[Congressional Record Volume 149, Number 77 (Thursday, May 22, 2003)]
[Senate]
[Pages S7031-S7037]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SPECTER (by request):
  S. 1133. A bill to amend title 38, United States Code, to improve the 
authorities of the Department of Veterans Affairs relating to 
compensation, dependency and indemnity compensation, pension, education 
benefits, life insurance benefits, and memorial benefits, to improve 
the administration of benefits for veterans, and for other purposes; to 
the Committee on Veterans' Affairs.
  Mr. SPECTER. Mr. President, as Chairman of the Committee on Veterans' 
Affairs, I have today introduced, at the request of the Secretary of 
Veterans Affairs, S.1133, the proposed ``Veterans Programs Improvement 
Act of 2003.'' The Secretary of Veterans Affairs has submitted this 
proposed legislation to the President of the Senate by letter dated 
April 25, 2003.
  My introduction of this measure is in keeping with the policy which I 
have adopted of generally introducing--so that there will be specific 
bills to which my colleagues and others may direct their attention and 
comments--all Administration-proposed draft legislation referred to the 
Committee on Veterans' Affairs. Thus, I reserve the right to support or 
oppose the provisions of, as well as any amendment to, this 
legislation.
  I ask unanimous consent that the text of the bill be printed in the 
Record, together with the transmittal letter and a section-by-section 
analysis which accompanied it.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1133

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; REFERENCES TO TITLE 38, UNITED STATES 
                   CODE.

       (a) Short Title.--This act may be cited as the ``Veterans 
     Programs Improvement Act of 2003''.
       (b) References.--Except as otherwise expressly provided, 
     wherever in this Act an amendment is expressed in terms of an 
     amendment to a section or other provision, the reference 
     shall be considered to be made to a section or other 
     provision of title 38, United States Code.

     SEC. 2. INCREASE IN RATES OF DISABILITY COMPENSATION AND 
                   DEPENDENCY AND INDEMNITY COMPENSATION.

       (a) Rate Adjustment.--The Secretary of Veterans Affairs 
     shall, effective on December 1, 2003, increase the dollar 
     amounts in effect for the payment of disability compensation 
     and dependency and indemnity compensation by the Secretary, 
     as specified in subsection (b).
       (b) Amounts To Be Increased.--The dollar amounts to be 
     increased pursuant to subsection (a) are the following:
       (1) Compensation.--Each of the dollar amounts in effect 
     under section 1114;

[[Page S7032]]

       (2) Additional compensation for dependents.--Each of the 
     dollar amounts in effect under section 1115(1);
       (3) Clothing allowance.--The dollar amount in effect under 
     section 1162;
       (4) New dic rates.--Each of the dollar amounts in effect 
     under paragraphs (1) and (2) of section 1311(a);
       (5) Old dic rates.--Each of the dollar amounts in effect 
     under section 1311(a)(3);
       (6) Additional dic for surviving spouses with minor 
     children.--The dollar amount in effect under section 1311(b);
       (7) Additional dic for disability.--Each of the dollar 
     amounts in effect under subsections (c) and (d) of section 
     1311; and
       (8) DIC for dependent children.--Each of the dollar amounts 
     in effect under sections 1313(a) and 1314.
       (c) Determination of Increase.--(1) The increase under 
     subsection (a) shall be made in the dollar amounts specified 
     in subsection (b) as in effect on November 30, 2003.
       (2) Except as provided in paragraph (3), each such amount 
     shall be increased 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, 2003, as a result of a determination under 
     section 215(i) of such Act (42 U.S.C. 415(i)).
       (3) Each dollar amount increased pursuant to paragraph (2) 
     shall, if not a whole dollar amount, be rounded down to the 
     next lower whole dollar amount.
       (d) Special Rule.--The Secretary may adjust 
     administratively, consistent with the increases made under 
     subsection (a), the rates of disability compensation payable 
     to persons within the purview of section 10 of Public Law No. 
     85-857 (72 Stat. 1263) who are not in receipt of compensation 
     payable pursuant to chapter 11 of title 38, United States 
     Code.
       (e) Publication of Adjusted Rates.--At the same time as the 
     matters specified in section 215(i)(2)(D) of the Social 
     Security Act (42 U.S.C. 415(i)(2)(D)) are required to be 
     published by reason of a determination made under section 
     215(i) of such Act during fiscal year 2004, the Secretary of 
     Veterans Affairs shall publish in the Federal Register the 
     amounts specified in subsection (b) as increased pursuant to 
     subsection (a).

     SEC. 3. REPEAL OF 45-DAY RULE FOR EFFECTIVE DATE OF AWARD OF 
                   DEATH PENSION.

       Subsection (d) of section 5110 is amended--
       (1) by striking the designation ``(1)'';
       (2) by striking ``death compensation or dependency and 
     indemnity compensation'' and inserting ``death compensation, 
     dependency and indemnity compensation, or death pension''; 
     and
       (3) by striking paragraph (2).

     SEC. 4. EXCLUSION OF LUMP-SUM LIFE INSURANCE PROCEEDS FROM 
                   DETERMINATIONS OF ANNUAL INCOME FOR PENSION 
                   PURPOSES.

       Subsection (a) of section 1503 is amended--
       (1) by striking ``and'' at the end of paragraph (9);
       (2) by striking ``materials.'' at the end of paragraph 
     (10)(B) and inserting ``materials; and''; and
       (3) by adding at the end the following new paragraph:
       ``(11) lump-sum proceeds of any life insurance policy or 
     policies on a veteran, for purposes of pension under 
     subchapter III of this chapter.''.

     SEC. 5. CLARIFICATION OF PROHIBITION ON PAYMENT OF 
                   COMPENSATION FOR ALCOHOL OR DRUG-RELATED 
                   DISABILITY.

       (a) Clarification.--Chapter 11 is amended--
       (1) in section 1110, by striking ``drugs.'' and inserting 
     ``drugs, even if the abuse is secondary to a service-
     connected disability.''; and
       (2) in section 1131, by striking ``drugs.'' and inserting 
     ``drugs, even if the abuse is secondary to a service-
     connected disability.''.
       (b) Applicability.--The amendments made by subsection (a) 
     shall apply to any claim--
       (1) filed on or after the date of enactment of this Act; or
       (2) filed before the date of enactment of this Act and not 
     finally decided as of that date.

     SEC. 6. ALTERNATIVE BENEFICIARIES FOR NATIONAL SERVICE LIFE 
                   INSURANCE AND UNITED STATES GOVERNMENT LIFE 
                   INSURANCE.

       (a) National Service Life Insurance.--(1) Section 1917 is 
     amended by adding at the end the following new subsection:
       ``(f)(1) Following the death of the insured and in a case 
     not covered by subsection (d)--
       ``(A) if the first beneficiary otherwise entitled to 
     payment of the insurance does not make a claim for such 
     payment within two years after the death of the insured, 
     payment may be made to another beneficiary designated by the 
     insured, in the order of precedence as designated by the 
     insured, as if the first beneficiary had predeceased the 
     insured; and
       ``(B) if, within four years after the death of the insured, 
     no claim has been filed by a person designated by the insured 
     as a beneficiary and the Secretary has not received any 
     notice in writing that any such claim will be made, payment 
     may (notwithstanding any other provision of law) be made to 
     such person as may in the judgment of the secretary be 
     equitably entitled thereto.
       ``(2) Payment of insurance under paragraph (1) shall be a 
     bar to recovery by any other person.''.
       (b) United States Government Life Insurance.--Section 1952 
     is amended by adding at the end the following new subsection:
       ``(c)(1) Following the death of the insured and in a case 
     not covered by section 1950 of this title--
       ``(A) if the first beneficiary otherwise entitled to 
     payment of the insurance does not make a claim for such 
     payment within two years after the death of the insured, 
     payment may be made to another beneficiary designated by the 
     insured, in the order of precedence as designated by the 
     insured, as if the first beneficiary had predeceased the 
     insured; and
       ``(B) if, within four years after the death of the insured, 
     no claim has been filed by a person designated by the insured 
     as a beneficiary and the Secretary has not received any 
     notice in writing that any such claim will be made, payment 
     may (notwithstanding any other provision of law) be made to 
     such person as may in the judgment of the Secretary be 
     equitably entitled thereto.
       ``(2) Payment of insurance under paragraph (1) shall be a 
     bar to recovery by any other person.''.
       (c) Transition Provision.--In the case of a person insured 
     under subchapter I or II of chapter 19, title 38, United 
     States Code, who dies before the date of the enactment of 
     this Act, the two-year and four-year periods specified in 
     subsection (f)(1) of section 1917 of title 38, United States 
     Code, as added by subsection (a), and subsection (c)(1) of 
     section 1952 of such title, as added by subsection (b), as 
     applicable, shall for purposes of the applicable subsection 
     be treated as being the two-year and four-year periods, 
     respectively, beginning on the date of the enactment of this 
     Act.

     SEC. 7. TIME LIMITATION ON RECEIPT OF CLAIM INFORMATION 
                   PURSUANT TO REQUEST BY DEPARTMENT OF VETERANS 
                   AFFAIRS.

       (a) In General.--Section 5102 is amended by adding at the 
     end the following new subsection:
       ``(c) Time Limitation.--(1) If information that a claimant 
     and the claimant's representative, if any, are notified under 
     subsection (b) is necessary to complete an application is not 
     received by the Secretary within one year from the date of 
     such notification, no benefit may be paid or furnished by 
     reason of the claimant's application.
       ``(2) This subsection shall not apply to any application or 
     claim for Government life insurance benefits.''.
       (b) Repeal of Superseded Provisions.--Section 5103 is 
     amended--
       (1) by striking ``(a) Required information and evidence.--
     ''; and
       (2) by striking subsection (b).
       (c) Effective Date.--The amendments made by this section 
     shall take effect as if enacted on November 9, 2000, 
     immediately after the enactment of the Veterans Claims 
     Assistance Act of 2000 (Public Law 106-475; 114 Stat. 2096).

     SEC. 8. BURIAL PLOT ALLOWANCE.

       (a) Subsection (b) of section 2303 is amended--
       (1) in the matter preceding paragraph (1), by striking ``a 
     burial allowance under such section 2302, or under such 
     subsection, who was discharged from the active military, 
     naval, or air service for a disability incurred or aggravated 
     in line of duty, or who is a veteran of any war'' and 
     inserting ``burial in a national cemetery under section 2402 
     of this title''; and
       (2) in paragraph (2), by striking ``(other than a veteran 
     whose eligibility for benefits under this subsection is based 
     on being a veteran of any war)'' and inserting ``is eligible 
     for a burial allowance under section 2302 of title or under 
     subsection (a) of this section, or was discharged from the 
     active military, naval, or air service for a disability 
     incurred or aggravated in line of duty, and such veteran''.
       (b) Section 2307 is amended in the last sentence by 
     striking ``and (b)'' and inserting ``and (b)(2)''.

     SEC. 9. PROVISION OF MARKERS FOR PRIVATELY MARKED GRAVES.

       (a) In General.--Subsection (d) of section 502 of the 
     Veterans Education and Benefits Expansion Act of 2001 (Public 
     Law 107-103; 115 Stat. 995), as amended by section 203 of the 
     Veterans Benefits Act of 2002 (Public Law 107-330; 116 Stat. 
     2824), is further amended by striking ``September 11, 2001'' 
     and inserting ``November 1, 1990''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the enactment of section 
     502 of Public Law 107-103.

     SEC. 10. EXPANSION OF BURIAL ELIGIBILITY FOR REMARRIED 
                   SPOUSES.

       (a) In General.--Paragraph (5) of section 2402 is amended 
     by striking ``(which for purposes of this chapter includes an 
     unremarried surviving spouse who had a subsequent remarriage 
     which was terminated by death or divorce)'' and inserting 
     ``(which for purposes of this chapter includes a surviving 
     spouse who remarries following the veteran's death)''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to deaths occurring on or after the date of the 
     enactment of this Act.

     SEC. 11. MAKE PERMANENT AUTHORITY FOR STATE CEMETERY GRANTS 
                   PROGRAM.

       (a) Permanent Authorization.--Paragraph (2) of section 
     2408(a) is amended--
       (1) by striking ``for fiscal year 1999 and for each 
     succeeding fiscal year through fiscal year 2004''; and
       (2) by adding at the end ``Funds appropriated under the 
     preceding sentence shall remain available until expended.''.

[[Page S7033]]

       (b) Technical Amendment.--Subsection (e) of section 2408 is 
     amended by striking ``Sums appropriated under subsection (a) 
     of this section shall remain available until expended.''.

     SEC. 12. FORFEITURE OF BENEFITS FOR SUBVERSIVE ACTIVITIES.

       (a) Addition of Certain Offenses.--Paragraph (2) of section 
     6105(b) is amended by striking ``sections 792, 793, 794, 798, 
     2381, 2382, 2383, 2384, 2385, 2387, 2388, 2389, 2390, and 
     chapter 105 of title 18'' and inserting ``sections 175, 229, 
     792, 793, 794, 798, 831, 1091, 2332a, 2332b, 2381, 2382, 
     2383, 2384, 2385, 2387, 2388, 2389, 2390, and chapter 105 of 
     title 18''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to claims filed after the date of the enactment 
     of this Act.

     SEC 13. VETERANS' ADVISORY COMMITTEE ON EDUCATION.

       Section 3692 is amended--
       91) in subsection (a), by inserting ``as far as 
     practicable'' after ``include'';
       (2) in subsections (a) and (b), by striking ``chapter 106'' 
     and inserting ``chapter 1606'' both places it appears; and
       (3) in subsection (c), by striking ``2003'' and inserting 
     ``2013''.

     SEC. 14. REPEAL OF EDUCATION LOAN PROGRAM.

       (a) Termination of Program.--No loans shall be made under 
     subchapter III of chapter 36 after the date of the enactment 
     of this Act, and such subchapter shall be repealed 90 days 
     after such date of enactment.
       (b) Closing of Loan Fund.--All monies in the revolving fund 
     established in the Treasury of the United States of America 
     known as the ``Department of Veterans Affairs Education Loan 
     Fund'' (the ``Fund'') on the day before the date of repeal of 
     such subchapter III shall be transferred to the Department of 
     Veterans Affairs Readjustment Benefits Account, and the Fund 
     shall be closed.
       (c) Discharge of Liability.--The liability on any education 
     loan debt outstanding under such subchapter III shall be 
     discharged, and any overpayments declared under section 
     3698(e)(1) of that subchapter shall be waived without further 
     process on the date funds are transferred as referred to in 
     subsection (b) of this section.
       (d) Technical Amendment.--On the date of repeal of such 
     subchapter III, as provided herein, the table of sections at 
     the beginning of chapter 36 shall be amended by striking the 
     items relating to subchapter III.
       (e) Conforming Amendment.--(1) Chapter 34 is amended--
       (A) by repealing paragraph (2) of section 3462(a); and
       (B) in paragraph (1) of section 3485(e), by striking 
     ``(other than an education loan under subchapter III)''.
       (2) Section 3512 is amended by repealing subsection (f).
       (3) The amendments made by paragraphs (1)(B) and (2) shall 
     take effect 90 days after the date of the enactment of this 
     Act.

     SEC. 15. RESTORATION OF CHAPTER 35 EDUCATION BENEFITS OF 
                   CERTAIN INDIVIDUALS.

       (a) Restoration.--Subsection (h) of section 3512 is amended 
     by inserting ``or is involuntarily ordered to full-time 
     National Guard duty under section 502(f) of title 32'' 
     following ``title 10''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as of September 11, 2001.

     SEC. 16. EXPANSION OF MONTGOMERY GI BILL EDUCATION BENEFITS 
                   FOR CERTAIN SELF-EMPLOYMENT TRAINING.

       (a) Self-employment Training.--Subparagraph (B) of section 
     3002(3) is amended--
       (1) in clause (i) by striking ``and'';
       (2) by adding at the end the following clause:
       ``(iii) a program of self-employment on-job training 
     approved as provided in section 3677(d) of this title; and''.
       (b) Program Approval.--Section 3677 is amended--
       (1) in subsections (a) and (c), by inserting ``self-
     employment on-job training or'' after ``other than'';
       (2) in subsection (b)(1), by inserting ``described in 
     subsection (a)'' after ``offering training''; and
       (3) by adding at the end the following new subsection:
       ``(d)(1) Any State approving agency may approve a program 
     of self-employment on-job training for purposes of chapter 30 
     of this title only when it finds that the training is 
     generally recognized as needed or accepted for purposes of 
     obtaining licensure to engage in the self-employment 
     occupation or is required for ownership and operation of a 
     franchise that is the objective of the training.
       ``(2) The training entity offering the training for which 
     approval is sought under this chapter must submit to the 
     State approving agency a written application for approval, in 
     the form and with the content as prescribed by the Secretary, 
     which shall include such information as is required by the 
     State approving agency.
       ``(3) As a condition for approving a program of self-
     employment on-job training, the State approving agency must 
     find upon investigation that the following criteria are met:
       ``(A) The training content is adequate to qualify the 
     eligible individual for the self-employment occupation that 
     is the objective of the training.
       ``(B) The training consists of full-time training for a 
     period of less than six months.
       ``(C) The length of the training period is not longer than 
     that customarily required to obtain the knowledge, skills, 
     and experience needed to successfully engage in the 
     particular self-employment occupation that is the objective 
     of the training.
       ``(D) The training entity has adequate instructional space, 
     equipment, materials, and personnel to provide satisfactory 
     training on the job.
       ``(E) The training entity keeps adequate records of each 
     trainee's progress toward the self-employment objective and, 
     at the end of the training period, issues a license, 
     certificate, or other document recording the individual's 
     successful completion of the training program.
       ``(F) The training entity and the self-employment on-job 
     training program meet such other criteria as the Secretary 
     may prescribe and as the State approving agency, with the 
     Secretary's approval, may establish.''.
       (c) Conforming Amendment.--Paragraph (2) of section 3687(a) 
     is amended by inserting ``subsections (a), (b), and (c) of'' 
     before ``section 3677''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the date six months after the enactment 
     of this Act and shall apply to self-employment on-job 
     training approved and pursued on or after that date.
         The Secretary of Veterans Affairs
                                   Washington, DC, April 25, 2003.
     Hon. Richard B. Cheney,
     President of the Senate,
     Washington, DC.
       Dear Mr. President: I am transmitting a draft bill, the 
     ``Veterans Programs Improvement Act of 2003'. I request that 
     this draft bill be referred to the appropriate committee for 
     prompt consideration and enactment.


    Increase in Rates of Disability compensation and Dependency and 
                         Indemnity Compensation

       Section 2 of the draft bill would direct the Secretary of 
     Veterans Affairs to increase administratively the rates of 
     disability compensation for veterans with service-connected 
     disability and of dependency and indemnity compensation (DIC) 
     for the survivors of veterans whose deaths are service 
     related, effective December 1, 2003. As provided in the 
     Presidents fiscal year (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 
     percent. We believe this proposed COLA is necessary and 
     appropriate to protect the affected benefits from the eroding 
     effects of inflation.
       We estimate that enactment of this section 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.


REPEAL OF 45-DAY RULE FOR EFFECTIVE DATE OF AWARD OF DEATH PENSION AND 
EXCLUSION OF LUMP-SUM INSURANCE PROCEEDS FROM DETERMINATIONS OF ANNUAL 
                      INCOME FOR PENSION PURPOSES

       Section 3 of the draft bill would amend 38 U.S.C. 
     Sec. 5110(d) to make an award of death pension effective the 
     first day of the month in which the death occurred if the 
     claim is received within one year from the date of death. 
     Section 4 of the draft bill would amend 38 U.S.C. 
     Sec. 1503(a) to add lump-sum proceeds of life insurance 
     policies to the list of payments that do not count as income 
     for purposes of determining eligibility for death pension 
     benefits administered by the Department of Veterans Affairs 
     (VA) under chapter 15 of title 38, United States Code.
       Under 38 U.S.C. Sec. 5110(a), an award based on a death 
     pension claim received more than 45 days after the veterans 
     death can be effective no earlier than the date of the claim. 
     Pursuant to current 38 U.S.C. Sec. 5110(d)(2), however, if VA 
     receives an application for death pension within 45 days of 
     the veteran's death, then the effective date of a death 
     pension award is the first day of the month in which the 
     death occurred. Section 5110(d)(2)'s original one-year period 
     was reduced to the current 45 days by the Deficit Reduction 
     Act of 1984, Pub. L. No. 98-369, 98 Stat. 494, 854-901, as a 
     cost-saving measure. Unfortunately, the ``45-day rule'' 
     created a situation that has led to unfair and unequal 
     treatment of applications for VA death pension.
       The practical effect of the ``45-day rule'' in many cases 
     has been to exclude lump-sum life insurance proceeds received 
     within 45 days of the veteran's death from the countable 
     income for pension claimants who file their claims more than 
     45 days after the date of the veteran's death. In contrast, 
     claimants who both receive insurance proceeds and file 
     pension claims within 45 days of the veteran's death have 
     insurance proceeds counted as annual income, often reducing 
     or precluding pension benefits during their first year of 
     potential eligibility. In other words, claimants who receive 
     insurance proceeds within 45 days of death, but who wait 45 
     days or longer to file pension claims, can receive pension 
     effective from the date of claim without regard to recently-
     received insurance proceeds. In essence, claimants receiving 
     lump-sum insurance proceeds under the current law are 
     encouraged to forego entitlement from the date of death in 
     exchange for the exclusion of the insurance payment in 
     determining countable income for the following 12 months.
       While many veterans' advocates are aware of this situation 
     and advise claimants who receive life insurance proceeds 
     within 45 days of death to postpone filing their claims, the 
     current law unfairly penalizes claimants who are not well 
     versed in such technical details. Fairness dictates that VA 
     rules and

[[Page S7034]]

     procedures be straightforward, particularly for claimants who 
     are coping with the losses of loved ones. Consequently, we 
     believe the ``45-day rule'' should be eliminated in favor of 
     a rule making death pension benefits effective from the first 
     day of the month of the veterans death if the claim is 
     received within one year of that date.
       However, we believe that this change must go hand in hand 
     with an amendment, provided in section 4 of the draft bill, 
     excluding lump-sum life insurance proceeds from the 
     computation of income for death pension purposes. Lump-sum 
     life insurance proceeds of genuine consequence are more 
     appropriately address in terms of net worth, as provided in 
     38 U.S.C. Sec. 1543, than in terms of income. Pursuant of 
     section 1543, a claimant is ineligible to receive death 
     pension benefits if his or her net worth is such that it is 
     reasonable that some portion of it should be consumed for his 
     or her maintenance. In our view, a surviving spouse whose 
     income, excluding lump-sum life insurance proceeds, and net 
     worth do not constitute a bar to pension deserves help 
     from VA.
       We believe these proposed amendments are necessary and 
     appropriate to eliminate unequal treatment of death pension 
     applicants and to uphold one of the fundamental principles of 
     the pension program, which is to ensure that those with the 
     greatest need receive the greatest benefit.
       We estimate that the net effect of enactment of both 
     section 3 and section 4 would cost $649 thousand for FY 2004 
     and $12.8 million for the ten-year period FY 2004 through FY 
     2013.


clarification of prohibition on payment of compensation for alcohol or 
                        drug-related disability

       Section 5(a) of the draft bill would amend 38 U.S.C. 
     Sec. Sec. 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 5(b) would make that amendment applicable to claims 
     filed on or after the date of enactment and to claims filed 
     before then but not finally decided as of that date.
       Section 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 also currently provide, ``but on compensation shall be 
     paid if the disability is a result of the veterans 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 has 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. 
     Sec. 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 pays 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 not precluding compensation for 
     an alcohol or drug-abuse-related disability arising 
     secondarily from a service-connected disability. Allen v. 
     Prncipi, 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. Pincipi, 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, opening that that 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 removes an incentive to refrain from debilitating 
     and self-destructive 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 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. All 
     but 97,000 of those disabilities are currently rated less 
     than 100 percent disabling 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 5 of this 
     draft would avoid those increased costs. Our estimate of 
     savings that would result from enactment of the draft bill is 
     based on the payment of only basic compensation for alcohol 
     or drug abuse disabilities secondary to service-connected 
     disabilities (i.e., it does not consider temporary total 
     evaluations, special monthly compensation, or compensation 
     for the secondary effects of alcohol or drug abuse). We 
     estimate that this provision would result in benefit cost 
     savings of $127 million and administrative cost savings of 
     $44 million in FY 2004 and benefit cost savings of $4.6 
     billion and administrative cost savings of $97 million for 
     the ten-month period FY 2004 through FY 2013.


   alternative beneficiaries for national service life insurance and 
                united states government life insurance

       Section 6 would authorize the payment of unclaimed National 
     Service Life Insurance (NSLI) and United States Government 
     Life Insurance (USGLI) proceeds to an alternative 
     beneficiary.
       Under current law, there is no time limit under which a 
     named beneficiary of an NSLI or USGLI policy is required to 
     claim the proceeds. Consequently, when the insured dies and 
     the beneficiary does not file a claim for the proceeds, VA is 
     required to hold the unclaimed funds indefinitely in order to 
     honor any possible future claims by the beneficiary. VA holds 
     the proceeds as a liability. While extensive efforts are made 
     to locate and pay these individuals, there are cases where 
     the beneficiary simply cannot be found. Under current law, we 
     are not permitted to pay the proceeds to a contingent or 
     alternative beneficiary unless we can determine that the 
     principal beneficiary predeceased the insured. Consequently, 
     payment of the proceeds to other beneficiaries is withheld.
       A majority of the existing liabilities of unclaimed 
     proceeds were established over ten years ago. As time passes, 
     the likelihood of locating and paying a principal beneficiary 
     becomes more remote. In fact, the older a liability becomes, 
     the more unlikely it is that it will ever be paid even though 
     other legitimate heirs of the insured have been located.
       Section 6 would authorize the Secretary to pay NSLI and 
     USGLI proceeds to an alternative beneficiary when the 
     proceeds have not been claimed by the named beneficiary 
     within two years following the death of the insured or within 
     two years of this bill's enactment, whichever is later. The 
     principal beneficiary would have two years following the 
     insured's death to file a claim. Afterward, a contingent 
     beneficiary would have two additional years within which to 
     file a claim. Payment would be made as if the principal 
     beneficiary had predeceased the insured. If there is no 
     contingent beneficiary to receive the proceeds, payment would 
     be made to those equitably entitled, as determined by the 
     Secretary. As occurs under current law, no payment would be 
     made if payment would escheat to a State. Such payment would 
     bar recovery of the proceeds by any other individual.
       Section 6 of the bill would apply retroactively as well as 
     prospectively, and is similar to the time-limitation 
     provisions of the Servicemember's and Veterans' Group Life 
     Insurance programs and the Federal Employees Group Life 
     Insurance program.
       Insofar as payment to beneficiaries is made from the 
     insurance trust funds, there are no direct appropriated 
     benefit costs associated with this section of the bill. The 
     liabilities are already set aside and would eventually be 
     paid, either as payment to beneficiaries that eventually 
     claim the proceeds, or released from liability reserves and 
     paid as dividends.
       There are approximately 4,000 existing policies in which 
     payment has not been made due to the fact that we cannot 
     locate the primary beneficiary, despite extensive efforts.

[[Page S7035]]

     Over the years, the sum of moneys had as aggregated to 
     approximately $23 million. Each year, about 200 additional 
     policies (with an average face value of $9600, or 
     approximately $1.9 million annually) are placed into this 
     liability because the law prohibits payment to a contingent 
     beneficiary or to the veteran's heirs. It is estimated that 
     approximately two-thirds of the 4,000 policies would 
     eventually be paid as a result of this legislation. 
     Additionally, in anticipation of the fact that VA will not be 
     able to pay about one-third of these policies, nearly $7 
     million has already been released to surplus and made 
     available for dividend distribution.
       VA estimates that the enactment of this section would 
     result in costs of $15 million during the five-year period FY 
     2004 through FY 2008 and a total of $17 million during the 
     ten-year period FY 2004 through FY 2013.


time limitation on receipt of claim information pursuant to request by 
                     department of veterans affairs

       Section 7(a) and (b) of the draft bill would make a 
     technical correction to the statutory provisions created by 
     the Veterans Claims Assistance Act of 2000 (VCAA), Pub. L. 
     No. 106-475, 114 Stat. 2096. Section 7(c) would make that 
     correction effective as if enacted immediately after the 
     VCAA.
       Before the enactment of the VCAA, 38 U.S.C. Sec. 5103(a) 
     required VA, if a claimant's application for benefits was 
     incomplete, to notify the claimant of the evidence necessary 
     to complete the application. Section 5103(a) further 
     provided: ``If such evidence is not received within one year 
     from the date of such notification, no benefits may be paid 
     or furnished by reason of such application.''
       In accordance with former section 5103(a), VA regulations 
     provide that, if evidence requested in connection with a 
     claim is not furnished within one year after the date of 
     request, the claim will be considered abandoned. After the 
     expiration of one year, VA will take no further action unless 
     it receives a new claim. Furthermore, should the right to 
     benefits be finally established, benefits based on such 
     evidence would commence no earlier than the date the new 
     claim was filed. 38 C.F.R. Sec. 3.158(a).
       Before the enactment of the VCAA, title 38, United States 
     Code, contained no provision requiring VA to notify a 
     claimant of the evidence necessary to substantiate a claim.
       Section 3(a) of the VCAA struck former 38 U.S.C. 
     Sec. Sec. 5102 and 5103 and added new sections 5102 and 5103. 
     114 Stat. at 2096-97. Now section 5102(b) requires VA, if a 
     claimant's application for a benefit is incomplete, to notify 
     the claimant (and his or her representative, if any) of the 
     information necessary to complete the application. Section 
     5102 contains no provision concerning a time limitation for 
     the submission of information necessary to complete an 
     application.
       Now section 5103(a) requires VA, upon receipt of a complete 
     or substantially complete application for benefits, to notify 
     the claimant (and his or her representative, if any) of any 
     information and evidence not previously provided to VA that 
     is necessary to substantiate the claim. Furthermore, that 
     notice must indicate which portion of that information and 
     evidence, if any, is to be provided by the claimant and which 
     portion, if any, VA will attempt to obtain on the claimant's 
     behalf. Section 5103(b)(1) provides, in the case of 
     information or evidence that the claimant is notified is to 
     be provided by him or her, if VA does not receive such 
     information or evidence within one year from the date of such 
     notification, no benefit may be paid or furnished by reason 
     of the claimant's application.
       As a result of the amendments made by the VCAA, the 
     statutory provision imposing a one-year limitation now 
     relates to the substantiation of claims rather than to the 
     completion of applications. We do not believe Congress 
     intended this change from prior law. This change raises 
     several potential problems.
       Without a statutory limitation of one year to complete an 
     application, VA no longer has a statutory basis for closing 
     an application as abandoned. Thus, if a claimant were to 
     submit an incomplete application for benefits, but not 
     respond to VA's notice of the information necessary to 
     complete it until many years later, the award of any benefit 
     granted on the basis of that application would have to be 
     effective from the date of the application, even though the 
     claimant took no action to complete it for many years. 
     Further, it appears that VA would be authorized to close or 
     deny the claim based on the claimant's failure to respond. We 
     do not believe Congress intended this result. Rather, we 
     believe that the former one-year statutory limitation on the 
     time available to complete an application should be restored.
       The statutory limitation of one year to substantiate a 
     claim also raises potential problems. One such problem is the 
     possibility that courts will interpret the provision to 
     preclude VA from deciding a claim until one year has expired 
     from the date VA gives notice of the information and evidence 
     necessary to substantiate the claim. Exactly that 
     interpretation was offered by several veterans service 
     organizations challenging VA's regulations implementing the 
     VCAA. Under those regulations, as part of VA's notice under 
     section 5103(a), VA will request the claimant to provide any 
     evidence in the claimant's possession that pertains to the 
     claim. We ask for the evidence within 30 days, but tell the 
     claimant that one year is available to respond. If the 
     claimant has not responded to the request within 30 days, VA 
     may decide the claim before expiration of the one year, based 
     on all the information and evidence contained in the file, 
     including information and evidence it has obtained on the 
     claimant's behalf. However, VA will have to readjudicate the 
     claim if the claimant subsequently provides the information 
     and evidence within one year of the date of the request. 38 
     C.F.R. Sec. 3.159(b)(1).
       VA issued those rules ``to allow for the timely processing 
     of claims.'' 66 Fed. Reg. 17,834, 17,835 (2001). Once an 
     application had been substantially completed, VA does not 
     want to have to wait one year to decide the claim, given the 
     large backlog of claims awaiting adjudication by VA and the 
     Secretary's commitment to reducing the backlog and shortening 
     the time VA takes to adjudicate claims. What VA considers to 
     be Congress' inadvertent moving of the one-year limitation 
     from the provision relating to completion of applications to 
     the provision relating to the substantiation of claims could 
     impede VA's efforts to improve service to veterans. VA doubts 
     that Congress intended to require VA, after requesting 
     evidence from a claimant, to keep the claim open and pending 
     for a full year if the claimant has not responded.
       Furthermore, section 5103(b)(1)'s clear and unambiguous 
     language appears to prohibit the payment of benefits even 
     though VA could allow a claim. For example, VA might be able 
     to allow a claim on the basis of evidence VA obtained on the 
     claimant's behalf, even though the claimant has not 
     provided the evidence requested of him or her. Or VA might 
     find clear and unmistakable error in a prior denial and 
     need to grant benefits on the claim that was erroneously 
     denied. Yet section 5103(b)(1) prohibits the payment or 
     furnishing of any benefit if VA does not receive within 
     one year the information or evidence the claimant is to 
     provide according to VA's notice. Surely, Congress did not 
     intend such a results.
       Finally, some of VA's pro-veteran regulations will have to 
     be changed unless the one-year time limitation is removed 
     from section 5103. For example, 38 C.F.R. Sec. 20.1304(a) 
     permits an appellant to submit additional evidence during the 
     90 days following notice that an appeal has been certified to 
     the Board of Veterans' Appeals and the appellate record has 
     been transferred to the Board. That 90-day period may extend 
     beyond the one-year period following notice of the 
     information and evidence necessary to substantiate the claims 
     given under section 5103(a), in which case it would conflict 
     with the statutory mandate that ``no benefit may be paid or 
     furnished by reason of the claimant's application'' if VA 
     does not receive the evidence within one year from the date 
     of the section 5103(a) notice. Another potentially 
     conflicting regulation is 38 C.F.R. Sec. 3.156(b), which 
     deems new and material evidence received before expiration of 
     the one-year appeal period (beginning when notice of the 
     decision on a claim is sent) or before an appellate decision 
     is made if a timely appeal is filed to have been filed in 
     connection with the claim pending at the beginning of the 
     appeal period. Because the one-year appeal period necessarily 
     extends beyond the one-year substantiation period, the 
     regulation authorizes the grant of benefits based on evidence 
     not timely received under section 5103(b), contrary to the 
     statutory mandate.
       Accordingly, we propose a technical amendment to sections 
     5102 and 5103 that would prevent these problems. Section 7 
     would restore the one-year limitation to section 5102 and 
     remove it from section 5103. It would make these technical 
     amendments effective as if enacted immediately after the 
     VCAA.
       No costs are associated with this proposal. These 
     amendments would allow VA to close inactive or abandoned 
     claims and would prevent unjustified retroactive awards.


                         burial plot allowance

       Section 8 of the draft bill would amend 38 U.S.C. 
     Sec. Sec. 2303(b) and 2307 to authorize payment of the burial 
     plot allowance to states for each veteran interred in a state 
     veterans cemetery at not cost to the veteran's estate or 
     survivors.
       Current section 2302(b)(1) authorizes VA to pay to a state 
     a $300 plot or interment allowance for each eligible veteran 
     buried in qualifying state veterans' cemetery. Such allowance 
     authorized only if the veteran: (1) was a veteran of any war; 
     (2) was discharged from active service for a service-
     connected disability; (3) was receiving VA compensation or 
     pension at the time of death; or (4) died in a VA facility. 
     Under current section 2307, survivors of veterans who die as 
     a result of service-connected disabilities may seek 
     reimbursement of burial and funeral expenses not exceeding 
     $2,000. If, however, a burial and funeral allowance is paid 
     to a veteran's survivors under section 2307, states cannot 
     also receive a plot allowance for burial of the veteran. The 
     proposed amendment would expand VA's authority to pay the 
     plot allowance to states for burial in State veterans' 
     cemeteries of all eligible peacetime veterans and all wartime 
     veterans who die of service-connected disabilities.
       This amendment would encourage state participation in the 
     State Cemetery Grants Program. In 1978, Congress established 
     the State Cemetery Grants Program to complement VA's national 
     cemetery system by assisting states in providing burial plots 
     for veterans in areas where existing national cemeteries 
     cannot satisfy veterans' burial needs. State officials have 
     indicated to VA that they consider future maintenance costs

[[Page S7036]]

     when deciding whether to pursue a state cemetery grant. To 
     the extent that the amendment would help defray those 
     maintenance costs and encourage states to establish veterans' 
     cemeteries, it would make the benefit of burial in such a 
     cemetery an accessible option for more veterans.
       The proposed amendment would allow states to receive plot 
     allowance payments for approximately 1,200 additional 
     interments annually. We estimate the costs associated with 
     the enactment of this amendment would be $360,000 for FY 2004 
     and $3.6 million for the ten-year period from FY 2004 through 
     FY 2013.


            PROVISION OF MARKERS FOR PRIVATELY MARKED GRAVES

       Section 9 would change the applicability date of VA's 
     current authority to provide a marker for the private-
     cemetery grave of a veteran, regardless of whether the grave 
     has been marked at private expense. Section 2306(a) of title 
     38, United States Code, has long authorized VA to provide a 
     Government headstone or marker for the unmarked grave of an 
     eligible individual. Section 502 of the Veterans Education 
     and Benefits Expansion Act of 3001, Pub. L. No. 107-103, 
     Sec. 502, 115 Stat. 976, 994, which was signed into law on 
     December 27, 2001, authorized VA to furnish appropriate 
     marker for the grave of an eligible veteran buried in a 
     private cemetery, regardless of whether the grave was already 
     marked with a non-Government marker. This authorization was 
     made applicable to veterans who died on or after that Act's 
     enactment date. Public Law 107-440 extended this authority to 
     include deaths.
       Under current law, if a veteran died before September 11, 
     2001, provision of a Government headstone or market is 
     authorized only if the veterans' grave is unmarked. If a 
     veteran died after September 11, 2001, provision of a 
     Government headstone or market is authorized regardless of 
     whether the grave is already marked at private expense. While 
     recent changes in the law have allowed VA to begin to meet 
     the needs of families who view the government-furnished 
     market as a means of honoring and publicly recognizing a 
     veteran's military service, VA is now in the difficult 
     position of having to deny a benefit based solely on when a 
     veteran died.
       Moreover, the law has never precluded the addition of a 
     privately purchased headstone to a grave after place of a 
     government-furnished marker, resulting in double marking. 
     However, when a private marker had been placed in the first 
     instance, a Government marker may not be provided if the 
     veteran died before September 11, 2001. We believe this 
     creates an arbitrary distinction disadvantaging families who 
     promptly obtained a private marker.
       From October 18, 1979, until November 1, 1990, with the 
     enactment of the Omnibus Budget and Reconciliation Act of 
     1990, VA paid a headstone or marker allowance to those 
     families who purchased a private headstone or marker in lieu 
     of a Government headstone or marker. Those families all had 
     the opportunity to benefit from the VA-marker program. Our 
     proposal would benefit families of those veterans who died 
     between November 1, 1990, and September 11, 2001.
       We estimate that the mandatory cost of this proposal would 
     be $4.9 million if FY 2004 and $12.4 million during the 
     period FY 2004 through FY 2013.


         expansion of burial eligibility for remarried spouses

       Section 10 would allow a veteran's surviving spouse who 
     marries a non-veteran after the veteran's death to be 
     eligible for burial in a VA national cemetery based on his or 
     her marriage to the veteran. Over the last several years, the 
     National Cemetery Administration has seen an increase in the 
     number of requests for burial of a veteran's widow or widower 
     who has married a non-veteran after the veteran has died. 
     These cases involve spouses of veterans who have been married 
     for many years and have raised a family with the veteran. 
     Typically, the veteran's children and grandchildren, and of 
     the current spouse, support the burial of the decedent with 
     the original veteran-spouse in a VA national cemetery. 
     However, current law does not permit it if the remarriage 
     remained in effect when the veteran's survivor predeceased 
     the new spouse.
       Public Law 103-446 revised eligibility criteria for burial 
     in a national cemetery to reinstate burial eligibility for a 
     surviving spouse of an eligible veteran whose subsequent 
     remarriage to a non-veteran has been terminated by death or 
     dissolved by divorce. The current proposal would be 
     consistent with that amendment in further acknowledging the 
     importance of the first marriage to the veteran's family. 
     This proposal would allow the deceased veteran to be buried 
     with a spouse with whom he or she always expected to be 
     buried with a spouse with whom he or she always expected to 
     be buried. It would also allow the veteran's children to 
     visit a single gravesite to pay their respects to their 
     parents.
       We estimate that the cost associated with this proposal 
     would be minimal. The average number of requests for burials 
     for individuals previously married to an eligible veteran who 
     subsequently married a non-veteran is estimated to be 200 per 
     year; the majority of these burials would be second 
     interments. The cost of a second interment (including a 
     headstone or marker) in a VA national cemetery ranges from 
     just over $400 to nearly $800, depending on the type of 
     burial and placement of the remains, with an average cost of 
     approximately $550. For FY 2004, we anticipate the cost of 
     the proposal would be $110,000. Our ten-year cost estimate 
     (FY 2004 through FY 2013) is $1.1 million.


       make permanent authority for state cemetery grants program

       Section 2408 of title 38, United States Code, authorizes VA 
     to make grants to states to assist them in establishing, 
     expanding, or improving state veterans' cemeteries. Section 
     2408(a)(2) currently authorizes appropriations for making 
     those grants through fiscal year 2004. Section 11 of our 
     proposed bill would permanently authorize such 
     appropriations.
       VA's State Cemetery Grants Program is an important 
     component in meeting the burial needs of our Nation's 
     veterans. State veterans' cemeteries supplement VA's national 
     cemetery system in providing burial options to veterans 
     throughout the Nation. VA's State Cemetery Grants Program has 
     already helped to fund 49 operational state veterans' 
     cemeteries, and six more are under construction. VA has 
     received over 30 additional pre-applications from states 
     requesting grants. There is a tremendous, on-going demand for 
     grants to improve or expand existing state veterans' 
     cemeteries, and VA's proposal would assist long-term planning 
     for this important program.
       Appropriations for VA's State Home Grants Program 
     (authorized by subchapter III of chapter 81, title 38, United 
     States Code) are permanently authorized under 38 U.S.C. 
     Sec. 7133(a). The amendment made by section 11 of this bill 
     would improve the consistency in the operation of the two 
     programs.
       The costs associated with this proposal would be those 
     included in VA's annual budget request for use in providing 
     grants to states. The President's budget submission to 
     Congress for FY 2004 includes a request for $32 million for 
     the State Cemetery Grants Program.


            forfeiture of benefits for subversive activities

       Section 12 would amend 38 U.S.C. Sec. 6105 to supplement 
     the list of offenses conviction of which would result in a 
     bar to all gratuitous VA benefits. Section 6105 provides that 
     an individual convicted after September 1, 1959, of any of 
     several specified offenses involving subversive activities 
     shall have no right to gratuitous benefits, including 
     national cemetery burial, under laws administered by the 
     Secretary of Veterans Affairs and that no other person shall 
     be entitled to such benefits on account of such individual. 
     Congress' primary concern in enacting this provision was to 
     prevent VA benefits from being provided based on military 
     service of persons found guilty of offenses involving 
     national security. This proposal would amend section 6105 to 
     supplement the list of offenses conviction of which would 
     result in a bar to all gratuitous VA benefits to include 
     additional offenses that have come into being since enactment 
     of section 6105.
       This proposal would extend the current prohibition on 
     payments of gratuitous benefits to persons convicted of 
     subversive activities to include six additional classes of 
     activities. The following offenses from title 18, United 
     States Code, would be added: sections 175 (Prohibitions with 
     respect to biological weapons); 229 (Prohibited activities 
     with respect to chemical weapons); 831 (Prohibited 
     transactions involving nuclear materials); 1091 (Genocide); 
     2332a (Use of certain weapons of mass destruction); and 2332b 
     (Acts of terrorism transcending national boundaries). All of 
     these offenses, which involve serious threats to national 
     security, were added to title 18, United States Code, after 
     the enactment of section 6105.
       There is no cost associated with this proposal. Cost 
     savings would be insignificant.


               veterans' advisory committee on education

       Section 13 would extend to the year 2013 the expiration 
     date of the Veterans' Advisory Committee on Education. It 
     would also amend the language requiring that veterans from 
     specific wartime and post-wartime periods be members of the 
     Committee to state that Committee positions must be filled 
     with such individuals as far as practicable. Finally, this 
     section would make a technical amendment to reflect that, 
     under title 10, United States Code, as reorganized, chapter 
     106 is now designated chapter 1606.
       Under current law, the authority for the Committee will 
     expire on December 31, 2003. VA favors extending the 
     existence of the Education Advisory Committee. The Committee 
     has been useful for the Secretary in keeping in touch with 
     the education community, as well as the veterans' service 
     organizations. Over the last several years, the Committee has 
     made a number of recommendations that have, in turn, become 
     legislative proposals. We believe the Committee's discussions 
     and recommendations are an invaluable aid to our efforts in 
     administering the education program.
       The amendment that would require that veterans from certain 
     periods, e.g. World War II, the Korean conflict era, or post-
     Korean conflict era, be included as members of the Committee 
     only as far as practicable allows for flexibility in filling 
     Committee positions if finding members of specific 
     populations who wish to serve on the Committee might be 
     problematic.
       We estimate the costs associated with the extension of the 
     Committee would be $25,400 for FY 2004 and $200,000 for the 
     ten-year period from FY 2004 through FY 2013.


                    repeal of education loan program

       Section 14 would repeal the VA education loan program and 
     waive any existing repayment obligations, to include 
     overpayments

[[Page S7037]]

     due to default on such loans. The program, in effect since 
     January 1, 1975, currently is available to issue loans up to 
     a maximum of $2,500 per academic year to spouses and 
     surviving spouses who are past their delimiting dates with 
     remaining entitlement to chapter 35 benefits. The population 
     for this program is very limited, and with other options in 
     the public and private sectors, there is no longer a demand 
     for these loans. In fact, VA has not issued a loan under this 
     program in several years, but the government has paid an 
     estimated $70,000 a year to administer it. VA's October 2002 
     monthly loans statistics show 20 current education loans in 
     the amount of $14,987.08 and 116 defaulted education loans 
     totaling $105,908.10. As is apparent, it costs VA more to 
     administer the loan program than to forgive the debts 
     currently outstanding.


  restoration of chapter 35 education benefits of certain individuals

       Section 15 would amend the law to provide that individuals 
     who qualify for chapter 35 benefits and are involuntarily 
     ordered to full-time National Guard duty under 32 U.S.C. 
     Sec. 502(f) after September 11, 2001, would have their 
     individual delimiting dates (the ending date of the 
     individual's eligibility) extended by an amount of time equal 
     to that period of full-time duty plus 4 months.
       Public Law 107-103 restored entitlement to National Guard 
     personnel who qualified for chapter 35 benefits who had to 
     discontinue course pursuit as a result of being called to 
     active duty under specific sections of title 10, United 
     States Code. Our proposal would provide the same delimiting 
     date extension to National Guard members who are activated 
     under title 32.
       We estimate the costs associated with the enactment of 
     section 15 would be $150,000 for FY 2004 and approximately $5 
     million for the ten-year period from FY 2004 through FY 2013.


  EXPANSION OF MONTGOMERY GI BILL EDUCATION BENEFITS FOR CERTAIN SELF-
                          EMPLOYMENT TRAINING

       Section 16 would expand the Montgomery GI Bill chapter 30 
     program by authorizing education assistance benefits for 
     veterans under that program for on-job training in certain 
     self-employment training programs. Such training might, for 
     example, include that necessary for operation of a franchise 
     or to gain a commercial drivers' license to become an 
     independent trucker.
       The Veterans Entrepreneurship and Small Business 
     Development Act of 1999 (Pub. L. 106-50) requires that all 
     Federal agencies aggressively support self-employment for 
     veterans and service-disabled veterans, directly and through 
     public-private partnerships. This amendment will provide 
     veterans considering self-employment with improved access to 
     capital for training. Thus, more veterans will be encouraged 
     to initiate steps towards self-employment and sustainable 
     self-sufficiency.
       We estimate the costs associated with the enactment of 
     section 16 would be $357,000 for FY 2004 and approximately 
     $3.9 million for the ten-year period from FY 2004 through FY 
     2013.
       The Budget Enforcement Act's pay-as-you-go (PAYGO) 
     requirements and discretionary spending caps expired on 
     September 30, 2002. The attached proposals affect revenues 
     and direct spending. This bill is currently estimated to 
     produce cost savings of $116.1 million for FY 2004 and $4.52 
     billion for FY 2004 through FY 2013. These proposals were 
     included in the President's FY 2004 Budget and should be 
     considered in conjunction with all other proposals in the 
     Budget. The Administration supports the extension of budget 
     enforcement mechanisms in a manner that ensures fiscal 
     discipline and is consistent with the President's Budget.
       The Office of Management and Budget advises that there is 
     no objection to the transmission of this bill and that its 
     enactment would be in accord with the Administration's 
     program.
           Sincerely yours,
                                               Anthony J. Principi
       Enclosure.

     Section-by-Section Analysis of Draft Bill--Veterans Programs 
                        Improvement Act of 2003


   section 1. short title; references to title 38, united states code

       Section 1(a) would provide a short title for the Act: the 
     ``Veterans Programs Improvement Act of 2003.'' Section 1(b) 
     would provide that all amendments made by the Act, unless 
     otherwise specified, are to a section or other provision of 
     title 38, United States Code.


section 2. increase in rates of disability compensation and dependency 
                       and indemnity compensation

       Section 2 would direct the Secretary of Veterans Affairs to 
     administratively increase the rates of disability 
     compensation for veterans with service-connected disabilities 
     and of dependency and indemnity compensation (DIC) for the 
     survivors of veterans whose deaths are service related, 
     effective December 1, 2003. As provided in the President's 
     fiscal year 2004 budget request, the rate of increase would 
     be the same as the cost of living adjustment that will be 
     provided under current law to Social Security recipients, 
     which is currently estimated to be 2 percent.


 section 3. repeal of 45-day rule for effective date of award of death 
                                pension

       Section 3 would amend 38 U.s.C. Sec. 5110(d) to make an 
     award of death pension effective the first day of the month 
     in which the death occurred if the claim is received within 
     one year from the date of death.


     section 4. exclusion of lump-sum life insurance proceeds from 
          determinations of annual income for pension purposes

       Section 4 would amend 38 U.S.C. Sec. 1503(a) to add lump-
     sum proceeds of life insurance policies to the list of 
     payments that do not count as income for purposes of 
     determining eligibility for death pension benefits 
     administered by the Department of Veterans Affairs (VA) under 
     chapter 15 of title 38, United States Code.


section 5. clarification of prohibition on payment of compensation for 
                   alcohol or drug-related disability

       Section 5(a) would amend 38 U.S.C. Sec. Sec. 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 5(b) would make that 
     amendment applicable to claims filed on or after the date of 
     enactment and to claims filed before then but not finally 
     decided as of that date.


    section 6. alternative beneficiaries for national service life 
         insurance and united states government life insurance

       Section 6 would authorize the payment of unclaimed National 
     Service Life Insurance and United States Government Life 
     Insurance proceeds to an alternative beneficiary.


section 7. time limitation on receipt of claim information pursuant to 
               request by department of veterans affairs

       Section 7(a) and (b) would make a technical correction to 
     the statutory provisions created by the Veterans Claims 
     Assistance Act of 2000 (VCAA), Pub. L. No. 106-475, 114 Stat. 
     2096. It would change the applicability of a one-year time 
     limit from the substantiation of a claim to the completion of 
     an application. Section 7(c) would make that correction 
     effective as if enacted immediately after the VCAA.


                    section 8. burial plot allowance

       Section 8 would amend 38 U.S.C. Sec. Sec. 2302(b) and 2307 
     to authorize payment of the burial plot allowance to states 
     for each veteran interred in a state veterans' cemetery at no 
     cost to the veteran's estate or survivors.


      section 9. provision of markers for privately marked graves

       Section 9 would change the applicability date (to deaths 
     occurring on or after November 1, 1990) of VA's current 
     authority to provide a marker for the private-cemetery grave 
     of a veteran, regardless of whether the grave has been marked 
     at private expense.


   Section 10. Expansion of Burial eligibility for Remarried Spouses

       Section 10 would allow a veteran's surviving spouse who 
     marries a non-veteran after the veteran's death to be 
     eligible for burial in a VA national cemetery based on his or 
     her marriage to the veteran.


 Section 11. Make Permanent authority for state cemetery grants program

       Section 11 would permanently authorize appropriations for 
     the State Cemetery Grants Program under 38 U.S.C. Sec. 2408, 
     which authorizes VA to make grants to states to assist them 
     in establishing, expanding, or improving state veterans' 
     cemeteries.


      Section 12. Forfeiture of benefits for subversive activities

       Section 12 would amend 38 U.S.C. Sec. 6105 to supplement 
     the list of offenses conviction of which bars entitlement to 
     all gratuitous VA benefits.


         section 13. veterans' advisory committee on education

       Section 13 would extend to the year 2013 the expiration 
     date of the Veterans' Advisory Committee on Education. It 
     would also amend the language requiring that veterans from 
     specific wartime and post-wartime periods be members of the 
     Committee to state that Committee positions must be filled 
     with such individuals when practicable. Finally, this section 
     would make a technical amendment to reflect that, under title 
     10, United States Code, as reorganized, chapter 106 is now 
     designated chapter 1606.


             Section 14. Repeal of Educational Loan Program

       Section 14 would repeal the VA education loan program and 
     waive any existing repayment obligations, to include 
     overpayments due to default on such loans.


  Section 15. Restoration of chapter 35 education benefits of certain 
                              individuals

       Section 15 would provide that individuals who qualify for 
     chapter 35 benefits and are involuntarily ordered to full-
     time National Guard duty under 32 U.S.C. Sec. 502(f) after 
     September 11, 2001, would have their individual delimiting 
     dates (the ending date of the individual's eligibility) 
     extended by an amount of time equal to that period of full-
     time duty plus 4 months.


  Section 16. Expansion of Montgomery GI bill education benefits for 
                    certain self-employment training

       Section 16 would expand the Montgomery GI Bill chapter 30 
     program by authorizing education assistance benefits for 
     veterans under that program for on-job training in certain 
     self-employment training programs.
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