Rule2022-10388
Fiduciary Bond
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
May 16, 2022
Effective
June 15, 2022
Issuing agencies
Veterans Affairs Department
Abstract
The Department of Veterans Affairs (VA) amends its regulations that govern fiduciary activities. More specifically, the amendments revise specific procedures to exempt a VA-appointed 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, State-mandated liability insurance or a blanket bond from having to obtain an additional bond payable to the Secretary of Veterans Affairs (Secretary).
Full Text
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<title>Federal Register, Volume 87 Issue 94 (Monday, May 16, 2022)</title>
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[Federal Register Volume 87, Number 94 (Monday, May 16, 2022)]
[Rules and Regulations]
[Pages 29671-29673]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-10388]
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DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 13
RIN 2900-AR11
Fiduciary Bond
AGENCY: Department of Veterans Affairs.
ACTION: Final rule.
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SUMMARY: The Department of Veterans Affairs (VA) amends its regulations
that govern fiduciary activities. More specifically, the amendments
revise specific procedures to exempt a VA-appointed 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, State-mandated liability insurance or a blanket bond
from having to obtain an additional bond payable to the Secretary of
Veterans Affairs (Secretary).
DATES: This rule is effective June 15, 2022.
FOR FURTHER INFORMATION CONTACT: Kevin Baresich, Program Analyst,
Pension and Fiduciary Service (21PF), Veterans Benefits Administration,
Department of Veterans Affairs, 810 Vermont Avenue NW, Washington, DC
20420, (202) 632-8863. (This is not a toll-free number.)
SUPPLEMENTARY INFORMATION: In a document published in the Federal
[[Page 29672]]
Register on September 29, 2021, at 86 FR 53913, VA proposed to amend
its fiduciary activity regulations by providing an exception to certain
eligibility requirements to exempt a VA-appointed fiduciary who is also
a court-appointed fiduciary, or a State agency with existing State-
mandated liability insurance or a blanket bond from obtaining a
separate surety bond payable to the Secretary. The 60-day public
comment period ended on November 29, 2021. VA received comments from
two individuals.
The first commenter was fully supportive of the proposed rule. The
other commenter was not in support of the proposed rule. Neither
commenter recommended revisions to the proposed rule. However, the
second commenter expressed general concerns with the purpose of the
rulemaking. The commenter opposed the exemption of a VA bond
requirement, even if redundant, to protect a VA beneficiary's funds.
The commenter was not persuaded that a bond made payable to the
Secretary is unnecessary when VA funds under management are also
protected by bonds ordered by a court, State-mandated liability
insurance, or a blanket bond. The commenter believed that a VA-specific
bond provides an additional layer of protection and safeguards the
funds of a vulnerable VA beneficiary. However, the commenter did not
explain how removing redundant coverage would increase risk to
beneficiaries. We do not agree that our proposed regulation would
disadvantage a VA beneficiary or limit any protections provided and
make no changes based upon this comment.
In 2018, VA amended its fiduciary program regulations. 83 FR 32716
(July 13, 2018). VA promulgated new regulations meant to establish a
national standard for the appointment and supervision of VA
fiduciaries. Specifically, VA implemented a requirement that certain
potential VA fiduciaries obtain a surety bond payable to the Secretary
to ensure that VA would be able to recoup misused funds from a surety
company as opposed to initiating collections against a fiduciary. 38
CFR 13.230(d). However, as explained in the proposed rule, we recognize
that the purpose for which this requirement was imposed would be
defeated in instances where a court-appointed fiduciary or State-agency
already had a bond in place. We noted that in these instances, the bond
typically would be payable to the state where the court is located, and
for this reason VA would be unable to make a direct claim against that
bond. This circumstance highlighted a potential problem with VA's
practice of requiring multiple bonds, that if a surety company already
paid out on a misused-benefits claim under a state-court bond, another
surety company would not pay out on a VA bond for the same misconduct.
Therefore, a second bond would not satisfy its intended purpose.
Further, it would not make sense to burden a VA beneficiary with paying
a second bond premium where there already is adequate protection in
place. Indeed, to do so would be contrary to VA's core mission to
ensure that a VA beneficiary's benefits are managed in their best
interest. A VA beneficiary would not be financially disadvantaged by
the removal of a duplicative bond requirement because VA is now
required to reimburse a beneficiary of any misused funds. 38 U.S.C.
6107.
Finally, the same commenter stated that if a fiduciary breaches his
or her duties as a fiduciary, that individual should be held
accountable by both the State and VA.
The amendments under this rule do not waive VA's obligation under
the law to hold a fiduciary who has misused VA benefits accountable for
such misuse. 38 CFR 13.400, 13.500.
VA adopts the rule as proposed without change.
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 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 <a href="http://www.regulations.gov">www.regulations.gov</a>.
Paperwork Reduction Act
This final rule includes provisions constituting a revised
collection of information under the Paperwork Reduction Act of 1995 (44
U.S.C. 3501-3521) that require approval by the Office of Management and
Budget (OMB). Accordingly, under 44 U.S.C. 3507(d), VA has submitted a
copy of this rulemaking action to OMB for review and approval.
Regulatory Flexibility Act
The Secretary 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 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, the Secretary certifies that the
adoption of 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. 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 final rule would have no such effect
on State, local, and tribal governments, or on the private sector.
Assistance Listing
The Assistance Listing program number and title for programs
affected by this rule are as follows: 64.104, Pension for Non-Service-
Connected 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.
Congressional Review Act
Pursuant to Subtitle E of the Small Business Regulatory Enforcement
Fairness Act of 1996 (known as the Congressional Review Act) (5 U.S.C.
801 et seq.), the Office of Information and Regulatory Affairs
designated this rule as not a major rule, as defined by 5 U.S.C.
804(2).
[[Page 29673]]
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 May 5, 2022, 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,
Regulations Development Coordinator, Office of Regulation Policy &
Management, Office of General Counsel, Department of Veterans Affairs.
For the reasons stated in the preamble, the Department of Veterans
Affairs amends 38 CFR part 13 as set forth below:
PART 13--FIDUCIARY ACTIVITIES
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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.
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2. Amend Sec. 13.230 by revising paragraph (c)(1) to read as follows:
Sec. 13.230 Protection of beneficiary funds.
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(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 non-VA funds.
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[FR Doc. 2022-10388 Filed 5-13-22; 8:45 am]
BILLING CODE 8320-01-P
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</html>Indexed from Federal Register on May 16, 2022.
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