VA Testimony of Daniel L. Cooper before Congress on July 10, 2003

STATEMENT OF
DANIEL L. COOPER,
UNDER SECRETARY FOR BENEFITS,
BEFORE THE
SENATE COMMITTEE ON VETERANS' AFFAIRS

Mr. Chairman and Members of the Committee, thank you for the opportunity to testify today on several bills of great interest to veterans.

This bill would amend 38 U.S.C. § 103(d) to remove, for surviving spouses who remarry after age 55, the bar on the payment of Dependency and Indemnity Compensation ( DIC) to surviving spouses who remarry. VA has no objection to this bill in principle, but because the mandatory costs are not included in the President's FY 2004 Budget, we cannot support enactment without a corresponding offset.

The DIC program provides tax?free monthly benefits to the surviving spouse of a veteran who dies in or as a result of military service. Current law denies DIC during periods of the surviving spouse's subsequent marriage or (in cases not involving remarriage) during periods when the surviving spouse lives with another person and holds himself or herself out openly to the public to be that person's spouse.

DIC was created for two purposes: to replace family income lost due to the servicemember's or veteran's death and to serve as reparation for the death. In 1956, the Servicemen's and Veterans' Survivor Benefits Act replaced the preexisting death-compensation program and the $10,000 Servicemen's-Indemnity-Act payment with DIC. The House Select Committee on Survivor Benefits explained, in a 1955 report, H.R. Rep. No. 84-993, that "these two separate and distinct survivor benefit programs . . . would become one. To this limited extent one of the objectives of the committee, greater simplicity, would be accomplished and the long?term interest and equity of survivors protected." In this manner, DIC was intended to meet, at least in part, the Government's obligation to those who died in the defense of our country. An expansion of DIC eligibility would well serve this purpose for the following reasons.

S. 249 would assist surviving spouses by allowing those over age 55 to maintain their standards of living, thus removing any economic disincentive to remarriage. A veteran's surviving spouse would be able to subsequently marry without fear of economic deprivation, and the elderly couple could live together in comfort and dignity--legally married.

Benefits for surviving spouses of military retirees through the Department of Defense's (DoD) Survivor Benefit Plan do not terminate if remarriage takes place at age 55 or thereafter. Social Security survivors' benefits do not terminate if remarriage takes place at age 60 or thereafter. S. 249 would thus better align DIC benefits with benefits provided to surviving spouses of military retirees under DoD's Survivor Benefit Plan and to surviving spouses under the Social Security program.

Enactment of S. 249 could result in benefit costs of as much as $23.9 million during FY 2004 and $1.1 billion during the period FY 2004 through 2013.

S. 257, the "Veterans Benefits and Pensions Protection Act of 2003," would amend VA's anti-assignment statute, 38 U.S.C. § 5301, by adding language to prohibit certain agreements, as well as collateral security arrangements, between persons receiving monetary VA benefits and third parties. Third parties use these agreements to acquire for consideration rights to receive monetary benefits paid to VA beneficiaries. Besides prohibiting these agreements and arrangements, S. 257 would subject third parties who enter into such agreements or arrangements to penalties of fine, imprisonment, or both. The bill would also require VA to "carry out a program of outreach" to inform veterans and other beneficiaries of the prohibition and would authorize $3,000,000 in appropriations for such outreach for FY 2004 through 2008.

Let me first assure the Committee that, because 38 U.S.C. § 5301 generally bars assignment of VA benefits, VA regional offices have not and do not honor such agreements. Nevertheless, once funds are paid to a beneficiary, VA lacks the ability to oversee how those funds are used, unless the beneficiary has been found mentally incompetent. While we would certainly counsel veterans, their dependents, and survivors to very carefully consider the full ramifications of assigning their benefits, we believe they should be free to decide how best to manage their own personal finances. Therefore, we do not support enactment of S. 257.

Section 2(a) and (b) of S. 517 would eliminate the current requirements that a former prisoner of war (POW) be detained or interned for at least thirty days in order to be eligible for a presumption of service connection for certain diseases, and at least ninety days in order to be eligible to receive VA care and treatment for a dental condition or disability.

VA supports section 2(a) and (b) of S. 517, which are virtually identical to provisions in a draft bill we recently submitted to Congress. Currently, 38 U.S.C. § 1112(b) provides a presumption of service connection for certain diseases for former POWs who were detained or interned for at least thirty days. Also, 38 U.S.C. § 1712(a)(1)(F) provides eligibility for VA outpatient dental care services and treatment, and related dental appliances for dental conditions or disabilities of former POWs who were detained or interned for at least ninety days. Recent military engagements involving the United States instruct that, because of our Nation's advanced technology and superior warfare capability, actual combat may end in a far shorter period of time than in previous wars. As a result of this phenomenon, American soldiers who are detained or interned by the enemy are likely to be held for less than 90 days, or even 30 days, as was the case with the United States soldiers held as POWs during Operation Iraqi Freedom. Recent experience has indicated, however, that, despite the shorter duration, the conditions of detention or internment may be such that these former POWs may suffer from many of the same diseases for which a presumption of service connection is available pursuant to section 1112(b) and from dental conditions or disabilities for which dental care and treatment is currently available pursuant to section 1712(a)(1)(F) for former POWs who were held for longer periods. We believe it would be equitable to eliminate the requirement of a particular duration of detention or internment so that all former POWs would be eligible for the presumption of service connection for the diseases specified in section 1112(b) and for dental care and treatment pursuant to section 1712(a)(1)(F). We estimate that enactment of section 2(a) and (b) would have mandatory costs of $3.3 million in FY 2004 and $61 million over ten years.

Section 2(c) of S. 517 would add heart disease, stroke, liver disease, diabetes (type 2), and osteoporosis to the list of diseases for which a presumption of service connection is available pursuant to 38 U.S.C. § 1112(b). Section 2 of S. 1281 would add cardiovascular disease (heart disease), cerebrovascular disease (stroke), and chronic liver disease, including cirrhosis and primary liver carcinoma, to the presumptive diseases in section 1112(b).

Section 2(c) of S. 517 would also authorize the Secretary to promulgate regulations creating a presumption of service connection for any other disease which the Secretary determines has a "positive association with the experience of being a [POW]." A "positive association" would exist "if the credible evidence for the association is equal to or outweighs the credible evidence against the association." In deciding whether to promulgate such a regulation, the Secretary would be required to consider the recommendations of the Advisory Committee on Former POWs and any other available sound medical and scientific information and analyses. VA would have 60 days from receipt of an Advisory Committee recommendation to make a determination as to whether a presumption of service connection is warranted, and then another 60 days to publish in the Federal Register either proposed regulations, if VA determines that a presumption is warranted, or a notice explaining the scientific basis for a determination that a presumption is not warranted.

VA continues to investigate the long-term health consequences of the conditions of POW internment or detention, such as malnutrition, vitamin deficiency, and exposure to parasitic and infectious diseases. In severe forms, such conditions of internment or detention could likely be associated with the conditions specified in section 2(c) of S. 517 and section 2 of S. 1281. It is also true that many POWs suffered physical and mental torture and maltreatment, which could lead to long-term stress and anxiety, which in turn have been shown to have adverse effects on the health of many individuals. VA is committed to properly compensating former POWs for the disabilities resulting from their service to our Nation. In light of the potential connection between the POW experience and the diseases listed in the subject bills, we could support enactment of section 2(c) of S. 517 and section 2 of S. 1281 only if the Committee can identify offsetting savings, since most of these costs are not in the President's FY 2004 Budget. We estimate that enactment of all of the S. 517 provisions, i.e., elimination of the minimum confinement period and additional diseases presumed to be service connected, would result in benefit costs of $29.4 million in FY 2004 and $517.3 million over the ten-year period FY 2004 through FY 2013. If S. 517 were enacted, the most significant presumptions of S. 1281 would be addressed. If the S. 517 presumptions were not enacted, we estimate the benefit costs of S. 1281 would be $20.9 million in FY 2004 and $364.7 million over ten years.

We also note that, in its December 20, 2002 report, the Advisory Committee on Former POWs recommended to VA that cardiovascular disease be established as a presumptive condition. In response to this and previous recommendations by the Advisory Committee to add presumptive conditions, VA is establishing a Workgroup on Medical Presumptive Conditions in Former POWs to establish procedures, guidelines, and standards to determine whether a disease should be designated by VA as presumptively service connected in former POWs. We contemplate that the Workgroup will be comprised of representatives of the Under Secretaries for Benefits and Health, General Counsel, and Chairman of the Advisory Committee on Former POWs. The activities of this Workgroup will assist VA in determining whether scientific and medical evidence supports further expansion of the list of conditions presumed to be service connected in former POWs. In our view, these activities will render unnecessary the procedures for establishment of new presumptions based on consideration of recommendations from the Advisory Committee on Former POWs, as proposed in section 2(c) of S. 517.

Section 3 of S. 1281 would require the Secretary of Defense and the Secretary of Veterans Affairs to conduct a joint review of the mission, procedures, and administration of the DoD Dose Reconstruction Program for preparing radiation dose estimates and to report to Congress on their findings within 90 days after the bill is enacted. The bill would also require the Secretaries to provide for ongoing independent review and oversight of the Dose Reconstruction Program and would require establishment of an advisory board as one method of providing such ongoing review. VA does not support this provision.

DoD has statutory responsibility for preparing radiation dose estimates. VA uses those dose estimates in adjudicating some claims for service-connected benefits filed by veterans exposed to radiation in service or their family members. A recent review by the National Research Council (NRC) of the National Academy of Sciences identified several concerns regarding certain methods and assumptions employed by DoD that may have caused underestimation of the upper-bound limits of exposure in some cases. We understand that DoD is presently in the process of revising its Dose Reconstruction Program to address the concerns identified by the NRC. Correspondingly, VA is working to identify claims previously decided based on dose reconstructions from DoD. Once we have identified those claims, we intend to seek revised dose estimates from DoD, if the claimant potentially could benefit from a revised dose estimate.

We believe the provisions of this legislation requiring VA and DoD to jointly review and report on the Dose Reconstruction Program would be superfluous in view of the comprehensive NRC report. The committee of highly qualified experts assembled by the NRC spent more than two years reviewing the Dose Reconstruction Program. The NRC report discusses in detail the specific concerns identified in the Dose Reconstruction Program and provides a clear framework for DoD's current efforts to revise its program. We do not believe that a further review of the same matters by VA and DoD would provide any significant additional information to aid in identifying and correcting any problems in the Dose Reconstruction Program. The oversight responsibilities that would be required by this legislation would unnecessarily divert VA resources from the task of identifying and reviewing potentially affected claims.

Dose estimates prepared by DoD are often an important piece of evidence VA must consider in adjudicating claims for benefits based on radiation exposure. In view of the importance of this information and the difficult and sensitive nature of the adjudicative issues involved in such claims, we consider it important to avoid even the appearance that VA is influencing DoD's procedures and methods of preparing the dose estimates. Assigning VA an oversight role in matters affecting the creation of such evidence may result in a perception among some veterans that the estimates lack objectivity.

For these reasons, we do not support this provision. We estimate that this provision, if enacted, would result in approximately $350,000 in annual costs to VA.

Section 4 of S. 1281 would require VA, not later than 60 days after the date of the enactment of this Act, to contract with the National Academy of Sciences (NAS), or other appropriate organization, to determine the appropriate disposition of the Air Force's well-known "Ranch Hand" epidemiologic study when it terminates in 2006. Among other things, the NAS would be required to address, and ultimately report on, the advisability of extending the study and the disposition of the specimens, medical records, and other data collected in the course of this long-term study.

VA generally supports the suggestion for independent review of the merits of the Ranch Hand study, as proposed. VA has never been involved in the funding, conduct, or direction of DoD's "Ranch Hand" study. As a result, VA cannot provide close oversight of the NAS contract, as proposed in section 4 of the bill. Were VA required to enter into the contract required by section 4, we estimate the costs associated with enactment of this provision to be $1.5 million, which would be redirected from veteran's Medical Care funds.

Section 5 of the bill would require both VA and DoD to make available to NAS in each of fiscal years 2004 through 2013, $250,000 each from their respective appropriations for the Medical Follow-Up Agency (MFUA). MFUA would use these funds for epidemiological research on members of the Armed Forces and veterans.

We support the continued funding of the MFUA whose independence and outstanding scientific reputation lend a high degree of credibility to critical studies that have a direct bearing on VA health care and compensation policies. As you know, the MFUA has been essential to VA for conducting a number of critical studies on veterans' health issues, including a study on Shipboard Hazard and Defense (SHAD) veterans, studies on actual hepatitis rates among veterans, and a congressionally mandated study on hearing loss among military personnel. In short, the MFUA is a critical asset for VA.

S. 792 and S. 1136 are very similar bills that recodify and revise the Soldiers' and Sailors' Civil Relief Act of 1940 (SSCRA), while renaming it the "Servicemembers Civil Relief Act" (SCRA). Most of the protections provided under the SCRA would be afforded to current members of the uniformed services and to their dependents. DoD, not VA, is the Federal agency with the primary interest in these bills, and we defer to DoD on all such matters that fall within DoD's jurisdiction.

There is, however, one provision of the SSCRA, Article IV-Insurance, that VA is charged with administering. I would like to summarize for the Committee at this time our views on the insurance-protection provisions of S. 792 and S. 1136.

Under section 402(c) of the SCRA, the maximum amount of life insurance coverage protection provided would be increased from $10,000 to $250,000. The original intent of the SSCRA with regard to life insurance protection was to provide individuals summoned to active duty with a guarantee that their commercial life insurance coverage would not lapse for nonpayment of premiums during service. While the provision of the current statute that provides protection for up to $10,000 of coverage under certain types of policies was of greater significance during the 1940s and 1950s, it has become less of a benefit for those serving in the Armed Forces today and has been little used by service personnel. This is probably because the amounts of insurance and types of coverage, including the availability of coverage up to $250,000 under the Servicemembers' Group Life Insurance program, have expanded over the years, while the protection provided by the SSCRA has not changed.

We generally support the proposed revision of the life insurance protections of the SSCRA contemplated by S. 792 and S. 1136, which would greatly enhance the insurance protection available to active duty personnel. We believe that many servicemembers could benefit from the insurance protection provisions of the bills, particularly the proposed increase in the amount of life insurance that may be guaranteed and the expansion of the types of life insurance policies that are eligible for protection. We also applaud the effort to draft the bills in plain language. We do, however, have several concerns of a technical nature with regard to these bills.

In particular, section 401(1) of the SCRA would define "policy" as an insurance policy under which the insurer may not increase the premium if the insured is in military service. It is VA's understanding that normal term insurance premium increases based upon age are not prohibited, and the only prohibition is that of increasing premiums simply because the insured is called to military service. Some clarification concerning whether normally scheduled premium increases are acceptable under this definition may be necessary. We also note that VA regulations implementing the SSCRA currently exclude group life insurance from protection under that statute. Congress may wish to clarify whether it intends to include group insurance within the coverage of the insurance protection provisions.

Under section 402(a), the life insurance protection of the SCRA could be requested by the insured, the insured's designee, or the insured's beneficiary. Most other SCRA provisions would require the servicemember to personally request protection. While the SSCRA currently permits life insurance protection to be requested by the servicemember's designee or by the servicemember's beneficiary when the insured is deployed outside the continental United States, S. 792 and S. 1136 would also permit an application by a beneficiary when the insured is deployed in the United States. We question whether it is desirable to require VA to provide premium protection based on a beneficiary's request about which the servicemember may be unaware. The servicemember may become obligated to repay any money VA expends to keep the policy in place. We believe the better course is to require that the protections afforded under Title IV of the SCRA be requested by the servicemember or the insured's designee.

Section 407(a)(2) would require the United States, upon expiration of insurance protection under the SCRA, to reimburse the insurer for unpaid premiums in the amount of the difference between the amount of premiums due and the cash surrender value of the policy. The protections of the SCRA would be provided during a period beginning upon a servicemember's entry into military service and ending on the date of release from military service. As a result, VA is obligated to provide protection for the full military career of every active duty servicemember who is insured under a life-insurance policy that is in force for at least 180 days before entry into military service and at the time of application for SCRA protection. Given the period of protection provided by the SCRA and the increased coverage proposed in section 402(c), the Government's liability would likely increase exponentially. Congress should recognize that these provisions would result in a substantial increase in the Government's obligation to its service personnel.

Under section 409, VA's decisions regarding life insurance protection would be subject to review by the Board of Veterans' Appeals (Board) and the Court of Appeals for Veterans Claims (Veterans Court). If the contemplated review of life insurance protections is adopted, conforming changes should be made to title 38 to clarify the scope of the Board's jurisdiction. Also, the current language of section 409 does not appear to provide exclusive jurisdiction in the Board and the Veterans Court over such matters. We recommend that Congress make its intentions clear in this regard, and we would be glad to work with Committee staff to draft these clarifications.

The budgetary impact of the expansion of insurance protection contemplated by these bills will depend on the number of servicemembers who are called to active duty in the future, the number who choose to take advantage of the insurance protection provisions, and whether the expanded protection will apply to group life insurance policies. VA estimates that the benefit cost of enactment of S. 792 or S. 1136 would be $186,000 annually for every 10,000 personnel called to active duty. VA estimates that administrative costs of the insurance protection provisions would total $67,000 in FY 2004, $359,000 over the five-year period FY 2004?2008, and $788,000 over the ten-year period FY 2004?2013.

The only other notable impact of S. 792 and S. 1136 on VA would be in VA housing loan programs. The provisions of the existing SSCRA concerning interest rates, default judgments, termination of mortgages, and similar issues have a marginal impact on VA with respect to VA-guaranteed loan holders and loans held in our portfolio. We are not aware that any loan holders in the VA housing-loan programs have encountered significant problems as a result of these important protections granted to persons in military service. We do not anticipate that the amendments contemplated by S. 792 and S. 1136 would have any significant additional impact on the VA housing loan programs.

S. 806, the "Deployed Service Members Financial Security and Education Act of 2003," would amend title 37 of the United States Code to authorize payment of a monthly allowance to servicemembers involved in lengthy or repeated deployments. This bill would also amend the interest-rate-relief provisions of the SSCRA to include certain student loans and would preserve educational status and protect tuition payments of deployed servicemembers. As S. 806 pertains to allowances and protections for active members of the Armed Forces, we defer to DoD as to its merits.

S. 938 would amend 38 U.S.C. § 1318(b)(3) to eliminate the September 30, 1999, date limitation on benefit eligibility for surviving spouses and children of former POWs who died of nonservice-connected causes and were totally disabled for a continuous period of one year prior to death. Under current law, VA pays DIC benefits under chapter 13 of title 38, United States Code, to the surviving spouse, dependent children, and dependent parents of service members who died during active duty or who died after service as a result of a service?connected condition. In addition, VA provides benefits in the same manner to the surviving spouse and children of veterans who died after service from a nonservice?connected cause if the veteran was totally disabled due to a service-connected cause: (1) for a continuous period of ten or more years immediately preceding death; (2) for a continuous period of at least five years after the veteran's release from service; or (3) in the case of a former POW who died after September 30, 1999, for a continuous period of at least one year immediately preceding death. The amendment to section 1318(b)(3) would eliminate the date limitation governing benefit eligibility for POWs' survivors, thereby authorizing such payments regardless of the date of the veteran's death.

We estimate that enactment of the proposed amendment to 38 U.S.C. § 1318(b)(3) would result in additional mandatory benefit costs of $7.5 million in FY 2004 and $208.7 million for the 10-year period FY 2004 through FY 2013. Additional discretionary costs would total $187,000 for five years. This proposal was not in the President's Budget for FY 2004, so we cannot support it without an offset.

S. 978 would authorize VA to guarantee loans to veterans to purchase stock or membership in a cooperative housing project.

Under current law, veterans may purchase conventional homes, condominium units, or manufactured homes and manufactured home lots with VA guaranteed loans. In all cases except manufactured homes, the veteran is purchasing real property. Although a manufactured home is normally considered personal property, veterans nevertheless obtain title to the actual homes they will be occupying. In contrast, the buyers of co-ops do not acquire an interest in real estate or obtain title to their dwelling unit. Instead, the purchasers acquire a share of the cooperative's stock, coupled with the right to occupy a particular apartment in the building. Unlike other VA loans, there would be no lien on real property or tangible personal property.

Predominately, cooperative housing projects are subject to blanket mortgages. This poses a significant risk to the buyer, the loan holder, and VA. The co-op owners are responsible for the monthly payment on their share loans as well as the assessments levied by the co-op project. The survival of the project may depend upon virtually all members of the co-op meeting their assessment obligations. Failure of a few members to do so could lead to foreclosure of the blanket mortgage on the entire building. Such foreclosure would totally wipe out the interests of all co-op owners, even those owners who made timely payments. It would also leave the holder of the VA guaranteed share loans without any security. This sets co-ops apart from condominiums.

The governing documents of most co-ops contain a right of first refusal, a right by the co-op board to approve or reject a prospective buyer, or other restrictions on the resale of units. These rights of first refusal or most other sales restrictions are not permitted by VA regulations and could adversely affect the marketability of a unit. If veteran-borrowers are experiencing financial difficulties and cannot freely dispose of their units at an advantageous price, foreclosure is more likely. These resale restrictions could also hamper VA's efforts to resell properties following loan termination, thus increasing VA's loss. Since most co-op projects have such resale restrictions, few projects are likely to meet the requirements VA would set for the acceptability of cooperative projects. Accordingly, VA opposes enactment of S. 978.

VA estimates that enactment of S. 978 would result in approximately 30 additional guaranteed loans a year, with a first-year cost of $70,000 and a 10-year cost of approximately $847,000.

S. 1124, the "Veterans Burial Benefits Improvement Act of 2003," would increase the amount of several burial benefits for veterans. Section 2(a) of the bill would amend 38 U.S.C. §§ 2302(a) and 2303(a)(1)(A) to increase the burial and funeral allowance for nonservice-connected deaths from $300 to $1,135, and amend 38 U.S.C. § 2307 to increase the burial and funeral allowance for service-connected deaths from $2,000 to $3,712. Section 2(b) would amend 38 U.S.C. § 2303(b) to increase the plot allowance for veterans who are buried in State or private cemeteries from $300 to $670. Section 2(c) would add to title 38 a new section 2309, which would require future annual increases in these benefits based on the percentage increases of the Consumer Price Index. The initial increases in the various benefits would apply to deaths occurring on or after the date of enactment of this legislation.

We estimate that the bill could increase spending by $116 million during FY 2004 and $1.4 billion during the ten-year period FY 2004 through FY 2013.

The proposed new rates are apparently derived from a December 19, 2000 Pricewaterhouse-Coopers study, "An Assessment of Burial Benefits Administered by the Department of Veterans Affairs." Since that report, President Bush approved legislation increasing two of the three benefits listed in S. 1124. On December 27, 2001, President Bush signed Public Law 107?103, thus increasing burial and funeral allowances for service-connected deaths by one third and doubling the plot allowance. Furthermore, the adequacy of the current burial and plot allowances must be considered in the context of the overall burial program. The Government has responded to veterans' burial needs in recent years by establishing several new national cemeteries and by significantly enhancing the grant program under which state veterans cemeteries are established. The State Cemetery Grants Program now provides up to 100 percent of the costs of construction associated with the establishment, expansion, or improvement of state veterans cemeteries. Given the expanding availability of burial options within both national and state veterans cemeteries, and the competing demands for scarce VA resources, at this time we cannot support S 1124.

S. 1131, the "Veterans' Compensation Cost-of-Living Adjustment Act of 2003," would direct the Secretary of Veterans Affairs to increase administratively the rates of compensation for veterans with service-connected disabilities and of DIC for the survivors of veterans whose deaths are service related, effective December 1, 2003. As provided in the President's FY 2004 budget request, the rate of increase would be the same as the cost-of-living adjustment (COLA) that will be provided under current law to Social Security recipients, which is currently estimated to be 2.0 percent. We believe this proposed COLA is necessary to protect the benefits of affected veterans and their survivors from the eroding effects of inflation.

We estimate that enactment of this COLA bill would cost $355 million during FY 2004 and $4.3 billion over the period FY 2004 through FY 2013. However, this cost is already assumed in the Budget baseline and, therefore, would not have any effect on direct spending.

Mr. Chairman, S. 1132, the "Veterans' Survivors Benefits Enhancements Act of 2003," contains several provisions that would improve benefits for survivors and certain dependents of veterans under the Department's various programs.

Specifically, section 2 of this bill would increase educational assistance benefits under the chapter 35 VA's Survivors' and Dependents' Educational Assistance program by 44.8 percent, from $680 to $985 per month for full-time course pursuit, from $511 to $740 for three-quarter time pursuit, and from $340 to $492 per month for half-time pursuit, effective for months of course pursuit on or after October 1, 2003. It would also raise the basic monthly rate payable for Special Restorative Training (SRT) to $985. Similarly, the optional supplement to the SRT basic rate would be increased to pay the amount of tuition and fee charges that, on a monthly basis, would exceed $307 for FY 2004.

Given this benefits increase, the measure would suspend the statutory annual Consumer Price Index-based adjustment in chapter 35 educational assistance rates for FY 2004.

Chapter 35 benefit rates earlier equaled rates payable under the Vietnam Era GI Bill to a veteran with no dependents and, for a time, exceeded chapter 30 Montgomery GI Bill (MGIB) rates. In more recent years, however, chapter 35 benefits have lost ground. The current $680 chapter 35 monthly rate is significantly below the MGIB rate payable to eligible veterans with 3 years or more of service, which will be $985 per month in FY 2004 under legislation already enacted. Section 2 of S. 1132 would remedy this, ensuring that chapter 35 spouses, surviving spouses, and children would receive educational assistance equal to that of veterans receiving such educational assistance under the MGIB. Mr. Chairman, although we appreciate your efforts to restore this balance, the President's FY 2004 Budget does not include this proposal.

VA estimates the effect of the rate increase in section 2 of this measure could raise obligations by approximately $1.4 billion over the 10-year period FY 2004 through FY 2013.

Section 3 of S. 1132 would decrease the entitlement available to new chapter 35 recipients from the current 45 months to 36 months. This would apply in the case of those who first file an educational assistance claim under chapter 35 after the date of enactment.

Approximately 23 percent of dependents use more than 36 months of benefits. Nevertheless, we believe the 44-percent increase in the monthly rate would compensate for the loss of 9 months of entitlement. VA further believes this reduction in entitlement would be necessary to partially offset the cost of increases in the rates of assistance allowance provided by section 2 of this bill.

VA estimates the cost savings for section 3 of S. 1132 would be approximately $126.9 million over the ten-year period FY 2004 through FY 2013. The estimated ten-year net cumulative cost for sections 2 and 3 of S. 1132 is $1.3 billion. VA supports the provision in principle, but because it was not in the President's Budget for FY 2004, we cannot support it without a corresponding offset.

Section 4 of S. 1132 would amend 38 U.S.C. § 1311 to provide an additional $250 in DIC for a surviving spouse with one or more children under the age of 18. The increase would apply only for the 5-year period after the veteran's death and would cease when all children attain age 18.

By boosting the DIC rate payable to a surviving spouse with children during the 5 years following a veteran's death, this provision would provide dependents additional monetary support at an appropriate time. VA has no objection to the provision in principle, but because it was not in the President's Budget for FY 2004, we cannot support it without a corresponding offset.

Section 5 would amend 38 U.S.C. § 2402(5) to make a veteran's surviving spouse who marries a non-veteran after the veteran's death eligible for burial in a VA national cemetery based on his or her marriage to the veteran. This provision is similar to a VA proposal sent to Congress on April 25, 2003. Our full rationale and justification for this proposal, as well as our cost estimates, are contained in Secretary Principi's April 25, 2003 letter to the President of the Senate.

Unlike VA's proposal, section 5 of S. 1132 would make the burial eligibility of remarried surviving spouses of veterans retroactive to deaths occurring on or after January 1, 2000. We estimate that the additional costs associated with this retroactivity would be negligible. Although it is difficult to determine how many families of already deceased, and presumably interred, remarried surviving spouses of veterans would want to disinter their loved ones and then re-inter them with their veteran spouses in a national cemetery, we believe the number of such families would not be significant.

Section 6 would amend chapter 18 of title 38, United States Code, to authorize VA to provide a monetary allowance and other benefits to a person suffering from spina bifida who is natural child, regardless of age or marital status, of a veteran who served in the active military, naval, or air service in or near the Korean demilitarized zone (DMZ) between January 1, 1967, and December 31, 1969, if the person was conceived after such service began and if the veteran is determined by VA, in consultation with the DoD, to have been exposed to a herbicide agent during such service. The term "herbicide agent" would be defined as a chemical in a herbicide used in support of United States and allied military operations in or near the Korean DMZ, as determined by VA in consultation with DoD during the specified period.

VA is still formulating its views and cost estimates on this provision. As soon as those views and estimates are cleared for transmittal, we will provide them to the Committee.

Mr. Chairman, we very much appreciate your courtesy in introducing S. 1133 at the Department's request. Our full rationale and justification for these proposals, as well as our cost estimates, are contained in Secretary Principi's April 25, 2003 letter to the President of the Senate and will not be repeated here. Several of this bill's provisions are also covered in other bills that are on the agenda for today's hearing.

All of the provisions in VA's proposal are significant to the programs administered by VA and the veterans served by those programs. Among the important proposals in S. 1133 that have not been otherwise introduced in the Senate are:

All of the proposals in S. 1133 would improve veterans programs and their administration, and we commend them to the Committee's careful consideration.

S. 1188, the "Veterans' Survivor Benefits Act of 2003," would, in section 2, eliminate a discrepancy regarding the limitation on the period for which retroactive benefits due and unpaid a claimant may be paid to others after the claimant's death. In the interest of fairness, we support enactment of this provision.

Under 38 U.S.C. § 5121, periodic monetary benefits to which an individual was entitled at death under existing ratings or decisions or based on evidence on file with VA at the date of death are paid upon the individual's death to specified classes of survivors according to a prescribed order of preference. Before a recent court decision, VA had construed section 5121 to limit the payment of any benefits under that section to the retroactive period specified in the statute, regardless of whether the payment was based on an existing rating or decision or on evidence on file at the date of death. The retroactive payment period, originally one year, was extended to two years by Public Law 104?275, the "Veterans' Benefits Improvements Act of 1996."

On December 10, 2002, the United States Veterans Court issued its decision in Bonny v. Principi, 16 Vet. App. 504 (2002). The court held that 38 U.S.C. § 5121(a) specifies two kinds of benefits: benefits that have been awarded to an individual in existing ratings or decisions but not paid before the individual's death, and benefits that could have been awarded based on evidence in the file at the date of death. The court held that, in the case of the first type of benefits, the statute requires that an eligible survivor is to receive the entire amount of the award; only the latter type of "accrued" benefits is subject to section 5121(a)'s two-year limitation. The court based its interpretation of the statute primarily on section 5121(a)'s punctuation.

The Veterans Court's Bonny decision has resulted in differing entitlements under section 5121 based on the status of the deceased's claim at the date of his or her death. S. 1188 would eliminate this discrepancy by eliminating the two-year limitation on payment of retroactive benefits for all classes of beneficiaries under that statute.

The distinction the Bonny decision draws between the two categories of claimants-those whose claims had been approved and those whose entitlement had yet to be recognized when they died-is really one without a difference. In either case, a claimant's estate is deprived of the value of benefits to which the claimant was, in life, entitled. Section 2 of S. 1188 would remove this inequitable distinction, and we support its enactment.

We note that section 2 of S. 1188 would also add a new class of claimants eligible for accrued benefits. Chapter 18 of title 38, United States Code, authorizes monetary benefits for Vietnam veterans' children with birth defects. This provision would ensure that, upon the death of a child entitled to benefits under chapter 18, the child's surviving parents would be eligible for accrued benefits.

In addition, we note one technical change needed in section 2 of S. 1188 should it be enacted. The comma in current section 5121(a) following "existing ratings or decisions" should be deleted to clarify, for purposes of 38 U.S.C. §§ 5121(b) and (c) and 5122, that the term "accrued benefits" includes both benefits that have been awarded to an individual in existing ratings or decisions but not paid before the individual's death, as well as benefits that could be awarded based on evidence in the file at the date of death.

Sections 3 and 4 of S. 1188 would add new sections 5127 and 7270 to title 38, United States Code. These sections would provide that, if a claimant for monetary veterans benefits dies on or after the date of enactment of this legislation and before a decision on the claim becomes final, an "eligible person" may submit an application to VA or a motion to a court to be substituted as the claimant. They would require VA or the court to grant such an application or motion if timely filed.

S. 1188 would not limit its application to claims for benefits in which benefits are due and unpaid under existing ratings or decisions or in which evidence sufficient to decide the claim has already been developed. Under section 5121, the findings necessary to support an award of accrued benefits must be made on the factual record established during the deceased claimant's lifetime. In contrast, section 5127(f) contemplates that a substitute claimant may submit evidence to substantiate the deceased's claim. Section 5127(d) would require VA to assist the substitute claimant in developing the claim pursuant to the Veterans Claims Assistance Act of 2000 (VCAA) in essentially the same manner as if the claimant had survived.

VA opposes this legislation primarily because it would impose significant additional burdens by requiring evidentiary development after the veteran's death, when the veteran cannot provide critical information necessary to properly develop and adjudicate the claim. Inasmuch as VA would be unable to rely upon the veteran to provide information about events in service, treatment during and after service, and the nature and extent of his or her condition, as the VCAA contemplates, it would be unusually difficult and burdensome for VA to develop those claims to the extent required by the VCAA. Indeed, in many cases, it simply may be impossible for VA to obtain sufficient information to resolve the claim. Claims for disability compensation often cannot be resolved without examining the veteran to discern the nature and extent of the claimed disability and determine whether the disability may be related to events or injuries in service. In requiring VA to conduct medical examinations when necessary to a decision, the VCAA recognizes that, absent a medical examination of the veteran, the evidence will often be insufficient for VA to make a reasoned decision on the claim. Even if the issue of service connection can be resolved, there may be no basis on which to establish a degree of disability. Accordingly, VA's inability to contact or examine a deceased veteran may be an insurmountable obstacle to the proper development and adjudication of a claim for benefits or to an accurate rating of a disability.

Moreover, the notification requirements in section 3 of S. 1188 would impose an additional burden on VA's already overtaxed adjudication system. Under section 5127(c), VA would be required to notify "the eligible person" that the claim will be dismissed unless an application for substitution is received within one year of the claimant's death, within 6 months of the date of the Secretary's notification, or within 3 months of notification of an adverse decision under section 5121, whichever is latest. It appears that this provision would require VA to send multiple notices because there is no way of knowing which of several of potentially eligible persons is actually eligible until they submit an application for substitution. Not only would this provision require multiple notices, it would require a burdensome search of the deceased's complete file to see if it contained addresses of any individuals in the listed classes. In addition, other VA records, such as hospital records, would apparently have to be searched. Further, if VA records were found to contain addresses of potentially "eligible persons," VA would have to send notices to all such persons, even if the information identifying them was many years old and VA had no way of knowing whether they were surviving.

Sections 3 and 4 of S. 1188 would not afford VA or a court sufficient discretion in carrying out their provisions. Sections 5127(a) and 7270(b) would require VA or a court to approve "any" timely application for substitution submitted by an eligible person.

The substitution-of-parties portion of S. 1188 may be intended to provide veterans' families with benefits in the same manner as is currently done for survivors of Social Security claimants. The Social Security Act provides for adjustment of underpayments of Supplemental Security Income by payment to the underpaid individual's surviving spouse or, if the underpaid individual was a disabled or blind child, by payment to the child's surviving parents if the deceased individual had lived with such spouse or parents within the 6 months preceding death. 42 U.S.C. § 1383(b)(1)(A). That Act also provides for adjustment of underpayments of Old-Age and Survivors Benefits by payment to survivors of the underpaid individual. 42 U.S.C. § 404(d). Thus, the current differences between treatment of Social Security benefits and veterans benefits upon the death of an unpaid individual are the two-year limitation on certain retroactive payments under 38 U.S.C. § 5121 and the parties to whom the unpaid benefits can be paid. We believe that such differences can best be addressed by eliminating the two-year-limitation, which is addressed by section 2 of S. 1188, and by expanding that provision to authorize payment to adult children.

VA estimates that enactment of these provisions of S. 1188 could result in benefit costs of $16.1 million for FY 2004 and $62.5 million for the period FY 2004 through FY 2013 and administrative costs of $661,000 in FY 2004 and $2.6 million for the period FY 2004 through FY 2013.

S. 1199, the "Veterans Outreach Improvement Act of 2003" would define the term "outreach" for title 38 purposes and would establish a new subchapter IV under Chapter 5 of title 38, entitled "OUTREACH," covering outreach funding and activities by the Department.

"Outreach" would be defined as meaning the act or process of reaching out in a systematic manner to proactively provide information, services, and benefits counseling to potentially eligible beneficiaries to ensure they are fully informed about and receive assistance in applying for benefits.

The new subchapter would require that the Secretary establish a separate "outreach account," with subaccounts for funding outreach activities for each of VA's Administrations, i.e., Health (VHA), Benefits (VBA), and National Cemetery (NCA), and require separate budgeting for each subaccount. Subchapter IV, further, would require VA to establish procedures for effectively coordinating outreach activities between and among the Administrations, the Office of Public Affairs, and the Office of the Secretary, with periodic review and modification of such procedures to better achieve outreach requirements. Finally, this new subchapter would require VA to assist states in providing outreach and assistance in locations proximate to eligible veteran populations and enter into cooperative agreements and arrangements with veterans agencies of the various States to implement, coordinate, and improve such outreach. In this regard, VA would be authorized to award grants to State veterans agencies to achieve outreach purposes, including enhancing assistance in development and submission of claims for veterans' and veterans'-related benefits. The State agencies, in turn, could award these grants to local governments or other entities in the State for such purposes.

Mr. Chairman, we certainly appreciate this interest in outreach activities for veterans and their dependents. However, we already provide extensive and effective outreach information and assistance, and are implementing and planning new initiatives. Consequently, we believe this measure is unnecessary.

S. 1199 would require a new infrastructure within the Department to coordinate all Department outreach activities and to oversee the proposed new outreach award grants. However, each VA Administration currently has Outreach Coordinators/Offices assigned to develop, implement, and oversee outreach activities. VA's Office of Public Affairs has the responsibility to coordinate the outreach activities of these three Administrations, in conjunction with the Secretary's wishes. A strategic work group has been formed by the Deputy Assistant Secretary for Public Affairs, which includes key executives and public affairs representatives from all three Administrations. This existing structure already affords the necessary internal and external coordination to achieve VA's outreach objectives.

Recently such coordination has resulted in sharing of resources and staffing at the Public Service Recognition Week activities at the National Mall and for the upcoming AARP Conference in September 2003. Further, NCA is teaming up with VHA and VBA to extend its message to groups that more routinely come into contact with those entities. In this regard, a comprehensive plan is being implemented to improve awareness of NCA's benefits among VHA and VBA counselors and social workers who, because of their direct contact with the hospice industry and with families at the time of imminent loss, can be instrumental in having burial benefit information distributed to those families. All VA Administrations will be participating in a scheduled meeting to discuss and coordinate the Department's FY 2004 outreach activities.

VA's field offices also engage in and are encouraged to sponsor joint outreach events. This is currently being done in "Stand-downs" where the Homeless Outreach Coordinators from the regional offices and medical centers work hand-in-hand in gaining sponsorship and staffing of these worthwhile events.

Mr. Chairman, we view outreach as an extremely important part of our mission to assure that no veteran or eligible dependent is left behind in being made aware of the benefits VA provides and their ability to apply for and receive all of those benefits to which they may be entitled. We take this mission seriously in our efforts, for example, to meet the existing title 38 requirements for outreach to veterans and dependents, including specially targeted groups: recently separated veterans, active duty personnel (to include Reserves/Guard), elderly, homeless, women, Gulf War, those exposed to Agent Orange in Vietnam, minority, Native American, Former Prisoners of War, service-disabled, Asian and Pacific Islanders, eligible dependents, and first time applicants for VA benefits and services. VHA has an aggressive outreach program directed at veterans living on the streets and in shelters who otherwise would not seek assistance, and at those veterans suffering post-traumatic stress syndrome.

Although not covered by this bill, our outreach programs are not limited to veterans and dependents, but include active duty and reserve service members; partner organizations such as Veterans Service Organizations, State approving agencies, military education counselors and recruiters; as well as community service providers, lenders, the funeral industry, and other non-veteran groups.

We certainly welcome and encourage the interest in and participation of veterans agencies and other agencies of the states in outreach to veterans and their dependents. We will continue to cooperate and coordinate with those agencies. However, we believe VA's current outreach program meets the statutory requirements and provides both the quality and uniformity of benefit information and assistance necessary to be effective.

S. 1213 would amend title 38, United States Code, to improve benefits for Filipino veterans of World War II, and their survivors, who lawfully reside in the United States, by expanding their eligibility for VA health care, compensation, DIC, and burial benefits. S. 1213 would also extend VA's authority to maintain a regional office in the Philippines through 2008. This bill reflects proposed legislation submitted by the Secretary of Veterans Affairs to the President of the Senate by letter dated May 12, 2003, and we greatly appreciate the Chairman's courtesy in introducing S. 1213. The full rationale and justification for this proposed legislation, as well as our cost estimates, are contained in the Secretary's May 12th letter. For the reasons stated in that letter, VA strongly supports this legislation and recommends that Congress approve S. 1213 as introduced.

Section 2 of S. 1239, the "Former Prisoners of War Compensation Act of 2003," would add a new subchapter at the end of chapter 11 of title 38, United States Code, to authorize special compensation for former POWs. This special compensation would be in addition to any service-connected disability compensation or pension to which a former POW may be entitled and would be exempt from attachment, execution, or levy in the same manner as special pension paid to Medal of Honor recipients is exempt pursuant to 38 U.S.C. § 1562(c). The bill would authorize the Secretary of Veterans Affairs to pay monthly to each former POW, including active duty personnel, special compensation at a rate of payment determined by the cumulative length of confinement as a POW. Thirty days would be the minimum period of confinement for which a former POW would be eligible to receive special compensation. The bill would establish three rates of special compensation based on the length of the period of the former POW's confinement, as follows:

	Length of Former POW's Confinement		Special Compensation Monthly Rate
	30-120 days		$150
	121-540 days		$300
	541 days or more		$450

We estimate that benefit-costs for the POW portion of the bill would be $134.4 million for FY 2004 and $839.5 million for FY 2004 through FY 2013. We estimate administrative costs to be an additional one-time cost of $654,000 in the first year. These amounts are not included in the President's FY 2004 budget request, so the Department cannot support this provision's enactment. However, we are sensitive to the contributions and needs of former POWs and will consider additional benefits for them in formulating future budget requests. I would add that we have recently submitted legislation to remove the minimum internment periods for purposes of POW's dental care and presumptions of service connection, and to exempt them from the co-payments for VA medications.

Section 3(a) of S. 1239 would amend 38 U.S.C. §§ 1110 and 1131 to clarify that the prohibition on payment of compensation for a disability that is a result of the veteran's own abuse of alcohol or drugs applies even if the abuse is secondary to a service-connected disability. Section 3(b) would make that amendment applicable to claims filed on or after the date of enactment and to claims filed prior to, but not finally decided as of that date. We strongly support this provision, which is also proposed in the President's budget.

Sections 1110 and 1131 of title 38, United States Code, authorize the payment of compensation for disability resulting from injury or disease incurred or aggravated in line of duty in active service, during a period of war or during other than a period of war, respectively. Sections 1110 and 1131 also currently provide, "but no compensation shall be paid if the disability is a result of the veteran's own willful misconduct or abuse of alcohol or drugs." Before their amendment in 1990, the provisions currently codified in sections 1110 and 1131 prohibited compensation "if the disability is the result of the veteran's own willful misconduct." In 1990, they were amended to also prohibit compensation if the disability is a result of the veteran's own alcohol or drug abuse.

VA had long interpreted those provisions to authorize compensation not only for disability immediately resulting from injury or disease incurred or aggravated in service, but also for disability more remotely resulting from such injury or disease. That interpretation is embodied in 38 C.F.R. § 3.310(a), which provides that, generally, disability which is proximately due to or the result of a service-connected disease or injury shall be service connected. Thus, VA does pay, in specific cases, compensation for primary service-connected disability and for secondary service-connected disability. However, consistent with the plain meaning of sections 1110 and 1131, if a disability, whether primary or secondary, is a result of the veteran's own alcohol or drug abuse, VA did not pay compensation.

This has changed. On February 2, 2001, a three-judge panel of the United States Court of Appeals for the Federal Circuit interpreted section 1110 as allowing compensation for an alcohol or drug-abuse-related disability arising secondarily from a service-connected disability. Allen v. Principi, 237 F.3d 1368, 1370 (Fed. Cir. 2001). More specifically, the panel held that section 1110 "does not preclude compensation for an alcohol or drug abuse disability secondary to a service-connected disability or use of an alcohol or drug abuse disability as evidence of the increased severity of a service-connected disability." Id. at 1381. The Government filed a petition for rehearing and rehearing en banc, which the panel and full court denied on October 16, 2001. Allen v. Principi, 268 F.3d 1340, 1341 (Fed. Cir. 2001). However, five of the eleven judges who considered the petition for rehearing en banc dissented from the order denying rehearing, opining that the court's interpretation is wrong. 268 F.3d at 1341?42.

We are concerned that payment of additional compensation based on the abuse of alcohol or drugs is contrary to congressional intent and is not in veterans' best interests because it provides an incentive to engage in debilitating and self-destructive behavior by providing additional compensation for the disability caused by such behavior.

The Federal Circuit's interpretation in Allen could also greatly increase the amount of compensation VA pays for service-connected disabilities. Under the court's interpretation, any veteran with a service-connected disability who abuses alcohol or drugs is potentially eligible for an increased amount of compensation if he or she can offer evidence that the substance abuse is a result of a service-connected disability, i.e., that the substance abuse is a way of coping with the pain or loss the disability causes. Under this interpretation, alcohol or drug abuse disabilities that are secondary to either physical or mental disorders are compensable.

The potential for increased costs is illustrated by mental disorders, which are frequently associated with alcohol and drug abuse. Almost 421,000 veterans are currently receiving compensation for a service-connected mental disability. About 324,000 of those disabilities are currently rated less than 100 percent and could potentially be rated totally disabling on the basis of secondary alcohol or drug abuse. Even if the service connection of disability from alcohol or drug abuse does not result in an increased schedular evaluation, temporary total evaluations could be assigned whenever a veteran is hospitalized for more than twenty-one days for treatment or observation related to the abuse. Even the 97,000 cases of a service-connected mental disability evaluated at 100 percent disabling have potential for increased compensation for secondary alcohol or drug abuse if the statutory criteria for special monthly compensation are met.

The potential increase in compensation does not end there. Under the Federal Circuit's interpretation, VA is required to pay compensation for the secondary effects of the abuse of alcohol or drugs. Once alcohol or drug abuse is service connected as being secondary to another service-connected disability, then service connection can be established for any disability that is a result of the service-connected abuse of alcohol or drugs. If alcohol or drug abuse results in a disease, such as cirrhosis of the liver, then that disease would also be service connected and provide a basis for compensation under the court's interpretation.

Of course, an increase in the amount of compensation VA pays for service-connected disabilities will increase the benefit cost of the compensation program. Section 3 of S. 1239 would avoid those increased costs. Our estimate of savings that would result from enactment of this provision is based on the payment of only basic compensation for alcohol or drug abuse disabilities secondary to service-connected disabilities. We estimate that this provision would result in benefit savings of $127 million and administrative savings of $44 million in FY 2004 and benefit savings of $4.6 billion and administrative savings of $97 million for the ten-year period FY 2004 through FY 2013. This amount does not include the savings that would be associated with payment of compensation for temporary total evaluations, special monthly compensation, or compensation for the secondary effects of alcohol or drug abuse.

Section 4 of S. 1239 would require VA to provide outpatient dental services and treatment, and related dental appliances, for any non-service-connected dental condition or disability from which a veteran who is a former POW is suffering. Currently, a veteran who is a former POW may receive dental benefits for non-service-connected dental conditions or disabilities only if the veteran was incarcerated for 90 days or more. By eliminating the 90-day requirement, section 4 would authorize VA to treat all former POWs the same, regardless of their length of captivity, with respect to dental care for a non-service-connected condition or disability. It would also make the eligibility rules for dental benefits for former POWs the same as for other health-care services for former POWs.

This provision is identical to VA's recent proposal, and we strongly support its enactment.

S. 1282 would direct the Secretary of Veterans Affairs to establish national cemeteries for geographically underserved populations of veterans. It would direct the Secretary to identify the ten burial service areas in the United States, as determined by the Secretary, most in need of a new national cemetery to ensure that 90 percent of the veterans who reside in each service area live within 75 miles of a national cemetery. The bill would define "burial service area" as having a radius of approximately 75 miles, containing a minimum population of approximately 170,000 veterans, and not being served by a national or state veterans cemetery. In addition, the bill would direct the Secretary to submit to Congress a report setting forth each burial service area identified by the Secretary as needing a cemetery and a schedule and cost estimate for the establishment of each new national cemetery. The first report would be due within 120 days after the date of enactment, and annual status reports would be required until the ten cemeteries were completed.

Not all of America's veterans and their families have easy and convenient access to a national cemetery. In the Veterans Millennium Health Care and Benefits Act, Pub. L. No. 106?117 (1999), Congress directed VA to identify areas of the country with the greatest concentrations of veterans who do not have reasonable access to a burial option in a national or state veterans cemetery. Substantial documentation demonstrates that 80 percent of burials in national cemeteries involve individuals who resided within 75 miles of the cemetery. VA has determined that a veteran population threshold of 170,000 within a 75-mile service radius is an appropriate threshold for the establishment of a new national cemetery.

In response to the Veterans Millennium Health Care and Benefits Act, on May 15, 2002, VA transmitted to Congress a report entitled, Study on Improvements to Veterans Cemeteries - Volume 1: Future Burial Needs. An independent contractor, Logistics Management Institute (LMI), prepared the report. It assesses the number of additional cemeteries needed to ensure that 90 percent of veterans live within 75 miles of a national or state veterans cemetery between 2005 and 2020. The report identified 31 locations recommended by LMI as areas of greatest need. Six sites had over 170,000 veterans who currently were not being served by a burial option by a state or national cemetery within 75 miles of their residences. On June 4, 2003, VA transmitted revised veteran population estimates, based on 2000 United States Census data. From the two listings, eleven locations were identified as meeting VA's population threshold. VA plans to meet the identified unmet burial needs in each location by either establishing a new national cemetery or expanding an existing national cemetery.

Several steps are involved in establishing a new national cemetery. Depending on the size of the project, the cost of these steps can range from $100,000 to $250,000 for environmental compliance requirements; $3 million to $6 million for land acquisition, if required; $1 million to $2 million for master planning and design; and $15 million to $25 million for construction. Even with an aggressive schedule, it generally takes 4 1/2 to 5 years to open a cemetery to initial burials. A new national cemetery's average annual operating costs range between $1 million and $2 million, without consideration of headstones and grave liners, which are purchased through mandatory funds.

Because the Future Burial Needs report released last year and the updated demographic data transmitted to Congress earlier this year satisfy the intent behind S. 1282, enactment of this bill is unnecessary. However, VA is committed to begin addressing those identified locations with unmet burial needs within the annual budgetary process.

Section 1(a) of S. 1360 would amend 38 U.S.C. § 7105(b) to provide, in effect, that a writing filed by a claimant, a claimant's legal guardian, an accredited representative, attorney, or authorized agent, or a legal guardian expressing disagreement with a decision of an agency of original jurisdiction shall be recognized as a notice of disagreement (NOD). The amendment made by section 1(a) would apply to any document filed on or after the date of enactment of S. 1360 and any document filed prior to the date of enactment that was not rejected as an NOD by VA as of that date. Section 1(b) of S. 1360 would provide that, if a document filed as an NOD between March 15, 2002, and the date of enactment of S. 1360 meets the requirements of section 1(a) for an NOD, but VA determined that it did not constitute an NOD pursuant to 38 C.F.R. § 20.201, VA would have to treat the document as an NOD if the claimant makes a request, or VA makes a motion, within one year after the date of enactment, to treat it as a NOD.

S. 1360 would overturn the decision of the United States Court of Appeals for the Federal Circuit in Gallegos v. Principi, in which that court held that 38 C.F.R. § 20.201, defining an NOD as a writing expressing a desire for appellate review, is a reasonable and permissible construction of 38 U.S.C. § 7105, which sets forth the necessary steps for appellate review by the Board. Defining a writing as an NOD irrespective of whether it expresses a desire for appellate review would represent a major change in the statutory scheme of 38 U.S.C. § 7105, which refers to an NOD only in the context of initiating an appeal to the Board.

It does not serve veterans to initiate appeals of their claims against their wishes. However, requiring VA to treat any document disagreeing with an initial VA determination or decision on a claim as an NOD, without regard to whether it expresses a desire for appellate review, would impose a substantial burden on the VA claims adjudication system and hinder us in achieving our objective of improving the efficiency of claim adjudications and reducing the time necessary to resolve claims. VA is inundated on a daily basis by myriad correspondence from claimants and their representatives. Under the proposed amendment, in any case in which such correspondence could be construed as expressing disagreement with an initial claim decision, VA would be required to initiate a time-consuming, multi-step process under which it is obligated to reexamine the claim and determine if additional review or development is warranted and, ultimately, prepare a statement of the case summarizing the evidence, citing applicable laws and explaining their affect, and providing the reasons for making the determination in question. This process would apparently be required even in cases where, although a claimant has expressed disagreement with a VA decision, it is quite plain from the claimant's submission that the claimant has no desire for appellate review of the decision.

VA opposes S. 1360 and believes that the goal of the bill can better be achieved by amending VA's procedures to assure that VA ascertains the intent of a claimant who expresses disagreement with an initial VA claim decision.

That concludes my statement, Mr. Chairman. I would be happy now to entertain any questions you or the other members of the Committee may have.