[Federal Register Volume 82, Number 235 (Friday, December 8, 2017)]
[Rules and Regulations]
[Pages 57830-57835]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-26523]
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DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 3
RIN 2900-AP48
Extra-Schedular Evaluations for Individual Disabilities
AGENCY: Department of Veterans Affairs.
ACTION: Final rule.
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SUMMARY: The Department of Veterans Affairs (VA) amends its
adjudication regulation pertaining to extra-schedular consideration of
a service-connected disability in exceptional compensation cases. This
rule clarifies that an extra-schedular evaluation is to be applied to
an individual service-connected disability when the disability is so
exceptional or unusual that it makes application of the regular rating
schedule impractical. An extra-schedular evaluation may not be based on
the combined effect of more than one service-connected disability. For
the reasons set forth in the proposed rule and in this final rule, VA
is adopting the proposed rule as final, with two changes, as explained
below.
DATES:
Effective Date: This rule is effective January 8, 2018.
Applicability Date: The provisions of this final rule shall apply
to all applications for benefits that are received by VA on or after
January 8, 2018 or that are pending before VA, the United States Court
of Appeals for Veterans Claims, or the United States Court of Appeals
for the Federal Circuit (Federal Circuit) on January 8, 2018.
FOR FURTHER INFORMATION CONTACT: Nora Jimison, Policy Analyst,
Regulations Staff (211D), Compensation Service, Department of Veterans
Affairs, 810 Vermont Avenue NW., Washington, DC 20420, (202) 461-9700.
(This is not a toll-free telephone number.)
SUPPLEMENTARY INFORMATION: On April 20, 2016, VA published in the
Federal Register (81 FR 23228) a proposed rule to amend its regulation
at 38 CFR 3.321(b)(1) in order to clarify its long-standing
interpretation that the regulation provides an extra-schedular
evaluation for a single service-connected disability, and not for the
combined effect of two or more service-connected disabilities. Section
501 of title 38, United States Code, provides VA with the authority to
interpret its own regulations under its general rulemaking authority.
Menegassi v. Shinseki, 638 F.3d 1379, 1382 (Fed. Cir. 2011). VA had
already proposed to clarify section 3.321(b)(1) as part of a regulation
rewrite project in 2013; however, a subsequent decision by the Federal
Circuit held that section 3.321(b)(1) required VA to consider the
combined effects of two or more service-connected disabilities when
determining extra-schedular evaluations. Johnson v. McDonald, 762 F.3d
1362, 1365-66 (Fed. Cir. 2014), rev'g 26 Vet. App. 237 (2013). This
decision conflicts with VA's longstanding interpretation of section
3.321(b)(1), and VA therefore decided to amend the regulation in a
separate rulemaking to clarify its interpretation of the regulation.
Interested persons were invited to submit comments to the proposed
rule on or before June 20, 2016, and 11 comments were received. Those
comments have been organized according to topic in the discussion
below.
I. Separation of Powers
A commenter stated that VA's rulemaking to overturn Johnson is a
violation of the constitutional doctrines of separation of powers and
due process. We disagree. ``A court's prior judicial construction of a
statute trumps an agency construction . . . if the prior court decision
holds that its construction follows from the unambiguous terms of the
statute and thus leaves no room for agency discretion.'' National Cable
& Telecomms. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 982
(2005). The Federal Circuit, however, held in Johnson that the language
of prior 38 CFR 3.321(b)(1), not a statute, was ``unambiguous'' and
``consistent with language of [38 U.S.C.] Sec. 1155 authorizing the
regulation.'' 762 F.3d at 1365-66. Where a court decision is based on
interpretation of an agency regulation, the agency may undertake
rulemaking to revise the regulation to change or clarify the intended
meaning of the regulation. See National Org.
[[Page 57831]]
Veterans' Advocates, Inc. v. Secretary of Veterans Affairs, 260 F.3d
1365, 1374 (Fed. Cir. 2001). Section 1155 of title 38, United States
Code, authorizes VA to ``adopt and apply a schedule of ratings of
reductions in earning capacity from specific injuries or combination of
injuries . . . based, as far as practicable, upon the average
impairments of earning capacity . . . in civil occupations.'' The
statute does not mention an extra-schedular evaluation, but rather
leaves it to VA's discretion to determine when it is not practicable to
assign a rating based upon loss in average earning capacity, and 38 CFR
3.321(b)(1) explains when VA will do so. We therefore do not believe
that amendment of the regulation violates separation of powers or due
process.
II. Conflict With 38 U.S.C. 1155
Four commenters stated that amended section 3.321(b)(1) contradicts
38 U.S.C. 1155. One commenter stated that, by limiting an extra-
schedular evaluation to an individual rating, an adjudicator is barred
from considering a veteran's average earning impairment resulting from
a veteran's ``injuries'' and instead must look to the impairment of
each injury. Another commenter stated that the amended rule would
render the term ``combination of injuries'' in section 1155
superfluous. A third commenter stated that the regulation is
inconsistent with the plain language of the statute because it applies
to a single disability and as a result, the rule will have no
controlling weight. The fourth commenter stated that the regulation
should compensate for ``average impairments of earning capacity'' as
provided in section 1155 rather than ``actual impairment of earning
capacity'' as provided in amended section 3.321(b)(1).
The rule does not contradict or misinterpret 38 U.S.C. 1155. As
explained above, section 1155 authorizes VA to ``adopt and apply a
schedule of ratings of reductions in earning capacity from specific
injuries or combination of injuries. The ratings shall be based, as far
as practicable, upon the average impairments of earning capacity . . .
in civil occupations.'' VA has specified how its rating schedule will
be applied to determine average impairments in earning capacity due to
combinations of injuries. Under the table in 38 CFR 4.25, the ratings
for each disability which are based upon the average earning impairment
are combined and a rating is assigned for the combined effect of the
disabilities. Thus, the terms ``injuries'' and ``combination of
injuries'' in section 1155 are not rendered superfluous as a result of
revised section 3.321(b)(1). Further, section 1155 states that
``ratings shall be based, as far as practicable, upon the average
impairments of earning capacity.'' VA's rule provides for discretion in
cases where the schedule is inadequate to compensate for average
impairment of earning capacity. Therefore, the regulation is not
inconsistent with the statute.
We disagree with the comment that section 3.321(b)(1) must
compensate for impairment of ``average earning capacity.'' Rather, as
the commenter acknowledges, an extra-schedular evaluation is intended
for ``the exceptional case where the schedular evaluation,'' which is
based on average earning capacity, ``is inadequate.'' Section 1155
states that the rating schedule is to be ``based, as far as
practicable, upon the average impairments of earning capacity.'' By its
terms, the statute leaves to VA's discretion situations where use of a
schedule based on average impairments is not practical or feasible.
Pursuant to this authority, VA has promulgated section 3.321(b)(1)
allowing for an extra-schedular evaluation in cases in which
application of the regular schedular standards is impractical because
the veteran's disability is so exceptional or unusual due to such
related factors as marked interference with employment or frequent
periods of hospitalization. In clarifying its longstanding policy in
the amended regulation, VA will continue to look to the evidence to
determine whether the veteran's service-connected disability causes
factors such as marked interference with employment or frequent periods
of hospitalization, rather than limiting a veteran to a schedular
rating based upon average impairment of earning capacity.
Another commenter stated that the regulation is inconsistent with
the congressionally mandated statutory scheme, which is pro-veteran. As
explained above, by its terms, 38 U.S.C. 1155 leaves to VA's discretion
situations where use of a schedule based on average impairments is not
practicable or feasible, i.e., where applying such a schedule would not
result in a rating reflective of the true measure of disability.
Because 38 CFR 3.321(b)(1) allows for an extra-schedular evaluation in
cases where the disability is ``so exceptional or unusual due to such
related factors as marked interference with employment or frequent
periods of hospitalization'' as to render impractical the application
of the regular schedular standards, we believe that the rule is
consistent with title 38, United States Code, and is pro-veteran.
As explained in the notice of proposed rulemaking, 81 FR at 23230,
VA has limited extra-schedular consideration to individual disabilities
in part due to the substantial difficulty that would accompany efforts
to apply such consideration to the combined effects of multiple
disabilities in a logical and consistent manner. A determination as to
whether existing rating-schedule provisions are inadequate to evaluate
a particular claimant's disability requires comparison of the
manifestations of the claimant's disability with the types of
manifestations listed in the applicable rating schedule provisions.
Ratings for combinations of disabilities are determined by application
of a standard formula in 38 CFR 4.25, and there are thus no provisions
in the rating schedule describing impairments that would be associated
with a particular combination of disabilities. Accordingly, VA
adjudicators would have no objective standard for determining whether a
particular combined rating is adequate or inadequate. Requiring
adjudicators to consider the adequacy of combined ratings would lead to
inconsistent and highly subjective determinations, and would likely
cause delays in the adjudication of claims. These effects would in some
respects be detrimental to claimants and to the effective operation of
VA's claims-adjudication system.
III. VA's Interpretation of Prior Version of 38 CFR 3.321(b)(1)
One commenter disputed VA's statement in the notice of proposed
rulemaking that the Department has long interpreted 38 CFR 3.321(b)(1)
to provide an extra-schedular evaluation for only one service-connected
disability. The commenter cited to the dissenting opinion in the
Veterans Court's Johnson decision, 26 Vet. App. at 257-58, regarding
the regulatory language over time. 81 FR 23278.
We respectfully disagree with the analysis of VA's interpretation
of the regulation over time. As we stated in the notice of proposed
rulemaking, VA, since 1936, has interpreted section 3.321(b)(1) to
provide for an extra-schedular evaluation for each service-connected
disability for which the schedular evaluation is inadequate based upon
the regulatory criteria. The original rule which was promulgated in
1930, R & PR 1307(B), required that a recommendation from a field
office alleging that the rating schedule provides inadequate or
excessive ratings in an individual case include a statement of findings
regarding the
[[Page 57832]]
extent to which a veteran's actual reduction in earning capacity ``is
due to the service-connected disability.'' The regulation includes only
the single version of the word ``disability.'' The 1936 version of the
rule, R & PR 1142, required a submitting agency to provide a
recommendation ``concerning service connection and evaluation of every
disability, under . . . the applicable schedules as interpreted by the
submitting agency.'' This sentence was deleted from the regulation in
1954, but was incorporated in the Department of Veterans Benefits
Veterans Administration Manual 8-5 Revised, para. 47.j. (Jan. 6, 1958),
to provide instruction for cases referred under VA Regulation 1142. The
word ``every'' means ``[a]ll of a whole collection or aggregate number,
considered separately, one by one; each, considered as a unitary part
of an aggregate number.'' Every, Ballentine's Law Dictionary (emphasis
added). Thus, for 28 years following promulgation of R & PR 1307(B) and
(C), the VA predecessor regulations to 38 CFR 3.321(b)(1) and the
Manual provided for an extra-schedular evaluation based upon the
effects of a ``disability,'' not disabilities.
The Federal Circuit has previously recognized that VA's
interpretation of section 3.321(b)(1) is found in the VBA Manual. Thun
v. Shinseki, 572 F.3d 1366, 1369 (Fed. Cir. 2009). As explained above,
the 1958 Manual M8-5 Revised, para. 47.j., instructed that every claims
folder forwarded for extra-schedular consideration ``will include a
definite recommendation from the submitting agency concerning
evaluation of every disability under the schedule as interpreted by the
submitting agency with the diagnostic code.'' In 1992, VBA revised the
VBA Manual by adding the word ``individual'' before the word
``disability(ies)'' in paragraph 3.09, Submission For Extra-Schedular
Consideration. M21-1, Part VI, para. 3.09 (Mar. 17, 1992), which
required preparation of a memorandum to be submitted to Central Office
``whenever the schedular evaluations are considered to be inadequate
for an individual disability(ies).'' Thus, we believe that there is
ample support for the statement that VA has long-interpreted section
3.321(b)(1) and its predecessors as providing for an extra-schedular
evaluation for a single service-connected disability that was not
adequately compensated under the rating schedule.
IV. Coverage of Single Disability Under Amended Section 3.321(b)(1)
Two commenters pointed out that section 3.321(b)(1) is intended
``[t]o accord justice,'' and that the proposed rule is unjust and
inequitable because it ignores the cumulative effects of multiple
conditions on a veteran's earning capacity. See Johnson, 762 F.3d at
1366. Another commenter stated that proposed section 3.321(b)(1)
ignores the fact that a veteran may have multiple service-connected
disabilities that combine to limit the veteran's ability to work or
that combine to generate an actual condition worse than that
contemplated by the disability schedule.
The commenters mistakenly assume that VA may only ``accord
justice'' if all service-connected disabilities are considered
collectively for deciding entitlement to an extra-schedular evaluation.
There is no dispute that 3.321(b)(1) accords justice by authorizing
extra-schedular ratings based upon the effect of a service-connected
disability upon an individual veteran rather than limiting the veteran
to a schedular rating based upon average impairment of earning
capacity. Also, the phrase ``[t]o accord justice'' is given context in
section 3.321(b)(1) by the sentence that precedes it: ``[r]atings shall
be based, as far as practicable, upon the average impairments of
earning capacity with the additional proviso that the Secretary shall
from time to time readjust this schedule of ratings in accordance with
experience.'' The rule thus authorizes VA to assign ratings beyond
those provided in the schedule even in advance of any necessary
revision to the rating schedule. Further, there is a policy reason for
limiting an extra-schedular evaluation under section 3.321(b)(1) to a
single service-connected disability. As explained above, VA believes
that the rule is consistent with the regulatory scheme, under which
there is a distinction between application of the schedular criteria
relating to specific disabilities and the application of the formula in
38 CFR 4.25 for combining individual disability ratings.
A commenter inquired about whether a veteran would be entitled to
an extra-schedular rating for each service-connected disability. A
veteran would be entitled to an extra-schedular rating for each
service-connected disability that satisfies the criteria in the rule,
i.e., (1) the schedular evaluation for the disability is inadequate;
and (2) the disability is so exceptional or unusual due to related
factors such as marked interference with employment or frequent periods
of hospitalization.
V. Conflict Between Amended Section 3.321(b)(1) and Other VA
Regulations
One commenter stated that the rule appears to conflict with 38 CFR
3.102, which provides that VA will ``administer the law under a broad
interpretation.'' We do not believe that there is a conflict because,
rather than limit a veteran to a schedular rating that is
``inadequate,'' 38 CFR 3.321(b)(1) provides for an extra-schedular
evaluation to account for an ``exceptional or unusual disability''
involving ``marked interference with employment or frequent periods of
hospitalization.''
One commenter wrote that the rule is inconsistent with VA's
regulatory scheme for evaluating disabilities because it considers a
disability in a vacuum, pointing to 38 CFR 4.10 regarding functional
impairment and 38 CFR 3.383, which pertains to special consideration if
a veteran has suffered loss of certain paired organs or extremities as
a result of service-connected disabilities and non-service-connected
disabilities.
The regulations cited by the commenter do not support the comment.
Section 4.10 states that ``[t]he basis of disability evaluations is the
ability of the body as a whole . . . to function under the ordinary
conditions of daily life including employment.'' The cited statement,
however, falls within Subpart A of the Part 4 regulations, which
provides ``regulations prescribing the policies and procedures for
conducting VA medical examinations,'' which are not considered a part
of the rating schedule because ``[t]he rating schedule consists only of
those regulations that establish disabilities and set forth the terms
under which compensation shall be provided.'' Martinak v. Nicholson, 21
Vet. App. 447, 451-52 (2007) (citing 38 U.S.C. 1155); Vazquez-Flores v.
Shinseki, 580 F.3d 1270, 1280 (Fed. Cir. 2009). ``Thus, . . . the
effects of a disability on one's daily life . . . are not relevant to a
disability rating made by a ratings specialist.'' Vazquez-Flores, 580
F.3d at 1280. While section 4.10 and related regulations make clear
that fully descriptive medical examinations are needed to facilitate
application of VA's rating schedule, they do not alter the operation of
the rating schedule, which provides for disability ratings to be
assigned for each separate disability under the applicable criteria of
the rating schedule.
Section 3.383 of title 38, Code of Federal Regulations, implements
38 U.S.C. 1160, which provides that, in certain cases of paired organs
or
[[Page 57833]]
extremities in which a veteran has a non-service-connected disability
attributable to one organ or extremity and a service-connected
disability associated with the other organ or extremity, VA must pay
compensation as if the combination of disabilities were the result of
service-connected disability. Thus, Congress has specified the manner
of considering the combined effects of these disabilities. Section
3.321(b)(1), on the other hand, fills a gap in 38 U.S.C. 1155 providing
the Secretary with authority to address instances in which the ratings
for individual disabilities under the schedule are not practicable or
feasible.
One commenter stated that VA's proposed regulation does not take
into account veterans who do not qualify for consideration of
entitlement to a rating of total disability based upon individual
unemployability (TDIU) under 38 CFR 4.16(b). The commenter states that
a veteran may be forced to drop out of the workforce and apply for TDIU
as a result of extra-schedular evaluations based upon a single
disability.
Section 3.321(b)(1) addresses a different issue than section
4.16(a) and (b) were written to address. Section 3.321(b)(1) provides
an exception to reliance upon a particular rating contained in the
rating schedule where the schedule is determined to be inadequate in a
particular case and examines the rating issue from the perspective of
the schedule in rating a veteran's disability and provides adjustments
to the schedule based on the veteran's disability. Section 4.16, on the
other hand, looks at the situation from the perspective of the
unemployability of an individual veteran. Under section 4.16(a) and
(b), the deciding official looks at the overall impairment of a veteran
to determine whether the veteran is employable regardless of the
particular disability rating or combination of disability ratings
awarded. Thus, section 3.321(b)(1) focuses on the schedule's failure to
address the effect of a veteran's particular disability and the latter
focuses upon the veteran's overall employability. Amending section
3.321(b)(1) based on this comment would also render section 4.16
superfluous because section 3.321(b)(1) could be the basis for a 100
percent extra-schedular rating which would be equivalent to a TDIU
rating.
Another commenter stated that the combined ratings table is
inadequate to compensate for the vast array of potential interactions
between multiple disabilities. The commenter disputed VA's statement in
the notice of proposed rulemaking that there is no mechanism for
comparing the combined effects of multiple service-connected
disabilities with the schedular criteria and contends, citing Yancy v.
McDonald, 27 Vet. App. 484 (2016), that the Department can evaluate the
combined effects of multiple disabilities and then compare those
effects to the symptoms contemplated for individual disabilities.
The commenter misunderstands VA's statement. In Johnson, the
Federal Circuit held that referral for an extra-schedular evaluation
``may be based on the collective impact of the veteran's
disabilities.'' 762 F.3d at 1365. In Yancy, 27 Vet. App. at 495, the
Veterans Court stated that the first step when considering entitlement
to an extra-schedular evaluation is to decide whether the schedular
evaluations reasonably contemplate the veteran's symptomatology,
including any symptoms resulting from the combined effects of multiple
service-connected disabilities. However, as VA explained in the notice
of proposed rulemaking, there are no provisions in the rating schedule
describing impairments associated with a particular combination of
disabilities. 81 FR 23230. VA does not merely aggregate symptoms of a
veteran's service-connected disabilities. Rather, VA evaluates the
combined effects of multiple service-connected disabilities by
``consider[ing] . . . the efficiency of the individual as affected
first by the most disabling condition, then by the less disabling
condition, then by other less disabling conditions, if any, in the
order of severity.'' 38 CFR 4.25. As a result, it is not possible for
the Department to determine for purposes of 38 CFR 3.321(b)(1) whether
the rating derived from application of section 4.25 is ``inadequate''
to compensate for the combined effects of these disabilities. 81 FR
23230.
If, in a particular case, evidence indicated that two or more
service-connected disabilities combined to produce a symptom the
claimant believed was not adequately addressed by the rating criteria
for any of the individual disabilities at issue, the claimant could,
under this rule, seek extra-schedular ratings for the individual
conditions and VA would be required to evaluate the medical evidence in
determining whether the rating schedule was adequate to evaluate each
disabling condition, but would not be required to separately determine
whether the combined rating resulting from 38 CFR 4.25 was adequate to
evaluate the combined effects of the multiple disabilities.
VI. Decision Maker on Extra-Schedular Claims
A commenter stated that, to the extent that extraschedular
evaluation of the combined effect of multiple disabilities may impose
an additional burden on the Director of the Compensation Service, the
decision should instead be made by regional offices (RO) and the Board
of Veterans' Appeals. We agree that the ROs should make these fact-
intensive decisions in the first instance, and we have therefore
revised the rule by eliminating the phrase ``upon field station
submission'' and the word ``referred.''
VII. Section 3.321(b)(1) Criteria for Extra-Schedular Evaluation
Three commenters criticized the proposed rule on the basis that it
does not provide guidance about how to apply the proposed rule or to
the Board about how to review the Director's finding.
The standards for awarding an extra-schedular award are set forth
in section 3.321(b) and have been included in the regulation since
1961. See 38 CFR 3.321(B) (1961). Extraschedular consideration is a
question of fact ``assessing a veteran's unique disability picture and
whether that picture results in an average impairment in earning
capacity significant enough to warrant an extraschedular rating.''
Kuppamala v. McDonald, 27 Vet. App. 447, 454 (2015). Current VBA
procedures require the RO to submit a memorandum to the Director that
includes the evidence used for the review, including the medical
evidence in detail for each service-connected disability. M21-1, Part
III, Subpart iv, chapt. 6, Sec. B, para. 4.d. and h. (July 25, 2017).
The question for the VA decision maker is whether a veteran's
disability is ``exceptional or unusual'' because the disability
``marked[ly] interfere[s] with employment or [causes] frequent periods
of hospitalization.'' The Board's review of the matter is de novo and
requires consideration of all evidence and information pertaining to
whether the degree and frequency of an individual's veteran's
disability interferes with employment or causes frequent periods of
hospitalization. Kuppamala, 27 Vet. App. at 458-59.
One commenter stated that, in Kuppamala, the Secretary admitted
that there are no manageable standards for the assignment of an
extraschedular rating. In fact, the Secretary argued in Kuppamala
``there are no judicially manageable standards governing the Director's
decision as to extraschedular ratings,'' which would make it
[[Page 57834]]
impossible for the Board to review the decision. Id. at 452 (emphasis
added). The Veterans Court concluded, however, that 38 U.S.C. 1155 and
38 CFR 3.321(b)(1) provide a judicially manageable standard. Id. at
454.
Another commenter stated that VA does not explain how it is
possible to ``'ensure fair and consistent application of rating
standards''' given that 38 CFR 3.321(b)(1) requires an initial finding
that the ``schedular evaluation is inadequate.'' (Quoting 81 FR 23231).
The rating standards to which VA referred relate to a determination
about whether a veteran is entitled to an extra-schedular evaluation,
and as explained in the notice of proposed rulemaking, VA believes that
the Department is able to fairly and consistently apply rating
standards if consideration under section 3.321(b)(1) is limited to
whether a rating for an individual disability is adequate as opposed to
deciding whether a combined rating based upon residual work efficiency
is adequate to rate multiple service-connected disabilities.
One commenter stated that the definition of the term ``disability''
in amended section 3.321(b)(1) is unclear and that an extra-schedular
evaluation should be available for disability arising from a common
disease entity or etiology. The commenter states that, if a veteran has
a knee disability that causes both limitation or motion and
instability, both effects of the disability should be evaluated
together for purposes of entitlement to an extra-schedular rating.
``Words are not pebbles in alien juxtaposition; they have only a
communal existence; and not only does the meaning of each
interpenetrate the other, but all in their aggregate take their purport
from the setting in which they are used.'' Shell Oil Co. v. Iowa Dep't
of Revenue, 488 U.S. 19, 25 n.6 (1988) (quoting Nat'l Labor Relations
Bd. v. Federbush Co., 121 F.2d 954, 957 (2d Cir. 1941)). Section
3.321(b)(1) states that, ``[t]o accord justice to the exceptional case
where the schedular evaluation is inadequate to rate a single service-
connected disability,'' an extra-schedular evaluation may be approved.
The requirement that VA consider the adequacy of the schedular
evaluation means that the term ``single service-connected disability''
refers to the individual condition for which the schedular evaluation
is inadequate, rather than the effects of a disability, each of which
may be rated individually before receiving a combined rating.
Another commenter stated that the rule does not define ``actual
impairment in earning capacity'' and posed a series of questions about
how the term will be defined, e.g., whether a veteran must show loss of
a certain amount of income as a result of the disability, and if so,
how much of loss must the veteran suffer; whether inability to earn a
higher level of income will suffice; and how will actual impairment in
earning capacity be determined if a veteran is not employed. We have
considered these comments and agree that an extra-schedular rating
should be commensurate with the average rather than actual impairment
of earning capacity due exclusively to the disability and we have
revised the rule accordingly.
VIII. Comments Beyond Scope of Rulemaking
A commenter criticized the algorithm used to combine disabilities
in 38 CFR 4.25. Another commenter remarked on the inadequacy of the
rates in 38 U.S.C. 1114, but acknowledged that this comment is beyond
the scope of the rulemaking. These comments are beyond the scope of the
rulemaking, and we therefore make no change based on these comments.
Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess the
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 effects, and other advantages; distributive impacts;
and equity). Executive Order 13563 (Improving Regulation and Regulatory
Review) emphasizes the importance of quantifying both costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
Executive Order 12866 (Regulatory Planning and Review) defines 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 this Executive Order.''
The economic, interagency, budgetary, legal, and policy
implications of this regulatory action have been examined, and it has
been determined not to be a significant regulatory action under
Executive Order 12866. VA's impact analysis can be found as a
supporting document at http://www.regulations.gov, usually within 48
hours after the rulemaking document is published. Additionally, a copy
of this rulemaking and its impact analysis are available on VA's Web
site at http://www.va.gov/orpm/, by following the link for ``VA
Regulations Published From FY 2004 Through Fiscal Year to Date.''
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). This final rule will directly affect only individuals and will
not directly affect small entities. Therefore, pursuant to 5 U.S.C.
605(b), this rulemaking 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 the 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 one year. This final rule would have no such effect
on State, local, and tribal governments, or on the private sector.
Paperwork Reduction Act
This final rule contains no provisions constituting a collection of
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3521).
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance numbers and titles for
the programs affected by this document are 64.109, Veterans
Compensation for Service-Connected Disability.
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
[[Page 57835]]
electronically as an official document of the Department of Veterans
Affairs. Gina S. Farrisee, Deputy Chief of Staff, Department of
Veterans Affairs, approved this document on November 13, 2017, for
publication.
List of Subjects in 38 CFR Part 3
Administrative practice and procedure, Claims, Disability benefits,
Veterans.
Dated: November 13, 2017.
Jeffrey Martin,
Impact Analyst, Office of Regulation Policy & Management, Office of the
Secretary, Department of Veterans Affairs.
For the reasons stated in the preamble, the Department of Veterans
Affairs amends 38 CFR part 3 as set forth below:
PART 3--ADJUDICATION
Subpart A--Pension, Compensation, and Dependency and Indemnity
Compensation
0
1. The authority citation for part 3, subpart A continues to read as
follows:
Authority: 38 U.S.C. 501(a), unless otherwise noted.
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2. Amend Sec. 3.321 by revising the heading of paragraph (b), and
revising paragraph (b)(1), to read as follows:
Sec. 3.321 General rating considerations:
* * * * *
(b) Extra-schedular ratings in unusual cases--(1) Disability
compensation. Ratings shall be based, as far as practicable, upon the
average impairments of earning capacity with the additional proviso
that the Secretary shall from time to time readjust this schedule of
ratings in accordance with experience. To accord justice to the
exceptional case where the schedular evaluation is inadequate to rate a
single service-connected disability, the Director of Compensation
Service or his or her delegate is authorized to approve on the basis of
the criteria set forth in this paragraph (b), an extra-schedular
evaluation commensurate with the average impairment of earning capacity
due exclusively to the disability. The governing norm in these
exceptional cases is a finding by the Director of Compensation Service
or delegatee that application of the regular schedular standards is
impractical because the disability is so exceptional or unusual due to
such related factors as marked interference with employment or frequent
periods of hospitalization.
* * * * *
[FR Doc. 2017-26523 Filed 12-7-17; 8:45 am]
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