
18 of title 38, United States Code, or its legislative history that 
Congress intended VA to administer the monetary allowance for children 
with spina bifida any differently than compensation, dependency and 
indemnity compensation, or pension in this respect, and we make no 
change based on this suggestion.
    We proposed to define the term ``Vietnam veteran,'' for purposes of 
this benefit, to include an individual with service in the waters 
offshore and service in other locations ``if the conditions of service 
involved duty or visitation in the Republic of Vietnam.'' One commenter 
recommended that we eliminate the phrase ``if the conditions of service 
involved duty or visitation in the Republic of Vietnam.''
    VA defines the term service in the Republic of Vietnam, for the 
purposes of presuming herbicide exposure, 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'' (see 
38 CFR 3.307(a)(6)(iii)). Because herbicides were not applied in waters 
off the shore of Vietnam, limiting the scope of the term service in the 
Republic of Vietnam to persons whose service involved duty or 
visitation in the Republic of Vietnam limits the focus of the 
presumption of exposure to persons who may have been in areas where 
herbicides could have been encountered. Since the purpose of this 
rulemaking is to provide a monetary allowance to the children of those 
same veterans that VA presumes to be

[[Page 51275]]

herbicide-exposed if the children are born with spina bifida, it would 
be inappropriate to revise the presumption of exposure for the purposes 
of this benefit. We make no change based on this comment.
    VA proposed to amend 38 CFR 3.263 and 3.275 to implement the 
provisions of 38 U.S.C. 1805(c) that specify that the monetary 
allowance not be considered income or resources in determining 
eligibility for benefits under any Federal program. One commenter 
stated that not only should the monetary allowance be excluded from VA 
net worth calculations but that assets purchased with the monetary 
allowance should also be excluded from those calculations.
    Both Secs. 3.263 and 3.275 define ``net worth'' to mean the market 
value, less mortgages or other encumbrances, of all real and personal 
properties owned by the claimant, except the claimant's dwelling 
(single family unit), including a reasonable lot area, and personal 
effects suitable and consistent with the claimant's reasonable mode of 
life. In our judgment, that definition allows reasonable exclusions 
from net worth for purposes of VA's income-based benefit programs, and 
we make no change based on this comment.
    Several commenters suggested that VA provide an outreach plan as 
part of the final regulation. Although we intend informally to advise 
potentially eligible claimants that benefits are available and to 
solicit claims, we see no reason to include a statement regarding this 
matter in the regulations, since those who read the regulations 
necessarily would know about the program.
    Several commenters stated that spina bifida claimants should have 
the same due process and appellate rights as other VA claimants.
    38 CFR 3.103, Procedural due process and appellate rights, clearly 
states that its provisions apply to all claims for benefits and relief 
within the purview of VA's adjudication regulations (38 CFR part 3). 
Since the regulatory framework for the monetary allowance to children 
with spina bifida (38 CFR 3.814) is codified within 38 CFR part 3, the 
due process and appellate rights provided by Sec. 3.103 apply to spina 
bifida claimants.
    One commenter requested that the comment period for this rulemaking 
proceeding be extended until the end of the comment period for the 
proposed rule regarding vocational training and rehabilitation for 
Vietnam veterans' children who suffer from spina bifida.
    Such an extension is unwarranted. An understanding of the issues in 
the rulemaking proceeding regarding vocational training and 
rehabilitation is not necessary to make informed comments regarding 
this rulemaking proceeding.
    Another commenter recommended that VA use its Schedule for Rating 
Disabilities (title 38, Code of Federal Regulations, part 4) to 
evaluate the severity of disabilities for the purpose of furnishing the 
monetary allowance for spina bifida.
    38 U.S.C. 1155, the statutory authority for VA's Schedule for 
Rating Disabilities, provides that evaluations of disabled veterans be 
based, as far as practicable, upon average impairment of earning 
capacity resulting from similar disabilities in civil occupations, and 
be at one of ten grades in 10 percent increments. 38 U.S.C. 1805(b) 
authorizes VA to pay a monetary allowance to an eligible child with 
spina bifida 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. By 
requiring evaluations at three levels rather than 10, and by not 
directing that evaluations be based on average impairment of earning 
capacity or be expressed in percentages, Congress established 
requirements for evaluating spina bifida so different from the 
requirements for evaluating disabilities for compensation and pension 
purposes that they are incompatible with the Schedule for Rating 
Disabilities. By codifying the requirement to establish rating criteria 
for spina bifida other than under the authority of 38 U.S.C. 1155, 
Congress further indicated its expectation that children with spina 
bifida would be evaluated under different criteria. For these reasons, 
we make no change based on this comment.
    Section 1805 of title 38, United States Code, provides a monetary 
allowance at one of three levels to eligible individuals based on the 
degree of disability to be determined according to a rating schedule 
prescribed by the Secretary. We proposed to base the three levels of 
disability on neurological deficit, as manifested by impairment of 
functioning of: the extremities; bowel or bladder; and intellect; and 
to evaluate each of those at one of three levels of severity. Several 
commenters objected that those criteria are too narrow because they 
fail to include all disabilities ``related to, or secondary to, spina 
bifida,'' such as hydrocephalus, Arnold-Chiari malformation, sexual/
reproductive dysfunction, latex allergy, seizure disorders, etc.
    While spina bifida is commonly associated with other developmental 
defects and congenital abnormalities, 38 U.S.C. 1805 authorizes VA to 
pay the monetary allowance for any ``disability resulting from'' spina 
bifida. Neurological deficit is the main determinant of disability for 
individuals 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).
    Conditions that are commonly associated with spina bifida, such as 
Arnold-Chiari malformation, hydrocephalus, etc., generally affect one 
or more of the same functions we proposed to use for rating spina 
bifida. The evaluation criteria do not require the raters to rate 
impairment of those functions only to the extent that it is due to 
spina bifida, but allow them to take into account the effect on those 
functions of associated conditions. In our judgment, the rating 
criteria that we proposed constitute a reasonable method for 
differentiating between three levels of disability, as Congress 
required, and we make no change based on these comments.
    Several commenters felt that the payment criteria do not take into 
account the synergistic effect of disabilities and recommended that an 
individual with more than one Level II disability be rated at Level 
III.
    Congress mandated rating criteria supporting three levels of 
payment. If we are to administer this monetary allowance equitably, and 
in the manner we believe Congress intended, in assigning an 
intermediate (Level II) payment based on combined aspects of 
neurological impairment, we must consider not only that some 
beneficiaries with spina bifida may be less severely disabled than a 
particular individual, but that some may be more severely disabled. 
Someone with even four Level II disabilities, for example, would not be 
as severely disabled as someone with any of the Level III disabilities, 
because the criteria used to assess each disability represent 
incremental degrees of severity from least (Level I) through most 
severe (Level III). Since Congress established three levels of payment, 
it would not be equitable, in our judgment, to pay someone with Level 
II impairment of each neurological function considered in the criteria 
the same amount as someone with Level III impairment of each 
neurological function considered. The criteria as proposed represent a 
reasonable and equitable method for distinguishing three levels of 
disability, and we make no change based on this comment.
    We proposed to measure impairment of intellectual functioning using

[[Page 51276]]

intelligence quotient (I.Q.). A number of commenters stated that I.Q. 
is not the best representation of intellectual functioning as it 
relates to level of disability. Some recommended that we use 
``performance I.Q.'' or ``assessed intellectual functioning'' instead.
    According to a recent British study, it is, in fact, I.Q. that is 
one of the two main determinants of disability and dependency in 
individuals with spina bifida, neurological deficit being the other 
(Open spina bifida: a complete cohort reviewed 25 years after closure, 
Urology Department, Addenbrooke's Hospital, Cambridge, UK, Dev Med 
Child Neurol 1995 Jan; 37(1):19-29). Furthermore, it is important to 
keep the criteria as simple and objective as possible to ensure 
consistent ratings and timely resolution of claims. Although I.Q. can 
be measured by any of several standardized tests that are in general 
use, we are not aware of any comparable standard objective measures for 
the other aspects of intellectual functioning that the commenters 
suggested we use. For these reasons, we make no change based on these 
comments.
    One commenter felt that the payment criteria should take into 
account emotional suffering due to past surgical procedures.
    38 U.S.C. 1805 authorizes a monetary allowance for disability 
resulting from spina bifida. In normal usage, the term ``disability'' 
implies a lack of the ability to function normally, physically or 
mentally (Dorland's Illustrated Medical Dictionary, 27th ed. 1988, 
480). In our judgment, mental suffering due to prior surgeries is not a 
disability as that term is used in the statute, and we make no change 
based on this comment.
    We proposed to evaluate impairment of bowel and bladder function 
from least (Level I) to most (Level III) severely impaired based on 
whether an individual is continent of urine and feces, requires drugs 
or mechanical means to maintain proper bladder or bowel function, or is 
completely incontinent of urine or feces. A number of commenters stated 
that these criteria penalize individuals for receiving appropriate 
treatment and are a financial disincentive to seeking treatment.
    The issue is not whether impairment of bowel or bladder function is 
severely disabling--we can concede that it is--but the degree of 
severity. An individual who is continent at least part of the time, by 
whatever means, is clearly less disabled than one who is unable to 
attain any degree of continence by any means. Even in cases where an 
individual has attained continence of either bowel or bladder function 
through drugs or mechanical means, other factors would influence the 
payment level. For example, some individuals may be able to attain 
continence for either bowel or bladder function but not both. In such a 
case, the payment level would remain at Level III. Furthermore, 
individuals with impairment of bowel or bladder function will, in many 
cases, have other impairments that affect the payment level, so that a 
change from incontinence to continence might not warrant any change in 
the payment level. In our judgment, the fact that a beneficiary might, 
in rare cases, receive a higher monthly payment if he or she does not 
follow procedures designed to alleviate, or at least manage, 
incontinence will not outweigh for most individuals with spina bifida 
the incentives, from both health and social perspectives, to follow 
such a program. We therefore make no change based on this comment.
    Two commenters pointed out that because the degree of continence 
may change, the payment level may need to change. One recommended that 
we not reduce the payment from Level II (based on the fact that an 
individual requires drugs to maintain urinary continence) to Level I, 
until one year after he or she becomes continent without drugs, in 
order to ascertain whether continence can be maintained without 
medication.
    The payment level is based on a combination of specified functional 
impairments. For that reason, a change in the severity of one type of 
impairment would not necessarily affect the payment level. A reduction 
from Level II to Level I based on the fact that an individual has 
achieved urinary continence, for example, would occur only if all other 
specified impairments (bowel, ambulation, I.Q., upper extremities) were 
also at Level I. Under the provisions of 38 CFR 3.814, VA will 
reevaluate the disability level whenever there is an indication of 
material change in an individual's condition; these evaluations will 
generally be based on medical reports from the beneficiary's primary 
care physician or the medical institution where he or she receives 
treatment. Should the health-care provider indicate that the long-term 
effect of withdrawing treatment cannot yet be determined, the rating 
activity could defer the reevaluation if it had any potential effect on 
the payment level. The length of any deferment should be based on 
medical evidence rather than a fixed period set by regulation, however, 
and we make no change based on this comment.
    Because all children less than one year of age, whether or not they 
are suffering from spina bifida, are essentially helpless, incontinent, 
unable to walk, and too young for I.Q. to be measured, we proposed to 
pay children under the age of one at Level I. Several commenters 
objected to this provision.
    One commenter stated that this provision is unfair because it is at 
odds with the likely disability once the child is old enough to be 
properly examined, and arbitrary because it treats infants with spina 
bifida differently than older individuals with spina bifida without a 
rational basis.
    The rating criteria for spina bifida are based on impairment of 
specified neurological functions. These functions have not yet 
developed in newborns, regardless of their spina bifida status. We do 
not dispute the fact that an infant with spina bifida has disabilities 
due to the condition. However, since it would be purely speculative to 
assess the severity of impairment of neurological functions until such 
time as those functions would have developed, in our judgment, there is 
a rational basis for setting the level of the monthly allowance at the 
lowest rate established by statute. As for the comment that Level I may 
not reflect the eventual severity of the child's disability, we believe 
that the monetary allowance is meant to reflect the current, rather 
than potential, level of severity, and that the requirement to 
reevaluate at age one is sufficient to ensure the child will be paid 
according to the actual impairment of neurological function once it is 
possible to objectively assess that impairment.
    Three commenters felt that a child under the age of one should be 
paid at Level III. One commenter gave as a reason that this is the 
period of most intensive medical and surgical treatment. Another said a 
child with hydrocephalus could have multiple shunt malfunctions.
    The issue is impairment of specific functions that are not yet 
developed in any infant. A child eligible for the monetary allowance is 
also entitled to health care from VA, including medical care, supplies, 
transportation, etc. Such a child will not be deprived of needed 
medical care because of the amount of monetary allowance. Furthermore, 
a child under the age of one may be evaluated at Level III if a 
pediatric neurologist or pediatric neurosurgeon certifies that there is 
a neurologic deficit present that will prevent the individual from 
ambulating, that will preclude self-care and feeding self because of 
sensory or motor impairment of the upper extremities, or that will make 
it impossible for the individual to achieve urinary or fecal 
continence. For these

[[Page 51277]]

reasons, we make no change based on this comment.
    One commenter said this inequity of presuming a Level I could 
continue for years if the parents or VA fail to arrange a reevaluation.
    No changes are made based on this comment. These regulations 
require VA to reevaluate a child when it reaches one year of age and 
thereafter at intervals of not more than five years. That is adequate 
protection against the inequity the commenter foresees. Anything beyond 
that would be a duty beyond the scope of VA's responsibility. 
Furthermore, a child, parent, or guardian may submit evidence that the 
disability has worsened at any time after the child is one year of age, 
and VA will determine whether that evidence warrants a change in the 
amount of monetary allowance.
    Several commenters felt that the provision requiring certification 
by a pediatric neurologist for an infant to be paid at Level III is too 
stringent. Some commenters suggested that in addition to pediatric 
neurologists the certification also should be allowed to be made by 
pediatric neurosurgeons. We agree that such determinations could also 
be made by pediatric neurosurgeons. However, due to the difficulty of 
making an objective prognosis for infants with this complex disability, 
we believe that only pediatric neurologists and pediatric neurosurgeons 
have sufficient expertise to ensure that the option of rating the 
infant at Level III is equitably and consistently applied. Accordingly, 
the final rule limits such certifications to pediatric neurologists and 
pediatric neurosurgeons.
    Some commenters said that infants with spina bifida, particularly 
those in rural areas, might not have access to a pediatric neurologist 
and recommended that VA accept certifications from other health-care 
practitioners.
    Hospitals even in rural areas offer referral services for treatment 
or evaluation of severely disabled children. Under the provisions of 38 
U.S.C. 1803, VA will provide an eligible child with spina bifida any 
health care, including transportation expenses, that it determines is 
necessary. If VA determines that evaluation by a pediatric neurologist 
or a pediatric neurosurgeon qualifies as a reasonable need, the 
services of a pediatric neurologist or a pediatric neurosurgeon will be 
available to any eligible disabled child who needs them, and we make no 
change based on this comment.
    We proposed to rate impairment of neurological function of the 
lower extremities at Level I if the individual is able to walk without 
braces or other external support; at Level II if he or she is 
ambulatory, but only with braces or other external support; and at 
Level III if he or she is unable to ambulate. One commenter said that 
the need to wear braces should warrant a Level III determination, and 
another said that some who can walk without braces still have very 
severe disability.
    This comment raises the same issue, i.e., the degree of severity, 
discussed above in conjunction with the synergistic effects of 
disabilities. In order to administer this monetary allowance equitably, 
it is important that we consider not only that some beneficiaries may 
be less severely disabled than an individual rated at Level II, but 
also that some may be more severely disabled. While spina bifida is 
undoubtedly a very disabling condition, the statute requires us to 
establish rating criteria that distinguish three levels of disability. 
A person able to ambulate with braces or other external support is 
unquestionably less severely disabled than an individual who is unable 
to ambulate. We believe, therefore, the proposed criteria establish a 
clear and reasonable separation between the intermediate and most 
severe levels of impairment of neurological functioning of the lower 
extremities, and we make no change based on this comment.
    We proposed to reevaluate individuals with spina bifida at the age 
of one year and then at intervals of no more than five years until the 
individual reaches the age of 21. One commenter proposed that VA waive 
further reevaluation if the child's primary caregiver states that it is 
unlikely that the overall level of disability will improve.
    Periodic reevaluations are necessary because, until maturity, the 
level of neurological functioning may fluctuate. Virtually all children 
can be taught to ambulate with sufficient bracing and external support, 
for example, but those with lesions at L2 or higher will usually revert 
to wheelchairs in the teenage period (Diseases of the Nervous System, 
Arthur K. Asbury, M.D., Guy M. McKhann, M.D., and W. Ian McDonald, Ph. 
D., 1986, 712). The purpose of the reevaluations is to ensure that the 
beneficiary is being paid at the level commensurate with the severity 
of the disability. Although reevaluation will generally be based on 
private medical evidence, it is the VA adjudicator, rather than the 
caregiver, who is responsible for determining how that medical evidence 
compares to the requirements set forth in VA regulations. We therefore 
make no change based on this comment.
    One commenter noted that the application form asked for parents' 
Social Security numbers. The commenter asserted that the form should 
clearly state that this is optional information. No change to the form 
is made based on this comment. The form clearly and prominently states 
in the material under the heading ``Privacy Act Information'' that 
disclosure of Social Security numbers is voluntary.
    One commenter also noted that the application form asked for the 
parents' VA claim numbers and asserted that such information is 
irrelevant and should be eliminated from the form. No change to the 
form is made based on this comment. Not all parents will have VA claim 
numbers. However, for those who do, the corresponding claims file 
should provide relevant information that would eliminate the need for 
other searching. For example, the file should establish whether the 
parent had service in the Republic of Vietnam during the Vietnam era.
    For the sake of clarity, we have made some non-substantive 
editorial changes to the proposed language.
    VA appreciates the comments submitted in response to the proposed 
rule. Based on the rationale set forth in the proposed rule and this 
document, the provisions of the proposed rule are adopted with the 
changes noted above.

Executive Order 12866

    This final rule has been reviewed by OMB under Executive Order 
12866.

Administrative Procedure Act

    There is good cause for making this final rule effective without 
regard to a 30 day delay. This final rule does not adversely affect 
anyone, and the affected children need the benefits from the rule as 
soon as possible.

Paperwork Reduction Act

    Information collection requirements associated with this final rule 
concerning the Application for Spina Bifida Benefits (38 CFR 3.814) 
have been approved by the Office of Management and Budget (OMB) under 
the provisions of the Paperwork Reduction Act (44 U.S.C. 3504(h)) and 
have been assigned OMB Control Number 2900-0572.
    This collection of information included in 38 CFR 3.814 concerns an 
application for eligibility for the monetary allowance based on spina 
bifida that must be submitted on VA Form 21-0304, which has been 
approved.
    OMB assigns a control number for each collection of information it 
approves. VA may not conduct or

[[Page 51278]]

sponsor, and a person is not required to respond to, a collection of 
information unless it displays a currently valid OMB control number. 
The valid OMB control number assigned to the collection of information 
in this final rule is displayed at the end of the affected section of 
the regulations.
    Two collection of information comments were received and are 
discussed above.

Regulatory Flexibility Act

    The Secretary hereby certifies that this final rule 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. This final rule would not directly affect any small entities. 
Only VA beneficiaries could be directly affected. Therefore, pursuant 
to 5 U.S.C. 605(b), this final rule is exempt from the initial and 
final regulatory flexibility analysis requirements of Secs. 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, Reporting and recordkeeping requirements, 
Veterans, Vietnam.

    Approved: September 11, 1997.
Hershel W. Gober,
Acting Secretary of Veterans Affairs.

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

PART 3--ADJUDICATION

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

    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 suffering 
from 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 
suffering from 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 suffering from 
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 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 
suffering from spina bifida under 38 U.S.C. 1805. Where a change in 
disability level warrants a reduction of the monthly allowance 
currently being paid, VA will notify the beneficiary at his or her 
latest address of record of the proposed reduction, furnish detailed 
reasons therefor, and allow the beneficiary 60 days to present 
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 VA does not receive additional evidence within 
that period, it will take final rating action and reduce the award 
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;                  
                                                 Dependency and   Pension; old-     section 306                 
                                  Dependency       indemnity      law (veterans,     (veterans,                 
            Income                (parents)       compensation      surviving        surviving         See--    
                                                   (parents)       spouses and      spouses and                 
                                                                    children)        children)                  
----------------------------------------------------------------------------------------------------------------
                                                                                                                
*                  *                  *                  *                  *                  *                
                                                        *                                                       
(40) Monetary allowance under  Excluded.......  Excluded.......  Excluded.......  Excluded.......  Sec.  3.262(y
 38 U.S.C. 1805 for children                                                                        ).          
 suffering from spina bifida                                                                                    
 who are children of Vietnam                                                                                    
 Veterans (38 U.S.C. 1805(d)).                                                                                  
----------------------------------------------------------------------------------------------------------------

* * * * *
    6. In Sec. 3.262, paragraph (y) is added immediately preceding the 
final authority citation at the end of the section to read as follows:


Sec. 3.262  Evaluation of income.

* * * * *
    (y) Monetary allowance under 38 U.S.C. 1805 for a child suffering 
from 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 suffering from spina

[[Page 51279]]

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 suffering 
from 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 
suffering from 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 suffering 
from 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 suffering from 
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 suffering 
from 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 
suffering from 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) through 
(e) are redesignated as paragraph (a) introductory text and paragraphs 
(a)(1) through (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 suffering 
from 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 
suffering from 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) through 
(j) are redesignated as paragraph (a) introductory text and paragraphs 
(a)(1) through (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 suffering 
from 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 suffering from 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 under the undesignated centerheading 
``Special Benefits'' to read as follows:


Sec. 3.814  Monetary allowance under 38 U.S.C. 1805 for a child 
suffering from 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 (d) of this 
section to or for a child who it has determined is suffering from spina 
bifida and 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 suffering from 
spina bifida is the natural child of two Vietnam veterans, 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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[[Page 51280]]

[GRAPHIC] [TIFF OMITTED] TR30SE97.000



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[[Page 51281]]

    (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) 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, or to reassess 
the level of disability when required to do so under the provisions of 
paragraph (d)(4) or (5) of this section, VA 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 or a pediatric neurosurgeon 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. In either case, VA will reassess the level 
of disability when the child reaches 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.

(Paperwork requirements were approved by the Office of Management and 
Budget under control number 2900-0572.)

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

PART 3--[AMENDED]

    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.
    14. 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)''.
    15. The Cross Reference following Sec. 3.707 is amended by removing 
``Sec. 3.503(h)'' and adding, in its place, ``Sec. 3.503(a)(8)''.
    16. The Cross Reference following Sec. 3.807 is amended by removing 
``Sec. 3.503(h)'' and adding, in its place, ``Sec. 3.503(a)(8).''.

[FR Doc. 97-25663 Filed 9-29-97; 8:45 am]
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