UNITED STAT ES COURT OF AP P EALS FOR VETERANS CLAIMS

No. 98-57

C AT HERI NE A. O Z ER , A PP EL L ANT ,

V

. ANTHONY J. P RI NCI PI , S EC RE T A RY O F V ET ER A N S A FF A I RS , A PPEL L EE

.

Be fore HOL DAWAY, I VERS, and STEI NB ERG, J

ud ge s.
O R D E R
This matter is befor e the Court on the appellant' s J une 5, 2001, application for an a war d of
a t t o r n e y f e e s an d e x p e n s e s u n d e r

t h e E qu a l A c c e s s t o J u s t i c e A c t , 2 8 U

. S

. C

. § 2 4 1 2 ( d ) ( E A J A )

. In
a F e br ua ry 6, 20 01 , op ini on , the Court re ve rs e d a Se pte mbe r 19 97 B oa rd of Ve te rans ' Appe als (Board or BV A) de c isi on tha t ha d d e nie d D e pa

rtme nt o f V e te ra

ns Af fa ir s ( VA ) d e pe nd e nts ' educational assistance ( DEA) benef its, and the Court remande d the matter f or re adjudication. Ozer v. Principi , 14 Vet.App. 257, 258 ( 2001) [hereina fter Oz e r I ]. In its opini on, the Court invalidated,
a s incon si st ent with s ta tut or y a uth or ity (3 8 U .S. C. § 35 12 (1 99 4) ), a re gulatio n ( 38 C.F .R. § 2 1. 30 46 (c ) ( 20 00 )) tha

t th e B oa rd ha d a pp lie d to deny the DE A be ne fi ts sou g ht by the a pp e lla nt. Id. a t 26 4. Th e re a ft e r, the a pp e lla nt time ly fi le d he r EA JA a pp lic a tio n, wh ic h see ks $1 3, 64 1. 16 in fee s and expenses (Applica tion (Appl.) at 1); the Sec reta ry filed a r esponse, a

nd the appe llant filed
a re ply . The Cou rt o rder ed additional brie fing from the pa rties, and or al ar g ument was he ld on September 4, 2002. There afte r, t he C ourt order ed fur ther brie fing , and both par ties have r esponded.

The Court has a lrea dy

held that the EAJA application her e mee ts any jurisdictional require ments, 2 8 U.S.C. § 2412(d)(1)( A), (1) (B ), (2) (B ). Ozer v. Principi , 16 Vet.App. 88, 89 (2002) ( per c uriam brief

ing or der) . The only

contested issues in this app lication are whether the Se c re tary wa s su bs tanti a lly

jus tif ie d a nd , if no t, t he re a so na

ble ne ss of the re qu e ste d fe e . 38 U .S. C. § 2412(d)( 1)(A) . For

the re asons that follow, the Court will deny the appe llant's a

pplication.

"O nce a n appellant ha s al l ege d a lack of substantial justification, the burden shifts to the Secre tary to prove that VAwas substantially justified in [ both] its admini s t rative and litigation po si ti on s. " C u l l en s v. Go ber , 1 4 Ve t

. Ap p

. 2 3 4 , 2 3 7 (2 0 0 1 ) ( en b an c) (c i t i n g Loc he r v . B ro wn , 9 Vet.App. 535, 537 ( 1996)). The Supreme Court has de te r mi n e d th a t " substantially

justified" mea

ns "justified to a de g ree that could satisfy a re asonable person"

. Pierce v. Unde rwood , 487 U.S. 552, 56 5 ( 19 88 ). F ur

the rm or e , th is C ourt

ha s e sta bli sh e d th e fol lo wing" tot a lity of the c ir c ums tanc e s" standard to de termine whe ther the Sec reta ry has ca rried that burden:2 VA mus t demonstrate the rea sonablene ss, in law and fa ct, of the position of . .

. VA in a matter befor e the Court, and of the action or failure to act by

. . . VA in a matter be fore . . . VA, base d upon the totality of the c ircumstance s, includin g merits, conduct, r easons g ive n, and

c on sis te nc y

wi th ju di cial p re c e de nt a nd VApo lic y

wi th respe ct to such position, and action or failure to act, as r efle cted in the
re c or d o n a

pp e a l and the fi lin g s o f t

he pa rt ie s b e fo re the Court

. Sti llwe ll v . B ro wn , 6 Vet.App. 291, 302 ( 1994).

The unde rly ing me rits adjudication ar ose out of an a pplication for D EA bene fits by the appellant, the w ife of a

dece ased ve tera

n. I n its unde rl y ing de cision, the Boa rd applied a

VA regulation, 38 C

. F. R

. § 2 1.3046(c) , which at that time, inter a lia, limit ed the pe riod of DEA
e lig ibi lit y a s f oll ow s: " Th e pe ri od

of e lig ibi lity

c ann ot e xce e d 1 0 y e ars

. . . . " 38 C.F .R. § 21.3046(c) (1) ( 2000). On a ppeal, th e C o u rt d etermined "that the Secre tary ' s limi tation of [the DEA] period to a fixed term of ten y ear s is unlawful and thus . . . the B VA wa s not permitted to find the appellant ineligible for DEA for the rea sons set forth in its decision". Oz e r I , 14 Vet.App. at 263. I nstead, the opinion "h[eld] s imply that the 10-y ear

period de scribed in [38 U.S.C. § 3512(b) (1994)] do e s n ot b e g in u

nti l, a s th e statut e say s o n it s f a c e, the l a st o f t

he thr e e a lte rn a tiv e s se t f or th i n subsection (b)( 1) has be en eliminated"

. Id. at 262. Section 3512(b)( 1) provided at that time that the DEA eli gibi li ty

peri odmay

no t ex ceed "1 0 y ears aft er wh ich ever of t he fo ll owi ng la s t occu rs". 38 U. S.C. § 35 12 (b )( 1) (1 99 4)

. Se c tio n 35 12 (b )( 1) the n lis te d the fo llo wi ng a lte rn a tiv e dat e s:

(A ) T he d ate on

wh ic h th e Se c re tary

fi rs t f ind s th e sp ou se from whom elig i b i l i t y

is derived ha s a ser

vice- connec ted total disability perma nent in nature

. (B ) T he date of de a th o f t he sp ou se fr om w ho m e lig ibi lity is de ri ve d w ho die s w hil e a tot a l di sa bil ity e va luate d a s p e rm ane nt i n nature was in existence. (C) T h e d at e o n wh i ch the Secr etar y deter mines that the spouse from whom elig ibilit y is derived died of

a ser vice- connec ted d i s a b i l i t y. 38 U.S.C. § 3512(b)(1) ( 1994).

I n th e me ri ts s ta g e of

thi s li tig a tio n, the Court

de te rm ine d:
[S ]ection 3512(b)(1) (A) pr ovides only one of thr ee ev ents " bey ond ten y ear s after

. . . the . . . las t " of which occur s no DEA is authorized. 38 U.S.C. § 3512(b)(1) ( emphasis added). Thus, the statutory
su bp ara g ra phc ite d by

the Se c re tary

do e s not provide a ny information3 a s to the " c omm e nc e me nt o f t he e lig ibi lity

pe ri od " , n or

do e s it establish a fixed 10-y ear

period of such elig ibilit y
. The parties have not provided evide nce of

a statutory basis for the f

ix ed 10-y ear

period provided for

in § 21.3046(c) , and the Court is not awa re of any such ba sis

.

. . . . Be c a u s e § 2 1

. 3 0 4 6 ( c ) im

p o s e s a 1 0

- y e ar li mi tati o no nthe provisi o n of DEA that was not containe d in or authorized by 38 U.S.C. § 3512, or any other provision s o f title 38 of which the Court is awa

re, we must hold, as we have held in simil ar c ases in the past, that the re g ulation cannot stand.

Ozer I , 14 Vet.App. at 263-64.

I. Su bstantial Ju stifi cation at the A dm inis trat ive Level

I n demonstrating substantial justi fication at the administrative level i n a case in which the Se c re tary ' s r e g ulatio n h a s b e e n inva lid a te d, the Se c re tary mus t pr ov e su

bs tanti a l ju sti fi c a tio n b oth i np r o m u l g a t i n g t h e r e g u l a t i o nan d i nh i s p o s i t i o nd

u r i n g a d j u d i c a t i o n o f t h e c l a i m b e f o r e t h e a g e n c y. Se e Fe lto n v . B ro wn , 7 Vet.App. 276, 283 ( 1994) [hereina fter Felton II ]. The Sec reta

ry argues that his administrative position i n both r espec ts was substantially justified beca

use, inter a lia, under the Sti llwe ll totality -of- the-c ircumstance s test, the regulation exi sted for " deca des" befor e the Court struck it d o wn , t he under ly ing issue w as one of first impression, and the Court' s panel opinion on the merits was not una

nimous. Response at 9-10; June 2002 Supplemental Memorandum (Me m.)
a t 18- 19

. Th e a

pp e lla nt co un te rs that the Se c re tary ' s re g ulatio n (1) " wa s c le arl y c on tr ary to t he pla in meaningof the statute" , (2) " as a r esult rende red me aning less the stat u t e's o p erative lang uag e of l i m i t at i o n " ( J u l y

2 0 0 2 M em

. at 2 (c i t i n g Swiney v. G ober , 14 Vet.App. 65, 71 ( 2000))) , and (3) ther efor e, had no r easona ble basis in the law unde r Pierce , su pra . Appl. at 4-5.

I n Felton II

, this Court denied an EAJA application based on a n underlying de cision in which the Court had invalidated a regulation beca

use " it was not authorized by t h e statute"

. Felton II , 7 Vet.App. at 282-83. In the Felton un de rl y ingme ri ts d e c isi on , th e Court ha d f ound that th e statut e a t is su e ha d a "p la in me anin g " and that it wa s " c le ar t

hat it is c on tr ary

to t he langua g e and

purp os e of t he statute to deny

[t o] t he vete ran" the bene fit that the regulation disallowed. Fe lto n v . B ro wn , 4 Vet.App. 363, 369- 70 (1993) [here inafter Felton I ]

. T h e C o u rt (1 ) d et er m i n edt h at t h e r egu l at i o n 's "r estriction is clea

rly in contrave ntion of the statute, and the r eg ulation i s , t here fore , neither

' appropr iate to ca

rry out' nor ' consistent with' the law under 38 U.S.C.[ ] § 501(a) "; (2) deter mined that that "a dded restric tion is an unauthorized limit ation on the scope of [t he g overning

statute]"; and (3) c oncluded that be cause the statute " clea rly mandated" the bene fit sought, the r eg ulation "violates th e s tatu e b y d e n y in g " th a t b e n e fit. Felton I , 4 Vet.App. at 371. During the EAJA lit iga tion, the Court held: "Althoug h we he ld in the underlying c ase on the merits that the Secr etar y ' s interpre tation4

of the statute, a s set forth in [t he reg ulation] , was in excess of st atutory authority , we cannot say that th e S ecret ary 's po si ti on hadno reas on abl e bas is in law or i n fac t. " Felton II , 7 Vet.App. at 283. The Court the n conclude d: "G iven the statutory silence on the particula r matter and the lack of

a conf lict wi th ad ve rs e pr e c e de nt, the Se c re tary ' s posi tio n dur ing thi s par t of the a dmi nis tr a tiv e ph a se , i. e ., in pro mu lgat in g the r egula ti on at i ss ue, was su bs tan ti all y ju st if ied ." Id. at 284.

Her e, the Sec reta

ry argues that " VA' s position t hat there could be s ep arate and distinct delimiting per iods in a particular case if the vete ran passed aw ay was incor

rec t" but " was not
unrea sonable" . J une 2002 Mem. at 18. The Court is unable to f ind a meaning ful distinction between the instant c ase a

nd Felton II

, which dete rmined that the Sec reta ry ' s interpre tation contained in the regulation there inva lidated was re as o n ab l y based in the la w. Felton II

, su pra . Although the app ella nt c on te nd s th a t Felton II is d ist inguis ha ble fr om t

he ins tant c a se on

the g ro un d th a t in Felton II there was no statutory

provision and VA was filling a g ap by issuing its reg ulation where as he re the inv a lid a te d r e g ulatio n d ir e c tly con tr avene d a sp e c if ic dir e c tiv e the n in

the statut e (" whicheve r . . . last occ urs" , 38 U.S.C. § 3512(b)( 1) (1994)), t he esse nce of the merits dec ision on t h e v al i d i t y

o f t h e r egu l at i o n i n ea ch ca s e i s t h e s am e: T h e r egu l at i o nco n t ra v en edt h e p l ai nl an gu age of the statute and thus w as invalid. See F elton I , 4 Ve t.A pp . at 36 9- 71 ; Oz e r I

, 14 Vet.App. at 263- 64. I ndeed, as the prec eding discussion shows, the Court's denunciation of the re g ulation was eve n strong er in Felton I

than in Oz e r I

. See ibid. There fore , the Court holds that the Se cr et ar y was substantially justified in promulg ating the regulation at issue here

. See F elton II , 7 Vet.App. at 282- 84; Secr etary ' s Oct. 2002 Mem. at 2 ( attesting that Fe dera l Reg ister " contained no disc ussion of public comments having been solicited or rec eived" ).

As to the second part of action at the administrative level, VA' s application of the r eg ulation i n the instant case , VA and the BV A wer e bound by law to apply

the re g ulation to the appellant's claim. See F

ugere v . Derwiniski , 1 Ve t.A pp . 103 , 110 (1 99 0) (h old ingthat a g e nc y is b ound by its regulations). Moreove r, as in Felton II , " the re g ulatio n w a s not que sti on e d" un til pr oc e e din g s in thi s Court. Felton II

, 7 Ve t.A pp . at 28 4; se e Oz e r v . W est , 13 Vet.App. 458, 460 ( 2000) (pe r cur iam briefingorder ); Secre tary ' s Oct. 2002 Mem. at 2. The Felton Court concluded, a s do we, that "[g ]i ven the exis tence of t he reg ulation, whose validit y had not y et been questioned in this case, the S ecret ary 's po si ti on du ri ng th is part of t he ad mi ni st rat iv e ph ase w as al so su bs tan ti all y ju st if ied ". Ibid.

II. Su bstantial Ju stifi cation at the Litigation Level

The Court' s analy sis in Felton II of su bs tanti a l ju sti fi c a tio n at th e liti g a tio n le ve l c los e ly mirrore d that opinion's discussion as t o t he promulg ation of and a dminist rative r eliance on the regulation. Felton II

, supra. The Court re iterate d the " rea sonable ba sis in fact or law" standard a nd conclude d that the Secr etar y , in de fending the application of his r eg ulation, met this st andar d. See id . at 285. The Court summarized the Secre t ar y ' s argument in Felton I "that the statute did not addre ss the specific issue envisioned by the reg ulation", which is simi lar to the Sec reta ry ' s argument in the instant case that the regulation was promulg ated a nd applied base d on VA' s "inc orre ct" , but "not unr easona

ble" , idea " that there could be separate and distinct delimiting per iods in a particular5

case if the vete ran pa ssed awa y " ( J une 2002 Mem. at 18), and d et er m i n ed that "[i]n l ight of the
re g ulatio n' s h ist or

y , th e Se c re tary ' s p os iti on in t he un de rl y ing c a se on

the me ri ts w a s su

bs tanti a lly justified". Felton II

, su pra . Simi larly , in light of the a naly sis and conclusions re ache d in Felton I and Felton II

, the Secr etar

y ' s li t i gat i on position here had a "r easona ble basis in fac t or law" based
on his arguments made before the C ourt. Felton II , su pra
. Th e re fo re , the Se c re tary wa s su bs tanti a lly justified at the litigation leve l as well.

III. Conclusi on
I n Felton II

, the Court made c lear t h at " the re solution of EAJ A issues depe nds on many fac tors", F

elton II , 7 Vet.App. at 286, and in Sti llwe ll the Court

str e sse d th a t " re a so na

ble ne ss i s det erm in ed b y

th e to tal it y of th e cir cum st ances , and no t by any si ngle- fact or ap pro ach. " Sti llwe ll , su pra (c i t i n g Chiu v. United States , 948 F.2d 711, 715 n.4 ( Fe d. Cir. 1991)). He re, a s in the Felton litigation, the re g ulation was contra ry to law, but beca

use t his case was one of first impression and there was no prior disapproval of or c halleng e to the re g ulation, and bec ause the Court finds, based
on Felton I

and Felton II

, th a t " ' a reas on a

ble pe rs on

c ou ld t hink [th e Se c re tary ' s p os iti on ] co rr e c t, that is, . . . it has a rea sonable ba sis in fact or law ' ", F e lton I I , 7 Ve t

. Ap p

. at 2 8 0 (q u o t i n g Pierce , 487 U.S. at 566 n.2), the Court hol d s t h at t h e S ecr etar y ' s position, at both t he administrative a nd litigation stag es, w as subs tantially justified. There are two other fa ctors that could buttre ss our c on c lus ion . F ir st, it a

pp e ars that th e Se c re tary

c or re c tly anti c ipate d wh at Co ngress in te nd e d a s a fix ed delimiting pe riod, notwithstanding the statutory lang uag e to the contr ary , beca use soon af

ter the merits opinion in Ozer I , Co ng re ss a c te d to ame nd th e st atute so a s to pe rm it the Se c re tary to apply a fix ed DEA delimiting period. Vetera ns Education and B enef

its Ex pansion Act of 2001, Pub. L . No. 107-103, § 108(c )(2) , (c) (3), 115 Stat. 976, 985 (2001). Second, although it is certa inly not dispositi ve, compare Thompson ( Abraham) v. Principi , __ Vet.App. __,__, No. 99-515, slip. op. at 3-4, 2002 WL31549093, at *2 (Nov. 19, 2002) , with id . at slip op. at 8-9, 2000 WL at *5-6, the fact that one of the judge s on this panel viewed the regul ati on as valid and dissente d from the holding
o f th e me r it s o p in ion, Oz e r I , 1 4 Vet.App. at 265 (Holdawa y , J ., dissenting) , is one fac tor to be considere d among the totality of the c ircumstance s involved in assessing the re asonable ness of the Secre tary ' s administrative and litigation positions. Cf. Ma rc us v . S ha lal a , 17 F. 3d 10 33 , 1 03 8 ( 7th C i r. 1 9 9 4 ) ( aw ar d i n g E AJ A f ee s b as edo nu n re as o n ab l e a gen cy ad o p t i o no f re gu l at i o n s , ev en t h o u gh two circ uit courts had sustained those r eg ulations). On consider ation of the for eg oing a naly sis and the su bmi ssi on of the pa rt ie s, it i s ORDERED that the appe llant's EA J A application is DENI ED.

DA TE D: No ve mbe r 2 2, 20 02 PER CU RI AM

. HOL DAWAY, Judge , with whom I VERS, Judge , jo ins , c on c ur ri ng : I c on c ur in t he re su lt in t he pr e se nt ca se , an d wr ite se pa rate ly sim ply to e mph a size an im

po rt ant p oin t no t me nti on e d in the or de r i ssu e d b y

the Court

.6

Whil e the or der r elies entire ly on t h e C o u rt 's previous dec ision in Fe lto n v . B ro wn , 7 Vet.App. 276 ( 1994), which the se judg es believe to have be en rig htl y d ec i d ed, as the basis for de nyingthe ap pel lan t's EA JA a pp lic a tio n, the re is a

no the r, mor e fu

nd a me nta l, g ro un d th a t w ou ld
serve as the prope r basis to deny the appe llant's EA J A application even in the the o re t i ca l absenc e of Felton . I n Piercev. Unde rwood , 487 U.S. 552, 566 n.2 (1988), the U.S

. Supreme Court explained that " a po sit ion c an b e jus tif

ie d e ve n th ou g h it

is n ot c or re c t, a nd we be lie ve it c an be su bs tanti a lly (i .e ., fo r t he mos t pa

rt ) j us tif ie d if a re a sonab le pe rs on

c ou ld t hink it c or re c t, t hat is , if it h a s a re a so na ble ba sis in l aw a

nd fa ct. " Th erefore , if

the po sit ion

take n b y VA , a lth ou g h u lti ma te ly deter mined to be " incorre ct," is debatable – that is, if r e a s o n a b lem in d

s c o u ld differ –t h en VA 's position m ust be found to be subs t an t i al l y j u stified. Moreove r, this Court has held that the g overnme nt need not be " ' justified to a high de g ree ,' but r ather ' justified in substance or

in the main' – that is , jus ti fi ed to a degree that cou ldsat is fy a reas on abl e per so n. " Fe lto n v . B ro wn , 7 Vet.App. 27 6, 28 0 ( 19 94 ); see also Pierc e , 487 U.S. at 565; Sti llwe ll v . B ro wn , 6 Vet.App. 291, 302 ( 1994). As ref lected in the Court' s opinion on the merits in thi s case , there was a clea r diffe renc e of opinion among members of

the pane l (ea ch of whom, presumably , possesses a " rea sonable mind" ) as to the clar ity of the statutory

scheme and the validity

of the re g ulation at issue. I n fac t, it is difficult to see how any rea sonable person could deny the debatability

of this issue. Given that re asonable minds differ ed as to this point, the EAJ A application would have to be denied under Pierce , su pra , even in the absenc e of Felton

. STEI NB ERG, Judge , concur

ring : Iwrite sepa

rate ly to e x press my continued disapproval of the analy sis a

nd holding in Fe lto n v . B ro wn , 7 Vet.App. 276 ( 1994) [hereina fter Felton II ]. See id.
a t 28 7- 94 (S te inb e rg , J., c on c ur ri ng in part and dis se nti ng in part ). I ma int a in my be lie f t hat Felton II was wr ong ly

decide d, and thus, wer e it not for i t s p re ce d en tial force , Iwould vote to g rant the application in this case, fo r t h e re asons stated in my dissent in Felton II

, su pra . Iam, howeve r, constraine d by

the Felton II

holding to join in this order, albe it reluctantly

. See B ethea v . Derwinski , 2 V e t.A pp . 2 52 , 254 (1 99 2) (" [w]he re the re is an e arl ie r pane l . . . op ini on , w e a pp ly a ru le that in
a su bs e qu e nt c a se , a

pa ne l or sin g le jud g e may

no t r e nd e r a

de c isi on wh ic h c on fl ic ts m a te ri a lly wi th such ea rlier pa nel" ).