[Federal Register: December 21, 2001 (Volume 66, Number 246)]
[Rules and Regulations]               
[Page 66273-66291]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21de01-16]                         


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Part IX





Department of Justice





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Office of the Attorney General



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28 CFR Part 104



September 11th Victim Compensation Fund of 2001; Interim Final Rule


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DEPARTMENT OF JUSTICE

Office of the Attorney General

28 CFR Part 104

[CIV 104P; AG Order No. 2541-2001]
RIN 1105-AA79

 
September 11th Victim Compensation Fund of 2001

ACTION: Interim final rule with request for comments.

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SUMMARY: Shortly after the September 11, 2001 terrorist attacks, the 
President signed the ``September 11 Victim Compensation Fund of 2001'' 
(the ``Fund'') into law as Title IV of Public Law 107-42 (``Air 
Transportation Safety and System Stabilization Act'') (the ``Act''). 
The Act authorizes compensation to any individual (or the personal 
representative of a deceased individual) who was physically injured or 
killed as a result of the terrorist-related aircraft crashes on that 
day. The Act provides that the Fund will be administered by a Special 
Master appointed by the Attorney General. On November 26, 2001, the 
Attorney General appointed Kenneth R. Feinberg as Special Master.
    The Department of Justice, in consultation with the Special Master, 
is issuing certain procedural rules so the Special Master may commence 
operations of the program as soon as practicable. In order to allow the 
Special Master to begin distributing funds, the Department is issuing 
this rule as an ``Interim Final Rule'' that will have the force and 
effect of law immediately upon publication. This rule is designated 
``interim,'' however, because the Department is also seeking further 
comment for a period of 30 days as part of its further review and may 
expand or adjust aspects of the rule after receiving additional 
comments.

DATES: This interim rule takes effect on December 21, 2001. Comments in 
response to this notice are due by January 22, 2002.

ADDRESSES: Comments on the interim rule should be submitted by e-mail 
to: victimcomp.comments@usdoj.gov , or by telefax to 301-519-
5956. Telefaxes should be limited to 15 pages. Comments may also be 
mailed to Kenneth L. Zwick, Director, Office of Management Programs, 
Civil Division, U.S. Department of Justice, Main Building, Room 3140, 
950 Pennsylvania Avenue NW, Washington, DC 20530. However, the 
Department encourages commenters to submit their comments by e-mail or 
telefax. Comments received are public records. The name and address of 
the commenter should be included with all submissions. The comments 
will be made available on the Victim Compensation Fund Web site, 
www.usdoj.gov/victimcompensation. Comments will also be available for 
public inspection at a reading room in Washington, DC. Arrangements to 
visit the reading room must be made in advance by calling 888-714-3385 
(TDD: 888-560-0844).

FOR FURTHER INFORMATION CONTACT: Kenneth L. Zwick, Director, Office of 
Management Programs, Civil Division, U.S. Department of Justice, Main 
Building, Room 3140, 950 Pennsylvania Avenue NW, Washington, DC 20530, 
telephone 888-714-3385 (TDD 888-560-0844).

SUPPLEMENTARY INFORMATION:

Statement by the Special Master

    The September 11th Victim Compensation Fund of 2001 is an 
unprecedented expression of compassion on the part of the American 
people to the victims and their families devastated by the horror and 
tragedy of September 11. The Act itself (specifically Title IV--Victim 
Compensation), and the attached regulations drafted and implemented 
pursuant to the Act, are designed to bring some measure of financial 
relief to those most devastated by the events of September 11. In one 
important sense, the Fund symbolizes the commitment of the American 
people to those most in need. It is an example of how Americans rally 
around the less fortunate.
    The attached regulations have two objectives: (1) To provide fair, 
predictable and consistent compensation to the victims of September 11 
and their families throughout the life of the program; and (2) to do so 
in an expedited, efficient manner without unnecessary bureaucracy and 
needless demands on the victims. The regulations highlight a fast track 
administrative compensation program, eliminating the red tape, time and 
expense of a traditional lawsuit. Quick payment to eligible claimants 
characterizes this program.
    The Fund offers the eligible claimant an alternative to litigation. 
To succeed in the courtroom, a victim of the September 11 tragedy, or 
his or her representative, would be compelled to litigate, probably for 
many years at excessive cost, and with all the uncertainty of result 
which is part of the litigation process. Among the hazards of such a 
court proceeding are: Would liability be demonstrated? Against whom? 
Would sufficient funds be available to pay in full any resulting tort 
award? Would the verdict, even if favorable, withstand appellate 
challenge?
    Trade-offs are required in developing Fund procedures that are 
different than those in the more conventional lawsuit. It is possible 
to develop an alternative administrative scheme, providing speedy and 
efficient compensation, which will help bring some closure to the 
events of September 11. We should not require its victims to revisit 
the tragic events of September 11 over and over again during the 
pendency of a lawsuit in our courts.
    In formulating the regulations, we heeded the instruction of the 
Attorney General to help the neediest of victims as quickly as 
possible. Accordingly, under these regulations, an eligible claimant 
can receive an immediate advance payment of $50,000 in cases involving 
death, or $25,000 in certain cases involving serious physical injury. 
These payments are downpayments only, advanced to provide immediate 
financial assistance to those in need.
    We were required, of course, to adhere to the language which 
Congress set out in the statute, including the provisions requiring 
that awards be offset by all collateral source compensation such as 
benefits from life insurance and other government programs. However, we 
did find ambiguity in the statute as to gifts provided to victims and 
their families by private charities. These regulations do not require 
that awards be offset by such private charitable assistance.
    We have concluded that the purpose of the Act is not simply to 
examine economic and noneconomic harm, but also to provide compensation 
that is just and appropriate in light of claimants' individual 
circumstances. We have concluded that any methodology that does nothing 
more than attempt to replicate a theoretically possible future income 
stream would lead to awards that would be insufficient relative to the 
needs of some victims' families, and excessive relative to the needs of 
others. The statute specifies that individual circumstances beyond 
economic and noneconomic harm should be taken into account. It is our 
view that, absent extraordinary circumstances, awards in excess of $3 
million, tax-free, will rarely be appropriate in light of individual 
needs and resources. At the same time, we want to ensure that victims' 
families are receiving at least a minimum level of resources to help 
meet their needs and rebuild their lives. Thus, we have concluded that 
the families of deceased victims should receive a combined total

[[Page 66275]]

of at least $500,000 from this program, other state and Federal 
programs, life insurance policies and other sources of compensation. 
Similarly, the baseline for single decedents should be $300,000. This 
ensures that every needy claimant's total compensation from this 
program and other sources will be at least equal to these threshold 
amounts.
    In sum, the September 11th Victim Compensation Fund of 2001 is an 
attempt by the American people to demonstrate their solidarity with, 
and generosity for, those injured by the terrible September 11 attack 
on our country. It provides an alternative compensation scheme to the 
traditional tort system, a method of providing substantial and quick 
compensation to those who elect to participate.
    Neither this Fund nor any monetary compensation can possibly 
provide a full measure of relief to those who have suffered as a result 
of September 11. But the Fund will provide appropriate compensation and 
some measure of comfort to those whose lives have been torn asunder by 
the events of September 11.

Background

    The following discussion provides background information and 
explanation of the regulations promulgated herein. Section A describes 
the statutory backdrop for the regulations; Section B discusses the 
Department's rulemaking procedures to date; Section C addresses 
Eligibility; Section D pertains to Advance Benefits; Section E 
discusses Final Awards made by the Fund; Section F describes the 
Special Master's claims evaluation process; and Section G relates to 
Assistance to Claimants. The text of the regulations is set forth 
following these explanatory sections. A catalog of public commentary is 
set forth thereafter as an Appendix. More detailed information 
regarding the program, including a flow chart of applicable procedures 
and a table of estimated or ``presumed'' awards, will be available on 
the Victims Compensation Fund Web site at www.usdoj.gov/
victimcompensation.
A. The Statute
    The President signed the ``September 11th Victim Compensation Fund 
of 2001'' (the ``Fund'') into law on September 22, 2001, as Title IV of 
Public Law 107-42 (``Air Transportation Safety and System Stabilization 
Act'') (``the Act''). The purpose of this Fund is to provide 
compensation to eligible individuals who were physically injured as a 
result of the terrorist-related aircraft crashes of September 11, 2001, 
and compensation through a ``personal representative'' for those who 
died as a result of the crashes. Generally, eligibility is limited to: 
(1) Individuals on the planes at the time of the crashes (other than 
the terrorists); and (2) individuals present at the World Trade Center, 
the Pentagon or the site of the crash in Pennsylvania at the time of 
the crashes or in the immediate aftermath of the crashes.
    The Fund is designed to provide a no-fault alternative to tort 
litigation for individuals who were physically injured or killed as a 
result of the aircraft hijackings and crashes on September 11, 2001. 
Others who may have suffered losses as a result of those events (e.g., 
those without identifiable physical injuries but who lost employment) 
are not included in this special program. Indeed, compensation will be 
provided only for losses caused on account of personal physical 
injuries or death, even though the victims may have suffered other 
losses, such as property loss. For this reason, the Department and the 
Special Master anticipate that all awards from the Fund will be free of 
federal taxation. See I.R.C. Sec. 104(a)(2) (stating that damages 
received ``on account of personal physical injuries or physical 
sickness'' are excludable from gross income for purposes of federal 
income taxation).
    A claimant who files for compensation waives any right to file a 
civil action (or to be a party to an action) in any federal or state 
court for damages sustained as a result of the terrorist-related 
aircraft crashes of September 11, 2001, except for actions to recover 
collateral source obligations.
    Determinations on eligibility and the amount of compensation are to 
be made by the Special Master. After determining whether an individual 
is an eligible claimant under the Act, the Special Master is to 
determine the amount of compensation to be awarded based upon the harm 
to the claimant, the facts of the claim, and the individual 
circumstances of the claimant.
    The law also provides that the Special Master is to make a final 
determination on any claim within 120 days from when the claim was 
filed and, if an award is made, to authorize payment within 20 days 
thereafter. The determinations of the Special Master are final and are 
not reviewable by any court. Claims with the Fund must be filed on or 
before two years after the effective date of these regulations, i.e. 
December 22, 2003. Payments from the Fund are made by the United States 
Government, which in turn obtains the right of subrogation to each 
award.
    Pursuant to the Act, regulations addressing certain administrative 
matters must be issued within 90 days of enactment. Section 407 of the 
Act provides that the Department, in consultation with the Special 
Master, promulgate regulations on four matters by December 21, 2001:
    (1) Forms to be used in submitting claims;
    (2) The information to be included in such forms;
    (3) Procedures for hearing and the presentation of evidence; and
    (4) Procedures to assist an individual in filing and pursuing 
claims under this title.
    In addition, section 407 authorizes, but does not require, the 
Department to issue additional rules to implement the program. This 
Interim Final Rule addresses issues beyond the four specifically 
required by the Act in order to create a program that will be 
efficient, will treat similarly situated claimants alike, and will 
allow potential claimants to make informed decisions regarding whether 
to file claims with the Fund. Nonetheless, the Department recognizes 
that it cannot anticipate all of the issues that will arise over the 
course of the program and that there will inevitably be many difficult 
issues that the Special Master will have to resolve in the course of 
making determinations on individual claims.
B. Rulemaking History to Date
    On November 5, 2001, the Department requested public input on a 
number of issues. 66 FR 55901. The Department noted that, at that time, 
the Special Master had not yet been appointed, but that it wanted as 
much public comment as feasible before issuing the regulations by 
December 21, 2001. On November 26, 2001, the Attorney General appointed 
Kenneth R. Feinberg as Special Master. As called for by the Act, this 
interim final rule is promulgated in consultation with the Special 
Master.
    The Department received more than 800 comments in response to the 
Department's Notice of Inquiry. Some were very brief and only spoke to 
a single issue; others responded to the Department's questions on a 
point by point basis. Still others contained detailed analyses, 
recommendations and even proposed regulatory language.
    The range of commenters was very broad. Some commenters identified 
themselves as citizens, taxpayers or law professors, and many 
identified themselves as individuals who had contributed to charities 
for those impacted by the terrorist crashes. Many other commenters 
identified themselves as members of victims' families, partners or 
close friends, including some from organizations and groups of

[[Page 66276]]

survivors. Several commenters identified themselves as employers who 
lost a significant number of employees in the crashes. A number of 
commenters identified themselves as residents of housing near ``Ground 
Zero'' in New York.
    In addition, the Department received comments from many 
organizations including the American Insurance Association, the 
American Arbitration Association, the American Bar Association, Trial 
Lawyers Care, New York Trial Lawyers' Association, New York City Bar 
Association, Massachusetts Bar Association, National Center for Victims 
of Crime, National Association of Crime Victim Compensation Boards, the 
Oklahoma Crime Victim Compensation Board, Consumers Union, Public 
Citizen, the National Right To Life Committee, the Lamda Legal Defense 
& Education Fund, the American Civil Liberties Union, the Association 
of Flight Attendants, the Council on Foundations, the Nonprofit 
Coordinating Committee of New York, Independent Sector, the Alternative 
Dispute Resolution of the Federal Bar Association, the Alliance of 
Fiduciary Consultants, and the Foreign Claims Settlement Commission.
    Individual members of Congress, groups of members, and members of 
the Senate leadership also provided comments. Further, joint comments 
were submitted on behalf of the New York City Mayor, the New York 
Governor, and the New York Attorney General, by members of the New York 
Assembly, and by the Attorney General of Connecticut.
    Comments were also submitted by United Airlines and American 
Airlines, and from various individuals and companies who identified 
themselves as having expertise or experience in the administration of 
claims programs.
    The Department has read every submission it received in response to 
this notice, from handwritten notes to scholarly discussions. The 
Department wants to express its appreciation for the time and careful 
thought reflected in those submissions.
    While the Department has reviewed every submission it received, it 
will not regulate on every topic addressed in those comments. Over 70 
separate topics were identified; almost two dozen full size notebooks 
are necessary to organize all of the comments by topic. All of the 
comments will be retained by the Department for subsequent 
consideration when it reviews comments on this interim final rule, and 
the comments will remain posted on the Department's web site where they 
may be reviewed by the public. The Department was pleased to see that 
some comments responded to others placed on the web site, and hopes 
this facility will continue to be of interest to the public.
    It is not feasible to repeat here all of the suggestions received 
in the comments, let alone directly respond to each. The Appendix to 
this interim final rulemaking highlights some of the points raised by 
commenters in order to indicate the range of views received on how 
various issues should be approached.
C. Eligibility
    Section 405(b) of the Act requires the Special Master to determine 
whether a claimant is an ``eligible individual'' under section 405(c). 
``Eligibility,'' in turn, is defined by the Act to include: (1) 
individuals (other than the terrorists) aboard American Airlines 
flights 11 and 77 and United Airlines flights 93 and 175; (2) 
individuals who were ``present at'' the World Trade Center, the 
Pentagon, or the site of the aircraft crash at Shanksville, 
Pennsylvania at the time or in the immediate aftermath of the crashes; 
or (3) personal representatives of deceased individuals who would 
otherwise be eligible. Moreover, to be eligible for an award, an 
individual must have suffered physical harm or death as a result of one 
of the terrorist-related air crashes. This interim final rule addresses 
eligibility by defining the terms ``present at the site,'' ``immediate 
aftermath,'' ``physical harm,'' and ``personal representative.''
    ``Present at the site'': This rule defines the term ``present at 
the site'' (i.e. the World Trade Center, Pentagon, or Shanksville site) 
to mean physically present at the time of the crashes or immediate 
aftermath:
    (1) In the buildings or portions of buildings that were destroyed 
as a result of the airplane crashes; or
    (2) In any area contiguous to the crash sites that the Special 
Master determines was sufficiently close to the site that there was a 
demonstrable risk of physical harm resulting from the impact of the 
aircraft or any subsequent fire, explosions, or collapse of buildings 
(generally, the immediate area in which the impact occurred, fire 
occurred, portions of buildings fell, or debris fell upon and injured 
persons).
    There are several reasons for this geographic limitation. First, 
this geographic limitation comports with the plain meaning of the 
statutory term ``present at.'' Second, this geographic limitation is 
consistent with the further statutory requirement of physical injury or 
death, because the zone designated is that in which there was a 
demonstrable risk of physical harm from falling debris, explosions, or 
fire.
    ``Immediate aftermath'': This rule defines the term ``immediate 
aftermath'' of the crashes to mean, for purposes of all claimants other 
than rescue workers, the period of time from the crashes until 12 hours 
after the crashes. This time frame appears to cover all of those who 
suffered physical injury or death, with the exception of rescue 
workers.
    With respect to rescue workers who assisted in efforts to search 
for and recover victims, the regulations define ``the immediate 
aftermath'' to include the period from the crashes until 96 hours after 
the crashes. The regulations provide for this longer time period for 
rescue workers in recognition of their heroic efforts and their 
selfless reasons for being at the sites, and responds to a request by 
the Mayor of New York City that the program recognize the high level of 
danger and difficulty during the first four days of rescue operations.
    ``Physical harm'': This rule defines the term ``physical harm'' to 
mean an objectively verifiable physical injury that was treated by a 
medical professional within 24 hours of the injury having been 
sustained or within 24 hours of rescue and either required 
hospitalization as an in-patient for at least 24 hours or caused, 
either temporarily or permanently, partial or total physical 
disability, incapacity, or disfigurement.
    There are several reasons for this definition. The statutory term 
``physical harm'' indicates that Congress did not intend for this Fund 
to compensate those who suffered only emotional harm or property 
damage. The statutory term ``physical harm'' also indicates that 
Congress did not intend for this Fund to cover those who face only a 
risk of future injury (i.e. latent harm that does not fully manifest 
itself within the statutory time period for this Fund). Indeed, because 
participation in this Fund precludes claimants from recovering through 
tort litigation, those with latent injuries that later became manifest 
would likely be undercompensated if they sought compensation now from 
the Fund before the injuries became manifest. Conversely, those who 
recovered for latent injuries that did not later become manifest could 
be overcompensated if they recovered from the Fund. While Congress 
might later consider whether an administrative program for latent harm 
caused by the September 11, 2001 terrorist-related aircraft crashes may 
be appropriate, the language of the statute that created this Fund does 
not contemplate awards for that purpose.

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    ``Personal Representative'': Section 405(c)(2)(C) provides that in 
the case of an individual who is deceased but who otherwise meets the 
other criteria for eligibility, a claim can be filed by the Personal 
Representative of the decedent. Section 405(c)(3)(A) provides that no 
more than one claim may be submitted by an individual or on behalf of a 
deceased individual.
    In many or most cases, the identity of the ``Personal 
Representative'' will not be in dispute. Where there are disputes, two 
issues arise: (1) What are the rules for determining who is the 
Personal Representative?; and (2) who should apply the rules and 
resolve the dispute?
    As to the first issue, the regulations rely on state law. Subject 
to certain contingencies, this rule defines the term ``Personal 
Representative'' to mean an individual appointed by a court of 
competent jurisdiction as the Personal Representative of the decedent 
or as the executor or administrator of the decedent's will or estate. 
In the event that no Personal Representative or executor or 
administrator has been appointed by any court of competent 
jurisdiction, and such issue is not the subject of pending litigation 
or other dispute, the Special Master may, in his discretion, determine 
that the Personal Representative is the person named by the decedent in 
the decedent's will as the executor or administrator. In the event no 
will exists, the Special Master may, in his discretion, determine that 
the Personal Representative is the first person in the line of 
succession established by the laws of the state of the decedent's 
domicile governing intestacy.
    Reliance on state law is necessary in part because those who file 
for recovery under the Fund waive their rights to recover through 
litigation, in which state law would determine the identity of the 
appropriate representatives of the decedent, or the decedent's estate, 
to bring suit. Thus, if the identity of Personal Representatives for 
purposes of this Fund were determined by federal regulation, there 
could be many situations in which the representative as defined by 
state law would choose litigation while the Personal Representative as 
defined by federal regulation would seek to recover from the Fund.
    The second issue raises questions of program administration. 
Disputes between relatives, former spouses and other interested parties 
can be exceptionally fact-intensive and time-consuming. Indeed, state 
courts often spend considerable time and resources resolving such 
matters. The Special Master cannot accomplish his statutory duties if 
bogged down with these types of complex disputes. Nor would it be 
advisable for the Special Master to attempt to step in and supplant 
state court practice or the testamentary intent of decedents. 
Consequently, the rule provides that the Special Master has no 
obligation to arbitrate, litigate or otherwise resolve disputes as to 
the identity of the Personal Representative. Instead, to ensure that 
funds are not needlessly tied up due to disputes regarding the identity 
of the Personal Representative, the regulations provide that the 
disputing parties may agree in writing to the identity of a Personal 
Representative to act on their behalf, who may seek and accept payment 
from the Fund while those disputing parties work to settle their 
dispute. In appropriate cases, the Special Master may determine an 
award, but place the payment in escrow until the dispute regarding the 
Personal Representative is finally resolved.
    Finally, the determination of the Personal Representative is not 
the same question as the determination of who ultimately will receive 
the award. In that regard, this rule provides that the Personal 
Representative shall distribute the award in a manner consistent with 
the law of the decedent's domicile or any applicable rulings made by a 
court of competent jurisdiction. However, in order to assure that the 
families of needy victims receive adequate compensation, the 
regulations further provide that the Personal Representative shall, 
before payment is authorized, provide to the Special Master a plan for 
distribution of any award received from the Fund. Notwithstanding any 
other provision of these regulations or any other provision of state 
law, in the event that the Special Master concludes that the Personal 
Representative's plan for distribution does not appropriately 
compensate the victim's spouse, children, or other relatives, the 
Special Master may direct the personal representative to distribute all 
or part of the award be distributed to such spouse, children, or other 
relatives.
D. Advance Benefits
    In order to comply with the Attorney General's November 26, 2001 
instructions to the Special Master to pay benefits to eligible 
claimants as quickly as possible, these regulations permit claimants to 
seek immediate ``Advance Benefits'' in the fixed amount of $50,000 in 
the case of deceased individuals and $25,000 in the case of severely 
injured individuals who required hospitalization for one week or more.
    To qualify for advance benefits, applicants must complete a short 
form (the ``Eligibility Form'') identifying basic eligibility and 
indicating that advance benefits would assist them in confronting 
current or immediate financial hardships. Such forms will be made 
available at claims intake centers as they are established, in response 
to telephone requests (888-714-3385, 202-305-1352, TDD: 888-560-0844), 
and on the Victims Compensation Fund Web site at www.usdoj.gov/
victimcompensation.
    Eligible claimants may apply for and receive advance benefits and 
then file their lengthier ``Personal Injury Compensation Form'' or 
``Death Compensation Form'' at any time within the two-year time frame 
for filing claims under the program. This will allow needy eligible 
claimants to obtain prompt advance payments even though they may need 
more time to collect full information regarding the amount of 
compensation they seek. The 120-day period for determination of 
compensation will be stayed or tolled until the claimant files the 
completed ``Personal Injury Compensation Form'' or ``Death Compensation 
Form'' needed to allow the Special Master to determine the amount of 
the final award. However, once a claimant applies for Advance Benefits, 
the claimant will be deemed to have waived the right to file a civil 
action in state or federal court for damages sustained as a result of 
the September 11 attacks.
    Advance benefits will be treated as advance payments on ultimate 
awards from the Fund. Thus, the amount of any advance benefits received 
will be deducted from the claimant's subsequent award.
E. Final Awards Made by the Fund
    Section 405(b) of the Act provides that the Special Master shall 
compensate eligible claimants based on the harm to the claimant 
(including both economic loss and noneconomic losses), the facts of the 
claim, and the individual circumstances of the claimant. The Act 
further provides that the Special Master shall determine the claimant's 
eligibility and the amount of compensation within 120 days.
    The Special Master and the Department have studied the language of 
the Act, the varying public comments, evidence and data about the many 
victims of the September 11 attacks, and economic and demographic 
studies and data in fashioning the interim final rule. After this 
careful consideration, the Special Master and the Department have 
concluded that the following principal objectives should guide any 
determination of economic and noneconomic losses.

[[Page 66278]]

    The first objective is that the process should be efficient, 
straightforward, and understandable to the claimants. This objective is 
based in part upon the statutory requirement that the Special Master 
review each claim and make an award determination within 120 days of 
filing. More important, however, is that claimants be able to enter the 
program--or choose not to enter the program--with an understanding of 
how their claims will be treated. This is especially important because 
the Act provides that, upon submission of a claim, a claimant waives 
the right to file a civil action for damages sustained as a result of 
the September 11 attacks. For claimants to make an informed decision 
regarding this waiver, they should have some understanding of how their 
award will be calculated and how much they would receive from the Fund 
should they decide to file a claim.
    The second objective is that each claimant should, to the greatest 
extent possible, be treated fairly based on the claimant's own 
individual circumstances and relative to other claimants. While the 
circumstances of death for many victims will differ, those 
circumstances will in many cases be unknowable. In principle, similarly 
situated claimants should not receive dramatically differing treatment.
    After careful consideration, the Special Master and the Department 
have concluded that, in order best to achieve these principal 
objectives, the Special Master should develop a methodology for 
calculating presumed economic and noneconomic losses that is based on 
readily identifiable individual circumstances for each claimant, such 
as age, prior income levels, marital status, and the number and ages of 
the victim's dependents. A methodology for determining presumed 
economic and noneconomic losses will also assist the Special Master in 
making fair and appropriate compensation determinations swiftly and 
efficiently within the time frame permitted by the Act.
    In order to enable claimants to make informed decisions regarding 
whether to submit a claim under the Fund and, if so, whether to submit 
evidence of extraordinary individual circumstances that could justify 
departure from the presumed awards, the interim final rule directs the 
Special Master to publish schedules, tables, or charts of presumed 
determinations for economic and noneconomic losses. While these 
schedules, tables, or charts cannot cover every possible claimant 
(e.g., injured claimants), they are extensive and detailed enough to 
provide the majority of potential claimants with a general dollar range 
into which their awards may fall.
    Nonetheless, the Special Master and the Department recognize that 
it will be impossible to fashion a presumptive methodology that will 
take into account all of the individual facts and circumstances for 
every claimant. Rather, some claimants may have extraordinary 
individual circumstances that justify departure from the presumed 
awards. Thus, the interim final rule provides that claimants may 
request that the Special Master depart from the presumed economic and 
noneconomic losses based upon a demonstration of extraordinary 
circumstances that the presumed award methodology does not adequately 
address.
    Economic loss: Determination of economic loss requires a prediction 
about each claimant's future. This assessment will be, by its nature, 
somewhat speculative. While the determination of economic loss should 
be based upon facts regarding the individual victim where those facts 
are available, some facts cannot be predicted on an individualized 
basis.
    The regulations also provide that the Special Master's schedules, 
tables, or charts should identify presumed determinations of economic 
loss up to a salary level commensurate with the 98th percentile of 
individual income in the United States. The Department recognizes that 
projecting earnings over worklife for people with extraordinary annual 
incomes is a very complex exercise, often requiring a detailed 
evaluation of variable and often complex formulae for nonvariable 
income, differing work life expectations, often highly volatile 
industries or markets, and other factors that are not often subject to 
easy generalization. We have also concluded that the purpose of the Act 
is not simply to examine economic and noneconomic harm, but also to 
provide compensation that is just and appropriate in light of the 
financial needs and resources of claimants. Any methodology that does 
nothing more than attempt to replicate a theoretically possible future 
income stream would lead to awards that would be insufficient relative 
to the needs of some victims' families, and excessive relative to the 
needs of others. Therefore, a claimant should not assume that he or she 
will receive an award greater than the presumed award simply because 
the victim had an income that exceeded the income for the 98th 
percentile. Indeed, the Act's requirement that the Special Master 
consider ``the individual circumstances of the claimant'' indicates 
that the Special Master may consider a particular claimant's financial 
needs and resources, just as the Department and the Special Master 
considered the needs of the claimants in concluding that no claimant 
bringing a claim on behalf of a deceased victim should receive less 
than $500,000 or $300,000 before collateral source offsets.
    If a claimant seeks review of a presumed award, the Special Master 
may consider a range of information, including demographic information 
on retirement trends for high wage earners, the individual's historical 
expenses, savings, and any other factors he deems relevant, including 
economic trends, information available from the Bureau of Labor 
Statistics, the Census Bureau and other entities on average income and 
retirement age for the victim's profession or even for the victim's 
former employer. Claimants should not expect awards grossly in excess 
of the highest awards listed on the Special Master's presumed award 
chart, as the individual circumstances of the wealthiest and highest-
income claimants will often indicate that multi-million dollar awards 
out of the public coffers are not necessary to provide them with a 
strong economic foundation from which to rebuild their lives.
    The Special Master and the Department recognize that the extent of 
physical injury for those victims who survived the September 11 attacks 
may vary to a degree that does not lend itself to a schedule, table, or 
chart. If the claimant's injury causes only a temporary disability, the 
Special Master may consider evidence regarding the length of time the 
claimant was absent from his employment in determining the appropriate 
compensation for economic loss. For those victims who suffered 
permanent physical disability, the Special Master may rely upon his 
economic loss methodology, but adjust the award based upon the extent 
of the physical disability. In evaluating claims of disability, the 
Special Master will, in general, make a determination regarding whether 
the claimant is capable of performing his or her usual profession in 
light of the injuries.
    With respect to claims of total permanent disability, the Special 
Master may accept a determination of disability made by the Social 
Security Administration as evidence of disability without any further 
medical evidence or review. The Special Master may also consider 
determinations of permanent total disability made by other governmental 
agencies or private insurers in evaluating the claim. The Special 
Master may require an evaluation of the claimant's disability and 
ability to perform his or her occupation from medical experts.

[[Page 66279]]

    With respect to claims of partial disability, the Special Master 
may consider evidence of the effect of the partial disability on the 
claimant's ability to perform his or her usual occupation as well as 
the effect of the partial disability on the claimant's ability to 
participate in usual daily activities.
    Noneconomic losses: Each person who was killed or injured in the 
September 11 attacks suffered grievous harm, and each person 
experienced the unspeakable events of that day in a unique way. Some 
victims experienced terror for many minutes, as they were held hostage 
by terrorists on an airplane or trapped in a burning building. Some 
victims had no warning of what was coming and died within seconds of a 
plane hitting the building in which they worked. While these 
circumstances may be knowable in a few extraordinary circumstances, for 
the vast majority of victims these circumstances are unknowable.
    After extensive fact finding, public outreach, and review of public 
comments, the Special Master and the Department have concluded that the 
most rational and just way to approach the imponderable task of placing 
a dollar amount upon the pain, emotional suffering, loss of enjoyment 
of life, and mental anguish suffered by the thousands of victims of the 
September 11 attacks is to assess the noneconomic losses for categories 
of claimants. The most obvious distinction is between those who died 
and those who suffered physical injury but survived.
    The regulations therefore set a presumed award for noneconomic 
losses sustained. For those victims who died as a result of the 
September 11 aircraft crashes, the presumed noneconomic losses will be 
$250,000, plus an additional $50,000 for the spouse and each dependent 
of the deceased victim. That $250,000 figure is roughly equivalent to 
the amounts received under existing federal programs by public safety 
officers who are killed while on duty, or members of our military who 
are killed in the line of duty while serving our nation. See 38 U.S.C. 
1967 (military personnel); 42 U.S.C. 3796 (Public Safety Officers 
Benefit Program). The latter figures--$50,000 for the spouse and each 
dependent--include a noneconomic component of ``replacement services 
loss.''
    For those victims who suffered physical injury but survived the 
September 11 attacks, the Special Master may establish a methodology 
for estimating their noneconomic losses. The Special Master may 
determine that it is appropriate to give some percentage of the 
noneconomic loss award given for victims who died, based upon the 
extent of the injury.
    The Special Master and the Department recognize, however, that no 
presumed award can take into account all of the unique individual 
circumstances of each claimant. Accordingly, as noted above, claimants 
may either accept the presumed award or instead attempt to demonstrate 
in a hearing before the Special Master extraordinary circumstances that 
justify departure from the presumed award.
    Collateral Sources: Section 405(b)(6) of the Act provides that the 
Special Master shall reduce the amount of compensation by the amount of 
the collateral source compensation ``a claimant has received or is 
entitled to receive'' as a result of the terrorist-related aircraft 
crashes of September 11, 2001. The interim final rule provides that 
collateral sources will include life insurance, pension funds, death 
benefit programs, and payments by federal, state, or local governments 
related to the terrorist-related aircraft crashes of September 11, 
2001. While many public commenters voiced strong opposition to the 
inclusion of some or all of these as collateral source compensation, 
the Act expressly includes each one within the definition of 
``collateral sources.''
    At the same time, the Act does not address whether certain other 
types of payments constitute collateral source compensation. The 
interim final rule provides that the following are not collateral 
source compensation:
    (1) The value of services or in-kind charitable gifts such as 
provision of emergency housing, food, or clothing; and
    (2) Charitable donations distributed to the beneficiaries of the 
decedent, to the injured claimant, or to the beneficiaries of the 
injured claimant by private charitable entities; provided, however, 
that the Special Master may determine that funds provided to victims or 
their families through a private charitable entity constitute, in 
substance, a collateral source as described above.
    The Department has concluded that charitable contributions should 
not be considered collateral source compensation within the meaning of 
the Act because, among other reasons, such charitable contributions are 
different in kind from the collateral sources listed in the Act. 
Moreover, because the collateral offset only applies to collateral 
source compensation that the claimant has received or is entitled to 
receive, deducting charitable awards from the amount of compensation 
would have the perverse effect of encouraging potential donors to 
withhold their giving until after claimants have received their awards 
from the Fund.
F. The Claims Evaluation Process
    Section 405(b)(4) of the Act provides that a claimant, after the 
filing of the claim, has the right to present evidence to the Office of 
the Special Master. The statute specifically provides that the claimant 
has the right to present witness statements and documents, the right to 
obtain legal counsel, and such other due process rights as are 
determined to be appropriate by the Special Master.
    The interim final regulations provide claimants with a choice of 
two Procedural Options--Track A or Track B. If a claimant selects Track 
A, the Claims Evaluator will determine eligibility and the claimant's 
presumed award and, within 45 days of the date the claim was deemed 
filed, notify the claimant in writing of the eligibility determination, 
the amount of the presumed award, and the right to request a hearing 
before the Special Master or his designee under Sec. 104.33 of these 
regulations. After an eligible claimant has been notified of the 
presumed award, the claimant may either accept the presumed 
compensation determination as the final determination and request 
payment, or may instead request a review before the Special Master or 
his designee pursuant to Sec. 104.33. If a claimant opts for a review, 
the claimant may make supplemental submissions. The Special Master may 
alter or modify the award if the presumed award was calculated 
erroneously, or if the claimant demonstrates extraordinary 
circumstances indicating that the presumed award does not adequately 
address the claimant's injury. There will be no further review or 
appeal from this determination.
    If the claimant selects Track B, a Claims Evaluator will determine 
eligibility within 45 days of the date the claim was deemed filed, but 
shall not determine the claimant's presumed award. The Claims Evaluator 
will then notify the claimant in writing of the eligibility 
determination. Upon notification of eligibility, the claimant will 
proceed to a hearing pursuant to Sec. 104.33. At such hearing, the 
Special Master or his designee will utilize the presumed award 
methodology, but may modify or vary the award if the claimant presents 
extraordinary circumstances not adequately addressed by the presumed 
award methodology. There shall be no review or appeal from this 
determination.

[[Page 66280]]

    Hearings, when sought, will be held by the Special Master or his 
designee. These hearings shall be conducted in a nonadversarial manner, 
the objective of which will be to permit the claimant to present 
information or evidence that the claimant believes is necessary to a 
full understanding of the claim. Claimants will be permitted, but not 
required, to present witnesses, including expert witnesses. The hearing 
officer shall be permitted to examine the credentials of experts.
    The hearings shall be limited in length to a time period determined 
by the Special Master or the relevant hearing officer, but generally 
not to exceed two hours. The hearings shall, to the extent practicable, 
be scheduled at times and in locations convenient to the claimant or 
his or her representative. The claimant shall be entitled to be 
represented by an attorney in good standing, but it is not necessary 
that the claimant be represented by an attorney.
G. Assistance to Claimants
    In its November 5, 2001 Notice of Inquiry, the Department noted 
that section 405(a) of the Act establishes some specific requirements 
with respect to the claim form and the information to be included. The 
law requires the Special Master to develop a claim form to use in 
filing claims for compensation under this program. The Special Master 
is to ensure that the form can be filed electronically if it is 
determined to be practicable. Moreover, by law, the form must include a 
statement of the factual basis for eligibility and information 
regarding income in recent years. In addition, the form is to request 
information from the claimant as to: (1) The physical harm suffered by 
a victim, or information confirming the death of the victim, as a 
result of the terrorist-related aircraft crashes of September 11, 2001; 
(2) income tax returns for recent years and other records; and (3) 
documentation regarding collateral source compensation including life 
insurance policies and government or employment-related programs which 
have or may provide funds or benefits to the claimant.
    The Department believes that it is important that this Fund be 
accessible to potential claimants who have limited resources and who 
are not trained in the law. Rather than attempt to address in detail 
the means by which the Special Master should provide assistance to 
claimants, these regulations leave the Special Master with discretion 
to implement steps to provide assistance to claimants and to make this 
Fund accessible to them.
    Because the Act does not provide for payment of legal or other fees 
by the Fund, these regulations do not impose any limits on the types or 
amount of fees that claimants may pay their attorneys or others 
providing assistance. Although the Department's regulations do not set 
specific limits on attorneys fees separate from those existing in state 
law or attorney ethical standards, the Department believes that 
contingency arrangements exceeding 5% of a claimant's recovery from the 
Fund would not be in the best interest of the claimants.
    The Department contemplates that the Special Master will have 
discretion to inform potential claimants of the nature of the Fund so 
that they may make informed decisions regarding the types or amount of 
fees that they pay for legal or other assistance. For example, the 
Special Master may notify claimants and potential claimants of the 
availability of free legal services. Likewise, the Special Master may 
inform claimants and potential claimants that the Fund is a no-fault, 
administrative scheme that should not involve the kind of risks and 
expense that would justify any significant contingency fees.
    These regulations similarly do not address the manner in which 
claimants may use funds that they receive from the Fund, except that 
the Personal Representatives must agree in an acknowledgment and 
release form to distribute the award to the beneficiaries of the 
decedent in accordance with the decedent's will or applicable state law 
or ruling by a court of competent jurisdiction. While the Department 
does not believe that it is appropriate for the Special Master to place 
further legal restrictions on the claimants' or beneficiaries' use of 
payments from the Fund, the Department does contemplate that the 
Special Master will have discretion to provide claimants with 
information regarding annuities or other financial planning devices or 
to offer structured awards with periodic payments.

Application of Various Laws and Executive Orders to This Rulemaking

Administrative Procedure Act, 5 U.S.C. 553
    This rule provides for compensation to eligible individuals who 
were physically injured and to the personal representatives of those 
who were killed as a result of the terrorist-related aircraft crashes 
of September 11, 2001. In order to provide compensation to eligible 
claimants as expeditiously as possible, Congress set a short 90-day 
deadline for the issuance of these regulations. The Department did seek 
public input on the issues, but it was not possible for the Department 
to prepare and publish a proposed rule for notice and comment within 
that very short time period.
    The APA provides that an agency need not go through proposed 
rulemaking and comment before issuing rules to implement benefits 
programs. 5 U.S.C. 553(a)(2). Moreover, the Department, in consultation 
with the Special Master, determined that taking the time to draft and 
publish a proposed rule for notice and comment before this rule took 
effect would have been impracticable in light of the short time between 
the enactment of the statute and the deadline for rulemaking, and also 
would have been contrary to the public interest, which strongly favors 
prompt disbursement of benefits. Accordingly, the Department has 
determined that there is ``good cause'' for exempting this rule from 
the provision of the Administrative Procedure Act that requires a 
notice of proposed rulemaking and the opportunity for public comment. 5 
U.S.C. 553(b)(B).
    For the same reasons, the Department also finds ``good cause'' for 
exempting this rule from the provision of the Administrative Procedure 
Act providing for a delayed effective date. 5 U.S.C. 553(d). Delaying 
the opportunity for eligible claimants to seek Advance Benefits or to 
file claims under the Act would be contrary to the public interest.
Congressional Review Act
    The Administrator of the Office of Information and Regulatory 
Affairs of the Office of Management and Budget has designated this 
interim final rule as a ``major rule'' as that term is defined by the 
Congressional Review Act (``CRA''), 5 U.S.C. 801 et. seq. Pursuant to 
section 808(2) of the CRA, the Department finds that ``good cause'' 
exists for establishing an effective date for this rule upon 
publication because delay would be impracticable in light of the short 
time between the enactment of the statute and the deadline for 
rulemaking, and also would be contrary to the public interest favoring 
prompt disbursement of benefits.
Paperwork Reduction Act of 1995
    The Department of Justice, Civil Division, has submitted the 
following information collection request to the Office of Management 
and Budget (OMB) for review and clearance in accordance with the 
emergency review procedures of the Paperwork Reduction Act of 1995. OMB 
approval has been granted, and this information collection

[[Page 66281]]

has been assigned OMB control number 1105-0073. The proposed 
information collection is published to obtain comments from the public 
and affected agencies. The emergency approval is only valid for 180 
days. Comments should be directed to OMB, Office of Information and 
Regulatory Affairs, Attention: Department of Justice Desk Officer, 
Washington, DC 20530.
    During the first 60 days of this same review period, a regular 
review of this information collection will be undertaken. All comments 
and suggestions, or questions regarding additional information, 
including obtaining a copy of the proposed information collection 
instrument with instructions, should be directed to Office of the 
Special Master, U.S. Department of Justice, 950 Pennsylvania Avenue, 
NW., Washington, DC 20530. We request written comments and suggestions 
from the public and affected agencies concerning the proposed emergency 
collection of information.
    Your comments should address one or more of the following four 
points:
    (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the proposed collection of information, including the validity of the 
methodology and assumptions used;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology, e.g., permitting electronic 
submission of responses.
Overview of This Information Collection
    (1) Type of Information Collection: New Collection.
    (2) Title of the Form/Collection: Registration/Eligibility Form and 
Application for Emergency Benefits from the Victim Compensation Fund.
    (3) Agency form number, if any, and the applicable component of the 
Department of Justice sponsoring the collection: Form Number: SM-001, 
Office of the Special Master, Department of Justice.
    (4) Affected public who will be asked or required to respond, as 
well as a brief abstract: Primary: Individuals who were physically 
injured and personal representatives of those killed as a result of the 
terrorist-related aircraft crashes of September 11, 2001. Abstract: The 
information collected from the Registration/Eligibility Form and 
Application for Emergency Benefits from the Victim Compensation Fund 
will be used to make advance payments to those claimants deemed 
eligible by the Special Master or his designee.
    (5) An estimate of the total number of respondents and the amount 
of time estimated for an average respondent to respond: 5,000 claimants 
with an average of 6.0 hours per response.
    (6) An estimate of the total public burden (in hours) associated 
with the collection: 30,000 hours annually.
    If additional information is required, contact: Robert B. Briggs, 
Department Clearance Officer, Information Management and Security 
Staff, Justice Management Division, United States Department of 
Justice, 601 D Street NW, Suite 1600, Washington, D.C. 20004.
Privacy Act of 1974
    The Department of Justice, Civil Division is establishing a new 
Privacy Act system of records entitled ``September 11th Victim 
Compensation Fund of 2001, JUSTICE/CIV-008.'' By law, regulations 
addressing certain administrative matters for the September 11th Victim 
Compensation Fund of 2001 must be issued within the 90-day period 
established by Congress. The Privacy Act notice will be published with 
no routine uses, so that it will be effective on the date published. It 
is likely that amendments to this notice, including routine uses, will 
be published at a later date, with the opportunity to comment. In the 
interim, disclosures necessary to process claims will be made only with 
the written consent of claimants or as otherwise authorized under 5 
U.S.C. 552a(b).
Regulatory Flexibility Act
    These regulations set forth procedures by which the Federal 
government will award compensation benefits to eligible victims of the 
September 11, 2001 terrorist attacks. Under 5 U.S.C. 601(6), the term 
``small entity'' does not include the Federal government, the party 
charged with incurring the costs attendant to the implementation and 
administration of the Victims Compensation Fund. To the extent that 
small entities, including small government entities, will be 
economically affected by the promulgation of these regulations, such 
effects will likely be minimal. Further, the number of entities that 
will be affected will, in all probability, fall short of a 
``substantial number'' of small entities. In fact, the Department 
believes that the promulgation of these rules will play a considerable 
role in reducing the amount of complex, private litigation, wherein a 
substantial number of small (and large) entities would undoubtedly be 
significantly impacted.
    Accordingly, the Department has reviewed this rule in accordance 
with the Regulatory Flexibility Act (5 U.S.C. 605(b)) and by approving 
it certifies that this rule will not have a significant economic impact 
on a substantial number of small entities because it provides 
compensation to eligible individuals who were physically injured as a 
result of the terrorist-related aircraft crashes of September 11, 2001, 
and compensation through a ``personal representative'' for those who 
were killed as a result of those crashes. This rule provides 
compensation to individuals, not to entities.
Unfunded Mandates Reform Act of 1995
    This rule will not result in the expenditure by State, local and 
tribal governments, in the aggregate, or by the private sector, of 
$100,000,000 or more in any one year, and it will not significantly or 
uniquely affect small governments. Therefore, no actions were deemed 
necessary under the provisions of the Unfunded Mandates Reform Act of 
1995.
Executive Order 12866--Regulatory Planning and Review
    This regulation has been drafted and reviewed in accordance with 
Executive Order 12866, ``Regulatory Planning and Review,'' section 
1(b), Principles of Regulation. The Department of Justice has 
determined that this rule is a ``significant regulatory action'' under 
Executive Order 12866, section 3(f), Regulatory Planning and Review, 
and accordingly this rule has been reviewed by the Office of Management 
and Budget.
Executive Order 13132--Federalism
    This regulation will not have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with Executive 
Order 13132, it is determined that this rule does not have sufficient 
federalism implications to warrant the preparation of a Federalism 
Assessment. However, the Department of Justice has worked cooperatively 
with state and local officials in the affected communities in the 
preparation of this rule. Also, the

[[Page 66282]]

Department individually notified national associations representing 
elected officials of the initial request for comment and will be taking 
similar action in connection with the interim final rule.

List of Subjects in 28 CFR Part 104

    Disaster assistance, Disability benefits, Terrorism.


    Accordingly, for the reasons set forth in the preamble, Part 104 of 
chapter I of Title 28 of the Code of Federal Regulations is added to 
read as follows:

PART 104--SEPTEMBER 11TH VICTIM COMPENSATION FUND OF 2001

Subpart A--General; Eligibility
104.1   Purpose.
104.2   Eligibility definitions and requirements.
104.3   Other definitions.
104.4   Personal Representative.
104.5   Foreign claims.
104.6   Amendments to this rule.
Subpart B--Filing for Compensation; Application for Advance Benefits
104.21   Filing for compensation.
104.22   Advance benefits.
Subpart C--Claim Intake, Assistance, and Review Procedures
104.31   Procedure for claims evaluation.
104.32   Eligibility review.
104.33   Hearing.
104.34   Publication of awards.
104.35   Claims deemed abandoned by claimants.
Subpart D--Amount of Compensation for Eligible Claimants
104.41   Amount of compensation.
104.42   Applicable state law.
104.43   Determination of presumed economic loss for decedents.
104.44   Determination of presumed noneconomic losses for decedents.
104.45   Determination of presumed economic loss for claimants who 
suffered physical harm.
104.46   Determination of presumed noneconomic losses for claimants 
who suffered physical harm.
104.47   Collateral sources.
Subpart E--Payment of Claims
104.51   Payments to eligible individuals.
104.52   Distribution of award to decedent's beneficiaries.
Subpart F--Limitations
104.61   Limitation on civil actions.
104.62   Time limit on filing claims.
104.63   Subrogation.
Subpart G--Measures to Protect the Integrity of the Compensation 
Program
104.71   Procedures to prevent and detect fraud.

    Authority: Title IV of Pub. L. 107-42, 115 Stat. 230, 49 U.S.C. 
40101 note.

Subpart A--General; Eligibility


Sec. 104.1  Purpose.

    This part implements the provisions of the September 11th Victim 
Compensation Fund of 2001, Title IV of Public Law 107-42, 115 Stat. 230 
(Air Transportation Safety and System Stabilization Act) to provide 
compensation to eligible individuals who were physically injured as a 
result of the terrorist-related aircraft crashes of September 11, 2001, 
and to the ``personal representatives'' of those who were killed as a 
result of the crashes. All compensation provided through the Fund will 
be on account of personal physical injuries or death.


Sec. 104.2  Eligibility definitions and requirements.

    (a) Eligible claimants. The term eligible claimants means:
    (1) Individuals present at the World Trade Center, Pentagon, or 
Shanksville, Pennsylvania site at the time of or in the immediate 
aftermath of the crashes and who suffered physical harm, as defined 
herein, as a direct result of the terrorist-related aircraft crashes;
    (2) The Personal Representatives of deceased individuals aboard 
American Airlines flights 11 or 77 and United Airlines flights 93 or 
175; and
    (3) The Personal Representatives of individuals who were present at 
the World Trade Center, Pentagon, or Shanksville, Pennsylvania site at 
the time of or in the immediate aftermath of the crashes and who died 
as a direct result of the terrorist-related aircraft crash.
    (4) The term eligible claimants does not include any individual or 
representative of an individual who is identified to have been a 
participant or conspirator in the terrorist-related crashes of 
September 11.
    (b) Immediate aftermath. The term immediate aftermath of the 
crashes shall mean, for purposes of all claimants other than rescue 
workers, the period of time from the crashes until 12 hours after the 
crashes. With respect to rescue workers who assisted in efforts to 
search for and recover victims, the immediate aftermath shall include 
the period from the crashes until 96 hours after the crashes.
    (c) Physical harm.
    (1) The term physical harm shall mean a physical injury to the body 
that was treated by a medical professional within 24 hours of the 
injury having been sustained or within 24 hours of rescue; and
    (i) Required hospitalization as an in-patient for at least 24 
hours; or
    (ii) Caused, either temporarily or permanently, partial or total 
physical disability, incapacity or disfigurement.
    (2) In every case not involving death, the physical injury must be 
verified by contemporaneous medical records created by or at the 
direction of the medical professional who provided the medical care.
    (d) Personal Representative. The term Personal Representative shall 
mean the person determined to be the Personal Representative under 
Sec. 104.4 of this part.
    (e) Present at the site. The term present at the site (i.e., the 
World Trade Center, Pentagon, or Shanksville, Pennsylvania site) shall 
mean physically present at the time of the crashes or in the immediate 
aftermath:
    (1) In the buildings or portions of buildings that were destroyed 
as a result of the airplane crashes; or
    (2) In any area contiguous to the crash sites that the Special 
Master determines was sufficiently close to the site that there was a 
demonstrable risk of physical harm resulting from the impact of the 
aircraft or any subsequent fire, explosions, or building collapses 
(generally, the immediate area in which the impact occurred, fire 
occurred, portions of buildings fell, or debris fell upon and injured 
persons).


Sec. 104.3  Other definitions.

    (a) Beneficiary. The term beneficiary shall mean a person entitled 
under the laws of the decedent's domicile to receive payments or 
benefits from the estate of or on behalf of the decedent on whose 
behalf the claim to the Fund was filed.
    (b) Dependents. The Special Master shall identify as dependents 
those persons so identified by the victim on his or her federal tax 
return for the year 2000 unless:
    (1) The claimant demonstrates that a minor child of the victim was 
born or adopted on or after January 1, 2001;
    (2) Another person became a dependent in accordance with then-
applicable law on or after January 1, 2001; or
    (3) The victim was not required by law to file a federal income tax 
return for the year 2000.
    (c) Spouse. The Special Master shall identify as the spouse of a 
victim the person reported as spouse on the victim's federal tax return 
for the year 2000 unless:
    (1) The victim was married or divorced in accordance with 
applicable state law on or after January 1, 2001; or
    (2) The victim was not required by law to file a federal income tax 
return for the year 2000.

[[Page 66283]]

    (d) The Act. The Act, as used in this part, shall mean Public Law 
107-42, 115 Stat. 230 (``Air Transportation Safety and System 
Stabilization Act''), 49 U.S.C. 40101 note.
    (e) Victim. The term victim shall mean an eligible injured claimant 
or a decedent on whose behalf a claim is brought by an eligible 
Personal Representative.


Sec. 104.4  Personal Representative.

    (a) In general. The Personal Representative shall be:
    (1) An individual appointed by a court of competent jurisdiction as 
the Personal Representative of the decedent or as the executor or 
administrator of the decedent's will or estate.
    (2) In the event that no Personal Representative or executor or 
administrator has been appointed by any court of competent 
jurisdiction, and such issue is not the subject of pending litigation 
or other dispute, the Special Master may, in his discretion, determine 
that the Personal Representative for purposes of compensation by the 
Fund is the person named by the decedent in the decedent's will as the 
executor or administrator of the decedent's estate. In the event no 
will exists, the Special Master may, in his discretion, determine that 
the Personal Representative for purposes of compensation by the Fund is 
the first person in the line of succession established by the laws of 
the decedent's domicile governing intestacy.
    (b) Notice to beneficiaries. Any purported Personal Representative 
must, before filing an Eligibility Form, provide written notice of the 
claim (including a designated portion of the Eligibility Form) to the 
immediate family of the decedent (including, but not limited to, the 
decedent's spouse, former spouses, children, other dependents, and 
parents), to the executor, administrator, and beneficiaries of the 
decedent's will, and to any other persons who may reasonably be 
expected to assert an interest in an award or to have a cause of action 
to recover damages relating to the wrongful death of the decedent. 
Personal delivery or transmission by certified mail, return receipt 
requested, shall be deemed sufficient notice under this provision. The 
claim forms shall require that the purported Personal Representative 
certify that such notice (or other notice that the Special Master deems 
appropriate) has been given. In addition, as provided in 
Sec. 104.21(b)(5) of this part, the Special Master may publish a list 
of individuals who have filed Eligibility Forms and the names of the 
victims for whom compensation is sought, but shall not publish the 
content of any such form.
    (c) Objections to Personal Representatives. Objections to the 
authority of an individual to file as the Personal Representative of a 
decedent may be filed with the Special Master by parties who assert a 
financial interest in the award up to 30 days following the filing by 
the Personal Representative. If timely filed, such objections shall be 
treated as evidence of a ``dispute'' pursuant to paragraph (d) of this 
section.
    (d) Disputes as to identity. The Special Master shall not be 
required to arbitrate, litigate, or otherwise resolve any dispute as to 
the identity of the Personal Representative. In the event of a dispute 
over the appropriate Personal Representative, the Special Master may 
suspend adjudication of the claim or, if sufficient information is 
provided, calculate the appropriate award and authorize payment, but 
place in escrow any payment until the dispute is resolved either by 
agreement of the disputing parties or by a court of competent 
jurisdiction. Alternatively, the disputing parties may agree in writing 
to the identity of a Personal Representative to act on their behalf, 
who may seek and accept payment from the Fund while the disputing 
parties work to settle their dispute.


Sec. 104.5  Foreign claims.

    In the case of claims brought by or on behalf of foreign citizens, 
the Special Master may alter the requirements for documentation set 
forth herein to the extent such materials are unavailable to such 
foreign claimants.


Sec. 104.6  Amendments to this rule.

    In the event that amendments are subsequently made to any section 
of this Part, claimants are entitled to have their claims processed in 
accordance with the provisions that were in effect at the time that 
their claims were submitted under Sec. 104.21(d).

Subpart B--Filing for Compensation; Application for Advance 
Benefits


Sec. 104.21  Filing for compensation.

    (a) Compensation form; ``filing.'' Except for applications for 
Advance Benefits pursuant to Sec. 104.22, no claim may be considered 
until the claimant has submitted both an ``Eligibility Form'' and 
either a ``Personal Injury Compensation Form'' or a ``Death 
Compensation Form.'' A claim shall be deemed ``filed'' for purposes of 
section 405(b)(3) of the Act (providing that the Special Master shall 
issue a determination not later than 120 days after the date on which a 
claim is filed), and for any time periods in this part, when a Claims 
Evaluator determines that both the Eligibility Form and either a 
Personal Injury Compensation Form or a Death Compensation Form are 
substantially complete. Provided, however, that if a claimant files an 
Eligibility Form requesting Advance Benefits pursuant to Sec. 104.22 of 
this part without filing either a ``Personal Injury Compensation Form'' 
or a ``Death Compensation Form,'' the claim shall be deemed ``filed'' 
when the Claims Evaluator determines that the Eligibility Form is 
substantially complete, but the time period for determination and any 
time periods in this part shall be stayed or tolled as described in 
Sec. 104.22(g) of this part.
    (b) Eligibility Form. The Special Master shall develop an 
Eligibility Form that will require the claimant to provide information 
necessary for determining the claimant's eligibility to recover from 
the Fund.
    (1) The Eligibility Form may require that the claimant certify that 
he or she has dismissed any pending lawsuit seeking damages as a result 
of the terrorist-related airplane crashes of September 11, 2001 (except 
for actions seeking collateral source benefits) within 90 days of the 
effective date of this part pursuant to section 405(c)(3)(B)(ii) of the 
Act and that there is no pending lawsuit brought by a dependent, 
spouse, or beneficiary of the victim.
    (2) The Special Master may require as part of the notice 
requirement pursuant to Sec. 104.4(b) that the claimant provide copies 
of a designated portion of the Eligibility Form to the immediate family 
of the decedent (including, but not limited to, the spouse, former 
spouses, children, other dependents, and parents), to the executor, 
administrator, and beneficiaries of the decedent's will, and to any 
other persons who may reasonably be expected to assert an interest in 
an award or to have a cause of action to recover damages relating to 
the wrongful death of the decedent.
    (3) The Eligibility Form may require claimants to provide the 
following proof:
    (i) Proof of death: Death certificate or similar official 
documentation;
    (ii) Proof of presence at site: Documentation sufficient to 
establish presence at one of the crash sites, which may include, 
without limitation, a death certificate, records of employment, 
contemporaneous medical records, contemporaneous records of federal, 
state, city or local government, an affidavit or declaration of the 
decedent's or injured claimant's employer, or other

[[Page 66284]]

sworn statement (or unsworn statement complying with 28 U.S.C. 1746) 
regarding the presence of the victim;
    (iii) Proof of death on board aircraft: Death certificate or 
records of American or United Airlines or other sufficient official 
documentation;
    (iv) Proof of physical harm: Contemporaneous medical records of 
hospitals, clinics, physicians, licensed medical personnel, or 
registries maintained by federal, state, or local government, and 
records of all continuing medical treatment;
    (v) Personal Representative: Copies of relevant legal 
documentation, including court orders; letters testamentary or similar 
documentation; proof of the purported Personal Representative's 
relationship to the decedent; copies of wills, trusts, or other 
testamentary documents; and information regarding other possible 
beneficiaries as requested by the Eligibility Form;
    (vi) Any other information that the Special Master deems necessary 
to determine the claimant's eligibility.
    (4) The Special Master may also require waivers, consents, or 
authorizations from claimants to obtain directly from third parties tax 
returns, medical information, employment information, or other 
information that the Special Master deems relevant in determining the 
claimant's eligibility or award, and may request an opportunity to 
review originals of documents submitted in connection with the Fund.
    (5) Application for Advance Benefits: The Eligibility Form shall 
include a section allowing claimants to indicate that they wish to 
apply for Advance Benefits. Claimants who apply for such Advance 
Benefits must certify on that Form that they have not yet received 
$450,000 in collateral source compensation if they are bringing a claim 
on behalf of a deceased victim with a spouse or dependent, $250,000 in 
collateral source compensation if they are bringing a claim on behalf 
of a deceased victim who was single with no dependents, or an amount in 
excess of their lost wages plus out-of-pocket medical expenses if they 
are an injured claimant. All such claimants also must state on the Form 
facts establishing financial hardship that would justify a 
determination that they are in need of Advance Benefits.
    (6) The Special Master may publish a list of individuals who have 
filed Eligibility Forms and the names of the victims for whom 
compensation is sought, but shall not publish the content of any such 
form.
    (c) Personal Injury Compensation Form and Death Compensation Form. 
The Special Master shall develop a Personal Injury Compensation Form 
that each injured claimant must submit. The Special Master shall also 
develop a Death Compensation Form that each Personal Representative 
must submit. These forms shall require the claimant to provide certain 
information that the Special Master deems necessary to determining the 
amount of any award, including information concerning income, 
collateral sources, benefits, and other financial information, and 
shall require the claimant to state the factual basis for the amount of 
compensation sought. It shall also allow the claimant to submit certain 
other information that may be relevant, but not necessary, to the 
determination of the amount of any award.
    (1) Claimants shall, at a minimum, submit all tax returns that were 
filed for the years 1998, 1999, and 2000. The Special Master may, at 
his discretion, require that claimants submit copies of tax returns or 
other records for any other period of years he deems appropriate for 
determination of an award. The Special Master may also require waivers, 
consents, or authorizations from claimants to obtain directly from 
third parties medical information, employment information, or other 
information that the Special Master deems relevant to determining the 
amount of any award.
    (2) Claimants may attach to the ``Personal Injury Compensation 
Form'' or ``Death Compensation Form'' any additional statements, 
documents or analyses by physicians, experts, advisors, or any other 
person or entity that the claimant believes may be relevant to a 
determination of compensation.
    (d) Submission of a claim. Section 405(c)(3)(B) of the Act provides 
that upon the submission of a claim under the Fund, the claimant waives 
the right to file a civil action (or to be a party to an action) in any 
Federal or State court for damages sustained as a result of the 
terrorist-related aircraft crashes of September 11, 2001, except for 
civil actions to recover collateral source obligations. A claim shall 
be deemed submitted for purposes of section 405(c)(3)(B) of the Act 
when the claim is deemed filed pursuant to Sec. 104.21, regardless of 
whether any time limits are stayed or tolled.
    (e) Provisions of information by third parties. Any third party 
having an interest in a claim brought by a Personal Representative may 
provide written statements or information regarding the Personal 
Representative's claim. The Claims Evaluator or the Special Master or 
his designee may, at his or her discretion, include the written 
statements or information as part of the claim.


Sec. 104.22  Advance Benefits.

    (a) Advance Benefits. Eligible Claimants may apply for immediate 
``Advance Benefits'' in a fixed amount as follows:
    (1) $50,000 for Personal Representatives; and
    (2) $25,000 for injured claimants who meet the requirements of 
paragraph (d) of this section.
    (b) Credit against award. The Advance Benefit shall be credited 
against any final compensation award so that the amount of the Advance 
Benefit is deducted from the final award under this program.
    (c) Application for Advance Benefits. An otherwise eligible 
claimant may seek Advance Benefits to alleviate financial hardship 
faced by the claimant (or financial hardship faced by the beneficiaries 
of the decedent) by submitting an Eligibility Form described in 
Sec. 104.21(b) and indicating thereon that he or she is applying for 
Advance Benefits.
    (d) Eligibility for Advance Benefits. In the case of a Personal 
Representative, the claimant may be deemed eligible for Advance 
Benefits if a Claims Evaluator or the Special Master or his designee 
determines that the claimant is eligible to recover under the Fund. In 
the case of an injured claimant, the claimant may be deemed eligible 
for Advance Benefits when the Special Master or his designee determines 
that the claimant is eligible to recover under the Fund and that the 
claimant's physical injury required hospitalization for one week or 
more.
    (e) Authorization of payments.
    (1) Payment in the amount described in paragraph (a) of this 
section will be authorized immediately upon a determination that the 
claimant is eligible for Advance Benefits and the claimant is:
    (i) An injured claimant;
    (ii) A Personal Representative who was the spouse of the deceased 
victim on September 11, 2001; or
    (iii) A Personal Representative who has obtained the consent of the 
spouse of the deceased victim (or, if there is no surviving spouse, all 
of the dependents of the deceased victim) to file for Advance Benefits.
    (2)(i) With respect to other Personal Representatives, payment will 
be authorized within 15 days after the determination that the claimant 
is eligible for Advance Benefits, provided that no other individual has 
asserted a colorable conflicting claim as the Personal Representative 
with respect to the decedent and the Personal

[[Page 66285]]

Representative identifies and has given notice to the beneficiaries to 
whom such Advance Benefits will be distributed.
    (ii) In the event that a colorable conflicting claim has been 
asserted, no Advance Benefit will be paid until a final eligibility 
determination has been made.
    (f) Tolling of 120-day clock and other time periods. A claimant 
filing an Eligibility Form requesting Advance Benefits before filing a 
Personal Injury Compensation Form or Death Compensation Form will be 
deemed to have waived his right to commencement of the 120-day period 
in section 405(b)(3) of the Act (providing that the Special Master 
shall provide notice to the claimant of his determination within 120 
days after the date on which a claim is filed). The 120-day period and 
all other time limitations in this part, except those applicable to 
Advance Benefit payments, shall be stayed or tolled until such time 
that a Claims Evaluator determines that the claimant's Personal Injury 
Compensation Form or Death Compensation Form is substantially complete.

Subpart C--Claim Intake, Assistance, and Review Procedures


Sec. 104.31  Procedure for claims evaluation.

    (a) Initial review. Claims Evaluators shall review the forms filed 
by the claimant and either deem the claim ``filed'' (pursuant to 
104.21(a)) or notify the claimant of any deficiency in the forms or any 
required documents.
    (b) Procedural tracks. Each claim will be placed on a procedural 
track, described herein as ``Track A'' and ``Track B,'' selected by the 
claimant on the Personal Injury Compensation Form or Death Compensation 
Form.
    (1) Procedure for Track A. The Claims Evaluator shall determine 
eligibility and the claimant's presumed award pursuant to Secs. 104.43 
to 104.46 of this part and, within 45 days of the date the claim was 
deemed filed, notify the claimant in writing of the eligibility 
determination, the amount of the presumed award, and the right to 
request a hearing before the Special Master or his designee under 
Sec. 104.33 of this part. After an eligible claimant has been notified 
of the presumed award, the claimant may either accept the presumed 
compensation determination as the final determination and request 
payment, or may instead request a review before the Special Master or 
his designee pursuant to Sec. 104.33. Claimants found to be ineligible 
may appeal pursuant to Sec. 104.32.
    (2) Procedure for Track B. The Claims Evaluator shall determine 
eligibility within 45 days of the date the claim was deemed filed, but 
shall not determine the claimant's presumed award; the Claims Evaluator 
shall notify the claimant in writing of the eligibility determination. 
Upon notification of eligibility, the claimant will proceed to a 
hearing pursuant to Sec. 104.33. At such hearing, the Special Master or 
his designee shall utilize the presumptive award methodology as set 
forth in Secs. 104.43 to 104.46 of this part, but may modify or vary 
the award if the claimant presents extraordinary circumstances not 
adequately addressed by the presumptive award methodology. There shall 
be no review or appeal from this determination.
    (c) Multiple claims from the same family. The Special Master may 
treat claims brought by or on behalf of two or more members of the same 
immediate family as related or consolidated claims for purposes of 
determining the amount of any award.


Sec. 104.32  Eligibility review.

    Any claimant deemed ineligible by the Claims Evaluator may appeal 
that decision to the Special Master or his designee by filing an 
eligibility appeal on forms created by the office of the Special 
Master.


Sec. 104.33  Hearing.

    (a) Supplemental submissions. The claimant may prepare and file 
Supplemental Submissions within 21 calendar days from notification of 
either the presumed award (Track A) or eligibility (Track B). The 
Special Master shall develop forms appropriate for Supplemental 
Submissions.
    (b) Conduct of hearings. Hearings shall be before the Special 
Master or his designee. The objective of hearings shall be to permit 
the claimant to present information or evidence that the claimant 
believes is necessary to a full understanding of the claim. The 
claimant may request that the Special Master or his designee review any 
evidence relevant to the determination of the award, including without 
limitation: Factors and variables used in calculating economic loss; 
the identity of the victim's spouse and dependents; the financial needs 
of the claimant; facts affecting noneconomic loss; and any factual or 
legal arguments that the claimant contends should affect the award. 
Claimants shall be entitled to submit any statements or reports in 
writing. The Special Master or his designee may require authentication 
of documents, including medical records and reports, and may request 
and consider information regarding the financial resources and expenses 
of the victim's family or other material that the Special Master or his 
designee deems relevant.
    (c) Location and duration of hearings. The hearings shall, to the 
extent practicable, be scheduled at times and in locations convenient 
to the claimant or his or her representative. The hearings shall be 
limited in length to a time period determined by the Special Master or 
his designee, but generally not to exceed two hours. The claimant may 
elect whether the hearing shall be public or private.
    (d) Witnesses, counsel, and experts. Claimants shall be permitted, 
but not required, to present witnesses, including expert witnesses. The 
Special Master or his designee shall be permitted to question witnesses 
and examine the credentials of experts. The claimant shall be entitled 
to be represented by an attorney in good standing, but it is not 
necessary that the claimant be represented by an attorney.
    (e) Waivers. The Special Master shall have authority and discretion 
to require any waivers necessary to obtain more individualized 
information on specific claimants.
    (f) Track A review of presumed award. For proceedings under Track 
A, the Special Master or his designee shall make a determination 
whether:
    (1) There was an error in determining the presumptive award, either 
because the claimant's individual criteria were misapplied or for 
another reason; or
    (2) The claimant presents extraordinary circumstances not 
adequately addressed by the presumptive award.
    (g) Determination. The Special Master shall notify the claimant in 
writing of the final amount of the award, but need not create or 
provide any written record of the deliberations that resulted in that 
determination. There shall be no further review or appeal of the 
Special Master's determination.


Sec. 104.34  Publication of awards.

    In order to assist potential claimants in evaluating their options 
of either filing a claim with the Special Master or filing a lawsuit in 
tort, the Special Master reserves the right to publicize the amounts of 
some or all of the awards, but shall not publish the name of the 
claimants or victims that received each award. If published, these 
decisions would be intended by the Special Master as general guides for 
potential claimants and should not be viewed as precedent binding on 
the Special Master or his staff.

[[Page 66286]]

Sec. 104.35  Claims deemed abandoned by claimants.

    The Special Master and his staff will endeavor to evaluate promptly 
any information submitted by claimants. Nonetheless, it is the 
responsibility of the claimant to keep the Special Master informed of 
his or her current address and to respond within the duration of this 
two-year program to requests for additional information. Claims 
outstanding at the end of this program because of a claimant's failure 
to complete his or her filings shall be deemed abandoned.

Subpart D--Amount of Compensation for Eligible Claimants.


Sec. 104.41  Amount of compensation.

    As provided in section 405(b)(1)(B)(ii) of the Act, in determining 
the amount of compensation to which a claimant is entitled, the Special 
Master shall take into consideration the harm to the claimant, the 
facts of the claim, and the individual circumstances of the claimant. 
The individual circumstances of the claimant may include the financial 
needs or financial resources of the claimant or the victim's dependents 
and beneficiaries. As provided in section 405(b)(6) of the Act, the 
Special Master shall reduce the amount of compensation by the amount of 
collateral source compensation the claimant (or, in the case of a 
Personal Representative, the victim's beneficiaries) has received or is 
entitled to receive as a result of the terrorist-related aircraft 
crashes of September 11, 2001. In no event shall an award (before 
collateral source compensation has been deducted) be less than $500,000 
in any case brought on behalf of a deceased victim with a spouse or 
dependent, or $300,000 in any case brought on behalf of a deceased 
victim who was single with no dependents.


Sec. 104.42  Applicable state law.

    The phrase ``to the extent recovery for such loss is allowed under 
applicable state law,'' as used in the statute's definition of economic 
loss in section 402(5) of the Act, is interpreted to mean that the 
Special Master is not permitted to compensate claimants for those 
categories or types of economic losses that would not be compensable 
under the law of the state that would be applicable to any tort claims 
brought by or on behalf of the victim.


Sec. 104.43  Determination of presumed economic loss for decedents.

    In reaching presumed determinations for economic loss for Personal 
Representatives bringing claims on behalf of decedents, the Special 
Master shall consider sums corresponding to the following:
    (a) Loss of earnings or other benefits related to employment. The 
Special Master, as part of the process of reaching a ``determination'' 
pursuant to section 405(b) of the Act, shall develop a methodology and 
publish schedules, tables, or charts that will permit prospective 
claimants to estimate determinations of loss of earnings or other 
benefits related to employment based upon individual circumstances of 
the deceased victim, including: The age of the decedent as of September 
11, 2001; the number of dependents who survive the decedent; whether 
the decedent is survived by a spouse; and the amount and nature of the 
decedent's income for recent years. The decedent's salary/income in 
1998-2000 shall be evaluated in a manner that the Special Master deems 
appropriate. The Special Master may, if he deems appropriate, take an 
average of income figures for each of those three years. The Special 
Master's methodology and schedules, tables, or charts shall yield 
presumed determinations of loss of earnings or other benefits related 
to employment for annual incomes up to but not beyond the 98th 
percentile of individual income in the United States for the year 2000. 
In cases where the victim was a minor child, the Special Master may 
assume an average income for the child commensurate with the average 
income of all wage earners in the United States.
    (b) Medical expense loss. This loss equals the out-of-pocket 
medical expenses that were incurred as a result of the physical harm 
suffered by the victim (i.e., those medical expenses that were not paid 
for or reimbursed through health insurance). This loss shall be 
calculated on a case-by-case basis, using documentation and other 
information submitted by the Personal Representative.
    (c) Replacement services loss. For decedents who did not have any 
prior earned income, or who worked only part time outside the home, 
economic loss may be determined with reference to replacement services 
and similar measures.
    (d) Loss due to death/burial costs. This loss shall be calculated 
on a case-by-case basis, using documentation and other information 
submitted by the personal representative and includes the out-of-pocket 
burial costs that were incurred.
    (e) Loss of business or employment opportunities. Such losses shall 
be addressed through the procedure outlined above in paragraph (a) of 
this section.


Sec. 104.44  Determination of presumed noneconomic losses for 
decedents.

    The presumed noneconomic losses for decedents shall be $250,000 
plus an additional $50,000 for the spouse and each dependent of the 
deceased victim. Such presumed losses include a noneconomic component 
of replacement services loss.


Sec. 104.45  Determination of presumed economic loss for claimants who 
suffered physical harm.

    In reaching presumed determinations for economic loss for claimants 
who suffered physical harm (but did not die), the Special Master shall 
consider sums corresponding to the following:
    (a) Loss of earnings or other benefits related to employment. The 
Special Master may determine the loss of earnings or other benefits 
related to employment on a case-by-case basis, using documentation and 
other information submitted by the claimant, regarding the actual 
amount of work that the claimant has missed or will miss without 
compensation. Alternatively, the Special Master may determine the loss 
of earnings or other benefits related to employment by relying upon the 
methodology created pursuant to Sec. 104.43(a) and adjusting the loss 
based upon the extent of the victim's physical harm.
    (1) Disability; in general. In evaluating claims of disability, the 
Special Master will, in general, make a determination regarding whether 
the claimant is capable of performing his or her usual profession in 
light of the injuries.
    (2) Total permanent disability. With respect to claims of total 
permanent disability, the Special Master may accept a determination of 
disability made by the Social Security Administration as evidence of 
disability without any further medical evidence or review. The Special 
Master may also consider determinations of permanent total disability 
made by other governmental agencies or private insurers in evaluating 
the claim. The Special Master may require that the claimant submit an 
evaluation of the claimant's disability and ability to perform his or 
her occupation prepared by medical experts.
    (3) Partial disability. With respect to claims of partial 
disability, the Special Master may consider evidence of the effect of 
the partial disability on the claimant's ability to perform his or her 
usual occupation as well as the effect of the partial disability on the 
claimant's ability to participate in usual daily activities.
    (b) Medical Expense Loss. This loss equals the out-of-pocket 
medical

[[Page 66287]]

expenses that were incurred as a result of the physical harm suffered 
by the victim (i.e., those medical expenses that were not paid for or 
reimbursed through health insurance). In addition, this loss equals 
future out-of-pocket medical expenses that will be incurred as a result 
of the physical harm suffered by the victim (i.e., those medical 
expenses that will not be paid for or reimbursed through health 
insurance). These losses shall be calculated on a case-by-case basis, 
using documentation and other information submitted by the claimant.
    (c) Replacement services loss. For injured claimants who did not 
have any prior earned income, or who worked only part-time outside the 
home, economic loss may be determined with reference to replacement 
services and similar measures.
    (d) Loss of business or employment opportunities. Such losses shall 
be addressed through the procedure outlined above in paragraph (a) of 
this section.


Sec. 104.46  Determination of presumed noneconomic losses for claimants 
who suffered physical harm.

    The Special Master may determine the presumed noneconomic losses 
for claimants who suffered physical harm (but did not die) by relying 
upon the noneconomic losses described in Sec. 104.44 and adjusting the 
losses based upon the extent of the victim's physical harm. Such 
presumed losses include any noneconomic component of replacement 
services loss.


Sec. 104.47  Collateral sources.

    (a) Payments that constitute collateral source compensation. The 
amount of compensation shall be reduced by all collateral source 
compensation, including life insurance, pension funds, death benefit 
programs, and payments by federal, state, or local governments related 
to the terrorist-related aircraft crashes of September 11, 2001.
    (b) Payments that do not constitute collateral source compensation. 
The following payments received by claimants do not constitute 
collateral source compensation:
    (1) The value of services or in-kind charitable gifts such as 
provision of emergency housing, food, or clothing; and
    (2) Charitable donations distributed to the beneficiaries of the 
decedent, to the injured claimant, or to the beneficiaries of the 
injured claimant by private charitable entities; provided, however, 
that the Special Master may determine that funds provided to victims or 
their families through a private charitable entity constitute, in 
substance, a payment described in paragraph (a) of this section.

Subpart E--Payment of Claims


Sec. 104.51  Payments to eligible individuals.

    Not later than 20 days after the date on which a determination is 
made by the Special Master regarding the amount of compensation due a 
claimant under the Fund, the Special Master shall authorize payment to 
such claimant of the amount determined with respect to the claimant.


Sec. 104.52  Distribution of award to decedent's beneficiaries.

    The Personal Representative shall distribute the award in a manner 
consistent with the law of the decedent's domicile or any applicable 
rulings made by a court of competent jurisdiction. The Personal 
Representative shall, before payment is authorized, provide to the 
Special Master a plan for distribution of any award received from the 
Fund. Notwithstanding any other provision of these regulations or any 
other provision of state law, in the event that the Special Master 
concludes that the Personal Representative's plan for distribution does 
not appropriately compensate the victim's spouse, children, or other 
relatives, the Special Master may direct the Personal Representative to 
distribute all or part of the award be distributed to such spouse, 
children, or other relatives.

Subpart F--Limitations


Sec. 104.61  Limitation on civil actions.

    (a) General. Section 405(c)(3)(B) of the Act provides that upon the 
submission of a claim under the Fund, the claimant waives the right to 
file a civil action (or to be a party to an action) in any federal or 
state court for damages sustained as a result of the terrorist-related 
aircraft crashes of September 11, 2001, except that this limitation 
does not apply to civil actions to recover collateral source 
obligations. The Special Master shall take appropriate steps to inform 
potential claimants of section 405(c)(3)(B) of the Act.
    (b) Pending actions. Claimants who have filed a civil action or who 
are a party to such an action as described in paragraph (a) of this 
section may not file a claim with the Special Master unless they 
withdraw from such action not later than March 21, 2002.


Sec. 104.62  Time limit on filing claims.

    In accordance with the Act, no claim may be filed under this part 
after December 22, 2003.


Sec. 104.63  Subrogation.

    Compensation under this Fund does not constitute the recovery of 
tort damages against a third party nor the settlement of a third party 
action, and the United States shall be subrogated to all potential 
claims against third party tortfeasors of any victim receiving 
compensation from the Fund. For that reason, no person or entity having 
paid other benefits or compensation to or on behalf of a victim shall 
have any right of recovery, whether through subrogation or otherwise, 
against the compensation paid by the Fund.

Subpart G--Measures to Protect the Integrity of the Compensation 
Program


Sec. 104.71  Procedures to prevent and detect fraud.

    (a) Review of claims. For the purpose of detecting and preventing 
the payment of fraudulent claims and for the purpose of assuring 
accurate and appropriate payments to eligible claimants, the Special 
Master shall implement procedures to:
    (1) Verify, authenticate, and audit claims;
    (2) Analyze claim submissions to detect inconsistencies, 
irregularities, duplication, and multiple claimants; and
    (3) Ensure the quality control of claims review procedures.
    (b) Quality control. The Special Master shall institute periodic 
quality control audits designed to evaluate the accuracy of submissions 
and the accuracy of payments, subject to the oversight of the Inspector 
General of the Department of Justice.
    (c) False or fraudulent claims. The Special Master shall refer all 
evidence of false or fraudulent claims to appropriate law enforcement 
authorities.

    Dated: December 19, 2001.
John Ashcroft,
Attorney General.

    Note: This Appendix will not appear in the Code of Federal 
Regulations.

Appendix to Preamble--Summary of Public Comments Submitted in Response 
to the November 5, 2001 Notice of Inquiry and Advance Notice of 
Rulemaking

    The following is a summary of the comments the Department of 
Justice (``the Department'') received in response to its Notice of 
Inquiry published on November 5, 2001. The Notice of Inquiry sought 
input on numerous issues regarding potential regulations for the 
``September 11 Victim Compensation Fund of 2001'' (the ``Fund''), 
which was signed into law as Title IV of Public Law 107-42 (``Air 
Transportation

[[Page 66288]]

Safety and System Stabilization Act'') (the ``Act'').
    Over 800 comments were received by the November 26, 2001 
deadline established by the Department. Additionally, hundreds of 
comments have been received since that date. Every comment was--and 
continues to be--reviewed, considered, and catalogued into one or 
more of 72 different topics. While the following summary does not 
address every issue raised by commenters, it provides a general 
synopsis of the most often raised issues. The summary is not 
intended to be an exhaustive illustration of every issue 
contemplated by the Special Master or the Department. Indeed, as 
mentioned above, all comments were considered in the promulgation of 
these interim final rules. Finally, the summarized issues below are 
not arranged in any particular order of importance or level of 
volume.

The Effective Date of This Interim Final Rule

    While the Act specified that this rule should be issued by 
December 21, 2001, it did not specify when they should become 
effective. Accordingly, the Department sought comment on this issue. 
The Department noted that the Administrative Procedure Act generally 
provides that rules not go into effect for at least 30 days absent 
``good cause.''
    Many commenters favored an immediate effective date so that 
claims could be filed right away. Many indicated an immediate need 
for relief and expressed frustration about their experiences with 
obtaining short-term assistance from other sources. However, some 
commenters thought an immediate effective date would be difficult to 
implement because the Special Master would need time to hire 
personnel and to set up the operation of the program before 
beginning to process claims.
    A number of commenters suggested a compromise--making available 
some amount of short-term relief on an immediate basis to eligible 
claimants, and then commencing the more detailed review process 
necessary to provide a final award. Some suggested using flat 
amounts for these immediate awards, while another commenter 
suggested establishing an interest-free line of credit upon which 
families could draw. Another suggestion was that claims for 
immediate assistance be prioritized by ``need.''

Eligibility

    In its November 5, 2001, Notice of Inquiry, the Department noted 
that section 405(b) of the statute requires the Special Master to 
determine whether a claimant is an ``eligible individual'' under 
section 405(c). ``Eligibility,'' in turn, is defined by the Act to 
include: (1) individuals (other than the terrorists) aboard American 
Airlines flights 11 and 77 and United Airlines flights 93 and 175; 
or (2) individuals who were ``present at'' the World Trade Center, 
the Pentagon, or the site of the aircraft crash at Shanksville, 
Pennsylvania at the time or in the immediate aftermath of the 
crashes; or (3) personal representatives of deceased individuals who 
would otherwise be eligible. Moreover, to be eligible for an award, 
an individual must have suffered physical harm or death as a result 
of one of the terrorist-related air crashes. The Department sought 
comment on whether a Departmental regulation or a statement of 
policy by the Special Master would be appropriate to clarify these 
criteria, and if so, what those criteria should be.
    The Department specifically invited comment on the following 
questions related to eligibility:
     How should ``present at'' be interpreted?
     Should the term ``physical harm'' be limited to serious 
injuries, as it is under some other no-fault compensation schemes, 
(see, e.g., N.Y. Ins. Law Sec. 5102), or should it be construed more 
broadly?
     Should ``physical harm'' be limited to currently 
identifiable injuries?
     Can and should the program address latent, but not yet 
evident, harm?
     What duration of time is intended by the statutory 
phrase ``immediate aftermath''?

(1) ``Present At'' And ``Immediate Aftermath''

    Many of the comments addressed the question of how to define the 
terms ``present at the site'' and ``immediate aftermath,'' 
especially for purposes of those who were in New York at the time of 
the crashes. Some commenters urged a broad definition of these 
terms. They recommended that anybody in New York City be considered 
``present'' because the debris and ash from the collapse of the 
World Trade Towers was widespread. Residents who live near the 
Ground Zero site in New York urged that they be eligible to recover 
under the Fund.
    In contrast, other commenters argued for a narrower definition 
of the terms, asserting that the legislation intended to constrain 
the Fund to the locus of the buildings themselves, and to some very 
limited time period after the crashes. One comment recommended that 
``immediate aftermath'' be defined as 48 hours after the crashes.

(2) Physical Harm

    With respect to the nature of harm involved, some commenters 
asserted there should be no lower boundary for ``nonserious'' 
injuries. Of those who commented on the point, there were 
disagreements as to whether post-traumatic stress could be 
considered physical harm for purposes of filing a claim under the 
Fund. Certain commenters indicated that many people suffered 
substantial stress from witnessing the attacks and devastation and 
that they should be eligible to recover from the Fund. However, 
others argued that the Fund was not intended to cover psychological 
injury because the language of the statute specifically requires 
that the claimant suffer ``physical harm.'' These commenters feared 
that recovery for stress-related injuries would open a Pandora's Box 
of less serious claims, which, in turn, may reduce the amount of 
compensation issued to those with the most serious physical 
injuries.

(3) Latent Harm

    Some of the comments focused on the problem of latent injuries 
and diseases. Several commenters mentioned the coughing they have 
experienced as a result of exposure to the crash site in New York, 
and some nearby residents expressed concern about latent harm that 
might accrue from returning to their homes before the conclusion of 
the rescue and cleanup efforts. On the other hand, other commenters 
expressed concern about covering any harms that do not manifest 
themselves within the two-year lifetime of the Fund. They argued the 
Fund was not designed to compensate for latent harm primarily 
because the Fund only exists for two years, and many injuries may 
not become manifest until after that time.

(4) Eligibility of Victims And Survivors

    Some commenters addressed the meaning of the word ``victim.'' 
For example, some commenters urged that any unborn child who died 
should be considered eligible for an award as a victim. With respect 
to a different group of potential claimants, some commenters argued 
that illegal aliens should not be eligible for awards. However, 
other commenters did not think that legal status should preclude an 
award from the Fund.
    With regard to claims on behalf of decedent victims, the 
comments evidenced a tremendous amount of confusion about whether 
the statute intended to cover only the losses incurred by the victim 
or the losses incurred by relatives and others. Some commenters 
noted that section 405 of the Act provides that only claims on 
behalf of the victim can be filed with the Fund, presumably leaving 
to the courts any claims by family members or partners on their own 
behalf. However, some commenters noted that section 403 of the Act 
states that its purpose is to provide compensation to any individual 
``or relatives of a deceased individual'' who were killed as a 
result of the terrorist-related aircraft crashes. The commenters 
further noted that various types of losses that may be compensated 
by the Fund pursuant to section 402 are akin to those that in civil 
actions are normally considered losses to survivors rather than to 
the victim.
    Many commenters commented on the ``eligibility'' of particular 
``survivors'' of the victim. Some suggested that only a spouse and 
children be considered ``eligible.'' Others expressed concern as to 
whether parents, divorced spouses, children of a prior marriage, and 
others with a legal relationship would be ``eligible'' for an award 
under the Fund. In this regard, a number of comments specifically 
urged that non-married partners and others with a non-traditional 
relationship be considered ``eligible'' for an award. Some 
commenters opposed the idea of extending eligibility under the Fund 
to those in non-traditional relationships and argued for a narrower 
definition of eligibility.
    Similarly, there were a number of comments about how 
``eligible'' survivors would participate in the decision of whether 
to submit an application to the Fund, since in their view the 
application to the Fund would prohibit all of them from filing civil 
litigation. Some commenters explicitly suggested the law be 
interpreted to allow claims both on behalf of the decedent's estate 
and on behalf of any survivors, and suggested that such claims could 
be consolidated for decision before the Special Master. Others, 
however, specifically recommended that claims be limited to those on 
behalf of the estate. Many commenters, presuming that to

[[Page 66289]]

be the case, recommended that the state courts be responsible for 
designating the representative to represent the estate, and that any 
award be distributed in accordance with the requirements of the will 
or state intestacy law.

Assistance to Claimants

    In its Notice of Inquiry of November 5, 2001, the Department 
noted that it would appear that these requirements--combined with 
the statutory time frame for the Special Master to reach a decision 
once a claim is filed--contemplate a detailed form and filing. 
Accordingly, the Department invited comments on whether there are 
actions the Special Master should be required to take before he can 
accept a claim, or deem a claim ``filed.'' The Department noted that 
the statute appeared to provide a very limited time frame for the 
Special Master to evaluate a claim before making a decision--120 
days from the date a claim is filed. Accordingly, the Department 
sought comment on whether the Special Master should be permitted to 
dismiss a claim as not properly filed for lack of adequate 
supporting information and, if so, whether an individual should 
thereafter be permitted to refile the claim. Comments were also 
solicited on whether it would be advisable to include in the rules a 
procedure where the time for making a determination could be 
extended by agreement.
    The Department also requested comment on the design and content 
of the claim forms in light of the statutory requirements, as well 
as on making the forms and their instructions readable and readily 
available. The Department also sought comment on how it should 
implement the statutory requirement that claimants be provided with 
assistance.
    While most of those who commented supported maintaining firm 
deadlines, many commenters suggested that a claimant be able to 
``halt the clock'' at the claimant's discretion for various purposes 
(e.g., to provide further evidence before the claim is evaluated, to 
allow more time to prepare for a hearing, or to allow for an 
administrative review of an initial award determination). Some 
suggested that the Special Master also have the authority not to 
start the clock until the claim contained sufficient information 
upon which an award determination could be made, or to halt the 
process for a set period of time to allow for review of an initial 
determination (provided that the claimant concurred with that 
decision).
    A number of commenters stressed that a claimant should not lose 
the right to proceed with their claim due to an incomplete file. One 
commenter suggested the Special Master should have 14 days to review 
a claim before deciding if there is enough information to proceed. 
Several commenters suggested that claimants not be required to waive 
their right to litigation until it was determined the claimant was 
eligible to recover from the Fund. Similarly, some commenters stated 
they would have difficulty deciding whether or not to opt into the 
fund (and thus waive their right to sue) if they did not have some 
idea or presumption of the range of recovery they might expect from 
the Fund.
    Many commenters urged the Department to establish a simplified 
procedure for initiating a claim with the Fund. They expressed 
frustration with the barrage of paperwork required to apply for 
assistance with other organizations. Some employers offered to 
provide information on behalf of their employees or survivors in an 
effort to reduce the paperwork burden on claimants. On the other 
hand, some noted that--in light of the pro bono legal assistance 
that has been offered to the survivors--claimants would have the 
option to have the assistance of an attorney to complete the forms. 
A number of commenters suggested a two-step claims process that 
would involve a simple initial submission, followed by a more 
asserted effort to collect additional information with the guidance 
of claimant assistance personnel from the Office of the Special 
Master.
    A number of commenters had suggestions as to how the Special 
Master might assist claimants both in filing claims and completing 
the claims process. Many suggested that local offices be established 
in New York City, Washington DC, Pennsylvania, and other cities that 
served as the domicile of victims. Some urged that outreach efforts 
be made to locate potential claimants and make them aware of the 
program's operations. Some mentioned that outreach should include 
multi-lingual assistance and publications. One group suggested that 
each Hearing Office have an Applicant's Assistant. Others suggested 
the Special Master hire victim advocates to assist claimants 
throughout the process.

The Claims Evaluation Process

    The Department solicited comment on whether every claimant 
should be granted an oral hearing or whether paper hearings may be 
sufficient, and what types of oral hearing might be practicable in 
light of the statutory time frames.
    Further, the Department sought comment on how evidence might be 
established and whether it is authorized to enforce requests made by 
the hearing officer to third parties for evidence that is necessary 
to a proceeding (e.g., evidence that might bear on whether all 
aspects of the claim file on which the decision will be based are 
accurate and complete). The Department sought comment on whether 
such proceedings should be recorded, whether such proceedings should 
be held in a location convenient to the claimant, how to deal with 
scheduling conflicts, and whether the opportunity for a hearing can 
be waived by a claimant through inaction or unwarranted delay.
    Many commenters had opposing views on the role hearings should 
play in claims evaluation. Some commenters--comparing this program 
to civil litigation--viewed the hearings as essential to each and 
every claim. These commenters recommended hearings as a sort of 
``mini-trial,'' which would include rules of evidence (albeit 
relaxed rules) and adversarial questioning of witnesses. Using the 
same analogy, however, these commenters suggested that many claims 
could be ``settled'' based on only the paper submissions. Other 
comments suggested the hearings be more akin to an opportunity--for 
those claimants who want to exercise it--to make an informal oral 
presentation of their cases. They viewed the hearing as an 
opportunity to ensure that the decision maker was aware of their 
individual circumstances. Many of these commenters also suggested, 
for various reasons, that not all claimants would want a hearing. 
Some commenters suggested allowing claimants, upon filing a claim, 
to elect among different ``tracks''--one that would involve a 
hearing, and one that would not.
    On the question of who should be hired as hearing officers, 
suggestions included retired trust executives, retired judges, 
attorneys experienced in handling high volume caseloads, and those 
experienced in civil litigation. Some commenters recommended there 
be a panel of hearing officers rather than one hearing officer. A 
number of commenters also recommended that claimants have the 
opportunity for review of their award to ensure that the decision 
maker was aware of their individual circumstances.
    Many commenters submitted detailed procedural suggestions for 
the claims process. Among other things, these suggestions dealt with 
how eligibility and damages could be established through the use of 
affidavits under penalty of perjury in the event relevant documents 
had been lost as a result of the crashes themselves (e.g., 
designations of beneficiaries maintained by employers). 
Additionally, a number of commenters suggested the Special Master 
have the right to subpoena evidence required to make a 
determination.

Awards Under the Fund

(1) Meeting the 120-Day Deadline

    The Department invited comment on what means and mechanisms 
could be implemented to allow just compensation within the 
statutorily-mandated 120-day period for processing claims. In 
particular, the Department sought input on whether and how 
statistical methodologies should be developed and used as a starting 
point for decision, and whether publication of hypothetical or 
presumptive awards for classes of individuals would assist potential 
claimants in determining whether to opt into the Fund. For the most 
part, these comments were encapsulated in discussions regarding the 
calculation of damages; namely, economic and noneconomic losses.

(2) Calculating ``Economic Losses''

    The Department sought specific comment on how the Special Master 
should determine ``economic losses.'' Although retaining experts is 
certainly not prohibited, the Special Master will not require any 
claimant to obtain legal counsel or other experts to assist in 
proving or presenting evidence of damages. The Special Master may, 
however, draw on available information from appropriate specialists 
in relevant fields to analyze economic losses. The Department 
invited comment regarding the necessary qualifications for such 
specialists, the data that should be utilized, the methodologies 
that should be employed, the documentation that should be required 
for every claimant, and how state law should bear upon such 
determinations. In addition, the Department invited comments on how 
to address the economic losses of individuals whose lost

[[Page 66290]]

future income streams would have been highly contingent, variable, 
or unpredictable.
    As expected, the range of comments on how best to calculate 
economic losses was widely varied. One group suggested a minimum 
value be calculated based on median income and remaining years of 
work, with flexibility to adjust the award after hearing all the 
evidence in individual cases. Similarly, certain comments suggested 
the use of a grid would be appropriate in certain circumstances to 
identify presumed awards. Others urged that no type of grid be used.
    In terms of presumptive valuation, a few commenters recommended 
that awards mirror the amount a party could anticipate receiving 
from personal injury or wrongful death actions. Others disagreed. 
Many recognized the limited opportunities now available to potential 
plaintiffs filing claims in civil courts arising out of the 
September 11, 2001 terrorist attacks. At least one commenter argued 
that the fairest approach in determining economic losses is that 
which insurance companies use in settling claims.
    Some commenters indicated that economic awards should not be 
based on differences in individual income prior to the crash. Some 
suggested using a flat dollar figure per surviving family member 
(e.g., $250,000 for each survivor). Another suggested a flat amount 
for death at $100,000, injury at $50,000, and various other losses 
at slated dollar figures. On the other hand, some commenters felt 
the purpose of the program is to act as a substitute for civil 
damage actions, and that efforts should be made to determine and 
take into consideration the amount of income likely lost by a 
decedent. A large number of comments were received with respect to 
how to establish such income (e.g., average over a certain number of 
prior years, plus information supplied by employers on future 
prospects).

(3) Calculating ``Noneconomic Losses''

    The Department also sought comment as to ``noneconomic losses.'' 
Most notably, the Department invited comments regarding whether, and 
in what manner, the Special Master can or should draw meaningful 
distinctions between both those victims who died in different 
locations and those who suffered similar injuries. The Department 
also invited comments on whether the Department should (as some have 
suggested) issue regulations determining the amount of noneconomic 
loss for classes of similarly situated individuals or whether, 
instead, the Special Master should determine all noneconomic loss on 
a detailed claim-by-claim basis. Further, the Department requested 
comment on what facts and circumstances should be considered in 
determining noneconomic losses for each individual, and what 
standards should be employed.
    Comments regarding noneconomic losses were similarly varied. One 
commenting association suggested noneconomic losses--such as pain 
and suffering--should be standardized because such losses do not 
vary by income strata. Numerous commenters advocated a ``fixed'' 
noneconomic award, stating that the government should not attempt to 
draw distinctions in the amount of pain suffered by victims or their 
survivors. One commenter suggested the most equitable process for 
determining noneconomic awards would be an elective process. Under 
this proposed method, a claimant could elect to have the award 
calculated by use of a matrix, or alternatively, could present 
evidence at a hearing to establish the amount to which the claimant 
believes he or she is entitled. A number of commenters argued that 
the statute necessitated an entirely individualized determination of 
noneconomic losses in every case. A group representing survivors of 
decedents suggested that noneconomic losses must be uncapped and 
based, in part, on the number and age of any surviving children or 
dependents, the current and future pain and suffering experienced by 
the victim's family, and the severity of pain suffered by the victim 
himself or herself.

(4) Taxation

    A number of commenters raised questions about the taxability of 
various kinds of awards issued under the Fund. Several commenters 
asserted that compensation from the Fund should be nontaxable under 
federal law, similar to various types of tort awards. Another 
commenter stated that state victim compensation fund awards 
generally are not taxable, either by the state or the federal 
government. On the other hand, another commenter stated he did not 
see the purpose of distributing taxpayers' money to victims, and 
urged taxing the awards so as to return some of the money to the 
Treasury.

Collateral Sources

    The Department sought comments on the issue of collateral 
sources. Although the Act requires that collateral sources be 
deducted from awards issued under the Fund (and explicitly outlines 
examples of certain types of collateral sources), the Department 
invited comment as to how the term ``collateral source'' should be 
defined.

(1) General Comments

    Despite the explicit language in the Act, a number of commenters 
took issue with deducting any collateral sources whatsoever. 
Although many recognized that both the Department and the Special 
Master are bound to follow the language in the Act, they nonetheless 
argued that collateral sources are--in many states--not offset in 
wrongful death suits. Some urged that the type of collateral source 
offsets should be interpreted narrowly. A number of commenters also 
suggested that if collateral source benefits to a victim are to be 
offset, a counter-offset should be made for the premiums or 
contributions made by the victim to purchase various benefits. 
Others specifically suggested that only the value of collateral 
benefits funded by a victim's employer should be offset.
    Many commenters, however, asserted that the program should not 
``unjustly enrich'' the victims or their survivors, and supported 
the use of widespread offsets. Some of these comments mentioned 
that--although the statute does not provide either a ceiling or 
floor for the amount of awards--the Fund may have only a limited 
pool of resources to distribute to claimants (akin to the funds 
being collected and distributed by charitable organizations), and 
suggested the need to help those most in need. Other comments noted 
that unjust enrichment should not flow through tax-payer dollars. It 
was mentioned that many taxpayers--who ultimately will provide the 
funds under the program--also sent in charitable contributions not 
to unjustly enrich victims or their families, but, rather, solely to 
help them through these troubled times.

(2) ``A claimant has received or is entitled to receive''

    Some commenters specifically focused on the word ``claimant'' in 
the phrase ``a claimant has received or is entitled to receive,'' 
and urged that any collateral source benefits not paid or to be paid 
directly to the claimant not be deducted from the award. These 
comments were often parallel to those concerning the question of 
whose losses are to be compensated under the Fund: only those of the 
decedent (estate), or those of others as well. (See the discussion 
of Eligibility.)
    A number of comments also focused on the words ``entitled to 
receive.'' Some recommended that only those collateral benefits 
scheduled to be paid as a result of contractual or other clear 
obligations should be deducted from an award. Others recommended 
that only the present value of any future contingent awards be 
considered in making any offset.

(3) Life Insurance

    Many commenters were frustrated that the Act requires life 
insurance proceeds to be deducted from awards. Many asserted that 
deducting life insurance will penalize those who planned ahead. One 
suggested that life insurance should only be offset if payable to a 
dependent of the victim, and another group of commenters indicated 
that only the sums received by the eligible applicant net of all 
taxes that exceed the premiums--or other payments made by the 
applicant--be deducted. A number suggested that if life insurance is 
to be offset, the premiums paid should be returned to the victim by 
reducing the amount of the benefit offset.

(4) Pensions

    While similar concerns (as to life insurance) were raised in 
connection with pensions, a more common comment concerned the 
meaning of the term ``pension.'' For example, some commenters noted 
that pensions are not normally considered to be ``compensation for a 
loss'' but are instead akin to savings.

(5) Workers Compensation And Victim Assistance Programs

    One commenter pointed out that most of the victims may be 
eligible for workers' compensation benefits because they were killed 
while on the job. Further, with respect to those receiving benefits 
under New York law, the compensation insurer can terminate workers' 
compensation payments--absent claimants obtaining consent to enter 
the Fund--if benefits are being paid to the injured workers or 
survivors. New York State legal authorities confirmed the 
noteworthiness of this issue, and

[[Page 66291]]

recommended that workers' compensation payments not be considered a 
collateral source to this extent.
    With respect to state victim assistance funds, one commenter 
noted that 42 U.S.C. 10602(e)--which generally provides that state 
crime victim boards may refuse to pay out benefits if another 
Federal program is paying benefits--was explicitly amended to 
exclude payments made under the September 11th Victim Compensation 
Fund of 2001. The commenter suggested that some programs covered 
under that code provision--that have already made payments--may be 
entitled to reimbursement as a result.

(6) Charitable Contributions

    Many victims of the terrorist-related crashes on September 11, 
2001, have or may receive support from special funds set up to 
assist them, as well as from special programs established by some of 
their employers to share future profits and the like. Accordingly, 
whether to reduce Fund awards by the amount of such contributions 
was one of the issues given the most attention in the comments. 
Notably, this issue was discussed in a number of news articles at 
about the time the Notice of Inquiry was issued.
    Commenters were heavily divided on this issue. Many were 
strongly opposed to reducing awards by the amount of charity funding 
received. This includes some commenters who donated to charities 
established for this purpose, as well as employers who established 
funds to help the families of the victims. Many insisted that funds 
collected by employers solely for the purpose of compensating 
victims of the September 11 attacks should not be deemed a 
collateral source. Many drew a distinction between funds provided 
for short-term assistance and need, and those designed to compensate 
victims for their losses.
    On the other hand, a number of comments from those who 
contributed money to various charities viewed the purposes of the 
charities and the Fund as one and the same; namely, compensating the 
victims. These commenters asserted they had not intended making 
contributions to unjustly enrich the families, and would hesitate to 
make such contributions in the future if their help turns out only 
to ensure persons maintain a certain lifestyle.
    A number of commenters also pointed to the practical 
difficulties of trying to establish what claimants may have received 
from charities. Some suggested the Fund should have access to any 
database of charitable contributions, including one that was 
reported to be under consideration in New York.
    After discussing these factors, some commenters suggested that 
the Special Master only offset charitable contributions over a 
certain amount. A few commenters suggested only offsetting charities 
set up for longer term assistance to the victims (e.g., tuition 
funds or scholarships for the children of all the victims).

Payment of Awards

    Some commenters expressed the view that payments by the fund 
should be in the form of ``structured settlements'' or annuities 
rather than in lump sum. One commenter suggested payments to 
children should go to a trustee for the benefit of the child. 
However, other commenters argued for lump sum payments and objected 
to the government placing any restrictions on the claimants' award.

Limitations on Fees for Assistance And Payment by the Special Master

    The Department requested comments on whether the Special Master 
has the authority to limit the types and amounts of fees that can be 
charged by counsel, accountants, experts or others who are retained 
by claimants to assist them to file and pursue compensation claims, 
and whether such fees can and should be paid by the Special Master 
directly out of compensation awards. The Department also solicited 
comments on what limitations, if any, the rules should impose on 
non-attorney, non-claimant representatives' participation in filing 
claims.
    A number of commenters noted that the right to be represented by 
counsel is provided by the statute, that not all claimants would be 
comfortable using pro-bono counsel to represent their interests, and 
that payment of attorneys' fees is necessary to ensure 
representation by counsel of choice. Some of these commenters 
suggested, however, that fees could be limited so as not to exceed 
10% of the award to claimant. Paradoxically, some commenters opposed 
using any amount of money from the Fund to pay legal fees.

[FR Doc. 01-31681 Filed 12-19-01; 4:09 pm]
BILLING CODE 4410-12-P