[Federal Register Volume 74, Number 151 (Friday, August 7, 2009)]
[Proposed Rules]
[Pages 39589-39591]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-18939]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 1

RIN 2900-AN14


Deceased Indebted Servicemembers and Veterans: Authority 
Concerning Certain Indebtedness

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend Department of Veterans Affairs 
(VA) regulations to implement certain provisions of the Combat Veterans 
Debt Elimination Act of 2008 and of the Veterans' Benefits Improvement 
Act of 2008. The proposed rule would implement the first statute's 
provisions granting limited authority to the Secretary of Veterans 
Affairs (Secretary) to terminate collection action on certain debts 
arising from a VA benefit program when the indebted individual is a 
member of the Armed Forces or a veteran who dies as a result of injury 
incurred or aggravated in the line of duty while serving in a theater 
of combat operations in a war or in combat against a hostile force 
during a period of hostilities after September 11, 2001, and to refund 
amounts collected after the individual's death. The proposed rule would 
also implement the second statute's provisions that similarly grants 
the Secretary discretionary authority to suspend or terminate 
collection of debts owed to VA by individuals who died while serving on 
active duty as a member of the Army, Navy, Air Force, Marine Corps, or 
Coast Guard during a period when the Coast Guard is operating as a 
service in the Navy, and to refund amounts collected after the 
individual's death.

DATES: Comments must be received on or before October 6, 2009.

ADDRESSES: Written comments may be submitted through http://www.Regulations.gov; by mail or hand-delivery to Director, Regulations 
Management (02REG), 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-AN14 Deceased Indebted Servicemembers and Veterans.'' 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) 461-4902 (this is not a toll-free number) 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: Peter Mulhern, Office of Financial 
Policy (047G), Department of Veterans Affairs, 810 Vermont Avenue, NW., 
Washington, DC 20420. Telephone: (202) 461-6487 (this is not a toll-
free number).

SUPPLEMENTARY INFORMATION: Prior to the enactment of section 1303 of 
the Combat Veterans Debt Elimination Act of 2008 (Pub. L. 110-252) and 
section 801 of the Veterans' Benefits Improvement Act of 2008 (Pub. L. 
110-389), VA could terminate collection of an indebtedness owed by a 
deceased servicemember or veteran only after determining that the 
servicemember or veteran left no estate or an insufficient estate from 
which to collect the debt. VA would contact the decedent's family or 
next-of-kin regarding collection of the debt to obtain information 
needed to make a decision on terminating collection. No matter how 
compassionate the language of the demand for repayment, VA's attempt to 
collect a debt at such time and under such circumstances has a huge 
emotional impact on the decedent's family. The Government's attempt to 
collect such a debt in these cases is often viewed as a callous action, 
which demonstrates a complete disregard and lack of gratitude for the 
servicemember's sacrifice, and insensitivity to the family's loss of 
their loved one.
    Section 1303 of Public Law 110-252 amends chapter 53 of title 38, 
United States Code, to add a new section (38 U.S.C. 5302A) granting 
limited authority to the Secretary to terminate collection action on 
certain debts arising from an individual's indebtedness from a VA 
benefit program. The individual must be a member of the Armed Forces or 
a veteran who dies as a result of injury incurred or aggravated in the 
line of duty while serving in a theater of combat operations, as 
determined by the Secretary in consultation with the Secretary of 
Defense, in a war or in combat against a hostile force during a period 
of hostilities after September 11, 2001. This authority may be 
exercised in the Secretary's discretion when determined to be in the 
best interest of the United States. This authority does not apply to 
any amounts owed the United States under any program carried out under 
the authority of 38 U.S.C. chapter 37 relating to housing and small 
business loans. This legislation eliminates the need to contact family 
members and avoids further hardship on them. Instead, it demonstrates 
appreciation for the decedent's sacrifice on behalf of a grateful 
Nation.
    Section 1303 of Public Law 110-252 also states that in any case 
where all or any part of a debt of a covered individual, as described 
in 38 U.S.C. 5302A(a), was collected after September 11, 2001, but 
before the date of Public Law 110-252, enacted on June 30, 2008, the 
Secretary may refund the amount collected if, in the Secretary's 
determination, collection of the indebtedness would have been 
terminated had section 5302A been in effect at the time and the 
individual is equitably entitled to such a refund.
    Noting the problems associated with contacting grieving survivors 
for purposes of collecting the debts owed to VA described above, see S. 
Rep. No. 110-449, at 43-44 (2008) (discussing the predecessor bill), 
Congress enacted section 801 of Public Law 110-389, which amended 31 
U.S.C. 3711(f) and granted limited authority to the Secretary to 
suspend or terminate action to collect a claim against the estate of a 
person who died while serving on active duty as a member of the Army, 
Navy, Air Force, Marine Corps, or Coast Guard during a period when the 
Coast Guard is operating as a service in the Navy. The Secretary must 
determine that, under circumstances applicable with respect to the 
deceased person, it is appropriate to do so. Section 801 of Public Law 
110-389 also grants the Secretary the authority to refund to the estate 
of the deceased member any amount collected by the Secretary from a 
member who died while serving on active duty as a member of the Armed 
Forces if the Secretary determines that, under the circumstances 
applicable with respect to the deceased person, it is appropriate to do 
so, whether

[[Page 39590]]

collected before, on, or after October 10, 2008.
    In preparing this proposed rule, we determined that the refund of 
any monies would be made to the estate of the decedent or, if there is 
no estate, to the decedent's next-of-kin. Public Law 110-252 does not 
specify how the refunded monies are to be distributed. Public Law 110-
389 only describes a refund to the estate of the decedent. However, in 
many instances the servicemember or veteran may not have left an estate 
or, if he or she did leave an estate, it has been closed by the time a 
refund may be distributed. Without a rule to fill this gap left by 
Congress, there is a strong possibility that the family of a deceased 
servicemember or veteran may suffer further by having, for example, to 
reopen a closed estate to accommodate Congress' instruction to pay 
refunds to decedents' estates. Therefore, to implement the legislation 
consistent with our interpretation of its purpose, it is necessary to 
address the distribution of a refund when an estate does not exist.
    We note that the refunds are for the express purpose of providing 
relief to the families of certain indebted servicemembers or veterans. 
See S. Rep. No. 110-449, at 43-44. Further, VA's authority under title 
38, United States Code, is generally limited to providing benefits for 
veterans and their survivors. Accordingly, we interpret Congress' 
intent to be that VA should, in appropriate cases, refund previously 
collected funds to the decedent's estate or, if there is no estate, to 
the decedent's surviving family members in the order that VA would pay 
accrued benefits to survivors under 38 U.S.C. 5121(a)(2). Although 
refunds under this proposed rule would not be accrued benefits for 
purposes of section 5121, they would be VA funds owed to deceased 
individuals and paid to surviving family members in lieu of the 
decedent. Accordingly, section 5121(a)(2) is sufficiently analogous to 
be useful for implementing our interpretation of Congress' intent with 
respect to the refunds. We propose to refund previous debt collections 
to the decedent's estate or, absent an estate, to the decedent's next-
of-kin in the following order: The decedent's spouse, the decedent's 
children (in equal shares), or the decedent's parents (in equal 
shares). We are specifically interested in comments concerning our 
proposed distribution of refunds in the absence of an estate.
    In drafting this proposed rule, we have attempted to incorporate 
the provisions of both Public Laws 110-252 and 110-389 into a single, 
consistent rule. One obstacle is the fact that the termination and 
refund provisions of Public Law 110-252 apply to a servicemember or a 
veteran who dies as a result of injury incurred or aggravated in the 
line of duty after September 11, 2001. Public Law 110-389 applies to a 
person who died while serving on active duty and states only that money 
collected before, on, or after the date of enactment of that law may be 
refunded. In S. Rep. No. 110-449, at 44, the Senate Committee on 
Veterans' Affairs noted that the predecessor bill, S. 3023, includes a 
freestanding provision that would permit VA to provide an equitable 
refund to any estate from which it collected a debt that it would have 
otherwise waived had the provision been in effect at the time. The 
report goes on to state that VA would have discretion to determine in 
which cases, if any, the use of the discretionary authority would be 
appropriate. Based upon our interpretation of the authority granted by 
Congress, we propose to limit refunds to the estate or next-of-kin of 
servicemembers or veterans who served on active duty after September 
11, 2001. This would ensure consistency in the refund of money under 
the proposed rule.
    We also propose to add a new section, 38 CFR 1.945, in order to 
implement 38 U.S.C. 5302A and 31 U.S.C. 3711(f). The new section would 
provide that the authority exercised by the Secretary to suspend or 
terminate collection action and/or refund amounts previously collected 
on certain indebtedness will not be delegated. It would provide that 
requests for suspension, termination of collection action and/or for 
refund of amounts previously collected would be submitted by certain VA 
officials to the Office of the Secretary through the VA Office of the 
General Counsel.

Paperwork Reduction Act

    This document contains no provisions constituting a collection of 
information under the Paperwork Reduction Act (44 U.S.C. 3501-3521).

Executive Order 12866

    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, when regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety, 
and other advantages; distributive impacts; and equity). The Executive 
Order classifies a ``significant regulatory action'' requiring review 
by the Office of Management and Budget (OMB) 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 not to be a significant regulatory action under the 
Executive Order.

Regulatory Flexibility Act

    The Secretary of Veterans Affairs hereby certifies that this 
proposed rule would not have a significant economic impact on a 
substantial number of small entities as they are defined in the 
Regulatory Flexibility Act, 5 U.S.C. 601-612. Only individual survivors 
and estates of certain VA beneficiaries could be directly affected. 
Therefore, pursuant to 5 U.S.C. 605(b), this proposed rule is exempt 
from the regulatory flexibility analysis requirements of sections 603 
and 604.

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 
issuing 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 (adjusted annually for inflation) in any year. This 
proposed rule would have no such effect on State, local, or tribal 
governments, or the private sector.

Catalog of Federal Domestic Assistance

    There is no Catalog of Federal Domestic Assistance program number 
applicable to this proposed rule.

List of Subjects in 38 CFR Part 1

    Claims, Administrative practice and procedure, Veterans.

    Approved: June 29, 2009.
John R. Gingrich,
Chief of Staff, Department of Veterans Affairs.

    For the reasons stated in the preamble, the Department of Veterans

[[Page 39591]]

Affairs proposes to amend 38 CFR part 1 as follows:

PART 1--GENERAL PROVISIONS

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

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

    2. The authority citation preceding Sec.  1.900 is revised to read 
as follows:

    Authority:  Sections 1.900 through 1.953 are issued under the 
authority of 31 U.S.C. 3711 through 3720E; 38 U.S.C. 501, 5302, 
5302A, 5314 and as noted in specific sections.

    3. Amend Sec.  1.940 by adding introductory text, to read as 
follows:


Sec.  1.940  Scope and application.

    Except as otherwise provided in Sec.  1.945:
* * * * *
    4. Add Sec.  1.945 to read as follows:


Sec.  1.945  Authority to suspend or terminate collection action on 
certain benefit indebtedness; authority for refunds.

    (a) The Secretary of Veterans Affairs (Secretary) may suspend or 
terminate collection action on all or any part of an indebtedness owed 
to VA by a member of the Armed Forces who dies while on active duty, if 
the Secretary determines that such suspension or termination of 
collection is appropriate and in the best interest of the United 
States.
    (b) The Secretary may terminate collection action on all or any 
part of an amount owed to the United States for an indebtedness 
resulting from an individual's participation in a benefits program 
administered by the Secretary, other than a program as described in 
paragraph (h) of this section, if the Secretary determines that such 
termination of collection is in the best interest of the United States. 
For purposes of this paragraph, an individual is any member of the 
Armed Forces or veteran who dies as a result of an injury incurred or 
aggravated in the line of duty while serving in a theater of combat 
operations in a war or in combat against a hostile force during a 
period of hostilities after September 11, 2001.
    (c) For purposes of this section:
    (1) Theater of combat operations means the geographic area of 
operations where the Secretary in consultation with the Secretary of 
Defense determines that combat occurred.
    (2) Period of hostilities means an armed conflict in which members 
of the United States Armed Forces are subjected to danger comparable to 
danger to which members of the Armed Forces have been subjected in 
combat with enemy armed forces during a period of war, as determined by 
the Secretary in consultation with the Secretary of Defense.
    (d) The Secretary may refund amounts collected after the death of a 
member of the Armed Forces or veteran in accordance with this paragraph 
and paragraph (e) of this section.
    (1) In any case where all or any part of a debt of a member of the 
Armed Forces, as described under paragraph (a) of this section, was 
collected, the Secretary may refund the amount collected if, in the 
Secretary's determination, the indebtedness would have been suspended 
or terminated under authority of 31 U.S.C. 3711(f). The member of the 
Armed Services must have been serving on active duty after September 
11, 2001. In any case where all or any part of a debt of a covered 
member of the Armed Forces was collected, the Secretary may refund the 
amount collected, but only if the Secretary determines that, under the 
circumstances applicable with respect to the deceased member of the 
Armed Forces, it is appropriate to do so.
    (2) In any case where all or any part of a debt of a covered member 
of the Armed Forces or veteran, as described under paragraph (b) of 
this section, was collected after September 11, 2001, the Secretary may 
refund the amount collected if, in the Secretary's determination, the 
indebtedness would have been terminated under authority of 38 U.S.C. 
5302A. In addition, the Secretary may refund the amount only if he or 
she determines that the deceased individual is equitably entitled to 
the refund.
    (e) Refunds under paragraph (d) of this section will be made to the 
estate of the decedent or, in its absence, to the decedent's next-of-
kin first listed below.
    (1) The decedent's spouse.
    (2) The decedent's children (in equal shares).
    (3) The decedent's parents (in equal shares).
    (f) The authority exercised by the Secretary to suspend or 
terminate collection action and/or refund amounts collected on certain 
indebtedness is reserved to the Secretary and will not be delegated.
    (g) Requests for a determination to suspend or terminate collection 
action and/or refund amounts previously collected as described in this 
section will be submitted to the Office of the Secretary through the 
Office of the General Counsel. Such requests for suspension or 
termination and/or refund may be initiated by the head of the VA 
administration having responsibility for the program that gave rise to 
the indebtedness, or any concerned staff office, or by the Chairman of 
the Board of Veterans Appeals. When a recommendation for refund under 
this section is initiated by the head of a staff office, or by the 
Chairman, Board of Veterans Appeals, the views of the head of the 
administration that administers the program that gave rise to the 
indebtedness will be obtained and transmitted with the recommendation 
of the initiating office.
    (h) The provisions of this section concerning suspension or 
termination of collection actions and the refunding of moneys 
previously collected do not apply to any amounts owed the United States 
under any program carried out under 38 U.S.C. chapter 37.

(Authority: 38 U.S.C. 501, 5302A; 31 U.S.C. 3711(f))

[FR Doc. E9-18939 Filed 8-6-09; 8:45 am]
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