99–010

Calendar No. 542

107TH CONGRESS REPORT

2nd Session " ! SENATE 107–234

VETERANS HEARING LOSS COMPENSATION ACT OF 2002

AUGUST 1, 2002.—Ordered to be printed

Mr. ROCKEFELLER, from the Committee on Veterans’ Affairs,

submitted the following

REPORT

[To accompany S. 2237]

The Committee on Veterans’ Affairs, to which was referred the

bill S. 2237, to amend title 38, United States Code, to enhance compensation for veterans with hearing loss, and for other purposes,

having considered the same, reports favorably thereon with an

amendment in the nature of a substitute and an amendment to the

title, and recommends that the bill, as amended, do pass.

INTRODUCTION

On April 24, 2002, Committee Chairman John D. Rockefeller IV

introduced S. 2237. S. 2237, as introduced, would have amended

provisions of title 38, United States Code, to enhance compensation

for veterans with hearing loss.

On June 27, 2001, S. 1113 was introduced by Ranking Committee Member Arlen Specter. Senator Mary Landrieu later cosponsored the bill. S. 1113 would have increased the amount of

Medal of Honor Roll special pension, to provide for an annual adjustment in the amount of that special pension.

On November 13, 2001, S. 1680 was introduced by Committee

member Paul D. Wellstone. The bill was later cosponsored by Senators Joseph R. Biden Jr., Christopher S. Bond, Thomas R. Carper,

Hillary Rodham Clinton, Mark Dayton, Richard J. Durbin, Judd

Gregg, Tim Johnson, Patrick J. Leahy, Harry M. Reid, and Charles

E. Schumer. S. 1680 would have amended the Soldiers’ and Sailors’

Civil Relief Act of 1940 to provide that duty of the National Guard

mobilized by a State in support of Operation Enduring Freedom, or
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otherwise at the request of the President, would qualify as military

service under that Act.

On January 29, 2002, S. 1905 was introduced by Chairman

Rockefeller at the request of the Administration. S. 1905 would

have enhanced veterans’ programs and the ability of the Department of Veterans Affairs to administer them.

On March 8, 2002, S. 2003 was introduced by Senator Bill Nelson and cosponsored by Senators Jeff Bingaman, John B. Breaux,

Kent Conrad, Tim Johnson, Mary L. Landrieu, and John McCain.

The bill was later cosponsored by Committee members Larry Craig,

Patty Murray, and Ben Nelson, and Senators Max Cleland, Durbin,

Daniel K. Inouye, John F. Kerry, Carl Levin, Joseph I. Lieberman,

and Jeff Sessions. S. 2003 would have clarified the applicability of

the prohibition on assignment of veterans benefits to agreements

regarding future receipt of compensation, pension, or dependency

and indemnity compensation.

On March 22, 2002, S. 2073 was introduced by Committee member Craig. S. 2073 would have provided for the retroactive entitlement of Ed W. Freemen to Medal of Honor special pension.

On April 9, 2002, S. 2079 was introduced by Chairman Rockefeller. The bill was later cosponsored by Senators Kent Conrad and

Tim Johnson. S. 2079 would have facilitated and enhanced judicial

review of certain matters regarding veteran’s benefits.

On April 18, 2002, Chairman Rockefeller introduced S. 2205. S.

2205 would have clarified the entitlement to disability compensation of women veterans who have service-connected mastectomies,

to provide permanent authority for counseling and treatment for

sexual trauma, and for other purposes.

On April 23, 2002, Ranking Committee Member Specter introduced S. 2230 with the co-sponsorship of Chairman Rockefeller.

The bill was later cosponsored by Committee member Craig. S.

2230 would have made permanent the authority of the Secretary

of Veterans Affairs to guarantee adjustable rate mortgages, and to

authorize the guarantee of hybrid adjustable rate mortgages.

On April 23, 2002, Ranking Committee Member Specter introduced S. 2231 with the cosponsorship of Chairman Rockefeller.

Committee member Craig later cosponsored the bill. S. 2231 would

have provided an incremental increase in amounts of educational

assistance for survivors and dependents of veterans.

On May 2, 2002, the Committee held a hearing, chaired by Senator Rockefeller, to receive testimony on S. 1113, S. 1680, S. 1905,

S. 2003, S. 2073, S. 2079, S. 2205, S. 2230, S. 2231, and S. 2237.

Testimony was heard from: The Honorable Tim McClain, General

Counsel, Department of Veterans Affairs; Mr. James Fischl, Director, National Veterans Affairs and Rehabilitation Commission, The

American Legion; Mr. Joseph Violante, National Legislative Director, Disabled American Veterans; Mr. David Tucker, Associate Legislative Director, Paralyzed Veterans of America; and Mr. Dennis

Cullinan, Director, National Legislative Service, Veterans of Foreign Wars.

After carefully reviewing the testimony from the foregoing hearing, the Committee met in open session on June 6, 2002, and voted

unanimously to report favorably S. 2237, as amended to include

provisions from S. 1680, S. 1905, S. 2003, S. 2073, S. 2079, S. 2205,
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S. 2230, S. 2231, and S. 2237. Present were Senators Rockefeller,

Jeffords, Wellstone, Murray, Miller, Nelson, Specter, Thurmond,

Murkowski, Hutchinson and Hutchison. Speakers included Senators Rockefeller, Jeffords, Wellstone, Murray, Specter and Murkowski. The vote to pass the Committee’s bill was unanimous.

SUMMARY OF THE COMMITTEE BILL AS REPORTED

S. 2237 as reported (hereinafter referred to as the ‘‘Committee

bill’’) contains various amendments to title 38 of the United States

Code and other freestanding provisions that would:

(a) clarify the entitlement to special monthly compensation

for women veterans who have service-connected mastectomies

by specifying that female veterans who have lost half or more

of a breast’s tissue are eligible for compensation;

(b) remove the ‘‘total deafness’’ requirement for the non-service-connected ear for compensation for hearing loss in paired

organs, allowing the Department of Veterans Affairs (hereinafter ‘‘VA’’) to consider partial non-service-connected hearing

loss when rating disability;

(c) give authority for presumption of service-connected hearing loss associated with particular military occupational specialties and allow VA to contract with an independent scientific

organization to review evidence of occupational hearing loss,

particularly that suffered during military service; (d) increase Medal of Honor pension from $600 to $1000 per

month, provide a cost of living adjustment for the pension, and

make retroactive lump-sum payments of pension;

(e) prohibit the assignment of monthly veteran’s benefits;

(f) extend the effective date of certain Omnibus Budget Reconciliation Act provisions to September 30, 2011;

(g) provide for an increase in the aggregate annual amount

authorized for State approving agencies for administrative expenses from $14,000,000 to $18,000,000 in the Fiscal Years

2003, 2004, and 2005;

(h) clarify and correct various authorities relating to VA;

(i) authorize a pilot program to guarantee adjustable rate

mortgages and hybrid adjustable rate mortgages;

(j) specify that duty of National Guard members mobilized by

States at the request of a Federal law enforcement agency for

homeland security activities be treated as military service

under the Soldiers and Sailors’ Civil Relief Act;

(k) prohibit certain benefits for persons who commit capital

crimes;

(l) modify the standard of review for the United States Court

of Appeals for Veterans Claims on findings of fact by the Board

of Veterans’ Appeals;

(m) authorize review by the United States Court of Appeals

for the Federal Circuit of certain decisions of law of the United

States Court of Appeals for Veterans Claims;

(n) enhance authority of the United States Court of Appeals

for Veterans Claims to award fees under the Equal Access to

Justice Act for non-attorney practitioners; and

(o) clarify the retroactive application of the ‘‘duty to assist’’

provisions in the Veterans Claims Assistance Act.
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COMMITTEE BILL

SECTION 101: ELIGIBILITY FOR SPECIAL MONTHLY COMPENSATION DUE

TO LOSS OF A BREAST

Background

VA estimates that women now comprise about 5% of enrolled veterans in the VA healthcare system, a percentage expected to double

over the next two decades. Congress and VA must ensure that

health care and compensation benefits adapt to meet this growing

population’s specific needs. The Veterans Benefits and Health Care

Improvement Act of 2000, Public Law 106–419, authorized VA to

provide special monthly compensation to any woman veteran who

‘‘has suffered the anatomical loss of one or both breasts (including

loss by mastectomy)’’ as a result of military service. 38 U.S.C.

§ 1114 (k).

On February 14, 2002, VA published a final rule addressing adjudication of claims for this special monthly compensation. 67 Fed.

Reg. 6872. This rule specified that ‘‘Anatomical loss of a breast exists when there is complete surgical removal of breast tissue (or the

equivalent loss of breast tissue due to injury). As defined in 38

C.F.R. § 4.116, radical mastectomy, modified radical mastectomy,

and simple (or total) mastectomy result in anatomical loss of a

breast, but wide local excision, with or without significant alteration of size or form, does not.’’ This decision appears inconsistent

with requirements for ‘‘acquired absence’’ of other creative organs

as defined in 38 C.F.R § 3.350, which describe very specifically how

reductions in size or changes in form of male creative organs can

be used to establish loss of use. Measuring loss of breast tissue

should not prove more clinically challenging than measuring physical or functional loss of male creative organs.

Although some patients do require mastectomy following a diagnosis of breast cancer, an increasing number of clinicians recommend breast-tissue conserving procedures such as wide local excision for specific patients. Conservation of some breast tissue does

not obviate the need for subsequent reconstructive surgery, especially if the excision resulted in significant alteration of size or

form, or for additional intervention with radiation therapy or chemotherapy. Even if restricting eligibility for compensation to those

who have undergone mastectomy does not influence medical decisions, it fails to acknowledge that women who undergo significant

loss of breast tissue contend with physical, emotional, and financial

challenges in returning to health.

Committee Bill

Section 101 amends 38 U.S.C. § 1114(k) to specify that women

veterans who have suffered the anatomical loss of half of the tissue

of one or both breasts in or as a result of military service may be

eligible for special monthly compensation. This provision restores

the intent of the original legislation and makes this provision consistent with other benefits extended for partial loss or loss of use

of an organ.
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Cost: Congressional Budget Office (hereinafter ‘‘CBO’’) estimates

that the direct spending cost will be less than $300,000 a year and

total about $2 million over the 2003–2012 period.

SECTION 102: ELIMINATES THE ‘‘TOTAL’’ DEAFNESS REQUIREMENT FOR

THE NON-SERVICE-CONNECTED EAR, ALLOWING VA TO CONSIDER

PARTIAL NON-SERVICE-CONNECTED HEARING LOSS WHEN RATING

DISABILITY

Background

In 1962, Public Law 87–610 was enacted requiring special consideration for certain cases involving blindness or bilateral kidney

dysfunction when disability of only one eye or kidney is service-connected. Public Law 87–610 allowed for compensation as if the

‘‘blindness in both eyes or such bilateral kidney involvement were

the result of service-connected disability.’’ Congress extended the

principle of ‘‘paired organ’’ impairment to the ears in 1965 with

Public Law 89–311. ‘‘This [paired organ] principle recognizes the

additional disability attendant on the non-service-connected loss of

function of a second paired organ when service connection has been

established for the other organ and the committee believes constitutes a reasonable liberalization of existing law.’’ S. Rept. No.

89–861 (1965). The amendment provided for a ‘‘veteran [that] has

suffered total deafness in one ear as a result of service-connected

disability and total deafness in the other ear as a result of nonservice-connected disability . . . the Secretary shall assign and pay

to the veteran the applicable rate of compensation under this chapter as if the combination of disabilities were the result of serviceconnected disability.’’

Under current 38 U.S.C. § 1160, special consideration is extended

to veterans’ service-connected disabilities in ‘‘paired organs or extremities,’’ such as eyes, kidneys, lungs, feet, or hands. For these

paired organs or extremities, VA is authorized to consider any degree of damage to both organs, even if only one resulted from military service, when rating disability. Total impairment is not a requirement for eyes, kidneys, hands, feet, or lungs. In fact, proportional impairment, such as ‘‘the loss or loss of use of one kidney

as a result of service-connected disability and involvement of the

other kidney as a result of non-service-connected disability,’’ is specifically provided for in subsections (1), (2), (4), and (5) of section

1160(a) of title 38. However, the requirement of total deafness remains unchanged under current law. 38 U.S.C. § 1160 (a)(3).

Boyer v. West, 210 F.3d 1351 (2000), demonstrated how this requirement can affect veterans. Gerald Boyer applied to VA for service connection for bilateral hearing loss. VA granted Boyer service

connection for the hearing loss in his left ear at zero-percent disability, but denied service connection for the hearing loss in his

right ear. Under 38 U.S.C. § 1160(a)(3), Boyer’s right-ear hearing

loss could not be considered in rating his service-connected left-ear

hearing loss because the right-ear hearing loss was less than total.

On appeal, the Board of Veterans’ Appeals (hereinafter ‘‘BVA’’) concluded that, for the purposes of evaluating the left-ear hearing loss,

Boyer’s right-ear hearing had to be considered normal. As a result,

Boyer was not entitled to a compensable rating for his left-ear loss.
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Boyer appealed BVA’s decision to the U.S. Court of Appeals for

Veterans Claims (hereinafter ‘‘CAVC’’). Relying on 38

U.S.C.§ 1160(a) and 38 C.F.R. § 4.85, CAVC affirmed BVA’s decision on Boyer’s claim for a compensable rating for his service-connected left-ear hearing loss. That decision, in turn, was affirmed by

the U.S. Court of Appeals for the Federal Circuit, stating that 38

U.S.C. § 1160(a)(3) ‘‘plainly speaks to the issue and precludes any

consideration of Mr. Boyer’s right-ear hearing loss for the purposes

of evaluating his service-connected hearing loss in his left ear.’’

Committee Bill

Section 102 of the Committee bill would eliminate the ‘‘total deafness’’ requirement and, thus, allow VA to consider partial non-service-connected hearing loss when rating disability for veterans like

Gerald Boyer. The striking of the word ‘‘total’’ in both clauses

would allow veterans with less than total hearing loss in both ears

to have their non-service-connected degree of hearing loss be a factor in evaluation of service-connected hearing loss. This change

would mirror the exceptions made for other ‘‘paired’’ organs and extremities in section 1160 and is necessary to compensate veterans

whose hearing has been more greatly impaired by service than it

would have been had they not served.

Cost: CBO estimates the direct spending cost will be $2 million

in 2003, and about $53 million over the 2004–2007 period, and

$178 million over the 2003–2012 period. CBO estimates that

spending subject to appropriations will increase by $2 million over

the 2003–2007 period.

SECTION 103: INDEPENDENT SCIENTIFIC STUDY ON POTENTIAL

CONNECTION BETWEEN MILITARY SERVICE AND HEARING LOSS

Background

According to the February 2001 VBA Annual Benefits Report,

more than 28,000 veterans—almost 11% of those receiving compensation for the first time—qualified in Fiscal Year 2000 for service-connected disability compensation on the basis of hearing loss.

Tinnitus, a ringing of the ears, and loss of auditory acuity ranked

second and third, respectively, in the numbers of disabilities most

frequently service-connected in newly compensated veterans. Of

these, just over half were rated 10% disabled, and more than 40%

were assigned a rating of 0% disability. A VBA White Paper dated

April 4, 2002, showed that a total of more than 300,000 veterans

had been service-connected for hearing loss by the end of Fiscal

Year 2001, with about 60,000 of these receiving compensation for

hearing loss as their major disability.

In order to establish service connection for hearing loss or

tinnitus, adjudicators must distinguish between noise-induced

hearing loss potentially related to in-service exposures and hearing

disorders unrelated to service. Such disorders may include age-related hearing loss, one of the most common health complaints

among Americans over the age of 65. Although research clearly

demonstrates a relationship between occupational or environmental

noise and hearing loss in older adults, establishing a link between

a veteran’s noise exposure during service and hearing loss diag-
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nosed years after separation can be hampered by incomplete medical records and uncertain clinical evidence.

Research has shown that sound impulses generated by gunfire

can be statistically related to hearing threshold shift—a change in

ability to detect sounds—in exposed recruits. A study of healthy

Finnish military conscripts published in the journal Military Medicine in 1992 showed that exposure to about 200–300 rifle shots in

the course of training, absent any other acoustic trauma, caused

hearing loss that could be measured clinically but not necessarily

noticed subjectively. A 1995 study of hearing loss in thousands of

U.S. Army personnel roughly grouped into high- and low-noise specialties showed that, despite hearing conservation programs initiated in the 1950’s, soldiers in the armor, artillery, and infantry

branches had greater hearing loss than their counterparts in other

areas of service. L.W. Henselman, D. Henderson, J. Shadoan, M.

Sumramaniam, S. Saunders, D. Ohlin. Effects of Noise Exposure,

Race, and Years of Service on Hearing in U.S. Army Soldiers. Ear

and Hearing 1995:16;382–391. This survey also demonstrated the

difficulty of studying service-related hearing loss, as only 25% of

the soldiers in the armor, artillery, and infantry branches— branches classified as ‘‘high-noise’’—had hearing tests available for

evaluation through the Army’s hearing conservation data registry.

Evaluating service-related hearing loss in veterans whose separations from service occurred many years ago, especially during wartime, can prove even more challenging. Anecdotally, veterans have

reported that the scarcity of audiometric resources in the field following World War II meant a wait of days or weeks, post-discharge, to receive testing prior to returning home, an unacceptable

delay for many. The frequency with which veterans discharged in

this era received audiometric evaluation—as well as the sensitivity

and accuracy of such testing—are not easily estimated, nor are

data uniformly available for later periods. Even more than forty

years after initiation of military hearing conservation programs,

the adequacy of hearing protection and post-separation testing

have not been conclusively determined.

This lack of a clear clinical history presents an obstacle to both

veterans and VA claims processors in weighing whether individual

hearing loss is service-connected. A veteran who incurred hearing

loss during service might not notice or seek treatment for that

hearing loss for many years. Such a delay may be especially prevalent given the potentially additive effects of service-related and

age-related hearing disorders, and the common denial of symptoms.

Although it is plausible to link hearing loss diagnosed years after

separation to noise exposure or acoustic trauma during service, current data is insufficient to assume this nexus. When faced with situations of potential exposures with incomplete scientific evidence

and clinical records previously, the Committee has called upon scientific experts to examine whether evidence supports a presumption of connection between in-service exposures and subsequent

health effects.

Committee Bill

Section 103 would authorize VA to create a presumption of service-connection for hearing loss or tinnitus in veterans who served
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in certain military occupational specialties if an outside scientific

authority finds that evidence warrants such a presumption.

The Committee bill would require VA to enter into a contract

with the National Academy of Sciences (hereinafter ‘‘NAS’’) or an

equivalent scientific organization to review data related to hearing

loss, tinnitus, and military service. NAS would be charged with reviewing relevant scientific publications on occupational hearing

loss, and identifying forms of acoustic trauma (including continuously high noise levels) experienced by servicemembers that could

contribute to hearing loss, hearing threshold shift, or tinnitus. NAS

would be tasked with determining whether hearing disorders resulting from such exposure would occur immediately or might be

noticed only after a delay, and whether evidence points to cumulative or progressive hearing problems after the initial insult. NAS

would also be directed to identify military occupational specialties

most likely to be associated with exposures that could be expected

to lead to hearing loss.

Section 103 would also direct NAS to assess whether the

audiometric data collected by the military services are sufficiently

complete and adequate in terms of rate of participation, thoroughness, and sensitivity to allow an objective assessment of individual

exposure. This would be based upon a survey of hearing threshold

shift records in a representative sample of members of all service

branches during or after each major conflict of the past century.

The scientific authorities would be asked to use this information to

determine when, if ever, hearing conservation programs provided

sufficient protection and audiometric testing to make adjudication

of hearing loss on an individual basis practical.

VA would be directed to review its own records on hearing disorders, and to report on the number of claims for disability compensation for hearing loss, tinnitus, or both from 1999–2001; the

number of those claims awarded, and the disability ratings assigned; and the total amount of compensation based on those

claims. This report would also include an estimate of the total cost

to VA of adjudicating those claims in full-time-employee equivalents. Finally, VA would be required to report on medical care provided to veterans for hearing disorders in each of the report years,

including the number and cost of hearing aids provided and the

military occupational specialties of those veterans during service.

Collectively, these data would be used by VA to determine if the

evidence warrants a presumption that veterans who served in specific military occupational specialties during specific periods were

exposed to sufficient noise or acoustic trauma to cause hearing disorders, regardless of the adequacy of the individual veteran’s

audiometric history at separation. Based on the recommendations

of the outside authority and VA’s report, VA would be authorized

by the Committee bill to create a presumption of service connection

for hearing loss or tinnitus for these veterans.

Cost: CBO estimates the cost will be $1 million over the 2003–

2007 period in spending subject to appropriations.
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SECTION 104: INCREASES THE RATE OF THE MEDAL OF HONOR SPECIAL

PENSION

Background

Section 1562 of title 38, of the United States Code provides a special pension to recipients of the Medal of Honor. When established

in 1916, this pension was meant to recognize, in some small measure, the extraordinary heroism of the recipients of our Nation’s

highest military honor. S. Rept. No. 64–240 (1916). However, the

Medal of Honor special pension has evolved into a form of supplemental income for many recipients.

There are currently 142 living Medal of Honor recipients. According to testimony presented to the Committee in July 1997 by

AMVETS, the majority of Medal of Honor recipients live solely on

Social Security benefits, supplemented by the Medal of Honor pension. Many recipients also travel extensively, often at their own expense, to speak at patriotic and commemorative events. These commitments present an additional financial strain for these gallant

men that ought to be compensated. The Medal of Honor special

pension is currently $600 per month.

Periodically, the pension amount has been increased to keep pace

with inflation and needs of its recipients. However, these increases

have been irregular in amount and frequency. Since its inception

more than 80 years ago, the pension amount has been increased on

four occasions in amounts ranging from $90 to $200 (Public Laws

87–138, 95–479, 103–161, and 105–368) to its current level. For

more than 5 years, the Medal of Honor Society, an organization

comprised entirely of Medal of Honor recipients, has sought to increase the pension amount to $1000 with an automatic cost-of-living adjustment thereafter.

Eligibility to receive the Medal of Honor special pension is contingent upon having first been awarded the Medal of Honor. There

has been, in some cases, a delay between the date of a recipient’s

act of gallantry for which the Medal of Honor is being awarded,

and the date on which the Medal of Honor is actually awarded.

This delay has created a situation which has resulted in some

Medal of Honor recipients receiving lower aggregate amounts of

special pension, based not on differences of when a recipient’s act

of valor occurs, but on differences of when official recognition of

that act occurs. Congress has, in some cases, addressed delay of the

award of the Medal of Honor by conferring retroactive entitlement

to special pension on recipients or their survivors. Section 577 of

the National Defense Authorization Act for Fiscal Year 1998, Public Law 105–85.

Committee Bill

Section 104 of the Committee bill would increase the Medal of

Honor special pension from $600 to $1000. Beginning in January

2003, the pension amount would be adjusted annually to maintain

the value of the pension in the face of the rising cost of living. The

amount of this adjustment would match the percentage of the increase paid to Social Security recipients. The Committee bill would

also provide for a one-time, lump-sum payment in the amount of

pension the recipient would have received between the date of the
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act of valor and the date that the recipient’s pension actually commenced.

Cost: CBO estimates the cost will be $2 million in 2003, $6 million over the 5-year period, and $8 million over 10-years.

SECTION 105: PROHIBITS ASSIGNMENT OF MONTHLY VETERANS BENEFITS AND CREATES AN EDUCATION AND OUTREACH CAMPAIGN

ABOUT FINANCIAL SERVICES AVAILABLE TO VETERANS

Background

Section 5301 of title 38 of the United States Code currently prohibits the assignment or attachment of a veteran’s disability compensation or pension benefits. Section 5301(a) provides that:

payments of benefits due or to become due under any law administered by the Secretary shall not be assignable except to

the extent specifically authorized by law, and such payments

made to, or on account of, a beneficiary shall be exempt from

taxation, shall be exempt from the claim of creditors, and shall

not be liable to attachment, levy, or seizure by or under any

legal or equitable process whatever, either before or after receipt by the beneficiary.

In recent years, private companies have offered contracts to veterans that exchange up-front lump sums for future benefits, generally valued at a mere 30% of their estimated future amount. VA’s

Office of General Counsel has determined that section 5301(a) provisions were circumvented by arrangements in which a veteran

contracted to pay for services with future VA benefit payments.

These arrangements often require a veteran to open a joint bank

account with the company, or arrange to have VA benefit checks

deposited into an account identified by the company. The company

can then legally withdraw the money from that account. Some companies have the veterans arrange for their checks to be sent to a

post office box operated by the company with, presumably, an arrangement with the veteran to allow the company to cash the

check. Some companies also require the veteran to provide collateral, such as a home or life insurance policy, in case the veteran

stops payment or dies.

Committee Bill

Section 105 clarifies the applicability of the prohibition on assignment of veterans benefits through agreements regarding future

receipt of compensation, pension, or dependency and indemnity

compensation. Section 105 would prohibit companies from entering

into agreements with veterans to turn over their monthly disability

compensation benefits to the company in exchange for a reduced

up-front lump sum. It would make the violation by the companies

punishable by a fine and up to one year in jail. This provision

would also require VA to create a five-year education and outreach

campaign to inform veterans about available financial services, ensuring that those in dire financial straits are not left without a

place to turn.

Cost: CBO estimates that section 105 would have no effect on direct spending and a negligible effect on spending subject to appropriation.
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SECTION 106: EXTENSION OF INCOME VERIFICATION AUTHORITY

Background

Section 106 would extend provisions which originated in Public

Law 101–508, the Omnibus Budget Reconciliation Act of 1990, giving the Internal Revenue Service (hereinafter ‘‘IRS’’) authority to

furnish income information to VA from IRS records. The Act required IRS to disclose to VA income information so that VA might

determine eligibility for VA needs-based pension, parents’ dependency and indemnity compensation, and VA health-care services.

In 1985, Committee member Murkowski requested that the General Accounting Office (hereinafter ‘‘GAO’’) review the accuracy of

self-reported beneficiary income using certain income tax data

maintained by IRS. The study found discrepancies between the income data the beneficiaries reported to VA and that reported to

IRS in nearly half of the sample cases. S. Rept. No. 101–134 (1989).

This review provided the impetus for the original legislation, intended to prevent the payment of needs-based benefits to claimants

who under-report their income.

This provision, codified at Internal Revenue Code

§ 6103(l)(7)(D)(viii), was authorized to remain in effect through September 30, 1992, by Public Law 101–508. In 1992, Public Law 102–

568 extended the authority through September 30, 1997. Public

Law 103–66 extended the authority to September 30, 1998, and in

1997, this authority was extended again through September 30,

2003, by Public Law 105–33.

Additional provisions of Public Law 101–508, codified at 38

U.S.C. § 5317, provide parallel authority for VA to use IRS information and require VA to notify applicants for needs-based benefits

that income information furnished by the applicant may be compared with the information obtained from the Departments of

Health and Human Services and Treasury under Internal Revenue

Code § 6103(l)(7)(D)(viii). This parallel authority was originally in

effect through September 30, 1992, pursuant to Public Law 101–

508. In 1992, Public Law 102–568 extended the authority to September 30, 1997. In 1993, Public Law 103–66 extended it to September 30, 1998. In 1997, Public Law 105–33 extended the authority to September 30, 2002. The VA Secretary’s authority to use IRS

income data is now scheduled to expire on September 30, 2008,

pursuant to Public Law 106–409.

Committee Bill

Section 106(a) of the Committee bill would extend Internal Revenue Code § 6103(l)(7)(D)(viii) until September 30, 2011, and section 106(b) would extend 38 U.S.C. § 5317 until September 30,

2011.

Cost: CBO estimates that this provision will result in savings of

$7 million in 2003, $76 million over 5-years, and $231 million over

the 2004–2012 period.
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SECTION 201: INCREASES THE AMOUNT OF FUNDING AUTHORIZED TO

STATE APPROVING AGENCIES

Background

Under chapter 36 of title 38, United States Code, State Approving Agencies (hereinafter ‘‘SAAs’’) assist VA in ensuring the quality

and integrity of educational institutions and job-training establishments where veterans, spouses and eligible children use VA educational benefits. Recent legislation has expanded the number and

types of learning opportunities available to veterans and other

beneficiaries, thereby increasing the workload of the SAAs.

In 2000, Congress enacted Public Law 106–419, which allows

veterans education benefits to be used for the payment of licensing

and certification tests required for certain professions. SAAs evaluate and approve entities offering these tests. Public Law 107–103,

enacted in 2001, expanded the definition of ‘‘educational institution’’ for Montgomery GI Bill (hereinafter ‘‘MGIB’’) payment eligibility to include certain private entities offering courses to advance

trainees in high technology vocations. Public Law 107–103 also allowed the use of MGIB benefits to enroll in non-college degree programs offered by institutions of higher learning. SAAs are responsible for determining eligibility and approving such courses and

programs. Under Public Law 107–103, SAAs also assumed greater

veterans outreach responsibilities.

The last permanent increase in authorized funding for SAAs was

in Public Law 103–446 for Fiscal Year 1995. Section 123 of Public

Law 106–419 specified a temporary increase until the end of Fiscal

Year 2002. Without Congressional action, the funding level will revert from $14 million to $13 million. SAA funding does not receive

cost-of-living adjustments.

Committee Bill

Section 201 would increase the amount authorized for SAA funding to $18 million through Fiscal Year 2005.

Cost: CBO estimates the cost will be $5 million in 2003, and $15

million over 2003–2005.

SECTION 202: TECHNICAL CORRECTIONS TO VARIOUS AUTHORITIES

RELATING TO VA EDUCATION ASSISTANCE BENEFITS

Committee Bill

This section clarifies and makes technical amendments to various education authorities.

Cost: CBO did not estimate any cost to be associated with section

202.

SECTION 301: AUTHORIZES VA TO CREATE A PILOT PROGRAM TO GUARANTEE ADJUSTABLE RATE AND HYBRID ADJUSTABLE RATE HOME

MORTGAGE LOANS

Background

The VA Home Mortgage Loan Guarantee program, established in

1944 by Public Law 78–346, was meant to help veterans readjust

to civilian life following service in World War II. As private mort-
13

gage lending practices have evolved, this VA guaranty program has

not kept pace.

For more than a decade, adjustable rate mortgages (hereinafter

‘‘ARMs’’) have been commonplace in the home loan market. These

loans provide potential home buyers with greater flexibility by offering, in the early years of the loan, lower interest rates than conventional fixed-rate home mortgage loans. While there is a risk

that interest rates may increase over the life of the loan, this risk

is mitigated by generally accepted safeguards limiting the amount

that the interest rate may increase per year and over the life of the

loan.

More recently, hybrid adjustable rate mortgages have gained

prominence within the home mortgage industry. This type of mortgage provides a fixed interest rate for the first 3 to 10 years of the

loan, with annual interest rate adjustments thereafter. Much like

conventional ARMs, hybrid ARMs offer lower interest rates during

the early years of the loan.

Currently, VA is the only major mortgage market participant

without authority to guarantee ARMs and hybrid ARMs. These options are available under the Federal Housing Administration’s

loan insurance program. The Committee believes that a pilot program should be established to determine if these loan options

would significantly benefit veterans seeking to purchase a home by

creating greater flexibility in financing options.

Committee Bill

Section 301 of the Committee bill would authorize VA to establish a 3-year pilot program to guarantee hybrid ARMs and re-authorize a 1995 pilot program to guarantee conventional ARMs. This

authority would begin in Fiscal Year 2003 and expire at the end

of Fiscal Year 2005.

Cost: CBO estimates the subsidy cost of vendee loans and sales

of vendee loans would be less than $500,000 a year over the 2003–

2005 period and about $1 million a year over the 2006–2012 period.

SECTION 401: EXTENDS SOLDIERS AND SAILORS CIVIL RELIEF ACT PROTECTION TO NATIONAL GUARD MEMBERS CALLED TO ACTIVE DUTY

UNDER TITLE 32, UNITED STATES CODE

Background

The Soldiers and Sailor’s Civil Relief Act of 1940 (hereinafter

‘‘SSCRA’’), 50 U.S.C. §§ 501–90, applies to servicemembers on active service. It was enacted to promote and strengthen the national

defense by suspending enforcement of certain civil liabilities of

servicemembers on active duty, thus allowing them to devote their

energies to the defense needs of the Nation. SSCRA provides certain rights and legal protections to servicemembers who have been

called up for active duty. For example, interest on debts that preceded active duty, such as mortgages, is reduced to 6%.

Servicemembers and their families cannot be evicted or have their

home mortgages foreclosed upon during active duty and life insurance cannot be canceled, unless it specifically excludes coverage for

military service. Certain legal judgments cannot be rendered
14

against absent servicemembers by default, and property cannot be

sold to pay taxes during the servicemember’s absence.

National Guard members may be activated under titles 10 or 32

of the U.S. Code. Title 10 authority is used for missions of national

defense funded by the Federal government and commanded by the

President and the Secretary of Defense. National Guard members

called to duty under title 32 authority fall under the command of

their State Governor. Section 502(f) of title 32 allows National

Guard members to be called up ‘‘to perform training or other duty.’’

These missions are funded by the Federal government, but the National Guard units are under the command of the governor. Only

National Guard members who are called up under title 10 are protected by SSCRA.

Following the events of September 11, 2001, National Guard

members were activated by States to guard airports at the request

and expense of the Federal government. Under the direction of

President George W. Bush, the Federal Aviation Administration

asked the Department of Defense to coordinate the use of National

Guard members at commercial airports nationwide for a period of

four to six months. Clearly, these servicemembers were called up

to serve a national mission, but their title 32 status prohibited

them from receiving SSCRA protections.

S. 2514, the National Defense Authorization Act for Fiscal Year

2003, would specifically authorize the Governor of a State, upon a

request by the head of a Federal law enforcement agency and with

the concurrence of the Secretary of Defense, to order National

Guard members of a State to perform full-time duty under 502(f)

of title 32 for the purpose of carrying out homeland security activities.

Committee Bill

Section 401 of the Committee bill would expand SSCRA protections to include those National Guard members serving full-time,

upon an order of the Governor of a State, by request of the head

of a Federal law enforcement agency and with the concurrence of

the Secretary of Defense, under 502(f) title 32 for homeland security purposes. Thus, SSCRA benefits will be provided to National

Guard members called up under the specific authority contemplated under the Defense Authorization Act in response to the

Nation’s current focus on homeland security.

Cost: CBO estimates that this provision would have little or no

net effect on federal direct spending and a negligible effect on State

and local tax revenues. CBO was unable to estimate private sector

costs associated with section 401.

SECTION 402: PROHIBITS CERTAIN ADDITIONAL BENEFITS FOR PERSONS

COMMITTING CAPITAL CRIMES

Background

Under current law, veterans are eligible for a number of benefits

by virtue of their service to the Nation. These benefits are generally provided without consideration of the veteran’s conduct following his or her discharge from the Armed Services. However,
15

Congress has limited VA benefits available to veterans who die

while fleeing prosecution or after being convicted of a capital crime.

Sections 6103, 6104, and 6105 of title 38, United States Code,

state that a veteran who has been convicted of fraud, treason, or

subversion forfeits all rights and claims to VA benefits or compensation. Congress extended this forfeiture of benefits in 1997

with the passage of Public Law 105–116. That statute prohibited

persons who committed capital crimes from interment or memorialization in the National Cemetery System, Arlington National

Cemetery, or in State cemeteries that receive VA grant funding. 38

U.S.C. §§ 2411 and 2408(d). However, this limitation was not extended to the provision of Presidential Certificates of Appreciation,

burial flags and VA grave markers.

Committee Bill

Section 402 of the Committee bill, would prohibit the issuance of

Presidential Certificates of Appreciation, flags, and memorial

headstones or grave markers to veterans convicted or fleeing from

prosecution of a State or Federal capital crime.

Cost: CBO estimates that this provision would have little or no

net effect on direct spending.

SECTION 403: MODIFIES THE PROCEDURES FOR DISQUALIFICATION OF

PERSONS COMMITTING CAPITAL CRIMES FOR INTERMENT OR MEMORIALIZATION IN NATIONAL CEMETERIES

Background

Section 2411 of title 38 of the United States Code prohibits interment or memorialization in a cemetery in the National Cemetery

System or in Arlington National Cemetery of any person convicted

of a capital crime. In addition, it prohibits interment or memorialization of persons found by the Secretary of Veterans Affairs or

the Secretary of the Army to have committed capital crimes but

who avoided conviction of the crime through flight or death preceding prosecution. 38 U.S.C. § 2411(b). In such cases, the VA Secretary or the Secretary of the Army must receive notice from the

Attorney General of the United States, or the appropriate State official, of the Secretary’s own finding before the prohibition shall

apply.

This requirement is administratively unwieldy and unnecessarily

redundant.

Committee Bill

Section 403 of the Committee bill would eliminate the requirement that the VA Secretary or the Secretary of the Army be notified of a finding by the Attorney General or the appropriate State

official, in cases of persons who are found to have committed capital crimes but who avoided conviction of the crime through flight

or death preceding prosecution.

Cost: CBO did not estimate any cost to be associated with section

403.
16

SECTION 501: STANDARD FOR REVERSAL BY COURT OF APPEALS FOR

VETERANS CLAIMS OF ERRONEOUS FINDING OF FACT BY BOARD OF

VETERANS’ APPEALS

Background

Under 38 U.S.C. § 7261(a)(4), CAVC applies a ‘‘clearly erroneous’’ standard of review to findings of fact made by BVA. The ‘‘clearly

erroneous’’ standard has been defined as requiring CAVC to uphold

BVA findings of fact if the findings are supported by ‘‘a plausible

basis in the record . . . even if [CAVC] might not have reached the

same factual determinations.’’ Wensch v. Principi, 15 Vet. App. 362,

366–68 (2001) (affirming BVA’s denial of service connection where

appellant provided substantial medical evidence in support of the

claim).

The ‘‘clearly erroneous’’ standard was originally adopted in 1988

in the Veterans’ Judicial Review Act, Public Law 100–687, which

established the current system of appellate adjudication for VA

benefits cases. The statute was amended slightly by Public Law

101–237 in 1989, although the ‘‘clearly erroneous’’ standard of judicial review remained unchanged.

The ‘‘clearly erroneous’’ standard emerged as part of a compromise agreement after Senate approval of S. 11 and the House

of Representatives approval of H.R. 5288. S. 11 directed CAVC to

set aside a BVA factual finding only ‘‘when it is so utterly lacking

in a rational evidentiary basis that a manifest and grievous injustice would result if the finding were not set aside.’’ H.R. 5288 precluded any CAVC review of BVA factual determinations ‘‘unless a

constitutional issue is presented.’’ The House and Senate Committees on Veterans’ Affairs noted that the ‘‘clearly erroneous’’ standard adopted at conference is ‘‘markedly wider than the standard

specified in the Senate bill.’’ 134 Cong. Rec. 31772 (1988).

More than a decade of experience with CAVC’s application of the ‘‘clearly erroneous’’ standard suggests that CAVC is not consistently performing thorough reviews of BVA findings and that the

Congressional intent for a broad standard of review has often been

narrowed in application. In the recent U.S. Court of Appeals for the

Federal Circuit decision of Hensley v. West, 212 F.3d 1255 (Fed.

Cir. 2000), the Federal Circuit vacated a CAVC decision that BVA

had not erred in finding that a veteran’s claim was not wellgrounded. The Federal Circuit rejected CAVC’s de novo review,

which it characterized as a ‘‘dissecting [of] the factual record in

minute detail.’’ Id. at 1264. The Federal Circuit emphasized that

CAVC should perform only limited, deferential review of BVA decisions, and stated that BVA fact-finding ‘‘is entitled on review to

substantial deference.’’ Id. at 1263. The Committee is concerned

with the high level of deference that Hensley suggests CAVC

should employ in its review of BVA findings.

The limited extent of CAVC’s review of BVA fact-finding is also

evident in CAVC opinions. CAVC has described its level of review

as ‘‘significantly deferential’’ and providing only ‘‘very narrow bases

for the Court to overturn [BVA] . . . determinations.’’ Butts v.

Brown, 5 Vet. App. 532, 544 (1993) (sustaining BVA’s rejection of

a veteran’s claim of service connection); see also Ammons v. Gober,

2000 WL 1114147 (Vet. App. 2000); accord Presley v. West, 2000
17

WL 1114124 (Vet. App. 2000) (describing the ‘‘clearly erroneous’’ standard as ‘‘deferential’’ and upholding BVA’s denial of service

connection). Although Ammons and Presley are both unpublished

memorandum decisions, they exemplify the limited extent of the review CAVC is performing of BVA fact-finding. This undesirable situation may be the result of confusion concerning the ‘‘clearly erroneous’’ standard, which exists outside the rubric set forth in the

Administrative Procedure Act (hereinafter ‘‘APA’’). 5 U.S.C.

§ 5107(2)(e).

In their testimony at the Committee hearing on May 2, 2002,

veterans service organizations (hereinafter ‘‘VSOs’’) voiced frustration with the perceived lack of searching appellate review of BVA

decisions. These groups argued that the large measure of deference

that CAVC affords BVA fact-finding is detrimental to claimants

and may result in failure to consider the ‘‘benefit of the doubt’’ rule

in 38 U.S.C. § 5107(b). Section 5107(b) provides that VA must find

for the claimant when, considering the evidence of record, there is

an approximate balance of positive and negative evidence regarding

any material issue including the ultimate merits of the claim. This

‘‘benefit of the doubt’’ standard is distinctly different from standards applicable to most adjudicatory proceedings, where claimants

are required to produce a preponderance of evidence so that the

weight of the evidence favoring their claims.

VA also testified at the Committee hearing on May 2, 2002, and

opined that CAVC routinely considers whether BVA has applied

the ‘‘benefit of the doubt’’ rule. However, VA suggested that if the

Committee believed a less restrictive standard than ‘‘clear erroneous’’ was warranted that the substantial evidence standard of

the APA was appropriate.

The Committee solicited comments from CAVC, the Federal Circuit, and the Administrative Office of the United States Courts. All

declined to comment.

Committee Bill

Section 501 amends section 7261(a)(4) of title 38 to change the

standard of review CAVC applies to BVA findings of fact from

‘‘clearly erroneous’’ to ‘‘unsupported by substantial evidence.’’ Section 502 also cross-references section 5107(b) in order to emphasize

that the Secretary’s application of the ‘‘benefit of the doubt’’ to an

appellant’s claim shall be considered by CAVC on appeal. The combination of these changes is intended to provide far more searching

appellate review of BVA decisions, and thus give full force to the

‘‘benefit of the doubt’’ provision. The formula ‘‘unsupported by substantial evidence of record’’ is similar to the standard specified in

the APA, and should be interpreted as such except that the interpretation must reflect the ‘‘benefit of the doubt’’ rule and thus provide a unique bias in favor of the claimant when the evidence is

balanced.

Change in CAVC’s standard of review was first proposed in S.

2079. That bill would have changed the ‘‘clearly erroneous’’ standard by allowing CAVC reversal of BVA fact-finding whenever that

finding was ‘‘not reasonably supported by a preponderance of the

evidence.’’ The Committee modified this standard in order to provide a more familiar and judicially-recognized standard of appellate
18

1The ‘‘substantial evidence’’ formula has been judicially interpreted to be slightly more deferential than a traditional ‘‘clearly erroneous’’ standard. Dickinson v. Zurko, 527 U.S. 150, 162– 163 (1999). However, the difference, if any, is slight: the Supreme Court stated in Dickinson: ‘‘[T]he difference is a subtle one-so fine that (apart from the present case) we have failed to uncover a single instance in which a reviewing court conceded that use of one standard rather than

the other would in fact have produced a different outcome.’’ Id.

review. Although the ‘‘clearly erroneous’’ standard has been interpreted by some to require an incrementally more searching review

than ‘‘substantial evidence,’’ the ‘‘substantial evidence’’ standard is

within the APA’s rubric.1 Under the APA’s rubric for agency review, ‘‘substantial evidence’’ review is the least deferential review

an appellate court may apply short of ‘‘de novo’’ review. By including specific reference to the ‘‘benefit of the doubt’’ rule in the

amendment made by section 501 and moving to a standard that is

recognized to provide for searching review, the Committee intends

for section 501 to make it clear that CAVC is to provide a thorough

review of VA benefits claims on appeal.

The Committee intends the ‘‘substantial evidence’’ standard to

mandate a limited degree of deference to BVA fact-finding, with

substantial deference given to findings of fact based on demeanor

evidence, but to provide for searching judicial review of VA benefits

claims encompassing the ‘‘benefit of the doubt’’ rule. The Committee believes this formula will achieve this goal.

Cost: CBO was unable to provide a cost estimate associated with

section 501.

SECTION 502: REVIEW BY THE U.S. COURT OF APPEALS FOR THE

FEDERAL CIRCUIT OF CERTAIN DECISIONS OF LAW

Background

In their testimony at the Committee hearing on May 2, 2002,

VSOs expressed concerns about the perceived inability of the U.S.

Court of Appeals for the Federal Circuit to review certain CAVC

decisions, specifically those involving questions of law not ‘‘with respect to the validity of any statute or regulation.’’ 38 U.S.C.

§ 7292(a). In the Independent Budget for Fiscal Year 2003, the veterans service organizations offered the ‘‘treating physician rule’’ as

an example of judge-made law that is not derived from a specific

regulation or statute. The ‘‘treating physician rule’’ refers to an evidentiary rule applied in Social Security cases where greater weight

is given to the opinion of a physician who treated the claimant

than the opinion of a non-treating expert. The veterans service organizations argued that there is no valid reason why this particular class of legal decisions should be exempt from judicial review, while legal decisions that involve interpretation of regulations or statutes receive appellate review. VA responded at a Committee hearing on May 2, 2002, asserting that the Federal Circuit

has assumed the power to address such questions, specifically citing Bailey v. West, 160 F.3d 1360 (Fed. Cir. 1998) (en banc), where

the Federal Circuit examined the validity of the ‘‘treating physician

rule,’’ and implicitly found jurisdiction to determine the issue, but

did not object to the provision. In sum, confusion has developed as

to the extent of the Federal Circuit’s jurisdiction to hear appeals

of CAVC decisions that are not clearly legal interpretations of statutes or regulations.
19

Committee Bill

Section 502 responds to the concerns raised above by amending

sections 7292(a) and (c) of title 38 to provide for appellate review

of a CAVC decision on any rule of law. The purpose of this change

is to clarify the jurisdiction of the Federal Circuit when reviewing

CAVC decisions so as to include, unequivocally, CAVC decisions involving rulings of law not derived from a statute or regulation.

Cost: CBO was unable to provide a cost estimate associated with

section 502.

SECTION 503: AUTHORITY OF COURT OF APPEALS FOR VETERANS

CLAIMS TO AWARD FEES UNDER EQUAL ACCESS TO JUSTICE ACT TO

NON-ATTORNEY PRACTITIONERS

Background

Currently, VA claimants who enlist the aid of attorneys and nonattorney practitioners supervised by attorneys, and who are successful in their claims and satisfy certain statutory requirements,

can avail themselves of the benefits of the Equal Access to Justice

Act (hereinafter ‘‘EAJA’’), 28 U.S.C. § 2412(d). The EAJA shifts the

burden of attorney fees from the citizen to the government in cases

where the government’s litigation position in not substantially justified and the citizen does not exceed certain income and asset criteria. In the case of VA claims, claimants are often represented up

to and through CAVC by qualified non-attorney representatives

from the VSOs.

Based upon a long-standing limitation on paying attorney fees in

veterans’ benefits cases, there had not been an active veterans’ bar

until the enactment of the Veterans Judicial Review Act, Public

Law 100–527. As a result, non-attorney volunteers and employees

of veterans service organizations and other non-profit organizations

began to represent veteran claimants before VA without direct supervision by an attorney. VA policy has never required that these

representatives be attorneys, only that they be credentialed by a

VA-recognized VSO. Currently, these non-attorney practitioners,

who have been credentialed by VSOs and admitted to practice before CAVC, are not eligible for EAJA fees unless the EAJA application is signed by an attorney.

Committee Bill

Section 503 would allow VSOs to be awarded fees under the

EAJA for representation provided to VA claimants by their employee non-attorney practitioners without the requirement that attorney to sign the EAJA application.

Cost: CBO estimates that this provision would have no effect on

mandatory spending and an insignificant effect on discretionary

spending.

SECTION 504: CLARIFICATION OF RETROACTIVE APPLICATION OF

PROVISIONS OF THE VETERANS CLAIMS ASSISTANCE ACT

Background

Public Law 106–475, the Veterans Claims Assistance Act of 2000

(hereinafter ‘‘VCAA’’), restored and enhanced VA’s duty to assist
20

claimants in developing their claims for veterans benefits. VCAA

requires VA to take very specific steps to assist claimants.

Although VA was already required to notify a claimant whose application was incomplete, under VCAA VA must also inform a

claimant of any medical or lay evidence necessary to substantiate

his or her claim. VCAA also specified that this notice must indicate

which portion of the evidence is to be provided by the claimant and

which portion VA will attempt to obtain on behalf of the claimant.

VCAA clarified VA’s duty to assist claimants in developing evidence for their claims for benefits. Section 3 requires VA to make

reasonable efforts to assist in obtaining evidence necessary to substantiate a claimant’s eligibility for benefits, but allows VA to decide a claim without providing such assistance when no reasonable

possibility exists that such assistance will aid in substantiating the

claim. Relevant records must be obtained by VA if the claimant

adequately identifies them to VA and authorizes them to be obtained. VA must inform the claimant whenever it is unable to obtain such records.

In the case of a veteran’s claim for disability compensation, section 3 also requires that VA obtain the claimant’s relevant service

medical records and, if the claimant has furnished sufficient information, other relevant service records, existing records of relevant

medical treatment or examination at VA health care facilities, and

any other relevant records held by a Federal department or agency.

VA must provide a medical examination or obtain a medical opinion when the evidence indicates that the claimant has a current

disability or persistent or recurrent symptoms of disability, which

may be associated with active military service, and when such an

examination or opinion is necessary for VA to make a decision on

the claim.

Two recent decisions by the U.S. Court of Appeals for the Federal

Circuit have found that the provisions in section 3 of VCAA pertaining to VA’s duty to assist cannot be applied retroactively to

claims pending at the time of enactment. In Dyment v. Principi,

287 F.3d 1377 (Fed. Cir. 2002), the Federal Circuit stated: ‘‘The Supreme Court has held that a federal statute will not be given retroactive effect unless Congress has made its contrary intention clear.

There is nothing in the VCAA to suggest that section 3(a) was intended to applied [sic] retroactively.’’ In Bernklau v. Principi, 291

F.3d 795, 806 (2002), the Court again concluded: ‘‘[S]ection 3(a) of

the VCAA does not apply retroactively to require that proceedings

that were complete before the Department of Veterans Affairs and

were on appeal to the Court of Appeals for Veterans Claims or this

court be remanded for readjudication under the new statute.’’

Committee Bill

Section 504 clarifies Congress’ intention that section 3 of VCAA,

be applied retroactively to cases that were ongoing either at the

various adjudication levels within VA or pending at the applicable

Federal courts prior to the date of VCAA’s enactment. In order to

prevent the creation of a group of VA claimants who would have

their claims decided without the benefit of the additional VA assistance under VCAA, section 505 of the Committee bill contains language that would provide for claims decided between the handing
21

down of the Dyment case and enactment of this provision to receive

the full notice, assistance, and protection afforded under VCAA.

VCAA was enacted to ensure that VA assist veterans in obtaining

evidence that is vital to their claims. This provision clarifies that

section 3 of the VCAA applies retroactively in order to ensure that

those VA claimants whose claims are denied or dismissed during

the period between April 24, 2002 and the date of enactment of this

Act, are given the higher level of VA assistance required.

Cost: CBO estimates that this provision would have no effect on

mandatory spending and an insignificant effect on discretionary

spending.

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

U.S. CONGRESS,

CONGRESSIONAL BUDGET OFFICE,

Washington, DC, July 1, 2002.

Hon. JOHN D. ROCKEFELLER IV,

Chairman, Committee on Veterans’ Affairs,

U.S. Senate, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 2237, the Veterans Benefits

Improvement Act of 2002.

If you wish further details on this estimate, we will be pleased

to provide them. The CBO staff contact is Melissa E. Zimmerman.

Sincerely,

BARRY B. ANDERSON,

for DAN L. CRIPPEN, Director.

S. 2237 Veterans Benefits Improvement Act of 2002 (As ordered reported by the Senate Committee on Veterans’ Affairs on June 6,

2002)

SUMMARY

S. 2237 would affect several veterans programs, including compensation, pensions, burial benefits, housing, and education. The

bill contains provisions that would increase direct spending for certain veterans’ compensation, housing, and education programs. It

also contains a provision to extend income verification authorities

that would reduce direct spending over the 2004–2012 period. On

balance, CBO estimates that enacting S. 2237 would result in a net

increase in direct spending totaling $31 million in 2003, $69 million over the 2003–2007 period, and $49 million over the 2003–

2012 period. The bill also contains one provision that could affect

revenues, but we cannot estimate the amounts of any such effects.

Because the bill would affect direct spending and revenues, pay-asyou-go procedures would apply.

In addition, CBO estimates that implementing S. 2237 would increase spending subject to appropriation by $2 million in 2003 and

$4 million over the 2003–2007 period, assuming appropriation of

the necessary amounts.

While S. 2237 contains an intergovernmental mandate as defined

in the Unfunded Mandates Reform Act (UMRA), CBO estimates

that the costs of complying with that mandate would not exceed
22

the threshold established in that act ($58 million in 2002, adjusted

annually for inflation).

The bill also contains a private-sector mandate as defined by

UMRA that would extend coverage under the Soldiers and Sailors

Civil Relief Act to certain National Guard members who are performing homeland security activities. While the number of National

Guard members affected by this extension is currently quite small,

CBO cannot estimate how many members might be called up to

perform these duties in the future, and thus, we cannot determine

the extent of the mandate. CBO expects that the cost could exceed

the UMRA threshold for private-sector mandates ($115 million in

2002, adjusted annually for inflation) if, in the future, a large number of National Guard members were called up by the states to perform homeland security activities.

ESTIMATED COST TO THE FEDERAL GOVERNMENT

The estimated budgetary impact of S. 2237 is shown in Table 1.

The costs of this legislation fall within budget functions 700 (veterans benefits and services) and 750 (administration of justice).

Table 1.—Estimated Budgetary Impact of S. 2237

[By Fiscal Year, in Millions Dollars]

2003 2004 2005 2006 2007

CHANGES IN DIRECT SPENDING a, b

Estimated Budget Authority .................................................................................... 31 27 25 ¥6 ¥8

Estimated Outlays ................................................................................................... 31 27 25 ¥6 ¥8

CHANGES IN SPENDING SUBJECT TO APPROPRIATION a

Estimated Authorization Level ................................................................................ 2 cccc

Estimated Outlays ................................................................................................... 2 cccc

a In addition to the bill’s impact on direct spending and discretionary spending, CBO estimates that S. 2237 could increase revenues into

the Crime Victims Fund over the 2003–2012 period for settlement of court cases brought by the Department of Veterans Affairs (VA) against

veterans who sign over their rights to compensation to another party. CBO cannot provide a specific estimate, however, given the uncertainty

surrounding the number of cases that might be brought by VA, when any such cases might be resolved, or the size of any penalties that a

court might impose. b A provision in S. 2237 would direct VA to presume that, for veterans who served on active duty during certain time periods and in certain military occupations, hearing loss and tinnitus are service-connected disabilities for the purposes of compensation. CBO cannot estimate

the cost of any increase in compensation payments that may result from enacting this provision because we cannot estimate the number of

veterans who might be eligible for compensation benefits until the National Academy of Sciences completes a study and VA writes the necessary regulations. It is possible, however, that the costs of this provision could be significant depending on how many veterans could gain

eligibility for compensation under the new regulations. c Less than $500,000.

BASIS OF ESTIMATE

Direct Spending and Revenues

The legislation would affect direct spending in veterans’ programs for compensation, pensions, burial benefits, housing, and

education. Table 2 summarizes those effects, and the individual

provisions that would affect direct spending are described below.

Table 2.—Estimated Direct Spending Under S. 2237

[By Fiscal Year, Outlays in Millions of Dollars]

2002 2003 2004 2005 2006 2007

COMPENSATION, PENSIONS, AND BURIAL BENEFITS

Spending Under Current Law ........................................... 24,406 25,678 26,910 30,115 28,674 27,013

Proposed Changes ............................................................ 0 4 ¥1 ¥4 ¥7 ¥9

Spending Under S. 2237 .................................................. 24,406 25,682 26,909 30,111 28,667 27,004
23

Table 2.—Estimated Direct Spending Under S. 2237—Continued

[By Fiscal Year, Outlays in Millions of Dollars]

2002 2003 2004 2005 2006 2007

COMPENSATION, PENSIONS, AND BURIAL BENEFITS

HOUSING

Spending Under Current Law ........................................... ¥1,041 299 317 326 335 341

Proposed Changes ............................................................ 0 22 23 24 1 1

Spending Under S. 2237 .................................................. ¥1,041 321 340 350 336 342

VETERANS’ READJUSTMENT BENEFITS

Spending Under Current Law ........................................... 1,959 2,276 2,544 2,715 2,875 3,036

Proposed Changes ............................................................ 0 5 5 5 0 0

Spending Under S. 2237 .................................................. 1,959 2,281 2,549 2,720 2,875 3,036

COMPENSATION, PENSIONS, AND BURIAL BENEFITS. Several sections of the bill would affect spending for veterans’ disability compensation, pensions, and burial benefits (see Table 3). Together,

those provisions would increase spending by $4 million in 2003, but

would lower spending by $17 million over the 2003–2007 period

and by $42 million over the 2003–2012 period.

COMPENSATION FOR HEARING LOSS IN PAIRED ORGANS. For veterans with hearing loss, current law requires that both ears must

be diagnosed as totally deaf for hearing loss that was not caused

by military service to be rated as service-connected for the purposes

of disability compensation. Section 102 would modify this requirement so that any degree of hearing loss in one ear that was not

caused by military service would be rated as service-connected if

any degree of hearing loss in the other ear was rated as serviceconnected.

Table 3. Estimated Changes in Direct Spending for Compensation, Pensions, and Burial Benefits

Under S. 2237

[By Fiscal Year, Outlays in Millions of Dollars]

Description of Provision 2003 2004 2005 2006 2007

Compensation for Hearing Loss in Paired Organs ................................................. 2 7 11 15 18

Income Verification Extension ................................................................................. 0 ¥9 ¥16 ¥23 ¥28

Medal of Honor Special Pension ............................................................................. 2 1 1 1 1

Mastectomy Benefits ............................................................................................... aaaaa

Denial of Burial Benefits ........................................................................................ aaaaa

Retroactive Claims Assistance ............................................................................... aaaaa

Total Changes in Compensation, Pensions, and Burial Benefits b ...... 4 ¥1 ¥4 ¥7 ¥9

a Less than $500,000.

b A provision in S. 2237 would direct VA to presume that, for veterans who served on active duty during certain time periods and in cer- tain military occupations, hearing loss and tinnitus are service-connected disabilities for the purposes of compensation. CBO cannot estimate the cost of any increase in compensation payments that may result from enacting this provision because we cannot estimate the number of veterans who might be eligible for compensation benefits until the National Academy of Sciences completes a study and VA writes the nec- essary regulations. It is possible, however, that the costs of this provision could be significant depending on how many veterans could gain

eligibility for compensation under the new regulations.

Based on data provided by the Department of Veterans Affairs

(VA), CBO estimates that enacting this provision would increase

the disability compensation paid to eligible veterans by about $100

a month on average. CBO estimates that, over the 2003–2007 period, about 6,000 veterans who are already receiving disability compensation for hearing loss would apply for a reevaluation of their

rating and receive an increase in their monthly disability payment.
24

33,000 veterans who would receive ratings for hearing loss for the

first time each year.

Considering expected mortality and new disability claims for

hearing loss, CBO estimates that about 13,000 veterans would be

receiving the increase in compensation in 2007 and about 19,000

veterans would receive it in 2012. After accounting for cost-of-living

adjustments (COLAs) over the 2003–2012 period, CBO estimates that section 102 would increase direct spending by about $2 million

in 2003, $53 million over the 2003–2007 period, and $178 million

over the 2003–2012 period. (CBO estimates that implementing this

section also would increase spending subject to appropriation by

about $2 million over the 2003–2007 period, assuming appropriation of the estimated amounts. CBO’s estimate of those outlays is

discussed below under the heading of ‘‘Spending Subject to Appropriation.’’)

Income Verification Extension. Section 106 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, 2003, while the authorization allowing VA

to acquire the information will expire on September 30, 2008. Section 106 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 2003, CBO estimates that enacting this provision would provide no additional cost savings for that year.

CBO estimates that, based on recent experience, VA will save (under current law) approximately $7 million in pension benefit

overpayments from verifying veterans’ incomes in 2003. Using that

information, CBO estimates that enacting section 106 would result

in direct spending savings of $76 million over the 2004–2007 period and $231 million over the 2004–2012 period.

Medal of Honor Special Pension. Section 104 would increase the

special pension paid to most Medal of Honor recipients from $600

to $1,000 a month and, beginning on December 1, 2003, increase

the pension each year by the same cost-of-living adjustment payable to Social Security recipients. This provision also would direct

VA to pay a lump-sum payment to compensate each recipient of the

special pension for the time period between the recognized act of

valor and the first special pension payment. The amount of the

payment would be calculated using the rate of compensation that

was in effect during the applicable time period. According to VA

and the Congressional Medal of Honor Society, there are 145 Medal

of Honor recipients that would receive the special pension increase

and COLAs under this provision, and 139 recipients who would be

eligible for the lump-sum payments.

CBO estimates that this provision would cost roughly $2 million

in 2003, the year the lump-sum payments would be made. In each

subsequent year, CBO estimates the provision would cost less than

$1 million a year. In total, CBO estimates the provision would cost

$8 million over the 2003–2012 period.

Mastectomy Benefits. Veterans who have suffered certain serviceconnected anatomical losses (e.g., the loss of a hand, a foot, etc.)
25

are eligible to receive a special compensation payment of $80 a

month in addition to any other disability compensation they receive. Under current law, to be entitled to this special compensation for the loss of breast tissue caused by breast cancer that was

diagnosed during military service, a woman must have lost an entire breast as the result of a mastectomy. Section 101 would change

this standard by providing the special compensation to women who

have lost half or more of the breast tissue as a result of a mastectomy for breast cancer that was diagnosed during military service.

Based on data provided by VA, CBO estimates that less than 150

women would be entitled to the special compensation in 2003 under

this provision, with about 10 new cases occurring each year after

that. CBO estimates that the additional cost to provide special payments to the affected women would be less than $300,000 a year

and total about $2 million over the 2003–2012 period.

Presumption of Service Connection for Hearing Loss. Section 103

would direct VA to presume that, for veterans who served on active

duty during certain time periods and in certain military occupations, hearing loss and tinnitus are service-connected disabilities

for the purposes of compensation. VA would be authorized to issue

regulations specifying the qualifying time periods and occupations,

and to subsequently provide monthly disability compensation payments to qualifying veterans based on a study to be conducted by

the National Academy of Sciences (NAS) in 2003. Because of the

time needed to conduct the study and draft the regulations, CBO

estimates that VA would not increase disability compensation benefits to eligible veterans under this provision until 2004.

CBO cannot estimate the cost of any increase in compensation

payments that may result from enacting this provision because we

cannot estimate the number of veterans who might be eligible for

compensation benefits until the NAS completes the study and VA

writes the regulations. It is possible, however, that the costs of this

provision could be significant depending on how many veterans

could gain eligibility for compensation under the new regulations.

(CBO estimates that implementing this section also would increase

spending subject to appropriation by $1 million over the 2003–2007

period, assuming appropriation of the estimated amounts. CBO’s

estimate of those outlays is discussed below under the heading of

‘‘Spending Subject to Appropriation.’’)

Prohibition on Assigning Benefits. Section 105 would prohibit

beneficiaries from signing over their rights to receive veterans’

compensation, pension, or dependency and indemnity compensation

benefits to another person. Any person, including the beneficiary,

who participates in an arrangement to reassign benefits would be

subject to a fine, imprisonment, or both penalties. This provision

also would direct VA to conduct a five-year outreach program to inform veterans about the prohibition on assigning benefits.

Because those prosecuted and convicted under section 105 could

be subject to criminal fines, the government might collect additional fines if this provision is enacted. Collections of such fines are

recorded in the budget as governmental receipts (revenues), which

are deposited in the Crime Victims Fund, and later spent. CBO

cannot estimate the impact on receipts because we cannot determine how many alleged violators VA might file suit against, wheth-
26

er the agency would win such legal action, or the size of any penalties that a court might impose. (CBO estimates that implementing this section also would increase spending subject to appropriation by a negligible amount over the 2003–2007 period, assuming appropriation of the estimated amounts. CBO’s estimate of

those outlays is discussed below under the heading of ‘‘Spending

Subject to Appropriation.’’)

Standard of Reversal and Scope of Authority. Under current law,

the Court of Appeals for Veterans Claims (CAVC) must determine

that any finding of material fact in a veteran’s appeal of a VA decision is ‘‘clearly erroneous’ to disregard it in reaching a decision.

Section 502 would direct the CAVC to apply a less restrictive

standard to evaluate findings of material fact that are adverse to

the claimant. It also would allow the CAVC to reverse a finding

under this standard.

Based on information provided by the Board of Veterans Appeals,

CBO expects that enacting this provision could make it more likely

that the CAVC would set aside VA findings of fact that are adverse

to the claimant which could result in more cases being remanded

to VA or decided in favor of the claimant. CBO cannot estimate the

cost of enacting this provision, however, because we cannot predict

the outcome of such litigation before the CAVC.

Review by Court of Appeals for the Federal Circuit. Section 503

would expand the jurisdiction of the U.S. Court of Appeals for the

Federal Circuit (CAFC) to allow the court to review a ‘‘rule of law.’’ A rule of law is a legal issue that does not involve a statute, regulation, or constitutional provision, but that may involve judicially

created legal principles. According to VA, enacting section 503

would likely cause more cases to fall under CAFC jurisdiction. Because we cannot predict the outcome of litigation brought before

the CAFC, however, CBO cannot estimate any potential increase in

direct spending that may result from a change in the number of decisions being reversed in favor of claimants.

Other Provisions. CBO estimates that the following provisions

would have an insignificant budgetary impact on direct spending:

• DENIAL OF BURIAL BENEFITS. Current law authorizes VA

to provide a Presidential Memorial Certificate, a flag to drape

the casket, and a headstone or grave marker for veterans who

were discharged or separated from active duty under conditions other than dishonorable to memorialize their death. Section 402 would authorize VA to deny these benefits to veterans

who have been convicted of a capital crime and sentenced to

death or life imprisonment.

CBO estimates that enacting this section would have an insignificant effect on the federal budget. Using data from the

U.S. Bureau of Justice Statistics and the Federal Bureau of

Prisons, CBO estimates that the prohibition would authorize

VA to deny these benefits to only a small number of veterans

each year. Based on information from the National Cemetery

Administration, the cost savings would be less than $150 a

person, CBO estimates.

• RETROACTIVE CLAIMS ASSISTANCE. The Veterans Claims

Assistance Act of 2000 (VCAA), enacted on November 9, 2000,

directed VA to provide assistance to veterans who file claims
27

for VA benefits. VA interpreted the VCAA as being retroactive

for certain cases that were open on or after the VCAA was enacted; however, in 2002, the CAVC ruled that the VCAA does

not apply retroactively for any case.

Section 505 would amend the law to specify that the VCAA

applies retroactively for all cases. It also would direct VA to assist the veterans whose claims were affected by the court’s ruling by helping them document their claim for reconsideration

by the department. This provision would only apply to certain

cases that were pending before a court on November 9, 2000,

and had been denied after April 24, 2002. According to information provided by VA, less than five cases would be eligible

to be reopened. While we cannot predict the outcome of these

appeals, CBO estimates that because of the very small number

of cases, the cost of enacting this provision would be negligible.

Housing. Section 301 would authorize VA to guarantee adjustable rate mortgages (ARMs) through 2005, including a relatively

new mortgage product, known as a hybrid ARM. These mortgages

carry an initial fixed interest rate for longer than one year and

then are subject to interest rate adjustments. The hybrid ARMs authorized under the bill would carry an initial fixed interest rate for

a period of not less than three years of the mortgage term.

Based on information from VA and the Federal Housing Administration, CBO estimates that about 10,000 new ARMs worth

roughly $1.6 billion would be guaranteed each year under this new

authority and that these loans would be 20 percent larger and 20

percent more likely to enter into default than fixed-rate mortgages.

(CBO estimates that fixed-rate mortgages have a default rate of

10.5 percent and that these ARMs would have a default rate of

12.4 percent.) CBO estimates that the net subsidy cost, as defined

by the Federal Credit Reform Act, of providing guarantees for these

ARMs would average $23 million over the 2003–2005 period. That

estimate reflects gross costs averaging about $27 million a year,

offset by savings of about $4 million a year for having fewer guarantees of fixed-rate mortgages. (Under the Federal Credit Reform

Act, the subsidy cost of a new guaranteed loan is the net present

value of estimated costs—at the time the loan is disbursed—of expected payments by the government to cover defaults and delinquencies, and other payments, net of expected payments to the government including any loan fees, penalties, and recoveries.)

When a guaranteed loan defaults and goes into foreclosure, VA

often acquires the property and issues a new direct loan (called a

vendee loan) when the property is sold. VA sells most vendee loans

on the secondary mortgage market and guarantees their timely repayment. Based on information from VA, CBO estimates the subsidy cost of vendee loans and sales of vendee loans would be less

than $500,000 a year over the 2003–2005 period and about $1 million a year over the 2006–2012 period.

Veterans’ Readjustment Benefits. Section 201 would increase

the amount available to state approving agencies by $5 million

each year in 2003, 2004, and 2005. CBO expects this change would

increase direct spending by $15 million over the 2003–2005 period.
28

SPENDING SUBJECT TO APPROPRIATION

CBO estimates that implementing S. 2237 would increase discretionary spending for VA’s general operating expenses by $2 million

in 2003 and $4 million over the 2003–2007 period, assuming that

the necessary amounts are appropriated.

Compensation for Hearing Loss in Paired Organs. For veterans with hearing loss, current law requires that both ears must

be diagnosed as totally deaf for hearing loss that was not caused

by military service to be rated as service-connected for the purposes

of disability compensation. Section 102 would modify this requirement so that any hearing loss in one ear that was not caused by

military service would be rated as service-connected if any degree

of hearing loss in the other ear was rated as service-connected.

CBO estimates that enacting this provision would cause certain

veterans with hearing loss to seek a reevaluation of their rating for

disability compensation from VA. CBO estimates that, as a result

of implementing this provision, about 4,000 veterans would submit

applications for a reevaluation of their rating in 2003 on top of

VA’s routine workload for rating applications. CBO also estimates

that in 2003, under this provision, about 500 veterans would apply

for disability compensation for hearing loss that would otherwise

not apply. Processing these additional applications would cost less

than $1 million in 2003 and about $2 million over the 2004–2007

period, CBO estimates.

Presumption of Service Connection for Hearing Loss. Section 103 would direct the Secretary of Veterans Affairs to enter

into an agreement with the NAS or another appropriate scientific

organization to conduct a study to determine the military occupations and time periods, if any, under which servicemembers may

have been exposed to conditions likely to cause or contribute to

hearing loss or tinnitus. Based on information provided by NAS,

CBO estimates that it would cost about $1 million in 2003 to perform this study.

Review by Court of Appeals for the Federal Circuit. Section

503 would expand the jurisdiction of the U.S. Court of Appeals for

the Federal Circuit to allow the court to review a ‘‘rule of law.’’ According to VA, enacting section 503 would likely increase the number of cases brought before the court. CBO cannot estimate the

costs associated with this larger workload because we have no

basis on which to predict the number of veterans that might file

an appeal under this provision.

Standard of Reversal and Scope of Authority. Section 502

would direct the CAVC to apply a less restrictive standard to

evaluate findings of material fact that are adverse to the claimant

and allow the court to reverse a finding under this new standard.

Based on information provided by the Board of Veterans Appeals,

CBO expects that more cases could be remanded to VA or decided

in favor of the claimant than under current law. Thus, CBO believes that CAVC actions could, under section 502, increase VA’s

discretionary costs for processing and paying claims. CBO cannot

estimate the likelihood or magnitude of such effects, however, because there is no basis to predict the outcome of such litigation before the CAVC.
29

Other Provisions. CBO estimates that implementing the fol- lowing provisions would cost less than $500,000 a year: • FEES FOR NON-ATTORNEY PRACTITIONERS. Current law authorizes the CAVC to award fees and expenses to attorneys who successfully represent clients before the court. Section 504 would authorize the CAVC to award these fees and expenses to individuals

who are not attorneys as well. According to VA, there are less than

35 of these practitioners who present a small number of cases before the court each year. Thus, CBO estimates that the cost of implementing this provision would be insignificant. • RETROACTIVE REQUIREMENT TO ASSIST CLAIMANTS. Section

505, described above under the heading of ‘‘Direct Spending,’’

would increase administrative costs for the CAVC because it would

expand the docket for that court. However, CBO estimates that the

costs of implementing this provision would be negligible because

the court’s docket would grow by less than five cases.

• PROHIBITION ON ASSIGNING BENEFITS. Section 105 would prohibit beneficiaries from signing over their rights to receive veterans’ compensation, pension, or dependency and indemnity compensation benefits to another person. Any person, including the

beneficiary, who participates in an arrangement to reassign benefits would be subject to a fine, imprisonment, or both penalties.

This provision also would direct VA to conduct a five-year outreach

program to inform veterans about the prohibition on assigning benefits. According to VA, the department would carry out this outreach program by adding information about the prohibition into its

regular mailings to veterans. CBO estimates that the cost of updating these documents would be negligible.

PAY-AS-YOU-GO CONSIDERATIONS

The Balanced Budget and Emergency Deficit Control Act sets up

pay-as-you-go procedures for legislation affecting direct spending or

receipts. The net changes in outlays that are subject to pay-as-yougo procedures are shown in Table 4. For the purposes of enforcing

pay-as-you-go procedures, only the effects through fiscal year 2006

are counted.

Table 4.—Estimated Impact of S. 2237 on Direct Spending and Receipts

[By Fiscal Year, in Millions of Dollars]

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Changes in outlays a ...... 0 31 27 25 ¥6 ¥8 ¥11 ¥13 ¥14 ¥14 32

Changes in receipts ....... 0 bbbbbbbbbb

a A provision in S. 2237 would direct the Department of Veterans Affairs to presume that, for veterans who served on active duty during

certain time periods and in certain military occupations, hearing loss and tinnitus are service-connected disabilities for the purposes of compensation. CBO cannot estimate the cost of any increase in compensation payments that may result from enacting this provision because we cannot estimate the number of veterans who might be eligible for compensation benefits until the National Academy of Sciences completes a

study and VA writes the necessary regulations. It is possible, however, that the costs of this provision could be significant depending on how

many veterans could gain eligibility for compensation under the new regulations. b CBO estimates that S. 2237 could increase revenues into the Crime Victims Fund over the 2003–2012 period for settlement of court

cases brought by the Department of Veterans Affairs against veterans who sign over their rights to compensation to another party. CBO cannot provide a specific estimate, however, given the uncertainty surrounding the number of cases that might be brought by VA, when any such

cases might be resolved, or the size of any penalties that a court might impose.

ESTIMATED IMPACT ON STATE, LOCAL, AND TRIBAL GOVERNMENTS

S. 2237 contains an intergovernmental mandate as defined in

UMRA because it would extend coverage under the Soldiers and
30

Sailors Civil Relief Act (SSCRA) to National Guard members who

are called up by the states but are performing homeland security

activities upon the request of a federal law enforcement agency.

This coverage would extend to those National Guard members certain protections including the right to maintain a single state of

residence for purposes of state and local personal and income taxes,

and the right to request a deferral in the payment of certain state

and local taxes and fees.

While CBO has no basis for estimating the number of National

Guard members that would ultimately be eligible for such protections, based on information from the Federation of Tax Administrators, we expect that relatively few would take advantage of these

protections and that the per capita cost would be small. We thus

estimate that any lost tax revenues to state and local governments

are unlikely to exceed the threshold for intergovernmental mandates ($58 million in 2002, adjusted annually for inflation).

The remaining provisions of S. 2237 contain no intergovernmental mandates and would impose no costs on state, local, or tribal governments.

ESTIMATED IMPACT ON THE PRIVATE SECTOR

The bill contains a private-sector mandate as defined by UMRA.

Section 401 would extend coverage under SSCRA to National

Guard members who are called up by the states but are performing

homeland security activities upon the request of a federal agency

and with the agreement of the Department of Defense.

SSCRA requires creditors to reduce the interest rate on

servicemembers’ obligations to 6 percent when such obligations predate active-duty service, unless the creditor convinces a court that

a member’s financial situation has not been materially affected by

reason of military service. SSCRA also allows the courts, when they

find that active-duty service has adversely affected a member’s financial condition, to temporarily stay certain civil proceedings,

such as evictions, foreclosures, and repossessions.

Since the number of affected personnel, while currently small,

fluctuates, CBO cannot determine the extent of the mandate. The

per capita mandate would be small, but the cost could exceed the

UMRA threshold if, in the future, a large number of National

Guard members fell into this category. UMRA’s threshold for private-sector mandates is $115 million in 2002 (and is adjusted annually for inflation).

PREVIOUS CBO ESTIMATE

On June 10, 2002, CBO transmitted a cost estimate for H.R.

4085, the Veterans’ and Survivors’ Benefits Expansion Act of 2002,

as ordered reported by the House Committee on Veterans’ Affairs

on May 9, 2002. Section 6 of H.R. 4085, which increases funds for

state approving agencies, is effectively identical to section 201 of

H.R. 2237. CBO estimates both sections would cost $15 million

over the 2003–2007 period.

Estimate prepared by: Federal Costs: (Compensation, Pensions,

Burial Benefits, and Court of Appeals for Veterans Claims) Melissa

E. Zimmerman; (Education Benefits) Sarah T. Jennings; (Housing)
31

Sunita D’Monte. Impact on State, Local, and Tribal Governments:

Theresa Gullo. Impact on the Private Sector: Sally S. Maxwell.

Estimate approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis.

CHANGES IN EXISTING LAW MADE BY THE COMMITTEE BILL, AS

REPORTED

In compliance with rule XXVI paragraph 12 of the Standing

Rules of the Senate, the following provides a print of the statute

or the part or section thereof to be amended or replaced (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 38, UNITED STATES CODE

* * * * * * *

§ 112. Presidential memorial certificate program

* * * * * * *

(c) A certificate may not be furnished under the program under

subsection (a) on behalf of a deceased person described in section

2411(b) of this title.

* * * * * * *

§ 1113. Presumptions rebuttable

(a) Where there is affirmative evidence to the contrary, or evidence to establish that an intercurrent injury or disease which is

a recognized cause of any of the diseases or disabilities within the

purview of section 1112, 1116, 1117, øor 1118¿ 1118, or 1119 of

this title, has been suffered between the date of separation from

service and the onset of any such diseases or disabilities, or the disability is due to the veteran’s own willful misconduct, service-connection pursuant to section 1112, 1116, øor 1118¿ 1118, or 1119 of

this title, or payments of compensation pursuant to section 1117 of

this title, will not be in order.

(b) Nothing in section 1112, 1116, 1117, øor 1118¿ 1118, or 1119

of this title, subsection (a) of this section, or section 5 of Public Law

98–542 (38 U.S.C. 1154 note) shall be construed to prevent the

granting of service-connection for any disease or disorder otherwise

shown by sound judgment to have been incurred in or aggravated

by active military, naval, or air service.

§ 1114. Rates of wartime disability compensation

For the purposes of section 1110 of this title—

* * * * * * *

(k) if the veteran, as the result of service-connected disability, has suffered the anatomical loss or loss of use of one

or more creative organs, or one foot, or one hand, or both buttocks, or blindness of one eye, having only light perception, has

suffered complete organic aphonia with constant inability to

communicate by speech, or deafness of both ears, having ab-
32

sence of air and bone conduction, or, in the case of a woman

veteran, has suffered the anatomical loss of half or more of the

tissue of one or both breasts (including loss by mastectomy), the rate of compensation therefor shall be $80 per month for

each such loss or loss of use independent of any other compensation provided in subsections (a) through (j) or subsection

(s) of this section but in no event to exceed $2,691 per month;

and in the event the veteran has suffered one or more of the

disabilities heretofore specified in this subsection, in addition

to the requirement for any of the rates specified in subsections

(l) through (n) of this section, the rate of compensation shall

be increased by $80 per month for each such loss or loss of use,

but in no event to exceed $3,775 per month;

* * * * * * *

CHAPTER 11—COMPENSATION FOR SERVICE–

CONNECTED DISABILITY OR DEATH

SUBCHAPTER I—GENERAL

Sec.

* * * * * * *

1119. Presumption of service connection for hearing loss associated with particular military occupational specialties.

* * * * * * *

§ 1119. Presumption of service connection for hearing loss associated with particular military occupational specialties

(a) For purposes of section 1110 of this title, and subject to section

1113 of this title, hearing loss, tinnitus, or both of a veteran who

served on active military, naval, or air service during a period specified by the Secretary under subsection (b)(1) and was assigned during the period of such service to a military occupational specialty or

equivalent described in subsection (b)(2) shall be considered to have

been incurred in or aggravated by such service, notwithstanding

that there is no record of evidence of such hearing loss or tinnitus,

as the case may be, during the period of such service.

(b)(1) A period referred to in subsection (a) is a period, if any, that

the Secretary determines in regulations prescribed under this

section—

(A) during which audiometric measures were consistently not

adequate to assess individual hearing threshold shift; or

(B) with respect to service in a military occupational specialty

or equivalent described in paragraph (2), during which hearing

conservation measures to prevent individual hearing threshold

shift were unavailable or provided insufficient protection for

members assigned to such military occupational specialty or

equivalent.

(2) A military occupational specialty or equivalent referred to in

subsection (a) is a military occupational specialty or equivalent, if

any, that the Secretary determines in regulations prescribed under

this section in which individuals assigned to such military occupational specialty or equivalent in the active military, naval, or air

service are or were likely to be exposed to a sufficiently high level
33

of acoustic trauma as to result in permanent hearing loss, tinnitus,

or both.

(c) In making determinations for purposes of subsection (b), the

Secretary shall take into account the report submitted to the Secretary by the National Academy of Sciences under section 103(c) of

the Veterans Benefits Improvement Act of 2002.

(d)(1) Not later than 60 days after the date on which the Secretary

receives the report referred to in subsection (c), the Secretary shall

determine whether or not a presumption of service connection for

hearing loss, tinnitus, or both is warranted for the hearing loss,

tinnitus, or both, as the case may be, of individuals assigned to each

military occupational specialty or equivalent, and during each period, identified by the National Academy of Sciences in such report

as a military occupational specialty or equivalent in which individuals are or were likely to be exposed during such period to a sufficiently high level of acoustic trauma as to result in permanent hearing loss, tinnitus, or both to a degree which would be compensable

as a service-connected disability under the laws administered by the

Secretary.

(2) If the Secretary determines under paragraph (1) that a presumption of service connection is warranted with respect to any

military occupational specialty or equivalent described in that paragraph and hearing loss, tinnitus, or both, the Secretary shall, not

later than 60 days after the date of the determination, issue proposed regulations setting forth the Secretary’s determination.

(3) If the Secretary determines under paragraph (1) that a presumption of service connection is not warranted with respect to any

military occupational specialty or equivalent described in that paragraph and hearing loss, tinnitus, or both, the Secretary shall, not

later than 60 days after the date of the determination— (A) publish the determination in the Federal Register; and

(B) submit to the Committees on Veterans’ Affairs of the Senate and the House of Representatives a report on the determination, including a justification for the determination.

(e) Any regulations issued under subsection (d)(2) shall take effect

on the date provided for in such regulations. No benefit may be paid

under this section for any month that begins before that date.

* * * * * * *

§ 1160. Special consideration for certain cases of loss of

paired organs or extremities

(a) Where a veteran has suffered—

* * * * * * *

(3) øtotal¿ deafness in one ear as a result of service-connected disability and øtotal¿ deafness in the other ear as the

result of non-service-connected disability not the result of the

veteran’s own willful misconduct;

* * * * * * *

§ 1562. Special provisions relating to pension

(a) The Secretary shall pay monthly to each person whose name

has been entered on the Army, Navy, Air Force, and Coast Guard
34

Medal of Honor roll, and a copy of whose certificate has been delivered to the Secretary under subsection (c) of section 1561 of this

title, a special pension at the rate of ø$600¿ $1,000, as adjusted

from time to time under subsection (e), beginning as of the date of

application therefor under section 1560 of this title.

* * * * * * *

(e) Effective as of December 1 each year, the Secretary shall increase the amount of monthly special pension payable under subsection (a) as of November 30 of such year by the same percentage

as the percentage by which benefit amounts payable under title II

of the Social Security Act (42 U.S.C. 401 et seq.) are increased effective December 1 of such year as a result of a determination under

section 215(i) of that Act (42 U.S.C. 415(i)).

* * * * * * *

§ 2301. Flags

* * * * * * *

(g) A flag may not be furnished under this section on behalf of

a deceased person described in section 2411(b) of this title.

ø(g)¿ (h)(1) The Secretary may not procure any flag for the purposes of this section that is not wholly produced in the United

States.

* * * * * * *

§ 2306. Headstones, markers, and burial receptacles

* * * * * * *

(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 marker may not be furnished under subsection (d) for the

grave of a person described in section 2411(b) of this title.

* * * * * * *

§ 2411. Prohibition against interment or memorialization in

the National Cemetery System or Arlington National Cemetery of persons committing Federal or

State capital crimes

(a)(1) * * *

* * * * * * *

(2) øThe prohibition¿ In the case of a person described in subsection (b)(1) or (b)(2), the prohibition under paragraph (1) shall not

apply unless written notice of a conviction øor finding under subsection (b)¿ referred to in subsection (b)(1) or (b)(2), as the case may

be, is received by the appropriate Federal official before such official approves an application for the interment or memorialization

of such person. Such written notice shall be furnished to such official by the Attorney General, in the case of a Federal capital crime,
35

or by an appropriate State official, in the case of a State capital

crime.

* * * * * * *

§ 3011. Basic educational assistance entitlement for service

on active duty

(a) Except as provided in subsection (c) of this section, each

individual—

(1) who—

* * * * * * *

(C) as of December 31, 1989, was eligible for educational

assistance benefits under chapter 34 of this title and—

* * * * * * *

(ii) reenlists or reenters on a period of active duty

øon or¿ after October 19, 1984; and

* * * * * * *

CHAPTER 30—ALL–VOLUNTEER FORCE EDUCATIONAL

ASSISTANCE PROGRAM

SUBCHAPTER I—PURPOSES; DEFINITIONS

Sec.

* * * * * * *

ø3014A. Accelerated payment of basic educational assistance for education leading to employment in high technology industry.¿

3014A. Accelerated payment of basic educational assistance for education leading

to employment in high technology occupation in high technology industry.

* * * * * * *

ø§ 3014A. Accelerated payment of basic educational assistance for education leading to employment in high

technology industry¿

§ 3014A. Accelerated payment of basic educational assistance

for education leading to employment in high technology occupation in high technology industry

* * * * * * *

(b) An individual described in this subsection is an individual

who is—

(1) enrolled in an approved program of education that leads

to øemployment in a high technology industry¿ employment in

a high technology occupation in a high technology industry (as

determined pursuant to regulations prescribed by the Secretary); and

* * * * * * *

§ 3035. Allocation of administration and of program costs

* * * * * * *

(b)(1) Except to the extent provided in øparagraphs (2) and (3)

of this subsection,¿ paragraphs (2), (3), and (4), payments for entitlement earned under subchapter II of this chapter shall be made
36

from funds appropriated to, or otherwise available to, the Department of Veterans Affairs for the payment of readjustment benefits

and from transfers from the Post-Vietnam Era Veterans Education

Account pursuant to section 3232(b)(2)(B) of this title.

* * * * * * *

(4) Payments attributable to the increased usage of benefits as a

result of transfers of entitlement to basic educational assistance

under section 3020 of this title shall be made from the Department

of Defense Educations Benefits Fund established under section 2006

of title 10 or from appropriations made to the Department of Transportation, as appropriate.

* * * * * * *

§ 3232. Duration; limitations

* * * * * * *

(c)(1) Subject to paragraph (3), the amount of educational assistance payable under this chapter for øa licensing¿ a particular licensing or certification test described in section 3452(b) of this title

is the lesser of $2,000 or the fee charged for the test.

* * * * * * *

§ 3512. Periods of eligibility

(a) * * *

* * * * * * *

(3) if the Secretary first finds that the parent from whom eligibility is derived has a service-connected total disability permanent in nature, or if the death of the parent from whom eligibility is derived occurs, after the eligible person’s eighteenth

birthday but before the person’s twenty-sixth birthday, then

(unless øparagraph (4)¿ paragraph (4) or (5) applies) such period shall end 8 years after the date that is elected by that person to be the beginning date of entitlement under section 3511

of this title or subchapter V of this chapter if—

* * * * * * *

(4) if the person otherwise eligible under paragraph (3) fails

to elect a beginning date of entitlement in accordance with that

paragraph, the beginning date of the person’s entitlement shall

be the date of the Secretary’s decision that the parent has a

service-connected total disability permanent in nature, or that

the parent’s death was service-connected, whichever is applicable;

ø(4)¿ (5) if the person serves on duty with the Armed Forces

as an eligible person after the person’s eighteenth birthday but

before the person’s twenty-sixth birthday, then such period

shall end 8 years after the person’s first discharge or release

from such duty with the Armed Forces (excluding from such 8

years all periods during which the eligible person served on active duty before August 1, 1962, pursuant to (A) a call or order

thereto issued to the person as a Reserve after July 30, 1961,

or (B) an extension of enlistment, appointment, or period of

duty with the Armed Forces pursuant to section 2 of Public
37

Law 87–117); however, in no event shall such period be extended beyond the person’s thirty-first birthday by reason of

this paragraph;

ø(5)¿ (6) if the person becomes eligible by reason of the provisions of section 3501(a)(1)(A)(iii) of this title after the person’s eighteenth birthday but before the person’s twenty-sixth

birthday, then (unless øparagraph (4)¿ paragraph (5) applies)

such period shall end eight years after the date on which the

person becomes eligible by reason of such provisions, but in no

event shall such period be extended beyond the person’s thirtyfirst birthday by reason of this clause;

ø(6)¿ (7)(A) if such person is enrolled in an educational institution regularly operated on the quarter or semester system

and such period ends during a quarter or semester, such period

shall be extended to the end of the quarter or semester; or

* * * * * * *

ø(7)¿ (8) if the person is pursuing a preparatory course described in section 3002(3)(B) of this title, such period may

begin on the date that is the first day of such course pursuit,

notwithstanding that such date may be before the person’s

eighteenth birthday, except that in no case may such person be

afforded educational assistance under this chapter for pursuit

of secondary schooling unless such course pursuit would otherwise be authorized under this subsection.

* * * * * * *

§ 3674. Reimbursement of expenses

(a)(1) * * *

(4) The total amount made available under this section for any

fiscal year may not exceed $13,000,000 or, for each of øfiscal years

2001 and 2002, $14,000,000¿ fiscal years 2003, 2004, and 2005,

$18,000,000. 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.

* * * * * * *

§ 3689. Approval requirements for licensing and certification testing

* * * * * * *

(b) REQUIREMENTS FOR TESTS.—(1) Subject to paragraph (2), a licensing or certification test is approved for purposes of this section

only if—

* * * * * * *

(B) the Secretary determines that the test is generally accepted, in accordance with relevant government, business, or

industry standards, employment policies, or hiring practices,

and with such other standards as the Secretary may prescribe,
38

as attesting to a level of knowledge or skill required to qualify

to enter into, maintain, or advance in employment in a predetermined and identified vocation or profession.

* * * * * * *

(c) REQUIREMENTS FOR ORGANIZATIONS OR ENTITIES OFFERING

TESTS.—(1) Each organization or entity that is not an entity of the

United States, a State, or political subdivision of a State, that offers a licensing or certification test for which payment may be

made under chapter 30, 32, 34, or 35 of this title and that meets

the following requirements, shall be approved by the Secretary to

offer such test:

(A) The organization or entity certifies to the Secretary that

the licensing or certification test offered by the organization or

entity is generally accepted, in accordance with relevant government, business, or industry standards, employment policies,

or hiring practices, and with such other standards as the Secretary may prescribe, as attesting to a level of knowledge or

skill required to qualify to enter into, maintain, or advance in

employment in a predetermined and identified vocation or profession.

(B) The organization or entity is licensed, chartered, or incorporated in a State and has offered øthe test¿ such test, or a

test to certify or license in a similar or related occupation, for

a minimum of two years before the date on which the organization or entity first submits to the Secretary an application for

approval under this section.

* * * * * * *

§ 3707. Adjustable rate mortgages

(a) The Secretary shall carry out a demonstration project under

this section øduring fiscal years 1993, 1994, and 1995¿ through fiscal year 2005 for the purpose of guaranteeing loans in a manner

similar to the manner in which the Secretary of Housing and

Urban Development insures adjustable rate mortgages under section 251 of the National Housing Act.

(b) øInterest rate adjustment provisions¿ Except as provided in

subsection (c)(1), interest rate adjustment provisions of a mortgage

guaranteed under this section shall—

(c) Adjustable rate mortgages that are guaranteed under this section shall include adjustable rate mortgages (commonly referred to

as ‘‘hybrid adjustable rate mortgages’’) having interest rate adjustment provisions that—

(1) are not subject to subsection (b)(1);

(2) specify an initial rate of interest that is fixed for a period

of not less than the first three years of the mortgage term;

(3) provide for an initial adjustment in the rate of interest by

the mortgagee at the end of the period described in paragraph

(2); and

(4) comply in such initial adjustment, and any subsequent

adjustment, with paragraphs (2) through (4) of subsection (b).
39

ø(c)¿ (d) The Secretary shall promulgate underwriting standards

for loans guaranteed under this section, taking into account—

* * * * * * *

ø(d)¿ (e) The Secretary shall require that the mortgagee make

available to the mortgagor, at the time of loan application, a written explanation of the features of the adjustable rate mortgage, including a hypothetical payment schedule that displays the maximum potential increases in monthly payments to the mortgagor

over the first five years of the mortgage term.

* * * * * * *

§ 5301. Nonassignability and exempt status of benefits

(a)(1) Payments of benefits due or to become due under any law

administered by the Secretary shall not be assignable except to the

extent specifically authorized by law, and such payments made to,

or on account of, a beneficiary shall be exempt from taxation, shall

be exempt from the claim of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary. The

preceding sentence shall not apply to claims of the United States

arising under such laws nor shall the exemption therein contained

as to taxation extend to any property purchased in part or wholly

out of such payments. The provisions of this section shall not be

construed to prohibit the assignment of insurance otherwise authorized under chapter 19 of this title, or of servicemen’s indemnity.

(2) For the purposes of this subsection, in any case where a

payee of an educational assistance allowance has designated the

address of an attorney-in-fact as the payee’s address for the purpose of receiving a benefit check and has also executed a power of

attorney giving the attorney-in-fact authority to negotiate such

benefit check, such action shall be deemed to be an assignment and

is prohibited.

(3)(A) For purposes of this subsection, in any case where a beneficiary entitled to compensation, pension, or dependency and indemnity compensation enters into an agreement with another person

under which agreement such other person acquires for consideration

the right to receive payment of such compensation, pension, or dependency and indemnity compensation, as the case may be, whether

by payment from the beneficiary to such other person, deposit into

an account from which such other person may make withdrawals,

or otherwise, such agreement shall be deemed to be an assignment

and is prohibited.

(B) Any agreement or arrangement for collateral for security for

an agreement that is prohibited under subparagraph (A) is also

prohibited.

(C)(i) Any person who enters into an agreement that is prohibited under subparagraph (A), or an agreement or arrangement that

is prohibited under subparagraph (B), shall be fined under title 18,

imprisoned for not more than one year, or both.

(ii) This subparagraph does not apply to a beneficiary with respect to compensation, pension, or dependency and indemnity com-
40

pensation to which the beneficiary is entitled under a law administered by the Secretary.

* * * * * * *

§ 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 Secretary of Health and Human

Services under section 6103(l)(7)(D)(viii) of the Internal Revenue

Code of 1986 expires on øSeptember 30, 2008¿ September 30, 2011.

* * * * * * *

§ 7261. Scope of review

(a) In any action brought under øthis chapter¿ section 7252(a) of

this title, the Court of Appeals for Veterans Claims, to the extent

necessary to its decision and when presented, shall—

* * * * * * *

(4) in the case of a finding of material fact made in reaching

a decision in a case before the Department with respect to benefits under laws administered by the Secretary, hold unlawful

and set aside or reverse such finding øif the finding is clearly

erroneous¿ if the finding is adverse to the claimant and the

Court determines that the finding is unsupported by substantial

evidence of record, taking into account the Secretary’s application of section 5107(b) of this title.

* * * * * * *

(e)(1) In making a determination on a finding of material fact

under subsection (a)(4), the Court shall review the record of proceedings before the Secretary and the Board of Veterans’ Appeals

pursuant to section 7252(b) of this title.

(2) A determination on a finding of material fact under subsection

(a)(4) shall specify the evidence or material on which the Court relied in making such determination.

* * * * * * *

§ 7292. Review by United States Court of Appeals for the

Federal Circuit

(a) After a decision of the United States Court of Appeals for Veterans Claims is entered in a case, any party to the case may obtain

a review of the decision with respect to the validity of a decision

of the Court on a rule of law or of any statute or regulation (other

than a refusal to review the schedule of ratings for disabilities

adopted under section 1155 of this title) or any interpretation

thereof (other than a determination as to a factual matter) that

was relied on by the Court in making the decision. Such a review

shall be obtained by filing a notice of appeal with the Court of Appeals for Veterans Claims within the time and in the manner prescribed for appeal to United States courts of appeals for United

States district courts.

* * * * * * *
41

(c) The United States Court of Appeals for the Federal Circuit

shall have exclusive jurisdiction to review and decide any challenge

to the validity of a decision of the Court of Appeals for Veterans

Claims on a rule of law or of any statute or regulation or any interpretation thereof brought under this section, and to interpret constitutional and statutory provisions, to the extent presented and

necessary to a decision. The judgment of øsuch court¿ the Court of

Appeals for the Federal Circuit shall be final subject to review by

the Supreme Court upon certiorari, in the manner provided in section 1254 of title 28.

* * * * * * *

SOLDIERS’ AND SAILORS’ CIVIL RELIEF

ACT OF 1940

OCT. 17, 1940, CH. 888, 54 STAT. 1178

* * * * * * *

Sec. 511. Definitions

(1) The term ‘‘person in the military service’’, the term ‘‘persons

in military service’’, and the term ‘‘persons in the military service

of the United States’’, as used in this Act (sections 501 to 593 of

this Appendix), shall include the following persons and not other:

All members of the Army of the United States, the United States

Navy, the Marine Corps, the Air Force, the Coast Guard, øand all¿

all officers of the Public Health Service detailed by proper authority for duty either with the Army or the Navy, and shall include

service of the National Guard, pursuant to a call or order to duty

by the Governor of a State, upon the request of a Federal law enforcement agency and with the concurrence of the Secretary of Defense, to perform full-time duty under section 502(f) of title 32,

United States Code, for purposes of carrying out homeland security

activities. The term ‘‘military service’’, as used in this Act (said sections), shall signify Federal service on active duty with any branch

of service heretofore referred to or mentioned as well as training

or education under the supervision of the United States preliminary to induction into the military service. The terms ‘‘active service’’ or ‘‘active duty’’ shall include the period during which a person

in military service is absent from duty on account of sickness,

wounds, leave, or other lawful cause.

* * * * * * *

TITLE 26—UNITED STATES CODE

* * * * * * *

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

* * * * * * *
42

(l) Disclosure of returns and return information for purposes

other than tax administration

* * * * * * *

(7) DISCLOSURE UPON REQUEST OF INFORMATION RELATING TO

TERRORIST ACTIVITIES, ETC.—

(E) TERMINATION.—No disclosure may be made under

this paragraph after øDecember 31, 2003¿ September 30,

2011.

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