[Federal Register Volume 71, Number 166 (Monday, August 28, 2006)]
[Proposed Rules]
[Pages 50872-50875]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-14079]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 21

RIN 2900-AM25


Vocational Rehabilitation and Employment Program--Initial 
Evaluations

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend regulations of the Department 
of Veterans Affairs (VA) concerning initial evaluations of individuals 
who apply for vocational rehabilitation and employment benefits. These 
proposed regulations are intended to reflect changes in law, VA's 
interpretation of applicable law and its determinations of procedures 
appropriate for use in the initial evaluation, to improve readability, 
and to make other nonsubstantive changes.

DATES: Comments must be received on or before October 27, 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-
AM25.'' 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: Catherine Kruger, Senior Policy 
Analyst, (202) 273-7344, or Mark Hawkins, Vocational Rehabilitation 
Counselor, (202) 273-6923, Vocational Rehabilitation and Employment 
Service (28), Veterans Benefits Administration, Department of Veterans 
Affairs, 810 Vermont Ave., NW., Washington, DC 20420.

SUPPLEMENTARY INFORMATION: We propose to amend VA's regulations in 38 
CFR Part 21, Subpart A--Vocational Rehabilitation Under 38 U.S.C. 
Chapter 31, concerning initial evaluations of individuals who apply for 
vocational rehabilitation and employment benefits. These proposed 
regulations are intended to reflect changes in law regarding initial 
evaluations and VA's interpretation of applicable law and its 
determinations of procedures appropriate for use in the initial 
evaluation, and to improve readability. We also propose to make a 
nonsubstantive conforming change in 38 CFR Part 21, Subpart M--
Vocational Training and Rehabilitation for Certain Children of Vietnam 
Veterans--Spina Bifida and Covered Birth Defects.
    In Davenport v. Brown, 7 Vet. App. 476 (1995), the United States 
Court of Appeals for Veterans Claims (then the United States Court of 
Veterans Appeals) set aside VA regulations that require a veteran's 
service-connected disability to cause the employment handicap or 
serious employment handicap that establishes the veteran's entitlement 
to vocational rehabilitation and employment benefits. The court held 
that the requirement of 38 CFR 21.51(c) that a veteran's service-
connected disability must ``materially contribute'' to the veteran's 
employment handicap is inconsistent with 38 U.S.C. 3102. Thus, the 
court set aside Sec.  21.51(c)(2), (e), (f)(1)(ii), and (f)(2) to the 
extent that they require a causal nexus between a veteran's service-
connected disability and that veteran's employment handicap. The court 
found unlawful the noted provisions of Sec.  21.51(c)(2), which require 
that, while a veteran's service-connected disability need not be the 
sole or primary cause of an employment handicap or serious employment 
handicap, it must ``materially contribute'' to the handicap.
    On October 9, 1996, Congress enacted the Veterans' Benefits 
Improvements Act of 1996 (Pub. L. 104-275), which redefined the terms 
``employment handicap'' and ``serious employment handicap'' to include 
a requirement that an individual's vocational impairment be one 
``resulting in substantial part from'' one or more service-connected 
disabilities, with respect to applications received on or after the 
date of enactment.
    To reflect the dates of applicability of these changes in legal 
requirements, the proposed rule would provide that for determinations 
made on any applications filed on or after March 30, 1995, the date of 
the Davenport v. Brown decision, but before October 9, 1996, the 
individual's service-connected disability(ies) need not contribute to 
the individual's overall vocational impairment or significant 
vocational impairment.
    For clarification, the table below summarizes the standards used to 
determine entitlement to vocational rehabilitation and employment 
benefits and services for applicants during these three distinct time 
periods. These concern entitlement determinations made for:
    (1) Claims filed prior to the Davenport decision;
    (2) Claims filed after the Davenport decision but prior to 
enactment of Public Law 104-275; and
    (3) Claims filed following enactment of Public Law 104-275.

[[Page 50873]]



------------------------------------------------------------------------
         Time period                Standard             Explanation
------------------------------------------------------------------------
Prior to Davenport decision   The individual's      A person found to
 (claims filed from April 1,   service-connected     have an employment
 1981 (Public Law 96-466),     disability(ies)       handicap who is
 to March 29, 1995).           must materially       rated 50 percent or
                               contribute to the     more service-
                               impairment of         connected is
                               employment. The       automatically found
                               serious employment    to have a serious
                               handicap              employment
                               determinations are    handicap. Those
                               based on level of     rated less than 50
                               service-connected     percent service-
                               disability(ies) and   connected have to
                               other criteria as     meet certain
                               provided in 38 CFR    specific percent of
                               21.52.                service-connected
                                                     disability(ies) and
                                                     other criteria to
                                                     be determined to
                                                     have a serious
                                                     employment
                                                     handicap.
After Davenport decision,     The individual's      The requirements
 but prior to Public Law 104-  service-connected     that service-
 275 (claims filed from        disability(ies)       connected
 March 30, 1995, to October    need not contribute   disability(ies)
 8, 1996).                     to the impairment     contribute to the
                               which results in      employment handicap
                               the employment        and serious
                               handicap. The         employment handicap
                               issues for            are removed, as are
                               determination are     the 50 percent, 30-
                               the existence of      40 percent, and 10-
                               vocational            20 percent
                               impairment and the    requirements for
                               extent or             finding a serious
                               significance of the   employment
                               impairment.           handicap.
After Public Law 104-275      The individual's      This standard was
 (claims filed on or after     service-connected     provided under
 October 9, 1996).             disability(ies)       Public Law 104-275.
                               must contribute
                               ``in substantial
                               part'' to the
                               impairment of
                               employability.
------------------------------------------------------------------------

    In our view, the phrase ``resulting in substantial part'' in the 
statutory definitions of ``employment handicap'' and ``serious 
employment handicap'' has the same meaning that ``material 
contribution'' has in current Sec.  21.51(c)(2). We are proposing to 
amend the regulations to reflect the statutory language. We propose to 
revise Sec. Sec.  21.50 through 21.52 in light of these changes in law, 
and for the additional reasons that we discuss in this preamble.
    We propose to revise current Sec.  21.50 to make clear what 
constitutes an initial evaluation for vocational rehabilitation and 
employment benefits, who is entitled to an initial evaluation, who 
conducts it, what questions it seeks to answer, and how a veteran's 
service-connected disability(ies) must contribute to vocational 
impairment. The initial evaluation is central to employment handicap 
and serious employment handicap determinations under Sec.  21.51 and 
Sec.  21.52, respectively.
    We propose to further revise Sec.  21.50 by consolidating and 
clarifying the factors VA develops and assesses in determining whether 
an individual has an employment handicap; if so, whether the individual 
has a serious employment handicap; and, lastly, whether the achievement 
of a vocational goal by the individual is currently reasonably 
feasible. Proposed Sec.  21.50(c) would set forth various factors for 
development and assessment as part of the initial evaluation, with 
minor modifications to existing provisions to improve readability.
    We propose to remove the provisions of current Sec.  21.50(d)(1) as 
unnecessary and obsolete, because that paragraph concerns 
determinations made prior to the initial evaluation and the 
determinations it refers to are no longer made by staff outside the 
Vocational Rehabilitation and Employment Division.
    Current Sec.  21.50(d)(2) identifies who, within VA, is responsible 
for making initial evaluation determinations. We propose to remove 
these provisions from Sec.  21.50 and to make appropriate references in 
Sec.  21.51 and Sec.  21.52, respectively, as to who is responsible for 
making each determination.
    We propose to revise Sec.  21.51 to reflect criteria that VA 
develops and assesses in determining the existence of an employment 
handicap. Certain factors for determining that the service-connected 
disability(ies) ``materially contribute'' to the impairment to 
employment set forth in current Sec.  21.51(e) would be set forth in 
proposed Sec.  21.51 for determining that the service-connected 
disability(ies) contribute ``in substantial part'' to the impairment to 
employment, as discussed above.
    Current Sec.  21.52 requires that the determination of serious 
employment handicap directly relate to differing levels of service-
connected disability ratings. Current Sec.  21.52 also requires a 
finding of serious employment handicap if an individual is found to 
have an employment handicap along with a neuropsychiatric service-
connected disability rated at 30 percent or more or any other service-
connected disability rated at 50 percent or more.
    Public Law 104-275 redefined the term ``serious employment 
handicap'' to make clear that the impairment to employability must meet 
both of the following conditions:
     It must be a significant impairment of an individual's 
ability to prepare for, obtain or retain employment consistent with 
abilities, aptitudes, and interests.
     It must result in substantial part from service-connected 
disabilities rated at 10 percent or more.
    We propose to revise Sec.  21.52 to reflect the factors VA develops 
and assesses in making the determination of ``significant impairment.'' 
These factors differ, in part, from the factors used to develop and 
assess the lower level of ``impairment'' necessary for employment 
handicap in Sec.  21.51, to ensure that an individual with a 
significant vocational impairment receives the rehabilitation services 
he or she needs.
    Lastly, we propose to make a nonsubstantive change in subpart M to 
Sec.  21.8032(a) by removing a reference to Sec.  21.50(b)(5) and 
adding, in its place, a reference to Sec.  21.50(b)(3).

Paperwork Reduction Act of 1995

    This proposed rule contains no new collections of information under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521). The Office 
of Management and Budget has approved collection of information 
provisions that are related to the provisions of proposed 38 CFR 21.50 
under OMB control number 2900-0009 (entitled ``Disabled Veterans 
Application for Vocational Rehabilitation and 38 CFR 21.30'') and has 
approved collection of information provisions that are related to the 
provisions of proposed Sec. Sec.  21.50 through 21.52 under OMB control 
number 2900-0092 (entitled ``Counseling Record--Personal 
Information'').

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 an expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any given year. This proposed rule would

[[Page 50874]]

have no such effect on State, local, and tribal governments, or on 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 proposed rule and 
has concluded that it is a significant regulatory action under 
Executive Order 12866 because it raises novel policy issues.

Regulatory Flexibility Act

    The Secretary hereby certifies that this proposed regulatory 
amendment 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. This proposed amendment would not 
directly affect any small entities. Only individuals could be directly 
affected. Therefore, pursuant to 5 U.S.C. 605(b), this proposed 
amendment is exempt from the initial and final regulatory flexibility 
analysis requirements of sections 603 and 604.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers and titles for 
programs that would be affected by this proposed rule are 64.116, 
Vocational Rehabilitation for Disabled Veterans, and 64.128, Vocational 
Training and Rehabilitation for Vietnam Veterans' Children with Spina 
Bifida or Other Covered Birth Defects.

List of Subjects in 38 CFR Part 21

    Administrative practice and procedure, Armed forces, Civil rights, 
Claims, Colleges and universities, Conflict of interests, Education, 
Employment, Grant programs--education, Grant programs--veterans, Health 
care, Loan programs--education, Loan programs--veterans, Manpower 
training programs, Reporting and recordkeeping requirements, Schools, 
Travel and transportation expenses, Veterans, Vocational education, 
Vocational rehabilitation.

    Approved: May 8, 2006.
Gordon H. Mansfield,
Deputy Secretary of Veterans Affairs.

    For the reasons set forth in the preamble, VA proposes to amend 38 
CFR part 21 (subparts A and M) as follows:

PART 21--VOCATIONAL REHABILITATION AND EDUCATION

Subpart A--Vocational Rehabilitation Under 38 U.S.C. Chapter 31

    1. Revise the authority citation for part 21, subpart A to read as 
follows:

    Authority: 38 U.S.C. 501(a), ch. 31, and as noted in specific 
sections.

    2. Revise Sec.  21.50 to read as follows:


Sec.  21.50  Initial evaluation.

    (a) Entitlement to an initial evaluation. VA will provide an 
initial evaluation to an individual who:
    (1) Applies for benefits under 38 U.S.C. chapter 31; and
    (2) Meets the service-connected disability requirements of Sec.  
21.40.

(Authority: 38 U.S.C. 3101(9), 3106)


    (b) Determinations to be made by VA during the initial evaluation. 
A counseling psychologist (CP) or vocational rehabilitation counselor 
(VRC) will determine:
    (1) Whether the individual has an employment handicap as determined 
in accordance with this section and Sec.  21.51;
    (2) Whether an individual with an employment handicap has a serious 
employment handicap as determined in accordance with this section and 
Sec.  21.52; and
    (3) Whether the achievement of a vocational goal is currently 
reasonably feasible as described in Sec.  21.53.

 (Authority: 38 U.S.C. 3102, 3103)


    (c) Factors for assessment as part of the initial evaluation. In 
making the determinations under paragraph (b) of this section, the 
following factors will be developed and assessed:
    (1) The handicapping effects of the individual's service-connected 
and nonservice-connected disability(ies) on employability and on 
independence in daily living;
    (2) The individual's physical and mental capabilities that may 
affect employability and ability to function independently in daily 
living activities in family and community;
    (3) The impact of the individual's identified vocational 
impairments on the individual's ability to prepare for, obtain, and 
keep suitable employment;
    (4) The individual's abilities, aptitudes, and interests;
    (5) The individual's personal history and current circumstances 
(including educational and training achievements, employment record, 
developmental and related vocationally significant factors, and family 
and community adjustment); and
    (6) Other factors that may affect the individual's employability.

 (Authority: 38 U.S.C. 3106(a))


    (d) Need for cooperation in evaluation. The individual's 
cooperation is essential during the initial evaluation. If the 
individual does not cooperate, the CP or VRC will make reasonable 
efforts to secure the individual's cooperation. If, despite those 
efforts, the individual fails to cooperate, VA will discontinue the 
initial evaluation. A redetermination of entitlement as described in 
Sec.  21.58 will be made in the case of an individual whose program has 
been discontinued due to failure to cooperate.

 (Authority: 38 U.S.C. 3111)


    3. Revise Sec.  21.51 to read as follows:


Sec.  21.51  Determining employment handicap.

    For the purposes of Sec.  21.50, an employment handicap will be 
found to exist only if a CP or VRC determines that the individual meets 
each of the following conditions:
    (a) Vocational impairment. The individual has a vocational 
impairment; that is, an impairment of the ability to prepare for, 
obtain, or keep employment in an occupation consistent with his or her 
abilities, aptitudes, and interests.
    (b) Effects of impairment not overcome. The individual has not 
overcome the effects of the individual's impairment of employability 
through employment in, or qualifying for employment in, an occupation 
consistent with his or her abilities, aptitudes, and interests. This 
situation includes an individual who qualifies for a suitable job, but 
who does not obtain or keep the job for reasons beyond his or her 
control.

 (Authority: 38 U.S.C. 3102)


    (c) Contribution of the service-connected disability(ies) to the 
individual's overall vocational impairment. (1) Except as provided in 
paragraph (c)(3) of this section, the service-connected disability(ies) 
must contribute in substantial part to the

[[Page 50875]]

individual's overall vocational impairment. This means that the 
disability(ies) must have an identifiable, measurable, or observable 
causative effect on the overall vocational impairment, but need not be 
the sole or primary cause of the employment handicap.
    (2) When determining the individual's overall vocational 
impairment, the CP or VRC will consider the factors identified in Sec.  
21.50(c).
    (3) For determinations made on applications for vocational 
rehabilitation filed on or after March 30, 1995, but before October 9, 
1996, the individual's service-connected disability(ies) need not 
contribute to the individual's overall vocational impairment.

 (Authority: 38 U.S.C. 3101, 3102)


    4. Revise Sec.  21.52 to read as follows:


Sec.  21.52  Determining serious employment handicap.

    (a) Requirements for determining serious employment handicap. For 
each individual who is found to have an employment handicap, a CP or 
VRC must make a separate determination of whether the individual has a 
serious employment handicap. For the purposes of an initial evaluation 
under Sec.  21.50, a serious employment handicap will be found to exist 
only if a CP or VRC determines that the individual meets each of the 
following conditions:
    (1) Significant vocational impairment. The individual has a 
significant vocational impairment; that is, a significant impairment of 
the ability to prepare for, obtain, or keep employment in an occupation 
consistent with his or her abilities, aptitudes, and interests, 
considering the factors described in Sec.  21.50 and paragraph (b) of 
this section.
    (2) Effects of significant impairment not overcome. The individual 
has not overcome the effects of the significant vocational impairment 
through employment in, or qualifying for employment in, an occupation 
consistent with his or her abilities, aptitudes, and interests. This 
includes an individual who qualifies for a suitable job, but who does 
not obtain or keep the job for reasons beyond his or her control.

 (Authority: 38 U.S.C. 3102)


    (3) Contribution of the service-connected disability(ies) to the 
individual's overall significant vocational impairment. (i) Except as 
provided in paragraph (a)(3)(ii) of this section, the service-connected 
disability(ies) must contribute in substantial part to the individual's 
overall significant vocational impairment. This means that the 
disability(ies) must have an identifiable, measurable, or observable 
causative effect on the overall significant vocational impairment, but 
need not be the sole or primary cause of the serious employment 
handicap.

(Authority: 38 U.S.C. 3101)


    (ii) For determinations made on applications for vocational 
rehabilitation filed on or after March 30, 1995, but before October 9, 
1996, the individual's service-connected disability(ies) need not 
contribute to the individual's overall significant vocational 
impairment.
    (b) Factors for assessment during the initial evaluation, when 
determining whether a significant vocational impairment exists. The 
combination of all restrictions and their effects on the individual 
define the extent of the vocational impairment and its significance. 
When determining whether the individual has a significant vocational 
impairment, VA will develop and assess the following factors and their 
effects:
    (1) Number of disabling conditions;
    (2) Severity of disabling condition(s);
    (3) Existence of neuropsychiatric condition(s);
    (4) Adequacy of education or training for suitable employment;
    (5) Number, length, and frequency of periods of unemployment or 
underemployment;
    (6) A pattern of reliance on government support programs, such as 
welfare, service-connected disability compensation, nonservice-
connected disability pension, worker's compensation, or Social Security 
disability;
    (7) Extent and complexity of services and assistance the individual 
needs to achieve rehabilitation;
    (8) Negative attitudes toward individuals with disabilities and 
other evidence of restrictions on suitable employment, such as labor 
market conditions; discrimination based on age, race, gender, 
disability or other factors; alcoholism or other substance abuse; and
    (9) Other factors that relate to preparing for, obtaining, or 
keeping employment consistent with the individual's abilities, 
aptitudes, and interests.

(Authority: 38 U.S.C. 3102, 3106)

Subpart M--Vocational Training and Rehabilitation for Certain 
Children of Vietnam Veterans--Spina Bifida and Covered Birth 
Defects

    5. Revise the authority citation for part 21, subpart M to read as 
follows:

    Authority: 38 U.S.C. 101, 501, 512, 1151 note, ch. 18, 5112, and 
as noted in specific sections.


Sec.  21.8032  [Amended]

    6. In Sec.  21.8032, amend paragraph (a) by removing ``Sec. Sec.  
21.50(b)(5)'' and adding, in its place, ``Sec. Sec.  21.50(b)(3)''.

[FR Doc. E6-14079 Filed 8-25-06; 8:45 am]
BILLING CODE 8320-01-P