[Federal Register Volume 81, Number 171 (Friday, September 2, 2016)]
[Rules and Regulations]
[Pages 60617-60620]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-21216]


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DEPARTMENT OF JUSTICE

28 CFR Part 104

[Docket No. CIV 151]
RIN 1105-AB49


James Zadroga 9/11 Victim Compensation Fund Reauthorization Act

AGENCY: Department of Justice.

ACTION: Final rule.

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SUMMARY: This rule finalizes the Interim Final Rule published on June 
15, 2016, which implemented recently-enacted statutory changes 
governing the September 11th Victim Compensation Fund of 2001 (the 
``Fund''). After consideration of all of the public comments filed in 
response to the Interim Final Rule, the Special Master has concluded 
that no substantive changes to the Interim Final Rule are needed. 
Accordingly, this Final Rule adopts as final the provisions of the 
Interim Final Rule, with only two minor technical corrections.

DATES: This final rule takes effect on September 2, 2016.

FOR FURTHER INFORMATION CONTACT: Jordana H. Feldman, September 11th 
Victim Compensation Fund, Civil Division, U.S. Department of Justice, 
290 Broadway, Suite 1300, New York, NY 10007, telephone 855-885-1555 
(TTY 855-885-1558).

SUPPLEMENTARY INFORMATION: On December 18, 2015, President Obama signed 
into law the James Zadroga 9/11 Victim Compensation Fund 
Reauthorization Act (the ``Reauthorized Zadroga Act''), Public Law 114-
113, Div. O, Title IV. The Act extends the September 11th Victim 
Compensation Fund of 2001 (the ``Fund'') which provides compensation to 
any individual (or a personal representative of a deceased individual) 
who suffered physical harm or was killed as a result of the terrorist-
related aircraft crashes of September 11, 2001, or the rescue and 
recovery efforts during the immediate aftermath of such crashes or the 
debris removal efforts that took place in the immediate aftermath of 
those crashes.
    On June 15, 2016, Special Master Sheila L. Birnbaum published an 
Interim Final Rule to revise the existing regulations to implement 
changes required by the Reauthorized Zadroga Act. (81 FR 38936). Since 
the issuance of the Interim Final Rule, Sheila Birnbaum has stepped 
down as Special Master and the Attorney General has appointed Rupa 
Bhattacharyya in her place, effective July 21, 2016.
    The Interim Final Rule took effect on the date of publication (June 
15, 2016), but provided a 30-day period for interested persons to 
submit public comments. Special Master Bhattacharyya is issuing this 
Final Rule, which addresses the issues that have been raised. For the 
reasons described below, after consideration of all of the public 
comments, the Special Master has concluded that no substantive changes 
to the Interim Final Rule are needed. Accordingly, this Final Rule 
adopts the provisions of the Interim Final Rule without change, except 
for two minor technical corrections.

Background

    The June 15, 2016, Interim Final Rule (81 FR 38936) provided a 
brief history of the September 11th Victim Compensation Fund of 2001, 
the James Zadroga 9/11 Health and Compensation Act of 2010 (Zadroga 
Act), and the regulations issued by the Special Masters pursuant to 
those statutes.
    On December 18, 2015, President Obama signed into law Public Law 
114-113, providing for the reauthorization of the Zadroga Act. The 
Reauthorized Zadroga Act extends the time period during which eligible 
claimants may submit claims, increases the Fund's total funding 
available to pay claims, creates different categories of claims, 
directs the Special Master to issue full compensation to eligible 
claimants, and instructs the Special Master to implement certain 
changes to the policies and procedures used to evaluate and process 
claims.
    The Interim Final Rule addressed those changes mandated by the 
statute. The Interim Final Rule was published in the Federal Register 
(81 FR 38936) and became effective on June 15, 2016, and was followed 
by a 30-day public comment period. The Department received 31 comments 
since the publication of the Interim Final Rule. The Special Master's 
office has reviewed and evaluated each of these comments in preparing 
this Final Rule. Significant comments received in response to the 
Interim Final Rule are discussed below. After careful review and 
consideration, and for the reasons described below, the Special Master 
has concluded that no substantive changes to the Interim Final Rule are 
warranted.
    Accordingly, this Final Rule adopts the provisions of the Interim 
Final Rule without change, except for two technical corrections, as 
follows. These are not substantive changes and merely correct minor 
drafting errors in the wording of the Interim Final Rule as published.
    (1) In section 104.21, Presumptively covered conditions, this Final 
Rule corrects an unintended wording error in the second sentence of 
paragraph (a), by restoring the missing word ``or,'' in this sentence.
    (2) In section 104.62, Time limit for filing claims, in paragraph 
(b), this Final Rule restores the missing cross-reference to paragraph 
``(a)'' of the section.

Summary of Comments on the Interim Final Rule and the Special Master's 
Response Categories of Claims

    Many comments focused on the statutory definition of Group A claims 
and the decision by Congress to define the two categories of claims by 
reference to the date the Special Master ``postmarks and transmits'' a 
final award determination to the claimant. Several commenters argued 
that the ``cut-off'' date for inclusion in Group A should have been the 
date the claim was submitted or filed by the claimant, rather than the 
date the final award amount was determined by the Special Master. The 
commenters asserted that claims that had been submitted to the Fund on 
or before December 17, 2015, but did not have a loss determined by that 
time, should be considered Group A claims and subject to the standards 
in effect at the time of their submission.
    The Reauthorized Zadroga Act makes clear that the critical date is 
the date

[[Page 60618]]

that the final award determination was postmarked and transmitted, not 
the date the claim was submitted. Therefore, under the plain language 
of the statute, claims that were pending but not determined as of 
December 17, 2015 cannot be considered Group A claims. Because Congress 
expressly set forth this definition in the statute, this definition 
cannot be changed by the Special Master.
    Some commenters asserted that the statutory definition is unfair or 
contrary to laws and principles that ensure that certain rights and 
benefits are not changed or compromised without notice. These comments 
focused on the unfairness of evaluating a claim submitted prior to 
reauthorization under the standards set forth in subsequently enacted 
legislation. In this regard, however, the Special Master is constrained 
by the law as Congress enacted it, and cannot disregard the clear 
language of the statute.
    One commenter suggested a change that would violate other 
applicable law. This commenter proposed that the Special Master 
backdate loss determination letters to December 17, 2015, for all 
claims or amendments that were pending at the time of reauthorization. 
Such an action would be in violation of the law and of generally 
accepted accounting principles. Therefore, the Special Master cannot 
accept that suggestion.

Valuation of Claims

$200,000 Annual Gross Income Cap

    Several commenters argued about the fairness of the statutory 
$200,000 cap on annual gross income. One commenter was concerned about 
the broad scope of the definition of ``annual gross income'' in 
computing economic loss. The Reauthorized Zadroga Act explicitly 
provides that the term ``gross income'' is defined as set forth in 
Section 61 of the Internal Revenue Code. Section 405(b)(7)(B), (C). 
There, the definition of ``gross income'' is broadly defined to include 
``all income from whatever source derived,'' including (but not limited 
to) compensation for services, including fees, commissions, fringe 
benefits, and other similar items, pensions, annuities, interest, and 
other sources of income. Sections 104.43 and 104.45 of the Interim 
Final Rule, the provisions that address the determination of economic 
loss for decedents and for injured claimants who suffered an eligible 
physical harm respectively, were revised to account for the $200,000 
annual gross income cap as required by the Reauthorized Zadroga Act. 
Because Congress explicitly provided this definition and annual income 
cap requirement in the statute, these requirements cannot be changed by 
the Special Master.
    One commenter noted that the cap may have unintended consequences 
for a claimant who is disabled at a young age and therefore has a long 
remaining work life. Another commenter suggested that the Special 
Master should mitigate the effect of the $200,000 annual gross income 
cap by adjusting certain components of the loss calculation 
methodology, such as extending work life, reducing the tax offset, or 
lowering the residual earnings deduction, in claims where the cap is 
implicated. The Special Master cannot make adjustments to the loss 
calculation methodology for the purpose of eliminating the effect of 
the annual gross income cap, as doing so would violate Congressional 
intent. The Special Master, however, intends to exercise her discretion 
to apply the cap in ways that are favorable to claimants, while 
consistent with the language and intent of the statute. For example, 
the VCF will apply the tax adjustment to earnings before computing the 
annual cap, rather than after computing the cap. By applying this 
adjustment before the annual cap is computed, the amount of gross 
income is reduced and thus the award reduction resulting from the 
application of the cap is reduced. This is consistent with the overall 
purpose of the loss computation which is to determine the amount of 
earnings--after all deductions--that is lost to the claimant as a 
result of the September 11th attacks. The Special Master will provide 
additional information concerning the Fund's valuation methodologies on 
the Fund's Web site in order to give claimants greater insight into, 
and confidence in, its decision-making process.
    Other comments questioned how the $200,000 annual gross income cap 
ended up in the statute. One commenter stated that a citizens group 
that advocated for the extension of the Zadroga Act in 2015 made no 
mention of such a cap. Another commenter asked whether the Fund advised 
Congress to designate the cap. The Fund took no such action. The 
Special Master cannot respond to questions about the process by which 
Congress develops legislation.

Noneconomic Loss Caps

    The Reauthorized Zadroga Act imposes caps on the amount of 
noneconomic loss that may be awarded for a claim that results from any 
type of cancer at $250,000 and for a claim that does not result from 
any type of cancer at $90,000. The Interim Final Rule, sections 104.45 
and 104.46, clarified that, in computing the total noneconomic loss, 
the Special Master has discretion to consider the effect of multiple 
cancer conditions or multiple cancer and non-cancer conditions, and 
that, in computing the amount of noneconomic loss for economic loss 
claims, the Special Master has discretion to consider the extent of 
disability and the fact that different eligible conditions may 
contribute to the disability. Several commenters commended the Special 
Master for interpreting the statutory noneconomic loss caps as not 
imposing an aggregate cap on noneconomic loss, noting that this 
interpretation is consistent with both the letter and spirit of the 
statute. One commenter stated that the Special Master's interpretation 
appropriately addresses the realities of the first responders who are 
diagnosed with multiple forms of cancer and non-cancer conditions and 
is therefore important in ensuring that claimants receive full 
compensation as contemplated by the Reauthorized Zadroga Act. This 
commenter also noted that the Interim Final Rule properly interpreted 
the statute as not affecting the noneconomic loss amounts for claims 
filed on behalf of decedents.

Timing of Filing Claims

    The Zadroga Act defines the timing requirements for filing a claim 
as the date no later than two years after the claimant ``knew (or 
reasonably should have known) . . . that the individual suffered a 
physical harm at a 9/11 crash site as a result of the terrorist-related 
aircraft crashes of September 11, 2001, or as a result of debris 
removal,'' and ``knew (or should have known) . . . that the individual 
was eligible to file a claim'' with the Fund. Section 405(c)(3)(A). The 
Reauthorized Zadroga Act does not change this requirement.
    One commenter suggested that the Special Master interpret the 
``knowledge'' component to mean personal knowledge that the claimant's 
eligible physical condition was related to his/her 9/11-related 
exposure based on the date the claimant received a diagnosis from the 
WTC Health Program of an eligible physical harm. The commenter argued 
that it is not reasonable to assume that a clean-up worker, resident, 
or other ``survivor'' knew or reasonably should have known that his/her 
physical condition was related to his/her 9/11-related exposure until 
that time, given repeated assurances from public officials regarding 
the safety of the air quality around the WTC site, the lack of 
resources available to that community

[[Page 60619]]

for medical screening and treatment until 2007, and the media's focus 
on the health-related impact on 9/11 responders.
    While these comments do not require changes in the regulations, 
they raise issues that merit consideration by the Special Master in 
evaluating the issue of ``timeliness.'' The Special Master will provide 
additional information concerning this issue on the Fund's Web site in 
order to give claimants greater insight into the decision-making 
process.

Fees and Expenses

    Two comments were submitted regarding revisions or clarifications 
to the provisions on the amounts that a representative of a claimant 
may charge in connection with a claim to the Fund. One commenter 
suggested that the Special Master clarify that Section 104.81 be 
revised to make clear that the limitation on attorneys' fees applies to 
charges ``to a claimant'' and that expenses not charged to a claimant 
need not be approved by the Special Master. The Special Master believes 
that the existing language is sufficiently clear and that no change is 
needed.
    Another commenter suggested the addition of a provision to address 
how costs associated with the transfer of claimant files should be 
allocated if a claimant terminates counsel and retains new counsel. The 
commenter suggested that any costs for such a transfer should be borne 
solely by ``incoming'' counsel. The Special Master does not believe 
that this is an issue to be addressed in the regulations and therefore 
no changes to the Final Rule are made with respect to this issue.

Other Comments

    The Special Master received a number of additional comments that, 
while not requiring changes to the regulations, raise important issues 
for the administration of the Fund. Former Special Master Birnbaum 
indicated from the reopening of the Fund in 2011 that her goal was to 
design, implement, and administer a program that is transparent and 
fair. Special Master Bhattacharyya is similarly committed to those 
goals in the administration of the Fund for the next five years.
    Comments stressed the importance of transparency so that claimants 
can understand the reasons for how their claims are handled. Some 
commenters suggested that certain claims were submitted months or years 
before the reauthorization and did not receive a loss calculation or 
other correspondence from the Fund requesting missing information or 
clarification of previously submitted information, and as a result, 
those claims will be unfairly subject to Group B statutory standards. 
These commenters did not identify specific claims and therefore the 
Special Master could not investigate the reasons why this may have 
happened or whether the loss amount in those claims would yield a 
different value under Group B standards. As a general matter, many 
claims that did not receive a loss calculation letter at the time of 
reauthorization had incomplete compensation forms, had an eligibility 
issue that precluded compensation review, were missing required 
supporting documents that were not submitted with the claim, or 
presented unique circumstances related to compensation that require 
additional research or third-party verification. Other claims may have 
submitted all of the paperwork necessary to process the claim but 
unfortunately were not fully evaluated and determined when Congress 
enacted the new legislation. The Fund has prioritized and granted 
expedited review for claimants suffering from a terminal illness or 
extreme financial hardship and undertook great efforts to review claims 
in the order in which they were submitted. The Fund continues its 
commitment to reviewing claims when they are fully submitted in a first 
in, first out order.
    The Special Master appreciates these comments. While these comments 
do not require changes in the regulations, they suggest ways that the 
Fund can better achieve its mission. The Special Master is attuned to 
these issues and will take them into account as she works to ensure 
that the Fund serves the 9/11 community as the Zadroga Act intended.
    Other commenters suggested changes that are outside the scope of 
this program. For example, two commenters called for the expansion of 
the New York State World Trade Center (WTC) Disability Law, which 
allows certain first responders to receive a disability pension due to 
injuries sustained as a result of 9/11 exposure, to include first 
responders who voluntarily left their employment or are not otherwise 
covered. Such an action would have to be addressed by the state 
legislature.
    One commenter objected to the definition of the ``9/11 crash site'' 
on the grounds that the northern boundary line does not encompass the 
full New York City exposure zone and is inconsistent with the boundary 
used in the WTC Health Program, but properly recognized that it would 
require an act of Congress to revise the boundary.

Regulatory Certifications

Administrative Procedure Act

    This Final Rule is being made effective on the date of publication 
in the Federal Register. The Special Master, pursuant to 5 U.S.C. 
553(d)(3), finds that there is good cause to forgo a 30-day delayed 
effective date for this Final Rule. The Final Rule makes no change to 
the provisions of the Interim Final Rule (except for two minor 
technical corrections fixing unintended errors). The preamble of this 
Final Rule responds to the public comments and explains why no 
substantive changes to the Interim Final Rule are needed. In the 
interests of transparency, the Special Master has deferred the issuance 
of payments on pending claims until after the publication of this Final 
Rule, which serves to make clear the final standards applicable to the 
adjudication of claims under the Fund. Thus, a 30-day delay in the 
effective date of this Final Rule would also have had the effect of 
further delaying the issuance of payments on claims under the revised 
provisions of Part 104, which would be undesirable and contrary to 
sound public policy.

Paperwork Reduction Act of 1995

    This Final Rule implements Public Law 114-113 which reauthorizes 
the September 11th Victim Compensation Fund of 2001. In order to be 
able to evaluate claims and provide compensation, the Fund must collect 
information from an individual (or a personal representatives of a 
deceased individual) who suffered physical harm or was killed as a 
result of the terrorist-related aircraft crashes of September 11, 2001 
or the debris removal efforts that took place in the immediate 
aftermath of those crashes. Accordingly, in connection with the 
approval of the Interim Final Rule, the Department of Justice, Civil 
Division, submitted an information collection request to the Office of 
Management and Budget for review and clearance in accordance with the 
emergency review procedures of the Paperwork Reduction Act of 1995. 
This request sought reinstatement of the prior information collection 
authorized under Public Law 111-347. The Department also published a 
Notice in the Federal Register soliciting public comment on the 
information collection associated with this rulemaking. 81 FR 20674 
(April 8, 2016). The Office of Management and Budget approved the 
information collection on June 13, 2016. The information collection 
will be effective until June 30, 2019.

[[Page 60620]]

Regulatory Flexibility Act

    These regulations set forth procedures by which the Federal 
government will award compensation benefits to eligible victims of the 
September 11, 2001, terrorist attacks. Under 5 U.S.C. 601(6), the term 
``small entity'' does not include the Federal government, the party 
charged with incurring the costs attendant to the implementation and 
administration of the Victim Compensation Fund. This rule provides 
compensation to individuals, not to entities.
    Further, because a general notice of proposed rulemaking was not 
required for the Interim Final rule, and in accordance with the 
Regulatory Flexibility Act (5 U.S.C. 603(a) and 604(a)), a Regulatory 
Flexibility Act analysis was not required.

Executive Orders 12866 and 13563--Regulatory Review

    This Final Rule has been drafted and reviewed in accordance with 
Executive Order 12866, ``Regulatory Planning and Review'' section 1(b), 
Principles of Regulation and in accordance with Executive Order 13563 
``Improving Regulation and Regulatory Review'' section 1(b) General 
Principles of Regulation. The Office of Management and Budget had 
determined that the Interim Final Rule was an ``economically 
significant regulatory action'' under Executive Order 12866, section 
3(f), Regulatory Planning and Review, and accordingly the Interim Final 
Rule had been reviewed by the Office of Management and Budget. This 
Final Rule, however, adopts as final the regulatory provisions 
promulgated by the Interim Final Rule, with no substantive change. 
Accordingly, the Department has determined that this Final Rule is not 
a significant regulatory action under Executive Order 12866, and this 
rule has not been reviewed by the Office of Management and Budget.

Executive Order 13132--Federalism

    This regulation will not have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with Executive 
Order 13132, it is determined that this rule does not have sufficient 
federalism implications to warrant the preparation of a Federalism 
Assessment. This rule is substantively identical to the Interim Final 
Rule published on June 15, 2016, and the Department of Justice worked 
cooperatively with state and local officials in the affected 
communities, and notified national associations representing elected 
officials, in the preparation of the Interim Final Rule.

Executive Order 12988--Civil Justice Reform

    This regulation meets the applicable standards set forth in 
sections 3(a) and 3(b)(2) of Executive Order 12988.

Unfunded Mandates Reform Act of 1995

    This rule will not result in the expenditure by State, local and 
tribal governments, in the aggregate, or by the private sector, of 
$100,000,000 or more in any one year, and it will not significantly or 
uniquely affect small governments. Therefore, no actions were deemed 
necessary under the provisions of the Unfunded Mandates Reform Act of 
1995.

Small Business Regulatory Enforcement Fairness Act of 1996

    This rule is not a major rule as defined by section 804 of the 
Small Business Regulatory Enforcement Fairness Act of 1996. This rule 
will not result in an annual effect on the economy of $100,000,000 or 
more, a major increase in costs or prices, or significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or on the ability of United States-based companies to 
compete with foreign-based companies in domestic and export markets.

Congressional Review Act

    This rule adopts as final the provisions of the Interim Final Rule 
published on June 15, 2016 (81 FR 38936). Upon consideration of the 
public comments submitted in response to the Interim Final Rule, the 
Special Master has determined that no substantive changes need to be 
made in the regulations in 28 CFR part 104, which took effect on June 
15, 2016. This rule makes no amendments to the existing regulations in 
28 CFR part 104, except for two technical changes correcting minor 
drafting errors.
    The Special Master has determined that this Final Rule does not 
fall within the definition of a ``rule'' under the Congressional Review 
Act, 5 U.S.C. 804(3)(C), because it is a rule of agency practice or 
procedure that does not substantially affect the rights or obligations 
of non-agency parties. Accordingly, the requirement to submit a report 
pursuant to 5 U.S.C. 801 is not applicable.

List of Subjects in 28 CFR Part 104

    Disaster assistance, Disability benefits, Terrorism.

    Accordingly, for the reasons set forth in the preamble, the interim 
rule amending 28 CFR part 104, which was published at 81 FR 38936, on 
June 15, 2016, is adopted as final with the following changes:

PART 104--SEPTEMBER 11TH VICTIM COMPENSATION FUND

0
1. The authority citation for Part 104 continues to read as follows:

    Authority: Title I V of Pub. L. 107-42, 115 Stat. 230, 49 U.S.C. 
40101 note; Title II of Pub. L. 111-347, 124 Stat. 3623; Div. O, 
Title IV of Pub. L. 114-113, 129 Stat. 2242.

0
2. In Sec.  104.21, the last sentence of paragraph (a) is revised to 
read as follows:


Sec.  104.21  Presumptively covered conditions.

    (a) * * * Group B claims shall be eligible for compensation only if 
the Special Master determines based on the evidence presented that a 
claimant who seeks compensation for physical harm has at least one WTC-
Related Physical Health Condition, or, with respect to a deceased 
individual, the cause of such individual's death is determined at least 
in part to be attributable to a WTC-Related Physical Health Condition.
* * * * *

0
3. In Sec.  104.62, paragraph (b) is revised to read as follows:


Sec.  104.62  Time limit on filing claims.

* * * * *
    (b) Determination by Special Master. The Special Master or the 
Special Master's designee should determine the timeliness of all claims 
under paragraph (a) of this section.

    Dated: August 29, 2016.
Rupa Bhattacharyya,
Special Master.
[FR Doc. 2016-21216 Filed 9-1-16; 8:45 am]
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