[Federal Register Volume 66, Number 89 (Tuesday, May 8, 2001)]
[Rules and Regulations]
[Pages 23166-23169]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-11569]



[[Page 23166]]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 3

RIN 2900-AK63


Disease Associated With Exposure to Certain Herbicide Agents: 
Type 2 Diabetes

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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

SUMMARY: The Department of Veterans Affairs (VA) is amending its 
adjudication regulations concerning presumptive service connection for 
certain diseases for which there is no record during service. This 
amendment is necessary to implement a decision of the Secretary of 
Veterans Affairs under the authority granted by 38 U.S.C. 1116 that 
there is a positive association between exposure to herbicides used in 
the Republic of Vietnam during the Vietnam era and the subsequent 
development of Type 2 diabetes. The intended effect of this amendment 
is to establish presumptive service connection for that condition based 
on herbicide exposure.

DATES: Effective Date: July 9, 2001.

FOR FURTHER INFORMATION CONTACT: Bill Russo, Regulations Staff, 
Compensation and Pension Service, Veterans Benefits Administration, 
Department of Veterans Affairs, 810 Vermont Avenue, NW, Washington, DC 
20420, telephone (202) 273-7211.

SUPPLEMENTARY INFORMATION: VA published a proposal to amend 38 CFR 
3.309(e) to establish presumptive service connection for Type 2 
diabetes based on exposure to herbicides in the Federal Register of 
January 11, 2001 (66 FR 2376-80). Interested persons were invited to 
submit written comments concerning the proposal on or before March 12, 
2001. We received 14 comments: one from the New York State Council of 
the Vietnam Veterans of America, one from the Wisconsin State Council 
of the Vietnam Veterans of America, and 12 from concerned individuals.

I. Comments on the Proposed Rule

Comments Supporting the Proposed Regulation

    Three commenters stated that they supported the proposed 
regulation. One e-mail comment signed by 86 individuals also stated 
that they supported the proposed regulation. One commenter stated that 
he supported the proposed regulation and asked for swift implementation 
of the regulation.

Minimum 10% Rating

    One commenter urged that all Vietnam veterans with Type 2 diabetes 
be awarded a minimum 10% disability rating.
    This rule implements 38 U.S.C. 1116(c), which requires VA to 
establish a presumption of service connection when a positive 
association is found between exposure to certain herbicide agents and 
the subsequent development of a disease. The statute does not require 
VA to presume that such diseases result in any particular degree of 
disability. Further, under 38 CFR 3.307(a)(6)(ii), any disease must be 
manifest to a degree of disability of 10 percent or more before it may 
be presumed service connected based on herbicide exposure. In 
establishing presumptions of service connection for specific diseases 
based on herbicide exposure or other circumstances of service, Congress 
has consistently required that the disease be manifest to a degree of 
disability of 10 percent or more before the presumption applies. (See 
38 U.S.C. 1116(a)(2)). We are aware of no justification for treating 
type 2 diabetes differently than other presumptive conditions in this 
regard. We therefore make no change based on this comment. We note that 
VA's rating schedule in 38 CFR 4.119, Diagnostic Code 7913, provides 
that a 10-percent rating will be assigned for diabetes which is 
``[m]anageable by restricted diet only.''

Herbicide Exposure Outside Republic of Vietnam

    One commenter urged that VA amend the proposed regulation to 
include veterans who did not serve in the Republic of Vietnam, but were 
exposed to herbicides during their military service.
    Section 1116(a)(3) of title 38 of the United States Code 
establishes a presumption of exposure to certain herbicides for any 
veteran who served in the Republic of Vietnam between January 9, 1962 
and May 7, 1975, and has one of the diseases on the list of diseases 
subject to presumptive service connection. However, if a veteran who 
did not serve in the Republic of Vietnam, but was exposed to an 
herbicide agent defined in 38 CFR 3.307(a)(6) during active military 
service, has a disease on the list of diseases subject to presumptive 
service connection, VA will presume that the disease is due to the 
exposure to herbicides. (See 38 CFR 3.309(e)). We therefore believe 
that there is no need to revise the regulation based on this comment.
    Another commenter urged VA to use this rulemaking to define service 
in the Republic of Vietnam to include service in Vietnam's inland 
waterways or its territorial waters. The commenter asserted that U.S. 
military personnel were exposed to herbicides while serving in those 
locations.
    Title 38 U.S.C. 1116 requires that a veteran have served ``in the 
Republic of Vietnam'' to be eligible for the presumption of exposure to 
herbicides. We believe that it is commonly recognized that this term 
includes the inland waterways.
    With respect to offshore service, 38 CFR 3.307(a)(6)(iii) provides 
that ``Service in the Republic of Vietnam `` includes service in 
offshore waters or other locations only if the conditions of service 
involved duty or visitation within the Republic of Vietnam. In 
interpreting similar language in 38 U.S.C. 101(29)(A), VA's General 
Counsel has concluded that service in a deep-water vessel in waters 
offshore the Republic of Vietnam does not constitute service ``in the 
Republic of Vietnam.'' (See VAOPGCPREC 27-97). VA's regulatory 
definition of ``Service in the Republic of Vietnam'' predates the 
enactment of section 1116(a)(3) (see former 38 CFR 3.311a(a)(1) 
(1990)), and we find no basis to conclude that Congress intended to 
broaden that definition. The commenter cited no authority for 
concluding that individuals who served in the waters offshore of the 
Republic of Vietnam were subject to the same risk of herbicide exposure 
as those who served within the geographic boundaries of the Republic of 
Vietnam, or for concluding that offshore service is within the meaning 
of the statutory phrase ``Service in the Republic of Vietnam.'' We 
therefore make no change based on this comment.

Type 1 Diabetes

    We received two comments urging VA to broaden the scope of this 
regulation to include Type 1 diabetes (also known as juvenile 
diabetes).
    One commenter noted that VA's rating schedule (38 CFR 4.119, DC 
7913) refers only to ``diabetes mellitus'' and does not distinguish 
between Type 1 and Type 2. He also noted that DC 7913 refers to 
ketoacidosis, and asserted that this condition only occurs with Type 1 
diabetes.
    VA's Schedule for Rating Disabilities (38 CFR part 4) is used to 
assess the level of disability caused by a disease or injury. It is not 
used to determine whether disabilities are service connected, nor is it 
considered when the Secretary determines whether there

[[Page 23167]]

is an association between herbicide exposure and a specific disease. 
Under 38 U.S.C. 1116, that decision is based on reports of the National 
Academy of Sciences (NAS) and all other sound medical and scientific 
information and analyses available to the Secretary.
    Another commenter, an endocrinologist, stated that environmental 
toxins are well known triggers for the onset of Type 1 diabetes. 
However, this commenter cited no medical or scientific literature in 
support of this statement, nor did the commenter specify which 
environmental toxins (e.g., herbicides) are well known triggers for 
Type 1 diabetes.
    The intent of the proposed regulation was to add only Type 2 
diabetes to the list of diseases subject to presumptive service 
connection based on herbicide exposure in the Republic of Vietnam. Type 
1 diabetes is a clinically distinct disease from Type 2 diabetes. As 
discussed extensively in ``Veterans and Agent Orange: Herbicide/Dioxin 
Exposure and Type 2 Diabetes'' (VAO: Diabetes), Appendix B, Type 1 is 
generally considered to be disease of insulin deficiency due to an 
immune disorder, while Type 2 diabetes is considered to be primarily a 
disease of insulin resistance. In its report, ``Veterans and Agent 
Orange: Update 1998'' (Update 1998), NAS concluded that there was 
``inadequate or insufficient evidence'' to determine whether an 
association existed between exposure to herbicides and immune 
disorders. The Secretary determined ``that the credible evidence 
against an association between immune system disorders and herbicide 
exposure outweighs the credible evidence for such an association, and [ 
] determined that a positive association does not exist.'' Diseases Not 
Associated With Exposure to Certain Herbicide Agents, 64 FR 59232, 
59241 (November 2, 1999).
    The conclusion reached by NAS in VAO Diabetes was that ``there is 
limited/suggestive evidence of an association between exposure to the 
herbicides used in Vietnam or the contaminant dioxin and Type 2 
diabetes.'' This conclusion was based on NAS' thorough review of the 
published scientific literature on herbicide exposure and diabetes. The 
Secretary subsequently determined that there is a positive association 
between exposure to herbicides used in the Republic of Vietnam during 
the Vietnam era and the development of Type 2 diabetes.
    Based on the reasons discussed above, VA finds no basis on which to 
expand the proposed regulation to include Type 1 diabetes, and we 
therefore make no change based on these comments.

Obesity and Type 2 Diabetes

    One commenter asserted that several recent medical studies reported 
a significant increase in the incidence of diabetes, apparently 
resulting from an increase in obesity in the general population. The 
commenter stated that assuming these studies are valid, it is improper 
for VA to find a ``statistically significant relationship'' between 
diabetes and Agent Orange.
    NAS was well aware that obesity is a significant risk factor in 
causing Type 2 diabetes. (VAO: Diabetes at 3). Nevertheless, after a 
thorough review of the scientific literature available on the subject, 
NAS concluded ``there is limited/suggestive evidence of an association 
between exposure to the herbicides used in Vietnam or the contaminant 
dioxin and Type 2 diabetes.''
    The Secretary has not found a ``statistically significant 
relationship'' between herbicide exposure and diabetes, but rather a 
``positive association.'' Title 38 U.S.C. 1116(b)(3) provides that an 
association is ``positive'' if the credible evidence for the 
association is equal to or outweighs the credible evidence against the 
association. Once he has determined that a positive association exists 
between herbicide exposure and a particular disease, the Secretary must 
publish regulations establishing presumptive service connection for 
that disease.
    The same commenter suggested that VA either reconsider whether to 
add Type 2 diabetes to the list of diseases subject to presumptive 
service connection based on herbicide exposure in the Republic of 
Vietnam or that it wait to publish the final rule until it reviewed 
these studies.
    Title 38 U.S.C. 1116(c)(1) requires that the Secretary, not later 
than 60 days after the date on which he receives a report from NAS, 
determine whether a presumption of service connection is warranted for 
each disease covered by the report and, if the Secretary determines 
that a presumption is warranted, issue proposed regulations within 60 
days thereafter. 38 U.S.C. 1116(c)(2) requires the Secretary to issue 
final regulations establishing presumptive service connection for any 
condition for which he determines there is a positive association with 
exposure of humans to an herbicide agent not later than 90 days after 
he has issued proposed regulations.
    We believe that the NAS adequately took into consideration the 
recognized relationship between obesity and type 2 diabetes, and the 
existence of additional studies concerning this risk factor does not 
warrant ignoring the time requirements of section 1116(c)(2). For 
reasons more fully explained in the proposal, the Secretary has 
concluded that presumptive service connection is warranted for Type 2 
diabetes, and VA is, therefore, proceeding with publication of a final 
rule notwithstanding these comments.

Effective Dates

    One commenter urged that the proposed rule be amended to state that 
awards granted under the rule will be retroactive to the date the 
claimant first submitted evidence of a diagnosis of Type 2 diabetes. 
Title 38 U.S.C. 1116(c)(2) clearly and unambiguously requires that 
regulations promulgated as a result of a decision of the Secretary of 
Veterans Affairs that a positive association exists between exposure to 
herbicides and a specified condition or disease ``shall be effective on 
the date of issuance.'' The effective date established by this rule is 
in accordance with 38 U.S.C. 1116(c)(2) and 5 U.S.C. 801 et. seq. Under 
38 U.S.C. 5110(g), when benefits are awarded based on a new regulation, 
the effective date of the award may not be earlier than the effective 
date of the regulation. In view of 38 U.S.C. 1116(c)(2) and 5110(g), VA 
does not have authority to provide in this rule for assignment of 
effective dates earlier than the date on which this rule is issued.
    Another commenter asked how the court case Nehmer v. U.S. Veterans' 
Admin., C.A. No. C-86-6160 (TEH) (N.D. Cal.), will apply to Type 2 
diabetes claims under the proposed rule. The commenter asserted that it 
is unfair for a Vietnam veteran to not be compensated retroactively by 
VA.
    Pursuant to a stipulation and order of the Federal district court 
in Nehmer, awards of disability compensation or dependency and 
indemnity compensation (DIC) made under VA's regulations issued 
pursuant to 38 U.S.C. 1116 may, in some circumstances, be made 
effective retroactive to the date of an earlier claim that was filed or 
denied before such regulations were issued. Thus, the Nehmer 
stipulation and order, when it applies, permits awards of retroactive 
benefits that would otherwise be prohibited by 38 U.S.C. 1116(c)(2) and 
5110(g). The scope and application of the Nehmer stipulation and order 
is the subject of pending litigation and, until that litigation is 
resolved, we cannot say how the Nehmer stipulation and order will 
affect claims under this rule.

[[Page 23168]]

    Nothing in this rule is intended to modify the Nehmer stipulation 
and order or to detract from rights existing under that document. The 
Nehmer stipulation and order applies to a specific class of claimants 
whose claims were previously filed or denied during a particular time 
period. This rule will apply to a broader class of claimants, including 
those whose claims were denied during periods not covered by the Nehmer 
stipulation and order, as well as those who file claims in the future. 
Individuals will continue to have specific rights under the terms of 
the Nehmer stipulation and order when it applies.
    The final rule does not incorporate the effective-date provisions 
of the Nehmer stipulation and order because the scope and application 
of those provisions is the subject of current litigation and because VA 
lacks the authority to issue regulatory provisions that would be 
inconsistent with 38 U.S.C. 1116(c)(2) and 5110(g). (See 38 U.S.C. 
501(a).)
    VA appreciates the comments submitted in response to the proposed 
rule that is now adopted without change.

II. Compliance With the Congressional Review Act, the Regulatory 
Flexibility Act, and Executive Order 12866

    We estimate that the five-year cost of this rule from appropriated 
funds would be $3.3 billion in benefits costs and $62 million in 
government operating expenses. Since it is likely that the adoption of 
the proposed rule may have an annual effect on the economy of $100 
million or more, the Office of Management and Budget has designated 
this rule as a major rule under the Congressional Review Act, 5 U.S.C. 
802, and a significant regulatory action under Executive Order 12866, 
Regulatory Planning and Review. The following information is provided 
pursuant to E.O. 12866.
    This rule is necessary to comply with 38 U.S.C. 1116, which 
requires VA to establish a presumption of service connection if the 
Secretary finds that there is a positive association between exposure 
to herbicides used in the Republic of Vietnam during the Vietnam era 
and the subsequent development of any particular disease. As explained 
above, the Secretary found that there is such an association regarding 
Type 2 diabetes. There are no feasible alternatives to this rule, since 
section 1116 requires the Secretary to promulgate it once he finds the 
positive association described above. This rule would not interfere 
with state, local or tribal governments in the exercise of their 
governmental functions.

Benefits Costs

    Historical statistics indicate that the total number of veterans 
who served in the Republic of Vietnam or its surrounding waters was 
about 2.6 million. We estimate that about 2.3 million of these veterans 
are alive today. Using information gained from VAO: Diabetes and VA's 
Office of Planning and Analysis, VA applied a prevalence rate of 9% to 
the current population to determine the number of veterans who might 
have Type 2 diabetes today. VA assumes that over five years, about 90% 
of these same veterans would file a diabetes-related claim. We expect 
that 8 out of 10 claims will be made by first time applicants 
(original) and that 2 out of 10 will come from veterans already service 
connected for some other issue (reopened). The average monthly award 
made on account of diabetes or its ancillary conditions for original 
and reopened claims is estimated to be $462 and $786, respectively. 
These figures are based on average benefits to current beneficiaries 
for all conditions and include dependents' benefits and unemployability 
benefits where applicable. A moderate number of DIC and burial claims 
have also been factored into this estimate.
    VA estimates the cumulative totals of benefits awards to claimants 
for years 2001-2005 as follows: 10,199, 80,526, 129,988, 159,198 and 
178,356. Benefits costs (in $ million) for years 2001-2005 are as 
follows: $16.6, $303, $720.1, $1,010.7, and $1,205.3, for a total cost 
of $3.3 billion over five years. This cost estimate also provides for a 
nominal number of DIC payments and burial awards. Anticipated cost-of-
living allowances (COLA's), per current economic assumptions, were 
factored into this estimate; however, no retroactive payments were 
considered.

Administrative Costs

    The administrative workload caused by this proposed rule is 
expected to be 13,361 claims filed in 2001 and more than 220,000 over 
five years. Full time employee resources devoted to processing claims 
in years one through five would be 128, 378, 311, 185, and 123, 
respectively. Administrative workloads assume that not all claims would 
be granted; it is probable that diabetes related claims will be 
received from veterans who never served in the Republic of Vietnam. GOE 
costs (in $ million) for years 2001-2005 are as follows: $6.4, $18.6, 
$16.5, $11.9, and $8.2, for a total GOE cost of $62 million over five 
years.
    The Unfunded Mandates Reform Act requires (in section 202) 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 
consequential effect on State, local, or tribal governments.
    This document contains no provisions constituting a collection of 
information under the Paperwork Reduction Act (44 U.S.C. 3501-3520).
    The Secretary hereby certifies that this regulatory amendment will 
not have a significant economic impact on a substantial number of small 
entities as they are defined in the Regulatory Flexibility Act, 5 
U.S.C. 601-612. 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.

(The Catalog of Federal Domestic Assistance program numbers are 
64.100, 64.101, 64.104, 64.105, 64.106, 64.109, and 64.110).

List of Subjects in 38 CFR Part 3

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

    Approved: April 19, 2001.
Anthony J. Principi,
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. 3.309, paragraph (e), the listing of diseases is amended 
by adding ``Type 2 diabetes (also known as Type II diabetes mellitus or 
adult-onset diabetes)'' between ``Chloracne or other acneform disease 
consistent with chloracne'' and ``Hodgkin's disease'' to read as 
follows:


Sec. 3.309  Diseases subject to presumptive service connection.

* * * * *

[[Page 23169]]

    (e) * * *
    Type 2 diabetes (also known as Type II diabetes mellitus or adult-
onset diabetes)
* * * * *
[FR Doc. 01-11569 Filed 5-7-01; 8:45 am]
BILLING CODE 8320-01-P