[Federal Register Volume 75, Number 168 (Tuesday, August 31, 2010)]
[Rules and Regulations]
[Pages 53199-53202]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-21668]


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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: Final rule.

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SUMMARY: This document amends Department of Veterans Affairs (VA) 
regulations to implement certain statutory provisions that grant 
limited authority to the Secretary of Veterans Affairs 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 on 
or after September 11, 2001, and to refund amounts collected after the 
individual's death. This document also implements statutory provisions 
that grant 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: Effective Date: September 30, 2010.

FOR FURTHER INFORMATION CONTACT: Peter Mulhern, Office of Financial 
Policy (047G), Department of Veterans Affairs, 810 Vermont Avenue, NW., 
Washington, DC 20420, (202) 461-6487. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: On June 30, 2008, Congress enacted the 
Combat Veterans Debt Elimination Act of 2008, Public Law 110-252, of 
which section 1303 amended chapter 53 of title 38, United States Code, 
to add a new section (38 U.S.C. 5302A) to grant limited authority to 
the Secretary of Veterans Affairs to terminate collection action on 
certain debts arising from an individual's indebtedness from a VA 
benefit program.
    The indebted 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 on or 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 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 on or 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.
    On October 10, 2008, Congress enacted the Veterans' Benefits 
Improvement Act of 2008, Public Law 110-389, of which section 801 
amended 31 U.S.C. 3711(f) to grant limited authority to the Secretary 
to suspend or terminate action by the Secretary 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 collected before, on, or 
after October 10, 2008.
    In a document published in the Federal Register on August 7, 2009, 
VA published the proposed rule associated with this document, see 74 FR 
39589, which would implement the provisions of 38 U.S.C. 5302A and 31 
U.S.C. 3711(f). In that document, we proposed to add 38 CFR 1.945 to 
implement the Secretary's limited authority to suspend or terminate 
collection action on certain debts arising from an individual's 
indebtedness from a VA benefit program. Under proposed Sec.  1.945, the 
individual must either be a person who died while serving on active 
duty after September 11, 2001, 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 or 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.

[[Page 53200]]

    We proposed that this authority would be exercised in the 
Secretary's discretion when determined to be in the best interest of 
the United States. The Secretary's authority under proposed Sec.  1.945 
would 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. The proposed rule also stated 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, 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 and only if the 
Secretary determines that the deceased individual is equitably entitled 
to the refund. The Secretary would also be authorized to refund to the 
estate of a deceased individual who died while serving on active duty 
as a member of the Armed Forces any amount collected by the Secretary 
from that member if the Secretary determines that, under the 
circumstances applicable with respect to the deceased member, it is 
appropriate to do so.
    We provided a 60-day comment period, which ended on October 6, 
2009. We received two comments during this period.
    The first commenter expressed concern about ``placing emphasis on 
the date of death'' of the service member and suggested that we broaden 
the scope of the regulation to include those who died in the line of 
duty prior to September 11, 2001. The commenter stated, ``any person 
that has voluntarily put themselves in the position to protect our 
country and its citizens should be extended this benefit regardless of 
a date of death.''
    In enacting Public Law 110-252, Congress limited the scope of 38 
U.S.C. 5302A to those members of the Armed Forces and veterans who died 
on or after September 11, 2001. Public Law 110-389, applies to a person 
who died while serving on active duty and explains that the Secretary 
may refund to the estate of such person any amount previously collected 
on a VA claim regardless of whether such collection was before, on, or 
after the date of enactment of that law. Further, in enacting Public 
Law 110-389, Congress limited the scope of 31 U.S.C. 3711(f) to members 
of the Armed Forces who die on active duty. This law provides the 
Secretary with discretionary authority to suspend or terminate 
collection action and to refund amounts previously collected. Based 
upon this authority granted by Congress, we limited refunds to the 
estate or next-of-kin of servicemembers or veterans who served on 
active duty on or after September 11, 2001. We believe that this 
ensures consistency and we will not make any changes to this rulemaking 
based upon this comment.
    The second commenter had several suggestions for expanding the 
scope of the rule including the following: (1) Providing specific 
language to include deaths related to post-traumatic stress disorder 
(PTSD) where the death of the veteran occurred well after combat; (2) 
distributing any refunds directly to the person responsible for the 
payment of the debt, rather than automatically distributing it to the 
deceased's estate or next-of-kin; (3) developing a system to minimize 
or eliminate debt-related contact with the decedent's family; (4) 
engaging the public and families directly to let them know a refund may 
be possible and to provide information on how to maneuver the process 
of obtaining a refund; and (5) expanding such debt relief to all debt, 
not just debt owed to VA. We will not make any changes to this 
rulemaking based upon these suggestions.
    Regarding the request that we include specific language concerning 
PTSD-related deaths, the language of 38 U.S.C. 5302A authorizes the 
Secretary to terminate collection action on debts owed by a member of 
the Armed Forces or a 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 after September 11, 2001. The type of relief 
proposed by the commenter is beyond the authority of that statute 
because PTSD is considered a disease and not an injury. We note, 
however, that the language of 31 U.S.C. 3711(f)(3) does not contain the 
same limitation; rather the Secretary may suspend or terminate 
collection of a debt of any person who dies while serving on active 
duty if under the circumstances it would be appropriate to do so. 
Therefore, the type of relief proposed by the commenter for deaths 
associated with diseases while serving on active duty may be 
appropriate under 31 U.S.C. 3711(f)(3). The final rule in Sec.  
1.945(a) provides the Secretary may suspend or terminate collection 
under this statute for any person who dies on active duty when the 
Secretary determines such action is appropriate and in the best 
interest of the United States. We made no changes to the final rule 
based on this comment.
    The second commenter also suggested that the distribution of any 
refunds go directly to the person responsible for payment of the debt, 
rather than automatic distribution to the deceased's estate or next-of-
kin. VA's authority under title 38, United States Code, is generally 
limited to providing benefits for veterans and their survivors. Refunds 
are for the express purpose of providing relief to the families of 
certain indebted servicemembers or veterans. We believe that Congress 
intended that VA, in appropriate cases, would refund previously 
collected funds first to the decedent's estate and, if there is no 
estate, then to the decedent's surviving family members in the same 
order that VA pays accrued benefits to survivors under 38 U.S.C. 
5121(a)(2). Therefore, this final rule implements our interpretation of 
Congressional intent with respect to the distribution of refunds. VA 
will refund previously collected funds 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).
    Next, the commenter asked whether a system could be developed to 
minimize or eliminate debt-related contact with the decedent's family. 
In doing so, the commenter suggested that the decedent's family should 
be notified of any termination or suspension of collection action, or 
the refund of any collected debt at the same time as they are notified 
by the Department of Defense (DoD) of the decedent's death. We do not 
believe that this suggestion can be implemented, primarily because 
DoD's goal is to provide the service member's family with the 
notification of death as quickly as possible. The VA process to 
determine whether the debt should be suspended or terminated or a 
refund issued, while done quickly, might not be completed prior to DoD 
providing notification of death to the next-of-kin. In addition, DoD 
has no authority to make a determination concerning the collection, 
termination, and suspension of debts owed to VA or the refund of any 
collected debt. It is the sole authority of VA to make the 
determination for collection action on all cases arising from a VA 
benefit program.
    The commenter also suggested that VA engage the public and families 
directly to let them know a refund may be possible and to provide 
information on how to maneuver the process of obtaining a refund. As 
authorized by sections 5302A and 3711(f), VA will limit refunds to the 
estates of deceased service members or veterans or their next-of-kin to 
ensure consistency in the refund of money. The next-of-kin will not 
need to initiate a request for a

[[Page 53201]]

refund. The refunds will be processed automatically within VA and 
submitted to the Secretary for approval.
    Finally, the commenter expressed his belief that all debt, not just 
debt owed to VA, should be forgiven for those who qualify under this 
final rule. Unfortunately, while we understand the commenter's 
concerns, our rulemaking authority is limited by sections 5302A and 
3711(f) to cancellation of collection actions pertaining to debts owed 
to VA.
    We note that section 1303 of Public Law 110-252 states that the law 
shall apply to those who died ``on or after'' September 11, 2001. 
However, 38 U.S.C. 5302A(b) authorizes the Secretary to take action 
regarding certain debts of individuals who die ``after September 11, 
2001.'' The plain language of Public Law 110-252 clearly indicates that 
Congress intended to include the debts of those who died on September 
11, 2001. Moreover, a public law provision generally prevails over a 
United States Code provision when there is an inconsistency. See 
Stephan v. United States, 319 U.S. 423, 426 (1943) (U.S. Code ``cannot 
prevail over the Statutes at Large when the two are inconsistent''); 
Patten v. United States, 116 F.3d 1029, 1034 n. 3 (4th Cir. 1997) 
(legislation enacted as a section of a public law and signed by the 
President had the force of law even though it was not codified). In 
light of the plain language of section 1303 and Congress' intent to 
liberalize the law regarding debts owed by individuals who die in 
combat or as a result of injuries incurred in combat, this final rule 
implements the public law provision and authorizes the Secretary to 
take action regarding indebted individuals who die on or after 
September 11, 2001.
    Based on the rationale set forth in the preamble to the proposed 
rule and in this preamble, VA is adopting the provisions of the 
proposed rule as a final rule with one change as noted above.

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), unless OMB waives such 
review, as any regulatory action this 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 final rule have been examined and it has been 
determined not to be a significant regulatory action under Executive 
Order 12866.

Regulatory Flexibility Act

    The Secretary hereby certifies that this final rule 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. Only individual survivors and estates of certain VA beneficiaries 
could be directly affected. Therefore, pursuant to 5 U.S.C. 605(b), 
this final rule is exempt from the initial and final regulatory 
flexibility analysis requirements of sections 603 and 604.

Unfunded Mandates

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

Catalog of Federal Domestic Assistance Program

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

Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this 
document and authorized the undersigned to sign and submit the document 
to the Office of the Federal Register for publication electronically as 
an official document of the Department of Veterans Affairs. John R. 
Gingrich, Chief of Staff, Department of Veterans Affairs, approved this 
document on August 25, 2010 for publication.

List of Subjects in 38 CFR Part 1

    Claims, Administrative practice and procedure, Archives and 
records, Cemeteries, Courts, Crime, Flags, Freedom of information, 
Government contracts, Government employees, Government property, 
Infants and children, Inventions and patents, Parking, Penalties, 
Privacy, Reporting and recordkeeping requirements, Seals and insignia, 
Security measures, Wages.

    Dated: August 26, 2010.
Robert C. McFetridge,
Director, Regulations Policy and Management, Office of the General 
Counsel, Department of Veterans Affairs.

0
For the reasons stated in the preamble, VA amends 38 CFR part 1 as 
follows:

PART 1--GENERAL PROVISIONS

0
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.


0
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.


0
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:
* * * * *


0
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,

[[Page 53202]]

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 on or 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 on or 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 on or 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 in the order 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. 2010-21668 Filed 8-30-10; 8:45 am]
BILLING CODE 8320-01-P