[Federal Register Volume 71, Number 32 (Thursday, February 16, 2006)]
[Rules and Regulations]
[Pages 8215-8222]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-1431]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 3

RIN 2900-AK65


Filipino Veterans' Benefits Improvements

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: This document amends the Department of Veterans Affairs (VA) 
adjudication regulations to reflect changes made by three Public Laws. 
First, Public Law 106-377, the Departments of Veterans Affairs and 
Housing and Urban Development, and Independent Agencies Appropriations 
Act, 2001, changed the rate of compensation payments to certain 
veterans of the Philippine Commonwealth Army and recognized guerrilla 
forces, who reside in the

[[Page 8216]]

United States. Second, Public Law 106-419, the Veterans Benefits and 
Health Care Improvement Act of 2000, changed the amount of monetary 
burial benefits that VA will pay to survivors of certain veterans of 
the Philippine Commonwealth Army and recognized guerrilla forces who 
lawfully reside in the United States at death. This document adopts 
with changes the interim final rule published in the Federal Register 
on December 27, 2001 at 66 FR 66763.
    This document additionally implements Public Law 108-183, the 
Veterans Benefits Act of 2003, and solicits comments on this regulatory 
amendment only. This public law added service in the Philippine Scouts 
as qualifying service for payment of compensation, dependency and 
indemnity compensation (DIC) and monetary burial benefits at the full-
dollar rate, and provided for payment of DIC at the full-dollar rate to 
survivors of certain veterans of the Philippine Commonwealth Army and 
recognized guerrilla forces who lawfully reside in the United States.

DATES: Effective Date: February 16, 2006.
    Comment Date: Comments on the regulatory amendments in this 
rulemaking which implement Public Law 108-183 only must be received on 
or before March 20, 2006.

ADDRESSES: Written comments may be submitted by: mail or hand-delivery 
to Director, Regulations Management (00REG1), Department of Veterans 
Affairs, 810 Vermont Ave., NW., Room 1068, Washington, DC 20420; fax to 
(202) 273-9026; or e-mail through http://www.Regulations.gov. Comments 
should indicate that they are submitted in response to ``RIN 2900-
AK65.'' All comments received will be available for public inspection 
in the Office of Regulation Policy and Management, Room 1063B, between 
the hours of 8 a.m. and 4:30 p.m., Monday through Friday (except 
holidays). Please call (202) 273-9515 for an appointment.

FOR FURTHER INFORMATION CONTACT: Bill Russo, Chief, Regulations Staff, 
Compensation and Pension Service (211D), Veterans Benefits 
Administration, Department of Veterans Affairs, 810 Vermont Avenue, 
NW., Washington, DC 20420, telephone (202) 273-7211.

SUPPLEMENTARY INFORMATION: To implement Public Law 106-377 and Public 
Law 106-419, VA published an interim final rule in the Federal Register 
for notice and comment (see 66 FR 66763). We received written comments 
from the American Coalition for Filipino Veterans, Inc.; the Disabled 
American Veterans; and two congressmen. Based on the rationale set 
forth in the interim final rule and in this document, we are adopting 
the provisions of the interim final rule as a final rule with the 
changes discussed below. We are also including in this final rule 
amendments to 38 CFR 3.40, 3.42, 3.43, 3.405, 3.505, and 3.1600 to 
implement provisions from Public Law 108-183 that relate to Filipino 
veterans. Public Law 108-183, the Veterans Benefits Act of 2003 was 
enacted subsequent to publication of the interim final rule. The 
provisions in the Public Law relate to Filipino veterans, therefore, we 
find it appropriate to include the amendments in this final rule. As 
well, the amendments are restatements of statutes and, as such, do not 
require publication for public notice and comment.

Street Address Requirement

    The interim final rule required that Filipino veterans and their 
survivors have a valid street address where they receive mail to prove 
that they are residing in the United States. Two commenters noted that 
some veterans and survivors do not have a street address because they 
are either homeless or live in a home that is mobile, such as a motor 
home or boat. One commenter stated that some veterans and survivors 
choose not to receive mail at their home address because ``mail 
security'' at that address is questionable.
    VA has established procedures for ensuring that homeless claimants 
and claimants without mailing addresses receive benefit payments. As 
stated in 38 CFR 1.710(d), if a claimant is homeless or does not have a 
mailing address, benefit payments and correspondence will be sent to 
the VA Agent Cashier of the Regional Office that adjudicated or is 
adjudicating the veteran's or survivor's claim, or to any other VA 
Agent Cashier that VA deems appropriate. Additionally, a homeless 
veteran or survivor may elect to receive correspondence from VA at 
General Delivery in a United States Postal Service (USPS) facility. As 
VA has acknowledged that having a valid street address is not a 
requirement for receipt of benefit payments, we agree that the 
requirement in the interim final rule of having a valid street address 
at which mail is received is overly restrictive. Accordingly, we have 
revised Sec. Sec.  3.42 and 3.43 to remove the requirement that a 
Filipino veteran or survivor must reside at a valid street address and 
receive mail at that address to be eligible for VA benefits at the 
full-dollar rate.
    Three commenters objected to the provision in Sec.  3.42(c)(4) that 
stated that VA would not pay benefits at the full-dollar rate if a 
veteran's or survivor's mailing address was a Post Office box, unless 
the USPS did not deliver mail to the veteran's or survivor's street 
address. They asserted that the provision was arbitrary and capricious, 
and contrary to 38 U.S.C. 5126, which provides that VA may not deny 
benefits on the basis that a claimant does not have a mailing address. 
One commenter stated that Sec.  3.42(c)(4) would also bar payment of 
benefits at the full-dollar rate if the veteran or survivor had a 
General Delivery mailing address.
    As stated above, we agree that the requirement in the interim final 
rule of having a valid street address at which mail is received is 
overly restrictive and we have removed that provision from the final 
rule. We believe this change addresses the commenters' concerns 
regarding 38 U.S.C. 5126. The issue addressed by Sec.  3.42(c)(4) is 
whether a Post Office box mailing address constitutes evidence that a 
Filipino veteran, or his or her survivor, is ``residing in the United 
States.'' We believe that it does not constitute such evidence. A Post 
Office box is essentially rented space. The box can be rented in any 
Post Office that has space available, and the box does not have to be 
in the Post Office that provides delivery service to the renter's 
residential address. A person who resides outside the United States can 
rent a Post Office box inside the United States. Although a valid 
mailing address in the United States is initially required to rent a 
Post Office box, there is no requirement that the renter remain in the 
United States or maintain a residence at that address. Access to a Post 
Office box does not require the physical presence of the renter. 
Physical possession of the key to the box or knowing the combination to 
the lock on the box is all that is required for access. Therefore, 
having a Post Office box as a mailing address does not establish that a 
person resides in the United States. Nevertheless, for reasons 
previously discussed, we have removed the requirement that a Filipino 
veteran or survivor must receive mail at a valid street address to be 
eligible for VA benefits at the full-dollar rate.
    Section 3.42(d)(4) provides that if mail from VA is returned by the 
USPS, VA will reduce payments to $0.50 for each dollar authorized. Two 
commenters objected to this provision. One commenter suggested that VA 
should take steps to verify that the

[[Page 8217]]

address of record is the most current address before reducing benefits. 
The other commenter simply called the provision arbitrary and unlawful. 
We disagree with the commenter's assertion that the provision is in any 
way arbitrary or unlawful, but we agree that VA should ensure that the 
mail was sent to the correct address before reducing benefits. 
Therefore, we have added language to Sec.  3.42(d)(4) and Sec.  
3.505(d) that requires VA to make reasonable efforts to determine the 
correct mailing address. If VA is unable to determine the correct 
mailing address after reasonable efforts, VA may reduce benefit 
payments to $0.50 for each dollar authorized.
    VA requires proof of lawful U.S. residency to establish eligibility 
for VA benefits at the full-dollar rate. One commenter urged VA to use 
the Social Security Administration's regulation, 20 CFR 416.1603, How 
to prove you are a resident of the United States, as guidance for 
alternative ways to prove residency if the Department has ``reason to 
question'' that a claimant or beneficiary is residing in the United 
States.
    We agree that the examples listed in that Social Security 
Administration regulation and similar examples listed in Department of 
Homeland Security regulations at 8 CFR 244.9, may be relevant evidence 
of residency. We have decided to use several of the examples from these 
two regulations, selecting those which are most commonly available to 
Filipino veterans and their survivors. We have not used the exact 
wording contained in those regulations; instead we have summarized them 
in both Sec. Sec.  3.42(c)(4) and 3.43(c)(4).

Requiring U.S. Citizenship and Immigration Services Verification of 
Naturalization or Permanent Residence Status

    After VA published the interim final rule, the Immigration and 
Naturalization Service (INS) was transferred to the Department of 
Homeland Security and renamed the U.S. Citizenship and Immigration 
Services (USCIS). We will refer to the USCIS when responding to 
comments concerning the INS. We also made non-substantive clarifying 
amendments to the rule to reflect this change.
    One commenter described ``data integrity'' problems at USCIS, 
quoting a portion of a 2001 Government Accountability Office (GAO) 
report regarding USCIS's data on immigration applications. This same 
commenter stated that there is no evidence that the USCIS will be able 
to provide verification directly to VA in a timely manner and there is 
a GAO audit finding that it will likely not be able to do so 
accurately.
    The referenced material from the GAO report concerns USCIS 
processing of immigration applications. It does not concern USCIS's 
ability to identify individuals to whom it has granted citizenship or 
resident alien status. Upon VA's request, USCIS verifies the 
citizenship or alien status of a Filipino veteran or survivor. We have 
not experienced any problems in receiving timely and accurate 
verification of citizenship or alien status from USCIS. USCIS generally 
responds to VA's requests for verification data within one work day of 
the request. Therefore, no changes are warranted based on this comment.
    One commenter suggests that some Filipino veterans and survivors 
may meet the USCIS criteria for a presumption of permanent residence as 
persons who ``have been lawfully admitted for permanent residence even 
though a record of his admission cannot be found,'' under 8 CFR 101.1, 
Aliens and Nationality, Presumption of lawful admission. This commenter 
stated that VA should require USCIS confirmation of naturalized 
citizenship or permanent resident alien status only if the Filipino 
veteran or survivor is unable to produce adequate alternative 
documentation of status.
    USCIS is the Federal agency with responsibility for granting 
citizenship or resident alien status, and for maintaining records on 
alien residents and naturalized citizens. VA has no authority to 
determine that a veteran has adequate alternative documentation of 
citizenship or permanent resident alien status under 8 CFR 101.1 and 
thus relies exclusively upon USCIS's verification, even if that 
verification is based upon USCIS's presumption of residency. Since 
USCIS timely responds to VA's requests for verification of citizenship 
or resident alien status, there is no need to seek alternative 
documentation of that status. No changes in the interim final rule are 
warranted based on this comment.
    Two commenters noted that USCIS does not require that employers 
request USCIS verification of citizenship or permanent resident alien 
status. Instead, USCIS allows employers to accept documentation such as 
a United States passport or Permanent Residence card.
    We agree that since the United States Department of State requires 
proof of U.S. citizenship before issuing a passport, VA may accept a 
valid passport as proof that a veteran or survivor is a citizen of the 
United States. Accordingly, we have amended Sec. Sec.  3.42(c)(2) and 
3.43(c)(2) to reflect that either USCIS verification or a valid United 
States passport is sufficient proof that a veteran or survivor is a 
citizen of the United States.
    We do not agree that a Permanent Residence card is sufficient proof 
of lawful residence in the United States. VA's responsibility under 
Public Laws 106-377, 106-419, and 108-183 to pay full-dollar rate 
benefits to Filipino veterans and survivors who are either citizens or 
permanent resident aliens is inherently different than the 
responsibility of employers to verify resident alien status for 
employment purposes. In addition, Permanent Residence cards may be 
forged. Because such cards may not be the most reliable evidence, we 
decline to accept them as sufficient proof of residency.

Length-of-Residency Requirements

    Three commenters felt that the length-of-residency requirements in 
the interim final rule were too stringent. Two of these commenters 
disagreed with the provisions in Sec. Sec.  3.42 and 3.43 that require 
the discontinuance of full-dollar rate benefits if a Filipino veteran 
is absent from the U.S. for more than 60 consecutive days. They noted 
that, under 20 CFR 404.460, Nonpayment of monthly benefits of aliens 
outside the United States, the Social Security Administration allows 
beneficiaries to continue receiving benefits as United States residents 
until they are absent from the country for more than 6 consecutive 
months. The commenters urged VA to adopt similar residency 
requirements.
    Section 402(t)(1) of title 42, United States Code, mandated the 6-
month absence rule that the Social Security Administration implemented 
in 20 CFR 404.460. Because Congress did not establish a specific 
residency period in the Public Laws authorizing full-dollar rate 
benefits for Filipino veterans, VA must establish reasonable residency 
requirements within its general rule-making authority.
    In our view, the requirement that a Filipino veteran or survivor 
not be absent from the United States for more than 60 consecutive days 
to continue to receive benefits at the full-dollar rate is fair, 
reasonable, and consistent with the applicable Public Laws. The 60-day 
requirement reasonably allows a Filipino veteran or survivor sufficient 
freedom to travel, while allowing payment of compensation or DIC at the 
full-dollar rate only while he or she is residing in the United States. 
An extended period spent outside of the United States is not consistent 
with the intent of Congress that the Filipino

[[Page 8218]]

veteran or survivor reside in the United States for receipt of benefits 
at the full-dollar rate. We therefore make no changes based on these 
comments.
    Another commenter also disagreed with the 60-day provision, 
asserting that it is arbitrary and ``has no apparent connection or 
correlation to the indicators or determinants of residency.'' This 
commenter stated that a beneficiary may need to be temporarily outside 
the United States for more than the 60-day limit imposed by the interim 
final rule. The key factor, the commenter urged, should be whether the 
beneficiary intends to give up his or her United States residency.
    We disagree that a beneficiary's intent should be the key factor in 
determining whether benefits may be paid at the full-dollar rate. 
Congress, by the language in the applicable Public Laws, limited 
entitlement to the full-dollar rate to Filipino veterans and survivors 
while they are actually residing in the United States, as citizens or 
aliens lawfully admitted for permanent residence. The statute makes no 
mention of the beneficiary's intent to establish a permanent residence 
as a factor. Therefore, no changes have been made based on this 
comment.
    This commenter also asserted that an important factor in Congress' 
decision to pay these beneficiaries at the full-dollar rate must have 
been Congress' recognition that these Filipino veterans' past military 
service and allegiance to the United States was and is on a par with 
that of other veterans. The commenter concluded that ``[t]o require of 
these Filipino [beneficiaries] a greater physical presence in the 
United States than is required of United States veterans [and 
survivors] is without any rational basis except to prevent Filipino 
[beneficiaries] from obtaining full [benefits] while actually living in 
the Philippines.''
    There is no general statutory residency requirement for receipt of 
VA benefits. However, Congress has determined that Filipino veterans 
and survivors must actually reside in the United States to receive VA 
benefits at the full-dollar rate. Thus, under current law, veterans of 
the United States Armed Forces and their survivors are entitled to the 
full range of VA benefits without regard to residency, while certain 
Filipino veterans and their survivors are entitled to VA benefits 
payable at the rate of $0.50 for each dollar authorized under the law, 
unless they reside in the United States. VA therefore cannot interpret 
these plain statutory provisions as the commenter suggests. 
Accordingly, no changes are being made based on this comment.
    Three commenters stated that Filipino beneficiaries traveling 
outside of the United States may be unavoidably detained because of 
physical illness or other infirmities which prevent them from timely 
returning to the United States. One commenter also noted that such 
beneficiaries may be absent from the U.S. to care for a terminally ill 
relative or to assist with the disposition of a relative's estate. 
Another commenter felt that VA should take into account each Filipino 
beneficiary's peculiar circumstances and reasons for foreign travel. 
This commenter agreed that physical presence outside the U.S. for 
extended periods on a regular basis might provide a basis to question 
the Filipino beneficiary's residency.
    We agree that Filipino beneficiaries who are traveling outside of 
the United States may not return within 60 days for legitimate reasons 
that are out of their control, such as physical illness or other 
infirmities that occur at any point during the 60-day or 183-day 
periods. The residency requirements in the interim final rule are based 
upon Congress' express intent to require that Filipino beneficiaries 
reside within the United States to receive benefits at the full-dollar 
rate. However, we recognize that circumstances may arise that prevent 
Filipino beneficiaries from returning to the United States as planned. 
Accordingly, we are amending Sec.  3.42(d)(1) to provide exceptions to 
the 60-day and 183-day rules for good cause. Exceptions will be granted 
on a case-by-case basis and must be thoroughly documented.
    We have deleted the last sentence of Sec.  3.42(e) as it is 
redundant with Sec.  3.405(e), and we have clarified that Sec.  3.405 
refers to a calendar year as opposed to a 12-month period. In addition, 
in Sec.  3.42(d)(1), we have revised the phrase ``on an initial basis'' 
to ``for the first time.'' The revised language clarifies application 
of the July 1st exception to the 183-day rule.

Effective Dates

    One commenter stated that the effective date provision in Sec.  
3.405(c) of the interim final rule invites misinterpretation. By using 
the term ``date of the rating'' in conjunction with the later phrase 
``such rating action,'' it appears to refer to the date of the decision 
rather than the effective date of the decision.
    We agree and have amended the regulation accordingly by changing 
the phrase ``Effective date of the rating establishing service 
connection'' to ``Effective date of service connection'' and the phrase 
``such rating action'' to ``the decision establishing service 
connection.'' These changes appear in Sec.  3.405(a)(3) of the final 
rule.
    One commenter stated that Sec.  3.405 in the interim final rule 
violated 38 U.S.C. 5110, Effective dates of awards. The rule listed 
several dates and provided that the latest of the dates would be the 
initial effective date for full-dollar rate benefits. This commenter 
stated that the general statutory rule for determining effective dates 
is found in 38 U.S.C. 5110(a), which states ``(a) Unless specifically 
provided otherwise in this chapter [38 U.S.C. 5100 et seq.], the 
effective date of an award based on an original claim, a claim reopened 
after final adjudication, or a claim for increase, of compensation, 
dependency and indemnity compensation, or pension, shall be fixed in 
accordance with the facts found, but shall not be earlier than the date 
of receipt of application therefor.'' The commenter asserted that Sec.  
3.405(e) of the interim final rule delays initial entitlement on a 
basis not permitted by statute.
    Section 3.405(e) of the interim final rule applied to resumption of 
payment at the full-dollar rate after the Filipino veteran or survivor 
was absent for 183 days or more in one calendar year and then returns 
to the United States. It did not apply to initial entitlement and 
neither did Sec.  3.405(d). Only the introductory text of Sec.  3.405 
and paragraphs (a), (b), and (c) applied to initial entitlement. We 
have reorganized Sec.  3.405 to make this distinction more clear.
    The statutory authority for Sec.  3.405 is 38 U.S.C. 107, not 38 
U.S.C. 5110, because resumption of payment at the full-dollar rate is 
more closely associated with the definition of ``residing in the United 
States'' than with general effective date provisions. Therefore, no 
changes are being made based on this comment.
    The same commenter asserted that section 5110(g) should apply 
because Public Law 106-377 was liberalizing legislation. We agree that 
section 5110(g) is applicable to the implementation of Public Law 106-
377, and the first sentence of the introductory text of Sec.  3.405 was 
designed for that application. However, it appears that a direct 
citation to 38 CFR 3.114(a) would more clearly indicate that the 
special effective date rules for liberalizing legislation apply. In 
addition, since we must now include the additional full-dollar rate 
entitlement created by Public Law 108-183, we have decided to 
reorganize and revise the content of Sec.  3.405 to more clearly 
identify the beneficiaries of these liberalizing laws and specify that 
Sec.  3.114(a) applies to all of them.

[[Page 8219]]

Changes Made To Implement Public Law 108-183

    Public Law 108-183 amended 38 U.S.C. 107 to allow payment of 
compensation, DIC, and burial benefits at the full-dollar rate for New 
Philippine Scouts and their survivors as well as DIC for survivors of 
veterans who served in the Philippine Commonwealth Army and recognized 
guerrilla forces, if the beneficiary is residing in the United States 
and is either a United States citizen or a legally admitted resident 
alien. To implement the provisions of Public Law 108-183, we have 
amended 38 CFR 3.40(b) by adding to the beginning of the second 
sentence, ``Except as provided in Sec. Sec.  3.42 and 3.43.'' This 
clause refers to provisions that extend payment of compensation, DIC, 
and burial benefits at the full-dollar rate to certain Filipino 
veterans and their survivors in accordance with amendments made by the 
new law. We have also amended Sec.  3.1600(a) and (b) concerning 
payment of monetary burial benefits at the full-dollar rate.
    We discovered a minor ambiguity in the law governing the effective 
date for monetary burial benefits at the full-dollar rate based on the 
service of a New Philippine Scout. The date of enactment of Public Law 
108-183 was December 16, 2003. Section 212(a)(4) of the law provides 
that the full-dollar rate for burial benefits applies to New Philippine 
Scouts who die ``after'' the date of enactment, while section 212(c) of 
the law provides that it applied to New Philippine Scouts who die ``on 
or after'' the date of enactment. In resolving the issue of whether the 
death of a New Philippine Scout on December 16, 2003, is within the 
provisions of Public Law 108-183, we are applying a pro-veteran 
interpretation and amending Sec.  3.43(b) to provide monetary burial 
benefits at the full-dollar rate for eligible Filipino veterans who die 
after December 15, 2003.
    Because VA published the interim final rule prior to the enactment 
of Public Law 108-183, it correctly referred only to benefits for 
veterans and not to benefits for survivors, other than monetary burial 
benefits. We have, therefore, amended Sec. Sec.  3.40, 3.42, 3.43, 
3.405, and 3.505 to include benefits for survivors as well as veterans, 
where appropriate, in accordance with the provisions of Public Law 108-
183.

Other Non-Substantive Clarifying Changes to These Rules

    We reviewed the regulations and corrected several minor 
inconsistencies in wording between Sec. Sec.  3.42 and 3.43. First, 
Sec.  3.42(a)(4) cited title 8, United States Code, regarding proof of 
permanent resident alien status and we have added the same citation to 
Sec.  3.43(a)(4).
    Section 3.42(b) is entitled ``Eligibility requirements,'' and we 
have used this same title for Sec.  3.43(b). We have changed the title 
of Sec.  3.42(c) to ``Evidence of eligibility,'' the same as the title 
for Sec.  3.43(c).
    Section 3.42(d)(2) incorrectly referred to ``paragraph (a) of this 
section,'' when the reference should have been to the eligibility 
requirements of paragraph (b), so we have changed that reference. We 
also noted that the last sentence of Sec.  3.42(d)(2) dealing with the 
effective date of restored eligibility for the full-dollar rate is 
redundant with paragraph (e) of the same section. We have, therefore, 
deleted the last sentence of Sec.  3.42(d)(2) to eliminate the 
redundancy.
    We have changed the second sentence of Sec.  3.40(a) to clearly 
state that benefits for veterans who served in the Regular Philippine 
Scouts are paid at the full-dollar rate in the same manner as veterans 
who served in the United States Armed Forces. We did this by adding 
``at the full-dollar rate'' to the end of the second sentence.
    We have change the wording in Sec.  3.42(a)(4) from ``* * * such 
status not having changed'' to ``and still has this status'', to 
parallel the language in Sec.  3.43(a)(4). We have added commas between 
``rate'' and ``based'' and between ``(d)'' and ``to'' in Sec.  3.42(b) 
to parallel Sec.  3.43(b).
    We have added the phrase ``or the veteran's survivor'' to Sec.  
3.42(c), (c)(2), and (c)(3), and the phrase ``or survivor's'' to (c)(4) 
to clarify that a claimant may be a Filipino veteran's survivor.
    Based on the rationale set forth in the interim final rule and this 
document, we are adopting the interim final rule as a final rule with 
the changes discussed in this document.

Administrative Procedure Act

    With regard to the regulatory amendments in this rulemaking which 
implement Public Law 108-183, we are making them effective on an 
emergency basis because there is good cause under the provisions of 5 
U.S.C. 553 to publish them as an interim final rule without regard to 
prior notice and comment and effective date provisions. Compliance with 
these provisions would be impracticable, unnecessary, and contrary to 
the public interest. Publication as an interim final rule will 
implement Public Law 108-183, which provides additional benefits to 
disabled Filipino veterans and their survivors, most of whom are 
elderly. Many of these Filipino veterans, and their survivors, have 
chronic health problems and financial hardships. Publication of these 
amendments as interim final rules will enable VA to immediately provide 
to these beneficiaries the increased benefits they need in order to 
better cope with the cost of living in the United States.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in expenditure by 
State, local, or tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any given year. This rule will have no such effect on 
State, local, or tribal governments, or the private sector.

Executive Order 12866

    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, when regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety, 
and other advantages; distributive impacts; and equity). The Order 
classifies a rule as a significant regulatory action requiring review 
by the Office of Management and Budget if it meets any one of a number 
of specified conditions, including: Having an annual effect on the 
economy of $100 million or more, creating a serious inconsistency or 
interfering with an action of another agency, materially altering the 
budgetary impact of entitlements or the rights of entitlement 
recipients, or raising novel legal or policy issues. VA has examined 
the economic, legal, and policy implications of this final rule and has 
concluded that it is a significant regulatory action because it raises 
novel policy issues.

Paperwork Reduction Act

    All collections of information under the Paperwork Reduction Act 
(44 U.S.C. 3501-3521) referenced in this final rule have existing OMB 
approval as forms. No changes are made in this final rule to those 
collections of information.

Regulatory Flexibility Act

    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

[[Page 8220]]

amendments would not directly affect any small entities. Only VA 
beneficiaries could be directly affected. Therefore, under 5 U.S.C. 
605(b), these amendments are exempt from the initial and final 
regulatory flexibility analysis requirements of 5 U.S.C. 603 and 604.

Catalog of Federal Domestic Assistance Program Numbers

    The Catalog of Federal Domestic Assistance program numbers are 
64.100, Automobiles and Adaptive Equipment for Certain Disabled 
Veterans and Members of the Armed Forces; 64.101, Burial Expenses 
Allowance for Veterans; 64.104, Pension for Non-Service-Connected 
Deaths for Veterans; 64.105, Pension to Veterans Surviving Spouses, and 
Children; 64.106, Specially Adapted Housing for Disabled Veterans; 
64.109, Veterans Compensation for Service-Connected Disability; and 
64.110, Veterans Dependency and Indemnity Compensation for Service-
Connected Death.

List of Subjects in 38 CFR Part 3

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

    Approved: October 6, 2005.
Gordon H. Mansfield,
Deputy Secretary of Veterans Affairs.

    Editor's Note: This document was received at the Federal 
Register on February 10, 2006.


0
For the reasons set forth in this preamble, VA is adopting the interim 
final rule amending 38 CFR part 3 which was published at 66 FR 66763 on 
December 27, 2001, as a final rule with the following changes:

PART 3--ADJUDICATION

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

0
1. The authority citation for part 3, subpart A continues to read as 
follows:

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

0
2. Section 3.40 is amended by:
0
a. In paragraph (a), removing the period at the end of the last 
sentence and adding, in its place, ``at the full-dollar rate.''.
0
b. Revising paragraph (b).
    The revision reads as follows:


Sec.  3.40  Philippine and Insular Forces.

* * * * *
    (b) Other Philippine Scouts. Service of persons enlisted under 
section 14, Pub. L. 190, 79th Congress (Act of October 6, 1945), is 
included for compensation and dependency and indemnity compensation. 
Except as provided in Sec. Sec.  3.42 and 3.43, benefits based on 
service described in this paragraph are payable at a rate of $0.50 for 
each dollar authorized under the law. All enlistments and reenlistments 
of Philippine Scouts in the Regular Army between October 6, 1945, and 
June 30, 1947, inclusive, were made under the provisions of Pub. L. 190 
as it constituted the sole authority for such enlistments during that 
period. This paragraph does not apply to officers who were commissioned 
in connection with the administration of Pub. L. 190.

(Authority: 38 U.S.C. 107)

0
3. In Sec.  3.42, paragraphs (a)(4), (b) introductory text, (c)(1) 
introductory text, (c)(2) through (c)(4), (d), and (e) are revised to 
read as follows:


Sec.  3.42  Compensation at the full-dollar rate for certain Filipino 
veterans or their survivors residing in the United States.

    (a) * * *
    (4) Lawfully admitted for permanent residence means that an 
individual has been lawfully accorded the privilege of residing 
permanently in the U.S. as an immigrant by the U.S. Citizenship and 
Immigration Services under title 8, United States Code, and still has 
this status.
    (b) Eligibility requirements. Compensation and dependency and 
indemnity compensation is payable at the full-dollar rate, based on 
service described in Sec.  3.40(b), (c), or (d), to a veteran or a 
veteran's survivor who is residing in the U.S. and is either:
* * * * *
    (c) Evidence of eligibility. (1) A valid original or copy of one of 
the following documents is required to prove that the veteran or the 
veteran's survivor is a natural born citizen of the U.S.:
* * * * *
    (2) Only verification by the U.S. Citizenship and Immigration 
Services to VA that a veteran or a veteran's survivor is a naturalized 
citizen of the U.S., or a valid U.S. passport, will be sufficient proof 
of such status.
    (3) Only verification by the U.S. Citizenship and Immigration 
Services to VA that a veteran or a veteran's survivor is an alien 
lawfully admitted for permanent residence in the U.S. will be 
sufficient proof of such status.
    (4) VA will not pay benefits at the full-dollar rate under this 
section unless the evidence establishes that the veteran or survivor is 
lawfully residing in the U.S.
    (i) Such evidence should identify the veteran's or survivor's name 
and relevant dates, and may include:
    (A) A valid driver's license issued by the state of residence;
    (B) Employment records, which may consist of pay stubs, W-2 forms, 
and certification of the filing of Federal, State, or local income tax 
returns;
    (C) Residential leases, rent receipts, utility bills and receipts, 
or other relevant documents showing dates of utility service at a 
leased residence;
    (D) Hospital or medical records showing medical treatment or 
hospitalization, and showing the name of the medical facility or 
treating physician;
    (E) Property tax bills and receipts; and
    (F) School records.
    (ii) A Post Office box mailing address in the veteran's name does 
not constitute evidence showing that the veteran was lawfully residing 
in the United States on the date of death.
    (d) Continued eligibility. (1) In order to continue receiving 
benefits at the full-dollar rate under this section, a veteran or a 
veteran's survivor must be physically present in the U.S. for at least 
183 days of each calendar year in which he or she receives payments at 
the full-dollar rate, and may not be absent from the U.S. for more than 
60 consecutive days at a time unless good cause is shown. However, if a 
veteran or a veteran's survivor becomes eligible for full-dollar rate 
benefits for the first time on or after July 1 of any calendar year, 
the 183-day rule will not apply during that calendar year. VA will not 
consider a veteran or a veteran's survivor to have been absent from the 
U.S. if he or she left and returned to the U.S. on the same date.
    (2) A veteran or a veteran's survivor receiving benefits at the 
full-dollar rate under this section must notify VA within 30 days of 
leaving the U.S., or within 30 days of losing either his or her U.S. 
citizenship or lawful permanent resident alien status. When a veteran 
or a veteran's survivor no longer meets the eligibility requirements of 
paragraph (b) of this section, VA will reduce his or her payment to the 
rate of $0.50 for each dollar authorized under the law, effective on 
the date determined under Sec.  3.505. If such veteran or survivor 
regains his or her U.S. citizenship or lawful permanent resident alien 
status, VA will restore full-dollar rate benefits, effective the date 
the veteran or survivor meets the eligibility requirements in paragraph 
(b) of this section.
    (3) When requested to do so by VA, a veteran or survivor receiving 
benefits at the full-dollar rate under this section must verify that he 
or she continues to meet the residency and citizenship or permanent 
resident alien status requirements of paragraph (b) of this

[[Page 8221]]

section. VA will advise the veteran or survivor at the time of the 
request that the verification must be furnished within 60 days and that 
failure to do so will result in the reduction of benefits. If the 
veteran or survivor fails to furnish the evidence within 60 days, VA 
will reduce his or her payment to the rate of $0.50 for each dollar 
authorized, as provided in Sec.  3.652.
    (4) A veteran or survivor receiving benefits at the full-dollar 
rate under this section must promptly notify VA of any change in his or 
her address. If mail from VA to the veteran or survivor is returned to 
VA by the U.S. Postal Service, VA will make reasonable efforts to 
determine the correct mailing address. If VA is unable to determine the 
correct mailing address through reasonable efforts, VA will reduce 
benefit payments to the rate of $0.50 for each dollar authorized under 
law, effective on the date determined under Sec.  3.505.
    (e) Effective date for restored eligibility. In the case of a 
veteran or survivor receiving benefits at the full-dollar rate, if VA 
reduces his or her payment to the rate of $0.50 for each dollar 
authorized under the law, VA will resume payments at the full-dollar 
rate, if otherwise in order, effective the first day of the month 
following the date on which he or she again meets the requirements. 
However, such increased payments will be retroactive no more than one 
year prior to the date on which VA receives evidence that he or she 
again meets the requirements.

0
4. In Sec.  3.43, paragraphs (a)(4), (b) introductory text, and (c)(2) 
through (c)(4) are revised to read as follows:


Sec.  3.43  Burial benefits at the full-dollar rate for certain 
Filipino veterans residing in the United States on the date of death.

    (a) * * *
    (4) Lawfully admitted for permanent residence means that the 
individual was lawfully accorded the privilege of residing permanently 
in the U.S. as an immigrant by the U.S. Citizenship and Immigration 
Services under title 8, United States Code, and on the date of death, 
still had this status.
    (b) Eligibility requirements. VA will pay burial benefits under 
chapter 23 of title 38, United States Code, at the full-dollar rate, 
based on service described in Sec.  3.40(c) or (d), when an individual 
who performed such service dies after November 1, 2000, or based on 
service described in Sec.  3.40(b) when an individual who performed 
such service dies after December 15, 2003, and was on the date of 
death:
* * * * *
    (c) * * *
    (2) In a claim based on the deceased veteran having been a 
naturalized citizen of the U.S., only verification of that status by 
the U.S. Citizenship and Immigration Services to VA, or a valid U.S. 
passport, will be sufficient proof for purposes of eligibility for 
full-dollar rate benefits.
    (3) In a claim based on the deceased veteran having been an alien 
lawfully admitted for permanent residence in the U.S., only 
verification of that status by the U.S. Citizenship and Immigration 
Services to VA will be sufficient proof for purposes of eligibility for 
full-dollar rate benefits.
    (4) VA will not pay benefits at the full-dollar rate under this 
section unless the evidence establishes that the veteran was lawfully 
residing in the U.S. on the date of death.
    (i) Such evidence should identify the veteran's name and relevant 
dates, and may include:
    (A) A valid driver's license issued by the state of residence;
    (B) Employment records, which may consist of pay stubs, W-2 forms, 
and certification of the filing of Federal, State, or local income tax 
returns;
    (C) Residential leases, rent receipts, utility bills and receipts, 
or other relevant documents showing dates of utility service at a 
leased residence;
    (D) Hospital or medical records showing medical treatment or 
hospitalization of the veteran or survivor, and showing the name of the 
medical facility or treating physician;
    (E) Property tax bills and receipts; and
    (F) School records.
    (ii) A Post Office box mailing address in the veteran's name does 
not constitute evidence showing that the veteran was lawfully residing 
in the United States on the date of death.
* * * * *

0
5. Section 3.405 is revised to read as follows:


Sec.  3.405  Filipino veterans and their survivors; benefits at the 
full-dollar rate.

    Public Laws 106-377 and 108-183, which provide disability 
compensation and dependency and indemnity compensation at full-dollar 
rates to certain Filipino veterans and their survivors, are considered 
liberalizing laws. As such, the provisions of 38 CFR 3.114(a) apply 
when determining the effective date of an award. If the requirements of 
Sec.  3.114(a) are not satisfied, then the effective date of an award 
of benefits at the full-dollar rate under Sec.  3.42 will be determined 
as follows:
    (a) Initial entitlement to full-dollar rate. The latest of the 
following:
    (1) Date entitlement arose;
    (2) Date on which the veteran or survivor first met the residency 
and citizenship or permanent resident alien status requirements in 
Sec.  3.42, if VA receives evidence of this within one year of that 
date; or
    (3) Effective date of service connection, provided VA receives 
evidence that the veteran or survivor meets the residency and 
citizenship or permanent resident alien status requirements in Sec.  
3.42 within one year of the date of notification of the decision 
establishing service connection.
    (b) Resumption of full-dollar rate. (1) Date the veteran or 
survivor returned to the United States after an absence of more than 60 
consecutive days; or
    (2) First day of the calendar year following the year in which the 
veteran or survivor was absent from the United States for a total of 
183 days or more, or the first day after that date that the veteran or 
survivor returns to the United States.

0
6. Section 3.505 is revised to read as follows:


Sec.  3.505  Filipino veterans and their survivors; benefits at the 
full-dollar rate.

    The effective date of discontinuance of compensation or dependency 
and indemnity compensation for a Filipino veteran or his or her 
survivor under Sec.  3.42 will be the earliest of the dates stated in 
this section. Where an award is reduced, the reduced rate will be 
payable the day following the date of discontinuance of the greater 
benefit.
    (a) If a veteran or survivor receiving benefits at the full-dollar 
rate under Sec.  3.42 is physically absent from the U.S. for a total of 
183 days or more during any calendar year, VA will reduce benefits to 
the rate of $0.50 for each dollar authorized under the law, effective 
on the 183rd day of absence from the U.S.
    (b) If a veteran or survivor receiving benefits at the full-dollar 
rate under Sec.  3.42 is physically absent from the U.S. for more than 
60 consecutive days, VA will reduce benefits to the rate of $0.50 for 
each dollar authorized under the law, effective on the 61st day of the 
absence.
    (c) If a veteran or survivor receiving benefits at the full-dollar 
rate under Sec.  3.42 loses either U.S. citizenship or status as an 
alien lawfully admitted for permanent residence in the U.S., VA will 
reduce benefits to the rate of $0.50 for each dollar authorized under 
the law, effective on the day he or she no longer satisfies one of 
these criteria.
    (d) If mail to a veteran or survivor receiving benefits at the 
full-dollar rate under Sec.  3.42 is returned to VA by the U.S. Postal 
Service, VA will make

[[Page 8222]]

reasonable efforts to determine the correct mailing address. If VA is 
unable to determine the veteran's or survivor's correct address through 
reasonable efforts, VA will reduce benefits to the rate of $0.50 for 
each dollar authorized under law, effective the first day of the month 
that follows the month for which VA last paid benefits.

(Authority: 38 U.S.C. 107)

0
7. In Sec.  3.1600, paragraphs (a) and (b) introductory text are 
revised to read as follows:


Sec.  3.1600  Payment of burial expenses of deceased veterans.

* * * * *
    (a) Service-connected death and burial allowance. If a veteran dies 
as a result of a service-connected disability or disabilities, an 
amount not to exceed the amount specified in 38 U.S.C. 2307 (or if 
entitlement is under Sec.  3.40(b), (c), or (d), an amount computed in 
accordance with the provisions of Sec.  3.40(b) or (c)) may be paid 
toward the veteran's funeral and burial expenses including the cost of 
transporting the body to the place of burial. Entitlement to this 
benefit is subject to the applicable further provisions of this section 
and Sec. Sec.  3.1601 through 3.1610. Payment of the service-connected 
death burial allowance is in lieu of payment of any benefit authorized 
under paragraph (b), (c) or (f) of this section.

(Authority: 38 U.S.C. 2307)

    (b) Nonservice-connected death burial allowance. If a veteran's 
death is not service-connected, an amount not to exceed the amount 
specified in 38 U.S.C. 2302 (or if entitlement is under Sec.  3.40(b), 
(c), or (d), an amount computed in accordance with the provisions of 
Sec.  3.40(b) or (c)) may be paid toward the veteran's funeral and 
burial expenses including the cost of transporting the body to the 
place of burial. Entitlement is subject to the following conditions:
* * * * *
[FR Doc. 06-1431 Filed 2-15-06; 8:45 am]
BILLING CODE 8320-01-P