[Federal Register Volume 83, Number 204 (Monday, October 22, 2018)]
[Rules and Regulations]
[Pages 53179-53182]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-22892]



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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 3

RIN 2900-AP43


Presumption of Herbicide Exposure and Presumption of Disability 
During Service for Reservists Presumed Exposed to Herbicides

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: The Department of Veterans Affairs (VA) is adopting as final 
an interim final rule published on June 19, 2015, to amend its 
adjudication regulation governing individuals presumed to have been 
exposed to certain herbicides. Specifically, VA expanded the regulation 
to include an additional group consisting of individuals who performed 
service in the Air Force or Air Force Reserve under circumstances in 
which they had regular and repeated contact with C-123 aircraft known 
to have been used to spray an herbicide agent (``Agent Orange'') during 
the Vietnam era. In addition, the regulation established a presumption 
that members of this group who later develop an Agent Orange 
presumptive condition were disabled during the relevant period of 
service, thus establishing that service as ``active military, naval, or 
air service.'' The effect of this action is to presume herbicide 
exposure for these individuals and to create a presumption that the 
individuals who are presumed exposed to herbicides during reserve 
service also meet the statutory definition of ``veteran'' (hereinafter, 
``veteran status'') for VA purposes and eligibility for some VA 
benefits.

DATES: Effective Date: This rule is effective October 22, 2018.
    Applicability Date: This final rule is applicable to any claim for 
service connection for an Agent Orange presumptive condition filed by a 
covered individual that was pending on or after June 19, 2015.

FOR FURTHER INFORMATION CONTACT: Stephanie Li, Chief, 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: In a document published in the Federal 
Register on June 19, 2015 (80 FR 35246), VA amended its regulation at 
38 CFR 3.307 governing individuals presumed to have been exposed to 
certain herbicides. VA provided the public 60 days in which to comment 
on the amendment made by the interim final rule, with the comment 
period ending August 18, 2015. VA received 46 comments from various 
organizations and individuals. The issues raised by the commenters that 
concerned a similar topic have been grouped together and VA's 
discussion of the comments organized accordingly. For the reasons set 
forth in the interim final rule and for those reasons discussed below, 
we are adopting the interim final rule as final without changes.
    The majority of public comments asserted a need for retroactive 
application of the effective date assigned for the interim final rule. 
Retroactivity is generally not favored in the law and an agency will 
not generally be considered to have authority to provide retroactive 
effect unless an exception to this general rule is provided via an 
express statutory delegation of authority. See Bowen v. Georgetown 
Univ. Hosp., 488 U.S. 204, 208 (1988). Further, 38 U.S.C. 5110(g) 
stipulates that the effective date of an award or increase based on a 
liberalizing law or VA issue will either be the ``effective date of the 
Act or administrative issue,'' or the date entitlement arose, whichever 
is later. This statute is implemented through regulation (38 CFR 
3.114), which generally does not contemplate VA providing benefits 
effective prior to the effective date of the liberalizing regulation 
itself.
    Even to the extent VA's rulemaking authority under 38 U.S.C. 501 
includes authority to issue retroactive regulations, and assuming such 
an understanding can be reconciled with section 5110(g), VA declines to 
do so in this matter. Even if VA's rulemaking authority extends to 
assigning a retroactive effective date in the abstract, doing so is 
nevertheless inconsistent with the intent of section 5110(g) and would 
certainly be inconsistent with VA's usual and longstanding practice to 
make substantive rules effective prospectively. Maintaining a general 
policy of applying new regulations prospectively helps ensure that all 
new liberalizing regulations are applied in a fair and consistent 
manner. The United States Court of Appeals for the Federal Circuit has 
reviewed this authority and held that VA did not act unreasonably in 
using a prospective effective date for a liberalizing regulation rather 
than a retroactive effective date in circumstance similar to this. 
McKinney v. McDonald, 796 F.3d 1377, 1384-85 (Fed. Cir. 2015). 
Additionally, we note that avoiding retroactivity serves the interests 
of orderly administration and clarity in the law. If new regulations 
apply only prospectively, then determining what law applied to a past 
claim as of a given point in time is a matter of looking up the 
regulation for the applicable year. When new regulations are given 
retroactive effect, agency personnel must navigate considerably more 
complexity (e.g., having to consult the law in 2018 in order to figure 
out what the law was in 1990). Retroactive application of a new 
regulation also entails significant complexity insofar as adjudicators 
may have to assess intervening changes to other relevant statutes and 
regulations and seek to develop evidence, years after the fact, 
regarding the existence and extent of disability during past periods. 
This would increase the potential for confusion, inconsistency, and 
delay in VA claim adjudications, in addition to the disparate treatment 
that would result from making some presumptions retroactive, but not 
others. Therefore, although it may be possible for VA to provide 
retroactive effect in some exceptional circumstance, this would be 
inappropriate as a routine matter. VA will make the provisions 
addressed herein effective prospectively from the date of enactment 
consistent with the approach both VA and Congress generally have 
followed in establishing liberalizing regulations and statutes 
benefitting other groups of veterans, and makes no change based on the 
comments suggesting a retroactive effective date for the amendments to 
38 CFR 3.307.
    Multiple sub-categories were present within the broad category of 
requests for a retroactive effective date. Numerous commenters argued 
that this regulation is unnecessary as current VA policies and 
procedures already allow for establishing service-connected disability 
status based on exposure to residual dioxin aboard C-123 aircraft and 
the subsequent development of disabilities related thereto. Multiple 
commenters theorized that the regulation is unnecessary to establish 
presumption of exposure as an in-service injury during inactive duty 
training or active duty for training status. The comments referenced an 
opinion of VA's Office of General Counsel (OGC), VAOPGCPREC 4-2002, as 
a basis for establishing that the exposure to residual dioxin was an 
in-service ``injury'' sufficient to satisfy the criteria for service 
connection under 38 U.S.C. 101(24). Similarly, other comments received 
referenced another OGC opinion, VAOPGCPREC 08-2001, as a basis to 
establish occurrence of an ``injury'' for the purposes of establishing 
active service to satisfy section 101(24).

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    The two cited opinions and the argument that reservists can meet 
the statutory definition of ``veteran'' simply on the basis of injury 
are all inapposite to this rulemaking. Current law, specifically 38 
U.S.C. 101(2), defines ``veteran'' as ``a person who served in the 
active military, naval, or air service, and who was discharged or 
released therefrom under conditions other than dishonorable.'' Section 
101(24) then clarifies that ``active military, naval, or air service'' 
includes active duty for training during which an injury or disease is 
incurred or aggravated in the line of duty, or inactive duty for 
training during which an injury was incurred or aggravated in the line 
or duty or during which an acute myocardial infarction, a cardiac 
arrest, or a cerebrovascular accident occurs. Further, in both 
scenarios, section 101(24) requires that, ``during'' the referenced 
duty period, the putative veteran ``was disabled or died'' from a 
covered injury or disease. Thus, two discrete elements are required 
before VA can conclude that active duty for training (ADT) or inactive 
duty training (IDT) are considered active service: Injury (or in the 
case of ADT, disease as well, or in the case of IDT, the events 
specified in section 101(24)(C)(ii)) incurred or aggravated in the line 
of duty, and incurrence of disability during such duty period from that 
same covered injury or disease. Although the commenters are correct in 
that VA stated in the interim final rule that exposure to Agent Orange 
constitutes injury for veteran status purposes, insofar as the 
commenters argue that injury alone is sufficient to establish veteran 
status they are incorrect. In both ADT and IDT cases, disability must 
be incurred during the period of service. See section 101(24) (B) and 
(C). In the absence of incurrence of disability or death during 
service, veteran status is still not established. The operation of the 
presumption at issue in this regulation is therefore necessary for the 
putative veterans in question to achieve service connection on a 
presumptive basis.
    Both of the OGC opinions cited by commenters addressed whether 
specific incidents during service were legally sufficient to satisfy 
the definition of injury in section 101(24). The opinions did not 
address whether the injuries at issue could or did cause a disability 
or death during the same period of service, much less create a 
presumption that the injuries at issue would do so. See VAOPGCPREC 08-
2001, 04-2002. Nor did the opinions create a presumption that an entire 
class of servicemembers was, in fact, exposed to herbicide. Claimants 
who present evidence of both injury during ADT or IDT service and 
disability first manifest or aggravated during that same service--the 
situation addressed in both VAPGCPREC 08-2001 and 04-2002--could be 
entitled to service connection on a direct basis if the elements for 
service connection are otherwise established. This rule does not affect 
that basis of service connection for any individual. Rather, this rule 
creates presumptions for individuals who performed service in the Air 
Force or Air Force Reserve under circumstances in which they had 
regular and repeated contact with C-123 aircraft known to have been 
used to spray an herbicide agent regarding exposure to herbicides, 
injury, and onset of diseases specified in 38 CFR 3.309(e). Thus, we 
disagree that this rule is unnecessary and/or conflicts with VAPGCPREC 
08-2001 and 04-2002. No changes are made in response to these comments.
    Multiple comments referenced a March 2013 correspondence from the 
Joint Services Records Research Center (JSRRC) to VA. JSRRC had cited 
the findings of a study by the Agency for Toxic Substances and Disease 
Registry (ATSDR) as relevant documentation establishing exposure to 
residual dioxin. The commenters requested that this memorandum be 
utilized as a basis for a retroactive effective date. Similarly, 
multiple comments referenced the 2015 findings of the Institute of 
Medicine (IOM) and requested that the date of these findings be 
utilized as a basis for the effective date of this regulation.
    VA finds no basis to utilize the JSRRC correspondence or the IOM 
findings to establish an earlier effective date for the regulation. For 
all regulations in which VA has established a presumption of exposure, 
there is a body of scientific evidence that must be considered and 
ultimately informs the decision to establish the presumption of 
exposure. This body of scientific evidence, by logical necessity, 
predates the effective date of the regulation. Exposure aboard 
contaminated C-123 aircraft is no different. As discussed above, to the 
extent VA has legal authority to establish a retroactive effective 
date, it is unquestionably the well-established practice of VA and 
Congress to establish liberalizing regulations and statutes benefitting 
other groups of veterans with prospective effective dates. Therefore, 
no change is warranted based on any of these multiple theories asserted 
in support of assigning a retroactive effective date for this 
regulation.
    Some comments referenced prior VA decisions to grant service-
connected disability benefits based on exposure during inactive or 
active duty for training status aboard contaminated C-123 aircraft and 
utilized this as a basis for the argument to assign an earlier 
effective date for this regulation. Prior decisions granting benefits 
as described were made on the basis of the facts found in the 
individual case and the law that existed at the time, and are not a 
means for assigning an effective date for a regulation. As previously 
noted, under 38 U.S.C. 5110(g), effective dates ``shall be fixed in 
accordance with the facts found but shall not be earlier than the 
effective date of the Act or administrative issue.'' The prior cases 
referenced in the comments were all granted on the basis of individual 
facts found, and as already discussed above, the current regulation 
establishes entitlement on a presumptive basis. Thus, no change is 
warranted based on these comments.
    Some commenters objected to the regulation on the basis that the 
regulation imposes an additional challenge for cases already on appeal 
as veteran status must now be considered. Determining veteran status is 
always part of the claims process. Although veteran status may not be 
directly addressed and discussed in the adjudication of every claim or 
an appeal, it is one of many determinations that must be made along the 
path of considering entitlement to any VA benefit, and is frequently at 
issue in claims arising from periods of active duty for training or 
inactive duty training. See, e.g., Collaro v. West, 136 F.3d 1304, 1308 
(Fed. Cir. 1998) (noting that ``status as a veteran'' is one of five 
elements to be resolved in an application for service-connected 
disability benefits). Thus, no change is made based upon these comments 
as veteran status is and has been a consideration always inherent in 
deciding claims for VA benefits.
    An additional category of comments objected to the effective date 
on the basis that failure to allow for retroactive benefits results in 
denial of due process for those individuals who had previously 
submitted claims. For a denial of due process to occur, there must be a 
property interest, such as entitlement to a benefit, and deprivation of 
the property interest flowing from the defective process. At the time 
any claim was received prior to the effective date of this regulation, 
presumptive entitlement to a benefit did not exist as a matter of law 
(38 U.S.C. 5110(g) and 38 CFR 3.114). Due process serves to protect 
property interests that are recognized or created by the law--it does 
not itself create property interests. Leis v. Flynt, 439 U.S. 438, 441 
(1979);

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Town of Castle Rock v. Gonzalez, 545 U.S. 748, 771 (2005). The 
requirements of due process therefore cannot serve to create a 
presumption of entitlement to benefits prior to the time that 
presumption actually existed. Additionally, the creation of a 
presumption of exposure to dioxin effective June 19, 2015, does not 
prevent a claimant from introducing evidence in an earlier claim in 
order to establish service connection on a facts found basis. As noted 
earlier, VA granted entitlement to benefits on the basis of individual 
facts found before enactment of this rule. Consequently, there is no 
deprivation of due process, and no change is warranted based upon these 
comments.
    Multiple comments referenced what was viewed as unfavorable 
treatment of reserve service as compared to individuals who established 
status as a veteran after other types of service. As described in the 
explanation of responses to effective date comments, the term 
``veteran'' is defined in existing statutes. This rule serves as a 
vehicle to help members of the Air Force Reserve establish that their 
herbicide-related disease was incurred during active service. VA is 
without authority to ignore the statutory definition of the term 
``veteran'' regardless of whether that term treats reserve service 
differently than other types of service. Therefore, no change is 
warranted based on these comments.
    VA received comments requesting action in accordance with the 
effective date rules governed by the class action case of Nehmer v. 
United States Department of Veterans Affairs, No. CV-86-6160 TEH (N.D. 
Cal.). The Nehmer case established herbicide exposure claim procedures 
for veterans who served in Vietnam. Thus, reservists who served aboard 
C-123 aircraft outside Vietnam are not Nehmer class members, unless the 
individual in question separately deployed to Vietnam, in which case 
they have long been presumed exposed to herbicides without regard to 
the impact of this regulation. The stipulations that the parties 
entered into in Nehmer therefore do not apply to this rulemaking. 
Consequently, no changes are warranted based on these comments.
    VA received four comments in which the commenter objected to 
concession of exposure based on a lack of and/or faulty scientific 
evidence confirming actual exposure to residual dioxin. One of these 
comments also cited a 20-year Air Force Health Study that showed no 
correlation between exposure in crews participating in Operation Ranch 
Hand and those disabilities that VA presumes associated with herbicide 
exposure. VA has based its decision to add presumptions for C-123 
veterans on the entire body of relevant evidence, including the 
findings of the February 24, 2015, IOM report ``Post-Vietnam Dioxin 
Exposure in Agent Orange-Contaminated C-123 Aircraft.'' The report 
found evidence of potentially harmful exposure to residual dioxin for 
those Air Force Reservists who worked aboard contaminated, former 
Operation Ranch Hand C-123 aircraft. VA considered the comments and 
evidence cited by the commenters, but determined that they are not 
sufficient to outweigh the IOM's finding that ``[Air Force] Reservists 
working in [Operation Ranch Hand] C-123s were exposed (in the technical 
sense of the word of having bodily contact with the chemicals) to the 
components of Agent Orange to some extent.'' Therefore, no change is 
warranted based on these comments.
    Further, with regard to the comment questioning the validity of the 
presumptive correlation between exposure to residual dioxin and the 
subsequent development of diseases, the IOM report clearly states and 
provides sufficient analysis to confirm that it is plausible that Air 
Force Reservists ``would have experienced some exposure to chemicals 
from herbicide residue when working inside [Operation Ranch Hand] C-
123s.'' The IOM committee reported that ``[n]o matter what'' 
decontamination methods were used, ``TCDD and phenoxy herbicide 
residues were still detected 30 years later in several of the C-123 
aircraft at levels in excess of international guidelines.'' TCDD refers 
to the dioxin, an unintended contaminant in Agent Orange, which was 
later determined to be a human carcinogen. The IOM was able to find 
sufficient sampling data to demonstrate that the C-123s experienced 
long-term contamination with Agent Orange and TCDD. The report further 
explains that the available data was sufficient to suggest that ``the 
C-123s did contribute to some adverse health consequences among the 
[Air Force] Reservists who worked in [Operation Ranch Hand] C-123s.'' 
It has been longstanding VA policy to presume service-connection for 
certain disabilities determined to have been related to exposure to 
Agent Orange or related herbicides during military service. See 38 CFR 
3.309(e), Disease associated with exposure to certain herbicide agents. 
Consequently, no changes are made with regard to that comment.
    Two comments were received requesting Agent Orange Registry 
examinations. Entitlement to Agent Orange Registry examinations is not 
within the scope of this rule making. Agent Orange Registry 
examinations are made available to individuals who may have been 
exposed to herbicides during a military operation or as a result of 
testing, transporting, or spraying herbicides for military purposes. 
This rulemaking does not impact the availability of Agent Orange 
Registry examinations. Consequently, no change is made based upon these 
comments.
    Several comments were received pertaining to exposure aboard C-123 
aircraft at specific locations. This regulation does not establish 
criteria based on specific locations, but rather based on the type of 
service (Air Force or Air Force Reserve) and circumstances of that 
service (regular and repeated contact with C-123 aircraft known to have 
been used to spray Agent Orange during the Vietnam era). Specifically, 
the amended regulation establishes that VA will presume exposure to 
herbicides and in-service injury and incurrence of disability for 
individuals who suffer from specified herbicide-related diseases and 
``regularly and repeatedly operated, maintained, or served onboard C-
123 aircraft known to have been used to spray an herbicide agent during 
the Vietnam era.'' It further clarifies that the individual had to have 
been assigned to an Air Force or Air Force Reserve squadron that was 
permanently assigned one of the affected aircraft, and that he/she had 
an Air Force specialty code indicating duties as a flight, ground 
maintenance, or medical crew member. VA procedures have been 
established based upon the interim final rule to set forth this 
criteria in order to determine whether an individual was exposed based 
on the circumstances of service. Therefore, no change is warranted in 
response to these comments.
    One commenter requested that breast cancer be designated as a 
disability presumptively related to exposure to residual dioxin on C-
123 aircraft. This comment is outside the scope of this rulemaking. 
This rulemaking establishes means for presuming exposure to herbicides 
and establishing veteran status. The designation of a presumptive 
relationship between herbicide exposure and the subsequent development 
of any type of disease, such as breast cancer, is not within the scope 
of this rulemaking. Consequently, no change is warranted based upon 
this comment. However, VA will continue to monitor relevant scientific 
and medical reports for conditions associated with exposure to certain 
herbicide agents. If, at a later date, there is sufficient

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evidence to suggest a relationship between exposure and additional 
disabilities, VA will initiate additional rulemaking as appropriate.
    One comment was received requesting clarification of entitlement to 
survivor benefits within the rulemaking. Although clarification of 
entitlement to survivor benefits is not within the scope of this 
rulemaking in particular, we note that status to claim entitlement to 
survivor benefits is generally predicated on the basis of the 
survivor's relationship to a veteran, while the benefits that a 
survivor may claim can be dependent on the benefits to which that 
veteran was entitled. Whether a veteran's entitlement to benefits is 
established based in part on this liberalizing rule would not itself 
impact a suvivor's ability to claim benefits or the benefits to which 
the survivor would be entitled. No change is warranted based upon this 
comment.

Executive Orders 12866, 13563, and 13771

    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,'' which requires 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 
this Executive Order.''
    The economic, interagency, budgetary, legal, and policy 
implications of this regulatory action have been examined and it has 
been determined to be a significant regulatory action under Executive 
Order 12866, because it rasises novel legal or policy issues arising 
out of legal mandates, the President's priorities, or the principles 
set forth in this Executive Order. 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 the rulemaking and its impact analysis are available on VA's website 
at http://www.va.gov/orpm by following the link for VA Regulations 
Published from FY 2004 through FYTD. This rule is not subject to the 
requirements of E.O. 13771 because this rule results in no more than de 
minimis costs.

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 will have no such effect on 
State, local, and tribal governments, or on the private sector.

Paperwork Reduction Act

    This regulatory action contains provisions constituting a 
collection of information under the provisions of the Paperwork 
Reduction Act (44 U.S.C. 3501 et seq.). Specifically, this rule is 
associated with information collections related to the filing of 
disability benefits claims, VA Forms 21-526EZ and 21P-534EZ. The 
information collections are currently approved by the Office of 
Management and Budget (OMB) and have been assigned OMB control numbers 
2900-0747 and 2900-0004. There are no changes to any of these 
collections and, thus, no incremental costs associated with this 
rulemaking.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers and titles for 
the programs affected by this document are 64.100, Automobiles and 
Adaptive Equipment for Certain Disabled Veterans and Members of the 
Armed Forces; 64.101, Burial Expenses Allowance for Veterans; 64.102, 
Compensation for Service-Connected Deaths for Veterans' Dependents; 
64.104, Pension for Non-Service-Connected Disability for Veterans; 
64.105, Pension to Veterans Surviving Spouses and Children; 64.106, 
Specially Adapted Housing for Disabled Veterans; 64.109, Veterans 
Compensation for Service-Connected Disability; and 64.110, Veterans 
Dependency and Indemnity Compensation for Service-Connected Death.

List of Subjects in 38 CFR Part 3

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

Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this 
document and authorized the undersigned to submit the document to the 
Office of the Federal Register for publication electronically as an 
official document of the Department of Veterans Affairs. Jacquelyn 
Hayes-Byrd, Acting Chief of Staff, Department of Veterans Affairs, 
approved this document on June 12, 2018, for publication.

    Dated: October 11, 2018.
Jeffrey M. Martin,
Assistant Director, Office of Regulation Policy & Management, Office of 
the Secretary, Department of Veterans Affairs.

PART 3--ADJUDICATION

0
Based on the rationale set forth in the interim final rule published in 
the Federal Register at 80 FR 35246 on June 19, 2015, and in this 
document, VA is adopting the provisions of the interim final rule 
amending 38 CFR part 3 as a final rule without change.

[FR Doc. 2018-22892 Filed 10-19-18; 8:45 am]
 BILLING CODE 8320-01-P