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[Senate Report 109-297]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 540
109th Congress                                                   Report
                                 SENATE
 2d Session                                                     109-297

======================================================================

 
VETERANS' CHOICE OF REPRESENTATION AND BENEFITS ENHANCEMENT ACT OF 2006

                                _______
                                

    July 27 (legislative day July 26), 2006.--Ordered to be printed

                                _______
                                

   Mr. Craig, from the Committee on Veterans' Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 2694]

    The Committee on Veterans' Affairs (hereinafter, 
``Committee''), to which was referred the bill (S. 2694), to 
amend title 38, United States Code, to remove certain 
limitations on attorney representation of claimants for 
veterans benefits in administrative proceedings before the 
Department of Veterans Affairs, and for other purposes, having 
considered the same, reports favorably thereon with an 
amendment in the nature of a substitute, and recommends that 
the bill, as amended, do pass.

                              Introduction

    On May 2, 2006, Committee Chairman Larry E. Craig 
introduced S. 2694, a bill to remove certain limitations on 
attorney representation of claimants for veterans benefits in 
administrative proceedings before the Department of Veterans 
Affairs (hereinafter, ``VA'') and for other purposes. Committee 
Member Lindsey O. Graham is an original cosponsor of S. 2694. 
Committee Members Kay Bailey Hutchison and James M. Jeffords, 
and Senators Saxby Chambliss and Lisa Murkowski were later 
added as cosponsors. The bill was referred to the Committee.
    On April 26, 2005, Senator Christopher J. Dodd introduced 
S. 909, a bill to expand eligibility for government markers for 
marked graves of veterans at private cemeteries. Senator 
Blanche L. Lincoln was later added as a cosponsor.
    On June 15, 2005, Committee Ranking Minority Member Daniel 
K. Akaka introduced S. 1252, a bill to increase the amount of 
supplemental insurance available for totally disabled veterans. 
Committee Member Ken Salazar is an original cosponsor.
    On July 28, 2005, Committee Ranking Member Akaka introduced 
S. 1537, a bill to provide for the establishment of Parkinson's 
Disease Research Education and Clinical Centers in the Veterans 
Health Administration of the Department of Veterans Affairs and 
Multiple Sclerosis Centers of Excellence. Committee Members 
Patty Murray and Barack Obama, and Senators Jeff Bingaman, 
Gordon H. Smith, Debbie Stabenow, Mark L. Pryor, and Tim 
Johnson were later added as cosponsors.
    On September 22, 2005, Chairman Craig introduced S. 1759, a 
bill to require the Secretary of the Army to remove the remains 
of Russell Wayne Wagner from Arlington National Cemetery. 
Senator Barbara A. Mikulski was later added as a cosponsor.
    On December 16, 2005, Senator Charles E. Schumer introduced 
S. 2121, a bill to provide housing loan benefits for the 
purchase of residential cooperative apartment units. Senators 
Mark Dayton and Paul S. Sarbanes are original cosponsors of S. 
2121. Committee Member James M. Jeffords was later added as a 
cosponsor.
    On March 15, 2006, Senator Conrad R. Burns introduced S. 
2416, a bill to expand the scope of programs of education for 
which accelerated payments of educational assistance under the 
Montgomery GI Bill may be used, and for other purposes. Senator 
Mark L. Pryor is an original cosponsor. Committee Member 
Lindsey O. Graham and Senators Lisa Murkowski, Barbara A. 
Mikulski, Elizabeth Dole, Saxby Chambliss and E. Benjamin 
Nelson were later added as cosponsors.
    On March 16, 2006, Committee Member Ken Salazar introduced 
S. 2433, a bill to establish an Assistant Secretary for Rural 
Veterans within VA, to improve the care provided to veterans 
living in rural areas, and for other purposes. Committee 
Ranking Member Akaka, Committee Members Patty Murray, Richard 
Burr, and John Thune and Senators Conrad R. Burns, Kent Conrad, 
Blanche L. Lincoln, Craig Thomas, Max Baucus, Byron L. Dorgan, 
Tim Johnson, Lisa Murkowski, and Mark L. Pryor are original 
cosponsors. Senator Michael B. Enzi was later added as a 
cosponsor.
    On April 24, 2006, Chairman Craig introduced S. 2634, a 
bill to strike the term of the positions of Under Secretary for 
Health and Under Secretary for Benefits and simplify 
appointments to such positions.
    On April 26, 2006, Committee Ranking Member Akaka 
introduced S. 2659, a bill to provide for the eligibility of 
Indian tribal organizations for grants for the establishment of 
veterans' cemeteries on trust lands. Senator Daniel K. Inouye 
is an original cosponsor of S. 2659. Committee Member Patty 
Murray was later added as a cosponsor.
    On May 8, 2006, Committee Ranking Member Akaka introduced 
S. 2762, a bill to ensure appropriate payment for the cost of 
long-term care provided to veterans in State homes, and for 
other purposes. Senators Olympia J. Snowe, Susan M. Collins, 
Charles E. Schumer, and Hillary Rodham Clinton were later added 
as cosponsors.
    On May 25, 2006, Senator Christopher J. Dodd introduced S. 
3069, a bill to modify the furnishing of government markers for 
graves of veterans at private cemeteries, and for other 
purposes. Senators Robert C. Byrd, Mike DeWine, Tim Johnson, 
Patrick J. Leahy, Kent Conrad, Byron L. Dorgan, and Edward M. 
Kennedy are original cosponsors of S. 3069. Senators John F. 
Kerry, Blanche L. Lincoln, Jeff Sessions, Herb Kohl, Joseph I. 
Lieberman, Rick Santorum and George V. Voinovich were later 
added as cosponsors.
    On June 5, 2006, Senator Mike DeWine introduced S. 3363, a 
bill to provide for accelerated payment of survivors' and 
dependents' educational assistance for certain programs, and 
for other purposes.
    On June 20, 2006, Chairman Craig introduced S. 3545, a bill 
to improve services for homeless veterans, and for other 
purposes. Committee Ranking Member Akaka, and Committee Members 
Richard Burr and Barack Obama are original cosponsors of S. 
3545. Committee Member Johnny Isakson was later added as a 
cosponsor.

                           Committee Hearings

    On June 23, 2005, the Committee held a hearing on, among 
other bills, S. 1252 and S. 909. Testimony was heard from: 
Senators Wayne Allard and Mark L. Pryor; the Honorable Daniel 
L. Cooper, Under Secretary for Benefits, U.S. Department of 
Veterans Affairs; Mr. Steve Smithson, Assistant Director, 
Veterans Affairs and Rehabilitation, The American Legion; Mr. 
Quentin Kinderman, Deputy Director, National Legislative 
Service, Veterans of Foreign Wars of the United States; Mr. 
Rick Surratt, Deputy National Legislative Director, Disabled 
American Veterans; Mr. Carl Blake, Associate National 
Legislative Director, Paralyzed Veterans of America; and Mr. 
Richard Jones, National Legislative Director, AMVETS.
    On May 11, 2006, the Committee held a hearing on, among 
other bills, S. 1537, S. 2433, S. 2634, and S. 2762. Testimony 
was heard from: Dr. Michael Kussman, Deputy Under Secretary for 
Health, Veterans Health Administration, U.S. Department of 
Veterans Affairs; Mr. Robert Shaw, Legislative Chairman, 
National Association of State Veterans Homes; Mr. John Melia, 
Executive Director, Wounded Warrior Project; Mr. Carl Blake, 
Associate Legislative Director, Paralyzed Veterans of America; 
Mr. Juan Lara, Assistant Director, National Legislative 
Commission, The American Legion; and Mr. Adrian Atizado, 
Assistant Legislative Director, Disabled American Veterans.
    On June 8, 2006, the Committee held a hearing on, among 
other bills, S. 2121, S. 2416, S. 2659, S. 2694, and S. 3363. 
Testimony was heard from: Senators Conrad R. Burns and Mark L. 
Pryor; Mr. Ronald Aument, Deputy Under Secretary for Benefits, 
Veterans Benefits Administration, U.S. Department of Veterans 
Affairs; the Honorable Donald L. Ivers, former Chief Judge of 
the United States Court of Appeals for Veterans Claims; Mr. 
Quentin Kinderman, Deputy Director, National Legislative 
Service, Veterans of Foreign Wars of the United States; Mr. 
Richard F. Weidman, Director of Government Relations, Vietnam 
Veterans of America; and Mr. Barton F. Stichman, Co-Director, 
National Veterans Legal Services Program.

                           Committee Meeting

    After carefully reviewing the testimony from the foregoing 
hearings, the Committee met in open session on June 22, 2006, 
and voted by unanimous voice vote to report favorably S. 2694, 
as amended, to include provisions derived from S. 909, S. 1252, 
S. 1537, S. 1759, S. 2121, S. 2416, S. 2433, S. 2634, S. 2659, 
S. 2694, as introduced, S. 2753, S. 2762, S. 3069, S. 3363, S. 
3545, and several original provisions.

               Summary of the Committee Bill as Reported

    S. 2694, as reported (hereinafter, ``the Committee bill''), 
contains various amendments to title 38, United States Code, 
and freestanding provisions, that would:
          (a) Authorize claimants to have paid attorney 
        representation in benefits cases before VA;
          (b) Establish the eligibility of Indian tribal 
        organizations for grants for the establishment of 
        veterans' cemeteries on trust lands;
          (c) Require the Secretary of the Army to remove the 
        remains of Russell Wayne Wagner from Arlington National 
        Cemetery;
          (d) Extend the provision of government grave markers 
        and headstones for the marked graves of veterans in 
        private cemeteries;
          (e) Authorize accelerated payment of educational 
        assistance under the Montgomery GI Bill for courses 
        leading to employment in the transportation, 
        construction, hospitality, or energy sectors of the 
        economy;
          (f) Authorize accelerated payment of survivors' and 
        dependents' educational assistance for courses leading 
        to employment in the transportation, construction, 
        hospitality, or energy sectors of the economy, or that 
        lead to employment in a high technology occupation in a 
        high technology industry;
          (g) Authorize funding for State Approving Agencies at 
        $19 million per year using funds paid from the 
        readjustment benefit account and funds made available 
        through discretionary appropriations;
          (h) Extend the biennial reporting requirement of VA 
        and the Department of Defense on the operation of the 
        Montgomery GI Bill program;
          (i) Mandate the establishment of at least six 
        Parkinson's disease, research, education, and clinical 
        centers and at least two Multiple Sclerosis Centers of 
        Excellence;
          (j) Eliminate the term limits for the positions of 
        Under Secretary for Health and Under Secretary for 
        Benefits;
          (k) Require VA to pay full costs for certain service-
        connected veterans residing in State homes, provide 
        medications for certain service-connected conditions to 
        veterans residing in State homes, and create a limited 
        authority for the Secretary of Veterans Affairs 
        (hereinafter, ``the Secretary'') to designate certain 
        beds in non-State facilities as State homes for 
        purposes of per diem payments;
          (l) Create an Office of Rural Health within the 
        Office of the Under Secretary for Health at VA;
          (m) Authorize a pilot program to provide caregiver 
        assistance and non-institutional care services;
          (n) Reaffirm the national goal to end homelessness 
        among veterans;
          (o) Express the Sense of the Congress on the 
        appropriate response of the Federal Government to the 
        needs of homeless veterans;
          (p) Extend the authority of VA to provide grant 
        assistance for comprehensive service programs for 
        homeless veterans;
          (q) Extend the authority of VA to provide treatment 
        and rehabilitation services to seriously mentally ill 
        and homeless veterans;
          (r) Extend the authority of VA to transfer properties 
        it acquires through foreclosure proceedings on homes 
        backed by VA-guaranteed loans for the purpose of 
        housing homeless veterans;
          (s) Extend the authorization of, and increase the 
        authorization amount for, grant funding for homeless 
        veterans with special needs;
          (t) Extend the authorization of, and increase the 
        authorization amount for, technical assistance programs 
        provided to homeless veterans service providers;
          (u) Include additional required elements in an annual 
        report on assistance provided to homeless veterans;
          (v) Add additional ex-officio members to the Advisory 
        Committee on Homeless Veterans;
          (w) Provide additional rental assistance vouchers for 
        VA-supported housing programs for homeless veterans;
          (x) Provide financial assistance for supportive 
        services for low-income veteran families;
          (y) Authorize VA to guaranty loans for the purchase 
        of stock in residential cooperative housing 
        corporations;
          (z) Increase from $20,000 to $30,000 the amount of 
        supplemental insurance coverage available to totally 
        disabled veterans under the Service-Disabled Veterans' 
        Insurance program;
          (aa) Extend from September 30, 2008, to September 30, 
        2011, the authorization for VA to match certain 
        beneficiary income information with data from other 
        agencies;
          (bb) Clarify the scope of covered correctional 
        facilities for purposes of determining entitlement to 
        certain benefits for those residing in correctional 
        facilities.

                               Discussion

Section 101: Attorney representation in veterans' benefits cases before 
        the Department of Veterans Affairs

Background: Veterans' representation

            A. Introduction
    VA has a non-adversarial process for developing and 
adjudicating claims for veterans' benefits. As part of that 
process, VA generally is obligated to notify a claimant of the 
evidence needed to substantiate a claim, to assist the claimant 
in obtaining that evidence, and to provide the claimant with 
the benefit-of-the-doubt in rendering a decision. See 38 U.S.C. 
Sec. Sec. 5103A, 5103(a), 5107(b). If a claimant disagrees with 
VA's initial decision, the claimant may seek a more favorable 
outcome through the non-adversarial appeal process within VA, 
which may include multiple reviews of the claim by adjudicators 
at a VA regional office, and a review by the Board of Veterans' 
Appeals (hereinafter, ``BVA'' or ``Board''). See 38 U.S.C. 
Sec. Sec. 7105, 7107.
    During the VA administrative process, a claimant may seek 
assistance--without charge to the claimant--from a recognized 
representative of a veterans' service organization 
(hereinafter, ``VSO'') or from other recognized individuals. 
See 38 U.S.C. Sec. 5902, 5903. However, until that VA 
administrative process has been completed, a claimant is 
statutorily prohibited from paying an attorney or agent to 
provide services with regard to a claim for veterans' benefits. 
See 38 U.S.C. Sec. 5904(c). As explained below, that policy 
dates back to the Civil War and, today, is considered to be 
unfair and outdated by a broad spectrum of individuals and 
organizations, including judges, veterans' organizations, 
veterans' advocates, law professors, and bar associations.
            B. History of attorney fee limitation
    In 1862, in response to concerns that unscrupulous lawyers 
were bilking Civil War veterans out of their pensions, Congress 
imposed a $5 limit on the amount of fees that agents or lawyers 
could charge individuals seeking veterans' benefits. 12 Stat. 
566, 568 (1862). Two years later, the $5 limit was raised to 
$10. 13 Stat. 387, 389 (1864). When those limits were imposed, 
``there was no regulation of law practice by government or 
licensing of attorneys by bar associations'' and, therefore, 
``[a]nyone could hold himself out as an attorney or claims 
agent and, for a fee, assist a veteran claim a pension.'' 
Hearing on Benefits Legislative Initiatives, Senate Committee 
on Veterans' Affairs, June 8, 2006, 109th Cong., 2d Sess. 
(hereinafter, ``SVAC June 8, 2006, Hearing'') (testimony of Mr. 
Richard Weidman).
    The Civil War era restriction on attorney fees remained in 
place for over 120 years, despite the subsequent development of 
``very powerful and active disciplinary entities'' to police 
the legal profession. SVAC June 8, 2006, Hearing (testimony of 
the Honorable Frank Q. Nebeker). As a practical matter, the 
restriction on attorney fees resulted in very few veterans 
having attorney representation during administrative 
proceedings before VA.
    In 1988, Congress created the U.S. Court of Veterans 
Appeals to provide judicial review of decisions rendered by the 
BVA. See Veterans' Judicial Review Act, Pub. L. 100-687, 102 
Stat. 4105 (1988) (hereinafter, ``VJRA''); see also Pub. L. 
105-368, 112 Stat. 3315 (1998) (renaming the U.S. Court of 
Veterans Appeals as the U.S. Court of Appeals for Veterans 
Claims (hereinafter, ``CAVC'')). At that time, the Committee 
acknowledged that ``the new right to judicial review * * * 
would be a hollow right indeed without some easing of the 
limitation on attorneys' fees.'' S. Rep. 100-418, at 63 (1988). 
The Committee further stated:

    The basis for Congressional action, first after the Civil 
War * * *, limiting the amount an attorney could receive for 
representing a claimant before the VA was grounded in a belief 
that the lawyers of that day were unscrupulous and were taking 
unfair advantage of veterans by retaining an unwarranted 
portion of the veterans' statutory entitlement in return for 
very limited legal assistance. Whatever the merits of such a 
view at that time that the limitation was imposed * * * it is 
the Committee's position that such a view of today's organized 
bar, particularly in light of the widespread network of local 
bar associations that now generally police attorney behavior, 
is no longer tenable.
    The Committee is also of the view that the current 
statutory limitation is an undue hindrance on the rights of 
veterans and other claimants to select representatives of their 
own choosing to represent them in VA matters.

S. Rep. 100-418, at 64. In discussing the reasons for not 
advancing legislation to allow attorney representation at the 
initial stages of the VA process, the Committee explained that 
``the existing limit on attorneys' fees is generally 
appropriate with respect to the initial claims stage in the 
sense that applying for VA benefits is a relatively 
uncomplicated procedure.'' S. Rep. 100-418, at 63.
    The Committee therefore advanced a bill (S. 11) that would 
have retained the $10 fee limit during the VA administrative 
process but would have lifted the fee limit after the BVA 
rendered an adverse decision. S. Rep. 100-418, at 65. 
Similarly, the House Committee on Veterans' Affairs favorably 
reported a bill (H.R. 5288) that would have allowed paid 
attorney representation after VA had ``affirm[ed] its decision 
to deny a claim.'' H. Rep. 100-963, at 28.
    As enacted, the VJRA removed the $10 fee limit and 
permitted claimants to hire attorneys only after ``the date on 
which the [BVA] first makes a final decision in the case.'' 38 
U.S.C. Sec. 5904(c). This allowed claimants to have the benefit 
of legal counsel when pursuing their cases before the CAVC, but 
did not permit claimants to hire attorneys until after VA had 
completed its administrative proceedings.
            C. Complexity of the VA system
    Since the enactment of the VJRA, there has been a growing 
recognition that the claims process is no longer a ``relatively 
uncomplicated procedure'' (S. Rep. 100-418, at 63). Among those 
recognizing this complexity have been the judges on the CAVC 
and those on the U.S. Court of Appeals for the Federal Circuit 
(hereinafter, ``Federal Circuit''), which hears appeals from 
the CAVC. In fact, the CAVC has described the statutory and 
regulatory framework governing veterans' benefits as a 
``confusing tapestry'' (Hatlestad v. Derwinski, 1 Vet. App. 
164, 167 (1991)) and the Federal Circuit has described the VA 
benefits system as involving ``arcane intricacies * * * that 
require[ ] voluminous statutes, regulations, manuals, and 
circulars to administer'' (Cook v. Principi, 318 F.3d 1334, 
1357 (Fed. Cir. 2002) (Gajarsa, J., dissenting)).
    The increasing complexity has been recognized by VA, as 
well. In fact, VA's then-Under Secretary for Benefits testified 
in 2000 that ``[t]he Veterans Disability Compensation Program 
is the most complex disability claims system in the Federal 
government'' and ``[t]he process veterans must follow is 
complicated.'' Hearing on the Department of Veterans Affairs 
Claims Adjudication and Pending Legislation Before the 
Committee, Senate Committee on Veterans' Affairs, July 20, 
2000, 106th Cong., 2d sess. (testimony of the Honorable Joseph 
Thompson). Similarly, in 2005, VA's current Under Secretary for 
Benefits, the Honorable Daniel Cooper, testified that the VA 
disability compensation system was becoming ``increasingly 
complicated.'' Hearing on Battling the Backlog: Challenges 
Facing the VA Claims Adjudication and Appeal Process, Senate 
Committee on Veterans' Affairs, 109th Cong., 1st sess., May 26, 
2005 (hereinafter, ``SVAC May 26, 2005, Hearing'').
    VSOs also have recognized the increasing complexity of the 
system. For instance, in 2005, the Veterans of Foreign Wars of 
the United States (hereinafter, ``VFW'') provided this 
description of the VA claims adjudication system: ``Compared to 
the compensation program of a decade ago, the work is much more 
complicated. It is now a complex thicket of court decisions, 
and statutory requirements.'' SVAC May 26, 2005, Hearing 
(testimony of Mr. Quentin Kinderman). Similarly, VFW testified 
in 2006 that, ``[f]or a veteran without a service officer, 
navigating the highly complex bureaucracy that the VA claims 
process has become is a nightmare.'' Hearing on the Legislative 
Presentation of the Veterans of Foreign Wars of the United 
States, Senate Committee on Veterans' Affairs, March 7, 2006, 
109th Cong., 2d sess. (testimony of Commander-in-Chief James 
Mueller).
            D. Support for repealing attorney fee limitation
    In view of that complexity, the growing recognition that 
section 5904(c) of title 38 curtails veterans' rights, and 
other important considerations, a wide array of individuals and 
organizations have expressed support for allowing veterans and 
other VA claimants to have the option of hiring lawyers at any 
time during the VA administrative process. See generally 
Matthew J. Dowd, Note, No Claim Adjudication Without 
Representation: A Criticism of 38 U.S.C. Sec. 5904(c), 16 Fed. 
Cir. B.J. (forthcoming Aug. 2006) (discussing increased public 
support for amending or revoking section 5904(c) of title 38).
    Perhaps most significantly, ``[t]he desirability of 
permitting veterans to employ lawyers during the early 
proceedings before the VA has been recognized by those in best 
position to perceive the prejudicial effect of the current 
system-the Judges presiding over the CAVC.'' SVAC June 8, 2006, 
Hearing (statement for the record of Mr. James C. McKay). 
Indeed, after 10 years of experience as the first Chief Judge 
of the CAVC, the Honorable Frank Q. Nebeker criticized the 
prohibition on hiring attorneys in a 1999 opinion:

    Another troubling aspect of representation has to do with 
the limited role lawyers are permitted (or may be paid) to play 
in the adjudication of claims for veterans benefits. When 
judicial review was established ten years ago, there was 
apparently concern on the part of Congress that opening the 
door to lawyer representation, even in a limited way, was so 
fraught with potential peril that at least some oversight of 
the attorney-client relationship was necessary. As a result, 
filing and review of fee agreements were, respectively, 
required and permitted. Arguably, there are two reasons why the 
law in the past ten years has reluctantly allowed fee-for-
service legal representation. The creation of the [CAVC] and 
its review authority introduced, for the first time, an 
adversarial process as an aspect of veterans claims 
adjudication. Secondly, the Congress might have anticipated 
that the pro bono services available at the regional office and 
[BVA] levels of [VA] would not usually be made available to 
disappointed claimants seeking to appeal to the [CAVC].
    So the antiquated ten dollar limit on fees was scrapped for 
the no-fee-until-after-a-final-BVA-decision rule.
    Why the perceived need effectively to restrict lawyer 
representation by proscribing the charging of fees prior to a 
BVA decision and the oversight of fee agreements by the [CAVC]? 
In the absence of any empirical or statistical data, one can 
only wonder whether Congress presumed that the bar would act 
unprofessionally or would replace the services offered gratis 
by veterans service groups? If the former, it is an unfounded 
indictment based on mistrust. If the latter, it is evidence of 
a desire to prevent the bar from trespassing upon protected 
turf. In either case, now that we have had nearly ten years of 
experience, a questioning of the basic premises is in order.
    A third reason, and perhaps the most important one, may be 
gleaned from our over nine years of experience in reviewing BVA 
denials of benefits. The [CAVC] continues to see many appeals 
where, if counsel were realistically permitted to represent a 
claimant during the adjudication process before a final BVA 
decision, an appeal would be unnecessary or even seen as futile 
by the applicant. However, with the present restrictions on 
lawyer representation, an error at the VA level may not be 
discovered until years later, where with counsel it might well 
have been prevented at the outset. Thus, restricting realistic 
access to counsel until after a final BVA decision can cause 
years of delay both in adjudication before VA and in 
discovering the error through appellate litigation, only to 
have the matter returned to VA for readjudication. This happens 
in many appeals.
    Effectively limiting lawyer representation until after a 
BVA final decision and after oversight of fee agreements is, 
quite arguably, unnecessarily paternalistic.

In the Matter of the Fee Agreement of Kenneth B. Mason Jr., 12 
Vet. App. 135, 137 (1999) (Nebeker, J., concurring).
    Subsequently, other CAVC judges spoke out against the 
restrictions on hiring lawyers. For instance, Judge Ronald 
Holdaway made the following statement in 2004:

    I think that there should be a right to counsel at the 
administrative level. * * *
    There's a paternalism involved that seems to me to be 
excessive. * * *
    * * * If you get lawyers involved at the beginning, you can 
focus in on what is this case about. I think you would get 
better records, you would narrow the issue, there would be 
screening * * * but the fundamental reason, why should veterans 
be treated differently from anyone else?
    * * * I think if we had lawyers involved at the beginning 
of these cases, it would be the single most fundamental change 
for the better that this system could have.

Should 38 U.S.C. Section 5904 Be Amended?, Eighth Annual 
Judicial Conference, U.S. Court of Appeals for Veterans Claims, 
19 Vet. App. 27 Advance Slip (April 22-23, 2004). Similarly, 
Judge Donald L. Ivers of the CAVC stated in 2004 that ``[t]he 
Court has historically taken a position recognizing that 
involvement of lawyers before the VA could be very helpful, and 
I concur.'' A Conversation with Chief Judge Donald L. Ivers, 
Tommy: A Lawyer's Guide to Veterans Affairs, Fed. Bar Ass'n 
Veterans L. Sec., Washington, D.C. (Dec. 2004).
    Numerous professors of law also have reached the conclusion 
that the prohibition against hiring attorneys should be 
revisited. Principally among them, Professor William F. Fox, 
Jr., of Catholic University of America Columbus School of Law, 
offered the following opinion in his treatise on veterans' law:

    Many of the problems at the Board that lead to defective 
Board decisions and that ultimately lead to the large numbers 
of remands for a proper statement of reasons or bases are 
attributable to the lack of a proper record-building process at 
the regional office level.
    Proper record building at the regional office level 
requires the participation of attorneys at the claims 
initiation stage of the process. The Social Security 
Administration, a benefits program in which attorneys are 
permitted to participate at the outset of the claims process, 
has very few of the record-building problems that continue to 
plague [VA]. Concededly, this requires legislation; but it is 
legislation of the highest import.

    William F. Fox, Jr., The Law of Veterans' Benefits: 
Judicial Interpretation, at 254 (3d ed., Paralyzed Veterans of 
America, 2002). Professor Fox later opined that, if he were to 
design the ``ideal process'' for the veterans'' benefits 
system, he would ``[f]irst and foremost * * * eliminate the 
remaining and totally artificial restrictions on the use of 
attorneys in the system to permit attorneys to represent 
claimants at every stage of the proceeding, including the 
initial claims process.'' William F. Fox, Jr., Deconstructing 
and Reconstructing the Veterans Benefits System, 13 Kan. J.L. & 
Pub. Pol'y 339, 344 (2004).
    Similarly, Professor Richard E. Levy, from the University 
of Kansas School of Law, offered this opinion in 2004:

    In light of the increasingly complex and legalistic 
character of the process, a critical question is whether non-
attorney representation is sufficient. For example, the CAVC 
has adopted an exhaustion requirement under which it will not 
consider matters that were not raised before the BVA. Without 
representation by attorneys, claimants often may find that they 
have failed to properly raise critical matters before the 
agency and, as a result, their claims are foreclosed.

           *         *         *         *         *

    * * * At the very least, veterans are left without an 
important source of protection considered essential in other 
legal contexts.

           *         *         *         *         *

    * * * [E]limination of limits on attorney compensation, 
perhaps the most entrenched feature of the [VA] system, 
warrants careful consideration. The administrative process is 
not always veteran friendly and may have become more 
adversarial as a result of judicial review. At any rate, the 
preservation of issues for review, which was not a factor 
before the VJRA, has become an important consideration and 
attorneys are likely to be especially helpful there. Moreover, 
while attorney representation is often seen as a negative from 
an agency perspective, attorney representation of veterans may 
well help the VA by reducing its burden of developing facts and 
compiling the record.

Richard E. Levy, Of Two Minds: Charitable and Social Insurance 
Models in the Veterans Benefits System, 13-SPG Kan. J.L. & Pub. 
Pol'y 303, 318-24 (2004).
    Additionally, Professor Eugene R. Fidell, from American 
University Washington College of Law, recently stated that the 
prohibition against hiring attorneys ``has been widely 
understood to be unfair for many, many years'' and is ``a 
museum piece that should have been gotten rid of a long time 
ago.'' Jim Abrams, The Associated Press, Congress Seeks to 
Change Civil War Law (May 8, 2006), found at http://
www.wtopnews.com/?nid=116&sid=784420 (last visited July 19, 
2006).
    Numerous bar associations also have supported a repeal of 
section 5904(c) of title 38, including the American Bar 
Association, the Court of Appeals for Veterans Claims Bar 
Association, the Pennsylvania Bar Association, the Maryland 
State Bar Association, the Rhode Island Bar Association, the 
Oklahoma Bar Association, the West Virginia Bar Association, 
the Arizona Bar Association, the Bar Association of the 
District of Columbia, and the Washington Bar Association. See 
generally Matthew J. Dowd, Note, No Claim Adjudication Without 
Representation: A Criticism of 38 U.S.C. Sec. 5904(c), 16 Fed. 
Cir. B.J. (forthcoming Aug. 2006); Message from the President 
of the CAVC Bar Association, Jennifer A. Dowd, Esq., found at 
http://www.cavcbar.net (last visited July 14, 2006).
    In addition, lawyers and other advocates practicing 
veterans' law before both VA and the CAVC have criticized the 
current restrictions against hiring attorneys. For instance, at 
the CAVC Judicial Conference in 2004, a long-time veterans' law 
practitioner provided these observations regarding the current 
statutory prohibition:

    [T]his is an issue of choice. * * * That is certainly the 
way my clients have presented it to me when I tell them that 
I'm not able to represent them before there's a final Board 
decision. And I note that [the materials distributed at the 
conference] talk at length about putting veterans in a special 
category. And I note that they are in a special category 
because they are one of only two groups in this country who are 
prohibited--legally prohibited from choosing to hire an 
attorney, and the other group is enemy combatants.
    So I would like to understand * * * why it makes sense that 
veterans along with enemy combatants are prohibited from 
choosing. We are not talking about forcing them to hire an 
attorney, we're not talking about what's the best way to fix 
the system in terms of the VA system, we are talking about 
giving veterans and their families a choice about how they 
proceed on their own behalf.

Should 38 U.S.C. Section 5904 Be Amended?, Statement of Ms. 
Barbara Cook, Eighth Annual Judicial Conference, U.S. Court of 
Appeals for Veterans Claims, 19 Vet. App. 40 Advance Slip 
(April 22-23, 2004). (Since that time, the U.S. Supreme Court 
has loosened the restrictions against enemy combatants engaging 
attorneys. See Hamdi v. Rumsfeld, 542 U.S. 507 (2004).)
    At the same conference, the president of the National 
Organization of Veterans Advocates (hereinafter, ``NOVA'') 
opined that section 5904 ``should be amended,'' but cautioned 
that ``any amendment to section 5904 should have a mandatory 
[continuing legal education] component to it'' because ``this 
is a complicated field of law.'' Should 38 U.S.C. Section 5904 
Be Amended?, Statement of Mr. Robert Chisholm, Eighth Annual 
Judicial Conference, U.S. Court of Appeals for Veterans Claims, 
19 Vet. App. 26 Advance Slip (April 22-23, 2004).
            E. Committee hearings
    During the 109th Congress, the issue of attorney 
representation for veterans was discussed at several Committee 
hearings. Initially, in May 2005, NOVA testified before the 
Committee that allowing claimants to hire attorneys after the 
Board has issued a final decision ``is too late in the process 
for counsel to be truly effective because by the time the Board 
makes a decision on the claim, the record is effectively 
closed.'' SVAC May 26, 2005, Hearing (testimony of Mr. Robert 
Chisholm); see 38 U.S.C. Sec. 7252(b) (``Review in the Court 
shall be on the record of proceedings before the Secretary and 
the Board.''). In addition, NOVA testified at that hearing 
that, if retained at earlier stages of the proceedings, 
``[a]ttorneys would be helpful in obtaining, organizing and 
presenting records on behalf of the veteran and making sure 
that the VA processes the claim in a timely and accurate 
manner.''
    In March 2006, The Retired Enlisted Association 
(hereinafter, ``TREA'') testified that there is no logic to the 
prohibition against hiring attorneys ``except history.'' 
Hearing on the Legislative Presentations of the Fleet Reserve 
Association, the Air Force Sergeant's Association, the Retired 
Enlisted Association, the Gold Star Wives of America, and the 
Military Officers Association of America, Senate Committee on 
Veterans' Affairs, March 2, 2006, 109th Cong., 2d sess. 
(testimony of Ms. Deirdre Parke Holleman). In addition, TREA 
testified that allowing attorney representation during VA's 
administrative proceedings ``would help a great deal with the 
repetitive nature of the filings.''
    Then, at the Committee's June 8, 2006, hearing, retired 
CAVC Judge Donald Ivers testified that ``[f]reedom to seek 
counsel of one's choice has long been a hallmark of this 
nation's system of justice'' and that it is ``highly 
contradictory'' that veterans ``who have given much in defense 
of that system are denied that freedom in pursuing claims 
arising out of their service.'' In addition, retired CAVC Chief 
Judge Frank Q. Nebeker stated in written testimony for the 
record that ``the paternal approach of effectively preventing 
lawyer representation in the benefits process [is] severely 
outmoded'' and stressed that ``veterans, like everyone else, 
should be at liberty to seek counsel in the free market.''
    Similar opinions were expressed in testimony provided at, 
or submitted for, the SVAC June 8, 2006, hearing by several 
organizations, including VVA, Paralyzed Veterans of America 
(hereinafter, ``PVA''), NOVA, and the National Veterans Legal 
Services Program (hereinafter, ``NVLSP''). In part, Mr. Richard 
Weidman of VVA testified that ``[l]egal counsel is the right of 
all Americans, except veterans'' and that ``[t]his is an 
injustice that must be redressed.'' In addition, he stated:

          This limitation, and the patronizing reasoning behind 
        it, sets veterans off from every other discrete group 
        of the American population. No other group--including 
        illegal aliens and felons in penal institutions--is 
        barred from making a free choice about who will be 
        their legal representative in matters personal to them 
        that may be pending before the government.

    Along the same lines, NVLSP testified that ``[i]t makes no 
rational sense to deny [veterans] this right when the right to 
choose to hire an attorney is enjoyed by criminal defendants, 
claimants for other federal government benefits including 
social security, and non-citizens opposing federal government 
efforts to deport them.'' SVAC June 8, 2006, Hearing (statement 
of Mr. Barton Stichman). In addition, NVLSP testified that 
``the current network of veterans' advocates available to our 
nation's veterans is greatly overburdened'' and that 
``[a]llowing disabled veterans to hire attorneys will help 
alleviate this burden and promote justice.''
    PVA submitted testimony for the June 8, 2006, hearing, 
noting that ``[t]he reason for the statutory fee limitation, 
now a prohibition, does not exist currently and has not existed 
for a long time.'' PVA recommended ``that the Committee 
consider language similar to that contained in Title 42 that 
governs recognition of representatives before the Social 
Security Administration and the fees that those representatives 
may collect.'' See 42 U.S.C. Sec. 406(a).
    On the other hand, VA, VFW, Disabled American Veterans 
(hereinafter, ``DAV''), and AMVETS provided testimony in June 
2006 expressing their opposition to allowing veterans the 
option of hiring lawyers. Their principal bases for opposition 
included concerns that attorneys would charge veterans 
excessive fees, that attorneys would make the VA process more 
complicated or more adversarial, and that attorneys would not 
have sufficient training in this area of law to be effective. 
SVAC June 8, 2006, Hearing (testimony of Mr. Ronald Aument, VA 
Deputy Under Secretary for Benefits; Mr. Quentin Kinderman, 
VFW; Mr. Joseph Violante, DAV; and Mr. David G. Greineder, 
AMVETS). In addition, DAV stated that ``[v]eterans should be 
able to file claims for disability benefits and receive fair 
decisions from [VA] without the necessity to hire and pay a 
large portion of their benefits to lawyers'' and that allowing 
veterans to hire attorneys ``will have far reaching detrimental 
effects that will far outweigh the emotional gratification of 
having the right to choose representation by a lawyer.'' SVAC 
June 8, 2006, Hearing (testimony of DAV citing Walters v. 
National Ass'n of Radiation Survivors, 473 U.S. 305 (1985)).
    Those concerns were addressed by other witnesses at the 
June 8, 2006, hearing, including Mr. Richard Weidman of VVA, 
who provided the following testimony:

    Primarily, the rationale articulated by the major VSOs and 
the VA for their vehement support for perpetuating the bar to 
veterans choosing attorney representation is paternalistic, 
i.e., they argue that the veterans benefits system is non-
adversarial and pro-claimant, and as such veterans and their 
benefits must be ``protected'' from unscrupulous attorneys. 
Putting aside the merits of the argument that the VA benefits 
system is non-adversarial, the view that veterans need to be 
``protected'' from attorneys simply has no basis in fact, and 
discriminates against veterans in comparison to the unfettered 
right of all other socioeconomic groups in our nation to hire 
an attorney. There is no evidence that veterans have been 
abused by their attorneys (by charging exorbitant fees, for 
example) upon their being provided representation services 
before the [CAVC] and then on remand from the [CAVC] to the 
BVA.
    Also cited by the VA and some others as to why attorney 
representation of veterans is harmful and should not be allowed 
is that, by introducing attorneys into the mix during the 
initial claims process, VA adjudicators will be forced to take 
a more adversarial position when adjudicating claims. However, 
many veterans' advocates would argue that the VA adjudication 
process is already adversarial. Virtually any veteran who has 
been through this process will tell you that.
    * * * With the assistance of an attorney at the start of a 
claim, the adjudicator's task can be streamlined to reviewing 
the evidence, developing the evidence as specified by the 
attorney, considering the attorney's legal and factual 
arguments and analysis, and rendering a decision. If the 
attorney fully develops the evidence as much as possible and 
writes a coherent argument, a favorable claims decision is 
essentially written for the adjudicator. * * *
    Another discredited ``doomsday'' argument is that allowing 
attorneys to represent veterans at the [VA regional office] 
level will result in undue competition with service 
representatives, perhaps even causing smaller VSOs to be driven 
out of the business of representing veterans. Such an outcome 
is highly unlikely. Allowing veterans the right to choose 
attorney representation will not diminish the critically 
important role of VA accredited VSO service representatives. As 
demonstrated by VVA's historical support for judicial review 
and the right to attorney representation, as well as its use of 
its own attorneys to represent veterans before the BVA and the 
[CAVC], VVA has always viewed the roles of accredited service 
representatives and attorneys as complementary. Both groups 
train and learn from each other, and cooperate in the 
representation of VVA's veteran clients. The strength of 
accredited service representatives is in their front-line work 
in the field, developing claims and succeeding at the regional 
office level in most routine cases. The further up the appeal 
process a case must go, the more likely it presents complicated 
legal or factual issues, and is not routine. In such cases, 
especially at the appellate levels, the role of attorneys can 
be critical to providing veterans with quality representation.
    Moreover, there will never be enough attorneys representing 
veterans to assist them all. Nor would attorneys have any 
incentive to take all veterans as clients. Because attorneys 
will be paid, economic considerations will determine the number 
of veterans who will choose legal representation. For the same 
reason, no small VSOs will be put out of the business of 
representing veterans because of attorneys. Only a small 
percentage of veterans' benefits claims involve amounts of 
past-due compensation sufficient to create incentives for 
attorney representation. Because the vast majority of cases do 
not involve large awards of past-due benefits, the vast 
majority of veterans will continue to have their cases 
represented by accredited VSO service representatives.
    Yet another argument used in the past to resist attorney 
representation is that many attorneys have little or no 
training in VA laws, regulations and adjudication policies, 
which would result in inadequate representation or even legal 
malpractice. This is a ``red herring'' because, since the VJRA 
was enacted in 1988, there already have been a number of 
attorneys throughout the country practicing in this area of the 
law. It is true that more attorneys new to this practice will 
become involved if the current bar to attorney representation 
is repealed. However, ethical and other professional 
responsibility rules require attorneys to be competent to 
adequately represent their clients. Attorneys without direct 
experience with VA benefits laws and procedures should be at 
least familiar with how to obtain the information and learn 
what is necessary to provide adequate representation to 
veterans. This is not a new concept for attorneys. It is the 
method attorneys use with respect to every area of law in which 
they might practice.
    Lastly, opponents of allowing veterans' freedom of choice 
also argue that only those veterans with financial means will 
be able to afford attorney representation. In other words, they 
argue that poorer veterans will be unable to afford attorneys 
and thus will be disadvantaged in terms of the quality of their 
representation, causing disparate classes of benefits 
claimants. It is highly unlikely, however, that some veterans 
will be denied the benefit of attorney representation based 
solely on their inability to pay the attorney's fee. Virtually 
no veteran will be required to pay an attorney in advance for 
representation. The vast majority of veterans' cases handled by 
attorneys will be done on a contingent basis (no fee unless an 
award of past-due compensation is won), which is the case with 
the limited attorney represented cases that occur today. This 
means that the merits of the veteran's case will most likely 
determine his or her access to an attorney, not the veteran's 
financial standing.
    The overriding concern for VVA, as well as any other 
individual or group that cares about the rights of veterans, is 
that veterans get the most effective representation possible. 
If a veteran wants to hire an attorney as his or her 
representative at the [VA regional office], is there a 
legitimate basis to deny them the right to do so? The position 
of VVA since its founding has been that no such basis exists. 
There should be no wavering from this same answer today.

    Additionally, in response to DAV's testimony, Mr. James C. 
McKay provided this written statement:

    The DAV asserts in [its June 8, 2006, testimony] that 
``veterans should be able to file claims for disability 
benefits and receive fair decisions from the [VA] without the 
necessity to hire and pay a large portion of their benefits to 
lawyers.'' There is no foundation for the premise of that 
statement. Under the provisions of S. 2694, there would be no 
``necessity'' that veterans hire lawyers. Rather, each veteran 
would have the choice of hiring a lawyer or not hiring a 
lawyer. Likewise, there is no basis for the demeaning 
conclusion that veterans would choose to hire a lawyer to 
satisfy an ``emotional gratification of having the right to 
choose representation by a lawyers.''

           *         *         *         *         *

    The main thrust of the DAV's argument relies completely on 
an outdated statement in S. Rep. No. 100-418, at 63-64 (1988), 
which, in turn, relied completely on the plurality opinion of 
four justices of the Supreme Court in Walters, issued twenty-
one years ago. * * *
    The DAV statement does not mention that the plurality 
decision in Walters was based largely on the amazing conclusion 
that lawyers are not needed because service organizations 
representatives (who charge no fee) are fully capable of 
representing veterans for the reason that ``complex'' cases 
constituted a ``tiny fraction'' of the total cases pending 
before the VA. (473 U.S. at 329-330). The plurality of justices 
proclaimed that the medical questions relating to the degree of 
disabilities of veteran claimants were overwhelmingly simple, 
and that complex medical issues seldom arose in VA 
administrative proceedings. (Ibid.)
    The plurality justices' view of the simplicity of veterans 
claims was at odds with the Supreme Court's view stated eleven 
years earlier in Johnson v. Robinson, 415 U.S. 361, 370 (1974), 
where the Court's decision relied on a statement of the 
Administrator of the Veterans Administration in support of the 
1979 amendment to 38 U.S.C. sec. 361 (1974), that, ``in the 
adjudication of compensation and pension claims, a wide variety 
of medical, legal, and other technical questions constantly 
arise which require expert examiners of considerable training 
and experience and which are not readily susceptible of 
judicial standardization.''

SVAC June 8, 2006, Hearing (statement of Mr. James C. McKay).
    Although, The American Legion also expressed concerns about 
allowing veterans to hire attorneys, that veterans' 
organization did not oppose the enactment of statutory 
provisions to address those concerns:

          The American Legion does not oppose the concept of 
        attorney representation in the VA system or the lifting 
        of current restrictions on attorney representation. We 
        are concerned that such legislation should contain 
        adequate safeguards to ensure each attorney's 
        competency, training and reasonable fee limits. We are 
        pleased that this bill [S. 2694] includes provisions 
        addressing these areas of concern. We recommend a fee 
        cap or reasonable hourly rate be included to help 
        ensure a speedy resolution of the claim. As it 
        currently stands with a 20 percent fee agreement, the 
        longer it takes to satisfactorily resolve a claim, the 
        larger an attorney's fee. A fee cap or reasonable 
        hourly rate would help to avoid this problem and create 
        an incentive for a timely resolution of the claim.

SVAC June 8, 2006, Hearing (testimony of Mr. Peter Gaytan).

Background: Additional basis for suspension of claimant representatives

    For many years, the VA claims processing system has 
experienced ``problems processing veterans'' disability 
compensation and pension claims,'' including ``large numbers of 
pending claims and lengthy processing times.'' SVAC May 26, 
2005, Hearing (testimony of Ms. Cynthia Bascetta, U.S. 
Government Accountability Office). Some experts and 
stakeholders have suggested that ``frivolous'' claims 
contribute to those problems and that the system could be 
improved if those individuals representing claimants before VA 
help to deter the filing of frivolous claims.
    For example, the 1996 report of the Veterans' Claims 
Adjudication Commission, found that some veterans' 
representatives ``encourage a veteran to file a claim that the 
agent knows will be denied, but prefer the VA to make the 
denial,'' which ``clogs the system with frivolous claims.'' 
Veterans' Claims Adjudication Commission, Report to Congress, 
at 137 (Dec. 1996); see Pub. L. 103-446 (1994) (creating the 
Veterans' Claims Adjudication Commission).
    Then, in a 2001 report to the Secretary of VA, the VA 
Claims Processing Task Force concluded that ``service 
organizations can help improve service to beneficiaries and 
increase veteran satisfaction by * * * helping deter frivolous 
claims.'' VA Claims Processing Task Force, Report to the 
Secretary of Veterans Affairs, at 59 (Oct. 2001). In addition, 
that Task Force concluded that ``[the Veterans Benefits 
Administration] and the service organizations must ensure that 
* * * frivolous claims are removed so that valid claims are not 
needlessly delayed.'' Id. at 60.
    More recently, the National Association of State Directors 
of Veterans Affairs stressed that VSOs should have a ``greater 
role * * * in the overall effort to manage and administer 
claims processing'' and repeated the VA Claims Processing Task 
Force recommendation that VSOs should ``help [ ] deter 
frivolous claims.'' Hearing on the Legislative Presentations of 
the National Association of State Directors of Veterans 
Affairs, AMVETS, the American Ex-Prisoners of War and the 
Vietnam Veterans of America, Senate Committee on Veterans' 
Affairs, March 30, 2006, 109th Cong., 2d sess. (testimony of 
Mr. George Basher (quoting VA Claims Processing Task Force, 
Report to the Secretary of Veterans Affairs, at 59 (Oct. 
2001))).
    Despite those recommendations, there currently is no 
uniform policy applicable to all representatives regarding the 
filing of frivolous claims with VA. For instance, although 
attorneys have an ethical obligation ``to examine a claim for 
its merit and to counsel the client against filing a claim if 
it is frivolous and without merit'' (SVAC May 26, 2005, Hearing 
(testimony of Mr. Robert Chisholm, NOVA)), VA does not have 
explicit authority to suspend or exclude attorneys from 
practicing before VA if they violate that obligation (see 38 
U.S.C. Sec. 5904(b)). In addition, although VSOs may decline to 
represent an individual if representation is ``impracticable or 
inappropriate because under the circumstances the facts or law 
do not support the filing of a claim or appeal'' (38 C.F.R. 
Sec. 14.628(d) Note (2006)), most VSOs ``essentially represent 
any claimant.'' SVAC May 26, 2005, Hearing (testimony of Mr. 
Rick Surratt, DAV).

Committee bill

    Section 101 of the Committee bill would repeal the 
provisions of section 5904(c) of title 38, United States Code, 
that prevent claimants from hiring lawyers during the VA 
administrative process. In addition, it would provide the 
Secretary with authority (1) to require attorneys and agents 
practicing before VA to have minimum levels of experience and 
specialized training, (2) to set reasonable restrictions on the 
amount of fees that an attorney or agent may charge for 
services rendered before VA, (3) to collect from attorneys and 
agents a periodic registration fee to defray costs associated 
with attorneys or agents practicing before VA, and (4) to 
review fee agreements and reduce fees that are excessive or 
unreasonable. As a conforming change, the bill would modify the 
requirements for filing fee agreements with VA. The bill also 
would repeal the criminal penalties in section 5905 of title 38 
applicable to representatives who impermissibly charge a fee 
for services provided in connection with a proceeding before 
VA.
    Section 101 would allow VA to suspend any representative--
including agents, attorneys, representatives of VSOs, or 
individuals recognized for particular claims--from practicing 
before VA for any of the reasons specified in section 5904(b) 
of title 38, as modified by this bill. The modifications to 
section 5904(b) of title 38 would expand the basis for 
suspension to include presenting frivolous claims, issues, or 
arguments to VA or failing to comply with other conditions 
specified by the Secretary in regulations.
    In general, the provisions of section 101 would be 
effective 6 months after the date of the enactment of the 
Committee bill. The provisions that would provide additional 
basis for suspension of individuals from practicing before VA 
(section (b)), that would repeal the limitation on hiring 
attorneys or agents (section (c)), that would modify the 
requirements for filing fee agreements (section (d)), and that 
would modify the Secretary's authority to review fee agreements 
and reduce fees (section (e)) would apply only to claims 
submitted to VA on or after that effective date.
    In deciding to favorably report this bill, the Committee 
recognizes that some organizations have concerns about allowing 
veterans the option of hiring attorneys. After carefully 
considering those views, the Committee has determined that 
continuing to abridge the personal rights of all veterans, and 
other VA claimants, is not an acceptable means of dealing with 
those concerns. Rather, the Committee has determined that 
Congress should take steps--as this bill would do--to minimize 
potential problems, while ensuring that our nation's veterans, 
and other VA claimants, will have the right to decide for 
themselves whether to hire attorneys.
    Above all, the Committee expects that, after the enactment 
of this bill, VA will continue to serve all claimants in a non-
adversarial, claimant-friendly manner, regardless of the 
presence of an attorney or any other representative in any case 
before VA. In addition, this Committee, VA, veterans' 
advocates, veterans' organizations, and other stakeholders 
should continue to seek ways to reduce the complexities of the 
VA adjudication system.
    Regarding the implementation of this bill, the Committee 
notes that VA currently has in place extensive regulations and 
procedures governing agents and attorneys who represent 
veterans and other claimants before VA. See, e.g., 38 C.F.R. 
Sec. Sec. 14.626-14.635 (2006). Although amendments to existing 
regulations and procedures may be necessary and appropriate to 
reflect the new and expanded flexibility for veterans to retain 
counsel, the Committee does not anticipate a major regulatory 
burden on VA.
    The Committee acknowledges that individuals and 
organizations have recommended that the prohibition on hiring 
attorneys be lifted on the bill's day of enactment for all 
pending and future claims. However, the Committee has adopted a 
delayed and staggered effective date, which will allow a 
deliberate and gradual implementation of these policies in 
order to minimize any disruption to the VA system.
    Regarding the addition of ``frivolous'' filings as a basis 
for suspension from practice before VA, the Committee notes 
that, in recent years, the number of claims filed with VA has 
increased dramatically and the number of disabilities per claim 
also has increased significantly. See Department of Veterans 
Affairs FY 2007 Budget Submission, Volume 2, 5A-2 (noting that 
``annual claims receipts grew 36 percent from 2000 to 2005'' 
and that ``the number of cases with eight or more disabilities 
claimed doubled from 21,814 in 2000 to 43,655 in 2005''). In 
light of this workload, the Committee believes that requiring 
all veterans' representatives to advocate responsibly, by 
avoiding frivolous claims, arguments, or issues, could be of 
significant help in ensuring that ``valid claims are not 
needlessly delayed.'' VA Claims Processing Task Force, Report 
to the Secretary of Veterans Affairs, at 60 (Oct. 2001).
    The Committee expects that this authority with respect to 
frivolous filings will be utilized by VA but that it will be 
used cautiously, so as not to have an undue chilling effect on 
the filing of claims that may ultimately succeed. See Abbs v. 
Principi, 237 F.3d 1342, 1351 (Fed. Cir. 2001) (defining 
frivolous arguments or issues as those ``that are beyond the 
reasonable contemplation of fair-minded people'' (quoting State 
Indus., Inc. v. Mor-Flo Indus., Inc., 948 F.2d 1573, 1578 (Fed. 
Cir. 1991))); Int'l Union of Bricklayers v. Martin Jaska, Inc., 
752 F.2d 1401, 1406 (9th Cir. 1985) (defining a frivolous 
appeal ``as one in which the result is obvious, or where the 
appellants'' claims are utterly meritless''). In that regard, 
the Committee intends that attorneys not be sanctioned for 
pursuing claims in a manner consistent with the ethical 
standards of jurisdiction(s) where they are licensed to 
practice law, but that VA will proceed with suspension in cases 
of egregious or bad faith behavior exceeding those standards of 
conduct. In no case should an attorney be suspended for 
pursuing all benefits potentially available to a client or for 
good faith challenges to existing regulations, statutes, or 
case law necessary to that pursuit.

Section 201: Eligibility of Indian tribal organizations for grants for 
        the establishment of veterans' cemeteries on trust lands

Background

    Section 202 of Public Law 95-476 established the State 
Cemetery Grants Program within VA and is codified in section 
2408 of title 38, United States Code. Through the State 
Cemetery Grants Program, VA may provide up to 100 percent of 
the cost to establish, expand, or improve a veterans' cemetery 
owned by a State. In turn, the State must provide suitable 
cemetery land and agree to operate and maintain the cemetery in 
accordance with VA standards.
    The State Cemetery Grants Program serves as a complement to 
VA's nationwide system of national cemeteries in meeting the 
overarching goal of ensuring that those who have served 
honorably in the military have a dignified, final resting 
place. The establishment or expansion of State veterans' 
cemeteries is particularly valuable in areas of the country 
where the veterans' population is insufficient to justify 
construction of a VA national cemetery.
    Under current law, the State Cemetery Grants Program is 
limited to veterans' cemeteries that are owned and operated by 
a State or U.S. territory. At present, 63 State-operated 
cemeteries have received grants under the program. Because 
tribal organizations are not considered States under existing 
law, they do not qualify for grant assistance.

Committee bill

    Section 201 of the Committee bill would authorize VA to 
make grants under the State Cemetery Grants Program to any 
tribal organization for the purpose of establishing, expanding, 
or improving veterans' cemeteries on trust lands owned by, or 
held in trust for, the tribal organization. Tribal 
organizations would be defined in the same manner as in section 
3765(4) of title 38, United States Code. Under section 201 of 
the Committee bill, ``trust lands'' would have the same meaning 
as in section 3765(1) of title 38.

Section 202: Removal of remains of Russell Wayne Wagner from Arlington 
        National Cemetery

Background

    The commission of certain crimes after separation from 
military service has long been a basis for denial of veterans' 
benefits. Crimes against the Nation (e.g., mutiny, treason, 
sabotage, or rendering assistance to the enemy) disqualify a 
veteran from all veterans' benefits, to include cemetery burial 
rights. See 38 U.S.C. Sec. Sec. 6103, 6104, 6105. The law also 
provides for the reduction of VA disability compensation for 
convicted felons serving a sentence of 60 days or more in a 
Federal, State, or local penal institution. See 38 U.S.C. 
Sec. 5313. In 1997, Public Law 105-116 was enacted to prohibit 
individuals from being interred or inurned at VA national 
cemeteries, Arlington National Cemetery (hereinafter, 
``Arlington''), or VA-funded State cemeteries, if the 
individual 1) was convicted of a Federal capital crime for 
which the person was sentenced to death or life imprisonment; 
2) was convicted of a State capital crime (defined as the 
willful, deliberate, or premeditated unlawful killing of 
another human being) for which the person was sentenced to 
death or life imprisonment without parole; or 3) was found 
(through an administrative process) to have committed a Federal 
or State capital crime but was not convicted of that crime by 
reason of death or flight from prosecution. Also in 1997, 
section 1077 of Public Law 105-85 was enacted to prohibit 
individuals from being interred or inurned in Arlington who are 
convicted of a capital offense under Federal law for which the 
death penalty may be imposed.
    According to testimony received at the Committee's 
September 22, 2005, hearing, Russell Wayne Wagner, a veteran 
who served on active duty for 3 years during the Vietnam era, 
was convicted in 2002 of the 1994 murders of Daniel and Wilda 
Davis. For his crime, Wagner was given two consecutive life 
sentences with the opportunity for parole. Wagner died in 
prison in February 2005 while carrying out his sentence. His 
cremated remains were inurned in Arlington in July 2005. 
Because Wagner's sentence for his State capital crime carried 
with it the possibility of parole, none of the laws enacted in 
1997 provided a legal impediment to the inurnment of his 
remains.
    The 1997 laws first expressed the Congress's desire to 
preserve the unique status of our nation's military cemeteries 
as national shrines by proscribing burial eligibility to 
individuals convicted of capital murder. Moved by the Wagner 
case, which demonstrated that the effect of the 1997 laws was 
diluted by myriad State sentencing guidelines for murder, 
section 662 of Public Law 109-163 was enacted in January 2006 
to, among other things, remove parole eligibility as a loophole 
through which State capital offenders could retain their 
eligibility for burial in a national cemetery. Wagner's 
remains, however, remain inurned in Arlington. According to 
cemetery officials, Wagner's is the sole case of a convicted 
murderer's remains being interred or inurned in Arlington since 
1997.

Committee bill

    Section 202 of the Committee bill would direct the 
Secretary of the Army to remove the remains of Russell Wayne 
Wagner from Arlington. The Secretary of the Army would first be 
required to notify the next-of-kin of record for Russell Wayne 
Wagner of the impending removal of his remains so that the 
next-of-kin has time to make other burial arrangements. The 
Secretary of the Army would then be required to relinquish 
Wagner's remains. In the event that no next-of-kin is 
available, section 202 would direct the Secretary of the Army 
to arrange for an appropriate disposition of the remains.
    Section 202 would also make five Congressional findings 
that are relevant to understanding why Wagner's remains would 
be ordered removed from Arlington. The first finding is that 
Arlington is a national shrine that memorializes the service of 
men and women who have defended the freedoms that the people of 
the United States enjoy. The second is that including remains 
of persons who have committed particularly notorious, heinous 
acts among those interred in Arlington would bring dishonor to 
the deceased and disrespect to their loved ones. The third 
finding is that the removal of remains of persons who have 
committed heinous acts is not an act of punishment against 
those persons, but rather is an act that would preserve the 
sacredness of cemetery grounds. The fourth finding is that 
Congress first enacted laws barring capital offenders from 
interment or inurnment in Arlington in 1997, and then in 2006 
passed a law to remove parole eligibility as a loophole through 
which capital offenders could retain interment or inurnment 
eligibility. And finally, the fifth finding is that Russell 
Wayne Wagner is the only individual convicted of a capital 
offense who has been interred or inurned in Arlington since 
1997, the year Congress first expressed its intent to keep such 
offenders out of the Nation's national cemeteries.
    The Committee recognizes that removing entitlement to 
gratuitous veterans' benefits based on actions that did not 
constitute a bar to entitlement at the time the benefits were 
conferred raises questions of constitutionality under ex post 
facto and bill of attainder considerations. In Calder v. Bull, 
3 U.S. (3 Dall.) 386, 390-392 (1798), the United States Supreme 
Court established a long-standing principle that an act 
violates the ex post facto clause of the U.S. Constitution when 
it is punitive, or criminal, in nature rather than civil. 
Whether a law is civil or punitive can, in part, be determined 
through an examination of legislative intent. According to the 
Supreme Court's decision in Seling v. Young, 531 U.S. 250, 261 
(2001), a statute will be struck down only when a court 
determines that ``the statutory scheme is so punitive in either 
purpose or effect as to negate the State's intention.'' Seling 
v. Young also established that a statute that has been 
classified as civil cannot be ``deemed punitive `as applied' to 
a single individual,'' id. at 263. Leaving aside the question 
of whether any law respecting the disposition of a deceased 
person's remains could ever be considered punitive, it is clear 
from the Congressional findings portion of section 202 of the 
Committee bill that the intent behind ordering Wagner's remains 
removed is to uphold the unique status of Arlington National 
Cemetery as a national shrine, as established by existing law. 
It is a place for our military dead to be forever memorialized 
and honored. Keeping the remains of a convicted double murderer 
in Arlington is incompatible with that expressed intent.
    Bills of attainder are prohibited by the U.S. Constitution 
and have been interpreted to include legislative acts which 
apply to certain named individuals or ``easily ascertainable'' 
members of a group in which the individuals are punished 
without a judicial trial (United States v. Lovitt, 328 U.S. 
303, 315 (1946)). A controlling case for purposes of section 
202 of the Committee bill is Nixon v. Administrator of General 
Services, 433 U.S. 425, 468-484 (1977). In that decision, the 
Supreme Court established a three-prong test in determining 
whether an act was a prohibited bill of attainder. An act was 
not a bill of attainder if 1) it imposed no punishment 
traditionally judged to be prohibited by the clause; 2) viewed 
functionally in terms of the type and severity of burdens 
imposed, it could rationally be said to further nonpunitive 
legislative purposes; and 3) it had no legislative record 
evincing a Congressional intent to punish. Again, leaving aside 
the question of whether it is possible to further ``punish'' a 
deceased individual, this three-prong test applied to the 
removal of Russell Wayne Wagner's remains demonstrates no 
violation of Constitutional principles relating to bills of 
attainder. Furthermore, the Supreme Court in the Nixon case 
concluded that even though the law in question specifically 
named the subject of the law, the act would not be struck down 
because the individual ``constituted a legitimate class of one, 
on whom Congress could fairly and rationally focus.'' Thus, 
while section 202 of the Committee bill specifically names 
Russell Wayne Wagner, it does so for a fair and rational 
reason, i.e., his are the only known remains of a capital 
offender interred in Arlington National Cemetery since 1997, 
the year Congress first expressed its desire to prohibit such 
offenders from burial privileges.

Section 203: Provision of government markers for marked graves of 
        veterans at private cemeteries

Background

    The organizational entity within VA responsible for the 
administration of VA's memorial programs is the National 
Cemetery Administration (hereinafter, ``NCA''). One of NCA's 
strategic goals is to provide veterans and their families with 
symbolic expressions of remembrance of the veteran's military 
service. These symbolic expressions include NCA's burial flag 
benefit, Presidential Memorial Certificate benefit, and the 
headstone and marker benefit.
    Under current law, VA will furnish upon request, at no 
charge to the veteran or the veteran's family, a headstone or 
marker to mark the grave of an eligible veteran in any cemetery 
around the world. Until recently, VA only had the authority to 
furnish a headstone or marker for unmarked graves, i.e., no 
double marking with a privately-purchased marker and then a 
government marker was permitted. As will be detailed below, the 
program has been expanded to allow VA to furnish a headstone or 
marker for a grave that is already privately marked.
    To meet family needs and private cemetery requirements, VA 
makes its full product line of headstones and markers 
available. While the style of the headstone or marker chosen 
must be consistent with existing monuments at the place of 
burial, families may choose from among flat bronze, granite, or 
marble markers and upright granite and marble headstones.
    Since the end of the Civil War, Congress gradually has 
expanded the provision of government headstones and markers to 
mark the graves of deceased veterans. There is a two-fold 
purpose behind this expansion: First, no person who served 
honorably in the military should, for lack of means, be buried 
in an unmarked grave. Second, irrespective of means, those who 
have served deserve a permanent memorialization of their 
military service.
    Originally, government headstones were provided only to 
mark the unmarked graves of veterans interred in military 
cemeteries. On February 3, 1879, Congress authorized the 
furnishing of headstones for the unmarked graves of veterans in 
private cemeteries. On October 18, 1978, Congress authorized VA 
to provide families of deceased veterans with a choice between 
being provided a government headstone or marker, or an 
allowance in lieu of a government-provided headstone or marker. 
With the enactment of the Omnibus Budget and Reconciliation 
Act, and effective November 1, 1990, the option of providing an 
allowance was eliminated.
    In its Fiscal Year 1999-2000 Report, the Advisory Committee 
on Cemeteries and Memorials recommended legislation to provide 
families with a VA headstone or marker for the privately-marked 
graves of eligible veterans, retroactive to November 1, 1990. 
In comments made within the Report, NCA noted that many 
families who chose private memorialization felt that they had 
lost out on a government benefit. The NCA reported that 
families were upset that they could not receive government 
headstones or markers to place along, or affix to, existing 
headstones or markers at private cemeteries.
    Section 502 of the Veterans Education and Benefits 
Expansion Act of 2001 (hereinafter, ``the VEBE Act''), Public 
Law 107-103, created a 5-year program during which time VA is 
required, upon request, to provide a government marker for 
veterans' graves in private cemeteries which are already 
privately marked. The new program applies to veterans who die 
on or after December 27, 2001, the date of enactment of the 
VEBE Act, and expires on December 31, 2006. Section 203 of the 
Veterans Benefits Act of 2002, Public Law 107-330, amended the 
effective date of eligibility to apply to deaths occurring on 
or after September 11, 2001. Thus, since 1978, only the 
families of veterans who died between November 1, 1990, and 
September 11, 2001, have not been able to avail themselves to a 
government-provided benefit, i.e., either a government-provided 
headstone or marker or an allowance in lieu thereof, if the 
grave of a veteran was already privately marked.
    In a February 2006 report required by the VEBE Act titled 
Report to Congress on the Provision of Government-Furnished 
Markers for Privately-Marked Graves, the Secretary recommended, 
in addition to making permanent the authority to provide a 
government headstone or marker for privately-marked graves, 
that Congress also consider clarifying how VA will accommodate 
the various needs of veterans' families when selecting and 
placing a Government-furnished headstone or marker. 
Furthermore, the Secretary recommended incorporating into 
statute VA's existing regulatory language that describes the 
delivery, placement, and availability of government headstones 
and markers. Additionally, the Secretary recommended revising 
existing language to support VA's furnishing a ``headstone or 
marker,'' as opposed to only a government ``marker,'' for 
privately-marked graves in private cemeteries.

Committee bill

    Section 203 of the Committee bill would permanently 
authorize VA to provide government headstones or markers for 
the privately-marked graves of veterans in private cemeteries. 
In addition, it would authorize VA to provide headstones and 
markers for the privately-marked graves of veterans who died on 
or after November 1, 1990. Section 203 would also effect the 
Secretary's recommendations to put into statute language that 
regulates delivery, placement, and availability of government-
furnished headstones or markers.

Section 301: Expansion of education programs eligible for accelerated 
        payment of educational assistance under the Montgomery GI bill

Background

    Under the Montgomery GI Bill--Active Duty (hereinafter, 
``MGIB-AD'') program, a veteran with at least 3 years of active 
duty service generally may receive educational assistance 
benefits in the maximum amount of $1034 per month for 36 
months. In 2001, Congress added a new provision to the MGIB-AD 
program to allow a veteran to receive ``accelerated payment'' 
of educational assistance benefits if the veteran is enrolled 
in a program leading to employment in a high technology 
industry. Programs that qualify for accelerated payments 
include engineering, mathematics, computer specialities, life 
science, and physical science, as long as the veteran will be 
seeking employment in a high technology industry, e.g., the 
aerospace industry. Generally, to qualify for accelerated 
payments, the tuition and fees for a program, when divided by 
the number of months in the program enrollment period, must be 
more than double the amount of monthly MGIB-AD benefits. Sixty 
percent of tuition and fees for the program term may be covered 
through a lump sum, accelerated payment.
    In 2003, President George W. Bush announced his ``High 
Growth Job Training Initiative,'' an effort to prepare workers 
to take advantage of new and increasing job opportunities in 
high growth, high demand, and economically vital sectors of the 
economy. Currently, 14 sectors have been identified as high 
growth: Advanced manufacturing, aerospace, automotive, 
biotechnology, construction, energy, financial services, 
geospatial technology, health care, homeland security, 
hospitality, information technology, retail, and 
transportation.

Committee bill

    Section 301 of the Committee bill would allow accelerated 
payments of MGIB-AD benefits for veterans enrolled in 
educational assistance programs that last fewer than 2 years 
and which lead to employment in the transportation sector, the 
energy sector, the construction sector, or the hospitality 
sector of the economy. In addition, the Committee bill would 
authorize accelerated benefits for such educational assistance 
programs offered by tribally-controlled colleges or 
universities.
    The provisions of section 301 would take effect on October 
1, 2007, and would apply only to enrollments that begin on or 
after that date. The provisions would expire on September 30, 
2011.

Section 302: Accelerated payment of survivors' and dependents' 
        educational assistance for certain programs of education

Background

    In general, a spouse or child of a veteran who dies or is 
totally disabled from a service-connected condition may receive 
up to 45 months of educational assistance benefits under the 
Survivors' and Dependents' Educational Assistance program 
(hereinafter, ``DEA''). As of October 1, 2005, the maximum 
monthly DEA payment is $827 per month.
    DEA recipients are not currently eligible to receive 
``accelerated payment'' of their educational assistance 
benefits, an option which is available only to eligible 
veterans under the MGIB-AD program who enroll in certain 
programs leading to employment in a high technology industry.

Committee bill

    Section 302 of the Committee bill would allow accelerated 
payments for survivors and dependents enrolled in educational 
assistance programs that last fewer than 2 years and lead to 
employment in a high technology industry, or which lead to 
employment in the transportation sector, the energy sector, the 
construction sector, or the hospitality sector of the economy.
    The provisions of section 302 would take effect on October 
1, 2007, and would apply only to enrollments that begin on or 
after that date. The provisions would expire on September 30, 
2011.

Section 303: Reimbursement of expenses for State approving agencies in 
        the administration of educational benefits

Background

    Under provisions of chapter 36 of title 38, United States 
Code, VA contracts for the services of State Approving Agencies 
(hereinafter, ``SAAs'') for the purpose of approving programs 
of education at institutions of higher learning, apprenticeship 
programs, on-job training programs, and other programs that are 
located within each SAAs' State of jurisdiction. Generally, SAA 
approval of these programs is required before beneficiaries may 
use their educational assistance benefits to pay for them. SAAs 
are also tasked with assisting VA with various outreach 
activities to inform eligible VA program participants of the 
educational assistance benefits to which they are entitled.
    Since 1988, VA payment for the services of SAAs has been 
made only out of funds available for readjustment benefits and 
is subject to annual funding caps. Section 3674(a)(4) of title 
38, United States Code, states as follows: ``The total amount 
made available under this section for any fiscal year may not 
exceed $13,000,000 or, * * * for fiscal year 2006, $19,000,000, 
and for fiscal year 2007, $19,000,000.'' Thus, existing law 
anticipates a reduction in authorized SAA funding of $6 million 
beginning in fiscal year 2008. Employees of SAAs are acutely 
aware of this potential problem. As is stated in the 2006 
Report of State Approving Agencies: ``If no action is taken, in 
2008 the cap will revert back to 13 million dollars--a 32 
percent cut!''
    Payments made from the readjustment benefit account are 
considered mandatory, or direct, spending. Section 505 of the 
fiscal year 2004 budget resolution (H. Con. Res. 95, 108th 
Congress) stipulates that a point of order may be raised in the 
Senate (through fiscal year 2008) against any mandatory 
spending legislation not assumed in the most recently-adopted 
budget resolution that would increase, or cause, an on-budget 
deficit for the first fiscal year, the period of the first 5 
fiscal years, or the period of the following 5 fiscal years. 
Thus, legislation that would continue SAA funding at, or near, 
the current $19 million level using funds available for 
readjustment benefits would run afoul of Senate budget rules if 
no offset is identified. Because the Committee's priority is to 
use identified offsets to enhance benefit programs for veterans 
and their survivors, as is evident in sections 301, 302, and 
602 of the Committee bill, and given current budget 
constraints, it is unlikely that SAA funding can be sustained 
from mandatory accounts alone.

Committee bill

    Section 303 of the Committee bill establishes an authorized 
funding level for SAAs of $19 million. Furthermore, the 
Committee bill establishes a hybrid funding mechanism for SAAs, 
with some funding to remain available from amounts paid for 
readjustment benefits, and other funding that is subject to the 
availability of discretionary appropriation. Funding from 
amounts available for readjustment benefits would be capped at 
$19 million in fiscal years 2006 and 2007, $13 million for each 
of fiscal years 2008 and 2009, $8 million in each of fiscal 
years 2010 through 2013, and $13 million for fiscal year 2014 
and each subsequent fiscal year.

Section 304: Modification of requirement for reporting on educational 
        assistance program

Background

    Section 3036 of title 38, United States Code, requires both 
VA and the Department of Defense (hereinafter, ``DoD'') to 
submit to the Congress separate, biennial reports on the 
operation of the Montgomery GI Bill educational assistance 
program. DoD's report is directed to include information on 
whether educational assistance benefits are adequate to meet 
its recruiting and retention needs. VA's report is directed to 
include information on program utilization and expenditure 
levels. Both agencies' reports are directed to include 
legislative recommendations for improvements, if there are any. 
No report has been required under this section since January 1, 
2005.

Committee bill

    Section 304 of the Committee bill would reinstate the 
biennial reporting requirement and extend it until January 1, 
2011. The first report from each agency would be due no later 
than 6 months after the date of the Committee bill's enactment. 
Each subsequent biennial report would be due on January 1.

Section 401: Parkinson's Disease Research, Education, Clinical Centers, 
        and Multiple Sclerosis Centers of Excellence

Background

    VA has a long and storied history as a leader in the 
advancement of medicine, and the Committee commends the 
department for its progressive and innovative research 
endeavors. Among the approaches that VA uses to advance its 
research efforts is the establishment of centers of excellence, 
and other centers, which combine basic biomedicine, 
rehabilitation, health services delivery, and clinical trials 
in their focus on a specific subject matter. This combined 
model was pioneered in the mid-1970s with the establishment of 
Geriatric Research, Education, and Clinical Centers 
(hereinafter, ``GRECCs'') which focus special attention on 
conditions of the aging veteran population. There currently are 
twenty-one GRECCs.
    In 2003, the Veterans Health Administration established two 
Multiple Sclerosis Centers of Excellence (hereinafter, 
``MSCoEs'') to serve the health care needs of approximately 
28,000 veterans with Multiple Sclerosis (hereinafter, ``MS''). 
These centers are located in Seattle and Portland, collectively 
known as ``MSCoE, West'' and Baltimore, known as ``MSCoE, 
East.'' Through these centers, scientists are able to carry out 
focused research on the causes, symptoms, and treatment of MS, 
including on symptoms such as fatigue and spasticity associated 
with MS, so as to give veterans afflicted with this disease a 
better quality of life.
    In 2001, VA established six Parkinson's Disease Research, 
Education and Clinical Centers (hereinafter, ``PADRECCs''). 
Operating as a national consortium, each PADRECC is 
participating in a landmark clinical trial to assess the 
effectiveness of surgical implantation of deep brain 
stimulators in reducing the symptoms of Parkinson's disease, 
while also studying other innovative clinical treatments. The 
six PADRECCs are located in the following cities: Houston, TX; 
Philadelphia, PA; Portland, OR; Seattle, WA; San Francisco, CA; 
Los Angeles, CA; and Richmond, VA. Through the PADRECCs, 
clinicians and educators can, among other things, determine 
better ways to manage symptoms associated with Parkinson's 
disease.

Committee bill

    Section 401 of the Committee bill would add a new section 
to title 38, United States Code, which would authorize VA to 
designate at least six PADRECCs and at least two MSCoEs. 
Additional centers could be established under this authority. 
Proposals for any future MSCoEs or PADRECCs would have to be 
vetted through a panel made up of experts in neurodegenerative 
diseases.
    The existing six PADRECCs and two MSCoEs serve veterans 
across the entire Veterans Health Administration via a 
nationally coordinated system. These centers are the model of 
innovation in the delivery of highly specialized healthcare and 
research for chronic disease in the veteran population. In 
providing a statutory basis for these centers, the Committee 
intends to ensure their continued existence.

Section 402: Repeal of term of office for the Under Secretary for 
        Health and the Under Secretary for Benefits

Background

    Chapter 3 of title 38, United States Code, contains a 
description of the fourteen VA positions for which Presidential 
nomination and Senate confirmation are required. There are 
seven Assistant Secretaries, one General Counsel, one Inspector 
General, three Under Secretaries, a Deputy Secretary, and a 
Secretary. Under Chapter 71 of title 38, United States Code, 
Presidential nomination and Senate confirmation are required 
for the position of BVA Chairman, whose term is for 6 years.
    With the exception of BVA Chairman, only the Under 
Secretary for Health and the Under Secretary for Benefits have 
statutory limits to their terms of office. All other positions 
serve at the pleasure of the President without a statutory term 
of office.

Committee bill

    Section 402 of the Committee bill would repeal the 4-year 
terms of office for the Under Secretary for Health and Under 
Secretary for Benefits positions. In taking this action, the 
Committee recognizes that the 4-year terms of office were 
originally intended to shield the office-holders from any 
political influence. The hope was that statutory term limits 
would allow the two officials to serve 4 consecutive years 
without any political considerations regardless of whether the 
service was in different administrations or under different VA 
leadership. History, however, has shown that new 
administrations or even new VA leadership within the same 
administration often bring new people at all levels of 
government, including the two Under Secretary positions. In 
fact, the last three Under Secretaries for Health and the 
previous Under Secretary for Benefits did not complete a full 
4-year term.
    The Committee also recognizes that passage of this 
provision may create the impression that the Committee is 
endorsing the politicization of these important jobs. However, 
sections 305(a)(2) (Under Secretary for Health) and 306(a) 
(Under Secretary for Benefits) require that the President 
appoint individuals to these two offices ``without regard to 
political affiliation or activity.'' The Committee bill would 
not change these requirements.

Section 403: Modifications to existing State home authorities

Background

            A. State veterans home per diem
    Under current law, VA operates a program in partnership 
with any State that has, or wishes to construct, a long-term 
care facility for veterans (hereinafter, ``State veterans' 
home''). State veterans' homes are constructed predominately 
with Federal money and are maintained with Federal assistance 
largely for the purpose of providing care to older veterans. 
Under the terms of the State veterans' home program, VA 
provides a fixed daily payment, known as a per diem, to the 
State for each veteran provided care in a State veterans' home. 
It is then left to each State to determine how to fund the 
remaining costs of caring for the residents. Some States charge 
individual veterans the balance of the cost of care. Others 
provide financing to the State veterans' home from the State's 
general revenue tax funds. Many even accept and bill Medicare 
or Medicaid for those residents who qualify. The VA per diem is 
provided regardless of the source of other revenue and 
irrespective of the service-connected condition or the economic 
status of the veteran.
    In 1999, Public Law 106-117, the Veterans' Millennium 
Health Care and Benefits Act, was enacted. That law, among 
other things, established a statutory requirement for VA to 
provide institutional long-term care to any veteran in need of 
such care for a service-connected condition, and to any veteran 
in need of such care who is also rated 70 percent or more 
disabled by VA. When VA provides these services in a VA nursing 
home or a private nursing care facility with which VA has a 
contract, the care is provided at no cost to the veteran. 
However, when the care is provided in a State veterans' home, 
VA pays only the per diem to the State, which then often bills 
the veteran for the remaining costs. The Committee believes 
this is unfair and irrational.
    The policy is irrational because under its current 
strictures a veteran can obtain long-term care for a service-
connected condition in a facility owned by VA, or in a private 
facility under contract with VA, at no cost. However, if that 
same veteran receives the services in a State veterans' home, 
the patient will likely be charged out-of-pocket expenses 
because VA will only provide a per diem for his or her care. 
The Committee sees no reason to continue a policy that 
financially discourages veterans from using long-term care 
facilities constructed primarily for their use.
    Even if the economics of this policy does not discourage 
veterans from using a State veterans' home, it is certainly 
unfair that the Federal government assumes 100 percent of the 
cost of care for these veterans in two settings, but not the 
third. The Committee believes this argument alone constitutes a 
sufficient justification to change the law.
            B. Prescription medications for veterans in State veterans' 
                    homes
    In 1996, Public Law 104-262, the Veterans' Health Care 
Eligibility Reform Act of 1996 (hereinafter, ``Eligibility 
Reform Act'') created a standard health care benefits package, 
which includes comprehensive medication coverage. In general, 
current law requires that prescriptions for medications be 
filled only on the written order of a physician employed by VA. 
However, there is an exception to that general requirement. The 
exception is that VA is required to provide medications on the 
order of any licensed physician to 1) veterans who are in 
receipt of additional disability compensation payments under 
chapter 11 of title 38, United States Code, on account of being 
permanently housebound, or in need of regular aid and 
attendance, due to a service-connected condition, or 2) 
veterans who are in receipt of non-service-connected pension 
payments under chapter 15 of title 38, and who are permanently 
housebound or in need of regular aid and attendance. Because 
veterans residing in State veterans' homes who are receiving VA 
pension under chapter 15 of title 38 are, by definition, 
receiving regular aid and attendance, this requirement creates 
a situation where, in some circumstances, VA is required to 
provide medications to certain non-service-connected pension 
recipients who reside in State veterans' homes, but cannot 
provide medications to some veterans with severe service-
connected conditions who reside in the same State veterans' 
home. The Committee believes that is simply irrational.
    Furthermore, under VA's comprehensive medication coverage, 
service-connected veterans rated 50 percent or higher are not 
required to make co-payments for needed medications received on 
an outpatient basis. Such veterans who are enrolled for care at 
VA, or who are in receipt of care at community nursing homes 
paid for by VA, can receive VA's full medication benefit at no 
charge as part of their care. However, as previously mentioned, 
service-connected veterans residing in a State veterans' home 
are not eligible to receive the medication benefit, even if 
they have a disability rating of 50 percent or higher, unless 
their service-connected disability necessitated the State home 
care. Pharmacy costs--in addition to the other out-of-pocket 
costs described above--are levied upon these veterans. Similar 
to the current policy regarding per diem payments, the 
Committee believes this policy is quite inequitable.
            C. Rural access to State veterans' homes
    As noted above, under current law, VA provides a per diem 
payment for each veteran who receives care in a State veterans' 
home. This means that in order to establish beds to provide 
care and services to veterans (and receive the per diem) a 
State must construct an entire facility dedicated to that 
purpose. While it is true that VA provides 66 percent of the 
cost of construction for a State veterans' home, the State must 
still contribute one-third of the cost and agree to operate the 
home far into the future. Over 100 State veterans' homes have 
been constructed under this arrangement. Unfortunately, in the 
case of rural and remote areas of the country, major 
construction of a State veterans' home would likely provide too 
many beds for too few veterans. In other words, it would be 
inefficient. Still, long-term care needs persist in rural areas 
of the country.

Committee bill

    Section 403 of the Committee bill would put service-
connected veterans receiving State veterans' home care on a 
level playing field with other veterans, regardless of the 
setting in which needed nursing home care is provided, by 
requiring VA to reimburse State veterans' homes for the cost of 
care of a veteran with a 70 percent or greater service-
connected condition.
    Section 403 also would require VA to provide, at no cost, 
prescription medication coverage for veterans with a 50 percent 
or greater service-connected disability. The Committee notes 
that existing regulations require that all State veterans' 
homes in receipt of a VA per diem payment retain the services 
of a pharmacist and provide all pharmaceutical services, 
including procedures that ensure the accurate acquisition, 
receipt, dispensation, and administration of drugs and 
biologicals to meet the needs of its residents. Therefore, 
State veterans' homes should have no trouble implementing this 
provision of the Committee bill.
    Finally, section 403 would authorize a 3-year pilot program 
that would allow VA to deem a total of 100 beds in non-VA 
facilities to be eligible for State veterans' home per diem 
payments. By design, the limited scope and duration of the 
program would ensure that the new authority does not begin to 
drive the State veterans' home program from its primary focus 
of construction and maintenance of separate homes for veterans, 
or put an unanticipated strain on VA's budget due to a sudden 
proliferation of beds in non-VA facilities across the country. 
The Committee intends to assess the interest in the pilot 
program from States around the country, and plans to follow its 
progress closely. The Committee also intends to consult with 
all interested stakeholders prior to any decision to re-
authorize or expand the pilot program.

Section 404: Office of Rural Health

Background

    During the past 8 years, VA has greatly expanded its 
network of individual sites for the delivery of health care 
services. Sites of care across the country now number over 
1,000. The vast majority of these sites are community-based 
outpatient clinics, which have opened in downtown, urban 
communities and, increasingly, in suburban settings.
    While these new sites of care are providing more services 
to more people closer to their homes, they are exacerbating the 
divide between those who live close to a VA site of care and 
those who do not. It is increasingly only those veterans who 
reside in rural areas of the country who cannot receive VA-
provided care from a facility in close proximity to home.
    Health care access in rural communities is a challenge not 
only confronting veterans who seek to use the VA health care 
system. Rural health access is a problem for many Americans and 
has been a long-time concern of Congress. Still, while Congress 
has provided funding and programs to assist the private medical 
system with the construction of health care facilities in rural 
communities, the training of physicians, nurses, and other 
providers to work in those communities, and even provided 
subsidies to encourage workers to move to remote locations, 
services provided by VA to veterans in rural areas remain 
sparse.
    The Committee acknowledges that moving more facilities or 
services to rural communities presents challenges. Facilities 
must have a large enough patient base to justify their 
existence or those facilities will be extremely inefficient and 
fiscally questionable investments. On the other hand, services 
purchased directly from community providers carry the risks of 
budget over-extension and a lack of care continuity.

Committee bill

    Section 404 of the Committee bill would create an Office of 
Rural Health in the Office of the Under Secretary for Health. 
The purpose of the Office of Rural Health would be to assist 
the Committee and VA health officials with the collection of 
data on, and the development of strategies for, many of the 
issues outlined above. The Committee expects that VA will 
devote time and attention, through this Office of Rural Health, 
to develop new and creative solutions that may ultimately help 
reduce the service divide between rural and non-rural veterans 
that is growing with each passing year.

Section 405: Pilot program on improvement of caregiver assistance 
        services

Background

    VA currently administers a number of services that are 
geared towards providing support to severely disabled or aging 
veterans, and the families of those veterans, who can no longer 
care for themselves but who do not want to be cared for in an 
institutional setting. These programs include, but are not 
limited to: adult-day care, respite care, case management and 
coordination, transportation services, home care services, 
hospice, and general caregiver support, such as education and 
training of family members.

Committee bill

    Section 405 of the Committee bill would require VA to 
conduct a 2-year pilot program to improve assistance provided 
to caregivers, particularly in home-based settings. Under this 
provision, $5,000,000 would be authorized for the purposes of 
carrying out the pilot program. The $5,000,000 for this program 
would be allocated in addition to whatever other funds VA is 
already spending on caregiver assistance services. The goal of 
this pilot program would be to encourage VA providers in the 
field to initiate their own versions of support services for 
caregivers in areas where such services are needed and where 
there are few other options available for families of disabled 
or aging veterans, particularly in rural or geographically 
isolated areas of the country. The Committee seeks to assist VA 
in building its non-institutional long-term care capacity and 
believes this pilot program would be one innovative way to do 
so.
    The section 405 pilot program is modeled after a program 
established through section 116 of Public Law 106-117. That 
program expanded and enhanced mental health services for 
veterans, and it has led to innovations in the treatment of 
veterans who suffer from mental illnesses and disorders. It is 
the Committee's hope that the program that would be established 
under section 405 will have similar results, and that new 
initiatives will arise from it that will be valuable to the 
overall VA system.
    Section 405 would also require a report to Congress on the 
pilot program. The report would contain a detailed assessment 
of the program's implementation, allocation of funds in support 
of the program, and results of the program.

Section 501: Reaffirmation of national goal to end homelessness among 
        veterans

Background

    Public Law 107-95, the Homeless Veterans Comprehensive 
Assistance Act of 2001 (hereinafter, ``HVCA Act''), established 
a goal to end homelessness among veterans within a decade of 
its enactment. The HVCA Act aimed to achieve the goal through: 
improved cooperation and coordination among Federal agencies 
with similar missions to stem or end homelessness; 
accountability of those agencies for achieving their mission; 
education of the homeless population to provide greater 
opportunities for work and earned income; and the establishment 
of programs to prevent homelessness among veterans.

Committee bill

    Section 501 of the Committee bill reiterates the goal of 
Congress to end homelessness among veterans within the time 
frame established under the HVCA Act. The Committee recognizes 
this is an ambitious goal. However, the Committee believes that 
it is a goal worth aggressively pursuing and commits to that 
pursuit with this and subsequent provisions within Title V of 
the Committee bill.

Section 502: Sense of Congress on the response of the Federal 
        Government to the needs of homeless veterans

Committee bill

    Section 502 of the Committee bill provides a complete list 
of concerns and views of the Committee on the needs of homeless 
veterans in America and outlines the Committee's concerns with 
the Federal government's response to those needs.

Section 503: Authority to make grants for comprehensive service 
        programs for homeless veterans

Background

    VA operates a Homeless Providers Grant and Per Diem Program 
to fund community agencies providing services to homeless 
veterans. The program aims to help homeless veterans achieve 
residential stability, improve skill levels, and increase 
personal income. Only programs that offer supportive housing or 
service centers for case management, education, crisis 
intervention, and counseling are eligible for funds.
    Since 1992, when the Homeless Providers Grant and Per Diem 
Program was established, VA has been able to spur development 
of increased levels of assistance at the local level for 
homeless veterans living throughout the country. Indeed, 
grantees' programs often fill existing gaps in the continuum of 
VA care and services, thus serving as an effective complement 
to VA's own efforts.
    VA has been successful at leveraging new resources to 
increase the overall supply of transitional housing and other 
effective assistance for homeless veterans throughout the 
country. The only programmatic shortcomings the Committee has 
identified are that there is more interest on the part of 
participating providers than there is grant money to support 
those efforts, and there are some suburban and rural areas 
where attracting potential community agencies to participate as 
grantees has been a major challenge for VA.

Committee bill

    Section 503 of the Committee bill would extend the 
authorization for the Homeless Grant and Per Diem Program and 
would increase the amount of funds authorized for these efforts 
to $130,000,000 in each fiscal year.

Section 504: Extension of treatment and rehabilitation for seriously 
        mentally ill and homeless veterans

Background

    The HVCA Act authorized VA to provide expanded services and 
programs to homeless veterans who suffer with serious and 
chronic mental illnesses. In addition to the comprehensive 
services available to all veterans who are homeless, the bill 
authorized: outreach services; care, treatment, and 
rehabilitative services, directly or by contract in community-
based treatment facilities, including halfway houses; and 
therapeutic transitional housing assistance in conjunction with 
work therapy and outpatient care.
    Further, the HVCA Act authorized VA to establish centers 
for the comprehensive provision of homeless services to 
veterans. The law directed that these service centers be in at 
least the 20 largest Metropolitan Statistical Areas of the 
country.
    Each of the authorities above would expire on December 31, 
2006.

Committee bill

    Section 504 of the Committee bill would extend the 
authority to operate both of these important, special programs 
for homeless veterans through December 31, 2011.

Section 505: Extension of authority for transfer of properties obtained 
        through foreclosure of home mortgages

Background

    Under current law, VA is authorized to sell, lease, or 
donate to non-profit entities and State and local governments, 
housing acquired by VA as a result of foreclosure on housing 
financed with a VA-guaranteed loan if the housing will be used 
for the purpose of providing shelter and assistance to homeless 
veterans and their families. VA is also authorized to make 
loans to non-profit entities for the purpose of financing the 
purchase or lease of housing to provide shelter to homeless 
veterans.
    The law requires VA to ensure that any transactions entered 
into under this authority are not to the serious financial 
detriment of VA and that the agreements will not seriously 
affect the financial integrity of the VA loan guaranty program.

Committee bill

    The Committee continues to support the use of foreclosed, 
VA-owned property under the strictures and parameters that 
currently exist for its use. As such, section 505 of the 
Committee bill extends the VA's authority for this purpose 
through 2011.

Section 506: Extension of funding for grant program for homeless 
        veterans with special needs

Background

    Under current law, VA operates a program through which it 
makes grants to homeless veteran service providers specifically 
for the purpose of encouraging those entities to provide unique 
services to special needs populations. Specifically, the 
program is intended to help: women veterans, including those 
with dependent children; veterans with serious mental illness; 
frail and elderly veterans; and those with terminal illnesses.
    The Committee continues to believe that mainstream programs 
which focus on recovery, employment, and reintegration may not 
be perfectly suited for these special populations. The 
Committee is attuned to the challenges inherent in providing 
safe shelter and services for women veterans, particularly 
those with dependent children. It is certainly likely that 
medical recovery and employment services will not be well 
suited for terminally ill and frail elderly patients.

Committee bill

    Section 506 of the Committee bill extends VA's authority to 
operate this program through 2011 and increases the annual 
authorized expenditure amount to $7,000,000 through the same 
time period.

Section 507: Extension of funding for homeless veterans service 
        provider technical assistance program

Background

    Under current law, VA operates a program to provide 
technical assistance to non-profit entities in their writing of 
submissions to VA for grants to provide services to homeless 
veterans. The current authority to provide the technical 
assistance expired at the end of 2005.
    The Committee recognizes that the grant-writing process is 
often a difficult and technical exercise that can leave even 
the most well-intentioned, non-profit entities searching for 
answers to legitimate questions. If poorly done or understood, 
the answers to these technical questions may ultimately 
decrease the possibility of their grant succeeding. The 
Committee does not desire to keep good providers out of Federal 
programs because of technical difficulties with the grant 
submission process.

Committee bill

    Section 507 of the Committee bill would authorize the 
continuation of the grant-application-assistance program 
through 2012.

Section 508: Additional element in annual report on assistance to 
        homeless veterans

Background

    The HVCA Act established the Advisory Committee on Homeless 
Veterans (hereinafter, ``Advisory Committee''). It consists of 
members appointed by the Secretary representing VSOs, homeless 
advocates, community-based providers, previously homeless 
veterans, and experts in the areas of mental health, substance 
abuse, vocational rehabilitation, and permanent housing. In 
addition, ex-officio members of the Advisory Committee include 
the Secretaries of other Cabinet-level agencies with an 
interest or role in the elimination and prevention of 
homelessness among veterans.
    Among the Advisory Committee's overarching goals is a 
review of the continuum of services provided by VA, directly or 
by contract, in order to improve coordination of all VA-
provided services with those of the departments that are 
involved in addressing the special needs of homeless veterans. 
Following its review of this and other issues, the Advisory 
Committee is required by statute to submit an annual report to 
VA.

Committee bill

    Section 508 of the Committee bill adds as a requirement to 
the Advisory Committee's annual report that it include findings 
of identified redundancies and gaps in government-wide, 
homeless assistance coordination efforts so that duplication 
can be eliminated and gaps can be filled.

Section 509: Advisory committee on homeless veterans

Background

    As discussed above, the Advisory Committee on Homeless 
Veterans includes, as ex-officio members, the Secretaries of 
other Cabinet-level agencies with an interest or role in the 
elimination and prevention of homelessness amongst veterans. 
The role of these members, among other things, is to review VA 
programs serving homeless veterans and to assess VA's 
coordination with housing and services provided by other 
Federal agencies. The current authority for the Advisory 
Committee expires on the December 31, 2006.

Committee bill

    Section 509 of the Committee bill would add two new ex-
officio members to the Advisory Committee: the Under 
Secretaries of Health and Benefits, who both have operational 
responsibility for VA's homeless programs. Section 509 would 
also add the Executive Director of the President's Interagency 
Council on Homelessness as a member to the Advisory Committee 
to improve the Committee's agency-wide coordination and 
oversight responsibilities. Finally, section 509 would 
authorize the Advisory Committee's continuation through 
September 30, 2011.

Section 510: Rental assistance vouchers for Veterans Affairs supported 
        housing program

Background

    The HVCA Act codified the existing Departments of Housing 
and Urban Development and Veterans Affairs Supported Housing 
(hereinafter, ``HUD-VASH'') program, which the two departments 
had been operating since 1992. In this coordinated program, the 
Department of Housing and Urban Development (hereinafter, 
``HUD'') is required to set aside section 8 housing vouchers 
for homeless veterans, and VA is required to provide 
appropriate case management services for each veteran in the 
program.

Committee bill

    Section 510 of the Committee bill would require HUD to set 
aside 500 rental assistance vouchers for homeless veterans in 
fiscal year 2007, 1,000 vouchers in fiscal year 2008, 1,500 
vouchers in fiscal year 2009, 2,000 vouchers in fiscal year 
2010, and 2,500 vouchers in fiscal year 2011. In addition, 
section 510 would require VA to report to the Committees on 
Veterans' Affairs in both the House of Representatives and the 
Senate on the effectiveness of the HUD-VASH program in 
comparison with other VA homeless programs. It is the 
Committee's hope that this report will confirm that the goals 
of eliminating any existing duplication among homeless 
assistance programs, and fully utilizing programs with a record 
of success, have been, or soon will be, successfully 
accomplished.

Section 511: Financial assistance for supportive services for very low-
        income veteran families in permanent housing

Background

    Poor, disabled, frail or elderly veterans, and poor 
veterans who reside in rural areas that are long distances from 
centrally-located services, are among a population of poverty-
level veterans (as defined by the HUD ``very low income 
index'') who, while not yet ``homeless'' as it is customarily 
defined, are certainly at risk of becoming homeless. Notably, 
the U.S. Census Bureau has estimated that 400,000 children live 
in households with poverty-level veterans. These at-risk 
veterans and their families are capable of benefitting from 
supportive services in home-based settings, but because they 
are not yet homeless, they do not likely qualify for 
traditional homeless assistance services. With the scarcity of 
homeless shelters and transitional housing units that are safe 
and appropriate for children, the Committee believes it is 
appropriate to invest in programs that can be an optimal aid 
for veterans who are committed to retaining their independence 
and self-sufficiency, while keeping their families intact.

Committee bill

    Section 511 of the Committee bill would establish a new VA 
program to provide supportive services to poverty-level 
veterans in their homes to help keep those veterans from 
becoming homeless. For this purpose, it would authorize $15 
million for fiscal year 2007, $20 million for fiscal year 2008, 
and $25 million for fiscal year 2009, with up to $750,000 to be 
made available annually for technical assistance. The funding 
would be used to provide financial assistance to non-profit, 
faith-based and consumer cooperatives so that they may provide 
and coordinate supportive services to help keep low-income 
veterans in permanent housing. The supportive services would 
include physical and mental health services, if they are not 
readily available at a nearby VA facility; personal financial 
planning; vocational counseling, assistance in obtaining health 
insurance; income support and veterans' benefits application 
services; transportation and educational services; and 
rehabilitation services.
    In addition, section 511 of the Committee bill would 
require VA to equitably distribute the program's financial 
assistance across geographic regions, including rural 
communities. It would require training and technical assistance 
to be provided to eligible entities for planning, development, 
and the provision of supportive services to very low-income 
veteran families occupying permanent housing. Finally, section 
511 would require a report on the effectiveness of this new 
program at preventing homelessness.

Section 601: Residential cooperative housing units

Background

    Under the provisions of chapter 37 of title 38, United 
States Code, VA is authorized to guarantee loans for eligible 
veterans and survivors to buy or build a home; to buy a 
residential condominium; to repair, alter or improve a home; to 
refinance an existing home loan; to buy a manufactured home 
with or without a lot; to buy and improve a manufactured home 
lot; to install a solar heating or cooling system or other 
weatherization improvements; or to buy a home and install 
energy-efficient improvements. There is no authority in law for 
VA to guarantee loans to purchase stock in a cooperative 
housing corporation (hereinafter, ``co-op'').
    A co-op is a legal entity that owns real estate, typically 
residential buildings. Owners who purchase shares in a co-op 
are entitled to occupy a specific housing unit within the co-
op. In addition to making payments on loans used to purchase 
shares in a co-op (hereinafter, ``share loans''), owners are 
responsible for paying monthly carrying charges to cover the 
co-op's debt, maintenance, and other expenses. According to the 
National Association of Housing Cooperatives, in written 
testimony for the record submitted for the Committee's June 8, 
2006, hearing, ``[o]ver 1.2 million families now live in 
townhouse and apartment housing co-ops in 30 states, the 
District of Columbia, and Puerto Rico.''
    The Federal Housing Administration has had authority for 
over 25 years to insure share loans. VA has no authority to 
guaranty share loans for veterans under its loan guaranty 
program. The Committee received testimony in association with 
its June 8, 2006, hearing in support of legislation to allow VA 
to guarantee share loans. Mr. David Greineder, Deputy National 
Legislative Director for AMVETS, submitted the following 
testimony: ``Co-ops make up the vast percentage of affordable 
housing in large cities and are usually less expensive than a 
condo or other unit. This legislation would give veterans 
greater housing choice by allowing them to use their hard-
earned benefits to buy a co-op if they prefer.'' Also 
submitting testimony in support of S. 2121 were VFW, PVA, and 
DAV. In addition, the Mortgage Bankers Association and the 
National Association of Realtors submitted letters of support.

Committee bill

    Section 601 of the Committee bill would authorize VA to 
guarantee loans for the purchase of stock or membership in a 
co-op. To ensure that the interests of veterans are protected, 
section 601 gives VA the authority to prescribe in regulations 
criteria that a co-op development, project, or structure must 
comply with before VA can guarantee a share loan.

Section 602: Increase in supplemental insurance for totally disabled 
        veterans

Background

    The Insurance Act of 1951 established the Service-Disabled 
Veterans' Insurance (hereinafter, ``S-DVI'') program for 
veterans with service-connected disabilities. The purpose of 
the S-DVI program is to provide veterans who, because of the 
nature of their disabilities, may not qualify for, or be able 
to afford, commercial life insurance policies. The S-DVI 
coverage limit has remained at $10,000 since the program's 
inception in 1951. Veterans who are rated as totally disabled 
by VA are eligible for waivers of premiums for the basic 
$10,000 coverage.
    In an attempt to allow certain service-connected veterans 
to supplement their S-DVI life insurance coverage, the 
Veterans' Benefits Act of 1992, Public Law 102-568, was enacted 
to provide for $20,000 of supplemental coverage (hereinafter, 
``supplemental S-DVI''). Veterans are eligible for supplemental 
S-DVI if they meet three criteria: 1) be eligible for a waiver 
of premiums due to total disability, 2) apply for supplemental 
S-DVI within 1 year from the time the waiver of premiums was 
granted, and 3) be under age 65. However, unlike the $10,000 
basic coverage, premiums may not be waived for supplemental S-
DVI. Premiums on supplemental S-DVI cover about two-thirds of 
the death benefit cost; the government covers the remaining 
costs.
    In 2001, a Congressionally mandated study, Program 
Evaluation of Benefits for Survivors of Veterans with Service-
Connected Disabilities, recommended that the basic S-DVI 
coverage limit be increased from $10,000 to $50,000. The study 
based its recommendation on data which show that, on average, 
for all surviving spouses of S-DVI policy holders, total 
household income decreased from about $48,840 to $27,300 in the 
year after the policy holder's, i.e., the veteran's, death. The 
study concluded that basic S-DVI coverage limits should cover 
the loss of income for at least 2 years after a veteran's 
death. Thus, in order to meet the study's recommendation for 
totally disabled S-DVI policy holders, supplemental S-DVI would 
need to be increased by $20,000 to allow for an aggregate 
coverage limit of $50,000 ($10,000 in basic coverage and 
$40,000 in supplemental S-DVI).
    Totally disabled veterans would benefit from the 
availability of higher supplemental S-DVI coverage amounts. 
This was reaffirmed in a July 28, 2005, letter from Secretary 
R. James Nicholson to the Committee Chairman regarding the 
administration's position on S. 1252:

          In our view, the current aggregate S-DVI coverage of 
        $30,000 is insufficient to meet disabled veterans' life 
        insurance needs. S. 1252 would increase the financial 
        security of disabled veterans by affording them the 
        opportunity to purchase additional life insurance 
        coverage otherwise not available to them.

Committee bill

    Section 602 would provide for a $10,000 increase in the 
amount of supplemental S-DVI available to totally disabled S-
DVI policy holders. The increase would be effective from 
October 1, 2007, until September 30, 2011. Veterans who 
purchase the higher level of supplemental S-DVI during this 
period would be able to retain the higher level of coverage, 
assuming continued payment of applicable premiums.

Section 603: Reauthorization of use of certain information from other 
        agencies

Background

    Section 5317 of title 38, United States Code, directs VA to 
notify applicants for needs-based VA benefits, such as VA 
pension, that information collected from the applicants may be 
compared with income-related information obtained by VA from 
the Internal Revenue Service and the Department of Health and 
Human Services. The authority for VA to obtain such information 
expires on September 30, 2008.
    Section 6103(l)(7) of the Internal Revenue Code authorizes 
the release of income information by the Internal Revenue 
Service to VA. This authority expires on September 30, 2008.

Committee bill

    Section 603 would extend until September 30, 2011, the 
authority of VA to obtain income information under section 5317 
of title 38, and the authority of the Internal Revenue Service 
to share income information under section 6103(l)(7) of the 
Internal Revenue Code.

Section 604: Clarification of correctional facilities covered by 
        certain provisions of law

Background

    Under section 5313 of title 38, United States Code, there 
is a limitation on the payment of VA compensation to an 
individual incarcerated in a ``Federal, State, or local penal 
institution'' for more than 60 days for conviction of a felony. 
In Wanless v. Principi, the CAVC directed VA to specifically 
address the question of whether the section 5313 limitation 
applies to a felon incarcerated--at the expense of the 
government--in a facility that is owned and operated by a 
private contractor (Wanless v. Principi, 18 Vet. App. 337, 338 
(2004)). In a concurring opinion, it was suggested that the 
phrase ``Federal, State, or local penal institution'' would not 
encompass a privately owned and operated correctional facility. 
After the CAVC issued Wanless, VA requested--but has not 
received--an opinion from the VA General Counsel on the issue 
posed by the CAVC.
    In recent years, there has been significant growth in the 
number of government entities utilizing penal facilities that 
are operated by private contractors. This growth may lead to 
further litigation over whether the current language of section 
5313 encompasses private prisons. If VA or the courts were to 
conclude that private prisons do not constitute a ``Federal, 
State, or local penal institution,'' as the CAVC has suggested, 
there would be the anomalous situation of the section 5313 
limitation applying to a felon in a publicly operated facility 
and not to a felon incarcerated for the same crime in a 
privately operated facility.

Committee bill

    Section 604 of the Committee bill would make a technical 
amendment to title 38, United States Code, to clarify that the 
section 5313 limitation applies to a felon incarcerated in any 
type of penal facility, including facilities operated by a 
private contractor. It would make the same change in other 
title 38 sections that currently have the phrase ``Federal, 
State, or local penal institution.''

                             Cost Estimate

    In compliance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate, the Committee, based on 
information supplied by the Congressional Budget Office 
(hereinafter, ``CBO''), estimates that enactment of the 
Committee bill would, relative to current law, increase direct 
spending for veterans' programs by less than $500,000 in fiscal 
year 2007, but decrease such spending by $6 million over the 
fiscal year 2007-2011 period, and by $5 million over the 2007-
2016 period. In addition, CBO projects discretionary spending 
resulting from S. 2694 at $186 million in fiscal year 2007 and 
$1.1 billion over the 2007-2011 period, assuming appropriation 
of the necessary amounts. Enactment of the Committee bill would 
not affect the budget of State, local, or tribal governments.
    The cost estimate provided by CBO, setting forth a detailed 
breakdown of costs, follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 19, 2006.
Hon. Larry E. Craig,
Chairman, Committee on Veterans' Affairs,
United States Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 2694, the Veterans' 
Choice of Representation and Benefits Enhancement Act of 2006.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sunita 
D'Monte.
            Sincerely,
                                          Donald B. Marron,
                                                   Acting Director.
    Enclosure.

S. 2694--Veterans' Choice of Representation and Benefits Enhancement 
        Act of 2006

    Summary: S. 2694 would make changes to several programs at 
the Department of Veterans Affairs (VA), primarily for medical 
care. CBO estimates that implementing this bill would cost $186 
million in 2007 and almost $1.1 billion over the 2007-2011 
period, assuming appropriation of the necessary amounts. In 
addition, CBO estimates that enacting this legislation would 
increase direct spending for veterans programs by less than 
$500,000 in 2007, but reduce it by $6 million over the 2007-
2011 period and by $5 million over the 2007-2016 period.
    S. 2694 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments. State and tribal governments would benefit from 
provisions of this bill.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 2694 is summarized in Table 1. The costs 
of this legislation fall within budget function 700 (veterans 
benefits and services).

 TABLE 1. ESTIMATED BUDGETARY IMPACT OF S. 2694, THE VETERANS' CHOICE OF REPRESENTATION AND BENEFITS ENHANCEMENT
                                                   ACT OF 2006
----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level......................................      216      237      238      219      220
Estimated Outlays..................................................      186      229      240      219      220

                                           CHANGES IN DIRECT SPENDING

Estimated Budget Authority.........................................        *        6        2       -6      -10
Estimated Outlays..................................................        *        6        2       -6     -10
----------------------------------------------------------------------------------------------------------------
Note.--* = Less than $500,000.

    Basis of estimate: For this estimate, CBO assumes that the 
bill will be enacted near the start of fiscal year 2007 and 
that the necessary amounts will be appropriated for each year. 
Most of the legislation's budgetary effects would fall within 
the discretionary spending category, but a few provisions would 
affect direct spending.

Spending subject to appropriation

    S. 2694 would affect VA programs for homeless veterans, 
nursing home care, readjustment benefits, and burial benefits. 
CBO estimates that implementing this bill would cost $186 
million in 2007 and almost $1.1 billion over the 2007-2011 
period, assuming appropriation of the necessary amounts (see 
Table 2).
    Medical Care. Titles IV and V of S. 2694 would make several 
changes to VA programs, primarily for nursing home care and 
homeless veterans. CBO estimates those provisions would cost 
about $1 billion over the 2007-2011 period, assuming 
appropriation of the necessary amounts.

                       TABLE 2. CHANGES IN SPENDING SUBJECT TO APPROPRIATION UNDER S. 2694
----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2007     2008     2009     2010     2011
----------------------------------------------------------------------------------------------------------------
                                                  MEDICAL CARE

Assistance for Homeless Veterans:
    Authorization Level............................................      153      158      163      138      138
    Estimated Outlays..............................................      131      157      161      139      138
State Veterans' Nursing Homes Payments and Benefits:
    Estimated Authorization Level..................................       58       66       69       70       71
    Estimated Outlays..............................................       52       62       68       69       71
Pilot Programs to Assist Caregivers of Veterans:
    Authorization Level............................................        5        0        0        0        0
    Estimated Outlays..............................................        3        1        1        0        0
                                                                    --------------------------------------------
    Subtotal-Medical Care:
        Estimated Authorization Level..............................      216      224      232      208      209
        Estimated Outlays..........................................      186      220      230      208      209

                                              READJUSTMENT BENEFITS

Estimated Authorization Level......................................        0        6        6       11       11
Estimated Outlays..................................................        0        6        6       11       11

                                                 BURIAL BENEFITS

Estimated Authorization Level......................................        *        7        0        0        0
Estimated Outlays..................................................        *        3        4        0        0
                                                                    ============================================
        Total Changes in Spending Subject to Appropriations Under
         S. 2694:
        Estimated Authorization Level..............................      216      237      238      219      220
        Estimated Outlays..........................................      186      229      240      219     220
----------------------------------------------------------------------------------------------------------------
Note.--* = Less than $500,000.

    Assistance for Homeless Veterans. Title V would create or 
extend authorization for several programs intended to assist 
homeless veterans. These provisions would increase VA spending 
by about $130 million in 2007 and $725 million over the 2007-
2011 period, assuming appropriation of the authorized amounts. 
In addition, section 505 would extend a mandatory program that 
allows for the transfer of properties to nonprofit 
organizations for use as homeless shelters. (CBO's estimate for 
the cost of this program is discussed below in the ``Direct 
spending'' section.)
    Grants for Comprehensive Service Programs. Section 503 
would provide VA with permanent authority to give grants to 
organizations that provide comprehensive service programs for 
homeless veterans. The prior authorization for this program 
expired in September of 2005. This section would authorize the 
appropriation of $130 million per year. Based on historical 
spending patterns for this program, CBO estimates that 
implementing this section would cost $117 million in 2007 and 
about $630 million over the 2007-2011 period.
    Assistance to Very Low-Income Families. Section 511 would 
require VA to provide financial assistance to organizations 
that help families of very low-income veterans who are living 
in, or about to move in to, permanent housing. This section 
would authorize appropriations for this program of $15 million 
in 2007, $20 million in 2008, and $25 million in 2009. CBO 
expects that it will take at least one year for the program to 
be established and provide grants. We estimate that 
implementing this program would cost $7 million in 2007 and 
about $60 million over the 2007-2011 period.
    Grants for Special Needs Veterans. Section 506 would 
reauthorize funding from 2007 through 2011 for a grants program 
for homeless veterans with special needs, such as women, the 
elderly, and the mentally ill. (No funding was provided for 
this program in 2006.) Based on the authorized amount of $7 
million per year, CBO estimates that implementing this section 
would cost $6 million in 2007 and about $34 million over the 
2007-2011 period.
    Technical Assistance Grants for Service Providers. Section 
507 would reauthorize through 2012 a program that provides 
technical assistance grants for organizations that help 
homeless veterans. Section 507 would authorize the 
appropriation of $1 million per year through 2012. CBO 
estimates that implementing this section would cost about $1 
million in 2007 and $5 million over the 2007-2011 period.
    State Veterans' Nursing Homes Payments and Benefits. 
Section 403 would modify VA payments to state-run nursing homes 
for veterans and the provision of VA benefits to the veterans 
who are patients in those homes. In total, implementing section 
403 would cost $52 million in 2007 and $322 million over the 
2007-2011 period, assuming appropriation of the necessary 
amounts.
    Increased Payments to State Nursing Homes. Under current 
law, VA pays state nursing homes for veterans a daily allowance 
to care for certain veterans. In 2006, that rate is $63.40 per 
veteran. Section 403 would require VA to pay state nursing 
homes for the full cost of care for veterans who have a 
service-connected disability rating of 70 percent or more. 
Based on information from VA and from the National Association 
of State Veterans Homes, CBO estimates that it costs the states 
about $200 a day to care for each veteran and that there are 
about 1,000 veterans in state homes whose disability ratings 
are 70 percent or more. Thus, CBO estimates that enacting this 
provision would cost $48 million in 2007 and about $280 million 
over the 2007-2011 period, assuming appropriation of the 
necessary amounts. This estimate assumes that the daily cost 
will rise at an average inflation rate of about 4 percent.
    Because the amount VA currently pays the state nursing 
homes for veterans does not cover the full cost of care, the 
homes must also collect money from the veterans themselves and, 
depending on the state, from other federal government sources 
and the state itself. If the Congress appropriates the full 
amount necessary to allow VA to pay for the complete costs for 
these veterans' care, it is likely that there will be a 
reduction in the amount of Medicaid funds used to cover the 
costs of care. Based on the current estimated portion of the 
cost that is paid for by Medicaid funds, CBO estimates that 
there could be potential savings to the federal government of 
about $5 million per year. (Such savings are contingent upon 
appropriation of the amounts necessary to implement this 
section.)
    Hospital Beds Treated as Nursing Home Beds. Section 403 
would also allow VA to treat up to 100 beds found in health 
facilities such as hospitals as nursing home beds for the 
purposes of making payments to cover the costs of care for 
veterans. No new beds could be added to this program after 
fiscal year 2009. Based on an estimated average cost of care of 
$250 per day in 2007, and allowing one year for the program to 
reach full capacity, CBO estimates that implementing this 
provision would cost about $4 million in 2007 and $40 million 
over the 2007-2011 period, assuming appropriation of the 
necessary amounts.
    Filling Prescriptions for Veterans in State Nursing Homes. 
Finally, section 403 would require that VA furnish prescription 
medicines to veterans with a service-connected disability 
rating of 50 percent or more who reside in state nursing homes. 
Under current law, VA can only fill prescriptions for those 
veterans who are enrolled in the VA medical care system and 
have prescriptions written by VA doctors. Based on data from VA 
about the percentage of veterans eligible for this benefit who 
are already enrolled in their system, CBO estimates that 
implementing this provision would cost less than $500,000 per 
year.
    Pilot Program to Assist Caregivers of Veterans. Section 405 
would require the Secretary to create a two-year program to 
provide funds to VA medical facilities to assist those caring 
for veterans by providing services such as adult daycare 
programs, transportation services, and hospice care. This 
section would authorize the spending of not less than $5 
million on the pilot program. CBO estimates that implementing 
this provision would cost $3 million in 2007 and $5 million 
over the duration of the program.
    Readjustment Benefits. VA is authorized to reimburse 
agencies that approve courses for veterans' readjustment 
(education) benefits for certain of the costs they incur in 
their certification efforts. Those agencies--known as state 
approving agencies--are offices designated by each state to 
provide the VA with a list of approved courses provided by 
educational institutions in their states. Under current law, VA 
may reimburse the agencies from funds available for the payment 
of readjustment benefits by a total of $19 million in both 2006 
and 2007, and $13 million each year thereafter.
    Section 303 would increase the amount VA may pay the 
agencies to $19 million a year for all years, but would reduce 
the amount VA could draw for that purpose from funds available 
for the payment of readjustment benefits to $8 million a year 
for 2010 through 2013. VA would be authorized to use funds, 
subject to the availability of appropriations, to make up the 
difference between the full amount authorized and the amount 
that could be paid from funds for readjustment benefits. CBO 
estimates that implementing this provision would have no cost 
in 2007 but would cost $34 million over the 2008-2011 period, 
assuming appropriation of the estimated amounts. (The effect of 
this section on readjustment benefits is discussed under the 
``Direct spending'' section.)
    Burial Benefits. Section 201 would allow VA to provide 
grants to tribal organizations to establish, expand, or improve 
veterans' cemeteries on trust lands owned by the tribal 
organizations. Under current law, VA can only provide grant 
money to states for the purposes of establishing, expanding, or 
improving a veterans' cemetery. Based on information from VA, 
state cemetery grants range from $4 million to $7 million, 
depending on the size of the project, with an average time of 
24 months to establish a cemetery from design to opening. CBO 
expects that one such request for a cemetery would be made over 
the 2007-2011 period, and estimates that implementing section 
201 would cost $7 million over that period, subject to 
appropriation of the necessary amounts.
    Section 202 would require the Secretary of the Army to 
remove the remains of Russell Wayne Wagner, a convicted 
murderer, from Arlington National Cemetery and return his 
remains to his family.
    Based on information from VA, CBO estimates that 
implementing section 202 would cost less than $100,000 in 2007, 
subject to the availability of appropriated funds.

Direct spending

    S. 2694 contains provisions that would both increase and 
decrease direct spending for veterans programs. On balance, CBO 
estimates enacting this legislation would increase direct 
spending for veterans programs by less than $500,000 in 2007, 
but reduce it by $6 million over the 2007-2011 period and by $5 
million over the 2007-2016 period (see Table 3).

                                TABLE 3. CHANGES IN DIRECT SPENDING UNDER S. 2694
----------------------------------------------------------------------------------------------------------------
                                                 Outlays by fiscal year, in millions of dollars--
                                 -------------------------------------------------------------------------------
                                   2007    2008    2009    2010    2011    2012    2013    2014    2015    2016
----------------------------------------------------------------------------------------------------------------
                                   COMPENSATION, PENSIONS, AND BURIAL BENEFITS

Income Verification Extension...       0       0      -5      -9     -13       0       0       0       0       0
Supplemental Service Disabled          0       2       3       3       3       2       2       2       2       2
 Veterans Insurance.............
Grave Markers...................       *       *       *       *       *       *       *       *       *       *
                                 -------------------------------------------------------------------------------
    Subtotal-Compensation,             *       2      -2      -6     -10       2       2       2       2       2
     Pensions, and Burial
     Benefits...................

                                              READJUSTMENT BENEFITS

Accelerated Payments of MGIB....       0       3       3       4       4       0       0       0       0       0
Accelerated Payments for               0       1       1       1       1       0       0       0       0       0
 Survivors and Dependants.......
State Approving Agencies........       0       0       0      -5      -5      -5      -5       0       0       0
                                 -------------------------------------------------------------------------------
    Subtotal-Readjustment              0       4       4       0       0      -5      -5       0       0       0
     Benefits...................
                                 ===============================================================================
        Total Changes in Direct        *       6       2      -6     -10      -3      -3       2       2      2
         Spending Under S. 2694.
----------------------------------------------------------------------------------------------------------------
Notes.--MGIB = Montgomery GI Bill; * = Less than $500,000.

    Compensation, Pensions, and Burial Benefits. Several 
sections of the bill would affect veterans benefits for 
disability compensation, pensions, life insurance, and burial 
benefits. CBO estimates that implementing these provisions 
would increase direct spending for veterans programs by less 
than $500,000 in 2007, but reduce it by $14 million over the 
2007-2011 period and by $3 million over the 2007-2016 period.
    Income Verification Extension. Section 603 would extend 
authorities under current law that allow VA to acquire 
information on income reported to the Internal Revenue Service 
(IRS) to verify income reported by recipients of VA pension 
benefits. The authorization allowing the IRS to provide income 
information to VA will expire on September 30, 2008, as will 
the authorization allowing VA to acquire the information. 
Section 603 would extend these authorities through September 
30, 2011, for both VA and the IRS. Because current law allows 
VA and the IRS to conduct income verification through the end 
of fiscal year 2008, CBO estimates that enacting this provision 
would provide no savings until fiscal year 2009.
    Based on information from VA, CBO estimates that in 2009 VA 
will make approximately $5 million in pension benefit 
overpayments that could be prevented by verifying veterans' 
incomes. Using that information, CBO estimates that enacting 
section 603 would result in direct spending savings of $26 
million over the 2009-2011 period.
    Supplemental Service Disabled Veterans Insurance (S-DVI). 
Section 602 would temporarily increase the amount of 
supplemental S-DVI a veteran may purchase. S-DVI is an 
insurance program open to veterans who separated from service 
on or after April 25, 1951, and who have been determined by VA 
to have a service-connected disability. Under current law, 
veterans who are eligible for a waiver of S-DVI premiums 
(totally disabled veterans) are eligible for an additional 
$20,000 in S-DVI coverage and they must apply within a year 
from notice of the grant of waiver. The premiums for 
supplemental S-DVI cannot be waived. By law, the premiums for 
S-DVI have been held constant for many years. Since the 
premiums are no longer sufficient to cover the estimated death 
claims per year, the federal government now subsidizes the 
program.
    Section 602 would increase the amount of supplemental S-DVI 
a veteran could purchase from $20,000 to $30,000 over the 
period beginning on October 1, 2007, and ending on September 
30, 2011. The amount of supplemental S-DVI that could be 
purchased would return to $20,000 after that period. However, 
veterans who purchased the additional coverage would be able to 
retain the higher coverage level. Based on information from VA 
on S-DVI accessions and mortality rates, CBO estimates that the 
number of veterans holding S-DVI policies will increase from 
about 15,000 in 2008 to 18,000 in 2011 and then decrease to 
about 12,000 by 2016, and that about 20 percent of all policy 
holders would chose to purchase additional coverage over the 
specified period. CBO estimates that enacting section 602 would 
increase direct spending for insurance benefits by $2 million 
in 2008, $11 million over the 2008-2011 period, and $21 million 
over the 2008-2016 period.
    Grave Markers. Section 203 would allow VA to provide a 
marker or headstone to be placed on a marked grave or other 
appropriate location in a private cemetery to commemorate a 
veteran's military service for those veterans who were buried 
after November 11, 1990.
    Under current law, veterans buried in a private cemetery 
are eligible for a second marker or headstone only if they were 
buried after September 11, 2001.
    Section 203 would also indefinitely extend the period 
during which a marker or headstone could be requested. The 
authority for VA to provide government headstones or markers to 
veterans buried in private cemeteries currently expires on 
December 31, 2006.
    Based on VA projections about future deaths and burials in 
private cemeteries, CBO estimates that about 20,000 requests 
for headstones or markers would be made over the 2007-2016 
period. The estimate also reflects information from a VA study 
that showed that only 27 percent of private cemeteries allow 
second markers and that less than 5 percent of those eligible 
would participate in this program. With an average cost of 
about $92 for each marker, CBO estimates that this provision 
would result in an increase in spending for burial benefits of 
less than $500,000 in 2007, $1 million over the 2007-2011 
period, and $2 million over the 2007-2016 period.
    Veterans Readjustment Benefits. S. 2694 contains several 
provisions that would modify the way veterans education 
benefits are currently provided. In total, CBO estimates 
enacting these provisions would not change direct spending for 
veterans readjustment benefits in 2007, but would increase such 
spending by $8 million over the 2008-2011 period, and would 
decrease such spending by $2 million over the 2008-2016 period.
    Accelerated Payments of MGIB Benefits. Section 301 would 
expand the range of education programs eligible for accelerated 
payment of education benefits under the Montgomery GI Bill 
(MGIB). Under current law, veterans may receive a lump-sum 
payment equal to 60 percent of the costs for certain courses, 
if tuition for those courses exceeds twice the benefit that 
would otherwise be paid. This section would add programs 
leading to employment in the transportation, construction, 
hospitality, and energy industries to those in high-technology 
industries already eligible for such payments, but would limit 
such expansion to the 2008-2011 period. Based on information 
from VA about the number of veterans using the current 
accelerated payment program and the number of veterans training 
in the transportation, construction, hospitality and energy 
fields, CBO estimates that this provision would increase direct 
spending for readjustment benefits by $14 million over the 
2008-2011 period.
    Accelerated Payments for Survivors and Dependants. Section 
302 would allow survivors and dependents to receive their 
education benefits using the expanded program of accelerated 
payments described above. These beneficiaries, who have not 
previously been allowed to receive any accelerated payments, 
would be eligible for such payments from 2008 through 2011. 
Based on information from the VA about the usage of this 
program by MGIB beneficiaries, CBO estimates that this 
provision would increase direct spending for readjustment 
benefits by $4 million over the 2008-2011 period.
    State Approving Agencies. VA is currently authorized to 
reimburse the state approving agencies from amounts available 
for the payment of readjustment benefits. The state approving 
agencies provide verification that various educational 
institutions are qualified to provide courses of education so 
that eligible veterans, survivors, and dependents may receive 
veterans education benefits while attending those institutions. 
Section 303 would reduce the amount of such reimbursements that 
could be provided from funds available for payment of 
readjustment benefits by $5 million a year from 2010 through 
2013. (This provision also would authorize additional amounts 
to be paid to the state approving agencies subject to the 
availability of appropriations, which is discussed under the 
``Spending subject to appropriation'' section.) CBO estimates 
that enacting this provision would reduce direct spending for 
veterans readjustment benefits by $20 million over the 2010-
2013 period.
    Other Provisions. The following provisions would have an 
insignificant impact on direct spending:
     Section 101 would allow VA to periodically collect 
fees from individuals recognized as agents or attorneys when 
representing veterans in benefits cases so as to offset the 
costs VA incurs in certifying that agents or attorneys are 
properly qualified. CBO estimates that implementing this 
provision would have an insignificant net effect on direct 
spending because it would allow VA to spend the fees collected 
to defray such costs.
     Section 505 would extend from 2008 through 2011, 
VA's authority to sell, lease, or donate foreclosed homes to 
nonprofit organizations and state or local governments for use 
as homeless shelters for veterans. The program provides savings 
to VA by reducing its inventory of foreclosed homes, but those 
savings are offset by discounts, ranging from 20 percent to 50 
percent of the estimated property value (roughly $90,000), that 
VA gives to nonprofit organizations. Because of the low volume 
of homes provided under this program--an average of 10 
properties a year over the last few years--CBO estimates this 
provision would have no significant effect on direct spending 
for the VA home loan program.
     Section 601 would authorize VA to guarantee loans 
made to purchase stock or membership in residential 
cooperatives. According to VA, cooperative housing projects 
have unique characteristics such as lack of outright ownership 
of real property, restrictions on sale of stock or membership, 
and blanket mortgages (a mortgage that covers the entire 
cooperative project, rather than an individual borrower), that 
would, in most instances, either violate VA's underwriting 
criteria or make them unsuitable for the home loan program. As 
a result, CBO estimates that very few loans would be guaranteed 
under this provision.
    Intergovernmental and private-sector impact: S. 2694 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments. State and tribal governments would benefit 
from provisions of this bill.
    Section 201 would make tribal governments eligible for a 
current program to establish, expand, or improve veteran 
cemeteries. Any costs to those governments would be incurred as 
a condition of participating in a voluntary federal program.
    Section 403 would authorize the Secretary of the VA to 
reimburse the full costs of long-term care for certain veterans 
in State Veteran Homes. Currently, the VA reimburses about one-
third of those costs; one-third of the remaining costs are 
collected from the veteran, and the rest is reimbursed by 
Medicaid or state contributions. CBO estimates that state 
governments could save about $10 million annually as a result 
of this provision, assuming that appropriations are provided to 
fully fund the costs of long-term care.
    Estimate prepared by: Federal Costs: Medical Care: Michelle 
Patterson. Readjustment Benefits: Mike Waters. Compensation, 
Pensions, Burial Benefits and Other Programs: Dwayne M. Wright. 
Housing: Sunita D'Monte. Impact on State, Local, and Tribal 
Governments: Melissa Merrell. Impact on the Private Sector: R. 
Derek Trunkey.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                      Regulatory Impact Statement

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee on Veterans' 
Affairs has made an evaluation of the regulatory impact that 
would be incurred in carrying out the Committee bill. The 
Committee finds that the Committee bill would not entail any 
regulation of individuals or businesses or result in any impact 
on the personal privacy of any individuals and that the 
paperwork resulting from enactment would be minimal.

                 Tabulation of Votes Cast by Committee

    In compliance with paragraph 7 of rule XXVI of the Standing 
Rules of the Senate, the following is a tabulation of votes 
cast in person or by proxy by members of the Committee on 
Veterans' Affairs at its June 22, 2006, meeting. On that date, 
the Committee, by unanimous voice vote, ordered S. 2694, as 
amended, a bill to amend title 38, United States Code, to 
remove certain limitations on attorney representation of 
claimants for veterans benefits in administrative proceedings 
before the Department of Veterans Affairs, and for other 
purposes, reported favorably to the Senate.

                             Agency Report

    On June 23, 2005, VA's Under Secretary for Benefits, the 
Honorable Daniel L. Cooper, appeared before the Committee and 
submitted testimony on, among other things, S. 909 and S. 1252. 
Additional comments were provided on S. 1252 in a letter to the 
Committee Chairman on July 28, 2005, from VA Secretary R. James 
Nicholson. On May 11, 2006, VA's Deputy Under Secretary for 
Health, Dr. Michael Kussman, appeared before the Committee and 
submitted testimony on, among other things, S. 1537, S. 2433, 
S. 2634, and S. 2762. On June 8, 2006, VA's Deputy Under 
Secretary for Benefits, Ronald Aument, appeared before the 
Committee and submitted testimony on, among other things, S. 
2694 as introduced, and also on the following additional bills 
from which provisions in S. 2694, as amended, are derived: S. 
1252, S. 2121, S. 2416, and S. 3363. Furthermore, in a letter 
from the Honorable William J. Haynes II, General Counsel of the 
Department of Defense, to the Committee Chairman on February 9, 
2006, additional views were provided with respect to S. 1759. 
Excerpts from the hearings on June 23, 2005, May 11, 2006, and 
June 8, 2006, and the February 9, 2006, letter are reprinted 
below:

Statement of Daniel L. Cooper, Under Secretary for Benefits, Department 
                   of Veterans Affairs--June 23, 2005

    Mr. Chairman and members of the Committee, I appreciate 
this opportunity to testify today on several bills concerning 
important programs administered by the Department of Veterans 
Affairs (VA).

           *         *         *         *         *

S. 909
    S. 909 would expand eligibility for government markers by 
changing the applicability date of VA's current authority to 
provide a marker for the private-cemetery grave of a veteran 
regardless of whether the grave has been marked at private 
expense.
    Pursuant to 38 U.S.C. Sec. 2306(d)(1), VA is authorized to 
furnish a Government marker for the grave of an individual who 
is buried in a private cemetery, even if the gravesite is 
already privately marked. However, this authority extends only 
to individuals who died on or after September 11, 2001. S. 909 
would authorize VA to furnish such markers for the graves of 
individuals who died on or after November 1, 1990.
    VA supports enactment of S. 909. Under current law, if a 
veteran died before September 11, 2001, VA is authorized to 
furnish a Government headstone or marker only if the veteran's 
grave is unmarked. Although the current law has allowed VA to 
begin to meet the needs of families who view the Government-
furnished marker as a means of honoring and publicly 
recognizing a veteran's military service, VA is now in the 
difficult position of having to deny this recognition based 
solely on when a veteran died.
    Furthermore, the law has never precluded the addition of a 
privately purchased headstone to a grave after placement of a 
Government-furnished marker, even though this practice results 
in double marking. In contrast, if a private marker is placed 
on a veteran's grave in the first instance, a Government marker 
may not be provided if the veteran died before September 11, 
2001. In our view, this creates an arbitrary distinction 
disadvantaging families who promptly obtained a private marker.
    For veterans who died during the period from October 18, 
1979, until November 1, 1990, when the Omnibus Budget 
Reconciliation Act of 1990 was enacted, VA may pay a headstone 
or marker allowance to those families who purchased a private 
headstone or marker in lieu of a Government headstone or 
marker. Therefore, those families also had an opportunity to 
benefit from the VA-marker program. S. 909 would, for the first 
time, permit families who bought a private marker for veterans 
who died between November 1, 1990, and September 11, 2001, to 
participate in the VA-marker program as well.
    VA estimates that enactment of S. 909 would cost $90,000 
during FY 2006 and $225,000 over the ten-year period FYs 2006-
2015. VA pays for headstones and markers with funds from the 
Compensation and Pension appropriation account.

           *         *         *         *         *

S. 1138, S. 1252, S. 1259, S. 1271
    Unfortunately, we did not receive the text of S. 1252, the 
``Disabled Veterans Insurance Improvement Act,'' S. 1259, the 
``Veterans Employment and Transition Services Act,'' or S. 
1271, the ``Prisoner of War Benefits Act of 2005,'' in time to 
be able to state our views on those bills. We will be happy to 
provide the Committee with official views and estimates once 
the necessary executive branch coordination has been completed. 
S. 1138, a bill to authorize placement in Arlington National 
Cemetery of a monument honoring veterans who fought in World 
War II as members of Army Ranger Battalions, was also recently 
added to the hearing agenda. We will provide our comments on 
this bill to the Committee after completing necessary executive 
branch coordination.
                                ------                                

      Letter From Secretary of Veterans Affairs R. James Nicholson

                                                     July 28, 2005.
Hon. Larry E. Craig,
Chairman, Committee on Veterans' Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: As requested at the June 23, 2005, 
legislative hearing before the Senate Committee on Veterans' 
Affairs, I am pleased to provide the views of the Department of 
Veterans Affairs (VA) on those bills for which we did not 
previously submit comments, including S. 917, a bill to make 
permanent the pilot program for direct housing loans for Native 
American veterans, S. 1138, a bill to authorize placement in 
Arlington National Cemetery of a monument honoring veterans who 
fought in World War II as members of Army Ranger Battalions, S. 
1252, the ``Disabled Veterans Insurance Improvement Act of 
2005,'' S. 1259, the ``Veterans Employment and Transition 
Services Act,'' and S. 1271, the ``Prisoner of War Benefits Act 
of 2005.'' VA's views on each of these bills are discussed 
below. To the extent that VA supports enactment of aspects of 
these bills that have cost implications, it is assumed that the 
costs would be accommodated within the scope of the President's 
budget request.

           *         *         *         *         *

S. 1252
    S. 1252, the ``Disabled Veterans Insurance Improvement Act 
of 2005,'' would amend section 1922A of title 38, United States 
Code, to increase from $20,000 to $40,000 the amount of 
supplemental life insurance available to veterans who are 
insured under Service-Disabled Veterans' Insurance (S-DVI) and 
who qualify for waiver of premiums due to total disability. 
Under current law, a veteran who has a service-connected 
disability but is otherwise in good health may obtain up to 
$10,000 of S-DVI by applying to VA within two years from the 
date of being notified that the disability is service 
connected. 38 U.S.C. Sec. Sec. 1903, 1922(a). VA may, upon 
application of an insured veteran, waive the payment of 
premiums during a period of continuous total disability. 38 
U.S.C. Sec. Sec. 1912(a), 1922(a). Section 1922A currently 
provides up to $20,000 of supplemental insurance to a disabled 
veteran who: (1) has basic S-DVI coverage; (2) has obtained a 
waiver of premiums on this coverage because he or she is 
totally disabled; and (3) applies to VA for the supplemental S-
DVI coverage within one year of being notified by VA that he or 
she is entitled to waiver of premiums. 38 U.S.C. Sec. 1922A(a) 
and (b). Waiver of premiums is not available on the 
supplemental coverage. 38 U.S.C. Sec. 1922A(d).
    By increasing the amount of available supplemental S-DVI to 
$40,000, S. 1252 would address a major concern of veterans, as 
shown by the Congressionally-mandated study Program Evaluation 
of Benefits for Survivors of Veterans with Service-Connected 
Disabilities. This study indicated that veterans were least 
satisfied with the maximum insurance available and that 
veterans deem the need for increased coverage to be most 
important. In our view, the current aggregate S-DVI coverage of 
$30,000 is insufficient to meet disabled veterans' life 
insurance needs. S. 1252 would increase the financial security 
of disabled veterans by affording them the opportunity to 
purchase additional life insurance coverage otherwise not 
available to them. Accordingly, VA supports S. 1252.
    S. 1252 does not specify its scope of applicability, but we 
interpret it to apply prospectively to any veteran who is 
eligible to apply for and obtain supplemental S-DVI under 
section 1922A, or to change the amount of supplemental S-DVI 
coverage previously obtained, on or after the date of S. 1252's 
enactment. Based on this interpretation, VA estimates that the 
additional coverage provided by S. 1252 would cost $2.6 million 
over the five-year period FY 2006 through FY 2010 and $9.5 
million over the ten-year period FY 2006 through FY 2015.

           *         *         *         *         *

    The Office of Management and Budget advises that there is 
no objection to the submission of this report from the 
standpoint of the Administration's programs.
            Sincerely yours,
                                                R. James Nicholson.
                                ------                                

   Statement of Michael Kussman, Deputy Under Secretary for Health, 
              Department of Veterans Affairs--May 11, 2006

    Good Morning Mr. Chairman and Members of the Committee:
    Thank you for inviting me here today to present the 
Administration's views on several bills that would affect 
Department of Veterans Affairs (VA) programs that provide 
veterans benefits and services.
S. 1537  Parkinson's Disease Research Education and Clinical Centers; 
        Multiple Sclerosis Research Education and Clinical Centers
    Mr. Chairman, I will begin by addressing S. 1537. This bill 
would require VA to establish six Parkinson's Disease Research, 
Education, and Clinical Centers (PADRECCs) and two Multiple 
Sclerosis Centers of Excellence (MS Centers). The bill 
prescribes detailed requirements for the centers. It would 
provide that any such center in existence on January 1, 2005, 
must be designated as a PADRECC or MS Center under this law 
unless the Secretary determines that it does not meet the 
bill's requirements, has otherwise not demonstrated 
effectiveness in carrying out the purposes of a PADRECC or MS 
Center, or has not demonstrated the potential to carry out 
those purposes effectively in the reasonably foreseeable 
future. The centers would also need to be geographically 
distributed. Finally, the Secretary could designate a facility 
as a new PADRECC or MS Center only if a peer review panel finds 
that the facility meets the requirements of the law, and 
recommends designation.
    VA does not support S. 1537 because it is unnecessary; the 
Department is already in full compliance with the substantive 
requirements of this bill. VA recommends that Congress await an 
ongoing evaluation of the existing PADRECCs before it considers 
whether to mandate that VA either continue their operation or 
designate new centers. Additionally, VA is concerned that 
statutory mandates for these ``disease specific'' centers has 
the potential to fragment care in what is otherwise a well-
designed, world class integrated health care system. I am 
increasingly concerned about the proliferation of this disease 
specific model and its impact on patient care and VA's 
integrate health care model. As it relates to a particular 
disease, I believe that it is much more important for VA to 
disseminate the best in evidence based practices across its 
health care system than to establish centers that provide care 
for a particular disease.
    VA currently has PADRECCs at six sites--San Francisco, 
California; Richmond, Virginia; Philadelphia, Pennsylvania; 
Houston, Texas; Los Angeles, California, and Puget Sound/
Portland, Oregon (a combined site). Those sites served a total 
of 18,500 patients in fiscal year 2004. We are currently 
conducting an evaluation of PADRECCs' effectiveness in 
disseminating best practices, impact on patient outcomes, and 
the types of organizational structures that contribute to 
effectiveness. The study will be completed in 2007. Until this 
study is complete, VA believes that it would be unwise to 
mandate continued operation of these or additional PADRECCs. VA 
will, of course, share the results of the evaluation with 
Congress to assist in determining the need for legislation in 
the future.
    For similar reasons, VA also does not support establishing 
new specialty centers for the care of veterans with multiple 
sclerosis. VA is well aware that Parkinson's disease and 
multiple sclerosis are prevalent in the veteran population, 
particularly among aging veterans. However, the nature of 
battlefield injuries is changing, and VA is now treating many 
new veteran patients with complex polytrauma syndromes, 
including brain injuries, limb loss, and sensory loss. Treating 
such disorders, and the mental and emotional disorders that 
accompany them, requires an interdisciplinary approach that 
moves beyond the focus on a single disease. By mandating new 
``education, research, and clinical centers'' that are disease-
specific, flexibility to respond to changing combinations of 
related conditions is reduced. It is also important to note 
that the ``models'' on which PADRECCs and MS Centers are based, 
the successful Geriatric Research, Education and Clinical 
Center (GRECC) and Mental Illness Research, Education and 
Clinical Center (MIRECC) programs, were not as narrowly-focused 
on a disease process but addressed a wide gamut of issues 
facing a significant portion of the veteran population.
S. 2433  Rural Veterans Care Act of 2006
    Mr. Chairman, S. 2433 is an ambitious measure to improve 
access to VA health care and other VA benefits by veterans 
living in rural and remote areas by creating a new Assistant 
Secretary who would be responsible for formulating, 
coordinating, and overseeing all VA benefits, policies, and 
procedures affecting such veterans. This would include 
overseeing and coordinating personnel and policies of the three 
Administrations (i.e., Veterans Health Administration (VHA), 
Veterans Benefits Administration, National Cemetery 
Administration) to the extent such programs affect veterans 
living in rural areas.
    Section 2 of the bill would establish a new Assistant 
Secretary for Rural Veterans (AS) to formulate, coordinate, and 
implement all policies and procedures of the Department that 
affect veterans living in rural areas. It would require the new 
Assistant Secretary to oversee, coordinate, promote, and 
disseminate research into issues affecting veterans living in 
rural areas, in cooperation with VHA and the centers that would 
be established under section 6 of the bill, as well as ensure 
maximum effectiveness and efficiency in the provision of 
benefits to these veterans in coordination with the Departments 
of Health and Human Services (HHS), Labor, Agriculture and 
local government agencies.
    In addition, section 2 would require the Assistant 
Secretary to identify a Rural Veterans Coordinator in each VHA 
Integrated Service Network (VISN), who would report directly to 
the Assistant Secretary and coordinate all the functions 
authorized under section 2 within his respective VISN. It would 
also require the Assistant Secretary, under the direction of 
Secretary, to supervise the VA employees who are responsible 
for implementing these policies and procedures.
    Section 3 of the bill would require the Assistant Secretary 
to carry out demonstration projects to examine alternatives for 
expanding care in rural areas. In so doing, the Assistant 
Secretary would have to work with the Department of Health and 
Human Services to coordinate care that is delivered through the 
Indian Health Service, Critical Access hospitals, or Community 
Health Centers. One such program would have to involve expanded 
use of fee-basis care for veterans living in rural or remote 
areas. Not later than one year after the date of enactment of 
this Act, the Assistant Secretary would be further required to 
re-evaluate VA policy on the use of fee basis care nationwide 
and to revise established policies to extend health care 
services to rural and remote rural areas.
    Section 4 of the bill would require the Secretary to 
conduct a three-year pilot program in 3 VISNs to evaluate 
various means to improve access to care in highly rural or 
geographically remote areas for all enrolled veterans and those 
with service-connected disabilities who live in such areas. In 
carrying out the pilot, the Secretary would be required to 
provide these veterans with acute or chronic symptom 
management, non-therapeutic medical services, and any other 
medical services jointly determined to be appropriate by the 
individual veteran's VA primary care physician and the 
respective VISN Director. The Secretary would also have to 
allocate 0.9% of the appropriated medical care funds to carry 
out this section before allocating any other medical funds.
    Section 5 would amend VA's authority to provide beneficiary 
travel benefits to require that covered lodging and subsistence 
be determined at the same rates that apply to Federal 
employees. It would also require that VA's mileage allowance be 
determined in accordance with the rates that apply to Federal 
employees.
    Finally, section 6 of the bill would require the new 
Assistant Secretary to establish up to five centers of 
excellence for rural health research, education, and clinical 
activities. These center(s) would be required to: conduct 
research on rural health services; allow for use of specific 
models of furnishing services to this population; provide 
education and training for health care professionals; and, 
develop and implement innovative clinical activities and 
systems of care.
    We share the concern that rural veterans have adequate 
access to VA health care and other VA services; however, we do 
not agree that the bill would effectively achieve this and, so, 
oppose S. 2433. First, the Under Secretaries of the three VA 
Administrations are responsible for formulating and 
implementing program policy in their respective areas. The 
proposed Assistant Secretary could have no direct authority 
over them or their organizations. The proposed role and 
responsibilities of the Assistant Secretary, as provided for in 
this legislation, would cause significant confusion and 
disruption across organizational lines--both among, and within, 
the Administrations.
    Assuming there were some way to operationalize the 
responsibilities of the Assistant Secretary, the ability of the 
Under Secretaries to manage their employees and respective 
programs efficiently and effectively would be significantly 
reduced. The bill would dilute control from the Administrations 
with respect to specified activities, personnel, and resources. 
This would increase the potential for fragmented services, 
waste, and inconsistent, if not unequal, treatment of veterans 
based solely on their geographic location. For instance, 23% of 
enrollees live in rural areas based on the Census' definition 
of a rural area. However, only four percent of enrollees live 
in a rural area and travel more than 60 minutes to a VA 
facility. Under the bill, a disproportionate share of health 
care resources would be directed to this population. The 
planning and delivery of services to rural veteran-enrollees 
would be inconsistent and incoherent with respect to the total 
population of enrolled veterans. The possibility of 
fragmentation in the delivery of benefits cannot be overstated.
    Second, S. 2433 would adversely dilute the ability of the 
Under Secretary for Health to manage not only the delivery of 
VA health care to rural veterans but also the delivery of 
health care to all veterans because of the significant costs 
associated with enactment of this bill. The proposed 
demonstration projects would cost $225 million based on the 
President's Budget for Fiscal Year 07. The additional 
beneficiary travel benefits would cost approximately $550 
million (based on current employee-related rates), and that 
estimate accounts only for the proposed increase in VA's 
mileage allowance. Providing per diem (lodging and subsistence) 
at the proposed rates in addition to the mileage allowance 
would raise the estimate to well over $1 billion. Moreover, 
these increases would assist only the limited categories of 
veterans who are eligible for beneficiary travel benefits. We 
believe medical care funds are better directed to the delivery 
of direct health care for all eligible veterans.
    We note that the mandate to expand the use of fee-basis 
care in the proposed demonstration projects may not be 
possible, because VA's authority to provide fee-basis care 
(meaning contract care other than care furnished under a 
sharing or scarce-medical-specialist agreement) is limited by 
statute. Further, the mandate ignores the economic impact of 
expanding the use of fee basis care. The cost of care in fee 
settings is typically significantly greater than the cost of 
the same care provided in VA settings. As a result, while fee-
basis expansion may make care accessible for some rural 
veterans, it would disproportionately reduce the resources 
available for care of all other veterans. Moreover, we do not 
understand the mandate to provide non-therapeutic medical 
services as part of the pilot program and would question the 
wisdom of providing such service from the three medical care 
appropriations. Finally, the demonstration projects and pilot 
project could be achieved, to a large extent, within the 
current VHA structure and existing authority. It does not 
require an organizational restructuring, which, again, would 
create significant risk of fragmentation and lack of continuity 
of care and benefits.

           *         *         *         *         *

S. 2634  Eliminating Statutory Term Limits of Under Secretary for 
        Health and Under Secretary for Benefits
    Mr. Chairman, S. 2634 would eliminate the current statutory 
four-year term limit that applies to both the Under Secretary 
for Health and the Under Secretary for Benefits position, as 
well as the currently mandated search-commission processes for 
identifying candidates to recommend to the President for these 
positions. VA supports S. 2634 as it would provide the 
Secretary with needed flexibility as well as decrease the time 
required to fill these vacancies.
                                ------                                

   Statement of Ronald Aument, Deputy Under Secretary for Benefits, 
              Department of Veterans Affairs--June 8, 2006

    Mr. Chairman and Members of the Committee, thank you for 
the opportunity to testify today on a number of legislative 
items of great interest to veterans. I am joined at the witness 
table by John H. Thompson, Deputy General Counsel.
S. 2121
    S. 2121, the ``Veterans Housing Fairness Act of 2005,'' 
would authorize VA to guarantee loans for stock in certain 
developments, structures, or projects of a cooperative housing 
corporation (co-ops).
    VA cannot support this bill because we do not believe that 
VA participation in co-ops would be in the best interest of the 
veteran or of the Government as guarantor of the loan. Under 
current law, a veteran may purchase a conventional home, a 
condominium unit, or a manufactured home and a manufactured 
home lot. In all cases except a manufactured home, the veteran 
is purchasing real property. Although the manufactured home is 
normally considered personal property, the veteran also obtains 
title to the actual home he or she will be occupying. In 
contrast, the buyer of a co-op does not acquire an interest in 
real estate or obtain title to his or her dwelling unit. 
Instead, the purchaser acquires personal property in the form 
of a share of the cooperative's stock, coupled with the right 
to occupy a particular apartment in the building. A buyer 
normally obtains a share loan that finances the purchase of an 
ownership interest in the co-op. This loan is evidenced by a 
promissory note and is secured by a pledge of the stock, 
shares, membership certificate, or other contractual agreement 
that evidences ownership in the corporation and by an 
assignment of the proprietary lease or occupancy agreement. VA 
would be guaranteeing this corporate share loan. Unlike other 
VA loans, there would be no lien on real property or tangible 
personal property.
    Cooperative housing projects are usually subject to blanket 
mortgages. This is a matter of great concern because of the 
significant risk to which the buyer, the loan holder, and VA 
are exposed. The buyer of a co-op is responsible for the 
monthly payment on the share loan as well as the assessments 
levied by the corporation, which can be significant. The 
survival of the project may depend upon each member of the co-
op meeting his or her obligations. Failure to do that could 
lead to foreclosure of the blanket mortgage on the entire 
building. Such foreclosure would wipe out any interest 
individual co-op owners, even owners who are timely in the 
payment of their share loans, may have in the project since 
they have no interest in real property. It would also leave the 
holder of the share loan without any security. This is what 
principally sets co-ops apart from condominiums.
    Many co-ops also retain a right of first refusal or a right 
by the co-op board to approve or reject a prospective buyer. 
Rights of first refusal are not permitted by VA regulation, 38 
C.F.R. Sec. 36.4350, and VA does not participate in projects 
that have them. We believe that the issue of right of first 
refusal alone would disqualify most projects from VA 
eligibility.
    We understand that some co-op projects impose other 
restrictions on sales, such as imposing a fee when the owner 
sells his or her unit to someone other than the corporation, or 
granting the exclusive right to sell units to a particular real 
estate broker, often at a higher commission. These and similar 
practices would be viewed as detrimental to the interests of 
veterans and, therefore, not permitted under current VA 
regulations for conventional or condominium developments. These 
practices could also adversely affect the marketability of a 
unit. If a veteran-borrower is experiencing financial 
difficulties and cannot freely dispose of his or her unit at an 
advantageous price, foreclosure with a resultant loss to VA is 
more likely.
    We also understand that conventional lenders, as well as 
the secondary mortgage market agencies, generally have 
additional underwriting and project requirements for co-ops 
because of the additional risks they present. In addition, 
valuation of these properties would be very complicated because 
of the blanket mortgage.
    Costs associated with this legislation would likely be 
insignificant compared to the overall VA guaranteed loan 
portfolio.
S. 2416
    S. 2416, the ``Veterans Employment and Training Act of 
2006,'' would expand the programs of education for which 
accelerated payment of educational assistance may be made under 
the chapter 30 Montgomery GI Bill (MGIB) program. Specifically, 
this measure would permit accelerated payment of the basic 
educational assistance allowance to veterans pursuing an 
approved program of education (in addition to the programs now 
authorized such payment) lasting less than two years and 
leading to employment in a sector of the economy that is 
projected to experience substantial job growth, positively 
affects the growth of another sector of the economy, or 
consists of existing or emerging businesses that are being 
changed by technology and innovation and require new skills for 
workers, as determined by the Department of Labor (DOL).
    Under current law, only an MGIB participant pursuing high-
cost courses leading to employment in a high technology 
occupation in a high technology industry has the option of 
receiving an accelerated benefit payment. This optional lump-
sum accelerated benefit payment may cover up to 60 percent of 
the cost of such a course, provided the pro-rated course costs 
exceed 200 percent of the applicable monthly MGIB rate. The 
lump-sum payment is deducted from the veteran's MGIB 
entitlement balance in the same manner as if paid on a monthly 
basis and may not exceed that balance.
    In addition, S. 2416 specifically states that, for purposes 
of accelerated payment of educational assistance, the term 
``program of education'' would include such a program pursued 
at a tribally controlled college or university (as defined in 
the Tribally Controlled College or University Assistance Act of 
1978).
    VA supports S. 2416, subject to Congress' enactment of 
legislation offsetting the cost of the increased benefits. 
However, as discussed below, we believe there may be a more 
efficient way of achieving its objective.
    We note that implementation would be challenging for VA. 
The DOL employment projections change every two years. In 
addition, depending on the definition of ``sector,'' it is 
possible that almost all programs would lead to employment in 
one sector of the economy that would affect at least one other 
sector positively. It would be cleaner and more direct if the 
bill simply stated that all high-cost short-term courses were 
eligible for accelerated payment. Secondly, S. 2416 would 
exclude from the proposed expansion of accelerated payment 
eligibility those individuals who are enrolled in an 
associate's or higher degree program. Thus, such an individual 
only could receive an accelerated payment if his or her program 
of education leads to employment in a high technology 
occupation in a high technology industry (as determined by VA). 
We can see no sound public policy basis for making this 
distinction.
    Concerning the bill's express provision for accelerated 
payments under chapter 30 to eligible veterans pursuing a 
program of education at a tribally controlled college or 
university, VA has no objection. We note, however, that VA 
currently considers such programs to be ``programs of 
education'' for MGIB purposes, and we are not aware of any 
situations pertaining to servicemembers or veterans attending 
tribally controlled colleges or universities that adversely 
affect their eligibility for accelerated benefit payments.
    VA estimates S. 2416, if enacted, would cost $11.5 million 
during FY 2007 and approximately $121.6 million over the period 
FYs 2007-2016. The estimates for the years following FY 2007 
would need to be reassessed annually due to DOL initiative 
changes.

           *         *         *         *         *

S. 2659
    S. 2659, the ``Native American Veterans Cemetery Act of 
2006,'' would authorize the Secretary of Veterans Affairs to 
make grants to Native American tribal organizations to assist 
them in establishing, expanding, or improving veterans' 
cemeteries on trust lands in the same manner and under the same 
conditions as grants to states are made under 38 U.S.C. 
Sec. 2408. We strongly support enactment of this bill.
    The cemetery grants program has proven to be an effective 
way of making the option of veterans cemetery burial available 
in locations not conveniently served by our national 
cemeteries. S. 2659 would create another means of accommodating 
the burial needs of Native American veterans who wish to be 
buried in tribal lands.
S. 2694
    S. 2694, the ``Veterans' Choice of Representation Act of 
2006,'' would eliminate the current prohibition on the charging 
of fees for services of an agent or attorney provided before 
the Board of Veterans' Appeals (Board) makes its first final 
decision in the case. It would also authorize VA to restrict 
the amount of fees agents or attorneys may charge and subject 
fee agreements between agents or attorneys and claimants to 
review by the Secretary, such review to be appealable to the 
Board. In addition, it would eliminate fee matters as grounds 
for criminal penalties under 38 U.S.C. Sec. 5905.
    S. 2694 would also authorize VA to regulate the 
qualifications and standards of conduct applicable to agents 
and attorneys, add three grounds to the list of grounds for 
suspension or exclusion of agents or attorneys from further 
practice before VA, subject VSO representatives and individuals 
recognized for a particular claim to suspension on the same 
grounds as apply to agents and attorneys, and authorize VA to 
periodically collect registration fees from agents and 
attorneys to offset the cost of these regulatory activities.
    We understand, and in fact agree with, the argument that 
veterans are as capable as anyone of deciding whether to employ 
attorneys on their behalves. However, that is not the issue. 
The Government has an obligation to ensure that veterans derive 
maximum value from taxpayer-supported VA programs. This 
Committee expressed its concern in 1988 when it reported out a 
bill (S. 11, 100th Cong.) that would have retained the prior 
$10 limitation on fees for claims resolved before or in the 
first Board decision, that any changes relating to attorneys' 
fees ``be made carefully so as not to induce unnecessary 
retention of attorneys by VA claimants.'' Under S. 2694, 
attorney fees would consume significant amounts of payments 
under programs meant to benefit veterans, and Congress should 
not enact this bill unless it becomes convinced veterans would 
gain more in terms of increased benefits than they would lose 
to their attorneys. Available evidence shows that is unlikely, 
hence we cannot support the bill's enactment.
    Throughout the years, Congress has recognized, correctly, 
that integration of VSO representatives into the process of 
developing and deciding claims is one of the most valuable 
features of the VA adjudication system. These representatives 
are available to guide through the claims process all claimants 
who seek their assistance, without charge. VSO representatives 
are well-versed in veterans benefits law as a result of the 
training they receive and therefore are well-equipped to 
successfully assist claimants throughout the administrative 
processing of their claims. Further, VSOs must certify to VA 
that their representatives are fully qualified to represent 
claimants. These facts alone cause us to doubt that 
participation by attorneys would gain claimants more in 
increased benefits than it would cost them in fees.
    Moreover, what empirical data exist do not indicate 
attorneys would provide service superior to that rendered by 
VSO representatives. For example, in FY 2005, 7.5 percent of 
appellants before the Board of Veterans' Appeals were 
represented by attorneys, and approximately 80 percent were 
represented by VSOs. Approximately the same percentage of 
claims was granted in matters appealed to the Board whether a 
claimant was represented by a VSO representative or was 
represented by an attorney. In FY 2005, the Board granted one 
or more of the benefits sought in 21.3 percent of the appeals 
in which a claimant was represented by an attorney. The Board 
granted one or more of the benefits sought in 22.3 percent of 
the cases in which a claimant was represented by a VSO.
    The expense of employing an attorney to obtain veterans 
benefits would appear to be largely unwarranted. For example, 
many claims are granted immediately by VA based on a 
presumption of service connection or incurrence of an injury or 
disease during service. VA currently has presumptions of 
service connection for several different kinds of service and 
many diseases. For example, a Vietnam veteran is entitled to a 
presumption of service connection if he or she develops 
diabetes mellitus (Type 2). Giving VA an opportunity to decide 
such a claim without attorney involvement may well save a 
veteran money. In addition, claimants do not appeal to the 
Board in about 90 percent of claims decided by VA regional 
offices, suggesting a high level of satisfaction with the 
regional offices' decisions in their cases. Paying an attorney 
to assist in presenting these claims would seem to be a waste 
of claimants' financial resources.
    Also, as this Committee recognized in 1988 when it reported 
out S. 11, there is ``no compelling justification'' for hiring 
an attorney prior to that point. The Supreme Court recognized 
in Walters v. National Ass'n of Radiation Survivors that, 
``[a]s might be expected in a system which processes such a 
large number of claims each year, the process prescribed by 
Congress for obtaining disability benefits does not contemplate 
the adversary mode of dispute resolution.'' Rather, the Supreme 
Court said, ``The process is designed to function throughout 
with a high degree of informality and solicitude for the 
claimant.''
    All a claimant need do is file a claim, and VA will notify 
the claimant of the information and evidence necessary to 
substantiate the claim, assist the claimant in obtaining 
relevant Government and private records, provide a medical 
examination or obtain a medical opinion when necessary to 
decide a compensation claim, and make an initial decision on 
the claim. If a claim is denied, all a claimant need do to 
initiate an appeal to the Board is to write VA expressing 
dissatisfaction or disagreement with the decision and a desire 
to contest the result. The VA agency that made the original 
decision on the claim will develop or review the claim in a 
final attempt to resolve the disagreement and issue a statement 
of the case if the disagreement is not resolved. VA assumes 
primary responsibility for leading a claimant through the 
administrative claims process, making the expenditure of a 
claimant's limited financial resources on an attorney 
unnecessary. Furthermore, we are concerned that enactment of 
this bill would impede the Government's paramount interest in 
promoting and maintaining a non-adversarial adjudicative 
process, as exemplified by the Veterans Claims Assistance Act 
of 2000 requiring VA to notify a claimant of the information 
and evidence necessary to substantiate a claim and to assist a 
claimant in obtaining such evidence. This statute was designed 
to facilitate beneficial interaction between claimants and VA 
during the initial adjudication process. S. 2694, by permitting 
claimants to employ paid attorneys before issuance of the first 
final Board decision, would be incongruent with the beneficent 
VA system that Congress has nurtured over the decades.
    Also, attorney-represented claimants would lose certain 
benefits of the current non-adversarial system. For example, 
the Court of Appeals for the Federal Circuit recently held in 
Andrews v. Nicholson that VA must sympathetically read all pro 
se pleadings, including a pro se motion alleging clear and 
unmistakable error (CUE) in a VA decision. However, the court 
stated in Andrews and in Johnston v. Nicholson that VA is not 
obligated to sympathetically read pleadings filed by counsel, 
and the failure to raise an issue in a CUE motion filed by 
counsel before the Board is fatal to subsequently raising the 
issue before the Court of Appeals for Veterans Claims. S. 2694 
would attempt to maintain the non-adversarial nature of the 
process by authorizing VA to suspend claim representatives who 
fail to conduct themselves ``with due regard for the non-
adversarial nature of'' VA proceedings. However, a requirement 
for non-adversarial conduct by an attorney appears inconsistent 
with an attorney's professional responsibility to ``represent a 
client zealously within the bounds of the law.'' MODEL CODE OF 
PROF'L RESPONSIBILITY CANON 7 (1983). ``While serving as 
advocate, a lawyer should resolve in favor of his client doubts 
as to the bounds of the law'' and may urge any permissible 
construction of the law favorable to his client. MODEL CODE OF 
PROF'L RESPONSIBILITY EC 7-3 and 7-4 (1983). An attorney who 
``appear[s] before an administrative agency, regardless of the 
nature of the proceeding it is conducting, has the continuing 
duty to advance the cause of his client within the bounds of 
the law.'' MODEL CODE OF PROF'L RESPONSIBILITY EC 7-15. 
Introducing an attorney charged with such professional 
obligations into the non-adversarial claims process from its 
initial stages would, in our view, inevitably make the process 
more adversarial, which we believe would harm the interests of 
VA claimants. Further, if S. 2694 were enacted, VA would likely 
have to hire attorneys to work in its Regional Offices to 
respond to the legal pleadings filed by attorneys in support of 
their clients' claims. However unintentional it would be, we 
predict the process would inevitably become more formal and 
brief driven, to the point claimants may feel they must hire 
attorneys to establish entitlement to their benefits. The 
result would almost certainly be to increase the time all 
veterans must wait for decisions in their claims. Finally, we 
cannot support S. 2694 because it would require creation of a 
substantial new bureaucracy to perform the additional 
accreditation and oversight responsibilities. Currently, an 
attorney in good standing with the bar of any state may 
represent a claimant before VA if the attorney states in a 
signed writing on his or her letterhead that he or she is 
authorized to represent the claimant. If S. 2694 were enacted, 
VA would have to create procedures and standards for 
accrediting attorneys and for reviewing fee agreements for 
services performed at the ROs to determine whether a fee 
charged by an agent or attorney is ``excessive or 
unreasonable.'' The additional time and substantial resources 
that would be required to carry out the accreditation process 
and review fee agreements for work performed before the ROs 
would, in our view, be better spent adjudicating the 
approximately 800,000 benefit claims that VA receives annually.
    Moreover, attorneys are licensed by the various states, 
which are responsible for regulating their conduct and 
disciplining them if they overreach with respect to fees 
charged. If attorneys are permitted to practice before the 
Department and charge fees for their services, it would be far 
better to have them regulated by the states responsible for 
their licenses than to create a new Federal office to monitor 
attorney conduct.
S. 3363
    S. 3363 would provide for accelerated payment of survivors' 
and dependents' educational assistance for certain programs of 
education under chapter 35 of title 38, United States Code. VA 
will provide its comments and costs on S. 3363 at a later time.
    That concludes my statement, Mr. Chairman. I would be happy 
now to entertain any questions you or the other members of the 
Committee may have.
                                ------                                * 
* * * * * *

   Letter From William J. Haynes II, General Counsel, Department of 
                                Defense

                                                  February 9, 2006.
Hon. Larry E. Craig,
Chairman, Committee on Veterans Affairs,
U.S. Senate, Washington, DC.
    Dear Chairman Craig: I want to convey the Department of 
Defense's position on S. 1759, a bill to ``require the 
Secretary of the Army to remove the remains of Russell Wayne 
Wagner from Arlington National Cemetery.'' The Department of 
Defense has no objection to the enactment of this bill.
    The Department notes that Mr. Wagner's remains were buried 
in accordance with existing law and that S. 1759 would not 
direct the removal of the remains of other capital offenders 
interred at Arlington National Cemetery. The Department is 
concerned that, as drafted S. 1759 would require the Department 
of the Army to bear the costs of a subsequent interment or 
inurnment in a public or private cemetery. The Department of 
Defense does not provide funeral costs for veterans at public 
or private cemeteries. Doing so in this case could set an 
undesirable precedent. Additionally, we believe the first 
option should be to offer the remains to the decedent's family.
    The Office of Management and Budget advises that, from the 
standpoint of the Administration's program, there is no 
objection to the presentation of this letter for the 
consideration of the committee.
            Sincerely,
                                              William J. Haynes II.

    Changes in Existing Law Made by the Committee Bill, as Reported

    In compliance with paragraph 12 of Rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the Committee bill, as reported, are shown as follows (existing 
law proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

TITLE 26, UNITED STATES CODE

           *       *       *       *       *       *       *

Sec. 6103. Confidentiality and disclosure of returns and return 
                    information

           *       *       *       *       *       *       *

          (l) * * *
          (7) * * *
    Only return information from returns with respect to net 
earnings from self-employment and wages may be disclosed under 
this paragraph for use with respect to any program described in 
clause (viii)(IV). Clause (viii) shall not apply after 
[September 30, 2008] September 30, 2011.

TITLE 38, UNITED STATES CODE

           *       *       *       *       *       *       *

PART I. GENERAL PROVISIONS

           *       *       *       *       *       *       *

CHAPTER 3. DEPARTMENT OF VETERANS AFFAIRS

           *       *       *       *       *       *       *

Sec. 305. Under Secretary for Health

           *       *       *       *       *       *       *

    [(c) The Under Secretary for Health shall be appointed for 
a period of four years, with reappointment permissible for 
successive like periods. If the President removes the Under 
Secretary for Health before the completion of the term for 
which the Under Secretary for Health was appointed, the 
President shall communicate the reasons for the removal to 
Congress.]
    [(d)] (c)(1) Whenever a vacancy in the position of Under 
Secretary for Health occurs or is anticipated, the Secretary 
shall establish a commission to recommend individuals to the 
President for appointment to the position.
      (2) A commission established under this subsection shall 
be composed of the following members appointed by the 
Secretary:
          (A) Three persons representing clinical care and 
        medical research and education activities affected by 
        the Veterans Health Administration.
          (B) Two persons representing veterans served by the 
        Veterans Health Administration.
          (C) Two persons who have experience in the management 
        of veterans health services and research programs, or 
        programs of similar content and scope.
          (D) The Deputy Secretary of Veterans Affairs.
          (E) The Chairman of the Special Medical Advisory 
        Group established under section 7312 of this title.
          (F) One person who has held the position of Under 
        Secretary for Health (including service as Chief 
        Medical Director of the Department), if the Secretary 
        determines that it is desirable for such person to be a 
        member of the commission.
      (3) A commission established under this subsection shall 
recommend at least three individuals for appointment to the 
position of Under Secretary for Health. The commission shall 
submit all recommendations to the Secretary. The Secretary 
shall forward the recommendations to the President with any 
comments the Secretary considers appropriate. Thereafter, the 
President may request the commission to recommend additional 
individuals for appointment.
      (4) The Assistant Secretary or Deputy Assistant Secretary 
of Veterans Affairs who performs personnel management and labor 
relations functions shall serve as the executive secretary of a 
commission established under this subsection.

Sec. 306. Under Secretary for Benefits

           *       *       *       *       *       *       *

    [(c) The Under Secretary for Benefits shall be appointed 
for a period of four years, with reappointment permissible for 
successive like periods. If the President removes the Under 
Secretary for Benefits before the completion of the term for 
which the Under Secretary for Benefits was appointed, the 
President shall communicate the reasons for the removal to 
Congress.]
    [(d)] (c)(1) Whenever a vacancy in the position of Under 
Secretary for Benefits occurs or is anticipated, the Secretary 
shall establish a commission to recommend individuals to the 
President for appointment to the position.
      (2) A commission established under this subsection shall 
be composed of the following members appointed by the 
Secretary:
      (A) Three persons representing education and training, 
real estate, mortgage finance, and related industries, and 
survivor benefits activities affected by the Veterans Benefits 
Administration.
      (B) Two persons representing veterans served by the 
Veterans Benefits Administration.
      (C) Two persons who have experience in the management of 
veterans benefits programs or programs of similar content and 
scope.
      (D) The Deputy Secretary of Veterans Affairs.
      (E) The chairman of the Veterans' Advisory Committee on 
Education formed under section 3692 of this title.
      (F) One person who has held the position of Under 
Secretary for Benefits (including service as Chief Benefits 
Director of the Department), if the Secretary determines that 
it is desirable for such person to be a member of the 
commission.
      (3) A commission established under this subsection shall 
recommend at least three individuals for appointment to the 
position of Under Secretary for Benefits. The commission shall 
submit all recommendations to the Secretary. The Secretary 
shall forward the recommendations to the President with any 
comments the Secretary considers appropriate. Thereafter, the 
President may request the commission to recommend additional 
individuals for appointment.
      (4) The Assistant Secretary or Deputy Assistant Secretary 
of Veterans Affairs who performs personnel management and labor 
relations functions shall serve as the executive secretary of a 
commission established under this subsection.

           *       *       *       *       *       *       *

PART II. GENERAL BENEFITS

           *       *       *       *       *       *       *

 CHAPTER 15. PENSION FOR NON-SERVICE-CONNECTED DISABILITY OR DEATH OR 
                              FOR SERVICE

Subchapter I. General

           *       *       *       *       *       *       *

Sec. 1505. Payment of pension during confinement in penal institutions

    (a) No pension under public or private laws administered by 
the Secretary shall be paid to or for an individual who has 
been imprisoned in a Federal, State, [or local penal 
institution] local, or other penal institution or correctional 
facility as a result of conviction of a felony or misdemeanor 
for any part of the period beginning sixty-one days after such 
individual's imprisonment begins and ending when such 
individual's imprisonment ends.

           *       *       *       *       *       *       *

CHAPTER 17. HOSPITAL, NURSING HOME, DOMICILIARY, AND MEDICAL CARE

           *       *       *       *       *       *       *

                 Subchapter V. Payments to State Homes

1741. Criteria for payment.
1742. Inspections of such homes; restrictions on beneficiaries.
1743. Applications.
1745. Nursing home care and medications for veterans with tates.
    service-connected disabilities.

           *       *       *       *       *       *       *

Subchapter II. Hospital, Nursing Home, or Domiciliary Care and Medical 
                               Treatment

Sec. 1710. Eligibility for hospital, nursing home, and domiciliary care

    (a) * * *

           *       *       *       *       *       *       *

          (4) The requirement in paragraphs (1) and (2) that 
        the Secretary furnish hospital care and medical 
        services, the requirement in section 1710A(a) of this 
        title that the Secretary provide nursing home care, 
        [and] the requirement in section 1710B of this title 
        that the Secretary provide a program of extended care 
        services, and the requirement in section 1745 of this 
        title to provide nursing home care and prescription 
        medicines to veterans with service-connected 
        disabilities in State homes shall be effective in any 
        fiscal year only to the extent and in the amount 
        provided in advance in appropriations Acts for such 
        purposes.

           *       *       *       *       *       *       *

Sec. 1741. Criteria for payment

    (a)(1) [The] Except as provided in section 1745 of this 
title, the Secretary shall pay each State at the per diem rate 
of--
          (A) $8.70 for domiciliary care; and
          (B) $20.35 for nursing home care and hospital care, 
        for each veteran receiving such care in a State home, 
        if such veteran is eligible for such care in a 
        Department facility.

           *       *       *       *       *       *       *

    (f) Any State home that requests payment or reimbursement 
for services provided to a veteran under this section shall 
provide to the Secretary such information as the Secretary 
considers necessary to identify each individual veteran 
eligible for payment under such section.

           *       *       *       *       *       *       *

Sec. 1745. Nursing home care and medications for veterans with service-
                    connected disabilities

    (a)(1) The Secretary shall pay each State home for nursing 
home care at the rate determined under paragraph (2), where 
such care is provided to any veteran as follows:
          (A) Any veteran in need of such care for a service-
        connected disability.
          (B) Any veteran who--
                  (i) has a service-connected disability rated 
                at 70 percent or more; and
                  (ii) is in need of such care.
      (2) The rate determined under this paragraph with respect 
to a State home is the lesser of--
          (A) the applicable or prevailing rate payable in the 
        geographic area in which the State home is located, as 
        determined by the Secretary, for nursing home care 
        furnished in a non-Department nursing home (as that 
        term is defined in section 1720(e)(2)); or
          (B) a rate not to exceed the daily cost of care, as 
        determined by the Secretary, following a report to the 
        Secretary by the director of the State home.
    (3) Payment by the Secretary under paragraph (1) to a State 
home for nursing home care provided to a veteran described in 
that paragraph constitutes payment in full to the State home 
for such care furnished to that veteran.
    (b) The Secretary shall furnish such drugs and medicines as 
may be ordered on prescription of a duly licensed physician as 
specific therapy in the treatment of illness or injury to any 
veteran as follows:
          (1) Any veteran who--
                  (A) is not being provided nursing home care 
                for which payment is payable under subsection 
                (a); and
                  (B) is in need of such drugs and medicines 
                for a service-connected disability.
          (2) Any veteran who--
                  (A) has a service-connected disability rated 
                at 50 percent or more;
                  (B) is not being provided nursing home care 
                for which payment is payable under subsection 
                (a); and
                  (C) is in need of such drugs and medicines.
    (c) Any State home that requests payment or reimbursement 
for services provided to a veteran under this section shall 
provide to the Secretary such information as the Secretary 
considers necessary to identify each individual veteran 
eligible for payment under such section.

           *       *       *       *       *       *       *

                         CHAPTER 19. INSURANCE

Subchapter I. National Service Life Insurance

           *       *       *       *       *       *       *

Sec. 1922A. Supplemental service disabled veterans' insurance for 
                    totally disabled veterans

    (a) Any person insured under section 1922(a) of this title 
who qualifies for a waiver of premiums under section 1912 of 
this title is eligible, as provided in this section, for 
supplemental insurance in an amount not to exceed [$20,000] 
$30,000, during the period beginning on October 1, 2007, and 
ending on September 31, 2011, or $20,000 at any other time.

           *       *       *       *       *       *       *

CHAPTER 20. BENEFITS FOR HOMELESS VETERANS

           *       *       *       *       *       *       *

                    Subchapter V. Housing Assistance

2041. Housing assistance for homeless veterans.
2042. Supported housing for veterans participating in compensated work 
          therapies.
2043. Domiciliary care programs.
2044. Financial assistance for supportive services for very low-income 
          veteran families in permanent housing.

           *       *       *       *       *       *       *

             Subchapter II. Comprehensive Service Programs

Sec. 2011. Grants

    (a) Authority To Make Grants.--[(1)] Subject to the 
availability of appropriations provided for such purpose, the 
Secretary shall make grants to assist eligible entities in 
establishing programs to furnish, and expanding or modifying 
existing programs for furnishing, the following to homeless 
veterans:
          [(A)] (1) Outreach.
          [(B)] (2) Rehabilitative services.
          [(C)] (3) Vocational counseling and training
          [(D)] (4) Transitional housing assistance.
          [(2) The authority of the Secretary to make grants 
        under this section expires on September 30, 2005.]

           *       *       *       *       *       *       *

Sec. 2013. Authorization of appropriations

    [There are authorized to be appropriated to carry out this 
subchapter amounts as follows:
          [(1) $60,000,000 for fiscal year 2002.
          [(2) $75,000,000 for fiscal year 2003.
          [(3) $75,000,000 for fiscal year 2004.
          [(4) $99,000,000 for fiscal year 2005.]
    There is authorized to be appropriated, to carry out this 
subchapter, $130,000,000 for fiscal year 2007 and each fiscal 
year thereafter.

           *       *       *       *       *       *       *

Subchapter IV. Treatment and Rehabilitation for Seriously Mentally Ill 
                         and Homeless Veterans

Sec. 2031. General treatment

           *       *       *       *       *       *       *

    (b) The authority of the Secretary under subsection (a) 
expires on December 31, [2006] 2011.

           *       *       *       *       *       *       *

Sec. 2033. Additional services at certain locations

           *       *       *       *       *       *       *

    (d) The program under this section shall terminate on 
December 31, [2006] 2011.

           *       *       *       *       *       *       *

Sec. 2041. Housing assistance for homeless veterans

           *       *       *       *       *       *       *

    (c) The Secretary may not enter into agreements under 
subsection (a) after December 31, [2008] 2011.

           *       *       *       *       *       *       *

Sec. 2043. Domiciliary care programs

           *       *       *       *       *       *       *

Sec. 2044. Financial assistance for supportive services for very low-
                    income veteran families in permanent housing

    (a) Distribution of Financial Assistance.--
          (1) The Secretary shall provide financial assistance 
        to eligible entities approved under this section to 
        provide and coordinate the provision of supportive 
        services described in subsection (b) for very low-
        income veteran families occupying permanent housing.
          (2) Financial assistance under this section shall 
        consist of per diem payments for each such family for 
        which an approved eligible entity is providing or 
        coordinating the provision of supportive services.
          (3)(A) Subject to the availability of appropriations 
        provided for such purpose, the Secretary shall provide 
        to each family for which an approved eligible entity is 
        providing or coordinating the provision of supportive 
        services per diem payments in the amount of the daily 
        cost of care estimated by such eligible entity (as 
        adjusted by the Secretary under subparagraph (C)).
          (B) In no case may the amount of per diem paid under 
        this paragraph exceed the rate of per diem authorized 
        for State homes for domiciliary care under subsection 
        (a)(1)(A) of section 1741 of this title, as adjusted by 
        the Secretary under subsection (c) of such section.
          (C) The Secretary may adjust the daily cost of care 
        estimated by an eligible entity for purposes of this 
        paragraph to exclude other sources of income described 
        in subparagraph (E) that the eligible entity certifies 
        to be correct.
          (D) Each eligible entity shall provide to the 
        Secretary such information with respect to other 
        sources of income as the Secretary may require to make 
        the adjustment under subparagraph (C).
          (E) The other sources of income referred to in 
        subparagraphs (C) and (D) are payments to the eligible 
        entity for furnishing services to homeless veterans 
        under programs other than under this subchapter, 
        including payments and grants from other departments 
        and agencies of the Federal Government, from 
        departments or agencies of State or local government, 
        and from private entities or organizations.
          (4) In providing financial assistance under paragraph 
        (1), the Secretary shall give preference to entities 
        providing or coordinating the provision of supportive 
        services for very low-income veteran families who are 
        transitioning from homelessness to permanent housing.
          (5) The Secretary shall ensure that, to the extent 
        practicable, financial assistance under this subsection 
        is equitably distributed across geographic regions, 
        including rural communities and tribal lands.
          (6) Each entity receiving financial assistance under 
        this section to provide supportive services to a very 
        low-income veteran family shall notify that family that 
        such services are being paid for, in whole or in part, 
        by the Department.
          (7) The Secretary may require entities receiving 
        financial assistance under this section to submit a 
        report to the Secretary that describes the projects 
        carried out with such financial assistance.
    (b) Supportive Services.--The supportive services referred 
to in subsection (a) are the following:
          (1) Services provided by an eligible entity or 
        subcontractors that address the needs of very low-
        income veteran families occupying permanent housing, 
        including--
                  (A) Outreach services;
                  (B) health care services, including 
                diagnosis, treatment, and counseling for mental 
                health and substance abuse disorders and for 
                post-traumatic stress disorder, if such 
                services are not readily available through the 
                Department medical center serving the 
                geographic area in which the veteran family is 
                housed;
                  (C) habilitation and rehabilitation services;
                  (D) case management services;
                  (E) daily living services;
                  (F) personal financial planning;
                  (G) transportation services;
                  (H) vocational counseling;
                  (I) employment and training;
                  (J) educational services;
                  (K) assistance in obtaining veterans benefits 
                and other public benefits, including health 
                care provided by the Department;
                  (L) assistance in obtaining income support;
                  (M) assistance in obtaining health insurance;
                  (N) fiduciary and representative payee 
                services;
                  (O) legal services to assist the veteran 
                family with reconsiderations or appeals of 
                veterans and public benefit claim denials and 
                to resolve outstanding warrants that interfere 
                with the family's ability to obtain or retain 
                housing or supportive services;
                  (P) child care;
                  (Q) housing counseling;
                  (R) other services necessary for maintaining 
                independent living; and
                  (S) coordination of services under this 
                paragraph.
          (2) Services described in paragraph (1) that are 
        delivered to very low-income veteran families who are 
        homeless and who are scheduled to become residents of 
        permanent housing within 90 days pending the location 
        or development of housing suitable for permanent 
        housing.
          (3) Services described in paragraph (1) for very low-
        income veteran families who have voluntarily chosen to 
        seek other housing after a period of tenancy in 
        permanent housing, that are provided, for a period of 
        90 days after such families exit permanent housing or 
        until such families commence receipt of other housing 
        services adequate to meet their current needs, but only 
        to the extent that services under this paragraph are 
        designed to support such families in their choice to 
        transition into housing that is responsive to their 
        individual needs and preferences.
    (c) Application for Financial Assistance.--
          (1) An eligible entity seeking financial assistance 
        under subsection (a) shall submit an application to the 
        Secretary in such form, in such manner, and containing 
        such commitments and information as the Secretary 
        determines to be necessary to carry out this section.
          (2) Each application submitted by an eligible entity 
        under paragraph (1) shall contain--
                  (A) a description of the supportive services 
                proposed to be provided by the eligible entity;
                  (B) a description of the types of very low-
                income veteran families proposed to be provided 
                such services;
                  (C) an estimate of the number of very low-
                income veteran families proposed to be provided 
                such services;
                  (D) evidence of the experience of the 
                eligible entity in providing supportive 
                services to very low-income veteran families; 
                and
                  (E) a description of the managerial capacity 
                of the eligible entity to--
                          (i) coordinate the provision of 
                        supportive services with the provision 
                        of permanent housing, by the eligible 
                        entity or by other organizations;
                          (ii) continuously assess the needs of 
                        very low-income veteran families for 
                        supportive services;
                          (iii) coordinate the provision of 
                        supportive services with the services 
                        of the Department;
                          (iv) tailor supportive services to 
                        the needs of very low-income veteran 
                        families; and
                          (v) continuously seek new sources of 
                        assistance to ensure the long-term 
                        provision of supportive services to 
                        very low-income veteran families.
          (3) The Secretary shall establish criteria for the 
        selection of eligible entities to be provided financial 
        assistance under this section.
    (d) Technical Assistance.--
          (1) The Secretary shall provide training and 
        technical assistance to participating eligible entities 
        regarding the planning, development, and provision of 
        supportive services to very low-income veteran families 
        occupying permanent housing.
          (2) The Secretary may provide the training described 
        in paragraph (1) directly or through grants or 
        contracts with appropriate public or nonprofit private 
        entities.
    (e) Funding.--
          (1) From amounts appropriated to the Department for 
        Medical Care, there shall be available to carry out 
        this section amounts as follows:
                  (A) $15,000,000 for fiscal year 2007.
                  (B) $20,000,000 for fiscal year 2008.
                  (C) $25,000,000 for fiscal year 2009.
          (2) Not more than $750,000 may be available under 
        paragraph (1) in any fiscal year to provide technical 
        assistance under subsection (d).
    (f) Definitions.--In this section:
          (1) The term ``consumer cooperative'' has the meaning 
        given such term in section 202 of the Housing Act of 
        1959 (12 U.S.C. 1701q).
          (2) The term ``eligible entity'' means--
                  (A) a private nonprofit organization; or
                  (B) a consumer cooperative.
          (3) The term ``homeless'' has the meaning given that 
        term in section 103 of the McKinney-Vento Homeless 
        Assistance Act (42 U.S.C. 11302).
          (4) The term ``permanent housing'' means community-
        based housing without a designated length of stay.
          (5) The term ``private nonprofit organization'' means 
        any of the following:
                  (A) Any incorporated private institution or 
                foundation--
                          (i) no part of the net earnings of 
                        which inures to the benefit of any 
                        member, founder, contributor, or 
                        individual;
                          (ii) which has a governing board that 
                        is responsible for the operation of the 
                        supportive services provided under this 
                        section; and
                          (iii) which is approved by the 
                        Secretary as to financial 
                        responsibility;
                  (B) A for-profit limited partnership, the 
                sole general partner of which is an 
                organization meeting the requirements of 
                clauses (i), (ii), and (iii) of subparagraph 
                (A).
                  (C) A corporation wholly owned and controlled 
                by an organization meeting the requirements of 
                clauses (i), (ii), and (iii) of subparagraph 
                (A).
                  (D) A tribally designated housing entity (as 
                defined in section 4 of the Native American 
                Housing Assistance and Self-Determination Act 
                of 1996 (25 U.S.C. 4103)).
          (6)(A) Subject to subparagraphs (B) and (C), the term 
        ``very low-income veteran family'' means a veteran 
        family whose income does not exceed 50 percent of the 
        median income for the area, as determined by the 
        Secretary in accordance with this paragraph.
          (B) The Secretary shall make appropriate adjustments 
        to the income requirement under subparagraph (A) based 
        on family size.
          (C) The Secretary may establish an income ceiling 
        higher or lower than 50 percent of the median income 
        for an area if the Secretary determines that such 
        variations are necessary because the area has unusually 
        high or low construction costs, fair market rents (as 
        determined under section 8 of the United States Housing 
        Act of 1937 (42 U.S.C. 1437f)), or family incomes.
          (7) The term ``veteran family'' includes a veteran 
        who is a single person and a family in which the head 
        of household or the spouse of the head of household is 
        a veteran.

           *       *       *       *       *       *       *

                    Subchapter VII. Other Provisions

Sec. 2061. Grant program for homeless veterans with special needs

           *       *       *       *       *       *       *

    (c) Funding.--
          (1) From amounts appropriated to the Department for 
        ``Medical Care'' for each of fiscal years [2003, 2004, 
        and 2005, $5,000,000] 2007 through 2011, $7,000,000 
        shall be available for each such fiscal year for the 
        purposes of the program under this section.

           *       *       *       *       *       *       *

Sec. 2064. Technical assistance grants for nonprofit community-based 
                    groups

           *       *       *       *       *       *       *

    [(b) Funding.--There is authorized to be appropriated 
$750,000 for each of fiscal years 2002 through 2005 to carry 
out the program under this section.]
    (b) Authorization of Appropriations.--There are authorized 
to be appropriated $1,000,000 for each of fiscal years 2007 
through 2012 to carry out the program under this section.

Sec. 2065. Annual report on assistance to homeless veterans

           *       *       *       *       *       *       *

    (b) * * *

           *       *       *       *       *       *       *

          (4) * * *
          (5) Information on the efforts of the Secretary to 
        coordinate the delivery of housing and services to the 
        homeless veterans with other Federal departments and 
        agencies, including--
                  (A) the Department of Defense;
                  (B) the Department of Health and Human 
                Services;
                  (C) the Department of Housing and Urban 
                Development;
                  (D) the Department of Justice;
                  (E) the Department of Labor;
                  (F) the Interagency Council on Homelessness;
                  (G) the Social Security Administration; and
                  (H) any other Federal department or agency 
                with which the Secretary coordinates the 
                delivery of housing and services to homeless 
                veterans.
          [(5)] (6) Any other information on those programs and 
        on the provision of such assistance that the Secretary 
        considers appropriate.

           *       *       *       *       *       *       *

Sec. 2066. Advisory Committee on Homeless Veterans

    (a) * * *

           *       *       *       *       *       *       *

          (3) The Committee shall include, as ex officio 
        members, the following:

           *       *       *       *       *       *       *

                  (D) * * *
                  (E) The Executive Director of the Interagency 
                Council on Homelessness (or a representative of 
                the Executive Director).
                  (F) The Under Secretary for Health (or a 
                representative of the Under Secretary after 
                consultation with the Director of the Office of 
                Homeless Veterans Programs).
                  (G) The Under Secretary for Benefits (or a 
                representative of the Under Secretary after 
                consultation with the Director of the Office of 
                Homeless Veterans Programs).

           *       *       *       *       *       *       *

    (d) Termination.--The Committee shall cease to exist 
[December 31, 2006] September 30, 2011.

           *       *       *       *       *       *       *

CHAPTER 23. BURIAL BENEFITS

           *       *       *       *       *       *       *

Sec. 2306. Headstones, markers, and burial receptacles

           *       *       *       *       *       *       *

    (d)(1) The Secretary shall furnish, when requested, an 
appropriate [Government marker] Government headstone or marker 
at the expense of the United States for the grave of an 
individual described in paragraph (2) or (5) of subsection (a) 
who is buried in a private cemetery, notwithstanding that the 
grave is marked by a headstone or marker furnished at private 
expense. Such a headstone or marker may be furnished only if 
the individual making the request for the Government headstone 
or marker certifies to the Secretary that the headstone or 
marker will be placed on the grave for which the headstone or 
marker is requested, or, if placement on the grave is 
impossible or impracticable, as close as possible to the grave 
within the grounds of the cemetery in which the grave is 
located.
    (2) Any headstone or marker furnished under this subsection 
shall be delivered by the Secretary directly to the cemetery 
where the grave is located or to a receiving agent for delivery 
to the cemetery.
    [(3) The authority to furnish a marker under this 
subsection expires on December 31, 2006.]
    (3) In furnishing headstones and markers under this 
subsection, the Secretary shall permit the individual making 
the request for a headstone or marker to select among any 
headstone or marker in the complete product line of Government 
headstones and markers.
    [(4) Not later than February 1, 2006, the Secretary shall 
submit to the Committees on Veterans' Affairs of the Senate and 
House of Representatives a report on the use of the authority 
under this subsection. The report shall include the following:
          [(A) The rate of use of the benefit under this 
        subsection, shown by fiscal year.
          [(B) An assessment as to the extent to which markers 
        furnished under this subsection are being delivered to 
        cemeteries and placed on grave sites consistent with 
        the provisions of this subsection.
          [(C) The Secretary's recommendation for extension or 
        repeal of the expiration date specified in paragraph 
        (3).]

           *       *       *       *       *       *       *

    (g)(1) A headstone or marker may not be furnished under 
subsection (a) for the unmarked grave of a person described in 
section 2411(b) of this title.
    (2) A memorial headstone or marker may not be furnished 
under subsection (b) for the purpose of commemorating a person 
described in section 2411(b) of this title.
    (3) A headstone or marker may not be furnished under 
subsection (d) for the grave of a person described in section 
2411(b) of this title.

           *       *       *       *       *       *       *

CHAPTER 24. NATIONAL CEMETERIES AND MEMORIALS

           *       *       *       *       *       *       *

Sec. 2408. Aid to States for establishment, expansion, and improvement 
                    of veterans' cemeteries

           *       *       *       *       *       *       *

    (e) * * *
    (f)(1) The Secretary may make grants under this subsection 
to any tribal organization to assist the tribal organization in 
establishing, expanding, or improving veterans' cemeteries on 
trust land owned by, or held in trust for, the tribal 
organization.
    (2) Grants under this subsection shall be made in the same 
manner, and under the same conditions, as grants to States are 
made under the preceding provisions of this section.
    (3) In this subsection:
          (A) The term ``tribal organization'' has the meaning 
        given that term in section 3765(4) of this title.
          (B) The term ``trust land'' has the meaning given 
        that term in section 3765(1) of this title.

           *       *       *       *       *       *       *

              PART III. READJUSTMENT AND RELATED BENEFITS

CHAPTER 30. ALL-VOLUNTEER FORCE EDUCATIONAL ASSISTANCE PROGRAM

           *       *       *       *       *       *       *

              Subchapter II. Basic Educational Assistance

3011. Basic educational assistance entitlement for service on active 
          duty.
3012. Basic educational assistance entitlement for service in the 
          Selected Reserve.
3013. Duration of basic educational assistance.
3014. Payment of basic educational assistance.
[3014A. Accelerated payment of basic educational assistance for 
          education leading to employment in high technology occupation 
          in high technology industry.]
3014A. Accelerated payment of basic educational assistance.
3015. Amount of basic educational assistance.
3016. Inservice enrollment in a program of education.
3017. Death benefit.
3018. Opportunity for certain active-duty personnel to withdraw election 
          not to enroll.
3018A. Opportunity for certain active-duty personnel to enroll before 
          being involuntarily separated from service.
3018B. Opportunity for certain persons to enroll.
3018C. Opportunity for certain VEAP participants to enroll.
3019. Tutorial assistance.
3020. Transfer of entitlement to basic educational assistance: members 
          of the Armed Forces with critical military skills.

           *       *       *       *       *       *       *

[Sec. 3014A. Accelerated payment of basic educational assistance for 
                    education leading to employment in high technology 
                    occupation in high technology industry]

Sec. 3014A. Accelerated payment of basic educational assistance

    (a) An individual described in subsection (b) who is 
entitled to basic educational assistance under this subchapter 
may elect to receive an accelerated payment of the basic 
educational assistance allowance otherwise payable to the 
individual under section 3015 of this title.
    (b) An individual described in this subsection is an 
individual who is--
          [(1) enrolled in an approved program of education 
        that leads to employment in a high technology 
        occupation in a high technology industry (as determined 
        pursuant to regulations prescribed by the Secretary); 
        and]
          (1) enrolled in either--
                  (A) an approved program of education that 
                leads to employment in a high technology 
                occupation in a high technology industry (as 
                determined pursuant to regulations prescribed 
                by the Secretary); or
                  (B) an approved program of education lasting 
                less than two years that (as so determined) 
                leads to employment in--
                          (i) the transportation sector of the 
                        economy;
                          (ii) the construction sector of the 
                        economy;
                          (iii) the hospitality sector of the 
                        economy; or
                          (iv) the energy sector of the 
                        economy.
          (2) charged tuition and fees for the program of 
        education that, when divided by the number of months 
        (and fractions thereof) in the enrollment period, 
        exceeds the amount equal to 200 percent of the monthly 
        rate of basic educational assistance allowance 
        otherwise payable to the individual under section 3015 
        of this title.

           *       *       *       *       *       *       *

Subchapter IV. Time Limitation for Use of Eligibility and Entitlement; 
General and Administrative Provisions

           *       *       *       *       *       *       *

Sec. 3036. Reporting requirement

    (a) The Secretary of Defense and the Secretary shall submit 
to the Congress at least once every two years, on January 1, 
separate reports on the operation of the program provided for 
in this chapter.

           *       *       *       *       *       *       *

    (d) No report shall be required under this section after 
[January 1, 2005] January 1, 2011.

   CHAPTER 31. TRAINING AND REHABILITATION FOR VETERANS WITH SERVICE-
                         CONNECTED DISABILITIES

Sec. 3108. Allowances

           *       *       *       *       *       *       *

    (g)(1) Notwithstanding any other provision of this title 
and subject to the provisions of paragraph (2) of this 
subsection, no subsistence allowance may be paid under this 
section in the case of any veteran who is pursuing a 
rehabilitation program under this chapter while incarcerated in 
a Federal, State, [or local penal institution] local, or other 
penal institution or correctional facility for conviction of a 
felony.

           *       *       *       *       *       *       *

CHAPTER 32. POST-VIETNAM ERA VETERANS' EDUCATIONAL ASSISTANCE

           *       *       *       *       *       *       *

Subchapter III. Entitlement; Duration

           *       *       *       *       *       *       *

Sec. 3231. Entitlement; loan eligibility

           *       *       *       *       *       *       *

    (d)(1) Subject to the provisions of paragraph (2) of this 
subsection, the amount of the educational assistance benefits 
paid to an eligible veteran who is pursuing a program of 
education under this chapter while incarcerated in a Federal, 
State, [or local penal institution] local, or other penal 
institution or correctional facility for conviction of a felony 
may not exceed the lesser of (A) such amount as the Secretary 
determines, in accordance with regulations which the Secretary 
shall prescribe, is necessary to cover the cost of established 
charges for tuition and fees required of similarly 
circumstanced nonveterans enrolled in the same program and the 
cost of necessary supplies, books, and equipment, or (B) the 
applicable monthly benefit payment otherwise prescribed in this 
section 3233 of this title. The amount of the educational 
assistance benefits payable to a veteran while so incarcerated 
shall be reduced to the extent that the tuition and fees of the 
veteran for any course are paid under any Federal program 
(other than a program administered by the Secretary) or under 
any State or local program.

           *       *       *       *       *       *       *

CHAPTER 34. VETERANS' EDUCATIONAL ASSISTANCE

           *       *       *       *       *       *       *

Subchapter IV. Payments to Eligible Veterans; Veteran-Student Services

           *       *       *       *       *       *       *

Sec. 3482. Computation of educational assistance allowances

           *       *       *       *       *       *       *

    (g)(1) Subject to the provisions of paragraph (2) of this 
subsection, the amount of the educational assistance allowance 
paid to an eligible veteran who is pursuing a program of 
education under this chapter while incarcerated in a Federal, 
State, [or local penal institution] local, or other penal 
institution or correctional facility for conviction of a felony 
may not exceed such amount as the Secretary determines, in 
accordance with regulations which the Secretary shall 
prescribe, is necessary to cover the cost of established 
charges for tuition and fees required of similarly 
circumstanced nonveterans enrolled in the same program and the 
cost of necessary supplies, books, and equipment, or the 
applicable monthly educational assistance allowance prescribed 
for a veteran with no dependents in subsection (a)(1) or (c)(2) 
of this section or section 3687(b)(1) of this title whichever 
is the lesser. The amount of the educational assistance 
allowance payable to a veteran while so incarcerated shall be 
reduced to the extent that the tuition and fees of the veteran 
for any course are paid under any Federal program (other than a 
program administered by the Secretary) or under any State or 
local program.

           *       *       *       *       *       *       *

CHAPTER 35. SURVIVORS' AND DEPENDENTS' EDUCATIONAL ASSISTANCE

           *       *       *       *       *       *       *

              Subchapter IV. Payments to Eligible Persons

3531. Educational assistance allowance.
3532. Computation of educational assistance allowance.
3532A. Accelerated payment of educational assistance allowance.
3533. Special assistance for the educationally disadvantaged.
3534. Apprenticeship or other on-job training; correspondence courses.
3535. Approval of courses.
3536. Specialized vocational training courses.
3537. Work-study allowance.
[3538. Repealed.]

           *       *       *       *       *       *       *

Sec. 3532. Computation of educational assistance allowance

           *       *       *       *       *       *       *

    (e) In the case of an eligible person who is pursuing a 
program of education under this chapter while incarcerated in a 
Federal, State, [or local penal institution] local, or other 
penal institution or correctional facility for conviction of a 
felony, the educational assistance allowance shall be paid in 
the same manner prescribed in section 3482(g) of this title for 
incarcerated veterans, except that the references therein to 
the monthly educational assistance allowance prescribed for a 
veteran with no dependents shall be deemed to refer to the 
applicable allowance payable to an eligible person under 
corresponding provisions of this chapter or chapter 36 of this 
title, as determined by the Secretary.

           *       *       *       *       *       *       *

Sec. 3532A. Accelerated payment of educational assistance allowance

    (a) The educational assistance allowance payable under 
section 3531 of this title with respect to an eligible person 
described in subsection (b) may, upon the election of such 
eligible person, be paid on an accelerated basis in accordance 
with this section.
    (b) An eligible person described in this subsection is an 
individual who is--
          (1) enrolled in either--
                  (A) an approved program of education that 
                leads to employment in a high technology 
                occupation in a high technology industry (as 
                determined pursuant to regulations prescribed 
                by the Secretary); or
                  (B) an approved program of education lasting 
                less than two years that (as so determined) 
                leads to employment in the--
                          (i) transportation sector of the 
                        economy;
                          (ii) construction sector of the 
                        economy;
                          (iii) hospitality sector of the 
                        economy; or
                          (iv) energy sector of the economy; 
                        and
          (2) charged tuition and fees for the program of 
        education that, when divided by the number of months 
        (and fractions thereof) in the enrollment period, 
        exceeds the amount equal to 200 percent of the monthly 
        rate of educational assistance allowance otherwise 
        payable with respect to the individual under section 
        3531 of this title.
    (c)(1) The amount of the accelerated payment of educational 
assistance payable with respect to an eligible person making an 
election under subsection (a) for a program of education shall 
be the lesser of--
          (A) the amount equal to 60 percent of the established 
        charges for the program of education; or
          (B) the aggregate amount of educational assistance 
        allowance to which the individual remains entitled 
        under this chapter at the time of payment.
    (2) In this subsection, the term ``established charges'', 
in the case of a program of education, means the actual charges 
(as determined pursuant to regulations prescribed by the 
Secretary) for tuition and fees which similarly circumstanced 
nonveterans enrolled in the program of education would be 
required to pay. Established charges shall be determined on the 
following basis:
          (A) In the case of an individual enrolled in a 
        program of education offered on a term, quarter, or 
        semester basis, the tuition and fees charged the 
        individual for the term, quarter, or semester.
          (B) In the case of an individual enrolled in a 
        program of education not offered on a term, quarter, or 
        semester basis, the tuition and fees charged the 
        individual for the entire program of education.
    (3) The educational institution providing the program of 
education for which an accelerated payment of educational 
assistance allowance is elected by an eligible person under 
subsection (a) shall certify to the Secretary the amount of the 
established charges for the program of education.
    (d) An accelerated payment of educational assistance 
allowance made with respect to an eligible person under this 
section for a program of education shall be made not later than 
the last day of the month immediately following the month in 
which the Secretary receives a certification from the 
educational institution regarding--
          (1) the person's enrollment in and pursuit of the 
        program of education; and
          (2) the amount of the established charges for the 
        program of education.
    (e)(1) Except as provided in paragraph (2), for each 
accelerated payment of educational assistance allowance made 
with respect to an eligible person under this section, the 
person's entitlement to educational assistance under this 
chapter shall be charged the number of months (and any fraction 
thereof) determined by dividing the amount of accelerated 
payment by the full-time monthly rate of educational assistance 
allowance otherwise payable with respect to the person under 
section 3531 of this title as of the beginning date of the 
enrollment period for the program of education for which the 
accelerated payment is made.
    (2) If the monthly rate of educational assistance allowance 
otherwise payable with respect to an eligible person under 
section 3531 of this title increases during the enrollment 
period of a program of education for which an accelerated 
payment of educational assistance allowance is made under this 
section, the charge to the person's entitlement to educational 
assistance under this chapter shall be determined by prorating 
the entitlement chargeable, in the manner provided for under 
paragraph (1), for the periods covered by the initial rate and 
increased rate, respectively, in accordance with regulations 
prescribed by the Secretary.
    (f) The Secretary may not make an accelerated payment of 
educational assistance allowance under this section for a 
program of education with respect to an eligible person who has 
received an advance payment under section 3680(d) of this title 
for the same enrollment period.
    (g) The Secretary shall prescribe regulations to carry out 
this section. The regulations shall include requirements, 
conditions, and methods for the request, issuance, delivery, 
certification of receipt and use, and recovery of overpayment 
of an accelerated payment of educational assistance allowance 
under this section. The regulations may include such elements 
of the regulations prescribed under section 3014A of this title 
as the Secretary considers appropriate for purposes of this 
section.

           *       *       *       *       *       *       *

           CHAPTER 36. ADMINISTRATION OF EDUCATIONAL BENEFITS

Subchapter I. State Approving Agencies

           *       *       *       *       *       *       *

Sec. 3674. Reimbursement of expenses

    (a) * * *

           *       *       *       *       *       *       *

          (2)(A) The Secretary shall make payments to State and 
        local agencies, out of amounts available for the 
        payment of readjustment benefits, and is authorized to 
        make additional payments subject to the availability of 
        appropriations, for the reasonable and necessary 
        expenses of salary and travel incurred by employees of 
        such agencies in carrying out contracts or agreements 
        entered into under this section, for expenses approved 
        by the Secretary that are incurred in carrying out 
        activities described in section 3674A(a)(3) of this 
        title (except for administrative overhead expenses 
        allocated to such activities), and for the allowance 
        for administrative expenses described in subsection 
        (b).
          (B) The Secretary shall make such a payment to an 
        agency within a reasonable time after the agency has 
        submitted a report pursuant to paragraph (3) of this 
        subsection.
          (C) Subject to paragraph (4) of this subsection, the 
        amount of any such payment made to an agency for any 
        period shall be equal to the amount of the reasonable 
        and necessary expenses of salary and travel certified 
        by such agency for such period in accordance with 
        paragraph (3) of this subsection plus the allowance for 
        administrative expenses described in subsection (b) and 
        the amount of expenses approved by the Secretary that 
        are incurred in carrying out activities described in 
        section 3674A(a)(3) of this title for such period 
        (except for administrative overhead expenses allocated 
        to such activities).
          (3) Each State and local agency with which a contract 
        or agreement is entered into under this section shall 
        submit to the Secretary on a monthly or quarterly 
        basis, as determined by the agency, a report containing 
        a certification of the reasonable and necessary 
        expenses incurred for salary and travel by such agency 
        under such contract or agreement for the period covered 
        by the report. The report shall be submitted in the 
        form and manner required by the Secretary.
          (4) [The total amount made available under this 
        section for any fiscal year may not exceed $13,000,000 
        or, for each of fiscal years 2001 and 2002, 
        $14,000,000, for fiscal year 2003, $14,000,000, for 
        fiscal year 2004, $18,000,000, for fiscal year 2005, 
        $18,000,000, for fiscal year 2006, $19,000,000, and for 
        fiscal year 2007, $19,000,000.] The total amount 
        authorized and available under this section for any 
        fiscal year may not exceed $19,000,000, except that the 
        total amount made available for purposes of this 
        section from amounts available for the payment of 
        readjustment benefits may not exceed $19,000,000 for 
        fiscal years 2006 and 2007, $13,000,000 for fiscal 
        years 2008 and 2009, $8,000,000 for each of fiscal 
        years 2010 through 2013, and $13,000,000 for fiscal 
        year 2014 and each subsequent fiscal year. For any 
        fiscal year in which the total amount that would be 
        made available under this section would exceed the 
        amount applicable to that fiscal year under the 
        preceding sentence except for the provisions of this 
        paragraph, the Secretary shall provide that each agency 
        shall receive the same percentage of the amount 
        applicable to that fiscal year under the preceding 
        sentence as the agency would have received of the total 
        amount that would have been made available without the 
        limitation of this paragraph.

           *       *       *       *       *       *       *

CHAPTER 37. HOUSING AND SMALL BUSINESS LOANS

           *       *       *       *       *       *       *

                          Subchapter II. Loans

Sec. 3710. Purchase or construction of homes

    (a) * * *

           *       *       *       *       *       *       *

          (11) * * *
          (12) To purchase stock or membership in a cooperative 
        housing corporation for the purpose of entitling the 
        veteran to occupy for dwelling purposes a single family 
        residential unit in a development, project, or 
        structure owned or leased by such corporation, in 
        accordance with subsection (h).

           *       *       *       *       *       *       *

    (h)(1) A loan may not be guaranteed under subsection 
(a)(12) unless--
          (A) the development, project, or structure of the 
        cooperative housing corporation complies with such 
        criteria as the Secretary prescribes in regulations; 
        and
          (B) the dwelling unit that the purchase of stock or 
        membership in the development, project, or structure of 
        the cooperative housing corporation entitles the 
        purchaser to occupy is a single family residential 
        unit.
    (2) In this subsection, the term ``cooperative housing 
corporation'' has the same meaning given such term in section 
216(b)(1) of the Internal Revenue Code of 1986.
    (3) When applying the term ``value of the property'' to a 
loan guaranteed under subsection (a)(12), such term means the 
appraised value of the stock or membership entitling the 
purchaser to the permanent occupancy of the dwelling unit in 
the development, project, or structure of the cooperative 
housing corporation.

           *       *       *       *       *       *       *

PART IV. GENERAL ADMINISTRATIVE PROVISIONS

           *       *       *       *       *       *       *

CHAPTER 53. SPECIAL PROVISIONS RELATING TO BENEFITS

           *       *       *       *       *       *       *

Sec. 5313. Limitation on payment of compensation and dependency and 
                    indemnity compensation to persons incarcerated for 
                    conviction of a felony

    (a)(1) To the extent provided in subsection (d) of this 
section, any person who is entitled to compensation or to 
dependency and indemnity compensation and who is incarcerated 
in a Federal, State, [or local penal institution] local, or 
other penal institution or correctional facility for a period 
in excess of sixty days for conviction of a felony shall not be 
paid such compensation or dependency and indemnity 
compensation, for the period beginning on the sixty-first day 
of such incarceration and ending on the day such incarceration 
ends, in an amount that exceeds--
    (b) * * *

           *       *       *       *       *       *       *

          (3) No apportionment may be made under this 
        subsection to or on behalf of any person who is 
        incarcerated in a Federal, State, [or local penal 
        institution] local, or other penal institution or 
        correctional facility for conviction of a felony.
    (c) The Secretary shall not assign to any veteran a rating 
of total disability based on the individual unemployability of 
the veteran resulting from a service-connected disability 
during any period during which the veteran is incarcerated in a 
Federal, State, [or local penal institution] local, or other 
penal institution or correctional facility for conviction of a 
felony.

           *       *       *       *       *       *       *

Sec. 5313A. Limitation on payment of clothing allowance to incarcerated 
                    veterans

    In the case of a veteran who is incarcerated in a Federal, 
State, [or local penal institution] local, or other penal 
institution or correctional facility for a period in excess of 
60 days and who is furnished clothing without charge by the 
institution, the amount of any annual clothing allowance 
payable to the veteran under section 1162 of this title shall 
be reduced by an amount equal to 1/365 of the amount of the 
allowance otherwise payable under that section for each day on 
which the veteran was so incarcerated during the 12-month 
period preceding the date on which payment of the allowance 
would be due. This section shall be carried out under 
regulations prescribed by the Secretary.

           *       *       *       *       *       *       *

Sec. 5317. Use of income information from other agencies: notice and 
                    verification

           *       *       *       *       *       *       *

    (g) The authority of the Secretary to obtain information 
from the Secretary of the Treasury or the Commissioner of 
Social Security under section 6103(1)(7)(D)(viii) of the 
Internal Revenue Code of 1986 expires on [September 30, 2008] 
September 30, 2011.

           *       *       *       *       *       *       *

CHAPTER 59. AGENTS AND ATTORNEYS

           *       *       *       *       *       *       *

Sec. 5902. Recognition of representatives of organizations

           *       *       *       *       *       *       *

    (b)(1) No individual shall be recognized under this 
section--
          [(1)] (A) unless the individual has certified to the 
        Secretary that no fee or compensation of any nature 
        will be charged any individual for services rendered in 
        connection with any claim; and
          [(2)] (B) unless, with respect to each claim, such 
        individual has filed with the Secretary a power of 
        attorney, executed in such manner and form as the 
        Secretary may prescribe.
          (2) An individual recognized under this section shall 
        be subject to the provisions of 5904(b) of this title 
        on the same basis as an individual recognized under 
        section 5904(a) of this title.

           *       *       *       *       *       *       *

Sec. 5903. Recognition with respect to particular claims

    (a) In General.--The Secretary may recognize any individual 
for the preparation, presentation, and prosecution of any 
particular claim for benefits under any of the laws 
administered by the Secretary if--
          (1) such individual has certified to the Secretary 
        that no fee or compensation of any nature will be 
        charged any individual for services rendered in 
        connection with such claim; and
          (2) such individual has filed with the Secretary a 
        power of attorney, executed in such manner and in such 
        form as the Secretary may prescribe.
    (b) Suspension.--An individual recognized under this 
section shall be subject to the provisions of section 5904(b) 
of this title on the same basis as an individual recognized 
under section 5904(a) of this title.

Sec. 5904. Recognition of agents and attorneys generally

    (a)(1) The Secretary may recognize any individual as an 
agent or attorney for the preparation, presentation, and 
prosecution of claims under laws administered by the Secretary. 
[The Secretary may require that individuals, before being 
recognized under this section, show that they are of good moral 
character and in good repute, are qualified to render claimants 
valuable service, and otherwise are competent to assist 
claimants in presenting claims.]
    (2) The Secretary may prescribe in regulations 
qualifications and standards of conduct for individuals 
recognized under this section, including a requirement that, 
before being recognized, an individual--
          (A) show that such individual is of good moral 
        character and in good repute, is qualified to render 
        claimants valuable service, and is otherwise competent 
        to assist claimants in presenting claims;
          (B) has such level of experience and specialized 
        training as the Secretary shall specify; and
          (C) certifies to the Secretary that the individual 
        has satisfied any qualifications and standards 
        prescribed by the Secretary under this section.
    (3) The Secretary may prescribe in regulations reasonable 
restrictions on the amount of fees that an agent or attorney 
may charge a claimant for services rendered in the preparation, 
presentation, and prosecution of a claim before the Department.
    (4)(A) The Secretary may, on a periodic basis, collect a 
registration fee from individuals recognized as agents or 
attorneys under this section.
    (B) The Secretary shall prescribe the amount and frequency 
of collection of such fees. The amount of such fees may include 
an amount, as specified by the Secretary, necessary to defray 
the costs to the Department in recognizing individuals under 
this section, in administering the collection of such fees, in 
administering the payment of fees under subsection (d), and in 
conducting oversight of agents or attorneys.
    (C) Amounts so collected shall be deposited in the account 
from which amounts for such costs were derived, merged with 
amounts in such account, and available for the same purpose, 
and subject to the same conditions and limitations, as amounts 
in such account.
    (b) The Secretary, after notice and opportunity for a 
hearing, may suspend or exclude from further practice before 
the Department any agent or attorney recognized under this 
section if the Secretary finds that such agent or attorney--
          (1) has engaged in any unlawful, unprofessional, or 
        dishonest practice;
          (2) has been guilty of disreputable conduct;
          (3) is incompetent;
          (4) has violated or refused to comply with any of the 
        laws administered by the Secretary, or with any of the 
        regulations or instructions governing practice before 
        the Department; [or]
          (5) has in any manner deceived, misled, or threatened 
        any actual or prospective claimant[.];
          (6) has presented frivolous claims, issues, or 
        arguments to the Department; or
          (7) has failed to comply with any other condition 
        specified by the Secretary in regulations prescribed by 
        the Secretary for purposes of this subsection.
    (c)[(1) Except as provided in paragraph (3), in connection 
with a proceeding before the Department with respect to 
benefits under laws administered by the Secretary, a fee may 
not be charged, allowed, or paid for services of agents and 
attorneys with respect to services provided before the date on 
which the Board of Veterans' Appeals first makes a final 
decision in the case. Such a fee may be charged, allowed, or 
paid in the case of services provided after such date only if 
an agent or attorney is retained with respect to such case 
before the end of the one-year period beginning on that date. 
The limitation in the preceding sentence does not apply to 
services provided with respect to proceedings before a court.]
          [(2)] (1) A person who, acting as agent or attorney 
        [in a case referred to in paragraph (1) of this 
        subsection], represents a person before the Department 
        or the Board of Veterans' Appeals [after the Board 
        first makes a final decision in the case] shall file a 
        copy of any fee agreement between them [with the Board 
        at such time as may be specified by the Board] with the 
        Secretary pursuant to regulations prescribed by the 
        Secretary. [The Board, upon its own motion or the 
        request of either party, may review such a fee 
        agreement and may order a reduction in the fee called 
        for in the agreement if the Board finds that the fee is 
        excessive or unreasonable. A finding or order of the 
        Board under the preceding sentence may be reviewed by 
        the United States Court of Appeals for Veterans Claims 
        under section 7263(d) of this title.]
          (2)(A) The Secretary, upon the Secretary's own motion 
        or at the request of the claimant, may review a fee 
        agreement filed pursuant to paragraph (1) and may order 
        a reduction in the fee called for in the agreement if 
        the Secretary finds that the fee is excessive or 
        unreasonable.
          (B) A finding or order of the Secretary under 
        subparagraph (A) may be reviewed by the Board of 
        Veterans' Appeals under section 7104 of this title.

           *       *       *       *       *       *       *

Sec. 5905. Penalty for certain acts

    Whoever [(1) directly or indirectly solicits, contracts 
for, charges, or receives, or attempts to solicit, contract 
for, charge, or receive, any fee or compensation except as 
provided in sections 5904 or 1984 of this title, or (2)] 
wrongfully withholds from any claimant or beneficiary any part 
of a benefit or claim allowed and due to the claimant or 
beneficiary, shall be fined as provided in title 18, or 
imprisoned for not more than one year, or both.

           *       *       *       *       *       *       *

PART V. BOARDS, ADMINISTRATIONS, AND SERVICES

           *       *       *       *       *       *       *

CHAPTER 73. VETERANS HEALTH ADMINISTRATION-ORGANIZATION AND FUNCTIONS

           *       *       *       *       *       *       *

          Subchapter II. General Authority and Administration

7311. Quality assurance.
7312. Special medical advisory group.
7313. Advisory committees: affiliated institutions.
7314. Geriatric research, education, and clinical centers.
7315. Geriatrics and Gerontology Advisory Committee.
7316. Malpractice and negligence suits: defense by United States.
7317. Hazardous research projects: indemnification of contractors.
7318. National Center for Preventive Health.
7319. Mammography quality standards.
7320. Centers for mental illness research, education, and clinical 
          activities.
7321. Committee on Care of Severely Chronically Mentally Ill Veterans.
7322. Breast cancer mammography policy.
7323. Required consultations with nurses.
7324. Annual report on use of authorities to enhance retention of 
          experienced nurses.
7325. Medical emergency preparedness centers.
7326. Education and training programs on medical response to 
          consequences of terrorist activities.
7327. Centers for research, education, and clinical activities on 
          complex multi-trauma associated with combat injuries.
7328. Medical preparedness centers.
7329. Parkinson's disease research, education, and clinical centers and 
          multiple sclerosis centers of excellence.

           *       *       *       *       *       *       *

Sec. 7328. Medical preparedness centers

           *       *       *       *       *       *       *

Sec. 7329. Parkinson's disease research, education, and clinical 
                    centers and multiple sclerosis centers of 
                    excellence

    (a) Designation.--The Secretary, upon the recommendation of 
the Under Secretary for Health and pursuant to the provisions 
of this section, shall--
          (1) designate--
                  (A) at least 6 Department health care 
                facilities as the locations for centers of 
                Parkinson's disease research, education, and 
                clinical activities and (subject to the 
                appropriation of sufficient funds for such 
                purpose); and
                  (B) at least 2 Department health care 
                facilities as the locations for Multiple 
                Sclerosis Centers of Excellence (subject to the 
                appropriation of sufficient funds for such 
                purpose); and
          (2) establish and operate such centers at such 
        locations in accordance with this section.
    (b) Existing Facilities; Geographic Distribution.--In 
designating locations for centers under subsection (a), the 
Secretary, upon the recommendation of the Under Secretary for 
Health, shall--
          (1) designate each Department health care facility 
        that, as of January 1, 2005, was operating a 
        Parkinson's Disease Research, Education, and Clinical 
        Center or a Multiple Sclerosis Center of Excellence 
        unless the Secretary, on the recommendation of the 
        Under Secretary for Health, determines that such 
        facility--
                  (A) does not meet the requirements of 
                subsection (c);
                  (B) has not demonstrated effectiveness in 
                carrying out the established purposes of such 
                center; or
                  (C) has not demonstrated the potential to 
                carry out such purposes effectively in the 
                reasonably foreseeable future; and
          (2) assure appropriate geographic distribution of 
        such facilities.
    (c) Minimum Requirements.--The Secretary may not designate 
a health care facility as a location for a center under 
subsection (a) unless--
          (1) the peer review panel established under 
        subsection (d) determines that the proposal submitted 
        by such facility is among those proposals which meet 
        the highest competitive standards of scientific and 
        clinical merit; and
          (2) the Secretary, upon the recommendation of the 
        Under Secretary for Health, determines that the 
        facility has (or may reasonably be anticipated to 
        develop)--
                  (A) an arrangement with an accredited medical 
                school which provides education and training in 
                neurology and with which such facility is 
                affiliated under which residents receive 
                education and training in innovative diagnosis 
                and treatment of chronic neurodegenerative 
                diseases and movement disorders, including 
                Parkinson's disease, or in the case of Multiple 
                Sclerosis Centers, multiple sclerosis disease;
                  (B) the ability to attract the participation 
                of scientists who are capable of ingenuity and 
                creativity in health-care research efforts;
                  (C) a policymaking advisory committee 
                composed of consumers and appropriate health 
                care and research representatives of the 
                facility and of the affiliated school or 
                schools to advise the directors of such 
                facility and such center on policy matters 
                pertaining to the activities of such center 
                during the period of the operation of such 
                center;
                  (D) the capability to conduct effectively 
                evaluations of the activities of such center;
                  (E) the capability to coordinate, as part of 
                an integrated national system, education, 
                clinical, and research activities within all 
                facilities with such centers;
                  (F) the capability to jointly develop a 
                consortium of providers with interest in 
                treating neurodegenerative diseases, including 
                Parkinson's disease, and other movement 
                disorders, or multiple sclerosis in the case of 
                Multiple Sclerosis Centers, at facilities 
                without such centers in order to ensure better 
                access to state of the art diagnosis, care, and 
                education for neurodegenerative disorders, or 
                in the case of the Multiple Sclerosis Centers, 
                autoimmune disease affecting the central 
                nervous system throughout the health care 
                system; and
                  (G) the capability to develop a national 
                repository in the health care system for the 
                collection of data on health services delivered 
                to veterans seeking care for neurodegenerative 
                diseases, including Parkinson's disease, and 
                other movement disorders, or in the case of 
                Multiple Sclerosis Centers, autoimmune disease 
                affecting the central nervous system.
    (d) Panel.--
          (1) The Under Secretary for Health shall establish a 
        panel to assess the scientific and clinical merit of 
        proposals that are submitted to the Secretary for the 
        establishment of new centers under this section.
          (2)(A) The membership of the panel shall consist of 
        experts in neurodegenerative diseases, including 
        Parkinson's disease and other movement disorders, and, 
        in the case of Multiple Sclerosis Centers, experts in 
        autoimmune disease affecting the central nervous 
        system.
          (B) Members of the panel shall serve as consultants 
        to the Department for a period of no longer than 2 
        years except in the case of panelists asked to serve on 
        the initial panel as specified in subparagraph (C).
          (C) In order to ensure panel continuity, half of the 
        members of the first panel shall be appointed for a 
        period of 3 years and half for a period of 2 years.
          (3) The panel shall review each proposal submitted to 
        the panel by the Under Secretary and shall submit its 
        views on the relative scientific and clinical merit of 
        each such proposal to the Under Secretary.
          (4) The panel shall not be subject to the Federal 
        Advisory Committee Act.
    (e) Adequate Funding.--Before providing funds for the 
operation of any such center at a health care facility other 
than a health care facility designated under subsection (b)(1), 
the Secretary shall ensure that--
          (1) the Parkinson's disease center at each facility 
        designated under subsection (b)(1) is receiving 
        adequate funding to enable such center to function 
        effectively in the areas of Parkinson's disease 
        research, education, and clinical activities; and
          (2) in the case of a new Multiple Sclerosis Center, 
        that existing centers are receiving adequate funding to 
        enable such centers to function effectively in the 
        areas of multiple sclerosis research, education, and 
        clinical activities.
    (f) Authorization of Appropriations.--
          (1) There are authorized to be appropriated such sums 
        as may be necessary for the support of the research and 
        education activities of the centers established under 
        subsection (a).
          (2) The Under Secretary for Health shall allocate to 
        such centers from other funds appropriated generally 
        for the Department of medical services account and 
        medical and prosthetics research account, as 
        appropriate, such amounts as the Under Secretary for 
        Health determines appropriate.
    (g) Funding Eligibility and Priority for Parkinson's 
Disease Research.--Activities of clinical and scientific 
investigation at each center established under subsection (a) 
for Parkinson's disease shall--
          (1) be eligible to compete for the award of funding 
        from funds appropriated for the Department medical and 
        prosthetics research account; and
          (2) receive priority in the award of funding from 
        such account to the extent funds are awarded to 
        projects for research in Parkinson's disease and other 
        movement disorders.
    (h) Funding Eligibility and Priority for Multiple Sclerosis 
Research.--Activities of clinical and scientific investigation 
at each center established under subsection (a) for multiple 
sclerosis shall--
          (1) be eligible to compete for the award of funding 
        from funds appropriated for the Department medical and 
        prosthetics research account; and
          (2) receive priority in the award of funding from 
        such account to the extent funds are awarded to 
        projects for research in multiple sclerosis and other 
        movement disorders.

           *       *       *       *       *       *       *

PART VI. ACQUISITION AND DISPOSITION OF PROPERTY

           *       *       *       *       *       *       *

   CHAPTER 81. ACQUISITION AND OPERATION OF HOSPITAL AND DOMICILIARY 
    FACILITIES; PROCUREMENT AND SUPPLY; ENHANCED-USE LEASES OF REAL 
PROPERTY

           *       *       *       *       *       *       *

   Subchapter III. State Home Facilities for Furnishing Domiciliary, 
                    Nursing Home, and Hospital Care

8131. Definitions.
8132. Declaration of purpose.
8133. Authorization of appropriations.
8134. General regulations.
8135. Applications with respect to projects; payments.
8136. Recapture provisions.
8137. State control of operations.
8138. Treatment of certain health facilities as State homes.

           *       *       *       *       *       *       *

Sec. 8137. State control of operations

           *       *       *       *       *       *       *

Sec. 8138. Treatment of certain health facilities as State homes

    (a) The Secretary may treat a health facility, or certain 
beds in a health facility, as a State home for purposes of 
subchapter V of chapter 17 of this title if the following 
requirements are met:
          (1) The facility, or certain beds in such facility, 
        meets the standards for the provision of nursing home 
        care that is applicable to State homes, as prescribed 
        by the Secretary under section 8134(b) of this title, 
        and such other standards relating to the facility, or 
        certain beds in such facility, as the Secretary may 
        require.
          (2) The facility, or certain beds in such facility, 
        is licensed or certified by the appropriate State and 
        local agencies charged with the responsibility of 
        licensing or otherwise regulating or inspecting State 
        home facilities.
          (3) The State demonstrates in an application to the 
        Secretary that, but for the treatment of a facility (or 
        certain beds in such facility), as a State home under 
        this subsection, a substantial number of veterans 
        residing in the geographic area in which the facility 
        is located who require nursing home care will not have 
        access to such care.
          (4) The Secretary determines that the treatment of 
        the facility, or certain beds in such facility, as a 
        State home best meets the needs of veterans for nursing 
        home care in the geographic area in which the facility 
        is located.
          (5) The Secretary approves the application submitted 
        by the State with respect to the facility, or certain 
        beds in such facility.
    (b) The Secretary may not treat a health facility, or 
certain beds in a health facility, as a State home under 
subsection (a) if the Secretary determines that such treatment 
would increase the number of beds allocated to the State in 
excess of the limit on the number of beds provided for by 
regulations prescribed under section 8134(a) of this title.
      (c) The number of beds occupied by veterans in a health 
facility for which payment may be made under subchapter V of 
chapter 17 of this title by reason of subsection (a) shall not 
exceed--
          (1) 100 beds in the aggregate for all States; and
          (2) in the case of any State, the difference 
        between--
                  (A) the number of veterans authorized to be 
                in beds in State homes in such State under 
                regulations prescribed under section 8134(a) of 
                this title; and
                  (B) the number of veterans actually in beds 
                in State homes (other than facilities or 
                certain beds treated as State homes under 
                subsection (a)) in such State under regulations 
                prescribed under such section.
    (d) The number of beds in a health facility in a State that 
has been treated as a State home under subsection (a) shall be 
taken into account in determining the unmet need for beds for 
State homes for the State under section 8134(d)(1) of this 
title.
    (e) The Secretary may not treat any new health facilities, 
or any new certain beds in a health facility, as a State home 
under subsection (a) after September 20, 2009.

           *       *       *       *       *       *       *

TITLE 42, UNITED STATES CODE

           *       *       *       *       *       *       *

CHAPTER 8. LOW-INCOME HOUSING

           *       *       *       *       *       *       *

Sec. 1437f. Low-income housing assistance

    (o) * * *

           *       *       *       *       *       *       *

        (19) * * *
                  [(B) Amount.--The amount specified in this 
                subparagraph is--
                          [(i) for fiscal year 2003, the amount 
                        necessary to provide 500 vouchers for 
                        rental assistance under this 
                        subsection;
                          [(ii) for fiscal year 2004, the 
                        amount necessary to provide 1,000 
                        vouchers for rental assistance under 
                        this subsection;
                          [(iii) for fiscal year 2005, the 
                        amount necessary to provide 1,500 
                        vouchers for rental assistance under 
                        this subsection; and
                          [(iv) for fiscal year 2006, the 
                        amount necessary to provide 2,000 
                        vouchers for rental assistance under 
                        this subsection.]
                  (B) Amount.--The amount specified in this 
                subparagraph is--
                          (i) for fiscal year 2007, the amount 
                        necessary to provide 500 vouchers for 
                        rental assistance under this 
                        subsection;
                          (ii) for fiscal year 2008, the amount 
                        necessary to provide 1,000 vouchers for 
                        rental assistance under this 
                        subsection;
                          (iii) for fiscal year 2009, the 
                        amount necessary to provide 1,500 
                        vouchers for rental assistance under 
                        this subsection; and
                          (iv) for fiscal year 2010, the amount 
                        necessary to provide 2,000 vouchers for 
                        rental assistance under this 
                        subsection; and
                          (v) for fiscal year 2011, the amount 
                        necessary to provide 2,500 vouchers for 
                        rental assistance under this 
                        subsection.
                  [(C) Funding through incremental 
                assistance.--In any fiscal year, to the extent 
                that this paragraph requires the Secretary to 
                set aside rental assistance amounts for use 
                under this paragraph in an amount that exceeds 
                the amount set aside in the preceding fiscal 
                year, such requirement shall be effective only 
                to such extent or in such amounts as are or 
                have been provided in appropriation Acts for 
                such fiscal year for incremental rental 
                assistance under this subsection.]

                                  
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