[Federal Register Volume 72, Number 46 (Friday, March 9, 2007)]
[Proposed Rules]
[Pages 10860-10876]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-4146]



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Part III





Department of Veterans Affairs





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38 CFR Part 5



Special and Ancillary Benefits for Veterans, Dependents, and Survivors; 
Proposed Rule

  Federal Register / Vol. 72, No. 46 / Friday, March 9, 2007 / Proposed 
Rules  

[[Page 10860]]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 5

RIN 2900-AL84


Special and Ancillary Benefits for Veterans, Dependents, and 
Survivors

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: The Department of Veterans Affairs (VA) proposes to reorganize 
and rewrite in plain language regulations concerning special and 
ancillary benefits for veterans, dependents, and survivors. These 
revisions are proposed as part of VA's rewrite and reorganization of 
all of its compensation and pension rules in a logical, claimant-
focused, and user-friendly format. The intended effect of the proposed 
revisions is to assist claimants and VA personnel in locating and 
understanding these provisions.

DATES: Comments must be received by VA on or before May 8, 2007.

ADDRESSES: Written comments may be submitted through http://www.Regulations.gov; by mail or hand-delivery to Director, Regulations 
Management (00REG), Department of Veterans Affairs, 810 Vermont Ave., 
NW., Room 1068, Washington, DC 20420; or by fax to (202) 273-9026. 
Comments should indicate that they are submitted in response to ``RIN 
2900-AL84--Special and Ancillary Benefits for Veterans, Dependents, and 
Survivors.'' Copies of 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. In 
addition, during the comment period, comments may be viewed online 
through the Federal Docket Management System (FDMS) at http://www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: William F. Russo, Director of 
Regulations Management (00REG), Department of Veterans Affairs, 810 
Vermont Avenue, NW., Washington, DC 20420, (202) 273-9515.

SUPPLEMENTARY INFORMATION: The Secretary of Veterans Affairs has 
established an Office of Regulation Policy and Management (ORPM) to 
provide centralized management and coordination of VA's rulemaking 
process. One of the major functions of this office is to oversee a 
Regulation Rewrite Project (the Project) to improve the clarity and 
consistency of existing VA regulations. The Project responds to a 
recommendation made in the October 2001 ``VA Claims Processing Task 
Force: Report to the Secretary of Veterans Affairs.'' The Task Force 
recommended that the compensation and pension regulations be rewritten 
and reorganized in order to improve VA's claims adjudication process. 
Therefore, the Project began its efforts by reviewing, reorganizing and 
redrafting the content of the regulations in 38 CFR part 3 governing 
the compensation and pension program of the Veterans Benefits 
Administration. These regulations are among the most difficult VA 
regulations for readers to understand and apply.
    Once rewritten, the proposed regulations will be published in 
several portions for public review and comment. This is one such 
portion. It adds subpart H, which includes proposed rules regarding the 
special and ancillary benefits for veterans, dependents, and survivors. 
After review and consideration of public comments, final versions of 
these proposed regulations will ultimately be published in a new part 5 
in 38 CFR.

Outline

Overview of New Part 5 Organization
Overview of Proposed Subpart H Organization
Table Comparing Current Part 3 Rules with Proposed Part 5 Rules
Content of Proposed Regulations

Special Benefits for Veterans, Dependents, and Survivors

5.580 Medal of Honor pension.
5.581 Awards of VA benefits based on special acts or private laws.
5.582 Naval pension.
5.583 Special allowance under 38 U.S.C. 1312.
5.584 Loan guaranty for surviving spouses; certification.
5.585 Certification for death gratuity.
5.586 Certification for dependents' educational assistance (DEA).
5.587 Minimum income annuity and gratuitous annuity.
5.588 Special allowance payable under section 156 of Public Law 97-
377.
5.589 Monetary allowance for Vietnam veterans' children born with 
spina bifida.
5.590 Monetary allowance for female Vietnam veterans' children with 
certain birth defects.
5.591 Effective dates of awards for certain disabled children of 
Vietnam veterans.

Ancillary Benefits for Certain Service-Connected Veterans and 
Certain Members of the Armed Forces Serving on Active Duty

5.603 Financial assistance to purchase a vehicle and adaptive 
equipment.
5.606 Clothing allowance.
Endnote Regarding Amendatory Language
Paperwork Reduction Act
Regulatory Flexibility Act
Executive Order 12866
Unfunded Mandates
Catalog of Federal Domestic Assistance Numbers
List of Subjects in 38 CFR Part 5

Overview of New Part 5 Organization

    We plan to organize the part 5 regulations so that all provisions 
governing a specific benefit are located in the same subpart, with 
general provisions pertaining to all compensation and pension benefits 
also grouped together. We believe this organization will allow 
claimants, beneficiaries, and their representatives, as well as VA 
personnel, to find information relating to a specific benefit more 
quickly than the organization provided in current part 3.
    The first major subdivision would be ``Subpart A--General 
Provisions.'' It would include information regarding the scope of the 
regulations in new part 5, delegations of authority, general 
definitions, and general policy provisions for this part. This subpart 
was published as proposed on March 31, 2006. See 71 FR 16464.
    ``Subpart B--Service Requirements for Veterans'' would include 
information regarding a veteran's military service, including the 
minimum service requirement, types of service, periods of war, and 
service evidence requirements. This subpart was published as proposed 
on January 30, 2004. See 69 FR 4820.
    ``Subpart C--Adjudicative Process, General'' would inform readers 
about claims and benefit application filing procedures, VA's duties, 
rights and responsibilities of claimants and beneficiaries, general 
evidence requirements, and general effective dates, as well as revision 
of decisions and protection of VA ratings. This subpart will be 
published as three separate Notices of Proposed Rulemaking (NPRM)s due 
to its size. The first of these three separate NPRMs, concerning VA's 
duties and the rights and responsibilities of claimants and 
beneficiaries, was published as proposed on May 10, 2005. See 70 FR 
24680.
    ``Subpart D--Dependents or Survivors of Veterans'' would inform 
readers how VA determines whether an individual is a dependent or a 
survivor of a veteran. It would also provide the evidence requirements 
for these determinations. This subpart was published as proposed on 
September 20, 2006. See 71 FR 55052.
    ``Subpart E--Claims for Service Connection and Disability 
Compensation'' would define service-connected disability compensation,

[[Page 10861]]

including direct and secondary service connection. This subpart would 
inform readers how VA determines entitlement to service connection. The 
subpart would also contain those provisions governing presumptions 
related to service connection, rating principles, and effective dates, 
as well as several special ratings. This subpart will be published as 
three separate NPRMs due to its size. The first, concerning 
presumptions related to service connection, was published on July 27, 
2004. See 69 FR 44614.
    ``Subpart F--Nonservice-Connected Disability Pensions and Death 
Pensions'' would include information regarding the three types of 
nonservice-connected pension: Improved Pension, Old-Law Pension, and 
Section 306 Pension. This subpart would also include those provisions 
that state how to establish entitlement to Improved Pension, and the 
effective dates governing each pension. This subpart will be published 
as two separate NPRMs due to its size. The portion concerning Old-Law 
Pension, Section 306 Pension, and elections of Improved Pension was 
published as proposed on December 27, 2004. See 69 FR 77578.
    ``Subpart G--Dependency and Indemnity Compensation, Death 
Compensation, and Accrued Benefits, and Special Rules Applicable Upon 
Death of a Beneficiary'' would contain regulations governing claims for 
dependency and indemnity compensation (DIC); death compensation; 
accrued benefits; benefits awarded, but unpaid at death; and various 
special rules that apply to the disposition of VA benefits, or proceeds 
of VA benefits, when a beneficiary dies. This subpart would also 
include related definitions, effective-date rules, and rate-of-payment 
rules. This subpart will be published as two separate NPRMs due to its 
size. The portion concerning accrued benefits, special rules applicable 
upon the death of a beneficiary, and several effective date rules, was 
published as proposed on October 1, 2004. See 69 FR 59072. The portion 
concerning DIC benefits and general provisions relating to proof of 
death and service-connected cause of death was published as proposed on 
October 21, 2005. See 70 FR 61326.
    ``Subpart H--Special and Ancillary Benefits for Veterans, 
Dependents, and Survivors'' would pertain to special and ancillary 
benefits available, including benefits for children with various birth 
defects. This subpart is the subject of this document.
    ``Subpart I--Benefits for Certain Filipino Veterans and Survivors'' 
would pertain to the various benefits available to Filipino veterans 
and their survivors. This subpart was published as proposed on June 30, 
2006. See 71 FR 37790.
    ``Subpart J--Burial Benefits'' would pertain to burial allowances.
    ``Subpart K--Matters Affecting the Receipt of Benefits'' would 
contain those provisions regarding bars to benefits, forfeiture of 
benefits, and renouncement of benefits. This subpart was published as 
proposed on May 31, 2006. See 71 FR 31056.
    ``Subpart L--Payments and Adjustments to Payments'' would include 
general rate-setting rules, several adjustment and resumption 
regulations, and election-of-benefit rules. Because of its size, 
proposed regulations in subpart L will be published in two separate 
NPRMs.
    The final subpart, ``Subpart M--Apportionments and Payments to 
Fiduciaries or Incarcerated Beneficiaries,'' would include regulations 
governing apportionments, benefits for incarcerated beneficiaries, and 
guardianship.
    Some of the regulations in this NPRM cross-reference other 
compensation and pension regulations. If those regulations have been 
published in this or earlier NPRMs for the Project, we cite the 
proposed part 5 section. We also include, in the relevant portion of 
the SUPPLEMENTARY INFORMATION, the Federal Register page where a 
proposed part 5 section published in an earlier NPRM may be found. 
However, where a regulation proposed in this NPRM would cross-reference 
a proposed part 5 regulation that has not yet been published, we cite 
to the current part 3 regulation that deals with the same subject 
matter. The current part 3 section we cite may differ from its eventual 
part 5 counterpart in some respects, but we believe this method will 
assist readers in understanding these proposed regulations where no 
part 5 counterpart has yet been published. If there is no part 3 
counterpart to a proposed part 5 regulation that has not yet been 
published, we have inserted ``[regulation that will be published in a 
future Notice of Proposed Rulemaking]'' where the part 5 regulation 
citation would be placed.
    Because of its large size, proposed part 5 will be published in a 
number of NPRMs, such as this one. VA will not adopt any portion of 
part 5 as final until all of the NPRMs have been published for public 
comment.
    In connection with this rulemaking, VA will accept comments 
relating to a prior rulemaking issued as a part of the Project, if the 
matter being commented on relates to both NPRMs.

Overview of Proposed Subpart H Organization

    This NPRM pertains to the VA adjudication rules that concern 
special and ancillary benefits for veterans, dependents, and survivors. 
The document addresses the rules that govern special benefits, such as 
Sec.  3.802 related to Medal of Honor, Sec.  3.801 related to special 
acts of Congress, and Sec.  3.814 related to children with spina 
bifida. We will also address the rules that govern ancillary benefits 
for which veterans with certain service-connected disabilities are 
eligible. These include the current Sec.  3.808 related to 
certification for automobiles or other conveyances under 38 U.S.C. 
3902; and Sec.  3.810 related to the clothing allowance under 38 U.S.C. 
1162. While these regulations have been substantially restructured and 
rewritten for greater clarity and ease of use, most of the basic 
concepts contained in these proposed regulations are the same as in 
their existing counterparts in 38 CFR part 3. However, a few 
substantive changes are proposed. We specifically note in the NPRM 
where the substantive changes occur.

Table Comparing Current Part 3 Rules With Proposed Part 5 Rules

    The following table shows the relationship between the current 
regulations in part 3 and the proposed regulations contained in this 
NPRM:

------------------------------------------------------------------------
                                            Based in whole or in part on
   Proposed part 5 section or paragraph       38 CFR part 3 section or
                                               paragraph (or ``New'')
------------------------------------------------------------------------
                            Special Benefits
------------------------------------------------------------------------
5.580(a)-(b)..............................  3.802(a)
(c)(1)-(2)................................  3.802(b).
5.580(c)(3)...............................  3.802(c).
5.580(c)(4)...............................  3.27(d).
5.580(d)-(e)..............................  3.802(b).
5.581(a)-(b)..............................  3.801(a).
5.581(c)(1)...............................  3.801(c)(2).
5.581(c)(2)...............................  3.801(d).
5.581(d)..................................  3.801(b).
5.581(e)(1)...............................  3.801(e).
5.581(e)(2)...............................  New.
5.581(f)..................................  3.801(c)(1).
5.582.....................................  3.803.
5.583.....................................  3.804.
5.584.....................................  3.805.
5.585.....................................  3.806.
5.586(a)..................................  New.
5.586(b)..................................  3.807(c).
5.586(c)..................................  3.807(c).
5.586(d)..................................  3.807(d).
5.587.....................................  3.811.
5.588.....................................  3.812.
5.589.....................................  3.814.
5.590.....................................  3.815.
5.591 (introductory paragraph)............  New.

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5.591(a) (introductory paragraph).........  3.814(e) (introductory
                                             paragraph), 3.815(i)
                                             (introductory paragraph).
5.591(a)(1)...............................  3.403(b).
5.591(a)(2)...............................  3.403(c), 3.815(i)
                                             (introductory paragraph).
5.591(a)(3)...............................  3.403(b), (c).
                                            3.815(i).
5.591(a)(4)...............................  3.400(g).
                                            3.814(e)(2), 3.815(i)(2).
5.591(a)(5)...............................  3.400(o)(2).
                                            3.814(e)(1).
                                            3.815(i)(1).
5.591(a)(6)...............................  3.114(a), 3.815(i)
                                             (introductory paragraph),
                                             3.403(c).
5.591(b) (introductory paragraph).........  3.500(a), 3.814(f),
                                             3.815(j).
5.591(b)(1)...............................  3.500(b)(1), 3.814(f)(1),
                                             3.815(j)(1).
5.591(b)(2)...............................  3.500(b)(2), 3.814(f)(2),
                                             3.815(j)(2).
5.591(b)(3)...............................  3.503(b).
5.591(b)(4)...............................  3.814(f) (introductory
                                             paragraph); 3.815(j)
                                             (introductory paragraph).
------------------------------------------------------------------------
                           Ancillary Benefits
------------------------------------------------------------------------
5.603(a)..................................  New.
5.603(b)(1)...............................  3.808(e).
5.603(b)(2)...............................  New.
5.603(c)(1)...............................  3.808(a), (b), and New.
5.603(c)(2)...............................  3.808(b).
5.603(c)(3)...............................  3.808(c).
5.603(d)(1)...............................  New.
5.603(d)(2)...............................  3.808(d) and 17.158.
5.603(e)..................................  3.808(c) and New.
5.603(f)..................................  New and 17.158.
5.606(a)..................................  New.
5.606(b)(1)...............................  3.810(a) (introductory
                                             paragraph).
5.606(b)(2) (introductory paragraph)......  3.810(a)(1).
5.606(b)(2)(i)............................  3.810(a)(1), (a)(2).
5.606(b)(2)(ii)...........................  3.810(a)(2).
5.606(b)(3)...............................  3.810(a) (introductory
                                             paragraph).
5.606(c)..................................  3.810(a)(1), (a)(2) and New.
5.606(d)..................................  3.810(b).
5.606(e)(1)...............................  3.810(c)(1).
5.606(e)(2)...............................  3.810(c)(2).
5.606(f)..................................  New.
5.606(g)..................................  New.
5.606(h)..................................  3.810(d).
------------------------------------------------------------------------

    Readers who use this table to compare existing regulatory 
provisions with the proposed provisions, and who observe a substantive 
difference between them, should consult the text that appears later in 
this document for an explanation of significant changes in each 
regulation. Not every paragraph of every current part 3 section 
regarding the subject matter of this rulemaking is accounted for in the 
table. In some instances other portions of the part 3 sections that are 
contained in these proposed regulations appear in subparts of part 5 
that will be published for public comment at a later time. For example, 
a reader might find a reference to paragraph (a) of a part 3 section in 
the table, but no reference to paragraph (b) of that section because 
paragraph (b) will be addressed in a separate NPRM. The table also does 
not include provisions from part 3 regulations that will not be carried 
forward to part 5. Such provisions are discussed specifically under the 
appropriate part 5 heading in this preamble. Readers are invited to 
comment on the proposed part 5 provisions and also on our proposals to 
omit those part 3 provisions from part 5.

Content of Proposed Rules

Special Benefits for Veterans, Dependents, and Survivors

Section 5.580 Medal of Honor Pension
    Current Sec.  3.802 and the authorizing statutes, 38 U.S.C. 
1560(c), 1561(c), and 1562, use the phrase ``special pension'' to 
reference benefits payable under those provisions to Medal of Honor 
recipients. In order to make this regulation more specific, however, VA 
proposes to use the phrase ``Medal of Honor pension'' when referring to 
benefits paid under proposed Sec.  5.580.
    Proposed Sec.  5.580 restates in plain language current Sec.  
3.802, regarding allocation of responsibilities between the service 
departments and VA with regard to Medal of Honor pension.
    Current Sec.  3.802(a) consists of two sentences. The first 
sentence briefly explains that the Secretaries of the Armed Forces and 
of the Department of Transportation are responsible for determining 
whether an applicant has been placed on the Medal of Honor Roll and for 
delivering to VA a certified copy of the certificate noting that the 
applicant has been placed on the Medal of Honor Roll and has a right to 
the Medal of Honor pension. The second sentence states: ``The special 
pension will be authorized on the basis of such certification.'' The 
current regulation does not clearly indicate that VA is authorized to 
pay the pension to a person placed on the Medal of Honor Roll.
    We propose to divide current Sec.  3.802(a) into two paragraphs. 
Proposed Sec.  5.580(a) explains that the service departments are 
responsible for determining the eligibility of an applicant to be 
entered on the Medal of Honor Roll, a determination in which VA has no 
role. We also propose in Sec.  5.580 to refer to the Department of 
Homeland Security instead of the Department of Transportation. This 
change is needed because the United States Coast Guard now falls under 
the jurisdiction of the Department of Homeland Security. Homeland 
Security Act of 2002, Public Law 107-296, Sec.  888(b), 116 Stat. 2249. 
Proposed Sec.  5.580(b) clarifies that it is the responsibility of VA 
to award the Medal of Honor pension after it receives a certified copy 
of the certificate. The authorities for proposed Sec.  5.580(a) and (b) 
are 38 U.S.C. 1560 and 38 U.S.C. 1561.
    Proposed Sec.  5.580(c) describes how VA calculates the amount and 
effective date of the Medal of Honor pension award and the retroactive 
lump sum payment associated with the pension award. Current Sec.  
3.802(b) provides, in part: ``An award of special pension at the 
monthly rate specified in 38 U.S.C. 1562 will be made as of the date of 
filing of the application [for placement on the Medal of Honor Roll] 
with the Secretary concerned.'' This sentence is split into proposed 
Sec.  5.580(c)(1) and (c)(2) and restated in plain language.
    Proposed Sec.  5.580(c)(3) is a restatement in plain language of 
current Sec.  3.802(c), with the exception of the last sentence of 
Sec.  3.802(c). The last sentence states ``VA will not make a 
retroactive lump sum payment under this section before October 1, 
2003.'' We propose not to include this sentence in Sec.  5.580(c) 
because, due to the passage of time, it no longer serves any useful 
purpose.
    In keeping with our objective to consolidate material concerning 
the same benefit, we propose to repeat the content of current Sec.  
3.27(d) relating to automatic adjustments of Medal of Honor pension in 
proposed Sec.  5.580(c)(4) without substantive change. We propose to 
title Sec.  5.580(c)(4) ``Automatic annual adjustment.''
    Proposed Sec.  5.580(d) is based, in part, on current Sec.  
3.802(b). The first sentence of proposed Sec.  5.580(d) is derived from 
the current rule. The second sentence of proposed Sec.  5.580(d) 
restates 38 U.S.C. 1562(c): ``Pensions payable under this section are 
not subject to any attachment, execution, levy, tax lien, or detention 
under any process whatever.'' We propose to add this statement to the 
regulation in order to emphasize the protections afforded the Medal of 
Honor pension.
    Proposed Sec.  5.580(e) restates the last sentence of current Sec.  
3.802(b) which explains that a veteran is entitled to only one Medal of 
Honor pension even

[[Page 10863]]

if the veteran is awarded more than one Medal of Honor.
Section 5.581 Awards of VA Benefits Based on Special Acts or Private 
Laws
    Proposed Sec.  5.581 restates current Sec.  3.801, governing awards 
of VA benefits based on a special act of Congress, and adds language 
clarifying the existing rule.
    Proposed Sec.  5.581(a) restates the definition of a ``special 
act'' from current Sec.  3.801(a), also called a ``private law,'' as an 
act of Congress that authorizes VA to pay benefits to a particular 
person.
    Proposed Sec.  5.581(b) clarifies the rule stated in current Sec.  
3.801(a) that VA will not award benefits based on a special act until a 
claimant-beneficiary has filed a formal application. The purpose of 
this provision is to ensure that VA has all of the necessary 
information (such as full name, address, military status, etc.), and 
that the information is current and accurate, in order to properly 
identify and make payments to the beneficiary.
    Proposed Sec.  5.581(c) restates current Sec.  3.801(c)(2) and (d), 
with clarification. The rule pertains to a special act that modifies 
the dates of a veteran's service or the character of a former 
servicemember's discharge. We propose to restate current Sec.  
3.801(c)(2) in plain language as Sec.  5.581(c)(1).
    Current Sec.  3.801(d) provides that a special act that shows a 
person commenced service in the active military service on a particular 
date and was honorably discharged on a subsequent date ``is sufficient 
regardless of whether the service department has any record of such 
service.'' In Sec.  5.581(c)(2), we propose to characterize a special 
act as ``conclusive'' rather than ``sufficient'' proof of the period of 
service described in the special act. For VA purposes, Congress' act on 
the matter is conclusive and no further investigation of the veteran's 
period of service is authorized.
    Proposed Sec.  5.581(d) restates in plain language current Sec.  
3.801(b). Paragraph (d) states that VA will pay the benefit in 
accordance with the rate, effective date, and duration prescribed in a 
special act. If the special act does not provide for the rate, 
effective date, or duration of payments, VA will set them consistent 
with existing public law.
    Proposed Sec.  5.581(e) describes two situations where the rate of 
pension or disability compensation may be changed. Proposed paragraph 
(e)(1), based on current Sec.  3.801(e), states that the rate of 
pension may be reduced when a payee is hospitalized. Proposed paragraph 
(e)(2) states that the rate of pension or disability compensation may 
be reduced when a payee is incarcerated. This is a new provision based 
on section 1505 of Title 38, United States Code, and 38 CFR 3.666, 
which prohibit the payment of pension under private laws administered 
by VA to an individual who is imprisoned for more than 60 days in a 
Federal, State, or local penal institution. It is also based on section 
5313 of Title 38, United States Code, and 38 CFR 3.365, which prohibit 
the payment of VA disability compensation to an individual who is 
imprisoned for more than 60 days in a Federal, State, or local penal 
institution. Although section 5313 and 38 CFR 3.365 do not specify that 
they are applicable to compensation paid under private law, there is no 
indication that they would apply only to compensation paid under public 
laws.
    Proposed paragraph Sec.  5.581(f) is based on current Sec.  
3.801(c)(1), which states that VA will not pay any other pension or 
disability compensation award other than the award authorized by the 
special act, unless the payee makes an election or unless the special 
act expressly authorizes VA to do so. We note that this provision might 
be problematic if it prohibits payment for a disability other than the 
disability for which payments are awarded under the special act. For 
example, if a special act awarded disability compensation for a back 
injury, VA should not be precluded from paying additional compensation 
for a different service-connected condition. Therefore, we have amended 
the provision to state that if VA is authorized to pay pension or 
disability compensation by a special act, it may not pay any other 
pension or disability compensation award to the extent that such award 
would be duplicative under section 5304 of Title 38, United States 
Code. Thus, the payee will be prevented from receiving more than one 
award for the same disability, but will not be prevented from receiving 
an award for a different disability or manifestation of disability. See 
Subpart L, Payments to Beneficiaries Who Are Eligible for More than One 
Benefit, Sec. Sec.  5.740 through 5.769, which will be published in a 
future NPRM.
Sections 5.582, Naval Pension, 5.583, Special Allowance Under 38 U.S.C. 
1312, and 5.584, Loan Guaranty for Surviving Spouses; Certification
    We propose to repeat the content of current Sec. Sec.  3.803 (Naval 
Pension), 3.804 (Special allowance under 38 U.S.C. 1312), and 3.805 
(Loan guaranty for surviving spouses; certification), in Sec. Sec.  
5.582, 5.583, and 5.584, respectively, without making any substantive 
changes to the text of the rules. We note that these sections do not 
have internal paragraph headings to identify the subject matter 
contained therein. Therefore, we propose to insert paragraph headings 
where appropriate to aid the reader in locating subject matter and to 
make these regulations easier to read.
    Further, in proposed Sec.  5.582, we inserted the word 
``disability'' before the word ``compensation'' in each instance to be 
consistent with other regulations in this NPRM. For the purpose of 
clarity and to avoid confusion between naval pension and VA pension, we 
propose not to use the phrase ``disability pension,'' which appears in 
current Sec.  3.803(b), in Sec.  5.582. We propose to place the word 
``VA'' before the phrase ``pension or disability compensation'' in 
order to distinguish the Department of Defense programs from the VA 
programs.
    Proposed Sec.  5.582(c) is based on current Sec.  3.803(c), which 
states that new awards of naval pension may not be made concurrently 
with VA pension or compensation. We note that the meaning of ``new'' is 
ambiguous. It is actually referring to awards of naval pension made on 
or after July 14, 1943. See 38 U.S.C. 5304(a)(1). To make this clear to 
the reader, we have amended this provision to include this date.
    Proposed Sec.  5.583(b)(1) is based on current Sec.  3.804(b)(1), 
which states that the special allowance under 38 U.S.C. 1312 is not 
payable where the veteran's death resulted from VA hospitalization, 
treatment, examination, or training. The purpose of this provision is 
to exclude deaths treated ``as if'' service connected, because such 
deaths do not meet the criteria of 38 U.S.C. 1312(a)(2). Since Sec.  
3.804 was promulgated, however, the criteria of 38 U.S.C. 1151 
(authorizing dependency and indemnity compensation for deaths treated 
``as if'' service connected because death was due to VA treatment or 
vocational rehabilitation) have been expanded, and 38 U.S.C. 1318 
(authorizing dependency and indemnity compensation for certain deaths 
treated ``as if'' service connected because the veteran was rated 
totally disabled at time of death) has been enacted. Therefore, current 
Sec.  3.804(b)(1) has been rewritten in proposed Sec.  5.583(b)(1) to 
encompass this expanded criteria for deaths that may be treated ``as 
if'' service connected. We have included a reference to proposed Sec.  
5.510(b)(2) and (3), which address deaths treated ``as if'' service 
connected under 38 U.S.C. 1151 and 1318. No substantive change is 
intended.
    Proposed Sec.  5.583(e)(1)(ii) is based on current Sec.  
3.804(e)(1)(ii), which states that the special allowance is payable for

[[Page 10864]]

death occurring as the result of a disease or injury which was incurred 
or aggravated in line of duty while on active duty or active duty for 
training, or an injury which was incurred or aggravated in line of duty 
while on inactive duty training, as a member of a uniformed service 
after September 15, 1940, if the veteran was discharged or released 
from the period of such duty under conditions other than dishonorable. 
We note that this provision does not incorporate the 2000 amendment to 
the statutory definition of ``active military, naval, or air service.'' 
The amendment included as ``active military, naval, or air service'' 
any period of inactive duty training during which the individual 
concerned was disabled or died from an acute myocardial infarction, a 
cardiac arrest, or a cerebrovascular accident occurring during such 
training. Rather than amend the regulatory provision to include this 
new language, we have decided to utilize the corresponding statutory 
language instead, which states simply ``as the result of a service-
connected disability incurred after September 15, 1940.'' See 38 U.S.C. 
1312(a)(2)(B). The statutory definition of ``service-connected'' 
includes the requirement that the disability was incurred or aggravated 
in the line of duty in the active military, naval, or air service. See 
38 U.S.C. 101(16). By using the statutory language in the regulation, 
it will not be necessary to amend the regulation every time there is an 
amendment to the statutory definition of ``active military, naval, or 
air service.'' No substantive change to the regulatory provision is 
intended. The requirement that the veteran was discharged or released 
under conditions other than dishonorable, currently found in Sec.  
3.804(e)(1)(ii), is contained in proposed Sec.  5.583(e)(2).
    In proposed Sec.  5.583(e)(2)(ii), the counterpart to current Sec.  
3.804(e)(2)(ii), we have replaced the reference to current Sec.  3.1(m) 
with proposed Sec.  5.660, which was published in Subpart K on May 31, 
2006. See 71 FR 31056. Current Sec.  3.804(e)(2)(ii) also includes a 
reference to the Sec.  3.300 series. Therefore, we have included 
references to any published proposed Part 5 counterparts to regulations 
in the current Sec.  3.300 series. These include Sec. Sec.  5.661 and 
5.662, which are the Part 5 counterparts to Sec. Sec.  3.301 and 3.302. 
These were published in Subpart K on May 31, 2006. These also include 
proposed Sec. Sec.  5.260 through 5.269, which are the Part 5 
counterparts to Sec. Sec.  3.307 through 3.309, 3.311, 3.316 and 317. 
These were published in Subpart E on July 27, 2004. See 69 FR 44614. We 
have retained the reference to the current Sec.  3.300 series, because 
the remaining regulations in that series have not yet been published in 
a Part 5 NPRM.
Section 5.585 Certification for Death Gratuity
    We propose to reword the text of current Sec.  3.806 for the sake 
of clarity. Current paragraph (a) refers to situations where VA makes a 
certification based on a claim filed with it, and current paragraph (b) 
refers to situations where VA makes a certification at the request of 
the Secretary concerned. As VA must go through the same determination 
criteria in either situation, we propose to combine paragraphs (a) and 
(b), as there is no need for them to be separate. Current paragraph (c) 
(which is proposed paragraph (b)) has also been slightly reorganized.
Section 5.586 Certification for Dependents' Educational Assistance 
(DEA)
    Proposed Sec.  5.586 is based on current Sec.  3.807 relating to 
certification for DEA. We note that the current provisions of Sec.  
3.807(a) and (b) are redundant of provisions already contained in Sec.  
21.3021. The provisions of Sec.  3.807(a) appear in Sec.  21.3021(a). 
The provisions of Sec.  3.807(b) appear in Sec.  21.3021(b), with the 
exception of the sentence stating that service-connected disability or 
death must have been the result of active military, naval, or air 
service on or after April 21, 1898. (Pub. L. 8-358). However, due to 
the passage of time, this date is no longer necessary and no longer 
needs to be included in this regulation. Further, the requirement that 
the service-connected disability or death must have been the result of 
active military, naval, or air service is necessarily implied in the 
eligibility requirements of Sec.  21.3021(a), that the veteran has or 
had a service-connected disability. A service-connected disability or 
death is, by statutory definition, the result of active military, 
naval, or air service. See 38 U.S.C. 101(16).
    Instead of repeating the same criteria already contained in Sec.  
21.3021, we propose to simply refer the reader to Sec.  21.3021 for the 
eligibility criteria. This will prevent possibly conflicting 
substantive provisions, and will prevent the necessity of amending two 
regulations for the same provision. We have also added a brief 
description of DEA.
    Proposed Sec.  5.586(b) is based on the second sentence of Sec.  
3.807(c), which indicates that the standards and criteria for 
determining service connection, either direct or presumptive, are those 
applicable to the period of service during which the disability was 
incurred or aggravated.
    Proposed Sec.  5.586(c)(1) is based on the first sentence of Sec.  
3.807(c), which states that a disability treated as if service 
connected under Sec.  3.383(a) (paired organs and extremities) is 
included for purposes of determining eligibility for DEA. Proposed 
Sec.  5.586(c)(2) is based on the third sentence of Sec.  3.807(c), 
which states that a disability treated as if service connected under 
Sec. Sec.  3.358, 3.361, or 3.800 (disability or death due to 
hospitalization or vocational rehabilitation) is not included for 
purposes of determining eligibility for DEA.
    Proposed Sec.  5.586(d) is based on current Sec.  3.807(d), 
containing the definitions of child, spouse, and surviving spouse for 
purposes of determining eligibility for DEA. Paragraph (d)(1), 
pertaining to the definition of ``child,'' remains essentially 
unchanged, since the definition is particular to eligibility for DEA. 
In paragraph (d)(2), we propose to add that a spouse means a person of 
the opposite sex. Currently, (d)(2) merely refers the reader to the 
appropriate regulation, Sec.  3.50 (proposed Sec.  5.190), for that 
definition. The reader is still referred to the appropriate regulation 
(old Sec.  3.1(j); proposed Sec.  5.190) for the requirements of a 
valid marriage. Paragraph (d)(3) is reworded but contains no 
substantive change.
Sections 5.587, Minimum Income Annuity and Gratuitous Annuity, and 
5.588, Special Allowance Payable Under Section 156 of Public Law 97-377
    We propose to repeat the content of current Sec. Sec.  3.811 and 
3.812 in Sec. Sec.  5.587 and 5.588 without making any substantive 
changes to the text of these rules. We note that current Sec.  3.811 is 
without internal paragraph headings in certain places to properly 
identify the subject matter. Therefore, we propose to insert paragraph 
headings in proposed Sec.  5.587(b)(2)-(d) as appropriate guideposts to 
aid the reader in locating subject matter and to make the regulation 
easier to read. For the purpose of consistency in usage between the 
various NPRMs, we propose to substitute the terms ``discontinue'' and 
``discontinuance'' in place of ``terminate'' and ``termination'' in 
Sec. Sec.  5.587(e) and 5.588.

[[Page 10865]]

Sections 5.589, Monetary Allowance for Vietnam Veterans' Children Born 
With Spina Bifida, and 5.590, Monetary Allowance for Female Vietnam 
Veterans' Children With Certain Birth Defects
    We propose to revise the titles of current Sec. Sec.  3.814 and 
3.815, respectively. We propose to revise the title of current Sec.  
3.814 (proposed Sec.  5.589) to read, ``Monetary allowance for Vietnam 
veterans' children born with spina bifida.'' We believe that this title 
more accurately and completely represents the content of the rule. For 
the same reason, we propose to amend the title of current Sec.  3.815 
(proposed Sec.  5.590), to read, ``Monetary allowance for female 
Vietnam veterans' children with certain birth defects.'' The proposed 
titles make the regulations easier to locate and identify in part 5.
    We note that the second sentence of Sec.  3.814(a), which indicates 
that a recipient of a monetary allowance under chapter 18 is not 
prevented from receiving other VA benefits, is substantively the same 
provision as found in Sec.  3.815(b), which uses slightly different 
language. We think the provisions in each regulation should use the 
same language, however, because they are both based on the same 
statute, 38 U.S.C. 1823. Therefore, in proposed Sec.  5.589, we have 
added paragraph (b), which is identical to the paragraph found in 
current Sec.  3.185(b) and proposed Sec.  5.590(b). For this reason, 
the second sentence of Sec.  3.814(a) is not carried over to proposed 
Sec.  5.589.
    Current Sec. Sec.  3.814 and 3.815 use the phrase ``active 
military, naval, or air service'' to refer to qualifying service for 
benefits under those regulations. VA has previously proposed, with 
regard to the regulations relating to service requirements for 
veterans, to use the term ``active military service'' in lieu of the 
longer term ``active military, naval, or air service'' in 38 U.S.C. 
101(24) and current part 3. 69 FR 4820, 4822 (2004). In order to 
maintain consistency, we propose to use the same phrase in these 
regulations pertaining to special and ancillary benefits. Note that, as 
an equivalent to the longer ``active military, naval, or air service,'' 
``active military service'' is a broader term than ``active duty.'' 
Compare 38 U.S.C. 101(21) with 38 U.S.C. 101(24).
    Neither the authorizing statutes nor the current regulations 
concerning these monetary allowances define ``service in the Republic 
of Vietnam''. To promote consistency among VA adjudications and because 
we believe it reflects Congressional intent in enacting Chapter 18, we 
propose to cross reference our proposed definition of the phrase as it 
applies to veterans seeking a presumption of exposure to herbicides, 
contained in Sec.  5.262(a)(1). See 69 FR 44614, July 27, 2004.
    We propose to move the effective date provisions of these rules, 
Sec. Sec.  3.814(e) and (f) and 3.815(i) and (j), to a new regulation, 
Sec.  5.591.
Section 5.591 Effective Dates of Awards for Certain Disabled Children 
of Vietnam Veterans
    Pursuant to 38 U.S.C. 1805(a), VA is required to pay ``a monthly 
allowance * * * to any child of a Vietnam veteran for any disability 
resulting from spina bifida suffered by such child.'' Current 
Sec. Sec.  3.403(b) and 3.814 implement 38 U.S.C. 1805. Similarly, VA 
is required by 38 U.S.C. 1815(a) to pay ``a monthly allowance to any 
eligible child for any disability resulting from the covered birth 
defects of that child.'' The term ``eligible child'' is defined in 38 
U.S.C. 1811 as a child of a ``woman Vietnam veteran'' who ``was born 
with one or more covered birth defects.'' Current Sec. Sec.  3.403(c) 
and 3.815 implement 38 U.S.C. 1815.
    The effective date of awards (and discontinuances or reductions of 
awards) of the monthly allowances described above are governed by 38 
U.S.C. 1832, which incorporates the provisions of 38 U.S.C. 5110(a), 
(b)(2), (g), and (i); and 5112(a) and (b)(1), (6), (9), and (10). 
Currently, the effective date rules that implement these statutory 
provisions are found in several part 3 regulations. The effective date 
rules for awards based on spina bifida under current Sec.  3.814 appear 
in current Sec. Sec.  3.814(e) and (f), 3.403(b), and 3.503(b). The 
effective date rules for awards based on birth defects under current 
Sec.  3.815 appear in current Sec. Sec.  3.815(i) and (j), 3.403(c), 
and 3.503(b). Much of the language in these rules is repetitive and can 
be simplified. We propose to reduce the repetition and increase the 
clarity in these rules by consolidating the effective date provisions 
located in current Sec. Sec.  3.814 and 3.815 with the provisions 
located in current Sec. Sec.  3.403 and 3.503, resulting in one 
comprehensive rule. We propose Sec.  5.591 as that new comprehensive 
rule.
    The introductory paragraph of proposed Sec.  5.591 outlines the 
scope of the proposed rule. Proposed Sec.  5.591(a) provides the 
general rule for determining the effective date of an award for the 
monetary allowances governed by the proposed rule. It restates content 
from current Sec. Sec.  3.403(b) and (c), 3.814(e), and 3.815(i), all 
of which restate the general rule articulated in 38 U.S.C. 5110(a). The 
general effective date statute, section 5110(a), is applicable to 
monthly allowances set forth in current Sec. Sec.  3.814 and 3.815, 
pursuant to 38 U.S.C. 1832(b)(2).
    Proposed Sec.  5.591(a)(1) and (a)(2) each limit the effective date 
of a monetary allowance to no earlier than the effective dates of 38 
U.S.C. 1805 and 1815. This limitation is required by 38 U.S.C. 5110(g), 
which states that the effective date of an award or increase in 
benefits pursuant to an Act or administrative issue ``shall not be 
earlier than the effective date of the Act or administrative issue.'' 
Subsection (g) of section 5110 is made applicable to these monetary 
awards by 38 U.S.C. 1832(b)(2).
    Proposed Sec.  5.591(a)(3) restates material currently found in 
Sec.  3.403(b) and (c) and Sec.  3.815(i), which is that the effective 
date of a monetary allowance will be the child's date of birth if the 
claim is received within a year of the birth date.
    Proposed Sec.  5.591(a)(4) states that VA will apply the rule in 
Sec.  3.400(g), which governs effective dates in cases where 
entitlement is established because of the correction of military 
records. This rule is applicable under 38 U.S.C. 1832(b)(2) and 
5110(i). Currently, the rule is restated in Sec. Sec.  3.814(e)(2) and 
3.815(i)(2). We propose to simply refer the reader to the actual rule, 
Sec.  3.400(g), instead of restating it.
    Proposed Sec.  5.591(a)(5) states that in a claim for increase of a 
monetary allowance, VA will apply the rule in Sec.  3.400(o)(2), 
pertaining to the effective date of an increase of compensation due to 
an increase in disability. This rule is applicable pursuant to U.S.C. 
5110(b)(2) and 1832(b)(2). Currently, Sec. Sec.  3.814(e)(1) and 
3.815(i)(1) restate the rule. We propose to simply refer the reader to 
the actual rule, Sec.  3.400(o)(2), instead of restating it.
    Proposed Sec.  5.591(a)(6) states that VA will apply the rule in 
Sec.  3.114(a), pertaining to a change of law or VA issue. Proposed 
Sec.  5.591(a)(6) incorporates the reference to Sec.  3.114(a) which 
appears in current Sec. Sec.  3.403(c) and 3.815(i). The statutory 
authority for current Sec.  3.114(a) is 38 U.S.C. 5110(g) and 
1832(b)(2).
    Proposed Sec.  5.591(b) governs reductions and discontinuances of 
the monetary allowances. Pursuant to 38 U.S.C. 1832, the provisions of 
38 U.S.C. 5112(a) and 5112(b)(1), (6), (9), and (10), governing 
effectives dates of reductions and discontinuances, are applicable.
    Currently, Sec. Sec.  3.814(f) and 3.815(j) restate 38 U.S.C. 
5112(a), which provides that the effective date of a reduction or 
discontinuance of certain

[[Page 10866]]

awards will be fixed according to the facts found, except as otherwise 
provided. This is implemented by current Sec.  3.500(a). We have 
included a reference to Sec.  3.500(a) in proposed Sec.  5.591(b).
    Proposed Sec.  5.591(b)(1) and (b)(2) applies the rules regarding 
the reduction or discontinuance of erroneous awards based on 
beneficiary or administrative error, located in current Sec.  
3.500(b)(1) and (2). Currently, paragraphs (1) and (2) of Sec.  
3.814(f) and paragraphs (1) and (2) of Sec.  3.815(j) repeat the 
language in paragraphs (1) and (2) of Sec.  3.500(b). We propose to 
simply incorporate those rules by reference to reduce repetitiveness.
    Proposed Sec.  5.591(b)(3) governs the effective date of a 
discontinuance based on the beneficiary's death, and restates current 
Sec.  3.503(b), which states that the last day of the month before the 
month in which a child's death occurs serves as the effective date of 
discontinuance. The statutory authority for this rule is 38 U.S.C. 
5112(b)(1), which is made applicable to these benefits through 38 
U.S.C. 1832(b)(4).
    Proposed Sec.  5.591(b)(4) restates the two cross references 
contained in the introductory paragraphs of current Sec. Sec.  3.814(f) 
and 3.815(j). The current rules cross-reference current Sec.  3.114(b), 
Discontinuance of Benefits based on a Change of Law or VA Issue.

Ancillary Benefits for Certain Service-Connected Veterans and Certain 
Members of the Armed Forces Serving on Active Duty

Section 5.603 Financial Assistance To Purchase a Vehicle and Adaptive 
Equipment
    Section 3902 of title 38, U.S.C., authorizes VA to assist certain 
veterans and servicemembers in acquiring a vehicle and adaptive 
equipment for a vehicle. Such assistance is available to claimants who 
have incurred certain disabilities as the result of injury sustained or 
disease contracted in or aggravated by active military service. See 38 
U.S.C. 3901(1)(A). VA's implementing regulations for 38 U.S.C. 3902 are 
currently codified at Sec.  3.808. It is our intent to rewrite the 
provisions currently in Sec.  3.808 in plain language to improve 
readability. As proposed, we have changed the title of this section to 
``Financial assistance to purchase a vehicle and adaptive equipment'' 
to better reflect the purpose of the regulation.
    Proposed Sec.  5.603(a) simply states in plain language the general 
nature of the benefit involved in this section.
    Proposed Sec.  5.603(b) provides definitions of applicable terms, 
namely ``adaptive equipment'' and ``vehicle.'' No substantive change 
from current Sec.  3.808 has been made to either term. We propose to 
include in Sec.  5.603(b) the types of adaptive equipment to which an 
eligible person may be entitled under this section. We propose to use 
the term ``vehicle'' in lieu of ``automobile or other conveyance'' to 
make the regulation easier to read.
    Proposed Sec.  5.603(c) identifies the criteria that a claimant 
must satisfy to obtain a certification of eligibility for the purchase 
of a vehicle and adaptive equipment. This is a plain language rewrite 
of current Sec.  3.808 criteria, and there is no change to the 
substantive provisions.
    Proposed Sec.  5.603(d), which is based on 38 CFR 17.158 and 
current VA practice, specifies certain limitations for eligibility for 
financial assistance to purchase a vehicle and/or adaptive equipment. 
It also states the limitations on how often an eligible person may take 
advantage of these benefits for the purchase of a vehicle and adaptive 
equipment, and states that payments may not be made for the repair, 
maintenance, or replacement of a vehicle, but payments may be made for 
the repair, replacement, or reinstallation of adaptive equipment.
    We note that current Sec.  3.808(d), which is entitled ``additional 
eligibility criteria for adaptive equipment,'' states that claimants 
for adaptive equipment must also satisfy the additional eligibility 
criteria of Sec. Sec.  17.156, 17.157, and 17.158 of this chapter. We 
have not included this provision in proposed Sec.  5.603 because the 
part 17 provisions do not state additional ``eligibility criteria.'' 
Rather, they state additional details regarding the assistance VA may 
provide. However, we have added a reference to those part 17 provisions 
in proposed Sec.  5.603(d)(2).
    Proposed Sec.  5.603(e) is based partly on current Sec.  3.808(c). 
We have also added a few details regarding the procedure of 
certification. These provisions reflect current VA practice; no 
substantive changes are intended.
    Proposed Sec.  5.603(f) is based on 38 CFR 17.158 and current VA 
practice; no substantive change is intended.
Section 5.606 Clothing Allowance
    Proposed Sec.  5.606 is derived from current Sec.  3.810 but is 
written in plain language to clarify certain provisions and to improve 
readability. We have reorganized the information in a logical format, 
addressing basic eligibility and applications, examinations, payments, 
and reduction for incarceration. We have also included rules for 
Filipino veterans and veterans living abroad to ensure that all 
affected persons have the information necessary to file an annual 
clothing allowance claim.
    Proposed Sec.  5.606(a) states generally the nature of the 
regulation. It does not add any substantive material to the regulation, 
but is merely intended to familiarize the reader with the nature of the 
regulation.
    Proposed Sec.  5.606(b), based on current Sec.  3.810(a), states 
the eligibility requirements for receiving benefits under this section. 
It is reorganized and rewritten in plain English. No substantive change 
from current Sec.  3.810(a) is intended, except for the reference to 
Sec.  3.326(c). The reference to Sec.  3.326(c) is in current Sec.  
3.810(a)(1), which states that one of the eligibility criteria is a VA 
examination or hospital or examination report from a facility specified 
in Sec.  3.326(c) which discloses that the veteran wears or uses 
certain prosthetic or orthopedic appliances (including a wheelchair) 
which tend to wear or tear clothing because of such disability and such 
disability is the loss or loss of use of a hand or foot compensable at 
a rate specified in Sec.  3.350(a), (b), (c), (d), or (f). The 
reference to Sec.  3.326(c) is not completely correct. Current Sec.  
3.326(c) states: ``Provided that it is otherwise adequate for rating 
purposes, a statement from a private physician may be accepted for 
rating a claim without further examination.'' This provision does not 
refer to a ``facility,'' as current Sec.  3.810(a)(1) might suggest. 
Rather, current Sec.  3.326(b) is the appropriate provision regarding 
reports from private facilities. Current Sec.  3.326(b) states in 
pertinent part: ``Provided that it is otherwise adequate for rating 
purposes, any hospital report, or any examination report, from any 
government or private institution may be accepted for rating a claim 
without further examination.'' Both paragraph (b) and paragraph (c) of 
current Sec.  3.326 are appropriate references, and therefore we have 
adjusted the reference to include both (b) and (c) of current Sec.  
3.326, which have been published as proposed Sec.  5.91(a). See 70 FR 
24680.
    We note that we have not carried forward the provision in current 
Sec.  3.810(a)(2) which states that VA's Chief Medical Director or 
designee will make the certification of eligibility. This provision 
addresses an internal administrative procedure within VA and does not 
need to be included in the regulation. Instead we have stated the 
provision in more general terms by indicating that VA will make the 
determination whether the service-

[[Page 10867]]

connected disability tends to wear out or tear the veteran's clothing 
or whether the prescribed medication causes irreparable damage to the 
veteran's outergarments. This is consistent with the language of the 
authorizing statute, 38 U.S.C. 1162, which indicates that such 
determinations are made by the Secretary. We have used the term ``VA'' 
instead of ``Secretary,'' which is consistent with the meaning of the 
statute. It is understood that an employee of VA will make the actual 
determination on behalf of the Secretary, and therefore ``VA'' is a 
more appropriate term. Using more general language (``VA'' instead of 
``Chief Medical Director'') in the proposed regulation removes the 
necessity of amending the regulation every time there is a change in VA 
procedure.
    Proposed Sec.  5.606(c) is a new provision based on current VA 
practice. It describes the criteria required for continuing entitlement 
to the clothing allowance. If a veteran has continuing entitlement to 
the clothing allowance, the veteran is not required to reapply for the 
clothing allowance each year.
    Proposed Sec.  5.606(d), regarding the annual payment period and 
anniversary date, is based on current Sec.  3.810(b). The first 
sentence of current Sec.  3.810(b) states that effective August 1, 
1972, the initial lump sum clothing allowance is due and payable for 
veterans meeting the eligibility requirements of paragraph (a) of this 
section as of that date. The August 1, 1972, date is the date that the 
clothing allowance was first effective. The first sentence of current 
Sec.  3.810(b) means that if a veteran met the eligibility requirements 
for the clothing allowance as of August 1, 1972, the clothing allowance 
was due and payable as of August 1, 1972. Due to the passage of time, 
this date and this sentence are no longer necessary, and they have not 
been carried forward to proposed Sec.  5.606.
    The second sentence of current Sec.  3.810(b) states that 
subsequent annual payments for those meeting the eligibility 
requirements of paragraph (a) of this section will become due on the 
anniversary date thereafter, both as to initial claims and recurring 
payments under previously established entitlement. The phrase 
``subsequent annual payments'' means payments after August 1, 1972. The 
``anniversary date'' means August 1 of each year after 1972. The 
sentence merely establishes that the clothing allowance is due to 
eligible veterans on August 1 of each year. The August 1 date applies 
to initial claims for the clothing allowance, and for automatically 
recurring payments.
    Proposed Sec.  5.606(d) is a plain language rewrite of current 
Sec.  3.810(b). We believe that the proposed language is clearer than 
the current version. In essence, current Sec.  3.810(b) relies on a 
reference to the original August 1, 1972, effective date of the 
clothing allowance statute in order to explain that the clothing 
allowance is due on August 1 of each year. A simpler way of saying this 
is to state that the clothing allowance is paid annually following each 
12-month period which begins August 1 and ends July 31. In addition, we 
have explained that the August 1 date is referred to as the anniversary 
date. It is helpful to keep the ``anniversary date'' terminology in 
order to easily explain the effective date provisions in proposed Sec.  
5.606(e). We have also added a definition of ``initial anniversary 
date,'' which is a phrase used in proposed Sec.  5.606(e). No 
substantive change from the current regulation is intended.
    Proposed Sec.  5.606(e), regarding the time for filing a claim for 
the clothing allowance, is based on current Sec.  3.810(c). It is 
rewritten in plain English. In addition, examples have been added in 
order to more clearly illustrate the meaning of these provisions. No 
substantive change from the current regulation is intended.
    Proposed Sec.  5.606(f) and (g) discuss clothing allowance claims 
for Filipino veterans and veterans living abroad. These two rules 
reflect current VA practice. The appropriate VA medical center 
prosthetic and sensory aids service will process the annual clothing 
allowance payment for those claims under the jurisdiction of the VA 
medical center assigned the geographical area where the veteran 
maintains a permanent address. Claims filed by Filipino veterans not 
permanently residing in the U.S. are processed locally in Manila, 
Philippines. Claims authorized for veterans of the U.S. Army and Old 
Philippine Scouts are paid in dollars. Claims authorized for New 
Philippine Scouts, Commonwealth Army of the Philippines, and guerilla 
service, are paid at a rate in Philippine pesos equivalent to $.50 for 
each dollar authorized under the law. See Sec.  3.42 (proposed Sec.  
5.613).
    Proposed Sec.  5.606(h) restates current Sec.  3.810(d) pertaining 
to reduction of the amount of the clothing allowance when a veteran is 
incarcerated for a period in excess of 60 days and is furnished 
clothing without charge by the penal institution. This regulation 
implements 38 U.S.C. 5313A. We propose to include a notation that the 
reduction applies to incarceration for any reason. We believe this 
brings focus to the controlling issue of whether the veteran is being 
furnished clothing without charge during incarceration, and not the 
reason for the veteran's incarceration. The statutory language of 38 
U.S.C. 5313A does not contain a requirement that a veteran be convicted 
of a felony for the reduction to occur. Proposed Sec.  5.606(h) 
clarifies that the reduction applies to all veterans who are 
incarcerated for more than 60 days and are furnished clothing without 
charge, without regard to the nature of the crime for which the veteran 
was convicted.

Endnote Regarding Amendatory Language

    We intend to ultimately remove part 3 entirely, but we are not 
including amendatory language to accomplish that at this time. VA will 
provide public notice before removing part 3.

Paperwork Reduction Act

    Although this document contains provisions constituting a 
collection of information in 38 CFR 5.603 and 5.606 under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501-3521), no new 
or proposed revised collections of information are associated with 
these proposed rules. The information collection requirements for 
Sec. Sec.  5.603 and 5.606 are currently approved by the Office of 
Management and Budget (OMB) and have been assigned OMB control numbers 
2900-0067, 2900-0188, and 2900-0198.

Regulatory Flexibility Act

    The Secretary hereby certifies that these proposed regulatory 
amendments 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. Although these proposed amendments 
affect some small entities, specifically auto dealerships, the proposed 
amendments do not substantively change the current regulation (38 CFR 
3.808) concerning auto dealerships. The current regulation does not 
have a significant economic impact on auto dealerships. Therefore, 
pursuant to 5 U.S.C. 605(b), this proposed amendment are exempt from 
the initial and final regulatory flexibility analysis requirements of 
sections 603 and 604.

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

[[Page 10868]]

and safety, and other advantages; distributive impacts; and equity). 
The Executive Order classifies a ``significant regulatory action,'' 
requiring review by the Office of Management and Budget (OMB) unless 
OMB waives such review, as any regulatory action that is likely to 
result in a rule that may: (1) Have an annual effect on the economy of 
$100 million or more or adversely affect in a material way the economy, 
a sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or tribal 
governments or communities; (2) Create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) Materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    The economic, interagency, budgetary, legal, and policy 
implications of this proposed rule have been examined and it has been 
determined to be a significant regulatory action under the Executive 
Order because it is likely to result in a rule that may raise novel 
legal or policy issues.

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 such 
effect on State, local, or tribal governments, or the private sector.

Catalog of Federal Domestic Assistance Numbers

    The Catalog of Federal Domestic Assistance program numbers and 
title for this proposal are 64.100, Automobiles and Adaptive Equipment 
for Certain Disabled Veterans and Members of the Armed Forces; 64.101, 
Burial Expenses Allowance for Veterans; 64.102, Compensation for 
Service-Connected Deaths for Veterans' Dependents; 64.104, Pension for 
Non-Service-Connected Disability for Veterans; 64.110, Veterans 
Dependency and Indemnity Compensation for Service-Connected Death; 
64.115, Veterans Information and Assistance; and 64.127, Monthly 
Allowance for Children of Vietnam Veterans Born with Spina Bifida.

List of Subjects in 38 CFR Part 5

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

    Approved: November 30, 2006.
Gordon H. Mansfield,
Deputy Secretary of Veterans Affairs.

    Editorial Note: This document was received at the Office of the 
Federal Register on March 5, 2007.

    For the reasons set forth in the preamble, VA proposes to further 
amend 38 CFR part 5, as proposed to be added at 69 FR 4832, January 30, 
2004, by adding subpart H to read as follows:

PART 5--COMPENSATION, PENSION, BURIAL, AND RELATED BENEFITS

Subpart H--Special and Ancillary Benefits for Veterans, Dependents, and 
Survivors

Special Benefits for Veterans, Dependents, and Survivors

Sec.
5.580 Medal of Honor pension.
5.581 Awards of VA benefits based on special acts or private laws.
5.582 Naval pension.
5.583 Special allowance under 38 U.S.C. 1312.
5.584 Loan guaranty for surviving spouses; certification.
5.585 Certification for death gratuity.
5.586 Certification for dependents' educational assistance (DEA).
5.587 Minimum income annuity and gratuitous annuity.
5.588 Special allowance payable under section 156 of Public Law 97-
377.
5.589 Monetary allowance for Vietnam veterans' children born with 
spina bifida.
5.590 Monetary allowance for female Vietnam veterans' children with 
certain birth defects.
5.591 Effective dates of awards for certain disabled children of 
Vietnam veterans.
5.592-5.599 [Reserved]

Ancillary Benefits for Certain Service-Connected Veterans and Certain 
Members of the Armed Forces Serving on Active Duty

5.600-5.602 [Reserved]
5.603 Financial assistance to purchase a vehicle and adaptive 
equipment.
5.604-5.605 [Reserved]
5.606 Clothing allowance.
5.607-5.609 [Reserved]

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

Subpart H--Special and Ancillary Benefits for Veterans, Dependents, 
and Survivors

Special Benefits for Veterans, Dependents, and Survivors


Sec.  5.580  Medal of Honor pension.

    (a) Placement on the Medal of Honor Roll. The Secretaries of the 
Departments of the Army, Navy, Air Force, and Homeland Security 
determine entitlement to placement on the Medal of Honor Roll and issue 
certificates setting forth the right to receive Medal of Honor pension. 
After a person has been placed on the Medal of Honor Roll, and if such 
person has indicated a desire to receive the Medal of Honor pension, 
the Secretary concerned will provide VA with a certified copy of the 
certificate setting forth such person's right to the Medal of Honor 
pension.
    (b) Award of Medal of Honor pension by VA. Medal of Honor pension 
will be awarded by VA once the certification under paragraph (a) of 
this section is provided to VA.
    (c) Amount of the Medal of Honor pension, the effective date of the 
pension, and entitlement to a retroactive lump-sum payment. VA will pay 
a Medal of Honor pension and a retroactive lump-sum payment, as 
follows:
    (1) Effective date. The effective date for payment of a Medal of 
Honor pension is the date the service department concerned received the 
person's application for placement on the Medal of Honor Roll.
    (2) Monthly rate. VA will pay a Medal of Honor pension at the rate 
specified in 38 U.S.C. 1562, as adjusted under paragraph (c)(4) of this 
section.
    (3) Retroactive lump-sum payment. VA will pay to each person who is 
receiving or who in the future receives a Medal of Honor pension, a 
retroactive lump sum payment for the period beginning the first day of 
the month after the date of the event for which the veteran earned the 
Medal of Honor, and ending on the last day of the month preceding the 
month in which the pension commenced under paragraph (c)(1) of this 
section. The lump sum payment will be based on the monthly Medal of 
Honor pension rates in effect during the period for which the lump sum 
payment is made.
    (4) Automatic annual adjustment. VA will, effective December 1 of 
each year, increase the monthly Medal of Honor pension by the same 
percentage by which benefit amounts payable under Title II of the 
Social Security Act are increased effective December 1 of that year.
    (d) Medal of Honor pension exempt from offset, attachment, or other 
legal process. The Medal of Honor pension is paid in addition to all 
other payments under laws of the United States. It is not subject to 
any attachment, execution, levy, tax lien, or detention under any 
process whatever.
    (e) Only one Medal of Honor pension is allowed. VA will pay a 
person only

[[Page 10869]]

one Medal of Honor pension under this section, even if the person is 
awarded more than one Medal of Honor.

(Authority: 38 U.S.C. 1560, 1561, 1562)

Sec.  5.581  Awards of VA benefits based on special acts or private 
laws.

    (a) Special act means an act of Congress that authorizes VA to pay 
benefits to a particular person. Special acts are also known as private 
laws.
    (b) Formal application must be filed. VA will award benefits based 
on a special act only to an individual who files a formal application 
based on the special act, unless the individual:
    (1) Is currently receiving VA benefits; or
    (2) Has a pending formal application in the form prescribed by VA 
(a claim that has not been granted or finally denied by VA).
    (c) Special acts relating to military service--(1) Change to 
character of discharge. If a special act changes the character of a 
former servicemember's discharge from military service so as to 
establish the former servicemember's status as a veteran, but the 
special act does not establish the former servicemember's entitlement 
to VA pension or disability compensation, the former servicemember will 
satisfy the discharge requirement for purposes of establishing status 
as a veteran and may apply for and be awarded VA benefits if otherwise 
eligible.
    (2) Special act as conclusive proof of service. For VA purposes, a 
special act that states a veteran served on a particular date or dates 
and was discharged under conditions other than dishonorable on a 
particular date is conclusive proof of such service.
    (d) Rate, effective date, and duration of benefit. (1) VA will 
apply and will not change, except as provided in paragraph (e) of this 
section, the rate, effective date, and discontinuance date that is 
specified in a special act.
    (2) When a special act does not provide the rate, effective date, 
or discontinuance date, VA will award or continue the benefit 
consistent with applicable public laws.
    (e) Changes in rates--(1) Hospitalization. VA will reduce pension 
payable under a special act pursuant to Sec.  3.551 of this chapter 
(reduction of payments based on hospitalization), unless the special 
act expressly prohibits such reduction.
    (2) Incarceration. VA will reduce disability compensation and 
pension payable under a special act pursuant to Sec. Sec.  3.365 and 
3.666 of this chapter (reduction of payments during incarceration), 
unless the special act expressly prohibits such reduction.
    (f) Prohibition against duplicate awards. When pension or 
disability compensation is authorized by a special act, VA will not pay 
any other pension or disability compensation to the extent such awards 
would be duplicative under section 5304 of title 38, United States 
Code, unless the payee makes an election (see Sec.  3.700 of this 
chapter), or unless the special act expressly authorizes VA to do so.

(Authority: 38 U.S.C. 501(a), 1505, 5313, 5503)

Sec.  5.582  Naval pension.

    (a) Certification. VA will pay naval pension if the Secretary of 
the Navy certifies that the person is entitled to the pension.

(Authority: 10 U.S.C. 6160)


    (b) Concurrent receipt of awards in effect prior to July 14, 1943. 
Awards of naval pension in effect prior to July 14, 1943, or renewed or 
continued may be paid concurrently with VA pension or disability 
compensation; however, naval pension allowance under 10 U.S.C. 6160 may 
not exceed one-fourth of the rate of VA pension or disability 
compensation otherwise payable, exclusive of additional allowances for 
dependents or specific disabilities.
    (c) No concurrent receipt of awards initially made on or after July 
14, 1943. Naval pension initially awarded on or after July 14, 1943, 
may not be paid concurrently with VA pension or disability 
compensation.

(Authority: 38 U.S.C. 5304(a))


    (d) Naval pension not payable as accrued benefit. Naval pension 
remaining unpaid at the date of the veteran's death is not payable by 
VA as an accrued benefit.

(Authority: 10 U.S.C. 1414; 38 U.S.C. 5304)

Sec.  5.583  Special allowance under 38 U.S.C. 1312.

    (a) Allowance payable. The provisions of this section are 
applicable to the payment of a special allowance by VA to the surviving 
dependents of a veteran who served after September 15, 1940, and who 
died after December 31, 1956, as a result of such service and who was 
not a fully and currently insured individual under title II of the 
Social Security Act.
    (b) Allowance not payable. The special allowance is not payable:
    (1) Where the veteran's death is not service connected but is 
treated ``as if'' it were service connected under the provisions of 
this chapter. See Sec.  5.510(b)(2) and (3) of this chapter;
    (2) Where the veteran's death was due to service rendered with the 
Commonwealth Army of the Philippines while such forces were in the 
service of the Armed Forces pursuant to the military order of the 
President dated July 26, 1941, or was due to service in the New 
Philippine Scouts under section 14, Public Law 190, 79th Congress.
    (c) Claims for special allowance. A claim for dependency and 
indemnity compensation on a form prescribed will be accepted as a claim 
for the special allowance where it is determined that this benefit is 
payable or where a specific inquiry concerning entitlement to the 
special allowance is received.
    (d) Certification by the Social Security Administration. Payment of 
this allowance will be authorized on the basis of a certification from 
the Social Security Administration. Award actions subsequent to the 
original award, including adjustment and discontinuance, will be made 
in accordance with new certifications from the Social Security 
Administration.
    (e) Special allowance payable on death. (1) The special allowance 
will be payable only if the death occurred:
    (i) While on active duty, active duty for training, or inactive 
duty training as a member of a uniformed service (line of duty is not a 
factor); or
    (ii) As the result of a service-connected disability incurred after 
September 15, 1940.
    (2) Where the veteran died after separation from service:
    (i) Discharge from service must have been under conditions other 
than dishonorable as outlined in Sec.  5.30.
    (ii) Line of duty and service connection will be determined as 
outlined in Sec. Sec.  3.1(k), 3.1(m), Sec. Sec.  3.300 through 3.344, 
Sec. Sec.  5.260 through 5.269, and Sec. Sec.  5.660 through 5.662.

(Authority: 38 U.S.C. 1312)

Sec.  5.584  Loan guaranty for surviving spouses; certification.

    A certification of loan guaranty benefits may be extended to 
surviving spouses based on an application filed after December 31, 
1958, if:
    (a) The veteran served in the Armed Forces of the United States 
(Allied Nations are not included) at any time after September 15, 1940; 
and
    (b) The veteran died in service; or
    (c) The veteran died after separation from service and such 
separation was under conditions other than dishonorable, provided the 
veteran's death was the result of injury or disease incurred in or 
aggravated by service in line of duty rendered after September 15, 
1940, regardless of the date of entrance into such service (cases where 
compensation is payable because of

[[Page 10870]]

death resulting from hospitalization, treatment, examination, or 
training are not included); and
    (d) The surviving spouse meets the requirements of the term 
``surviving spouse'' as outlined in Sec.  5.200(a); and
    (e) The veteran's surviving spouse is unmarried or was remarried 
after age 57; and
    (f) The applicant is not an eligible veteran.


Sec.  5.585  Certification for death gratuity.

    (a) Certification by VA to the Secretary concerned. If VA 
determines either on the basis of a claim for VA benefits filed with it 
or at the request of the Secretary concerned, that a death occurred 
under the following circumstances, VA will certify that fact to the 
Secretary concerned:
    (1) The veteran died after December 31, 1956;
    (2) The veteran died during the 120-day period that began on the 
day following the day of his or her discharge or release from duty as 
described in 10 U.S.C. 1476;
    (3) Death resulted from disease or injury incurred or aggravated 
while on such duty, or travel to or from such duty; and
    (4) The deceased person was discharged or released from such 
service under conditions other than dishonorable.
    (b) VA law applies. The standards, criteria, and procedures for 
determining the incurrence or aggravation of a disease or injury under 
paragraph (a) of this section are those applicable under disability and 
death compensation laws administered by VA, except that there is no 
requirement under this section that any incurrence or aggravation have 
been in the line of duty.

(Authority: 10 U.S.C. 1476, 38 U.S.C. 1323)

Sec.  5.586  Certification for dependents' educational assistance 
(DEA).

    (a) Eligibility for DEA. DEA is an education benefit which VA is 
authorized to provide for certain classes, licenses, or certifications. 
See Sec.  21.3020 through 21.3344 of this chapter. In addition to 
paragraphs (b) through (d) of this section, the provisions of Sec.  
21.3021 of this chapter will be applied in a determination of 
eligibility for DEA.
    (b) Service connection. The standards and criteria for determining 
service connection, either direct or presumptive, are those applicable 
to the period of service during which the disability was incurred or 
aggravated (38 U.S.C. 3501(a)).
    (c) Disabilities treated as if service connected--(1) Paired organs 
or extremities. For purposes of eligibility for DEA, a ``service-
connected disability'' includes a disability treated as if service-
connected under the provisions of Sec.  3.383(a) of this chapter 
(paired organs and extremities).
    (2) Disability due to hospitalization, etc. For purposes of 
eligibility for DEA, a ``service-connected disability'' does not 
include a disability treated as if service connected under Sec. Sec.  
3.358, 3.361, or 3.800 of this chapter (disability or death due to 
hospitalization, etc.).
    (d) Relationship--(1) Child. For the purposes of this section, the 
term ``child'' means a veteran's child who meets the requirements of 
Sec.  5.220, except as to age and marital status.

(Authority: 38 U.S.C. 3501(a)(2))


    (2) Spouse. For VA purposes, a ``spouse'' means a person of the 
opposite sex whose marriage to the veteran meets the requirements for a 
valid marriage under Sec.  5.191.
    (3) Surviving spouse. For VA purposes, a ``surviving spouse'' is a 
person who meets the requirements of Sec.  5.200.

(Authority: 1 U.S.C. 7; 38 U.S.C. 101(3), 103(c))

Sec.  5.587  Minimum income annuity and gratuitous annuity.

    (a) Eligibility for minimum income annuity. The minimum income 
annuity authorized by Public Law 92-425 as amended is payable to a 
person:
    (1) Whom the Department of Defense or the Department of Homeland 
Security has determined meets the eligibility criteria of section 4(a) 
of Public Law 92-425 as amended other than section 4(a)(2) and (3); and
    (2) Who is eligible for pension under subchapter III of 38 U.S.C. 
chapter 15, or section 306 of the Veterans' and Survivors' Pension 
Improvement Act of 1978; and
    (3) Whose annual income, as determined in establishing pension 
eligibility, is less than the maximum annual rate of pension in effect 
under 38 U.S.C. 1541(b).
    (b) Computation of the minimum income annuity payment--(1) Annual 
income. VA will determine a beneficiary's annual income for minimum 
income annuity purposes under the provisions of Sec. Sec.  3.271 and 
3.272 of this chapter for beneficiaries receiving Improved Pension, or 
under Sec. Sec.  5.472 through 5.474 of this part for beneficiaries 
receiving Old Law or Section 306 Pensions, except that the amount of 
the minimum income annuity will be excluded from the calculation.
    (2) Determining rate of annuity for persons entitled to Improved 
Pension. VA will determine the minimum income annuity payment for 
beneficiaries entitled to Improved Pension by subtracting the annual 
income for minimum income annuity purposes from the maximum annual 
pension rate under 38 U.S.C. 1541(b).
    (3) Determining rate of annuity for persons entitled to Old Law and 
Section 306 Pensions. VA will determine the minimum income annuity 
payment for beneficiaries receiving Old Law and Section 306 Pensions by 
reducing the maximum annual pension rate under 38 U.S.C. 1541(b) by the 
amount of the Retired Servicemen's Family Protection Plan benefit, if 
any, that the beneficiary receives and subtracting from that amount the 
annual income for minimum income annuity purposes.
    (4) Recomputation. VA will recompute the monthly minimum income 
annuity payment whenever there is a change to the maximum annual rate 
of pension in effect under 38 U.S.C. 1541(b), and whenever there is a 
change in the beneficiary's income.
    (c) Exception as to the requirement of pension eligibility. An 
individual otherwise eligible for pension under subchapter III of 38 
U.S.C. chapter 15, or section 306 of the Veterans' and Survivors' 
Pension Improvement Act of 1978 shall be considered eligible for 
pension for purposes of determining eligibility for the minimum income 
annuity even though as a result of adding the amount of the minimum 
income annuity authorized under Public Law 92-425 as amended to any 
other countable income, no amount of pension is due.
    (d) Concurrent receipt of gratuitous annuity under Public Law 100-
456. If the Department of Defense or the Department of Homeland 
Security determines that a minimum income annuitant also is entitled to 
the gratuitous annuity authorized by Public Law 100-456 as amended, 
which is payable to certain surviving spouses of servicemembers who 
died before November 1, 1953, and were entitled to retired or retainer 
pay on the date of death, VA will combine the payment of the gratuitous 
annuity with the minimum income annuity payment.
    (e) Discontinuance. Other than as provided in paragraph (c) of this 
section, if a beneficiary receiving the minimum income annuity becomes 
ineligible for pension, VA will discontinue the minimum income annuity 
effective the same date.

(Authority: Sec. 4, Pub. L. 92-425, 86 Stat. 706, 712, as amended 
(10 U.S.C. 1448 note))


[[Page 10871]]




Sec.  5.588  Special allowance payable under section 156 of Public Law 
97-377.

    The provisions of this section apply to the payment of a special 
allowance to certain surviving spouses and children of individuals who 
died on active duty prior to August 13, 1981, or who died as a result 
of a service-connected disability which was incurred or aggravated 
prior to August 13, 1981. This special allowance is a replacement for 
certain social security benefits which were either reduced or 
discontinued by provisions of the Omnibus Budget Reconciliation Act of 
1981.
    (a) Eligibility requirements. (1) A determination must first be 
made that the person on whose earnings record the claim is based either 
died on active duty prior to August 13, 1981, or died as a result of a 
service-connected disability which was incurred or aggravated prior to 
August 13, 1981. For purposes of this determination, character of 
discharge is not a factor for consideration, and death on active duty 
subsequent to August 12, 1981, is qualifying provided that the death 
resulted from a service-connected disability which was incurred or 
aggravated prior to August 13, 1981.
    (2) Once a favorable determination has been made under paragraph 
(a)(1) of this section, determinations as to the age, relationship and 
school attendance requirements contained in paragraphs (a)(1) and 
(b)(1) of section 156 of Public Law 97-377 will be made. In making 
these eligibility determinations VA shall apply the provisions of the 
Social Security Act, and any regulations promulgated pursuant thereto, 
as in effect during the claimant's period of eligibility. Unless 
otherwise provided in this section, when issues are raised concerning 
eligibility or entitlement to this special allowance which cannot be 
appropriately resolved under the provisions of the Social Security Act, 
or the regulations promulgated pursuant thereto, the provisions of 
title 38, Code of Federal Regulations, are applicable.
    (b) Computation of payment rate--(1) Basic entitlement rate. A 
basic entitlement rate will be computed for each eligible claimant in 
accordance with the provisions of subparagraphs (a)(2) and (b)(2) of 
section 156 of Public Law 97-377 using data to be provided by the 
Social Security Administration. This basic entitlement rate will then 
be used to compute the monthly payment rate as described in paragraphs 
(b)(2) to (b)(6) of this section.
    (2) Original or reopened awards to surviving spouses. The monthly 
payment rate shall be equal to the basic entitlement rate increased by 
the overall average percentage (rounded to the nearest tenth of a 
percent) of each legislative increase in dependency and indemnity 
compensation rates under 38 U.S.C. 1311 which became effective 
concurrently with or subsequent to the effective date of the earliest 
adjustment under section 215(i) of the Social Security Act that was 
disregarded in computing the basic entitlement rate.
    (3) Original and reopened awards to children. The monthly payment 
rate shall be equal to the basic entitlement rate increased by the 
overall average percentage (rounded to the nearest tenth of a percent) 
of each legislative increase in the rates of educational assistance 
allowance under 38 U.S.C. 3531(b) which became effective concurrently 
with or subsequent to the effective date of the earliest adjustment 
under section 215(i) of the Social Security Act that was disregarded in 
computing the basic entitlement rate.
    (4) Subsequent legislative increases in rates. The monthly rate of 
special allowance payable to a surviving spouse shall be increased by 
the same overall average percentage increase (rounded to the nearest 
tenth of a percent) and on the same effective date as any legislative 
increase in the rates payable under 38 U.S.C. 1311. The monthly rate of 
special allowance payable to a child shall be increased by the same 
overall average percentage increase (rounded to the nearest tenth of a 
percent) and on the same effective date as any legislative increase in 
the rates payable under 38 U.S.C. 3531(b).
    (5) Amendment of awards. Prompt action shall be taken to amend any 
award of this special allowance to conform with evidence indicating a 
change in basic eligibility, any basic entitlement rate, or any 
effective date previously determined. It is the claimant's 
responsibility to promptly notify VA of any change in their status or 
employment which affects eligibility or entitlement.
    (6) Rounding of monthly rates. Any monthly rate computed under the 
provisions of this paragraph (b), if not a multiple of $1, shall be 
rounded to the next lower multiple of $1.
    (c) Claimants not entitled to this special allowance. The following 
are not entitled to this special allowance for the reasons indicated.
    (1) Claimants eligible for death benefits under 38 U.S.C. 1151. The 
deaths in such cases are not service-connected.
    (2) Claimants eligible for death benefits under 38 U.S.C. 1318. The 
deaths in such cases are not service connected.
    (3) Claimants whose claims are based on an individual's service in:
    (i) The Commonwealth Army of the Philippines while such forces were 
in the service of the Armed Forces pursuant to the military order of 
the President dated July 26, 1941, including recognized guerrilla 
forces (see 38 U.S.C. 107).
    (ii) The New Philippine Scouts under section 14, Public Law 190, 
79th Congress (see 38 U.S.C. 107).
    (iii) The commissioned corps of the Public Health Service 
(specifically excluded by section 156 of Pub. L. 97-377), or
    (iv) The National Oceanic and Atmospheric Administration 
(specifically excluded by section 156 of Pub. L. 97-377).
    (d) Appellate jurisdiction. VA shall have appellate jurisdiction of 
all determinations made in connection with this special allowance.
    (e) Claims--formal and informal. Formal claims for this special 
allowance must be filed on a form prescribed by the Secretary of 
Veterans Affairs. When informal claims or inquiries as to eligibility 
are received, the appropriate application form shall be provided. In 
such cases, the date of receipt of the informal claim or inquiry will 
be accepted as the date of claim for this special allowance if a formal 
claim on the prescribed form is received within 1 year from that date.
    (f) Retroactivity and effective dates. There is no time limit for 
filing a claim for this special allowance. Upon the filing of a claim, 
the effective date for an award of benefits begins on or after the 
first day of the month in which the claimant first became eligible for 
this special allowance, except that no payment may be made for any 
period prior to January 1, 1983.

(Authority: Sec. 156, Pub. L. 97-377, 96 Stat. 1830, 1920 (1982))

Sec.  5.589  Monetary allowance for Vietnam veterans' children born 
with spina bifida.

    (a) Monthly monetary allowance. VA will pay a monthly monetary 
allowance under subchapter I of 38 U.S.C. chapter 18, based upon the 
level of disability determined under the provisions of paragraph (d) of 
this section, to or for a person who VA has determined is an individual 
suffering from spina bifida whose biological mother or father is or was 
a Vietnam veteran. An individual suffering from spina bifida is 
entitled to only one monthly allowance under this section, even if the 
individual's biological father and mother are or were both Vietnam 
veterans.
    (b) No effect on other VA benefits. Receipt of a monetary allowance 
under 38 U.S.C. chapter 18 will not affect the right of the individual, 
or the right of

[[Page 10872]]

any person based on the individual's relationship to that person, to 
receive any other benefit to which the individual, or that person, may 
be entitled under any law administered by VA.
    (c) Definitions--(1) Vietnam veteran. For the purposes of this 
section, the term ``Vietnam veteran'' means a person who performed 
active military service in the Republic of Vietnam during the period 
beginning on January 9, 1962, and ending on May 7, 1975, without regard 
to the characterization of the person's service. For the definition of 
``service in the Republic of Vietnam,'' see Sec.  5.262(a)(1).
    (2) Individual. For the purposes of this section, the term 
``individual'' means a person, regardless of age or marital status, 
whose biological father or mother is or was a Vietnam veteran and who 
was conceived after the date on which the veteran first served in the 
Republic of Vietnam during the Vietnam era. Notwithstanding the 
provisions of Sec.  5.180(b), VA will require the types of evidence 
specified in Sec. Sec.  5.221 and 5.229 sufficient to establish in the 
judgment of the Secretary that a person is the biological son or 
daughter of a Vietnam veteran.
    (3) Spina bifida. For the purposes of this section, the term 
``spina bifida'' means any form and manifestation of spina bifida 
except spina bifida occulta.
    (d) Disability evaluations. (1) Except as otherwise specified in 
this paragraph (d), VA will determine the level of payment as follows:
    (i) Level I. The individual walks without braces or other external 
support as his or her primary means of mobility in the community, has 
no sensory or motor impairment of the upper extremities, has an IQ of 
90 or higher, and is continent of urine and feces without the use of 
medication or other means to control incontinence.
    (ii) Level II. Provided that none of the disabilities is severe 
enough to warrant payment at Level III, and the individual: walks with 
braces or other external support as his or her primary means of 
mobility in the community; or, has sensory or motor impairment of the 
upper extremities, but is able to grasp pen, feed self, and perform 
self care; or, has an IQ of at least 70 but less than 90; or, requires 
medication or other means to control the effects of urinary bladder 
impairment and no more than two times per week is unable to remain dry 
for at least 3 hours at a time during waking hours; or, requires bowel 
management techniques or other treatment to control the effects of 
bowel impairment but does not have fecal leakage severe or frequent 
enough to require wearing of absorbent materials at least 4 days a 
week; or, has a colostomy that does not require wearing a bag.
    (iii) Level III. The individual uses a wheelchair as his or her 
primary means of mobility in the community; or, has sensory or motor 
impairment of the upper extremities severe enough to prevent grasping a 
pen, feeding self, and performing self care; or, has an IQ of 69 or 
less; or, despite the use of medication or other means to control the 
effects of urinary bladder impairment, at least three times per week is 
unable to remain dry for 3 hours at a time during waking hours; or, 
despite bowel management techniques or other treatment to control the 
effects of bowel impairment, has fecal leakage severe or frequent 
enough to require wearing of absorbent materials at least 4 days a 
week; or, regularly requires manual evacuation or digital stimulation 
to empty the bowel; or, has a colostomy that requires wearing a bag.
    (2) If an individual who would otherwise be paid at Level I or II 
has one or more disabilities, such as blindness, uncontrolled seizures, 
or renal failure that result either from spina bifida, or from 
treatment procedures for spina bifida, the Director of the Compensation 
and Pension Service may increase the monthly payment to the level that, 
in his or her judgment, best represents the extent to which the 
disabilities resulting from spina bifida limit the individual's ability 
to engage in ordinary day-to-day activities, including activities 
outside the home. A Level II or Level III payment will be awarded 
depending on whether the effects of a disability are of equivalent 
severity to the effects specified under Level II or Level III.
    (3) VA may accept statements from private physicians, or 
examination reports from government or private institutions, for the 
purpose of rating spina bifida claims without further examination, 
provided the statements or reports are adequate for assessing the level 
of disability due to spina bifida under the provisions of paragraph 
(d)(1) of this section. In the absence of adequate medical information, 
VA will schedule an examination for the purpose of assessing the level 
of disability.
    (4) VA will pay an individual eligible for a monetary allowance due 
to spina bifida at Level I unless or until it receives medical evidence 
supporting a higher payment. When required to reassess the level of 
disability under paragraph (d)(5) or (d)(6) of this section, VA will 
pay an individual eligible for this monetary allowance at Level I in 
the absence of evidence adequate to support a higher level of 
disability or if the individual fails to report, without good cause, 
for a scheduled examination. Examples of good cause include, but are 
not limited to, the illness or hospitalization of the claimant, death 
of an immediate family member, etc.
    (5) VA will pay individuals under the age of 1 year at Level I 
unless a pediatric neurologist or a pediatric neurosurgeon certifies 
that, in his or her medical judgment, there is a neurological deficit 
that will prevent the individual from ambulating, grasping a pen, 
feeding himself or herself, performing self care, or from achieving 
urinary or fecal continence. If any of those deficits are present, VA 
will pay the individual at Level III. In either case, VA will reassess 
the level of disability when the individual reaches the age of 1 year.
    (6) VA will reassess the level of payment whenever it receives 
medical evidence indicating that a change is warranted. For individuals 
between the ages of one and twenty-one, however, it must reassess the 
level of payment at least every 5 years.
    (e) Effective dates. See Sec.  5.591.

(Authority: 38 U.S.C. 501, 1805, 1811, 1812, 1821, 1822, 1823, 1824, 
5101)

Sec.  5.590  Monetary allowance for female Vietnam veterans' children 
with certain birth defects.

    (a) Monthly monetary allowance. (1) General. VA will pay a monthly 
monetary allowance under subchapter II of 38 U.S.C. chapter 18 to or 
for an individual whose biological mother is or was a Vietnam veteran 
and who VA has determined to have disability resulting from one or more 
covered birth defects. Except as provided in paragraph (a)(3) of this 
section, the amount of the monetary allowance paid will be based upon 
the level of such disability suffered by the individual, as determined 
in accordance with the provisions of paragraph (e) of this section.
    (2) Affirmative evidence of cause other than mother's service 
during Vietnam era. No monetary allowance will be provided under this 
section based on a particular birth defect of an individual in any case 
where affirmative evidence establishes that the birth defect results 
from a cause other than the active military service of the individual's 
mother during the Vietnam era and, in determining the level of 
disability for an individual with more than one birth defect, the 
particular defect resulting from other causes will be excluded from 
consideration. This will not prevent VA from paying a monetary 
allowance under this section for other birth defects.

[[Page 10873]]

    (3) Nonduplication; spina bifida. In the case of an individual 
whose only covered birth defect is spina bifida, a monetary allowance 
will be paid under Sec.  5.589, and not under this section, nor will 
the individual be evaluated for disability under this section. In the 
case of an individual who has spina bifida and one or more additional 
covered birth defects, a monetary allowance will be paid under this 
section and the amount of the monetary allowance will be not less than 
the amount the individual would receive if his or her only covered 
birth defect were spina bifida. If, but for the individual's one or 
more additional covered birth defects, the monetary allowance payable 
to or for the individual would be based on an evaluation at Level I, 
II, or III, respectively, under Sec.  5.589(d), the evaluation of the 
individual's level of disability under paragraph (e) of this section 
will be not less than Level II, III, or IV, respectively.
    (b) No effect on other VA benefits. Receipt of a monetary allowance 
under 38 U.S.C. chapter 18 will not affect the right of the individual, 
or the right of any person based on the individual's relationship to 
that person, to receive any other benefit to which the individual, or 
that person, may be entitled under any law administered by VA.
    (c) Definitions--(1) Vietnam veteran. For the purposes of this 
section, the term ``Vietnam veteran'' means a person who performed 
active military service in the Republic of Vietnam during the period 
beginning on February 28, 1961, and ending on May 7, 1975, without 
regard to the characterization of the person's service. For the 
definition of ``service in the Republic of Vietnam,'' see Sec.  
5.262(a)(1).
    (2) Individual. For the purposes of this section, the term 
``individual'' means a person, regardless of age or marital status, 
whose biological mother is or was a Vietnam veteran and who was 
conceived after the date on which the veteran first entered the 
Republic of Vietnam during the period beginning on February 28, 1961, 
and ending on May 7, 1975. Notwithstanding the provisions of Sec.  
5.180(b), VA will require the types of evidence specified in Sec. Sec.  
5.221 and 5.229 sufficient to establish that a person is the biological 
son or daughter of a Vietnam veteran.
    (3) Covered birth defect. For the purposes of this section, the 
term ``covered birth defect'' means any birth defect identified by VA 
as a birth defect that is associated with the service of women Vietnam 
veterans in the Republic of Vietnam during the period beginning on 
February 28, 1961, and ending on May 7, 1975, and that has resulted, or 
may result, in permanent physical or mental disability. However, the 
term ``covered birth defect'' does not include a condition due to a:
    (i) Familial disorder;
    (ii) Birth-related injury; or
    (iii) Fetal or neonatal infirmity with well-established causes.
    (d) Identification of covered birth defects. All birth defects that 
are not excluded under the provisions of this paragraph (d) are covered 
birth defects.
    (1) Covered birth defects include, but are not limited to, the 
following (however, if a birth defect is determined to be familial in a 
particular family, it will not be a covered birth defect):
    (i) Achondroplasia;
    (ii) Cleft lip and cleft palate;
    (iii) Congenital heart disease;
    (iv) Congenital talipes equinovarus (clubfoot);
    (v) Esophageal and intestinal atresia;
    (vi) Hallerman-Streiff syndrome;
    (vii) Hip dysplasia;
    (viii) Hirschprung's disease (congenital megacolon);
    (ix) Hydrocephalus due to aqueductal stenosis;
    (x) Hypospadias;
    (xi) Imperforate anus;
    (xii) Neural tube defects (including spina bifida, encephalocele, 
and anencephaly);
    (xiii) Poland syndrome;
    (xiv) Pyloric stenosis;
    (xv) Syndactyly (fused digits);
    (xvi) Tracheoesophageal fistula;
    (xvii) Undescended testicle; and
    (xviii) Williams syndrome.
    (2) Birth defects that are familial disorders, including hereditary 
genetic conditions, are not covered birth defects. Familial disorders 
include, but are not limited to, the following, unless the birth defect 
is not familial in a particular family:
    (i) Albinism;
    (ii) Alpha-antitrypsin deficiency;
    (iii) Crouzon syndrome;
    (iv) Cystic fibrosis;
    (v) Duchenne's muscular dystrophy;
    (vi) Galactosemia;
    (vii) Hemophilia;
    (viii) Huntington's disease;
    (ix) Hurler syndrome;
    (x) Kartagener's syndrome (Primary Ciliary Dyskinesia);
    (xi) Marfan syndrome;
    (xii) Neurofibromatosis;
    (xiii) Osteogenesis imperfecta;
    (xiv) Pectus excavatum;
    (xv) Phenylketonuria;
    (xvi) Sickle cell disease;
    (xvii) Tay-Sachs disease;
    (xviii) Thalassemia; and
    (xix) Wilson's disease.
    (3) Conditions that are congenital malignant neoplasms are not 
covered birth defects. These include, but are not limited to, the 
following:
    (i) Medulloblastoma;
    (ii) Neuroblastoma;
    (iii) Retinoblastoma;
    (iv) Teratoma; and
    (v) Wilm's tumor.
    (4) Conditions that are chromosomal disorders are not covered birth 
defects. These include, but are not limited to, the following:
    (i) Down syndrome and other Trisomies;
    (ii) Fragile X syndrome;
    (iii) Klinefelter's syndrome; and
    (iv) Turner's syndrome.
    (5) Conditions that are due to birth-related injury are not covered 
birth defects. These include, but are not limited to, the following:
    (i) Brain damage due to anoxia during or around time of birth;
    (ii) Cerebral palsy due to birth trauma, (iii) Facial nerve palsy 
or other peripheral nerve injury;
    (iv) Fractured clavicle; and
    (v) Horner's syndrome due to forceful manipulation during birth.
    (6) Conditions that are due to a fetal or neonatal infirmity with 
well-established causes or that are miscellaneous pediatric conditions 
are not covered birth defects. These include, but are not limited to, 
the following:
    (i) Asthma and other allergies;
    (ii) Effects of maternal infection during pregnancy, including 
maternal rubella, toxoplasmosis, or syphilis;
    (iii) Fetal alcohol syndrome or fetal effects of maternal drug use;
    (iv) Hyaline membrane disease;
    (v) Maternal-infant blood incompatibility;
    (vi) Neonatal infections;
    (vii) Neonatal jaundice;
    (viii) Post-infancy deafness/hearing impairment (onset after the 
age of 1 year);
    (ix) Prematurity; and
    (x) Refractive disorders of the eye.
    (7) Conditions that are developmental disorders are not covered 
birth defects. These include, but are not limited to, the following:
    (i) Attention deficit disorder;
    (ii) Autism;
    (iii) Epilepsy diagnosed after infancy (after the age of 1 year);
    (iv) Learning disorders; and
    (v) Mental retardation (unless part of a syndrome that is a covered 
birth defect).
    (8) Conditions that do not result in permanent physical or mental 
disability are not covered birth defects. These include, but are not 
limited to:
    (i) Conditions rendered non-disabling through treatment;

[[Page 10874]]

    (ii) Congenital heart problems surgically corrected or resolved 
without disabling residuals;
    (iii) Heart murmurs unassociated with a diagnosed cardiac 
abnormality;
    (iv) Hemangiomas that have resolved with or without treatment; and
    (v) Scars (other than of the head, face, or neck) as the only 
residual of corrective surgery for birth defects.
    (e) Disability evaluations. Whenever VA determines, upon receipt of 
competent medical evidence, that an individual has one or more covered 
birth defects, VA will determine the level of disability currently 
resulting, in combination, from the covered birth defects and 
associated disabilities. No monetary allowance will be payable under 
this section if VA determines under this paragraph (e) that an 
individual has no current disability resulting from the covered birth 
defects, unless VA determines that the provisions of paragraph (a)(3) 
of this section are for application. Except as otherwise provided in 
paragraph (a)(3) of this section, VA will determine the level of 
disability as follows:
    (1) Levels of disability--(i) Level 0. The individual has no 
current disability resulting from covered birth defects.
    (ii) Level I. The individual meets one or more of the following 
criteria:
    (A) The individual has residual physical or mental effects that 
only occasionally or intermittently limit or prevent some daily 
activities; or
    (B) The individual has disfigurement or scarring of the head, face, 
or neck without gross distortion or gross asymmetry of any facial 
feature (nose, chin, forehead, eyes (including eyelids), ears 
(auricles), cheeks, or lips).
    (iii) Level II. The individual meets one or more of the following 
criteria:
    (A) The individual has residual physical or mental effects that 
frequently or constantly limit or prevent some daily activities, but 
the individual is able to work or attend school, carry out most 
household chores, travel, and provide age-appropriate self-care, such 
as eating, dressing, grooming, and carrying out personal hygiene, and 
communication, behavior, social interaction, and intellectual 
functioning are appropriate for age; or
    (B) The individual has disfigurement or scarring of the head, face, 
or neck with either gross distortion or gross asymmetry of one facial 
feature or one paired set of facial features (nose, chin, forehead, 
eyes (including eyelids), ears (auricles), cheeks, or lips).
    (iv) Level III. The individual meets one or more of the following 
criteria:
    (A) The individual has residual physical or mental effects that 
frequently or constantly limit or prevent most daily activities, but 
the individual is able to provide age-appropriate self-care, such as 
eating, dressing, grooming, and carrying out personal hygiene;
    (B) The individual is unable to work or attend school, travel, or 
carry out household chores, or does so intermittently and with 
difficulty;
    (C) The individual's communication, behavior, social interaction, 
and intellectual functioning are not entirely appropriate for age; or
    (D) The individual has disfigurement or scarring of the head, face, 
or neck with either gross distortion or gross asymmetry of two facial 
features or two paired sets of facial features (nose, chin, forehead, 
eyes (including eyelids), ears (auricles), cheeks, or lips).
    (v) Level IV. The individual meets one or more of the following 
criteria:
    (A) The individual has residual physical or mental effects that 
prevent age-appropriate self-care, such as eating, dressing, grooming, 
and carrying out personal hygiene;
    (B) The individual's communication, behavior, social interaction, 
and intellectual functioning are grossly inappropriate for age; or
    (C) The individual has disfigurement or scarring of the head, face, 
or neck with either gross distortion or gross asymmetry of three facial 
features or three paired sets of facial features (nose, chin, forehead, 
eyes (including eyelids), ears (auricles), cheeks, or lips).
    (2) Assessing limitation of daily activities. Physical or mental 
effects on the following functions are to be considered in assessing 
limitation of daily activities:
    (i) Mobility (ability to stand and walk, including balance and 
coordination);
    (ii) Manual dexterity;
    (iii) Stamina;
    (iv) Speech;
    (v) Hearing;
    (vi) Vision (other than correctable refraction errors);
    (vii) Memory;
    (viii) Ability to concentrate;
    (ix) Appropriateness of behavior; and
    (x) Urinary and fecal continence.
    (f) Information for determining whether individuals have covered 
birth defects and rating disability levels. (1) VA may accept 
statements from private physicians, or examination reports from 
government or private institutions, for the purposes of determining 
whether an individual has a covered birth defect and for rating claims 
for covered birth defects. If they are adequate for such purposes, VA 
may make the determination and rating without further examination. In 
the absence of adequate information, VA may schedule examinations for 
the purpose of determining whether an individual has a covered birth 
defect and/or assessing the level of disability.
    (2) Except in accordance with paragraph (a)(3) of this section, VA 
will not pay a monthly monetary allowance unless or until VA is able to 
obtain medical evidence adequate to determine that an individual has a 
covered birth defect and adequate to assess the level of disability due 
to covered birth defects.
    (g) Redeterminations. VA will reassess a determination under this 
section whenever it receives evidence indicating that a change is 
warranted.
    (h) Referrals. If a regional office is unclear in any case as to 
whether a condition is a covered birth defect, it may refer the issue 
to the Director of the Compensation and Pension Service for 
determination.
    (i) Effective dates. See Sec.  5.591.

(Authority: 38 U.S.C. 501, 1811, 1812, 1813, 1814, 1815, 1816, 1821, 
1822, 1823, 1824, 5101)

Sec.  5.591  Effective dates of awards for certain disabled children of 
Vietnam veterans.

    This section provides the effective date for an award, reduction, 
or discontinuance of the monthly monetary allowance payable under Sec.  
5.589 to a Vietnam veteran's biological child who is suffering from 
spina bifida or under Sec.  5.590 of this part to a woman Vietnam 
veteran's biological child who suffers from one or more covered birth 
defects.
    (a) Effective date of award. Except as otherwise provided in this 
paragraph, an award of a monetary allowance based on an original claim, 
a claim reopened after final denial, or a claim for increase will be 
effective the date VA received the claim or the date entitlement arose, 
whichever is later.
    (1) An allowance payable under Sec.  5.589 will not be effective 
before October 1, 1997.
    (2) An allowance payable under Sec.  5.590 will not be effective 
before December 1, 2001.
    (3) Subject to paragraphs (a)(1) and (2) of this section, the 
effective date will be the child's date of birth, if VA received the 
claim within 1 year of the birth date.
    (4) Subject to paragraphs (a)(1) and (2) of this section, if a 
previously denied claim is reopened and granted based on corrected 
military records, VA will apply the rule in Sec.  3.400(g) of this 
chapter.
    (5) Subject to paragraphs (a)(1) and (2) of this section, if a 
claimant files a claim for increase of a monetary allowance due to 
increase in disability, VA will

[[Page 10875]]

apply the rule in Sec.  3.400(o)(2) of this chapter .
    (6) If the allowance is based on a change of law or VA issue, VA 
will apply the rule in Sec.  3.114(a) of this chapter.
    (b) Effective dates of reductions or discontinuances. Except as 
otherwise provided in this paragraph, the effective date of a reduction 
or discontinuance of a monetary allowance shall be fixed in accordance 
with Sec.  3.500(a) of this chapter.
    (1) If the monetary allowance was paid erroneously because of 
beneficiary error, VA will apply the rule in Sec.  3.500(b)(1) of this 
chapter.
    (2) If the monetary allowance was paid erroneously because of 
administrative error by VA, VA will apply the rule in Sec.  3.500(b)(2) 
of this chapter .
    (3) If a discontinuance is due to the beneficiary's death, VA will 
discontinue benefits effective the first day of the month of the 
beneficiary's death.
    (4) If there is a change of law or VA issue, or change in 
interpretation of a law or VA issue, VA will apply the rule in Sec.  
3.114 of this chapter.
    (5) If a reduction or discontinuance is warranted by a change in 
the beneficiary's physical condition, VA will apply the rule in Sec.  
3.105(g) of this chapter.

(Authority: 38 U.S.C. 1805, 1832, 5110, 5112)

Sec. Sec.  5.592-5.599  [Reserved]

Ancillary Benefits for Certain Service-Connected Veterans and Certain 
Members of the Armed Forces Serving on Active Duty


Sec. Sec.  5.600-5.602  [Reserved]


Sec.  5.603  Financial assistance to purchase a vehicle and adaptive 
equipment.

    (a) General. Certain persons with qualifying disabilities will be 
certified as eligible for financial assistance to purchase a vehicle 
and necessary adaptive equipment.
    (b) Definition of terms. The following definitions apply to this 
section.
    (1) Adaptive equipment. (i) ``Adaptive equipment'' means equipment 
manufactured for sale to the general public and added to a vehicle to:
    (A) Make it safe for use by the eligible person, and
    (B) Assist the eligible person in meeting applicable standards of 
licensure by the proper licensing authority.
    (ii) Adaptive equipment includes:
    (A) Automatic transmission as to an eligible person who has lost or 
lost the use of a limb
    (B) Power steering, power brakes, power window lifts, and power 
seats
    (C) Air conditioning equipment, if such equipment is necessary for 
the health and safety of the eligible person and to the safety of 
others
    (D) Special equipment necessary to assist the eligible person in 
and out of the vehicle, regardless of whether the vehicle is to be 
operated by the eligible person or is to be operated for such person by 
another person
    (E) Modification of the interior space if necessary for the 
eligible person to enter or operate the vehicle.
    (F) Items the Under Secretary for Health or designee has deemed to 
be ordinarily necessary for a qualifying disability or combination of 
qualifying disabilities, or has deemed necessary in an individual case. 
Such specifications of equipment may include a limit on the financial 
assistance to be provided based on judgment and experience.
    (2) Vehicle means an automobile, van, truck, jeep, tractor, golf 
cart, or other conveyance.
    (c) Eligibility criteria. The claimant must meet all of the 
requirements of this paragraph (c).
    (1) Persons eligible. The claimant must be:
    (i) A veteran who is entitled to compensation under 38 U.S.C. 
chapter 11, including compensation under 38 U.S.C. 1151, for a 
qualifying disability described in paragraph (c)(2) of this section; or
    (ii) A member of the Armed Forces serving on active duty who has a 
qualifying disability described in paragraph (c)(2) of this section 
that is the result of an injury incurred or disease contracted in or 
aggravated by active military service.
    (2) Qualifying disabilities. The claimant must have one of the 
following disabilities:
    (i) Loss or permanent loss of use of one or both feet;
    (ii) Loss or permanent loss of use of one or both hands;
    (iii) Permanent impairment of vision of both eyes: Central visual 
acuity of 20/200 or less in the better eye, with corrective glasses, or 
central visual acuity of more than 20/200 if there is a field defect in 
which the peripheral field has contracted to such an extent that the 
widest diameter of visual field subtends an angular distance no greater 
than 20[deg] in the better eye.
    (iv) For the purpose of eligibility for adaptive equipment only, 
ankylosis of one or both knees or one or both hips.
    (3) Claim for financial assistance to purchase a vehicle and/or 
adaptive equipment. (i) The claimant must file an application form for 
financial assistance to purchase a vehicle or adaptive equipment, which 
includes a certification by the claimant that the vehicle will be 
operated only by persons properly licensed.
    (ii) A claim for financial assistance to purchase a vehicle will 
also be considered a claim for adaptive equipment necessary to operate 
the vehicle according to the safety standards of the licensing 
authority.
    (iii) There is no time limit in which the claimant must apply for 
the benefits under this section.
    (iv) For claimants applying while still on active military duty, 
the application form will be deemed filed with VA on the date it is 
shown to be in possession of military authorities for transmittal to 
VA.
    (d) Limitations on assistance--(1) Financial assistance for 
vehicles. An eligible person is not entitled to benefits for the 
purchase of more than one vehicle under the provisions of this section. 
No payments may be made for the repair, maintenance, or replacement of 
the vehicle.
    (2) Financial assistance for adaptive equipment. An eligible person 
is not entitled to adaptive equipment for more than two vehicles in a 
4-year period unless one of the adapted vehicles is no longer 
available. Payments may be made for the repair, replacement, or 
reinstallation of adaptive equipment deemed necessary by the Under 
Secretary for Health or designee. See Sec. Sec.  17.156 through 17.158 
for additional limitations on assistance for adaptive equipment.
    (e) VA certification process for financial assistance to purchase a 
vehicle and/or adaptive equipment. If a claim for financial assistance 
to purchase a vehicle or adaptive equipment is approved, VA will issue 
a certificate of eligibility to the claimant.
    (f) Eligible person's redemption of certificate of eligibility. The 
eligible person must give the certificate of eligibility to the seller 
of the vehicle and/or adaptive equipment. The seller will send the 
purchase receipt certificate of eligibility to VA finance for 
reimbursement for the purchase price, or the statutory limit set in 38 
U.S.C. 3902(a), whichever is less.

(Authority: 38 U.S.C. 3901, 3902, 3903)

Sec. Sec.  5.604-5.605  [Reserved]


Sec.  5.606  Clothing allowance.

    (a) General. Certain veterans with a qualifying disability will be 
certified eligible for a clothing allowance.
    (b) Eligibility criteria. The claimant must meet all of the 
requirements of this paragraph (b).
    (1) Disabled veteran. The claimant must be a veteran with a 
service-

[[Page 10876]]

connected disability, or a veteran with a disability compensable under 
38 U.S.C. 1151.
    (2) Qualifying disability. A qualifying disability must be shown by 
VA examination, or hospital or examination report from a facility 
specified in Sec.  5.91(a).
    (i) Due to the disability described in paragraph (b)(1) of this 
section, the veteran wears or uses a prosthetic or orthopedic appliance 
(including a wheelchair) which VA determines tends to wear out or tear 
the veteran's clothing; or
    (ii) The veteran uses prescription medication for a skin condition 
which is due to the disability described in paragraph (b)(1) of this 
section, and VA determines that the prescribed medication causes 
irreparable damage to the veteran's outer garments.
    (3) Application form for clothing allowance. The veteran must file 
an application form for an annual clothing allowance. Except as 
provided in paragraph (c) of this section, the veteran must reapply for 
the clothing allowance each year.
    (c) Continuing entitlement. VA will find that the veteran has 
continuing entitlement to the annual clothing allowance without the 
need to reapply each year if the following circumstances are met:
    (1) Service connection has been established for the loss or loss of 
use of a hand or foot and the disability requires use of a prosthetic 
or orthopedic appliance that wears or tears clothing; or
    (2) VA makes a finding that the disability for which the annual 
clothing allowance was awarded is static in nature and that future 
reevaluations of eligibility are unnecessary.
    (d) Annual payment period and anniversary date. The clothing 
allowance will be paid annually following each 12-month period 
beginning August 1 and ending July 31. The ``anniversary date'' for any 
12-month period is the August 1 following that 12-month period. The 
``initial anniversary date'' is the August 1 that follows the date when 
entitlement is initially established. A veteran is entitled to a 
clothing allowance payment for the 12-month period during which the 
entitlement is initially established.
    (e) Time limits for application. (1) If a veteran meets the 
requirements of paragraphs (b)(1) and (b)(2) of this section as of 
August 1 (known as the ``anniversary date'') of a calendar year, the 
veteran is eligible to receive the annual clothing allowance for that 
year if he or she submits a timely application form. An application 
form is timely if it is received within 1 year of the veteran's 
anniversary date (unless the veteran receives notice of his or her 
eligibility subsequent to an anniversary date for which entitlement is 
established, in which case paragraph (e)(2) of this section applies). 
For example, if VA issues a decision on April 1, 2005 that establishes 
service connection for a qualifying disability effective February 1, 
2005, the veteran is entitled to the 2005 clothing allowance if the 
veteran files an application form for the clothing allowance within 1 
year of August 1, 2005 (the initial anniversary date).
    (2) If an initial determination of service connection for the 
qualifying disability is made subsequent to an anniversary date for 
which entitlement is established, the application form for clothing 
allowance may be filed within 1 year from the date of notice to the 
veteran of such determination. For example, if VA issues a decision on 
December 1, 2005, that establishes service connection for a qualifying 
disability effective May 1, 2005, the veteran is eligible for the 2005 
clothing allowance if he or she files an application form within 1 year 
of the date he or she received notice of the December 1, 2005, 
decision.
    (3) If the veteran does not file the application form within 1 year 
of the initial anniversary date or the date specified in paragraph 
(e)(2), the veteran will be entitled to payment of the clothing 
allowance for any following year for which entitlement is established, 
if the veteran files an application form within 1 year of the 
anniversary date for that year. For example, if VA issues a decision on 
April 1, 2005, that establishes service connection for a qualifying 
disability effective February 1, 2005, and the veteran does not file 
within 1 year of August 1, 2005 (his initial anniversary date), then he 
or she is not entitled to the 2005 clothing allowance. However, the 
veteran may be entitled to payment for any following year. For example, 
the veteran would be entitled to the 2006 clothing allowance if he or 
she files an application form within 1 year of the August 1, 2006 
anniversary date.
    (4) If a veteran first meets the requirements of paragraphs (b)(1) 
and (b)(2) of this section after August 1 of a calendar year, the 
veteran is not eligible for that year's clothing allowance. The veteran 
may receive the clothing allowance for any subsequent year by 
submitting an application within 1 year of the anniversary date (August 
1) of that subsequent year.
    (f) Filipino veterans. Annual clothing allowance claims for 
Filipino veterans not permanently residing in the U.S. are processed 
locally in Manila, Philippines. Claims authorized for such veterans of 
the U.S. Army or Old Philippine Scouts are paid in dollars. Claims 
authorized for such veterans of the New Philippine Scouts, Commonwealth 
Army of the Philippines, or guerrilla service, are paid in Philippine 
pesos equivalent to $0.50 for each dollar authorized under the law.

(Authority: 38 U.S.C. 107, 1162)


    Cross-References: Eligibility based on service in Philippine and 
Insular Forces. See Sec.  5.610. Compensation at the full-dollar 
rate for certain Filipino veterans residing in the United States. 
See Sec.  5.614.

    (g) Other veterans living abroad. The appropriate VA medical center 
will process the annual clothing allowance payment for those claims 
under its jurisdiction based on the geographical area where the veteran 
maintains a permanent address.
    (h) Reduction for incarceration. Eligible veterans who are 
incarcerated for any reason for a period of more than 60 days in a 
Federal, State, or local penal institution and who are provided 
clothing without charge by the institution will not receive the full 
clothing allowance payment. The amount stated in 38 U.S.C. 1162 will be 
reduced by 1/365th of that amount for each day over 60 days that the 
veteran was incarcerated during the 12-month eligibility period 
beginning August 1 and ending July 31. No reduction will be made for 
the initial 60 days of a period of incarceration.

(Authority: 38 U.S.C. 5313A)

Sec. Sec.  5.607-5.609  [Reserved]

[FR Doc. E7-4146 Filed 3-8-07; 8:45 am]
BILLING CODE 8320-01-P