60-Day Proposed Rule - 2900-AR11

AR11(P) Reg published 9.29.21- Fidicuary Bonds.pdf

RIN 2900-AR11, Fiduciary Bond (38 CFR Part 13)

60-Day Proposed Rule - 2900-AR11

OMB: 2900-0804

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Federal Register / Vol. 86, No. 186 / Wednesday, September 29, 2021 / Proposed Rules
(b) Dismissal by the Board for
unsuitability. (1) If, upon
recommendation by a Copyright Claims
Attorney as set forth in paragraph (a) of
this section or at any other time in the
proceeding upon the suggestion of a
party or on its own initiative, the Board
determines that a claim or counterclaim
should be dismissed for unsuitability
under 17 U.S.C. 1506(f)(3), the Board
shall issue an order stating its intention
to dismiss the claim without prejudice.
(2) Within 30 days following issuance
of an order under paragraph (b) of this
section, the claimant or counterclaimant
may request that the Board reconsider
its determination. The respondent or
counterclaim respondent may file a
response within 30 days following
service of the claimant’s request.
(3) Following the expiration of the
time for the respondent or counterclaim
respondent to submit a response, the
Board shall render its final decision
whether to dismiss the claim for
unsuitability.
Dated: September 15, 2021.
Kevin R. Amer,
Acting General Counsel and Associate
Register of Copyrights.
[FR Doc. 2021–20303 Filed 9–28–21; 8:45 am]
BILLING CODE 1410–30–P

DEPARTMENT OF VETERANS
AFFAIRS
38 CFR Part 13
RIN 2900–AR11

Fiduciary Bond
Department of Veterans Affairs.
Proposed rule.

AGENCY:
ACTION:

The Department of Veterans
Affairs (VA) proposes to amend its
regulations that govern fiduciary
activities. More specifically, the
proposed amendments would revise
specific procedures to exempt a VAappointed fiduciary who is also serving
as a court-appointed fiduciary from
posting multiple bonds and to also
exempt a VA-appointed fiduciary that is
also a State agency with existing, Statemandated liability insurance or a
blanket bond from having to obtain an
additional bond payable to the Secretary
of Veterans Affairs.
DATES: Comments must be received by
VA on or before November 29, 2021.
ADDRESSES: Comments may be
submitted through
www.Regulations.gov. Comments
should indicate that they are submitted
in response to RIN 2900–AR11—
Fiduciary Bond. Comments received

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SUMMARY:

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will be available at www.regulations.gov
for public viewing, inspection or copies.
FOR FURTHER INFORMATION CONTACT:
David Klusman, Lead Program Analyst,
Pension and Fiduciary Service (21PF),
Veterans Benefits Administration,
Department of Veterans Affairs, 810
Vermont Ave. NW, Washington, DC
20420; (202) 632–8863. (This is not a
toll-free number).
SUPPLEMENTARY INFORMATION: VA
administers a fiduciary program for
beneficiaries who, as a result of injury,
disease, the infirmities of advanced age,
or being less than 18 years of age,
cannot manage their own VA benefits.
Under this program, VA oversees these
vulnerable beneficiaries, and appoints
and oversees fiduciaries who manage
these beneficiaries’ benefits. VA’s
current statutory authority for this
program is in 38 U.S.C. chapters 55 and
61.
VA is authorized to issue payments to
and supervise fiduciaries acting on
behalf of beneficiaries under 38 U.S.C.
5502. In 2004, Congress amended 38
U.S.C. chapters 55 and 61 to add new
provisions which, among other things,
authorize VA to conduct specific
investigations regarding the fitness of
individuals to serve as fiduciaries and
reissue certain benefits misused by
fiduciaries. In relevant part, the law
provides that any certification of a
person as a fiduciary shall be made on
the basis of ‘‘the furnishing of any bond
that may be required by the Secretary.’’
38 U.S.C. 5507(a)(3). On its face, this
statutory language provides VA with
authority to decide whether to require a
bond.
Under certain circumstances, if a
fiduciary misuses benefits, the law
requires that the Secretary pay the
beneficiary an amount equal to the
amount of benefits that were misused.
38 U.S.C. 6107. In 2018, VA amended
its fiduciary program regulations to
implement current law. Fiduciary
Activities, 83 FR 32716 (July 13, 2018).
As stated above, in some cases,
fiduciaries are required to obtain a
surety bond in order to protect the
beneficiaries’ benefits. However, there is
conflicting information in VA
regulations pertaining to bond
requirements for fiduciaries.
Specifically, 38 CFR 14.709 provides
that VA’s general policy is to require a
surety bond that follows State laws and
court rules from a court-appointed
individual fiduciary. Further, the
regulation indicates approved
alternative methods to a corporate
surety bond and authorizes the
acceptance of a lesser degree of
protection of funds under certain

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circumstances. However, 38 CFR
13.230, which was promulgated in 2018
when VA amended its fiduciary
program regulations, requires that any
bond furnished by a fiduciary ‘‘[c]ontain
a statement that the bond is payable to
the Secretary of Veterans Affairs.’’ 38
CFR 13.230(d)(3)(ii). VA’s final rule that
amended 38 CFR part 13 went into
effect on August 13, 2018. 83 FR 32716.
When it was promulgated, VA explicitly
stated that ‘‘[w]e intend to issue uniform
rules for all VA-appointed fiduciaries,
such as allowable fees, surety bond
requirements and appropriate
investments, to include fiduciaries who
also serve as court-appointed guardians
for beneficiaries.’’ Id. at 32727. The rule
noted that ‘‘VA’s fiduciary regulations
will result in a gradual discontinuance
of the current practice of recognizing a
court-appointed guardian or fiduciary
for purposes of receiving VA benefits on
behalf of a VA beneficiary’’ and that,
‘‘VA will establish a national standard
for appointing and overseeing
fiduciaries.’’ Id. at 32735. VA noted in
the final rule that, ‘‘[b]ased on our
experience in administering the
program, the risks of not requiring all
fiduciaries, with the [general] exception
of spouses, to furnish a surety bond
significantly outweigh any burden on a
prospective fiduciary.’’ Id. at 32727. VA
set forth a number of factors that weigh
in favor of requiring a bond: (1) It serves
as a screening tool for VA to use in
confirming qualification for
appointment—in other words, if a
fiduciary cannot obtain a bond because
the bonding company considers the risk
of fund exploitation too high, VA will
not appoint the prospective fiduciary;
(2) it is consistent with VA’s oversight
obligations, which include deterring
fiduciary misuse of benefits; and (3) it
puts a fiduciary on notice that he or she
is liable to a third party for any payment
on the bond. Id. With the 2018
amendment, VA also promulgated
additional bond requirements under
§ 13.230(d) in order to protect a
beneficiary’s interests if a fiduciary
misuses funds, including a requirement
that the bond be payable to the
Secretary. More recently, in January
2021, Congress enacted Public Law 116–
315, which amended 38 U.S.C. 6107(b),
to require VA to reissue misused funds
to all beneficiaries, regardless of
whether VA negligence was involved.
Under current § 13.410(c), VA must
attempt to recoup any misused benefits,
either from the surety company or, if no
bond is in place, from the fiduciary
directly. VA then must reissue any
recouped benefits to the beneficiary’s
fiduciary successor to the extent they

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Federal Register / Vol. 86, No. 186 / Wednesday, September 29, 2021 / Proposed Rules

were not already reissued. Under
§ 13.230(g), bond expenses may be
deducted from the beneficiary’s account
so that the fiduciary does not have to
pay for them out of pocket. Although
this cuts into the amount of benefits the
beneficiary ultimately receives, VA
noted that this provision is ‘‘consistent
with the protection of funds in
guardianships under state and uniform
laws.’’ 79 FR 430, 442 (Jan. 3, 2014).
While it seems redundant for VA to
require a separate bond from a VAappointed fiduciary who also is serving
as a court-appointed fiduciary, VA
instituted uniform surety bond
requirements as an additional safeguard
to ‘‘protect the beneficiary’s funds.’’ 83
FR 32727. In theory, requiring that a
VA-appointed fiduciary obtain a bond
that is payable to the Secretary ensures
that VA will be able to recoup any
misused funds from the surety company
rather than having to initiate a
collections action against an individual
fiduciary. Moreover, in instances where
a court-appointed fiduciary already has
a bond in place, the bond typically
would be payable to the state where the
court is located, so VA could not make
a direct claim against that bond. If the
state-court bond were enough to cover
the misused VA benefits, the state
would be able to make a claim against
the bond to make the beneficiary whole.
Thus, at least in some cases, a statecourt bond would provide adequate
protection for the beneficiary. We note,
however, that, in the event that VA
reissues benefits and the beneficiary
later receives funds recovered from the
state-court bond, it is not apparent that
VA would have any basis to recoup the
excess funds paid to the beneficiary,
even though it would amount to double
recovery on the part of the beneficiary.
A potential problem with VA’s practice
of requiring multiple bonds is that if a
surety company already paid out on a
misused-benefits claim under a statecourt bond, another surety company
would not pay out on the VA bond for
the same misconduct. That would
therefore defeat the purpose of requiring
a second bond made payable to the
Secretary. If the purpose of the second
bond is to ensure that the beneficiary is
made whole in the event of misuse, it
does not make sense to burden the
beneficiary with paying for a second
bond where there already is adequate
protection in place. As a result, VA
proposes to amend § 13.230 of its part
13 regulations as described below.
13.230 Protection of Beneficiary
Funds
VA proposes to amend 38 CFR 13.230
to exempt a VA-appointed fiduciary

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who is also serving as a court-appointed
fiduciary with a bond sufficient to
protect both VA and non-VA funds from
posting multiple bonds and to exempt a
VA-appointed fiduciary that is also a
State agency with existing, Statemandated liability insurance or a
blanket bond from having to obtain an
additional bond payable to the Secretary
of Veterans Affairs. The proposed
amendment is within VA’s general
rulemaking authority under 38 U.S.C.
501(a) and implements VA’s authority
under 38 U.S.C. 6107. The proposed
amendment would eliminate
duplicative fees from being charged
against a VA beneficiary’s funds for an
additional, unnecessary bond.
Additionally, VA beneficiaries who are
victims of misuse of their benefits by
their VA fiduciaries would not
experience undue delay in the
reissuance of their misused benefits.
Further, the bond requirement in 38
U.S.C. 5507(a)(3) gives VA discretion to
determine whether to require a bond.
Under current rules, 38 CFR 13.230,
does not include an exception to the
bond requirement for court-appointed
fiduciaries. Further, § 13.230
specifically requires that any bond
furnished by the fiduciary ‘‘[c]ontain a
statement that the bond is payable to the
Secretary of Veterans Affairs.’’
VA proposes to amend § 13.230 to add
an exception for posting an additional
bond for an individual serving as a
court-appointed fiduciary, where a bond
is in place under State law and court
rules and is sufficient to protect both
VA and non-VA funds and to add
another exception for a VA-appointed
fiduciary that is also a State agency with
existing, State-mandated liability
insurance or a blanket bond to not have
to obtain an additional bond payable to
the Secretary of Veterans Affairs. This
amendment is authorized by VA’s
general rulemaking authority in 38
U.S.C. 501, and by the discretion
conferred by 38 U.S.C. 5507(a)(3).
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. The Office of

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Information and Regulatory Affairs has
determined that this rule is not a
significant regulatory action under
Executive Order 12866. The Regulatory
Impact Analysis associated with this
rulemaking can be found as a
supporting document at
www.regulations.gov.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(at 44 U.S.C. 3507) requires that VA
consider the impact of paperwork and
other information collection burdens
imposed on the public. Under 44 U.S.C.
3507(a), an agency may not collect or
sponsor the collection of information,
nor may it impose an information
collection requirement unless it
displays a currently valid OMB control
number. See also 5 CFR 1320.8(b)(3)(vi).
The information collection
requirement in § 13.230 is currently
approved by OMB and has been
assigned OMB control number 2900–
0804. The proposed rule includes
provisions involving a revised
collection of information under the
Paperwork Reduction Act of 1995 that
will require approval by OMB. The
proposed rule would not involve a
substantive or material modification of
the approved collection.
Title: Protection of beneficiary funds.
Type of Information Collection:
Modification of a currently approved
information collection.
OMB Number: 2900–0804.
Summary of collection of information:
The amendment to the collection of
information in proposed § 13.230(c)(1)
would eliminate the requirement for a
VA-appointed fiduciary who is also
serving as a court-appointed fiduciary to
post multiple bonds and would also
eliminate the requirement for a VAappointed fiduciary that is also a State
agency with existing, State-mandated
liability insurance or a blanket bond to
obtain an additional bond payable to the
Secretary of Veterans Affairs. The
proposed amendment to § 13.230(c)(1)
would decrease the estimated annual
number of respondents and
consequently reduce the estimated total
annual reporting and recordkeeping
burden.
The estimated annual burden for the
revised collection of information would
be determined as follows:
Description of need for information
and proposed use of information: There
would be no change in the need for
information nor the proposed use of
information collected for OMBapproved Control Number 2900–0804.
The information is needed to facilitate
VA’s oversight regarding the funds
under management protection

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requirements prescribed in proposed
§ 13.230.
Description of likely respondents:
Certain fiduciaries appointed by VA
who manage VA benefit funds in excess
of $25,000. As stated, the proposed rule
would exempt a VA-appointed fiduciary
who is also serving as a court-appointed
fiduciary from posting multiple bonds
and would also exempt a VA-appointed
fiduciary that is also a State agency with
existing, State-mandated liability
insurance or a blanket bond from having
to obtain an additional bond payable to
the Secretary of Veterans Affairs. This
change would reduce the number of
respondents.
Estimated number of respondents per
year: 9,634 annually.
Estimated frequency of responses per
year: Once per year.
Estimated number of responses per
year: 9,634 annually.
Estimated average burden per
response: The estimated average burden
per response for OMB-approved Control
Number 2900–0804 has not changed
and remains at 1 minute.
Estimated total annual reporting and
recordkeeping burden: 161 hours.
Estimated total annual respondent
burden cost: $4,358.
VA estimates that the proposed rule
would reduce the number of
respondents in 2021 by 366 (from
10,000 to 9,634); however, it would
increase the current annual respondent
burden costs from $4,008 to $4,358,
resulting in an estimated information
collection burden costs increase of $350
(161 burden hours × $27.07 per hour).
The Bureau of Labor Statistics (BLS)
gathers information on full-time wage
and salary workers. According to the
latest available BLS data, the mean
hourly wage is $27.07 based on the BLS
wage code—‘‘00–0000 All
Occupations.’’ This information was
taken from the following website:
https://www.bls.gov/oes/current/oes_
nat.htm.
Regulatory Flexibility Act
The Secretary certifies that this
proposed rule would not have a
significant economic impact on a
substantial number of small entities as
they are defined in the Regulatory
Flexibility Act, 5 U.S.C. 601–612. This
regulation has the potential to impact all
2,350 small entities within the North
American Industry Classification
System Code 524126 (casualty and
bonding companies). There is a
projected loss of revenue of $66,989 per
firm which yields a 0.16% revenue loss
to each entity. Based on this analysis,
we conclude that this regulation will
not have a significant economic impact

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on a substantial number of small
entities. Therefore, pursuant to 5 U.S.C.
605(b), the initial and final regulatory
flexibility analysis requirements of 5
U.S.C. 603 and 604 do not apply.
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 proposed rule would
have no such effect on State, local, and
tribal governments, or on the private
sector.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic
Assistance program number and title for
this proposed rule are as follows:
64.104, Pension for Non-ServiceConnected Disability for Veterans;
64.105, Pension to Veterans Surviving
Spouses, and Children; 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 13
Surety bonds, Trusts and trustees, and
Veterans.
Signing Authority
Denis McDonough, Secretary of
Veterans Affairs, approved this
document on September 24, 2021, and
authorized the undersigned to sign and
submit the document to the Office of the
Federal Register for publication
electronically as an official document of
the Department of Veterans Affairs.
Luvenia Potts,
Regulation Development Coordinator, Office
of Regulation Policy & Management, Office
of General Counsel, Department of Veterans
Affairs.

For the reasons set forth in the
preamble, VA proposes to amend 38
CFR part 13 as follows:
PART 13—FIDUCIARY ACTIVITIES
1. The authority citation for part 13
continues to read as follows:

■

Authority: 38 U.S.C. 501, 5502, 5506–
5510, 6101, 6106–6108, and as noted in
specific sections.
Source: 83 FR 32738, July 13, 2018, unless
otherwise noted.

2. Revise § 13.230(c)(1) to read as
follows:

■

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§ 13.230

53915

Protection of beneficiary funds.

*

*
*
*
*
(c) * * *
(1) The provisions of paragraphs (a)
and (b) of this section do not apply to:
(i) A fiduciary that is a trust company
or a bank with trust powers organized
under the laws of the United States or
a state;
(ii) A fiduciary who is the
beneficiary’s spouse;
(iii) A fiduciary in the Commonwealth
of Puerto Rico, Guam, or another
territory of the United States, or in the
Republic of the Philippines, who has
entered into a restricted withdrawal
agreement in lieu of a surety bond;
(iv) A fiduciary that is also appointed
by a court and has obtained a state-court
bond, as referenced in 38 CFR 14.709,
sufficient to cover both VA and non-VA
funds; or
(v) A fiduciary that is also a State
agency with existing, State-mandated
liability insurance or a blanket bond
sufficient to cover both VA and on-VA
funds.
*
*
*
*
*
[FR Doc. 2021–21177 Filed 9–28–21; 8:45 am]
BILLING CODE 8320–01–P

ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[EPA–R05–OAR–2017–0583; EPA–R05–
OAR–2019–0311; EPA–R05–OAR–2020–
0501; FRL–9056–01–R5]

Air Plan Approval; Illinois;
Infrastructure SIP Requirements for
the 2012 PM2.5 and 2015 Ozone NAAQS
Environmental Protection
Agency (EPA).
ACTION: Proposed rule.
AGENCY:

The Environmental Protection
Agency (EPA) is proposing to approve
elements of a State Implementation Plan
(SIP) revision submitted by the State of
Illinois regarding the infrastructure
requirements of section 110 of the Clean
Air Act (CAA) for the 2012 annual fine
particulate matter (PM2.5) and 2015
ozone National Ambient Air Quality
Standards (NAAQS). Additionally, EPA
is proposing to approve the
infrastructure requirements related to
Prevention of Significant Deterioration
(PSD) for previous NAAQS. The
infrastructure requirements are designed
to ensure that the structural components
of each state’s air quality management
program are adequate to meet the state’s
responsibilities under the CAA.
DATES: Comments must be received on
or before October 29, 2021.
SUMMARY:

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