[Federal Register Volume 67, Number 66 (Friday, April 5, 2002)]
[Rules and Regulations]
[Pages 16309-16317]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-8201]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 20

RIN 2900-AL11


Board of Veterans' Appeals Rules of Practice: Claim for Death 
Benefits by Survivor

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: This document amends the Department of Veterans Affairs' (VA) 
Rules of Practice at the Board of Veterans' Appeals (Board) to clarify 
that the general rule that the Board is not bound by prior dispositions 
during the veteran's lifetime of issues involved in the survivor's 
claim does not apply to claims for ``enhanced'' Dependency and 
Indemnity Compensation (DIC). This amendment is necessary to eliminate 
confusion between the Board's current rule and another rule relating to 
DIC for survivors of certain veterans rated totally disabled at the 
time of death.

DATES: Effective Date: May 6, 2002.

FOR FURTHER INFORMATION CONTACT: Steven L. Keller, Senior Deputy Vice 
Chairman, Board of Veterans' Appeals, Department of Veterans Affairs, 
810 Vermont Avenue, NW., Washington, DC 20420 (202-565-5978).

SUPPLEMENTARY INFORMATION: The Board of Veterans' Appeals (Board) is an 
administrative body that decides appeals from denials of claims for 
veterans benefits.
    In a document published in the Federal Register on December 21, 
2001 (66 FR 65861), VA proposed to amend the Board's practice rule 
concerning claims for death benefits by survivors of veterans. The 
Board's rule states that, with certain exceptions, issues involved in a 
survivor's claim for death benefits will be decided without regard to 
any prior disposition of those issues during the veteran's lifetime. We 
proposed to add an exception to clarify that this rule does not apply 
to claims for ``enhanced'' DIC under 38 U.S.C. 1311(a)(2).
    This amendment is necessary to comply with the order of the United 
States Court of Appeals for the Federal Circuit in National 
Organization of Veterans' Advocates, Inc. v. Secretary of Veterans 
Affairs, 260 F.3d 1365 (Fed. Cir. 2001) (NOVA). In the case, the court 
noted that Sec. 20.1106 was apparently inconsistent with another VA 
regulation, 38 CFR 3.22. The court ordered VA to issue regulations to 
either remove or explain the apparent inconsistency.
    The public comment period ended on January 22, 2002. We received 
comments from three veterans service organizations. Two commenters 
submitted comments concerning both the proposed rule and a final rule 
published in the Federal Register of January 21, 2000 (65 FR 3388), 
revising the VA adjudication regulation at 38 CFR 3.22. Although any 
revision of Sec. 3.22 would be beyond the scope of the proposed rule, 
we will address the comments concerning Sec. 3.22 in this notice 
because the interpretation stated in Sec. 3.22 is closely related to 
the proposed rule, as indicated in our December 2001 notice of proposed 
rule making (NPRM) and the Federal Circuit's NOVA decision.
    Based on the rationale set forth in the proposed rule and in this 
document, we adopt the provisions of the proposed rule as a final rule.

Consistent Interpretation of 38 U.S.C. 1318(b) and 1311(a)(2)

    In the NOVA decision, the Federal Circuit concluded that 38 CFR 
3.22 and 38 CFR 20.1106 stated apparently inconsistent interpretations 
of virtually identical statutes codified at 38 U.S.C. 1318(b) and 38 
U.S.C. 1311(a)(2), respectively. Both statutes authorize payment of 
certain DIC benefits to survivors of veterans who were, at the time of 
death ``entitled to receive'' disability compensation for a service-
connected disability that was rated totally disabling for a specified 
number of years immediately preceding death. The court concluded that 
Sec. 3.22 interprets 38 U.S.C. 1318(b) as providing that the question 
of whether the veteran was ``entitled to receive'' such benefits would 
be governed by VA decisions during the veteran's lifetime, except where 
such decisions are found to contain a clear and unmistakable error 
(CUE). The court concluded that Sec. 20.1106 interprets 38 U.S.C. 
1311(a)(2), as requiring VA to disregard all decisions during the 
veteran's lifetime. The court directed VA to conduct rulemaking to 
either revise one

[[Page 16310]]

of its regulations to harmonize its interpretation of the statutes or 
to explain the basis for the apparent inconsistency in its 
interpretation of those statutes.
    One commenter asserts that VA has failed to explain why the current 
regulations, as construed by the court, are not correct, and has failed 
to explain why it is necessary to revise Sec. 20.1106. This comment 
appears to suggest that VA should retain its current regulations 
despite the apparent inconsistency identified in the NOVA case. VA does 
not agree. As stated in our December 2001 NPRM, we believe that 38 
U.S.C. 1318(b) and 1311(a)(2) must be construed in the same manner. As 
the Federal Circuit noted in NOVA, both statutes contain ``virtually 
identical language.'' The court further stated that it is a well-
established rule of statutory construction that identical language in 
different parts of a statute is intended to have the same meaning, and 
that ``[t]hat rule applies with equal force where, as here, the words 
at issue are used in two different sections of a complex statutory 
scheme and those two sections serve the same purpose, namely, the award 
of DIC benefits to survivors.'' Further, as stated in our December 21, 
2001 NPRM, the legislative history of section 1311(a)(2) makes clear 
that it was modeled on section 1318(b) and intended to have the same 
meaning. VA finds no basis for departing from the usual rule that 
identical statutory language must be given the same meaning. 
Accordingly, we make no change based on this comment.
    Two of the commenters submitted comments concerning both the 
proposed rule and VA's January 2000 final rule amending 38 CFR 3.22. 
Because we have concluded that the governing statutes should be 
interpreted consistently, and because the commenters present the same 
comments with respect to both the December 2001 proposed rule and the 
January 2000 final rule, our response to each comment applies to both 
Sec. 20.1106 and Sec. 3.22, except as otherwise indicated below.

Effect of the NOVA Decision and the Chenery Doctrine on the 
Validity of 38 CFR 3.22

    One commenter asserts that Sec. 3.22 must be revised because the 
basis for that rule was held to be invalid by the Federal Circuit in 
the NOVA case. In NOVA, the Federal Circuit concluded that the language 
of 38 U.S.C. 1318 was ambiguous as to whether DIC could be awarded 
where a veteran was ``hypothetically'' entitled to total disability 
compensation for ten or more years preceding death even though the 
veteran could not have been actually entitled to such benefits. The 
commenter asserts that Sec. 3.22 is based solely on a conclusion by VA 
that the language of 38 U.S.C. 1318 unambiguously prohibits DIC 
entitlement in such cases. Relying on the principle in Securities and 
Exchange Commission v. Chenery Corp., 318 U.S. 80 (1943), that an 
agency action may be upheld solely on the basis stated by the agency, 
the commenter argues that Sec. 3.22 is rendered invalid by the Federal 
Circuit's conclusion that 38 U.S.C. 1318(b) is ambiguous.
    VA does not agree with this characterization of the basis for 
Sec. 3.22. The January 2000 final rule notice did not conclude that the 
language of 38 U.S.C. 1318 unambiguously precludes DIC based on a 
veteran's ``hypothetical'' entitlement to the underlying benefits. 
Rather, we stated that the statute was ``most reasonably interpreted'' 
as prohibiting DIC on that basis. Our conclusion was based on an 
analysis of the language and legislative history of the statute and the 
broader context of related provisions of title 38, United States Code, 
rather than upon a conclusion that the statutory language alone 
compelled this result.
    The statute authorizes payment of DIC in two circumstances: (1) 
Where a veteran was ``in receipt of'' compensation at the time of death 
for a service-connected disability that was rated totally disabling for 
ten years immediately preceding death or for five years from date of 
discharge to date of death, or (2) where the veteran was ``entitled to 
receive'' compensation at the time of death for such disability. In its 
January 2000 rule, VA concluded that the statute was unambiguous only 
with respect to the first of these bases. We stated that ``[t]he phrase 
`in receipt of * * * compensation' unambiguously refers to cases where 
the veteran was, at the time of death, actually receiving compensation 
for service-connected disability rated totally disabling for the 
required period.'' 65 FR 3389.
    With respect to the second basis of DIC entitlement under 38 U.S.C. 
1318(b), we did not conclude that the statutory language was 
unambiguous. Instead, we merely stated that ``VA has concluded that the 
phrase ``entitled to receive * * * compensation'' is most reasonably 
interpreted as referring to cases where the veteran had established a 
legal right to receive compensation for the required period under the 
laws and regulations governing such entitlement, but was not actually 
receiving the compensation.'' 65 FR 3389. VA explained that this 
interpretation was based on analysis of the language and legislative 
history of 38 U.S.C. 1318(b) and the broader statutory context 
established by related provisions of title 38, United States Code. 65 
FR 3389-91. Because our interpretation was not based on the premise 
that the language of 38 U.S.C. 1318(b) is unambiguous, our 
interpretation is not inconsistent with the NOVA decision.
    VA further disagrees with the commenter's suggestion that the 
Chenery standard applies to interpretations such as that contained in 
Sec. 3.22. In the Chenery case, the Supreme Court stated that ``a 
reviewing court, in dealing with a determination or judgment which an 
administrative agency alone is authorized to make, must judge the 
propriety of such action solely by the grounds invoked by the agency.'' 
332 U.S. at 196. This principle has been held inapplicable to 
interpretive rules ``because the question of interpretation of a 
federal statute is not `a determination or judgment which an 
administrative agency alone is authorized to make.' '' North Carolina 
Comm'n of Indian Affairs v. Secretary of Labor, 725 F.2d 238, 240 (4th 
Cir.), cert. denied, 469 U.S. 828 (1984); see also American Postal 
Workers Union, AFL-CIO v. United States Postal Serv., 707 F.2d 548, 561 
(D.C. Cir. 1983), cert. denied, 465 U.S. 1100 (1984) (``In contrast to 
agency decisions made pursuant to adjudication and legislative 
rulemaking, interpretative rules may be sustained on grounds other than 
those assigned by the agency''). In the NOVA decision, the Federal 
Circuit concluded that Sec. 3.22 is an interpretive rule ``which does 
no more than interpret the requirements of section 1318.'' 260 F.3d at 
1377. Accordingly, the Chenery standard does not govern review of the 
interpretation in Sec. 3.22.

Statutory Basis of Clear and Unmistakable Error Requirement

    One commenter asserts that VA's interpretation of 38 U.S.C. 1318(b) 
and 1311(a)(2) is inconsistent with the language of those statutes. 
Section 1318(b) authorizes payment of DIC to the survivor of a veteran 
who, at the time of death was ``in receipt of or entitled to receive 
(or but for the receipt of retired pay or retirement pay was entitled 
to receive) compensation at the time of death for a service-connected 
disability that either (1) was continuously rated totally disabling for 
a period of 10 or more years immediately preceding death; or (2) if so 
rated for a lesser period, was so rated continuously for a period of 
not less than 5 years from the date of such veteran's discharge or 
other release from

[[Page 16311]]

active duty.'' In similar fashion, section 1311(a)(2) provides that a 
person otherwise entitled to DIC may receive an additional monthly 
amount of DIC in cases where the veteran ``at the time of death was in 
receipt of or was entitled to receive (or but for the receipt of 
retired pay or retirement pay was entitled to receive) compensation for 
a service-connected disability that was rated totally disabling for a 
continuous period of at least eight years immediately preceding 
death.''
    VA has interpreted the phrase ``entitled to receive'' to refer to 
circumstances where a veteran had established a legal right to receive 
compensation for a service-connected disability rated totally disabling 
for the specified number of years prior to death, but for some reason 
was not actually receiving compensation at the time of death. In 38 CFR 
3.22(b), we identified seven circumstances in which this requirement 
would be satisfied. In six of those circumstances, the veteran would 
have received a total disability rating from VA during his or her 
lifetime and the rating would have been in effect for the specified 
number of years prior to death, but the veteran would not have received 
payment for one of the reasons identified in Sec. 3.22(b). The seventh 
circumstance is where the veteran did not have a total service-
connected disability rating for the specified number of years during 
his or her lifetime, but would have held a total disability rating for 
such period if not for clear and unmistakable error (CUE) in a VA 
decision during the veteran's lifetime. 38 CFR 3.22(b)(3).
    The commenter asserts that Sec. 3.22 is invalid because the 
language of 38 U.S.C. 1318(b) ``does not limit the survivor to only a 
CUE theory of recovery as the VA announces in its rulemaking''. This 
comment mischaracterizes the interpretation stated in Sec. 3.22, which 
clearly provides that CUE is not the only means of establishing 
entitlement to DIC. As stated above, Sec. 3.22(b) identifies several 
methods other than a showing of CUE whereby a claimant may establish 
entitlement to DIC under 38 U.S.C. 1318, where the veteran was not 
receiving compensation during his or her lifetime.
    The commenter further asserts that ``[u]nder the plain language of 
the statute, a survivor is given the opportunity to show that the 
veteran would have been entitled to receive a different decision on a 
claim made during the veteran's lifetime.'' We understand this comment 
to allege that the plain language of 38 U.S.C. 1318(b) entitles a 
survivor to a de novo determination of a veteran's entitlement to 
benefits, without regard to whether there was CUE in a decision denying 
service connection or denying a total disability rating during the 
veteran's lifetime. VA does not agree. As this commenter noted in 
another comment, the Federal Circuit in its NOVA decision concluded 
that the language of 38 U.S.C. 1318(b) is ambiguous as to whether 
Congress intended to authorize DIC in cases where VA lacked authority 
to pay benefits to the veteran during his or her lifetime but a 
survivor alleges that the veteran was ``hypothetically'' entitled to 
have received certain benefits. NOVA, 260 F.3d at 1377.
    One commenter asserts that VA has failed to explain the meaning of 
the language of 38 U.S.C. 1318(b). Another commenter states that 
``[t]he natural reading of Sec. 1318(b) is that a survivor is given the 
opportunity to demonstrate--under any potential legal or factual theory 
of entitlement--that the deceased veteran was entitled to a total 
rating for the 10 year period before death.'' Although the scope of 
this commenter's proposed interpretation of 38 U.S.C. 1318(b) is not 
clear, we infer that the commenter is advocating the same 
interpretation alleged by the petitioners in the NOVA case. In that 
case, the petitioners alleged that it was irrelevant whether the 
veteran was actually entitled to receive benefits for the specified 
period preceding death under the statutes and regulations defining VA's 
authority to pay such benefits. Rather, the petitioners asserted that 
even if the veteran had never filed a claim for VA benefits or if VA 
had denied a total disability rating to the veteran, a survivor could 
receive DIC under 38 U.S.C. 1318(b) by showing that the veteran was 
``hypothetically'' entitled to a total disability rating for ten or 
more years prior to death.
    In its January 2000 final-rule notice and its December 2001 NPRM, 
VA explained the bases for its conclusion that 38 U.S.C. 1318(b) and 
1311(a)(2) authorize DIC only if the veteran's entitlement to benefits 
was established by ratings during the veteran's lifetime or is 
established by a finding that there was CUE in a decision during the 
veteran's lifetime that prevented the veteran from receiving total 
disability compensation for the specified period. The commenter has 
identified no error in the explanation stated in those notices. One 
commenter asserts that VA's interpretation is incorrect for the reason 
that 38 U.S.C. 1318(b) and 1311(a)(2) do not contain the terms ``clear 
and unmistakable error.'' However, the fact that the statutes do not 
expressly enumerate each circumstance that would satisfy the statute's 
requirements does not preclude VA from identifying those circumstances 
in its regulations interpreting those statutes. It is obvious that 38 
U.S.C. 1318(b) and 1311(a)(2) do not expressly refer to CUE or to any 
of the other bases identified by VA as circumstances where a veteran 
may be considered to have been ``entitled to receive'' compensation. 
Because the statutory language is ambiguous, VA has reviewed the 
relevant statutory context and the legislative history and concluded 
that the statutes are most reasonably construed to require that the 
veteran's entitlement to benefits have been established under the 
statutes and regulations specifying VA's authority to pay benefits to 
veterans for any period. The bases for this conclusion, already stated 
in our January 2000 final-rule notice and our December 2001 NPRM, are 
summarized below.
    38 U.S.C. 1318(b) requires not only that the veteran have been 
``entitled to receive'' compensation at the time of death, but that the 
veteran have been entitled to receive such compensation for ``a service 
connected disability that was rated totally disabling for a continuous 
period of ten or more years immediately preceding death.'' 38 U.S.C. 
1311(a)(2) contains a similar requirement, but specifies a period of 
eight, rather than ten years immediately preceding death. The 
requirement that the disability have been continuously ``rated'' 
totally disabling for a specified number of years prior to death 
suggests that Congress intended to authorize DIC in cases where the 
veteran had established entitlement to a total disability rating for 
such period, as distinguished from cases where a veteran theoretically 
could have established entitlement to a total rating for such period 
but had not done so. If Congress intended to permit DIC in cases where 
the veteran had not obtained a total disability rating, there would 
have been no reason for Congress to require that the disability have 
been ``rated'' totally disabling for a ``continuous period'' of ten or 
more years immediately preceding death. Rather, Congress could have 
achieved that objective more clearly by omitting the term ``rated'' and 
thereby authorizing DIC whenever the veteran's disability is shown to 
have been totally disabling for a specified period, irrespective of 
whether it had been rated as such. Because every term of a statute must 
be presumed to have meaning and effect, we conclude that the term 
``rated'' reflects Congress' intent to authorize DIC only in cases 
where a

[[Page 16312]]

total disability rating was in effect for the specified period during 
the veteran's lifetime.
    The requirements that the veteran have been ``entitled to receive'' 
disability compensation at the time of death and that the disability 
have been continuously ``rated'' totally disabling for a specified 
period are most reasonably construed in the connection with the 
statutory provisions in title 38, United States Code, prescribing the 
circumstances under which a veteran may be entitled to receive total 
disability compensation for any period. Inasmuch as Congress has 
established numerous specific provisions governing VA's authority to 
award such benefits for any period, it would be anomalous if the terms 
``entitled to receive'' and ``rated'' in 38 U.S.C. 1318(b) and 
1311(a)(2) were construed to refer to entitlement and ratings 
established by some other unspecified means outside the established 
statutory scheme.
    Generally, if a veteran had not established entitlement to a total 
disability rating for the specified period during his or her lifetime, 
VA would be precluded from awarding a retroactive total-disability 
rating for such period posthumously. This is because VA benefits 
generally may be awarded only prospectively from the date on which VA 
receives a claim for such benefits and because final VA decisions 
denying service connection or awarding less than a total disability 
rating are generally final and not subject to retroactive correction. 
See 38 U.S.C. 5110, 7104(b), 7105(c); 38 CFR 3.104, 3.105. Accordingly, 
if ratings during the veteran's lifetime did not establish the 
veteran's entitlement to a total disability rating for the specified 
period prior to death, the veteran generally could not have been 
``entitled to receive'' compensation at the time of death for a 
disability that was continuously ``rated totally disabling'' for such 
period.
    A limited exception to this general rule applies where it is shown 
that a clear and unmistakable error was committed in VA decisions on a 
veteran's claim. Where such error is established, VA may correct the 
error and, as a matter of law, the decision correcting the error ``has 
the same effect as if the decision had been made on the date of the 
prior decision.'' 38 U.S.C. 5109A(b); 7111(b); 38 CFR 3.105(a). 
Pursuant to these statutes, a posthumous decision correcting CUE and 
assigning a total disability rating for a retroactive period of ten or 
more years prior to a veteran's death has precisely ``the same effect'' 
as if a decision during the veteran's lifetime had awarded a total 
disability rating for that period. In such cases, the veteran must be 
deemed, as a matter of law, to have been ``entitled to receive'' 
compensation at the time of death for a disability that was 
continuously ``rated totally disabling'' for the specified period.
    This analysis of 38 U.S.C. 1318(b) and 38 U.S.C. 1311(a)(2) in 
relation to the surrounding statutory context points strongly in favor 
of the conclusion that the statute authorizes DIC only if the veteran's 
entitlement to a total disability rating for the specified period had 
been established during the veteran's lifetime or is established by 
posthumous correction of CUE. We note that the Federal Circuit 
expressed reservations about certain aspects of this analysis. In a 
footnote in the NOVA case, the court stated that reliance on the 
statutory requirement that the disability have been ``rated'' totally 
disabling for a specified number of years prior to death would 
``logically also preclude the filing of a claim based on clear and 
unmistakable error in the initial rating decision.'' NOVA, 260 F.3d at 
1377 n.12. In our view, however, according significance to the term 
``rated'' would not preclude DIC in cases involving posthumous 
correction of CUE. By statute, a total disability rating assigned in 
the context of correcting a CUE must have the same effect as if the 
corrected decision had been issued on the date of the prior decision. 
38 U.S.C. 5109A(b), 7111(b). In such cases, a veteran's disability must 
be deemed as a matter of law to have been ``rated'' totally disabling 
for the pre-death period covered by the corrected decision. In 
contrast, where a veteran had never claimed compensation or where VA 
denied a total rating and CUE is not shown, there would be no legal 
authority for concluding that the veteran's disability was ``rated'' 
totally disabling for the specified number of years prior to death. 
Accordingly, sections 1318(b) and 1311(a)(2) may be viewed as 
authorizing DIC in such cases only if the term ``rated'' is found to 
have no meaning and effect in the statute. Our interpretation comports 
with the statutory scheme for awarding veterans' benefits and is 
consistent with the well-established rule that a statute must be 
construed so that none of its terms or phrases is rendered meaningless. 
See United States v. Menasche, 348 U.S. 528, 538-39 (1955).
    This contextual analysis of the statutes finds strong support in 
the legislative history of 38 U.S.C. 1318(b). The phrase ``entitled to 
receive'' was added to 38 U.S.C. 1318(b) in response to an opinion by 
VA's General Counsel concluding that a prior version of that statute 
precluded DIC awards in cases where the veteran did not have a total 
disability rating for ten years immediately preceding death, even 
though the veteran would have held a total disability rating for that 
period if not for CUE committed by VA. In amending the statute, 
Congress explained that its intent was ``to provide that the 
requirement that the veteran have been in receipt of compensation for a 
service-connected disability rated as total for a period of 10 years 
prior to death (or for 5 years continuously from the date of discharge) 
is met if the veteran would have been in receipt of such compensation 
for such period but for a clear and unmistakable error regarding the 
award of a total disability rating.'' Explanatory Statement of 
Compromise Agreement, 128 Cong. Rec. H7777 (1982), reprinted in 1982 
U.S.C.C.A.N. 3012, 3013. Similarly specific statements appear in 
reports of the House and Senate Veterans Affairs Committees, and 
nothing in the legislative history suggests any different scope or 
purpose for this statutory language. Thus, Congress clearly intended to 
authorize DIC in cases where retroactive correction of CUE results in 
assignment of a total disability rating for the specified period 
preceding the veteran's death.
    By clearly stating its intent that DIC may be awarded if there was 
CUE in the prior final decision that prevented the veteran from 
receiving total disability compensation for the specified period, 
Congress necessarily indicated that the prior decisions would remain 
final and controlling in the absence of CUE. The detailed discussion of 
CUE in the legislative history would have been unnecessary and 
illogical if Congress had intended VA to ignore any final decisions 
during the veteran's lifetime. Accordingly, the legislative history 
discussing CUE cases comports with our contextual analysis of 38 U.S.C. 
1318(b) and 1311(a)(2).
    We note further that Congress's stated purpose for providing DIC in 
cases of certain non-service-connected deaths was to ensure a level of 
income to survivors in circumstances where totally-disabled veterans 
and their families had depended on VA disability compensation for 
support during the veteran's lifetime. Prior to 1978, DIC was payable 
only for service-connected deaths. In 1978, Congress enacted Public Law 
95-479 to permit DIC in cases where the death was not service connected 
but the veteran, at the time of death, was in receipt of compensation 
for a service-connected disability that was rated totally disabling for 
a continuous period of ten or more years immediately preceding death. 
The

[[Page 16313]]

Senate Committee on Veterans' Affairs explained the purpose of this 
legislation as follows:

The appropriate Federal obligation to these survivors should, in the 
Committee's view, be the replacement of the support lost when the 
veteran dies. For example, assume that a veteran who is totally 
blind from service-connected causes dies at the age of 55 from a 
heart attack, having been so disabled from the age of 22--a period 
of 33 years. During that period, his wife and he depended upon his 
disability compensation for income support, but, because his death 
is not service connected, she would not receive DIC.

S. Rep. No. 1054, 95th Cong., 2nd Sess. 28 (1978), reprinted in, 1978 
U.S.C.C.A.N. 3465, 3486. As explained above, Congress amended the 
statute in 1982 to include CUE cases. The 1982 amendment does not 
significantly undermine the general purpose to replace the benefit 
payments lost when a totally-disabled veteran dies, but recognizes a 
limited exception based on the concern that ``the existence of a clear 
and unmistakable error should not defeat entitlement to the survivors' 
benefits.'' S. Rep. No. 550, 97th Cong., 2d Sess., 35 (1982), reprinted 
in 1982 U.S.C.C.A.N. 2877, 2898. In contrast, the interpretation 
suggested by the commenter would significantly undermine the statute's 
purpose by extending benefits to survivors of veterans who had never 
even applied for VA disability compensation or who had been denied 
total disability compensation under circumstances not involving CUE.
    For the foregoing reasons and the reasons stated in our January 
2000 final-rule notice and our December 2001 notice of proposed rule 
making, we conclude that analysis of the language and history of 38 
U.S.C. 1318(b) and 1311(a)(2), and consideration of the pertinent 
statutory context in title 38, United States Code, clearly establish 
that those statutes authorize DIC in cases where the veteran's 
entitlement to total disability compensation for the specified number 
of years prior to death was established by ratings during the veteran's 
lifetime or by correction of CUE in such decisions, which, by operation 
of statute, has the same effect as if the veteran's entitlement had 
been established by ratings during the veteran's lifetime.

Effect of Principle of Resolving Interpretive Doubt in Favor of 
Veterans

    Two commenters assert that Sec. 3.22 is invalid because VA's final-
rule notice of January 2000 failed to consider the principle stated in 
Brown v. Gardner, 513 U.S. 115, 118 (1994), that ``interpretive doubt 
is to be resolved in the veteran's favor.'' For the reasons explained 
below, we do not believe that this principle requires any change in 
VA's interpretation of 38 U.S.C. 1318(b) and 1311(a)(2).
    In the NOVA case, the Federal Circuit concluded that the text of 38 
U.S.C. 1318(b) is ambiguous. However, the existence of textual 
ambiguity, alone, does not conclusively establish that there is 
``interpretive doubt'', nor does it require reference solely to the 
principle stated in Gardner without consideration of other indicators 
of legislative intent. In interpreting any statute, ``[t]he goal is to 
identify ``that permissible meaning which fits most logically and 
comfortably into the body of both previously and subsequently enacted 
law.' '' Smith v. Brown, 35 F.3d 1516, 1523 (Fed. Cir. 1994) (quoting 
West Va. Univ. Hosps. v. Casey, 499 U.S. 83, 100-01 (1991)). The 
process of identifying the meaning of any statute requires 
consideration of the statute's language, the context of the surrounding 
statutory scheme, and the history of the statutory language, in 
addition to canons of statutory construction such as that cited by the 
commenters. Smith, 35 F.3d at 1523-24. The Federal Circuit has 
explained the analysis as follows:

We must first carefully investigate the matter to determine whether 
Congress's purpose and intent on the question at issue is judicially 
ascertainable. We do so by employing the traditional tools of 
statutory construction; we examine the statute's text, structure, 
and legislative history, and apply the relevant canons of 
interpretation. If we ascertain that Congress had an intention on 
the precise question at issue, that intention is the law and must be 
given effect, and the only issue is whether the agency acted in 
accordance with that intent.

Boyer v. West, 210 F.3d 1351, 1355 (Fed. Cir. 2000) (quoting Delverde, 
SRL v. United States, 202 F.3d 1360, 1363 (Fed. Cir. 2000)).
    For the reasons explained previously, we conclude that the 
language, context, and legislative history of 38 U.S.C. 1318(b) and 38 
U.S.C. 1311(a)(2), viewed together, clearly evince Congress's intent to 
authorize DIC in cases where the veteran's entitlement to total 
disability compensation for the specified number of years prior to 
death was established by ratings during the veteran's lifetime or by 
correction of CUE in such decisions. We have considered the principle 
that interpretive doubt should be resolved in favor of veterans. 
However, ``clear evidence of legislative intent prevails over other 
principles of statutory construction.'' Johns-Manville Corp. v. United 
States, 855 F.2d 1556, 1559 (Fed. Cir. 1988), cert. denied, 489 U.S. 
1066 (1989); see also National R.R. Passenger Corp. v. National Ass'n 
of R.R. Passengers, 414 U.S. 453, 458 (1974) (``even the most basic 
principles of statutory construction must yield to clear contrary 
evidence of legislative intent.''); Smith v. Brown, 35 F.3d at 1526 
(claimant ``cannot rely upon the generous spirit that suffuses the law 
generally to override the clear meaning of a particular provision''). 
Where congressional intent is clear from examination of the statutory 
language, context, and history, resort to canons of statutory 
construction is therefore unnecessary. See Smith, 35 F.3d at 1525-26. 
VA has concluded that the language, context, and history of 38 U.S.C. 
1318(b) and 1311(a)(2) clearly establish Congress' intent that 
decisions during the veteran's lifetime will govern the issue of a 
survivor's entitlement to DIC unless it is shown that there was CUE in 
such decisions warranting retroactive assignment of a total disability 
rating for the specified period. Because we conclude that any textual 
ambiguity in section 1318(b) is resolved by the evidence of 
congressional intent provided by the legislative history and statutory 
context, there is no basis for applying the principle of resolving 
interpretive doubt in the veteran's favor.

Effect of Procedural and Substantive Requirements Governing CUE 
Claims

    One commenter argues that Sec. 3.22 is unreasonable to the extent 
it requires a showing of CUE in cases where the veteran's entitlement 
was not established during his or her lifetime, because the CUE 
requirement imposes ``virtually insurmountable barriers on establishing 
entitlement to DIC benefits under [38 U.S.C.] 1318(b). The specific 
``barriers'' identified by the commenter are the following: (1) CUE 
requires a showing that either the correct facts as they were known at 
the time of the prior decision were not before the adjudicator or that 
statutory and regulatory provisions extant at that time were 
incorrectly applied; (2) CUE must be an outcome determinative error in 
the prior decision; (3) a determination of CUE must be based on the 
record and law existing at the time of the prior decision; and (4) CUE 
must be pleaded with ``some degree of specificity''. In claims where 
CUE is alleged in a prior final decision of the Board of Veterans' 
Appeals, the commenter cites the following additional concerns: (1) A 
claimant's right to retain paid counsel is limited by statute and 
regulation; (2) a CUE claimant may not submit additional evidence to 
show CUE; (3) personal hearings on CUE claims are authorized only for 
``good cause'; (4) a

[[Page 16314]]

previously decided CUE claim may not be reopened based on new and 
material evidence; (5) the ``benefit of the doubt'' rule for weighing 
evidence does not apply to CUE claims; (6) the statutory requirement 
that VA notify claimants of the information and evidence necessary to 
substantiate a claim does not apply to CUE claims; and (7) once a claim 
of CUE in a decision has been finally decided, a claimant cannot 
thereafter raise a new CUE attack on the same decision.
    The ``barriers'' identified by the commenter are substantive and 
procedural requirements applicable to all CUE claims, not just those 
pertinent to DIC claims under 38 U.S.C. 1318(b) and 1311(a)(2). These 
requirements derive from regulations and judicial precedents concerning 
CUE claims generally. Inasmuch as this comment argues that requirements 
relating to CUE claims should not be applied to claims under 38 U.S.C. 
1318(b) and 1311(a)(2), it is essentially the same as the previously-
addressed comment asserting that those statutes cannot reasonably be 
construed to require a showing of CUE in any circumstance. As explained 
above, VA does not agree. Having concluded that Congress intended to 
require a showing of CUE in cases where the veteran's entitlement was 
not established by ratings during his or her lifetime, we find no basis 
for concluding that persons seeking to show CUE for purposes of 
establishing DIC entitlement under 38 U.S.C 1318(b) or 1311(a)(2) are 
exempt from the generally applicable legal requirements governing all 
CUE claims, and the commenter has identified no basis for such a 
distinction.
    The same commenter asserts that Sec. 3.22 is invalid because VA has 
failed to consider whether it is reasonable to impose the procedural 
and substantive requirements associated with CUE claims upon 
individuals seeking DIC under 38 U.S.C. 1318(b). This comment provides 
no basis for changing VA's interpretation of 38 U.S.C. 1318(b) and 
1311(a)(2). In interpreting those statutes, VA's role is limited to 
discerning the meaning of the statutes through analysis of their 
language, context, and history. VA may not alter the meaning of the 
statutes or ignore congressional intent based on an analysis as to 
whether a different course of action would be more reasonable. Such an 
analysis involves policy determinations that are inappropriate in the 
context of interpreting a federal statute. See Splane v. Secretary of 
Veterans Affairs, 216 F.3d 1058, 1063 (Fed. Cir. 2000).
    The statement that the CUE requirements present ``virtually 
insurmountable barriers'' to DIC entitlement may be viewed as 
suggesting that VA's interpretation yields absurd results that Congress 
could not have intended. We do not agree that these requirements impose 
``virtually insurmountable barriers'' to establishing DIC entitlement. 
Most of the procedural and substantive requirements identified by the 
commenter have been upheld by the Federal Circuit as reasonable 
requirements implementing the statutory provisions governing CUE 
claims. See Disabled American Veterans v. Gober, 234 F.3d 682 (Fed. 
Cir. 2000); Yates v. West, 213 F.3d 1372 (Fed. Cir. 2000); Bustos v. 
West, 179 F.3d 1378 (Fed. Cir. 1999). Although the standards for 
establishing CUE are generally more demanding than the standards for 
showing error in a direct appeal of a VA decision, they are not 
insurmountable. The United States Court of Appeals for Veterans Claims 
has noted the heightened standards reasonably reflect the fact that CUE 
involves a collateral attack on a final decision. See Fugo v. Brown, 6 
Vet. App. 40, 44 (1993).
    We note that the provisions in section 1318(b) permitting payment 
of DIC in cases involving posthumous correction of CUE were added in 
1982 as a liberalizing change, which extended DIC to cases that were 
previously excluded from that statute. Prior to the 1982 amendment, the 
statute (then codified at 38 U.S.C. 410(b)) authorized DIC only if the 
veteran was actually ``in receipt of'' compensation at the time of 
death for a service-connected disability that was rated totally 
disabling for a continuous period of ten or more years immediately 
preceding death. As we previously stated, the purpose of that statute 
was to provide a source of income to survivors in circumstances where a 
totally-disabled veteran and his or her family had depended on VA 
disability compensation during the veteran's lifetime. In revising the 
statute, Congress clearly stated that its intent was to authorize 
payment of DIC in cases where a clear and unmistakable VA error was the 
only obstacle to the veteran's receipt of total disability compensation 
for the specified period. Thus, rather than imposing an impermissibly 
high burden on DIC claimants, the statutory language at issue actually 
extended DIC entitlement to individuals who were previously ineligible 
for such benefits.
    Further, as we have previously stated, Congress' purpose in 
enacting section 1318(b) was to provide income to survivors to replace 
the VA disability compensation they depended on as a source of income 
during the veteran's lifetime. In 1982 Congress extended DIC to 
circumstances where CUE by VA deprived the veteran and his family of 
this income during his or her lifetime. We believe it was reasonable 
for Congress to provide DIC as a replacement for income that the 
veteran and his or her family received, or that VA incorrectly 
withheld, during the veteran's lifetime, without extending this benefit 
to the much broader class of circumstances suggested by the commenter.
    There is nothing absurd or unfair in the requirement that the 
veteran's entitlement to a total disability rating be established in 
accordance with the statutes and regulations governing the award and 
duration of total disability ratings. Under this standard, the findings 
necessary to support an award of DIC under 38 U.S.C. 1318(b) are made 
by reference to an established factual record and the existing 
statutory scheme governing entitlement to veterans benefits. In 
contrast, the alternative suggested by the commenter--i.e., requiring 
VA to make a de novo determination after a veteran's death as to 
whether the veteran hypothetically could have received a total 
disability rating for ten or more years prior to death--would entail 
potentially difficult burdens in developing evidence concerning the 
nature and extent of a now-deceased veteran's disability over past 
periods. Moreover, such findings would necessarily require VA to ignore 
the statutes and regulations governing the effective dates of 
disability ratings, which limit VA's authority to assign retroactive 
disability ratings. There would likely be significant difficulty and 
uncertainty concerning the assignment of retroactive effective dates 
for such ratings in the absence of any applicable statutory or 
regulatory standard. It is reasonable to infer that Congress did not 
intend to adopt this burdensome and ill-defined standard, particularly 
since it would go well beyond Congress's stated purpose of providing 
for DIC in cases where the veteran would have met the statutory 
criteria but for a CUE committed by VA.

Effect of VA Statutes and Regulations Governing Finality of 
Decisions, Notice of Decisions, and Procedural Rights of Claimants

    Our January 2000 final rule and our December 2001 NPRM stated that 
final rating decisions issued during a veteran's lifetime will be 
binding for purposes of determining a survivor's right to enhanced DIC 
benefits under 38 U.S.C. 1318(b) and 1311(a)(2) unless it is shown that 
there was CUE in such decisions. One commenter asserts that decisions 
rendered on a veteran's claim

[[Page 16315]]

cannot be considered final and binding with respect to the claimant's 
survivors, because the survivors were not parties to the veteran's 
claim. The commenter relies on the following statutes and regulations: 
38 U.S.C. 5101, 5104, 5108, 7104(b), and 7105(b)(1) and (c); 38 CFR 
3.1(q), 3.103(b) and (f), 3.151, 3.152, 19.25, 19.29(b), 20.3(c), (f), 
and (g), 20.201, and 20.1103. In general, those provisions require that 
VA decide ``claims'' presented by a ``claimant'; that VA provide the 
claimant with notice of its decision and notice of the right to appeal; 
that if a claimant files an appeal, VA ordinarily must provide a 
statement of the case to the claimant; and that the Board of Veterans' 
Appeals must decide all appealed claims. Pursuant to 38 U.S.C. 7105(c) 
and 38 CFR 20.1103, if a claimant does not timely appeal a regional 
office decision, the decision is considered final.
    The commenter states that ``[a]lthough a survivor's DIC claim under 
1311(a) or 1318(b) may be, in some respects, factually derivative of 
the veteran's prior claim, [the survivor's claim] cannot by definition 
be considered final until its merits have been decided by VA.'' We 
believe this comment confuses the procedural issue of a survivor's 
right to a decision on his or her DIC claim with the substantive issue 
of what facts the survivor must establish to demonstrate entitlement to 
DIC. With respect to the first issue, a DIC claim filed by a survivor 
under 38 U.S.C. 1318(b) or 1311(a)(2) will be adjudicated by VA in 
accordance with the statutory and regulatory provisions cited by the 
commenter. The survivor will be notified of VA's decision on the DIC 
claim and will be notified of the right to appeal that decision. A 
decision concerning the survivor's claim for DIC benefits will not be 
considered final until VA has notified the claimant of that decision 
and either the appeal period has expired or a final decision on any 
appeal has been rendered. Accordingly, contrary to the commenter's 
assertion, nothing in our interpretation of the statutes operates to 
deny a DIC claimant the procedural rights accorded by statute and 
regulation.
    With respect to the second issue, 38 U.S.C. 1318(b) and 1311(a)(2) 
require, as a condition of entitlement to DIC, a showing that the 
veteran was in receipt of or entitled to receive compensation for a 
service-connected disability that was continuously rated totally 
disabling for a specified number of years prior to the veteran's death. 
As previously explained, these statutes are most reasonably interpreted 
as providing that VA decisions during the veteran's lifetime govern 
that factual issue unless CUE is shown. The procedural statutes and 
regulations cited by the commenter do not alter our interpretation.
    The commenter asserts that the procedural statutes and regulations 
governing decisions and notice do not provide that decisions during a 
veteran's lifetime will be binding on the veteran's survivors. We 
agree, and we note that 38 CFR 20.1106 states that decisions during a 
veteran's lifetime generally do not govern a survivor's claim for death 
benefits. However, 38 U.S.C. 1318(b) and 1311(a)(2) themselves clearly 
require that decisions during a veteran's lifetime will govern for the 
specific purpose of determining a survivor's entitlement to DIC under 
those two statutes, because the survivor's entitlement is predicated on 
extent and duration of ratings assigned during the veteran's lifetime 
or those that would have been assigned absent CUE. The clearly 
expressed legislative intent in section 1318(b) and 1311(a)(2) governs 
our interpretation of those statutes and overrides any contrary 
inference based on the statutory and regulatory provisions of a more 
general nature cited by the commenter.
    To the extent the commenter suggests that the cited procedural 
statutes and regulations prohibit our interpretation of 38 U.S.C. 
1318(b) and 1311(a)(2), we disagree. In enacting statutes providing 
benefits to veterans and their survivors, Congress has broad authority 
to prescribe the circumstances under which such benefits may be paid. 
See Atkins v. Parker, 472 U.S. 115, 129 (1984) (Congress has ``plenary 
power to define the scopes and duration of the entitlement to * * * 
benefits, and to increase, decrease, or terminate those benefits based 
on its appraisal of the relative importance of the recipients' needs 
and the resources available to fund the program''). Congress could, as 
it did prior to 1982, limit DIC to cases where the veteran had actually 
received compensation for total service-connected disability for ten or 
more years prior to death. Similarly, Congress may extend DIC benefits 
to cases where the veteran's disability had been rated totally 
disabling for ten or more years prior to death or would have been so 
rated if not for CUE by VA, as the statutes now provide. Nothing in the 
procedural statutes or regulations cited by the commenter imposes any 
limitation on Congress' authority to prescribe the circumstances under 
which DIC may be paid to a veteran's survivor. Accordingly, we do not 
believe that any change in our interpretation is warranted by this 
comment.

Effect of Principles of Collateral Estoppel

    One commenter asserts that requiring DIC claimants to show CUE in 
cases where the veteran's entitlement to the required benefits was not 
established by ratings during the veteran's lifetime is contrary to 
judicial principles of collateral estoppel. Collateral estoppel, also 
known as issue preclusion, is a judicially-developed doctrine providing 
that ``[w]hen an issue of fact or law is actually litigated and 
determined by a valid final judgment, and the determination is 
essential to the judgment, the determination is conclusive in a 
subsequent action between the parties, whether on the same or a 
different claim.'' Restatement (Second) of Judgments Sec. 27 (1982). 
The commenter asserts that decisions during the veteran's lifetime 
cannot be considered controlling in a survivor's claim for DIC because 
the survivor was not a party to the prior decision.
    For the same reasons expressed in response to the previous comment, 
we conclude that this comment provides no basis for changing our 
interpretation. In 38 U.S.C. 1318(b) and 1311(a)(2), Congress has 
provided that decisions during a veteran's lifetime will govern a 
survivor's entitlement to DIC under those statutes unless CUE is shown. 
This requirement is imposed by 38 U.S.C. 1318(b) and 1311(a)(2) 
themselves. Nothing in the judicial doctrine of collateral estoppel 
imposes a limit on Congress's authority to define the scope of any 
benefit it provides or to condition DIC entitlement on a showing that 
the veteran had received a total disability rating for the specified 
period or would have obtained such a rating if not for CUE in a VA 
rating decision. See Mathews v. DeCastro, 429 U.S. 181, 185 (1976) 
(``Governmental decisions to spend money to improve the public welfare 
in one way and not another are `not confided to the courts. The 
discretion belongs to Congress unless the choice is clearly wrong, a 
display of arbitrary power, not an exercise of judgment.' '') (quoting 
Helvering v. Davis, 301 U.S. 619, 640 (1937)). Accordingly, we will 
make no change based on this comment.

Alleged Change in VA's Interpretation of 38 U.S.C. 1311(a)(2)

    One commenter states that the proposed rule is arbitrary and 
capricious and an abuse of VA's discretion because it conflicts with 
our prior interpretation of 38 U.S.C. 1311(a)(2) as identified by the 
Federal

[[Page 16316]]

Circuit in the NOVA case. VA does not agree. In NOVA, the Federal 
Circuit concluded that VA has authority to revise its interpretive 
rules, even where such rules have previously been relied on and 
interpreted by a court. 260 F.3d at 1373-74. Further the court's remand 
order expressly stated that VA may revise one of its interpretive 
rules. The commenter's assertion that the proposed rule is inconsistent 
with VA's prior interpretation of 38 U.S.C. 1311(a)(2) does not, in 
itself, establish any error in the proposed rule.
    The same commenter also takes issue with the statement in the 
December 2001 NPRM that the proposed rule does not constitute a change 
in VA's interpretation of 38 U.S.C. 1311(a)(2). The commenter asserts 
that this statement is inconsistent with the language of Sec. 20.1106 
and the Federal Circuit's decisions interpreting that regulation. This 
comment provides no basis for changing the proposed rule, because, as 
noted above, VA has authority to revise its interpretation of section 
1311(a)(2) regardless of whether the revision constitutes a change in 
interpretation or merely a clarification of VA's prior interpretation. 
Nevertheless, we reiterate that proposed rule does not change the 
manner in which VA has interpreted and applied 38 U.S.C. 1311(a)(2). In 
the NOVA case and in an earlier decision in Hix v. Gober, 225 F.3d 1377 
(Fed. Cir. 2000), the Federal Circuit concluded that Sec. 20.1106 
interprets 38 U.S.C. 1311(a)(2) in a manner that prohibits 
consideration of decisions rendered during a veteran's lifetime. This 
conclusion was based on the fact that Sec. 20.1106 states that, except 
with respect to claims under 38 U.S.C. 1318 and certain other claims, 
VA will decide issues involved in a survivor's claim for death benefits 
without regard to any prior disposition of those issues during the 
veteran's lifetime. Because this regulation states an exception for 
claims under section 1318 but not for claims under section 1311(a)(2), 
the Federal Circuit concluded that it represents a determination by VA 
that decisions during a veteran's lifetime must be ignored in claims 
under section 1311(a)(2). VA concedes that this is a reasonable reading 
of the language in Sec. 20.1106. However, as explained in the NPRM, the 
language of Sec. 20.1106 was not based on any such determination by VA 
and does not accurately reflect VA's interpretation of 38 U.S.C. 
1311(a)(2).
    As we explained in the NPRM, VA issued Sec. 20.1106 for the express 
purpose of allowing the Board ``to review `de novo' service connection 
cause of death cases.'' 45 FR 56093 (1980). That regulation was 
intended to apply only in cases where entitlement to DIC was dependent 
on a finding that the condition causing the veteran's death resulted 
from service. It was not intended to apply to claims, such as those 
under 38 U.S.C. 1318(b) or 1311(a)(2), where entitlement to DIC is 
dependent on the veteran having been in receipt of or entitled to 
receive certain benefits for a specified period during the veteran's 
lifetime. In 1992, VA amended Sec. 20.1106 to expressly state that that 
rule did not apply to claims under 38 U.S.C. 1318(b). Congress enacted 
38 U.S.C. 1311(a)(2) several months after VA amended that regulation. 
If VA had again amended Sec. 20.1106 to include express reference to 
section 1311(a)(2), the apparent inconsistency identified in the NOVA 
decision would have been avoided. However, as stated in the NPRM, VA's 
failure to issue a further amendment following the enactment of 38 
U.S.C. 1311(a)(2) was a matter of inadvertence rather than a product of 
a VA determination that section 1311(a)(2) permits or requires VA to 
ignore decisions rendered during a veteran's lifetime.
    In similar fashion, the same commenter asserts that the NPRM 
``pretends that the Federal Circuit did not interpret [section] 20.1106 
to allow for `hypothetical determinations.' For the reasons stated 
above, we conclude that this comment is incorrect and, in any event, 
would provide no basis for changing the proposed rule even if it were 
correct. In the NPRM, we stated that ``[t]he NOVA court concluded that 
38 CFR 20.1106 interprets * * * 38 U.S.C. 1311(a)(2) to require a 
posthumous determination of the veteran's `entitlement' to compensation 
without regard to whether VA rating decisions during the veteran's 
lifetime established such entitlement.'' We acknowledge that the 
Federal Circuit interpreted Sec. 20.1106 to permit DIC under 38 U.S.C. 
1311(a)(2) based on a veteran's ``hypothetical'' entitlement to 
compensation. As explained in the NPRM, however, we are revising 
Sec. 20.1106 because the Federal Circuit's determination is 
inconsistent with VA's intent in issuing Sec. 20.1106 and does not 
actually reflect VA's interpretation of 38 U.S.C. 1311(a)(2).

Compliance with NOVA Order

    One commenter asserts that VA has failed to comply with the Federal 
Circuit's remand order in the NOVA case. The commenter states that the 
Federal Circuit ordered VA to ``provide a reasonable explanation for 
its decision to interpret sections 1311 and 1318 in different ways''. 
The commenter further states that ``[w]hile it is true that the Federal 
Circuit's remand gave the Agency the opportunity to revise 38 CFR 
20.1106 to be consistent with the revised version of 38 CFR 3.22, the 
Agency's Public Notice fails to explain why the amendment to 20.1106 is 
necessary.'' We disagree with this comment.
    In the NOVA case, the Federal Circuit directed VA to conduct 
expedited rule making either to provide a reasonable explanation for 
the decision to interpret 38 U.S.C. 1311 and 1318 in different ways, or 
to revise Sec. 3.22 to harmonize it with Sec. 20.1106, or to revise 
Sec. 20.1106 to harmonize it with Sec. 3.22. As stated in the NPRM, VA 
chose the latter of those three options. Having decided to revise 
Sec. 20.1106, VA was not obligated by the NOVA order to provide an 
explanation for any decision to interpret sections 1311 and 1318 in 
different ways. Indeed, as previously stated in the NPRM and this 
document, VA has concluded that those statutes must be interpreted in 
the same manner.
    The December 2001 NPRM and this document clearly explain why 
revision of Sec. 20.1106 is necessary. Briefly stated, we have 
concluded that revision of Sec. 20.1106 is necessary because 38 U.S.C. 
1311 and 1318 must be construed in the same manner, because the Federal 
Circuit has concluded that Sec. 3.22 and Sec. 20.1106 currently do not 
interpret those statutes in the same manner, and because VA has 
concluded that the Federal Circuit's interpretation of Sec. 20.1106 is 
inconsistent with our intent in issuing that regulation and is 
inconsistent with our interpretation of 38 U.S.C. 1311(a)(2).

Suggestion That VA Seek Clarification From Congress

    One commenter recommends that VA seek clarification from Congress 
concerning its intent in enacting 38 U.S.C. 1318(b) and 1311(a)(2). For 
the reasons stated in the January 2000 final rule, the December 2001 
NPRM, and this notice, we conclude that the meaning of those statutes 
is clear from examination of the language and history of the statutes 
and their context in the statutory scheme established by Congress. 
Accordingly, we find no basis for the extraordinary step of asking 
Congress to clarify its intent in enacting the statutes at issue.

Revision of 38 CFR Part 3

    One commenter recommends that we move the provisions of 38 CFR 
20.1106 to 38 CFR part 3, or that we add a new provision to part 3 
containing provisions similar to those in Sec. 20.1106. We make no 
change to the proposed

[[Page 16317]]

rule based on this comment, although we will consider issuing 
additional rules in the future consistent with this comment.
    Section 20.1106 is located in subpart L of part 20 of title 38, 
Code of Federal Regulations. Part 20 of title 38 contains the Rules of 
Practice of the Board of Veterans' Appeals. Subpart L of part 20 
contains the Board's rules concerning the finality of decisions of the 
Board and VA regional offices. Section 20.1106 provides that, with 
certain exceptions, issues involved in a survivor's claim for death 
benefits will be decided without regard to any prior disposition of 
those issues during the veteran's lifetime. This rule has been stated 
in the Board's rules of practice since 1980. In 1992, we amended the 
rule to clarify that it did not apply to claims under 38 U.S.C. 1318. 
This final rule will further amend Sec. 20.1106 to clarify that the 
rule does not apply to claims under 38 U.S.C. 1311
    Part 3 of title 38, Code of Federal Regulations, contains 
substantive and procedural rules governing adjudication of claims for 
disability compensation, pension, DIC and other benefits. Part 3 
includes 38 CFR 3.22, which states VA's interpretation of 38 U.S.C. 
1318, and 38 CFR 3.5(e), which essentially reiterates the statutory 
provisions of 38 U.S.C. 1311(a)(2) without elaboration. However, part 3 
does not include a rule stating the principle in Sec. 20.1106 that, 
except in cases under 38 U.S.C. 1311 and 1318 and certain other 
statutes, issues in DIC claims generally will be decided without regard 
to any prior disposition of such issues during the veteran's lifetime.
    The commenter states that the principle stated in Sec. 1106 would 
apply to all VA decisions on DIC claims, whether such decisions are 
made by the Board or by a VA regional office. Accordingly, the 
commenter asserts that those principles should be stated in part 3.
    VA agrees that the principle stated in Sec. 20.1106 applies to DIC 
claims before either a VA regional office or the Board. The principles 
stated in Sec. 20.1106 reflect VA's interpretation of the statutory 
provisions applicable to DIC claims before both VA regional offices and 
the Board. VA has consistently applied that interpretation to DIC 
claims decided at both regional-office and Board levels, and will 
continue to do so. However, we will make no change to the proposed rule 
based on this comment.
    In the NOVA case, the Federal Circuit concluded that there was an 
apparent conflict between 38 CFR 3.22 and 38 CFR 20.1106. The court 
directed VA to conduct expedited rule making to revise either of those 
regulations or to explain the basis for the apparent inconsistency. The 
court further directed VA to stay all proceedings involving claims 
under 38 U.S.C. 1318 pending the completion of such rule making. As 
stated in our December 2001 NPRM, VA concluded that it was necessary to 
revise Sec. 20.1106 to remove the apparent inconsistency cited by the 
court.
    In view of the time limit imposed by the court for completing rule 
making and the fact that DIC claims have been stayed until this rule 
making is completed, we limited our proposed rule to addressing the 
apparent inconsistency identified by the Federal Circuit and did not 
propose additional changes to part 3, such as those recommended by the 
commenter. We believe it is appropriate to retain the Board's 
longstanding rule of practice in subpart L of part 20 of title 38, Code 
of Federal Regulations, because that rule pertains to subject matter 
addressed by that subpart.
    Nevertheless, we understand the commenter's concern that it would 
be logical to include a provision similar to Sec. 20.1106 in part 3 of 
title 38 of the CFR, to make clear that the same principles apply to 
claims before VA regional offices. We will make no change to part 3 in 
this final rule, because any such change would be beyond the scope of 
the proposed rule. However, we will consider whether to issue 
additional rules in the future consistent with this comment.

Unfunded Mandates

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

Paperwork Reduction Act

    This document contains no provisions constituting a collection of 
information under the Paperwork Reduction Act (44 U.S.C. 3501-3520).

Executive Order 12866

    This document has been reviewed by the Office of Management and 
Budget under Executive Order 12866.

Regulatory Flexibility Act

    The Secretary hereby certifies that this final rule would 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, inasmuch as this final rule applies to individual claimants for 
veterans' benefits and does not affect such entities. Therefore, 
pursuant to 5 U.S.C. 605(b), this final rule is exempt from the initial 
and final regulatory flexibility analyses requirement of sections 603 
and 604.
    There is no Catalog of Federal Domestic Assistance number for this 
final rule.

List of Subjects in 38 CFR Part 20

    Administrative practice and procedure, Claims, Veterans.

    Approved: March 29, 2002.
Anthony J. Principi,
Secretary of Veterans Affairs.

    For the reasons set out in the preamble, 38 CFR part 20 is amended 
as follows:

PART 20--BOARD OF VETERANS' APPEALS: RULES OF PRACTICE

    1. The authority citation for part 20 continues to read as follows:

    Authority: 38 U.S.C. 501(a) and as noted in specific sections.

    2. Section 20.1106 is revised to read as follows:


Sec. 20.1106  Rule 1106. Claim for death benefits by survivor-prior 
unfavorable decisions during veteran's lifetime.

    Except with respect to benefits under the provisions of 38 U.S.C. 
1311(a)(2), 1318, and certain cases involving individuals whose 
Department of Veterans Affairs benefits have been forfeited for treason 
or for subversive activities under the provisions of 38 U.S.C. 6104 and 
6105, issues involved in a survivor's claim for death benefits will be 
decided without regard to any prior disposition of those issues during 
the veteran's lifetime.

(Authority: 38 U.S.C. 7104(b))

[FR Doc. 02-8201 Filed 4-4-02; 8:45 am]
BILLING CODE 8320-01-P