[House Report 107-156]
[From the U.S. Government Publishing Office]



                                                                       
107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    107-156

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



 
                     VETERANS BENEFITS ACT OF 2001

                                _______
                                

 July 24, 2001.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Smith of New Jersey, from the Committee on Veterans' Affairs, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 2540]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Veterans' Affairs, to whom was referred the 
bill (H.R. 2540) to amend title 38, United States Code, to make 
various improvements to veterans benefits programs under laws 
administered by the Secretary of Veterans Affairs, and for 
other purposes, having considered the same, reports favorably 
thereon with amendments and recommends that the bill as amended 
do pass.

  The amendments (stated in terms of the page and line numbers 
of the introduced bill) are as follows:

  Page 5, line 20, strike ``section 2'' and insert ``section 
101''.

  Strike section 403 (page 14, line 7, through page 15, line 
24) and insert the following (and conform the table of contents 
in section 1(b) accordingly):

SEC. 403. DEPARTMENT OF VETERANS AFFAIRS HEALTH SERVICES IMPROVEMENT 
                    FUND MADE SUBJECT TO APPROPRIATIONS.

  (a) Amounts To Be Subject to Appropriations.--Effective 
October 1, 2002, subsection (c) of section 1729B is amended by 
striking ``Amounts in the fund are hereby made available,'' and 
inserting ``Subject to the provisions of appropriations Acts, 
amounts in the fund shall be available,''.
  (b) Technical Amendment.--Subsection (b) of such section is 
amended by striking paragraph (1) and redesignating paragraphs 
(2), (3), and (4) as paragraphs (1), (2), and (3), 
respectively.

                              Introduction

    The reported bill reflects the Committee's consideration of 
several bills introduced during the 107th Congress, to include 
H.R. 862, H.R. 1406, H.R. 1435, H.R. 1746, H.R. 2359, and H.R. 
2361.
    On July 10, 2001, the Subcommittee on Benefits held a 
hearing and considered the following bills: H.R. 862, to add 
Type 2 diabetes to the list of diseases presumed to be service 
connected for veterans exposed to certain herbicide agents; 
H.R. 1406, the Gulf War Undiagnosed Illness Act of 2001; H.R. 
1435, the Veterans' Emergency Telephone Service Act of 2001; 
H.R. 1746, to establish a single ``1-800'' telephone number for 
veterans benefits counseling; H.R. 1929, the Native American 
Veterans Home Loan Act of 2001; H.R. 2359, to authorize the 
payment of National Service Life Insurance and United States 
Government Life Insurance proceeds to an alternate beneficiary 
when the first beneficiary cannot be identified, to improve and 
extend the Native American veteran housing loan pilot program, 
to simplify document requirements for VA home loans and to 
eliminate the requirement to provide the Secretary of Veterans 
Affairs a copy of a notice of appeal to the Court of Appeals 
for Veterans Claims; and H.R. 2361, the Veterans' Compensation 
Cost-of-Living Adjustment Act of 2001.
    On July 12, 2001, the Subcommittee on Benefits met and 
unanimously ordered a draft bill incorporating provisions from 
H.R. 862, H.R. 1406, H.R. 1435, H.R. 1746, H.R. 2359, and H.R. 
2361 reported favorably to the full Committee.
    On July 18, 2001, the Chairman and Ranking Member, 
respectively, the Honorable Christopher H. Smith and the 
Honorable Lane Evans, and the Chairman and Ranking Member of 
the Subcommittee on Benefits, respectively, the Honorable Mike 
Simpson and the Honorable Silvestre Reyes, along with Mr. 
Stump, Mr. Filner, Mr. Bilirakis, Ms. Brown of Florida, Mr. 
Buyer, Mr. Rodriguez, Mr. Baker, Mr. Shows, Mr. Simmons, Mr. 
Udall of New Mexico, Mr. Brown of South Carolina, and Mrs. 
Capps introduced H.R 2540.
    On July 19, 2001, the full Committee met and ordered H.R. 
2540 reported favorably, as amended, to the House by unanimous 
voice vote.

                      Summary of the Reported Bill

    H.R. 2540 would:

  Title I - Annual Cost-of-Living Adjustment in Compensation and DIC 
                                 Rates

    1. LProvide, effective December 1, 2001, a cost-of-living 
adjustment to the rates of disability compensation for veterans 
with service-connected disabilities and to the rates of 
dependency and indemnity compensation for survivors of certain 
service-connected disabled veterans. As in the past, the 
percentage amount would be equal to the increase for benefits 
provided under the Social Security Act, which is calculated 
based upon changes in the Consumer Price Index.

                   Title II - Compensation Provisions

    1. LAdd Diabetes Mellitus (Type 2) to the list of diseases 
presumed to be service-connected in Vietnam veterans exposed to 
herbicide agents.

    2. LExpand, effective April 1, 2002, the definition of 
undiagnosed illnesses for Persian Gulf War veterans to include 
fibromyalgia, chronic fatigue syndrome, and chronic 
multisymptom illness and any other illness that cannot be 
clearly defined; signs or symptoms that may be a manifestation 
of undiagnosed illness include fatigue, unexplained rashes or 
other dermatological signs or symptoms, headache, muscle pain, 
joint pain, neurologic signs or symptoms, neuropsychological 
signs or symptoms, signs or symptoms involving the respiratory 
system (upper or lower), sleep disturbances, gastrointestinal 
signs or symptoms, cardiovascular signs or symptoms, abnormal 
weight loss, and/or menstrual disorders.

    3. LAuthorize the Secretary of Veterans Affairs to protect 
the grant of service connection of a Persian Gulf War veteran 
who participates in a Department of Veterans Affairs (VA)-
sponsored medical research project.

Title III - Administration of U.S. Court of Appeals for Veterans Claims

    1. LAllow the Court to impose registration fees on persons 
participating in Court-sponsored activities, including judicial 
conferences.

    2. LProvide the Court with the authority to use practice 
and registration fees for the purposes of disciplinary matters, 
and for defraying the expenses of judicial conferences and 
other activities to support and foster bench-and-bar 
relationships, veterans law or the work of the Court.

                        Title IV - Other Matters

    1. LAuthorize the Secretary to pay unclaimed National 
Service Life Insurance and United States Government Life 
Insurance proceeds to an alternate beneficiary when the first 
beneficiary cannot be located within three years of the death 
of the insured.

    2. LExtend to September 30, 2006, the copayment requirement 
for outpatient prescription medications.

    3. LMake the availability of funds from the Department of 
Veterans Affairs Health Services Improvement Fund subject to 
appropriations effective October 1, 2002.

    4. LExtend to December 31, 2005, VA's direct home loan 
program for Native American veterans living on trust lands, and 
eliminate the requirement for VA to have a separate memorandum 
of understanding (MOU) with tribal authorities if another 
federal agency has an MOU which substantially complies with 
VA's requirement.

    5. LModify the requirement for loan assumption language in 
home loan documents.

    6. LEliminate the requirement for veterans to furnish the 
Secretary of Veterans Affairs with a copy of the notice of 
appeal filed with the U.S. Court of Appeals for Veterans 
Claims.

    7. LRequire the Secretary to establish a two-year 
nationwide pilot program to expand the available hours of VA's 
1-800 toll-free information service, and to assess the extent 
to which a demand for such service exists.

    8. LMake technical and clerical amendments to title 38, 
United States Code.

    9. LCodify recurring provisions in annual Department of 
Veterans Affairs Appropriations Acts.

                       Background and Discussion

  TITLE I - ANNUAL COST-OF-LIVING ADJUSTMENT IN COMPENSATION AND DIC 
                                 RATES

    Increase in rates of disability compensation and dependency 
and indemnity compensation.--Section 101 of the bill would 
increase, effective December 1, 2001, the rates of compensation 
for service-connected disabilities and the rates of dependency 
and indemnity compensation (DIC) for surviving spouses and 
children of veterans who die of service-connected causes, as 
well as the additional amounts for dependents and survivors, 
and clothing allowances for certain veterans. The percentage of 
increase would be the same as that automatically received by 
Social Security recipients.
    The Committee annually reviews the service-connected 
disability compensation and DIC programs to ensure that the 
benefits provide reasonable and adequate compensation for 
disabled veterans and their families. Based on this review, the 
Congress acts annually to provide a cost-of-living adjustment 
(COLA) in compensation and DIC benefits. The Congress has 
provided annual increases in these rates for every fiscal year 
since 1976.

                   TITLE II - COMPENSATION PROVISIONS

    Presumption that Diabetes Mellitus (Type 2) is service-
connected.--Section 201 would codify VA's July 9, 2001, 
regulation providing benefits for Vietnam veterans with Type 2 
diabetes. In adding Type 2 diabetes to the list of diseases 
presumed to be service-connected for veterans exposed to 
herbicides in Vietnam, veterans will receive priority VA health 
care and depending on the severity of their illness, disability 
compensation. VA estimates that about nine percent of the 2.3 
million Vietnam veterans still alive have Type 2 diabetes. 
Approximately 16 percent of veterans currently receiving care 
in VA medical facilities have been diagnosed with diabetes.
    The Agent Orange Act of 1991, Public Law 102-4, directed VA 
to seek to enter into an agreement with the National Academy of 
Sciences (NAS) to review, summarize and evaluate the scientific 
evidence concerning the association between exposure to 
herbicides and each disease suspected to be associated with 
such exposure. NAS conducted comprehensive reviews and 
evaluations of available literature. NAS published its initial 
report in 1993, with updates published approximately every two 
years. In November 2000, the NAS' Institute of Medicine found a 
``limited/suggestive'' association between adult onset, or Type 
2, diabetes and exposure to Agent Orange and other herbicides 
used in Vietnam. The Committee believes the presumption 
established in regulation should be made permanent by statute.

    Inclusion of illnesses that cannot be clearly defined in 
presumption of service connection for Gulf War veterans.--
Section 202 expands the definition of ``undiagnosed illness'' 
for Persian Gulf War veterans to include fibromyalgia, chronic 
fatigue syndrome, and chronic multisymptom illness, as well as 
any other illness that cannot be clearly defined.
    Public Law 103-446 gave the Secretary the authority to 
compensate a Persian Gulf War veteran who suffers from 
disabilities that cannot be diagnosed or clearly defined, when 
other causes cannot be identified. In interpreting this law, VA 
issued General Counsel Opinion 8-98 holding that only 
disabilities that cannot be attributed to ``any known clinical 
diagnosis'' could be compensated. Many Gulf War veterans, 
however, report disabilities related to poorly understood 
multisymptom disabilities that one physician may classify as 
``undiagnosed'', and that another physician may diagnose as 
fibromyalgia or chronic fatigue syndrome. VA data indicates 
that approximately 2,000 Gulf War veterans diagnosed with 
chronic fatigue syndrome, 1,000 diagnosed with irritable bowel 
syndrome and 400 diagnosed with fibromyalgia have been denied 
service-connected compensation benefits for undiagnosed 
conditions.
    This provision would also apply to disabilities resulting 
from a chronic multisymptom illness, such as those described by 
Fukada et al in ``Chronic Multisymptom Illness Affecting Air 
Force Veterans of the Gulf War'', JAMA 1998; 280:981-988, and 
Reid et al in ``Multiple Chemical Sensitivity and Chronic 
Fatigue Syndrome in British Gulf War Veterans'', American 
Journal of Epidemiology 2001; 153:604-609. The Committee notes 
that chronic multisymptom illness may include symptoms 
attributed by some researchers to ``multiple chemical 
sensitivity.'' While the Committee recognizes there is not a 
generally accepted medical definition for multiple chemical 
sensitivity, the Committee bill explicitly includes such signs 
and symptoms.
    This section would allow a more consistent interpretation 
of ``undiagnosed illness'' in keeping with Congressional 
intent, and would take effect for benefits payable on April 1, 
2002. The bill also lists a number of symptoms that have been 
associated with undiagnosed or poorly defined illnesses in Gulf 
War veterans, to include fatigue, unexplained rashes or other 
dermatological signs or symptoms, headache, muscle pain, joint 
pain, neurologic signs or symptoms, neuropsychological signs or 
symptoms, signs or symptoms involving the respiratory system 
(upper or lower), sleep disturbances, gastrointestinal signs or 
symptoms, cardiovascular signs or symptoms, abnormal weight 
loss, and/or menstrual disorders.
    The Committee directs the Secretary to submit a report on 
October 1, 2002, on the Department's implementation of this 
section of the bill. The report would include the number of 
claims filed pertaining to this section, disposition of such 
claims, and other appropriate data.
    Current law provides that both diagnosed and undiagnosed 
disabilities be evaluated under the relevant medical criteria 
appropriate to each. This bill would not change that 
requirement.

    Preservation of service connection for undiagnosed 
illnesses to provide for participation in research projects by 
Gulf War veterans.--Section 203 would authorize the Secretary 
to protect the grant of service connection for a Persian Gulf 
War veteran who participates in a VA-sponsored medical research 
project. In the case of a Gulf War veteran being compensated 
for an undiagnosed illness, VA has taken the position that 
current law prevents them from acting to protect the 
individual's service-connected grant if, as a result of 
participating in a medical research study, the condition is 
diagnosed. Medical research studies are designed to increase 
knowledge of human disease and appropriate treatment. They 
often provide no direct benefit to individual research 
subjects, but serve a broader humanitarian goal.
    The Committee intends that this section would give the 
Secretary the authority to protect the service-connected 
character of benefits received by veterans participating in 
such studies in order to broaden participation by veterans in 
medical research studies of rare or ill-defined conditions, 
such as Amyotrophic Lateral Sclerosis (ALS or Lou Gehrig's 
Disease). The Committee intends by preserving the service-
connected character of the veteran's disabilities, that in the 
event of their death from such illnesses, survivors would 
qualify for survivor's benefits.

   TITLE III - ADMINISTRATION OF UNITED STATES COURT OF APPEALS FOR 
                            VETERANS CLAIMS

    Registration fees.--Section 301 would amend subsection 
7285(b) of title 38, United States Code, so that registration 
fees (currently a one-time fee of $30) paid to the Court of 
Appeals for Veterans Claims by those admitted to practice 
before it may be used in connection with practitioner 
disciplinary proceedings and in support of certain bench-and-
bar and veterans' law educational activities in addition to 
those now identified in that subsection. The Court currently 
collects these practice fees as well as registration fees paid 
by participants at its periodic Judicial Conferences, which are 
carried out under section 7286 of title 38, United States Code. 
Collection of the latter fees would be expressly authorized by 
the proposed amendment to subsection 7285(a) rather than by 
implication from section 7286 itself.
    Also, the Committee has added, in consultation with the 
Court, authorization for the collection of registration fees 
for other Court-sponsored activities where appropriate. The 
types of activities for which fees collected under section 
7285(a) are set forth in Chief Judge Kramer's May 24, 2001, 
letter to the Committee (see p. 20 for text). As is the case 
with the use of such nonappropriated-fund accounts in the 
Article III courts, the Committee intends that section 7285(a) 
fees would not be used for purposes for which appropriated 
funds are generally available, and that the support of bench-
and-bar activities would generally follow the practice of the 
Article III courts in using such fees.

    Administrative authorities.--Section 302 would add a new 
section 7287 to title 38, United States Code, to make available 
to the Court generally the same management, administrative, and 
expenditure authorities that are available to Article III 
courts of the United States. The Court, established by the 
Congress under Article I of the Constitution to exercise 
judicial power, has unusual status as an independent tribunal 
that was not intended to be subject to the control of the 
President or the executive branch. Because of its status, the 
Court does not have available to it certain general authorities 
that would normally be available were it part of another 
administrative structure, such as are the U.S. Court of Federal 
Claims (under the Administrative Office of the U.S. Courts), 
and the U.S. Court of Appeals for the Armed Forces (under the 
Department of Defense). Pursuant to section 7282 of title 38, 
United States Code, the Court submits its budget directly to 
and receives its appropriations directly from Congress.
    In the past, the Court has requested the enactment of 
various gap-filling statutory provisions, which are described 
in Chief Judge Kramer's May 24 letter. See 5 U.S.C. app. 
Sec. Sec. 109(8), 109(10); 38 U.S.C. Sec. Sec. 7253(g), 
7264(c), 7281(i). The Court's special stand-alone nature is 
also reflected in the provisions of section 7281(a) through (g) 
of title 38, United States Code, which permit it to develop its 
own personnel and job classification system for its judicial 
and nonjudicial personnel. Hence, unless there was a gap in its 
personnel-related authorities, the Court has indicated to the 
Committee that it would not use the proposed new section 7287 
for purposes of personnel classification, appointment, and 
compensation. Rather than the Court's having to request 
legislation each time that it becomes aware of an 
administrative authority that it is lacking, the proposed new 
section 7287 would provide a generic authority for it to use 
Court-related management, administrative, and fund-expenditure 
authorities that are appropriate for its efficient operation. 
For example, Chief Judge Kramer pointed out in his May 24 
letter two recently enacted authorities that the Court is 
lacking, but that seem to be generally available to the rest of 
the federal government to reduce the risk of personal liability 
for official actions. See U.S.C. Subchapter IV note (found 
preceding 5 U.S.C. Sec. 5941); 28 U.S.C. Sec. 613; 31 U.S.C. 
Sec. 3529. Under the proposed new section 7287, the Court would 
have these types of authorities available to it, but not have 
available any provision of law that is inconsistent with any 
provision of chapter 72 of title 38. Moreover, the Court would 
have to exercise the new gap-filling provision in accordance 
with all limitations with respect to the underlying authorities 
themselves and do so subject, of course, to the availability of 
appropriations provided for its operation.

                        TITLE IV - OTHER MATTERS

    Payment of insurance proceeds to an alternate beneficiary 
when first beneficiary cannot be identified.--Section 401 would 
grant the Secretary of Veterans Affairs the authority to 
authorize payment of National Service Life Insurance (NSLI) or 
United States Government Life Insurance (USGLI) proceeds to an 
alternate beneficiary when the proceeds have not been claimed 
by the first named beneficiary within three years following the 
death of the policyholder. Currently, VA is holding an 
estimated $23 million in insurance proceeds involving about 
4,000 claims because the first beneficiary has not come forward 
to file a claim. Under current law, there is no time limitation 
for a first named beneficiary of a NSLI or USGLI policy to file 
a claim for proceeds. As a result, when the insured dies and 
the beneficiary does not file a claim, VA is required to hold 
the unclaimed funds indefinitely in order to honor any possible 
future claims by that beneficiary. While VA employs extensive 
efforts to locate and pay these individuals, there are cases 
where a beneficiary simply cannot be found.
    Currently, VA is not permitted to pay the proceeds to an 
alternate beneficiary unless VA can determine that the first 
beneficiary predeceased the policyholder. The bill would 
provide that if no first named beneficiary had claimed the 
proceeds within three years of the veteran's death, benefits 
could be paid to a secondary beneficiary. If no beneficiary has 
filed a claim within five years of the veteran's death, 
benefits could be paid to such person as the Secretary 
determines is equitably entitled to the proceeds of the policy. 
As under current law, no benefits will be paid if the proceeds 
would escheat to a state.

    Extension of copayment requirement for outpatient 
prescription medications.--Section 402 would amend section 
1722A(c) of title 38, United States Code, to extend until 
September 30, 2006, the authority of the Secretary to require a 
copayment of $2 for each 30-day supply of medication VA 
furnishes a veteran on an outpatient basis for the treatment of 
a nonservice connected disability or condition. The current 
authority expires on September 30, 2002.

    Department of Veterans Affairs Health Services Improvement 
Fund.--Section 403 would amend section 1729B by making the 
availability of funds in the VA's Health Services Improvement 
Fund subject to the provisions of appropriations acts. This 
change to the Fund would be effective October 1, 2002, and 
would allow the Committee to meet the pay-as-you-go 
requirements of the Budget Act that apply to the bill.

    Native American veteran housing loan pilot program.--
Section 404 would extend to December 31, 2005, VA's direct home 
loan program for Native American veterans living on trust 
lands. The Native American veteran direct home loan program, 
which was enacted in October 1992, has enjoyed limited success. 
VA has made over 200 loans under this program to Native 
American veterans. The majority of these loans have been to 
Native Hawaiians.
    The bill would also amend section 3762(a)(1) to permit VA 
to make home loans to members of a Native American tribe that 
has entered in a memorandum of understanding (MOU) with another 
federal agency if that MOU generally conforms to the 
requirements of VA program. Current law requires a tribe to 
enter into a separate MOU with VA before VA can make home loans 
to members of that tribe. Eliminating the requirement for a 
separate MOU between each tribe and VA should expand the number 
of Native American veterans eligible for VA financing. The 
changes made by section 404 would reduce the administrative 
burden on Indian housing authorities and bring more uniformity 
in federal loan program processing procedures.

    Modification of loan assumption notice requirement.--
Section 405 would modify the requirement in 3714(d) of title 
38, United States Code, that all VA loans and security 
instruments contain on the first page of each such document in 
letters two and one half times the size of regular type face 
used in the document a statement that the loan is not assumable 
without the approval of VA. The extremely strict loan 
assumption notice requirement in the current law has prevented 
VA from approving the use of uniform loan instruments now used 
in FHA, ``Fannie Mae,'' and ``Freddie Mac'' transactions. The 
Committee bill would require that this notice appear 
conspicuously on at least one instrument (such as a VA rider) 
under guidelines established by VA in regulations. The 
Committee expects that the Secretary's regulations would 
provide for a typeface size to be used that would be 
sufficiently large and identifiable to provide notice similar 
to that provided by current law.
    The Committee notes this amendment would implement 
recommendations made by the executive branch's One-Stop 
Mortgage Initiative, which was an effort to develop a more 
consistent approach to delivering home ownership opportunities 
under various federal programs.

    Elimination of requirement for providing a copy of notice 
of appeal to the Secretary.--Section 406 would repeal the 
requirement in section 7266(b) of title 38, United States Code, 
that requires an individual appealing a decision of the Board 
of Veterans' Appeals to furnish the Secretary of Veterans 
Affairs with a copy of his or her notice of appeal to the U.S. 
Court of Appeals for Veterans Claims. In a number of instances, 
appellants have mailed their notices of appeal to VA, but not 
to the Court, thinking that they have complied with the 
statute. Some appeals have been dismissed because the Court did 
not receive the notices of appeal within the required 120 days. 
Rules for the U.S. Court of Appeals for Veterans Claims 
currently provide for notification to the Secretary when an 
appeal is docketed on the Court's calendar. Removal of this 
notice requirement would not impair VA's ability to receive 
notice of the filing of an appeal and to respond to those that 
are properly filed with the Court.

    Pilot program for expansion of toll-free telephone access 
to veterans service representatives.--Section 407 would require 
the Secretary to establish a two-year nationwide pilot program 
to test the benefit and cost effectiveness of expanding access 
to veterans service representatives of VA through a toll-free 
telephone number. Under the pilot program, the Secretary would 
be required to expand the available hours of such access to 
veterans service representatives to not less than 12 hours on 
each regular business day across U.S. time zones and not less 
than six hours on Saturday.
    The Committee views the pilot as a potential opportunity to 
build on current VA toll-free information services provided by 
veterans service representatives at VA regional offices through 
expanded hours and types of information. Currently, VA's toll-
free number provides 24 hours a day, seven days a week, access 
to its automated telephone response system and access to 
veterans service representatives during most of the business 
day. Callers may use the automated system to route inquiries 
concerning education, home loan and health care eligibility 
matters to offices that can provide the technical information 
related to those programs. The Committee intends that the pilot 
program would not affect calls normally routed to or handled by 
the Education, Loan Guaranty, or Health Eligibility Center 
toll-free lines.
    Currently, callers on the automated line may also be 
connected to a VA employee during certain portions of the 
business day. When a caller indicates a desire to speak to a VA 
employee, the call is automatically routed to the VA Regional 
Office with jurisdiction over the area code from which the call 
is made. Although VA tracks blocked and abandoned calls on this 
system, data is not available concerning the amount of time 
spent on hold. Testimony before the Committee indicated a wide 
variation in waiting times to speak to a veterans service 
representative from a few minutes to more than one-half hour.
    VA's system-wide blocked and abandoned call data show that 
VA has made demonstrable improvements in phone services. The 
Committee applauds these improvements. The Committee notes the 
following data from ``Number of 800-827-1000 Calls Answered by 
ROs,'' produced by the Veterans Benefits Administration and 
Sprint, Inc.:

           \In FY 1998 on a volume of 24 million calls, 
        the blocked call rate was 52 percent and the abandoned 
        call rate was 12.9 percent;

           \In FY 2001 on a volume of 6.7 million calls 
        to date, the blocked call rate is 2.9 percent and the 
        abandoned call rate is 4.5 percent.

    The Committee notes the hearing testimony on July 10, 2001, 
of Mr. Joseph A. Violante, Disabled American Veterans (DAV) 
National Legislative Director, on DAV's nationwide survey of 
VA's national toll-free hotline:

          The results of our survey were surprising and 
        somewhat unexpected. In all but a few cases, our NSOs 
        [National Service Organizations] were able to access 
        the help line on the first call. For the most part, 
        services were rendered in less than five minutes--this 
        was total call time. Overwhelmingly, we were informed 
        that the counselors were polite and courteous. In some 
        cases, the counselors offered to provide any additional 
        assistance that might be needed on other matters.

    The pilot program would begin six months after enactment 
and would provide information about veterans' benefits provided 
by federal departments and agencies and state governments. Not 
later than 120 days after the end of the pilot program, the 
Secretary would be required to provide the Committees on 
Veterans' Affairs of the Senate and House of Representatives a 
report on the pilot program. The report would contain the 
Secretary's assessment of benefits and cost effectiveness of 
continuing or making permanent the pilot program, including an 
assessment of the extent to which there is a demand for access 
to veterans service representatives during the period of 
expanded access.
    To the maximum extent feasible, in addition to collecting 
blocked and abandoned call rates in the pilot program, the 
Committee desires VA to collect data on the number and 
percentage of calls placed on hold and the length of time on 
hold, and the number and percentage of calls answered by way of 
Interactive Voice Recorder.

    Codification of recurring provisions in annual Department 
of Veterans Affairs Appropriations Acts.--Section 409 would 
codify those provisions that are recurring in annual Department 
of Veterans Affairs Appropriations Acts. Each year the Congress 
appropriates funds to the Department of Veterans Affairs as 
part of the Departments of Veterans Affairs and Housing and 
Urban Development, Independent Agencies Appropriations Act (VA-
HUD appropriations bill). Although the amount of the 
appropriations varies from year to year, the purposes for which 
appropriations are made are generally fixed, and change little 
if at all from year to year. Because the style of 
appropriations language discourages normal punctuation or 
sentence structure, some of the ``sentences'' making 
appropriations exceed a page in length. In order to make 
language appropriating funds to VA more comprehensible and 
easier for the average person to read, the reported bill 
includes provisions that codify in title 38, United States 
Code, the authorities for which the Department may spend 
appropriated funds. This language has been enacted in VA-HUD 
appropriations bill for many years, and this codification would 
eliminate the need to repeat this language in future 
appropriations bills. It does not have any substantive effect 
on the purposes for which funds have been appropriated in the 
past, and is intended to consolidate in one section of title 
38, United States Code, many of the non-title 38 provisions for 
which VA may spend appropriated funds.

                      Section-By-Section Analysis

    Section 1 would provide that this Act may be cited as the 
``Veterans Benefits Act of 2001''.

    Section 2 states that except as otherwise expressly 
provided, all references are to title 38, United States Code.

    Section 101(a) would authorize the Secretary of Veterans 
Affairs to increase, effective December 1, 2001, the dollar 
amounts in effect for the payment of disability compensation 
and dependency and indemnity compensation.

    Section 101(b) would specify the programs to receive 
increased dollar amounts: compensation, additional compensation 
for dependents, clothing allowance, new DIC rates, old DIC 
rates, additional DIC for surviving spouses with minor 
children, additional DIC for disability, and DIC for dependent 
children.

    Section 101(c)(1) would increase the dollar amounts for 
those specified in subsection (b) based on the amount in effect 
on November 30, 2001.

    Section 101(c)(2) would specify that each amount shall be 
increased by the same percentage by which benefits are 
increased under title II of the Social Security Act (42 U.S.C. 
401 et seq.).

    Section 101(c)(3) would round down to the next lower dollar 
amount all compensation and DIC benefits, when the amount is 
not a whole dollar amount.

    Section 101(d) would provide a special rule authorizing the 
Secretary of Veterans Affairs to 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 85-857, who are not in 
receipt of compensation payable pursuant to chapter 11 of title 
38, United States Code.

    Section 102 would require the Secretary of Veterans Affairs 
to publish in the Federal Register the amounts specified in 
subsection (b), as increased pursuant to that section.

    Section 201 would amend section 1116(a)(2). It would add a 
new subparagraph (H) authorizing the Secretary to include 
Diabetes Mellitus (Type 2) to the list of diseases presumed to 
be service connected for Vietnam veterans exposed to 
herbicides.

    Section 202 (a) would amend subsection (a) of section 1117 
by adding fibromyalgia, chronic fatigue syndrome, chronic 
multisymptom illness, or any other illness that cannot be 
clearly defined (or combination of illnesses that cannot be 
clearly defined) as illnesses presumed to be service connected 
in Persian Gulf War veterans.

    Section 202 (b) would add a new subsection (g) of section 
1117 by listing signs and symptoms that may be a manifestation 
of an undiagnosed illness, including fatigue, unexplained 
rashes or other dermatological signs or symptoms, headache, 
muscle pain, joint pain, neurologic signs or symptoms, 
neuropsychological signs or symptoms, signs or symptoms 
involving the respiratory system (upper or lower), sleep 
disturbances, gastrointestinal signs or symptoms, 
cardiovascular signs or symptoms, abnormal weight loss, 
menstrual disorders.

    Section 202(c) provides an effective date of April 1, 2002 
for the provisions contained in this section.

    Section 203(a) would amend section 1117 by adding a new 
subsection (h) authorizing the Secretary to preserve a grant of 
service connection for an undiagnosed illness when a Persian 
Gulf veteran in receipt of compensation participates in a 
medical research project sponsored by the Department. This 
section does not apply in a case in which the original award 
for compensation or service connection was based on fraud or it 
is clearly shown from military records that the person 
concerned did not have the requisite service or character of 
discharge. The Secretary would be required to publish in the 
Federal Register a notice of each determination made by the 
Secretary under this section with respect to a medical research 
project.

    Section 203(b) would provide that this section would be 
effective with respect to any medical research project of the 
Department of Veterans Affairs whether commenced before, on, or 
after the date of enactment of this Act.

    Section 301(a) would amend subsection (a) of section 7285 
by authorizing the U.S. Court of Appeals for Veterans Claims to 
impose registration fees on persons participating in a judicial 
conference convened pursuant to section 7286 of this title or 
in any other court-sponsored activity.

    Section 301(b) would amend subsection (b) of section 7285 
to specifically authorize the U.S. Court of Appeals for 
Veterans Claims to use fees for Court-sponsored activities for 
conducting investigations and proceedings, including employing 
independent counsel, to pursue disciplinary matters; to defray 
the expenses of judicial conferences convened pursuant to 
section 7286 of this title; and for other activities and 
programs that are designed to support and foster bench and bar 
communication and relationships or the study, understanding, 
public commemoration, or improvement of veterans law or of the 
work of the Court.

    Section 302(a) would amend subchapter III of chapter 72 by 
specifically authorizing the Court of Appeals for Veterans 
Claims to exercise, for purposes of management, administration, 
and expenditure of funds, the authorities provided for such 
purposes by any provision of law (including any limitation with 
respect to such provision) applicable to a court of the United 
States as defined in section 451 of title 28, United States 
Code, except to the extent that such provision of law is 
inconsistent with a provision of chapter 72.

    Section 401(a) would amend section 1917 by authorizing the 
payment of insurance proceeds under the National Service Life 
Insurance program to another beneficiary designated by the 
insured, if the first beneficiary otherwise entitled to payment 
does not make a claim within three years after the death of the 
insured. If within five 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 of the 
insurance proceeds would be authorized (notwithstanding any 
other provision of law) to be made to such person as may in the 
judgment of the Secretary be equitably entitled to the proceeds 
of the policy.

    Section 401(b) would amend section 1951 by authorizing the 
payment of insurance proceeds under the United States 
Government Life Insurance program to another beneficiary 
designated by the insured, if the first beneficiary otherwise 
entitled to payment does not make a claim within three years 
after the death of the insured. If within five 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 of the insurance proceeds would be authorized 
(notwithstanding any other provision of law) to be made to such 
person as may in the judgment of the Secretary be equitably 
entitled to the proceeds of the policy.

    Section 401(c) would provide that in the case of a person 
insured under subchapter I or II of chapter 19 who dies before 
the date of enactment of this Act, would for purposes of the 
applicable subsection be treated as being the three-year and 
five-year periods, respectively, beginning on the date of 
enactment of this Act.

    Section 402 would amend section 1722A(c) by extending the 
copayment requirement for outpatient prescription medications 
from September 30, 2002 to September 30, 2006.

    Section 403(a) would amend section 1729B that establishes 
the Department of Veterans Affairs Health Services Improvement 
Fund and by making availability of its funds subject to the 
provisions of appropriations acts, effective October 1, 2002.

    Section 404(a) would amend section 3761(c) by extending the 
Native American Veteran Housing Loan pilot program from 
December 31, 2001 to December 31, 2005.

    Section 404(b) would permit VA to make a direct housing 
loan to a Native American veteran of a tribe that has entered 
into a memorandum of understanding (MOU) with any department or 
agency of the United States that the Secretary determines 
substantially complies with the requirements of section 
3762(b).

    Section 405 would amend section 3714(d) to require that for 
any loan guaranteed, insured, or made under chapter 37, the 
Secretary shall provide, by regulation, that at least one 
instrument evidencing either the loan or the mortgage or deed 
of trust therefore, would be required to conspicuously contain, 
in such form as specified by the Secretary, a notice in 
substantially the following form: ``This loan is not assumable 
without the approval of the Department of Veterans Affairs or 
its authorized agent.''.

    Section 406(a) would repeal subsection (b) of section 7266, 
by eliminating the requirement for an appellant to furnish the 
Secretary with a copy of notice of appeal.

    Section 407(a) would require the Secretary of Veterans 
Affairs to conduct a pilot program to test the benefits and 
cost effectiveness of expanding access to veterans service 
representatives of the Department of Veterans Affairs through a 
toll-free telephone number. Under the pilot program, the 
Secretary would be required to expand the available hours of 
such access to veterans service representatives to not less 
than 12 hours on each regular business day and not less than 
six hours on Saturday.

    Section 407(b) would require that the Secretary ensure that 
veterans service representatives have available to them 
information about veterans benefits provided by all other 
departments and agencies of the United States and state 
governments, in addition to the laws administered by the 
Secretary.

    Section 407(c) would require the Secretary to establish the 
pilot program in consultation with the heads of other 
departments and agencies of the United States that provide 
veterans benefits.

    Section 407(d) would define 'veterans benefits' for 
purposes of this section as benefits provided to a person based 
upon the person's own service, or the service of someone else, 
in the Armed Forces.

    Section 407(e)(1) and (2) would provide that the pilot 
program begin not later than six months after date of enactment 
of this Act and end at the end of the two-year period beginning 
on the date on which the program begins.

    Section 407(f) would require the Secretary to submit to the 
Committees on Veterans' Affairs of the Senate and House a 
report on the pilot program not later than 120 days after the 
end of the pilot. The report would provide the Secretary's 
assessment of the benefits and cost effectiveness of continuing 
or making permanent the pilot program, including an assessment 
of the extent to which there is a demand for access to veterans 
service representatives during the period of expanded access to 
such counselors.

    Section 408 would make certain technical and clerical 
amendments to title 38.

    Section 409 would codify certain recurring provisions in 
annual Department of Veterans Affairs Appropriations Acts.

                    Performance Goals and Objectives

    The reported bill would authorize veteran benefits 
enhancements and program improvements under laws administered 
by the Secretary of Veterans Affairs. It also would authorize 
additional administrative authorities for the U.S. Court of 
Appeals for Veterans Claims. All veterans programs and 
activities affected by the reported bill are currently 
authorized. Their performance goals and objectives are 
established in annual performance plans and are subject to the 
Committee's regular oversight.

  Statements of the Views of the Administration and the United States 
                  Court of Appeals for Veterans Claims

STATEMENT OF JOSEPH THOMPSON, UNDER SECRETARY FOR BENEFITS, DEPARTMENT 
    OF VETERANS AFFAIRS, BEFORE THE SUBCOMMITTEE ON BENEFITS, HOUSE 
             COMMITTEE ON VETERANS' AFFAIRS, JULY 10, 2001

    Mr. Chairman and Members of the Committee:
    Thank you for the opportunity to testify today on several 
legislative items of great interest to veterans. Accompanying me today 
is Dr. John Feussner, Chief Research and Development Officer.

                                H.R. 862

    The first measure I will discuss, Mr. Chairman, is H.R. 862. This 
bill would amend section 1116 of title 38, United States Code, by 
adding diabetes mellitus (Type 2) to the list of diseases presumed to 
be service connected in veterans exposed to certain herbicide agents. 
In view of final rules recently issued by VA concerning this subject, 
we believe this bill is not necessary.
    Section 1116(b)(1) of title 38, United States Code, directs VA to 
establish presumptions of service connection for diseases shown to have 
a ``positive association'' with exposure to herbicide agents. On May 8, 
2001, VA published in the Federal Register a final rule which adds Type 
2 diabetes to the regulatory list, contained in 38 C.F.R. 
Sec. 3.309(e), of diseases VA presumes to be service connected in 
veterans exposed to certain herbicide agents in service. This final 
rule effectuates the purpose of H.R. 862.
    Section 1116(a)(1)(B) of title 38, United States Code, expressly 
establishes a presumption of service connection for each disease that 
``the Secretary determines in regulations prescribed under this section 
warrants a presumption of service-connection by reason of having a 
positive association with exposure to an herbicide agent.'' Inasmuch as 
the statute already incorporates by reference the diseases identified 
in VA regulations issued pursuant to section 1116, and VA has included 
diabetes mellitus, Type 2 in those regulations, we believe it is 
unnecessary to amend section 1116 to specifically mention diabetes 
mellitus, Type 2.
    Congress has not amended section 1116 to include specific reference 
to each disease for which VA has previously established a presumption 
of service connection by regulation. For example, in 1996, VA issued a 
final rule establishing presumptions of service connection for prostate 
cancer and acute and subacute peripheral neuropathy in veterans exposed 
to certain herbicide agents. We see no need for legislative action 
ratifying these regulatory determinations.
    Because H.R. 862 would merely reiterate requirements of existing 
statute and regulation, its enactment would result in no additional 
costs to VA.

                               H.R. 1406

    The ``Gulf War Undiagnosed Illness Act of 2001,'' H.R. 1406, would 
amend section 1117 of title 38, United States Code, which governs 
compensation for certain Gulf War veterans. We cannot support the 
enactment of section 2 of this bill, but we support the enactment of 
section 3.
    Section 2 of H.R. 1406 would amend section 1117 to include 
``fibromyalgia, chronic fatigue syndrome, a chronic multisymptom 
illness, or any other ill-defined illness (or combination of ill-
defined illnesses)'' among the illnesses for which a presumption of 
service connection may be established for resulting chronic disability 
suffered by Gulf War veterans. Currently, section 1117 provides that 
the Secretary may pay compensation to any Gulf War veteran suffering 
from a chronic disability resulting from an undiagnosed illness (or 
combination of undiagnosed illnesses) that became manifest during 
active service in the Southwest Asia theater of operations during the 
Gulf War or became manifest to a compensable degree within a 
presumptive period (currently ending on December 31, 2001) as 
determined by regulation.
    With regard to fibromyalgia and chronic fatigue syndrome, under 
current law service connection may be established on a direct basis for 
disability resulting from either of these conditions. Each is 
recognized as diagnosable under VA's schedule for rating disabilities. 
Accordingly, we cannot support the inclusion of either condition in 
section 1117. With regard to other ``conditions'' that would be added 
by section 2, the descriptions of those conditions (``chronic 
multisymptom illness'' and ``any other ill-defined illness'') are very 
vague and would result in great uncertainty regarding proper 
implementation. The Department is pursuing multiple research 
initiatives intended to identify diseases or conditions that may be 
associated with service in the Gulf. The results of this research will 
provide a scientific foundation for decisions on possible presumptive 
service-connection of diseases or conditions found in veterans of the 
Persian Gulf War.
    Section 3 of the bill would authorize the Secretary, with respect 
to medical research projects sponsored by VA, to render a determination 
that medical information derived directly or indirectly from the 
participation in such a project by a Gulf War veteran who is in receipt 
of disability compensation under either section 1117 or 1118 of title 
38, United States Code, may not be used in adjudicating such veteran's 
entitlement to such compensation. Such determination would be based on 
a finding that it is necessary for the conduct of the project that Gulf 
War veterans participate without fear of loss of compensation. The 
Secretary would be required to publish in the Federal Register a notice 
of each determination made under this authority with respect to each 
medical research project concerned. This authority would be available 
for the Secretary's use with respect to any VA medical research project 
whether commenced before, on, or after the date of enactment of the 
bill.
    Veterans who suffer from undiagnosed illnesses should not be 
discouraged from participation in significant research projects that 
may result in a better understanding of illnesses associated with Gulf 
War service or in beneficial treatment of their disabling conditions. 
In addition, if significant numbers of Gulf War veterans who suffer 
from undiagnosed illnesses refuse to participate in such research 
projects out of fear that their entitlement to compensation may be 
adversely affected, the results of such studies may be rendered 
unreliable. Accordingly, Mr. Chairman, we support this provision.
    H.R. 1406 is subject to the PAYGO requirements of the Omnibus 
Budget Reconciliation Act of 1990, and, if enacted, it would increase 
direct spending. We estimate that enactment of H.R. 1406 would result 
in benefit costs of $15.3 million in Fiscal Year 2002 and a total 
benefit cost of $87.4 million for the five-year period from FY 2002 
through FY 2006. In addition, we estimate that administrative costs 
associated with enactment of this provision would total $819,000 during 
that five-year period. Because undiagnosed illnesses of Gulf War 
veterans are already subject to a presumption of service connection 
under 38 U.S.C. Sec. 1117 and it is not clear whether any additional 
illness would be service connected as an ``ill-defined illness,'' the 
estimates reflected above relate only to the addition of fibromyalgia 
and chronic fatigue syndrome as new presumptive conditions under that 
section.

                         H.R. 1435 & H.R. 1746

    H.R. 1435 and H.R. 1746 address the same basic issue, Mr. Chairman, 
so I will discuss these two measures together. Both bills deal with VA 
having a centralized toll-free telephone number that enables veterans 
Nationwide to receive complete and accurate information regarding 
benefits for veterans from not only VA but also from a variety of 
federal and state agencies.
    Although we fully support this goal, we are unable to support H.R. 
1435 and believe we are already in substantial compliance with the 
implied mandate of H.R. 1746.
    H.R. 1435 would authorize the Secretary to award a grant to a 
private, nonprofit entity to develop and operate a national, toll-free 
telephone hotline to provide information and assistance to veterans and 
their families. This hotline would provide general information about VA 
benefits, and also provide crisis intervention counseling, information 
regarding emergency shelter and food, substance-abuse rehabilitation, 
employment training and opportunities, and small business assistance 
programs.
    H.R. 1746 would require VA to provide a single toll-free phone 
number to enable the public to have access to veterans benefits 
counselors. The Secretary must ensure that these counselors have 
information about veterans benefits provided by all federal and state 
agencies.
    We would first note, Mr. Chairman, that the Veterans Benefits 
Administration has had a national toll-free number, 1-800-827-1000, 
since 1993. This number is listed in the blue pages of telephone books 
under the heading ``benefits information.'' Veterans call this number 
every day and receive information not only about VBA benefits, but also 
benefits administered by the Veterans Health Administration and the 
National Cemetery Administration as well as benefits offered by other 
federal and state agencies.
    VBA's telecommunications concept is based on three customer service 
objectives:

           \Accessibility (the call gets through);

           \Responsiveness (get call to the right place); and

           \Reliability (VA gives the correct answer).

    Our goals for our telephone system include:

           \Reduce blocked calls to 1 percent;

           \Reduce abandoned calls to 2 percent;

           \Reduce the volume of calls and misdirected calls; 
        and

           \Direct calls to program experts based on business 
        rules.

    While VA believes our efforts substantially comply with the intent 
of H.R. 1746, we recognize that there is more we can do. For this 
reason, we continue to monitor and modify our telephone service to 
ensure veterans receive the highest quality service from VA consistent 
with these goals and objectives. In May, the Secretary directed the 
Department to explore establishing a cost-effective centralized call 
center available on a 24/7 basis which would be able to respond to 
general inquiries about the full range of veterans benefits and health 
care services. That study is ongoing and will be completed shortly. VBA 
is also currently implementing initiatives, such as Virtual Information 
Center and Case Call Routing, that will improve telephone service and 
utilize our Veterans Service Representatives more efficiently. Case 
Call Routing will allow callers to call their case management team. 
Virtual Information Centers (VIC) allows us to adopt a Service Delivery 
Network (SDN) strategy to handle general calls.
    We also developed the State Benefit Reference System in FY 2001. 
This system provides VA employees computer-based information about 
veterans benefits offered by State agencies. We are investigating the 
development of a similar system for VA and non-VA federal benefits for 
use by VA counselors and veterans self-service on the internet.
    VA should have the flexibility to use the latest technologies in a 
way that will be of the greatest assistance to our veterans and other 
customers. Certain types of benefit issues may require a separate toll-
free number to direct calls to subject-matter experts. In addition, the 
issue as to whether a private entity, as envisioned by H.R. 1435, 
rather than VA personnel should operate such a system requires further 
study.
    We would be pleased to meet with your staff and discuss VA 
telecommunications concerns and initiatives.

                               H.R. 2359

    VA supports the enactment of H.R. 2359, if the bill's PAYGO costs 
of $15 million over five years can be accommodated within the budget 
limits agreed to by the President and the Congress.
    Section 1 of H.R. 2359 would authorize the payment of unclaimed 
National Service Life Insurance (NSLI) and United States Government 
Life Insurance (USGLI) proceeds to an alternate beneficiary. VA 
supports the enactment of section 1 of this bill.
    Under current law, there is no time limitation under which a named 
beneficiary of an NSLI or USGLI policy is required to file a claim for 
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 alternate 
beneficiary unless we can determine that the principal beneficiary 
predeceased the policyholder. 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 the principal beneficiary becomes more remote. In 
fact, the older the liability becomes, the more unlikely it is that it 
will ever be paid even though other legitimate heirs of the insured 
have been located.
    This bill would grant the Secretary authority to authorize payment 
of NSLI and USGLI proceeds to an alternate beneficiary when the 
proceeds have not been claimed by the named beneficiary within two 
years following the death of the policyholder or within two years of 
this bill's enactment, whichever is later. The principal beneficiary 
would have two years following the death of the insured to file a 
claim. Afterwards, a contingent beneficiary would then have two years 
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 be a bar to recovery of the proceeds by any other 
individual.
    Section 1 of H.R. 2359 would apply retroactively as well as 
prospectively, and is similar to the time-limitation provisions of the 
Servicemembers' 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. 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. Over the years, the sum of 
moneys held has aggregated to approximately $23 million. On a yearly 
basis, 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 will eventually be paid as a result of 
this legislation. Additionally, in anticipation of the fact that about 
one-third of these policies will not be able to be paid, nearly $7 
million has already been released to surplus and available for dividend 
distribution.
    This section is subject to the PAYGO requirements of the Omnibus 
Budget Reconciliation Act of 1990, and, if enacted, it would increase 
direct spending. The Administration estimates that its enactment would 
result in PAYGO costs of $15 million during Fiscal Years 2002-2006 and 
a total of $25 million during Fiscal Years 2002-2011.
    Adjudication of these 4,000 policies would entail administrative 
costs of approximately $154,000, representing two full-time employee 
equivalence (FTE) in claims processing and support. Approximately 94 
percent of this cost would be reimbursed to the Veterans Benefits 
Administration's General Operating Expense (GOE) account from the 
surplus of the trust funds, leaving about $9,000 in government costs 
(which assumes that about six percent of the policies are Service-
Disabled Veterans Insurance, which has no surplus and for which 
appropriated funds are used to cover administrative costs).
    Section 2 of H.R. 2359 would extend, by 4 years, the sunset for the 
VA's direct loan program for Native American veterans living on trust 
lands. VA strongly supports this program, and favors enactment of this 
provision.
    The Native American veteran direct loan program, which was enacted 
in October 1992, has enjoyed limited success. VA has made over 200 
loans under this program to Native American veterans. The majority of 
these loans have been to Native Hawaiians. This program is currently 
set to expire December 31, 2001. This provision extends the program 
until December 31, 2005.
    VA recently participated in the Executive Branch's One-Stop 
Mortgage Initiative, which was an effort to develop a more consistent 
approach to delivering home ownership opportunities to Native 
Americans. VA is hopeful that this initiative will increase 
opportunities and remove barriers to participation in the VA loan 
program for Native American veterans living on trust lands. VA is also 
aware of efforts by the Federal National Mortgage Association to 
increase private-sector lender willingness to make loans on tribal 
lands.
    VA believes a four-year extension of the Native American veteran 
direct loan program would give both the Executive Branch and the 
Congress an opportunity to see how various initiatives regarding Native 
American housing loans affect the ability of these veterans to obtain 
VA financing, and whether further program modifications are indicated.
    H.R. 2359 would also make two changes to the current law.
    First, the bill would permit VA to make loans to members of a 
Native American tribe that has entered into a memorandum of 
understanding (MOU) with another federal agency if that MOU 
contemplates loans made by VA and the MOU generally conforms to the 
requirements of the law governing the VA program. Current law requires 
a tribe to enter into an MOU with VA before we can make loans to 
members of that tribe.
    The bill would also modify the current requirement that all VA loan 
and security instruments contain, on the first page of each such 
document, in letters two-and-a-half times the size of the regular type 
face used in the document, a statement that the loan is not assumable 
without the approval of VA. H.R. 2359 would require that this notice 
appear conspicuously on at least one instrument (such as a VA rider) 
under guidelines established by VA in regulations.
    Those two amendments would implement recommendations by the One-
Stop Initiative. These changes would reduce the administrative burden 
on Indian housing authorities and bring more uniformity in federal loan 
program processing procedures. Eliminating the requirement for a 
separate MOU between each tribe and VA should expand the number of 
Native American veterans eligible for VA financing. The extremely 
strict loan assumption notice requirement in the current law has 
prevented VA from approving the use of uniform loan instruments now 
used in FHA, ``Fannie Mae,'' and ``Freddie Mac'' transactions.
    We recommend that section 2 of H.R. 2359 be further amended to 
repeal the requirement that VA outstation, on a part-time basis, Loan 
Guaranty specialists at tribal facilities if requested to do so by a 
tribe. We have consolidated loan processing and servicing operations 
from 46 regional offices to nine Regional Loan Centers, and do not have 
the resources to outstation loan personnel at various tribal locations. 
VA continues to make periodic outreach visits to all tribes, and 
provides training to tribal housing authorities. We believe that we can 
provide all necessary services to Native American veterans seeking VA 
housing loans without outstationing employees in remote tribal 
locations.
    We estimate that enactment of section 2 of H.R. 2359 would not 
require any additional appropriation of loan subsidy. Public Law No. 
102-389 appropriated $4.5 million ``to remain available until 
expended'' to subsidize gross obligations for direct loans to Native 
American veterans of up to $58.4 million. We estimate that sufficient 
funds would be available to cover projected Native American veteran 
loan volume until at least FY 2005. This section is subject to the 
PAYGO requirements of the Omnibus Budget Reconciliation Act of 1990, 
but we estimate the annual cost to be less than $500,000 annually over 
five years.
    Section 3 of H.R. 2359 would eliminate the requirement for 
appellants to furnish the Secretary of Veterans Affairs with a copy of 
the notice of appeal filed with the United States Court of Appeals for 
Veterans Claims (CAVC). VA supports the enactment of section 3 of this 
bill.
    Section 7266(a) of title 38, United States Code, provides that a 
claimant adversely affected by a decision of the Board of Veterans' 
Appeals (Board) must file a notice of appeal with the CAVC within 120 
days after the date on which the Board mailed notice of the decision to 
the appellant, in order to obtain review of the Board's decision. 
Subsection (b) of section 7266 requires such a claimant to furnish VA 
with a copy of the notice of appeal that he or she files with the CAVC.
    Failure to comply with the requirement to file a notice of appeal 
with the CAVC within 120 days of receiving notice of an adverse Board 
decision ordinarily will result in a dismissal of the appeal for lack 
of jurisdiction. Unfortunately, in a number of instances, appellants 
have mailed their notices of appeal to VA, but not to the CAVC, 
thinking that they have complied with the statute. Some such appeals 
have been dismissed because the notices of appeal were not received by 
the CAVC within the required 120 days. We believe that removal of the 
requirement that an appellant furnish the Secretary with a copy of his 
or her notice of appeal will clarify to which entity the notice must be 
provided, thereby resulting in fewer cases in which appellants, through 
inadvertence, lose their opportunity to appeal. Removal of this notice 
requirement will not impair VA's ability to respond to those appeals 
that are properly filed with the CAVC, because the court routinely 
notifies VA when an appeal has been docketed. This notice is normally 
provided to VA within a day or two of the receipt by the CAVC of the 
veteran's notice of appeal.
    There would be no costs associated with the enactment of this 
section.

                               H.R. 1929

    Mr. Chairman, H.R. 1929 would also extend the sunset for the Native 
American veteran housing loan program and amend the requirements 
concerning MOUs. Unlike section 2 of H.R. 2359, it does not address the 
loan assumption notice. Accordingly, Mr. Chairman, we prefer the 
language of H.R. 2359, with the additional amendment we have 
recommended.

                               H.R. 2361

    The ``Veterans' Compensation Cost-of-Living Adjustment Act of 
2001,'' H.R. 2361, would authorize a cost-of-living adjustment (COLA) 
for Fiscal Year 2002 in the rates of disability compensation and 
dependency and indemnity compensation (DIC). Section 2 of this bill 
would direct the Secretary of Veterans Affairs to increase 
administratively the rates of compensation for service-disabled 
veterans and of DIC for the survivors of veterans whose deaths are 
service related, effective December 1, 2001. As provided in the 
President's FY 2002 budget request, the rate of increase would be the 
same as the COLA that will be provided under current law to veterans' 
pension and Social Security recipients, which is currently estimated to 
be 2.5 percent.
    We estimate that enactment of this section would cost $376 million 
during FY 2002, $7.1 billion over the period FYs 2002-2006 and $28.5 
billion over the period FYs 2002-2011. Although this section is subject 
to the PAYGO requirement of the Omnibus Budget Reconciliation Act of 
1990 (OBRA), the PAYGO effect would be zero because OBRA requires that 
the full compensation COLA be assumed in the baseline. We believe this 
proposed COLA is necessary and appropriate in order to protect the 
benefits of affected veterans and their survivors from the eroding 
effects of inflation. These worthy beneficiaries deserve no less.
    Mr. Chairman, this concludes my statement. I will be pleased to 
respond to any questions you or the members of the Subcommittee may 
have.
                                ------                                --
----

         U.S. Court of Appeals for Veterans Claims,
                 Chambers of Chief Judge Kenneth B. Kramer,
                                      Washington, DC, May 24, 2001.
Hon. Christopher H. Smith,
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.

    Dear Mr. Chairman: On behalf of the Board of Judges of the 
United States Court of Appeals for Veterans Claims, I am 
transmitting to you draft legislation for the consideration of 
your Committee. We request that the bill be introduced on 
behalf of the Court and considered by the Committee for action 
at your earliest convenience.
    The draft legislation proposes amendments to 38 U.S.C. 
Sec. 7285 and to add a new section 7287 to chapter 72 of title 
38, U.S. Code. The purpose of the proposed amendment to section 
7285 is to clarify and expand the uses that may be made of the 
registration fees that the Court collects from its 
practitioners in connection with their admission to practice 
before the Court and from participants at the Court's Judicial 
Conferences carried out under 38 U.S.C. Sec. 7286. The purpose 
of the proposed new section 7287 (``Administration'') would be 
to permit the Court to exercise an administrative, management, 
or fund-expenditure authority available to the Article III 
courts where such a specific authority is not available to this 
Court and where its exercise would not be inconsistent with any 
provision of chapter 72 of title 38. A more detailed 
justification for each provision follows.

                              Section 7285

    The Court requests the enactment of legislation to amend 
section 7285 so that the provision as amended would read as 
follows (material to be added is shown in bold face and 
material to be deleted is shown in brackets):


          Sec. 7285. Practice Fee

          (a) The Court of Appeals for Veterans Claims may 
        impose a periodic registration fee on persons admitted 
        to practice before the Court. The frequency and amount 
        of such fee shall be determined by the Court, except 
        that such amount may not exceed $30 per year. In order 
        to defray the expenses of judicial conferences convened 
        pursuant to section 7286 of this title, the Court may 
        also impose a registration fee on the active 
        participation at such conferences by persons described 
        in that section.

          (b) Amounts received by the Court under subsection 
        (a) of this section shall be available to the Court for 
        the purposes of (1) conducting investigations and 
        proceedings, including employing independent [counsel] 
        counsel, to pursue disciplinary matters, and (2) 
        defraying [administrative costs for the implementation 
        of the standards of proficiency prescribed for practice 
        before the Court] the expenses of judicial conferences 
        convened pursuant to section 7286 of this title and 
        other activities and programs that are designed to 
        support and foster bench and bar communication and 
        relationships or the study, understanding, public 
        commemoration, or improvement of veterans law or of the 
        work of the Court.

    The principal purpose of the proposal is to amend section 
7285(b) of title 38, U.S. Code, so that registration fees 
(currently a one-time fee of $30) paid to the Court by those 
admitted to practice before the Court (sometimes called 
``practice fees'') may be used for certain activities in 
addition to those now identified in that subsection. The Court 
currently collects these practice fees as well as the 
registration fees paid by participants at the Court's periodic 
Judicial Conferences, which are carried out under 38 U.S.C. 
Sec. 7286 (collection of the latter fees would be expressly 
authorized by the proposed amendment to section 7285(a) rather 
than by implication from section 7286 itself). Currently, the 
Court has accumulated a balance of approximately $55,000 from 
these receipts after having expended only the relatively small 
amounts needed to engage the services of an ethics speaker at 
the last four Judicial Conferences (considered part of the 
presently authorized ``implementing standards of proficiency 
prescribed for practice before the Court'').
    The revised language would expand present category (1) in 
the subsection to include disciplinary-proceeding activities 
other than employing independent counsel, and would expand 
present category (2) so as to authorize the use of these funds 
to support activities (including the preparation, or 
procurement, and use, display, or dissemination of appropriate 
materials) and programs designed to support and foster bench 
and bar activities or the study, understanding, public 
commemoration, or improvement of veterans law generally or the 
work of the Court in particular. This expanded authority would 
be used to defray the expenses of, for example, activities for 
the following purposes: (a) To provide education programs for 
persons admitted to practice before the Court or persons, such 
as law students, eligible to seek permission to provide such 
representation on a pro hac vice basis; (b) to promote and 
support the formation and programs of a bar association for the 
Court (something that private practitioners and the Secretary's 
attorneys are actively pursuing now); (c) to encourage and 
support the development of law-school courses or clinical 
programs in veterans law; and (d) to sponsor appropriate public 
activities and events designed to foster communication and 
relationships among the Court's practitioners and potential 
practitioners and between bench and bar--for example, a Passing 
of the Gavel Ceremony (where a new Chief Judge takes office); 
the swearing in of a new judge; and a public commemoration 
(such as the presentation of a portrait of a retired or 
deceased judge, the dedication of the courtroom, or the 
establishment or presentation of a Court special public service 
award). As is the case with the use of such nonappropriated 
fund accounts in the Article III courts, the funds would not be 
used for purposes for which appropriated funds are generally 
available. The support of bench-and-bar activities would 
generally follow the practice of the Article III courts in 
using practice fees for the benefit of bench and bar in the 
administration of justice.

                              Section 7287

    The Court also requests the enactment of legislation to add 
the following new section 7287 to make available to the Court 
generally the same management, administrative, and expenditure 
authorities that are available to Article III courts of the 
United States:


          Sec. 7287. Administration

          Notwithstanding any other provision of law, the Court 
        of Appeals for Veterans Claims may exercise, for 
        purposes of management, administration, and expenditure 
        of funds, the authorities provided for such purposes by 
        any provision of law (including any limitation with 
        respect to such provision) applicable to a court of the 
        United States as defined in section 451 of title 28, 
        except to the extent that such provision of law is 
        inconsistent with a provision of this chapter.

    The proposed new section 7287 would generally make 
available to the Court the same management, administrative, and 
fund-expenditure authorities that are available to the Article 
III courts of the United States. Because of this Court's 
unusual status as an independent tribunal, established by the 
Congress under Article I of the Constitution to exercise 
judicial power, that was not intended to be subject to the 
control of the President or the executive branch (for example, 
the Court submits its budget directly to the Congress pursuant 
to 38 U.S.C. Sec. 7282 and receives its appropriation directly 
from the Congress), the Court does not have available to it 
certain general authorities that would normally be available 
were the Court part of another administrative structure, such 
as are the U.S. Court of Federal Claims (under the 
Administrative Office of the U.S. Courts (AO)), and the U.S. 
Court of Appeals for the Armed Forces (under the Department of 
Defense). (The situation regarding the U.S. Tax Court also is 
unusual in that it receives its appropriation directly from the 
Congress and is considered for some purposes, apparently, to be 
part of the legislative branch, see H.R. Rep. No. 105-217, 
105th Cong., 1st Sess., at 1042-43 (1997) (listing U.S. Tax 
Court under Legislative Branch budget accounts) .)
    In the past, this Court has requested the enactment of 
various gap-filling statutory provisions; for example, in 1990, 
the Congress specifically added to title 5 U.S.C. App. 
Sec. Sec. 109(8) and 109(10) a reference to this Court so that 
financial disclosure reports by its judges and certain 
nonjudicial personnel would be filed with and reviewed by the 
AO (Pub. L. No. 101-280, Sec. 3, 104 Stat. 152, 155 (1990) 
(amendments to Ethics in Government Act of 1978, as amended by 
Ethics Reform Act of 1989)); in 1991, the Congress added 
subsection (g) to 38 U.S.C. Sec. 7253 to provide that a process 
comparable to that prescribed by 28 U.S.C. Sec. 372(c) for 
consideration of complaints of judicial conduct would apply to 
the Court's judges (Pub. L. No. 102-82, Sec. 3, 105 Stat. 375 
(1991)); in 1991, the Congress added subsection (c) to 38 
U.S.C. Sec. 7264 to make applicable to the Court's judges 28 
U.S.C. Sec. 455 relating to the disqualification of judges 
(Pub. L. No. 102-82, Sec. 4, 105 Stat. 375, 376 (1991)); also 
in 1991, the Congress added subsection (i) to 38 U.S.C. 
Sec. 7281 to give the Court specific authority to accept and 
utilize voluntary services (Pub. L. No. 102-82, Sec. 7, 105 
Stat. 375, 377 (1991)) . The Court's special stand-alone nature 
is also reflected in the provisions of 38 U.S.C. Sec. 7281(a) 
through (g), which permit the Court to develop its own 
personnel and job classification system for its judicial and 
nonjudicial personnel. Accordingly, unless there were a gap in 
the Court's personnel-related authorities, the Court would not 
intend to use the proposed new section 7287 for purposes of 
personnel classification. appointment, and compensation.
    Rather than having to request legislation each time that 
the Court becomes aware of an administrative authority that is 
lacking, the proposed new section 7287 would provide a generic 
authority that would enable the Court to utilize already 
existing court-related management, administrative, and fund-
expenditure authorities that are appropriate for the efficient 
operation of the Court. Recently, for example, the Court has 
become aware of two authorities that it is lacking that seem to 
be generally available to the rest of the Federal Government. 
They both relate to reducing the risk of personal liability for 
official actions taken by the Court's judges or certain of its 
employees. In 1999, the Congress enacted, at the request of the 
AO, a provision that would permit certifying and disbursing 
officers in Article III and certain other courts to receive the 
same protection against personal liability for their 
expenditure decisions, by requesting a decision from the 
Comptroller General, that is available to certifying and 
disbursing officers in the executive and legislative branches. 
See Federal Courts Improvement Act of 2000, Pub. L. No. 106-
518, Sec. 304(c), 114 Stat. 2410, 2417 (2000), adding a new 
provision codified at 28 U.S.C. Sec. 613; 31 U.S.C. Sec. 3529 
(executive branch certifying and disbursing officers authorized 
to seek Comptroller General opinions). Also, authority was made 
available in 1999 to those courts to pay one half of the cost 
of premiums for personal-liability insurance policies that are 
obtained to protect judges and certain employees against 
liability for official actions. See Pub. L. No. 105-277, 
Sec. 101(h), 112 Stat. 2681-526 (1998) (amending 5 U.S.C. 
Subchapter IV note (found preceding 5 U.S.C. Sec. 5941); see 
also Pub. L. No. 106-58, Sec. 642(a), 113 Stat. 430, 477 (1999) 
(making such reimbursement mandatory). Such authority has been 
available to certain law-enforcement employees and supervisors 
or management officials in the executive or legislative branch 
since 1996, pursuant to 5 U.S.C. Subchapter IV note (found 
preceding 5 U.S.C. Sec. 5941). See Pub. L. No. 104-208, 110 
Stat. 3009-363 (1996).
    Under the proposed new section 7287, the Court would not 
have available to it any provision of law that is inconsistent 
with any provision of chapter 72 of title 38 and would have to 
abide by all limitations with respect to the authorities 
themselves. The Court would intend to exercise any authority 
made available by the new provision in a manner consistent with 
the exercise of such authority by the Article III courts and 
would notify the Committees on Veterans' Affairs whenever the 
Court established a procedure for the exercise of or otherwise 
exercised such an authority.

           *         *         *         *         *

    I would be glad to answer any questions that you or the 
Committee may have about the proposed legislation we are 
submitting. The Court greatly appreciates your continued 
support and that of the Committee.
            Sincerely,
                                         Kenneth B. Kramer,
                                                       Chief Judge.
                                ------                                --
----

         U.S. Court of Appeals for Veterans Claims,
                 Chambers of Chief Judge Kenneth B. Kramer,
                                     Washington, DC, June 27, 2001.
Hon. Christopher H. Smith,
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.

    Dear Mr. Chairman: In response to concerns raised by your 
Committee staff about the proposed legislation that I submitted 
on May 24, 2001, on behalf of the Court, enclosed is page 2 of 
that draft bill with changes that would make the registration-
fee discretionary authority more generic and avoid a possible 
need for additional legislation in the future. We greatly 
appreciate the suggestion and your interest in proceeding with 
our proposed bill.
    If you have any questions on this matter, please let me 
know.
            Sincerely,
                                         Kenneth B. Kramer,
                                                        Chief Judge
    Enclosure.
        
                                                     June 27, 2001.

                        [Enclosure first page.]

                                   2

SEC. 2. REGISTRATION FEES.

    (a) Section 7285(a) of title 38, United States Code, is 
amended by adding the following sentence at the end: ``The 
Court may also impose registration fees on persons 
participating at judicial conferences convened pursuant to 
section 7286 of this title and in other Court-sponsored 
activities.''.
    (b) Section 7285(b) of such title is amended by ----
            (1) inserting ``conducting investigations and 
        proceedings, including'' in clause (1) after ``(1)'';
            (2) inserting a comma after ``counsel'' in clause 
        (1); and
            (3) striking ``administrative costs for the 
        implementation of the standards of proficiency 
        prescribed for practice before the Court'' in clause 
        (2) and inserting in lieu thereof ``the expenses of 
        judicial conferences convened pursuant to section 7286 
        of this title and other activities and programs that 
        are designed to support and foster bench and bar 
        communication and relationships or the study, 
        understanding, public commemoration, or improvement of 
        veterans law or of the work of the Court.''.
    (c)(1) The heading for such section is amended by striking 
``Practice fee'' and inserting in lieu thereof ``Registration 
fees''.
    (2) The table of sections at the beginning of chapter 72 of 
such title is amended by striking ``Practice fee.'' and 
inserting in lieu thereof ``Registration fees.'' in the item 
related to section 7285.

SEC. 3. ADMINISTRATIVE AUTHORITIES.

    (a) Subchapter III of chapter 72 of title 38, United 
States, is amended by inserting after section 7286 the 
following new section:

                        [Enclosure second page.]

                                   3

``Sec. 7287. ADMINISTRATION

    ``Notwithstanding any other provision of law, the Court of 
Appeals for Veterans Claims may exercise, for purposes of 
management, administration, and expenditure of funds, the 
authorities provided for such purposes by any provision of law 
(including any limitation with respect to such provision) 
applicable to a court of the United States as defined in 
section 451 of title 28, except to the extent that such 
provision of law is inconsistent with a provision of this 
chapter.''.
    (b) The table of sections at the beginning of such chapter 
is amended by inserting after the item related to section 7286 
the following new item:

``7287. ADMINISTRATION.''.

        

               Congressional Budget Office Cost Estimate

    The following letter was received from the Congressional 
Budget Office concerning the cost of the reported bill:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 20, 2001.
Hon. Christopher H. Smith
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2540, the Veterans 
Benefits Act of 2001.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Michelle 
Patterson, who can be reached at 226-2840.
            Sincerely,
                                            Dan L. Crippen,
                                                           Director
    Enclosure.

               Congressional Budget Office Cost Estimate

                                                     July 20, 2001.

 H.R. 2540, Veterans Benefits Act of 2001, As ordered reported by the 
         House Committee on Veterans' Affairs on July 19, 2001

    SUMMARY. The Veterans Benefits Act of 2001 would affect 
several veterans' programs, including compensation, insurance, 
medical care, and housing. CBO estimates that enacting this 
legislation would reduce direct spending by $801 million over 
the 2002-2006 period and $702 million over the 2002-2011 
period. Because the bill would affect direct spending, pay-as-
you-go procedures would apply. In addition, CBO estimates that 
implementing H.R.2540 would increase spending subject to 
appropriation by $1 million in 2001, $47 million in 2002, and 
$781 million over the 2001-2006 period, assuming appropriation 
of the necessary amounts.
    The bill also would increase the amounts paid to veterans 
for disability compensation and to their survivors for 
dependency and indemnity compensation by the same cost-of-
living adjustment (COLA) payable to Social Security recipients. 
Because the COLA authorized by this bill is assumed in the 
budget resolution baseline, the bill would have no budgetary 
effect relative to the baseline. Relative to current law, CBO 
estimates that enacting this bill would increase spending for 
these programs by about $407 million in 2002. (The increase 
would take effect on December 1, 2001, and would amount to $543 
million on an annualized basis.)
    H.R. 2540 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would not affect the budgets of state, local, or tribal 
governments.

    ESTIMATED COST TO THE FEDERAL GOVERNMENT. The estimated 
budgetary impact of H.R. 2540 is shown in Table 1. This 
estimate assumes the legislation will be enacted by September 
2001. The costs of this legislation fall within budget function 
700 (veterans benefits and services).
      

                                Table 1. Estimated Budgetary Impact of H.R. 2540
----------------------------------------------------------------------------------------------------------------
                                                                 By Fiscal Year, in Millions of Dollars
                                                     -----------------------------------------------------------
                                                        2001      2002      2003      2004      2005      2006
----------------------------------------------------------------------------------------------------------------

                                           CHANGES IN DIRECT SPENDING

Estimated Budget Authority..........................         0         a      -181      -201      -202      -222
Estimated Outlays...................................         0         a      -169      -208      -202      -222


                                        SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level.......................        50         3       219       226       237       245
Estimated Outlays...................................         1        47       104       191       215       223
----------------------------------------------------------------------------------------------------------------
a Savings of less than $500,000.

      
    BASIS OF ESTIMATE.

                            Direct Spending

    The legislation would affect direct spending in veterans' 
programs for compensation, insurance, and housing, as well as 
offsetting receipts related to veterans' medical care (see 
Table 2).

    Health Services Improvement Fund. Section 402 would extend 
the authority to collect copayments for outpatient 
prescriptions through September 30, 2006. Under current law, 
this authority expires on September 30, 2002. The Department of 
Veterans Affairs (VA) currently collects a $2 copayment for 
each outpatient prescription it fills; using statutory 
authority, it is planning to increase the copayment to $7 per 
prescription. The $2 copayment is currently deposited into the 
Medical Care Collections Fund (MCCF). Under current law, 
amounts deposited to the MCCF are considered to be offsets to 
discretionary appropriations and spending from the MCCF is 
subject to annual appropriations. The $5 increase in the 
prescription copayment and other receipts will be deposited 
into the Health Services Improvement Fund (HSIF). Under current 
law, amounts deposited to the HSIF are considered offsets to 
direct spending, and VA may spend amounts in the HSIF without 
appropriations action. CBO estimates that extending the 
authority to collect prescription copayments would result in 
receipts of $300 million to $340 million a year, totaling about 
$1.3 billion over the 2003-2006 period. Of that amount, $0.9 
billion would be an offset to direct spending (from the $5 
increase in copayments) and $0.4 billion would be an offset to 
discretionary spending (from the $2 copayments).
    Section 403 of the bill would remove the automatic spending 
authority for funds in the HSIF and make spending from the HSIF 
subject to appropriation, beginning on October 1, 2002. 
Consequently, extension of the copayment requirement would not 
result in additional direct spending. Rather, about $11 million 
in direct spending currently projected over the 2003-2011 
period would be eliminated.
      

                          Table 2. Estimated Changes in Direct Spending under H.R. 2540
----------------------------------------------------------------------------------------------------------------
                                                             By Fiscal Year, Outlays in Millions of Dollars
                                                     -----------------------------------------------------------
                                                        2001      2002      2003      2004      2005      2006
----------------------------------------------------------------------------------------------------------------

                                                 DIRECT SPENDING

Health Services Improvement Fund
  Estimated Budget Authority........................         0         0      -217      -225      -236      -245
  Estimated Outlays.................................         0         0      -205      -232      -236      -245

Compensation Related to Undiagnosed Illnesses
  Estimated Budget Authority........................         0         0        36        24        23        22
  Estimated Outlays.................................         0         0        36        24        23        22

Veterans Insurance
  Estimated Budget Authority........................         0         0         0         0        11         1
  Estimated Outlays.................................         0         0         0         0        11         1

Home Loans for Native American Veterans
  Estimated Budget Authority........................         0         a         a         a         a         a
  Estimated Outlays.................................         0         a         a         a         a         a


                                      SUMMARY OF CHANGES IN DIRECT SPENDING

Estimated Budget Authority..........................         0         a      -181      -201      -202      -222
Estimated Outlays...................................         0         a      -169      -208      -202      -222
----------------------------------------------------------------------------------------------------------------
a Less than $500,000.

      
    Compensation Related to Undiagnosed Illnesses. Section 202 
would expand the definition of undiagnosed illness for the 
purpose of granting service-connected disability compensation 
to more Persian Gulf War veterans. Under current law, veterans 
who served in the Persian Gulf from August 2, 1990, to the 
present can be presumed to have a compensable disability if 
they exhibit symptoms that cannot be attributed to any 
diagnosable illness before December 31, 2001. Such symptoms 
include joint pain, headaches, sleep disorders, and respiratory 
problems. This section would expand eligibility to those Gulf 
War veterans who are diagnosed with any illness that cannot be 
clearly defined, including chronic fatigue syndrome (CFS), 
fibromyalgia, and chronic multisymptom illness. In addition to 
the diseases listed in the bill, CBO assumes that other 
diseases for which veterans could receive service-connected 
disability include irritable bowel syndrome, multiple chemical 
sensitivity (MCS), and autoimmune disorder.
    CBO obtained data from the VA on the number of Gulf War 
veterans who have been diagnosed with ill-defined illnesses 
like CFS and fibromyalgia and have had their claims for 
compensation denied. VA was unable to provide similar data for 
MCS or chronic multisymptom illness because it does not have 
diagnostic codes for these illnesses. CBO used data from a 
comprehensive study of Gulf War veterans' health to estimate 
the incidence of MCS within that population. Because chronic 
multisymptom illness often exhibits similar symptoms as CFS or 
fibromyalgia, CBO assumed that most veterans with this illness 
are likely to have already been diagnosed as having these other 
diseases.
    From the data provided by VA, CBO could not estimate the 
prevalence of autoimmune disorders that might be attributed to 
service in the Gulf War. VA does not have a single diagnostic 
code for this illness but, instead, classifies over a dozen 
widely varying diseases as autoimmune disorders.
    Assuming that some of the diagnoses are overlapping and 
that some previously denied cases would likely be resubmitted, 
CBO estimates that enactment of this bill would result in about 
3,000 additional veterans being granted compensation for a 
service-connected disability. Under current law, a veteran must 
have exhibited and documented signs and symptoms of an illness 
before December 31, 2001, to receive benefits for a service-
connected disability relating to Persian Gulf service, so most 
claims would probably be submitted in 2002. Because this 
section of the bill would take effect on April 1, 2002, and 
since VA takes an average of six months to adjudicate reopened 
claims, CBO expects that no payments would be made in 2002. 
Based on payment data from VA for approved claims for CFS, 
fibromyalgia, and similar illnesses, CBO estimates the average 
annual benefit for such illnesses would be about $8,000 in 
2003. As a result, CBO estimates that enacting section 202 
would increase direct spending by $36 million in 2003, $105 
million from 2002 through 2006, and $204 million over the 2002-
2011 period. (Under current law, we estimate that disability 
compensation payments to veterans will total $254 billion over 
the 10-year period.)

    Veterans Insurance. Section 401 of the bill would allow for 
the payment of certain insurance proceeds to an alternate 
beneficiary when the primary beneficiary cannot be identified. 
Under current law, there is no time limitation for when a named 
primary beneficiary of a National Service Life Insurance or 
United States Government Life Insurance policy must file a 
claim for the insurance proceeds. VA is currently required to 
hold the unclaimed proceeds indefinitely. According to the VA, 
there are about 4,000 existing policies in these two programs 
for which payments have not been made because the primary 
beneficiary cannot be located. The bill would authorize VA to 
pay an alternate beneficiary if no claim has been made by the 
primary beneficiary within three years of the policyholder's 
death. If no designated beneficiary makes a claim within five 
years of the policyholder's death, VA would be allowed to make 
a payment to any such person who may be judged to be entitled 
to the proceeds. If the policyholder died before the enactment 
of this bill, the above time requirements would begin on the 
date of the bill's enactment.
    Based on information provided by VA, CBO assumes an 
eventual payment of proceeds would be made on about two-thirds 
of the policies when the primary beneficiary cannot be located. 
As a result, CBO estimates that enacting this section would 
increase direct spending by $11 million in 2005, $12 million 
over the 2002-2006 period, and $22 million over the 2002-2011 
period. VA indicates that two additional employees would need 
to be hired to process these claims. CBO estimates that the 
resulting increase in discretionary spending for salaries and 
benefits would be less than $500,000 per year, assuming 
appropriation of necessary amounts.

    Home Loans for Native American Veterans. Section 404 would 
extend the Native American Veteran Housing Loan Pilot Program 
through December 31, 2005. Under the program, VA makes direct 
loans to veterans living on trust lands for the purchase, 
construction, or improvement of a home. In 1993, Public Law 
102-389 provided appropriations of $4.5 million for the subsidy 
cost of these loans. Since the program's inception, VA has made 
about 200 loans at a subsidy cost of $2 million.
    CBO estimates that under the bill, VA would subsidize about 
30 loans a year at an annual cost of about $250,000. Because 
these outlays would be from funds already appropriated and 
would not depend on future appropriation action, they would be 
considered direct spending. In addition, CBO estimates that 
VA's administrative expenses, a discretionary cost, would be 
roughly $500,000 in 2002 and $2 million over the 2002-2006 
period, assuming appropriation of the necessary amounts.

    Other Provisions. CBO estimates that the following 
provisions would have no net effect on direct spending.

    Compensation Related to Diabetes Mellitus.--Section 201 
would codify diabetes mellitus (type 2) as a disability with 
presumed service connection based on exposure to Agent Orange 
and other herbicides during the Vietnam War. Under current law, 
VA may add to the regulations establishing service-connected 
disability any disease that scientific study has determined to 
have a positive association with herbicide agents. 
Specifically, the Institute of Medicine (IOM) produces a report 
every two years that evaluates current research findings and 
categorizes diseases according to the amount of evidence 
suggesting an association with herbicides. In October 2000, the 
IOM concluded there was evidence suggesting an association for 
diabetes mellitus. VA began the appropriate procedures to 
establish this condition as one of the diseases for which there 
is a presumption of service connection for Vietnam War 
veterans. On July 9, 2001, this regulation went into effect. 
Because this bill would codify a regulation already in 
existence, no costs would be associated with this section.

    Cost-of-Living Adjustment--.Section 101 of the bill would 
increase the amounts paid to veterans for disability 
compensation and to their survivors for dependency and 
indemnity compensation by the same COLA payable to Social 
Security recipients. The increase would take effect on December 
1, 2001, and the results of the adjustment would be rounded to 
the next lower dollar.
    The COLA that would be authorized by this bill is assumed 
in the budget resolution baseline, pursuant to section 257 of 
the Balanced Budget and Emergency Deficit Control Act, and 
savings from rounding it down were achieved by the Balanced 
Budget Act of 1997 (Public Law 105-33). As a result, the bill 
would have no budgetary effect relative to the baseline. 
Relative to current law, CBO estimates that enacting this bill 
would increase spending for these programs by about $407 
million in 2002. This estimate assumes that the COLA effective 
on December 1, 2001, would be 2.7 percent. (The 2002 cost on an 
annualized basis would be $543 million, which would be the 
approximate cost in subsequent years.)

                   Spending Subject to Appropriation

    Table 3 shows the estimated effects of H.R. 2540 on 
discretionary spending for veterans' programs, assuming that 
appropriations are provided and receipts are collected in the 
amount of the estimated authorizations.

    Discretionary Offsetting Receipts. Section 402 would extend 
the authority to collect prescription copayments through 
September 30, 2006. As discussed above under ``Health Services 
Improvement Fund,'' a portion of those receipts are deposited 
to the MCCF and recorded as an offset to discretionary 
appropriations. CBO estimates that under H.R. 2540, 
discretionary offsetting receipts would be $86 million in 2003 
and would total $366 million through the end of 2006.
      

                  Table 3. Estimated Changes in Spending Subject to Appropriation for H.R. 2540
----------------------------------------------------------------------------------------------------------------
                                                                    By Fiscal Year, in Millions of Dollars
                                                           -----------------------------------------------------
                                                              2001     2002     2003     2004     2005     2006
----------------------------------------------------------------------------------------------------------------

                                        SPENDING SUBJECT TO APPROPRIATION

Spending Under Current Law for VA Medical Care
  Estimated Authorization Levela..........................   20,863   21,767   22,150   33,888   23,603   24,344
  Estimated Outlays.......................................   20,418   21,447   22,021   22,654   23,353   24,085

Proposed Changes
  Offsetting Receipts
    Estimated Authorization Level.........................        0        0      -86      -90      -93      -97
    Estimated Outlays.....................................        0        0      -86      -90      -93      -97

  Spending of Receipts
    Estimated Authorization Level.........................        0        0      303      315      329      342
     Estimated Outlays....................................        0        0      183      280      307      320

  Homeless Veterans Programs
    Authorization Level...................................       50        0        0        0        0        0
    Estimated Outlays.....................................        1       44        5        0        0        0

     Subtotal-Proposed Changes
      Estimated Authorization Level.......................       50        0      217      225      236      245
      Estimated Outlays...................................        1       44      102      190      214      223


            ----------------------------------------------------------------------------------------

Spending Under H.R. 2540 for VA Medical Care
  Authorization Level.....................................   20,913   21,767   22,367   23,113   23,839   24,589
  Estimated Outlays.......................................   20,419   21,491   22,123   22,844   23,567   24,308

Spending Under Current Law for General Operating Expenses
  Estimated Authorization Levela..........................    1,080    1,129    1,168    1,209    1,249    1,290
Estimated Outlays.........................................    1,066    1,124    1,164    1,205    1,245    1,286

Proposed Changes:
  Toll-Free Number Pilot Program
    Estimated Authorization Level.........................        0        2        1        0        0        0
    Estimated Outlays.....................................        0        2        1        0        0        0

Spending Under H.R. 2540 for General Operating Expenses
  Estimated Authorization Level...........................    1,080    1,131    1,169    1,209    1,249    1,290
  Estimated Outlays.......................................    1,066    1,126    1,165    1,205    1,245    1,286

Spending Under Current Law for Housing Loans
  Estimated Authorization Levela,\c.......................        1        1        1        1        1        1
  Estimated Outlays.......................................        1        1        1        1        1        1

Proposed Changes

  Estimated Authorization Level...........................        0        1        1        1        1        b
  Estimated Outlays.......................................        0        1        1        1        1        b

Spending Under H.R. 2540 for Housing Loans
  Estimated Authorization Levelc..........................        1        1        1        1        1        1
   Estimated Outlays......................................        1        1        1        1        1        1


                             SUMMARY OF CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level.............................       50        3      219      226      237      245
Estimated Outlays.........................................        1       47      104      191      215      223
----------------------------------------------------------------------------------------------------------------
a The 2001 level is the estimated amount appropriated for that year including the spending of MCCF receipts. The
  current-law amounts for the 2002-2006 period assume that appropriations continue at the 2001 level with
  adjustments for anticipated inflation, and that the current appropriation to spend MCCF receipts continues.
b Less than $500,000
c Both the current program and the proposed change are more than $500,000 but less than $1 million.

      
    As under current law, any spending from the MCCF would need 
to be provided through annual appropriation. In addition, 
spending from the HSIF also would be subject to annual 
appropriation under H.R. 2540. If the full amount of the 
receipts is appropriated each year, CBO estimates that outlays 
from these appropriations would total $183 million in 2003 and 
more than $1 billion over the period ending in 2006.

    Toll-Free Number Pilot Program. Section 406 would require 
the VA to conduct a pilot program to test the benefits and 
cost-effectiveness of expanding access to veterans service 
representatives through a toll-free telephone number. Under the 
pilot program, veterans benefits counselors would be available 
to take the calls from veterans for not less than 12 hours on 
regular business days and not less than six hours on Saturday. 
In addition, the counselors would have to be able to provide 
information on veterans benefits provided by state governments 
and other federal departments and agencies. The pilot program 
would begin within six months after enactment of the bill and 
run for two years.
    Today, veterans who call the primary toll-free number for 
VA (1-800-827-1000) are routed to the nearest regional office 
that specializes in the benefits for which the veteran has 
indicated he or she has most interest. These offices answer the 
telephones about 7 hours per business day. The VA has recently 
modified its computer system to enable veterans benefits 
counselors to provide information on state benefits to callers, 
and the department is working to expand its data system to 
include those programs offered to veterans by other federal 
agencies. Based on information provided by VA, CBO assumes that 
additional staff would have to be hired to handle the increased 
work load. CBO estimates that implementing this section will 
increase discretionary spending by $2 million in 2002 and $3 
million over the 2002-2006 period, assuming appropriation of 
the necessary amounts.

    Homeless Veterans Programs. Section 408 would amend the 
Homeless Veterans Comprehensive Service Programs Act of 1992 
and would authorize $50 million for fiscal year 2001 for 
programs under that act. Assuming appropriation of the 
authorized amount by early in September 2001, CBO estimates 
that outlays would increase by $1 million in 2001 and by $50 
million over the 2001-2006 period.

    PAY-AS-YOU-GO CONSIDERATIONS. The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays and governmental receipts that are subject 
to pay-as-you-go procedures are shown in the following table. 
For the purposes of enforcing pay-as-you-go procedures, only 
the effects in the current year, the budget year, and the 
succeeding four years are counted.
      

                                         Table 4. Estimated Impact of H.R. 2540 on Direct Spending and Receipts
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         By Fiscal Year, in Millions of Dollars
                                                              ------------------------------------------------------------------------------------------
                                                                2001    2002    2003     2004     2005     2006    2007    2008    2009    2010    2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays...........................................       0       0    -169     -208     -202     -222      25      20      19      18      17

Changes in receipts..........................................                                        Not Applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------

      
    INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT. H.R. 2540 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments. The bill would amend an existing 
home loan program for Native American veterans to simplify the 
role of tribal governments. Under current law, a veteran living 
on tribal trust land may participate in this program only if 
his or her tribal government has entered into a memorandum of 
understanding with the Department of Veterans Affairs. The 
proposed change would allow similar memorandums of 
understanding with other federal agencies to fulfill this 
requirement.

    PREVIOUS CBO ESTIMATE. On July 5, 2001, CBO prepared a cost 
estimate for H.R.1929, the Native American Veterans Home Loan 
Act of 2001, as introduced in the House on May 21, 2001. 
Section 402 of H.R. 2540 is similar to H.R. 1929, and its costs 
are identical.

    ESTIMATE PREPARED BY:
          Compensation and Insurance: Michelle Patterson (226-
        2840).
          Health Care: Sam Papenfuss (226-2840).
          Housing: Sunita D'Monte (226-2840).
          Impact on State, Local, and Tribal Governments: Elyse 
        Goldman (225-3220).
          Impact on the Private Sector: Allison Percy (226-
        2900).

    ESTIMATE APPROVED BY:
          Robert A. Sunshine, Assistant Director for Budget 
        Analysis.

                     Statement of Federal Mandates

    The preceding Congressional Budget Office cost estimate 
states that the bill contains no intergovernmental or private 
sector mandates as defined in the Unfunded Mandates Reform Act.

                 Statement of Constitutional Authority

    Pursuant to Article I, section 8 of the United States 
Constitution, the reported bill is authorized by Congress' 
power to ``provide for the common Defense and general Welfare 
of the United States.''

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

                      TITLE 38, UNITED STATES CODE



           *       *       *       *       *       *       *
PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


                           CHAPTER 1--GENERAL

Sec.
101.    Definitions.
     * * * * * * *
117.    Definition of cost of direct and guaranteed loans.
     * * * * * * *

Sec. 117. Definition of cost of direct and guaranteed loans

  For the purpose of any provision of law appropriating funds 
to the Department for the cost of direct or guaranteed loans, 
the cost of any such loan, including the cost of modifying any 
such loan, shall be as defined in section 502 of the 
Congressional Budget Act of 1974 (2 U.S.C. 661a).

           *       *       *       *       *       *       *


CHAPTER 3--DEPARTMENT OF VETERANS AFFAIRS

           *       *       *       *       *       *       *


Sec. 313. Availability of appropriations

  (a) * * *

           *       *       *       *       *       *       *

  (c) Compensation and Pension.--Funds appropriated for 
Compensation and Pensions are available for the following 
purposes:
          (1) The payment of compensation benefits to or on 
        behalf of veterans as authorized by section 107 and 
        chapters 11, 13, 51, 53, 55, and 61 of this title.
          (2) Pension benefits to or on behalf of veterans as 
        authorized by chapters 15, 51, 53, 55, and 61 of this 
        title and section 306 of the Veterans' and Survivors' 
        Pension Improvement Act of 1978.
          (3) The payment of benefits as authorized under 
        chapter 18 of this title.
          (4) Burial benefits, emergency and other officers' 
        retirement pay, adjusted-service credits and 
        certificates, payments of premiums due on commercial 
        life insurance policies guaranteed under the provisions 
        of article IV of the Soldiers' and Sailors' Civil 
        Relief Act of 1940 (50 U.S.C. App. 540 et seq.), and 
        other benefits as authorized by sections 107, 1312, 
        1977, and 2106 and chapters 23, 51, 53, 55, and 61 of 
        this title and the World War Adjusted Compensation Act 
        (43 Stat. 122, 123), the Act of May 24, 1928 (Public 
        Law No. 506 of the 70th Congress; 45 Stat. 735), and 
        Public Law 87-875 (76 Stat. 1198).
  (d) Medical Care.--Funds appropriated for Medical Care are 
available for the following purposes:
          (1) The maintenance and operation of hospitals, 
        nursing homes, and domiciliary facilities.
          (2) Furnishing, as authorized by law, inpatient and 
        outpatient care and treatment to beneficiaries of the 
        Department, including care and treatment in facilities 
        not under the jurisdiction of the Department.
          (3) Furnishing recreational facilities, supplies, and 
        equipment.
          (4) Funeral and burial expenses and other expenses 
        incidental to funeral and burial expenses for 
        beneficiaries receiving care from the Department.
          (5) Administrative expenses in support of planning, 
        design, project management, real property acquisition 
        and disposition, construction, and renovation of any 
        facility under the jurisdiction or for the use of the 
        Department.
          (6) Oversight, engineering, and architectural 
        activities not charged to project cost.
          (7) Repairing, altering, improving, or providing 
        facilities in the medical facilities and homes under 
        the jurisdiction of the Department, not otherwise 
        provided for, either by contact or by the hire of 
        temporary employees and purchase of materials.
          (8) Uniforms or uniform allowances, as authorized by 
        sections 5901 and 5902 of title 5.
          (9) Aid to State homes, as authorized by section 1741 
        of this title.
          (10) Administrative and legal expenses of the 
        Department for collecting and recovering amounts owed 
        the Department as authorized under chapter 17 of this 
        title and Public Law 87-693, popularly known as the 
        Federal Medical Care Recovery Act (42 U.S.C. 2651 et 
        seq.).
  (e) Medical Administration and Miscellaneous Operating 
Expenses.--Funds appropriated for Medical Administration and 
Miscellaneous Operating Expenses are available for the 
following purposes:
          (1) The administration of medical, hospital, nursing 
        home, domiciliary, construction, supply, and research 
        activities authorized by law.
          (2) Administrative expenses in support of planning, 
        design, project management, architectural work, 
        engineering, real property acquisition and disposition, 
        construction, and renovation of any facility under the 
        jurisdiction or for the use of the Department, 
        including site acquisition.
          (3) Engineering and architectural activities not 
        charged to project costs.
          (4) Research and development in building construction 
        technology.
  (f) General Operating Expenses.--Funds appropriated for 
General Operating Expenses are available for the following 
purposes:
          (1) Uniforms or allowances therefor.
          (2) Hire of passenger motor vehicles.
          (3) Reimbursement of the General Services 
        Administration for security guard services.
          (4) Reimbursement of the Department of Defense for 
        the cost of overseas employee mail.
          (5) Administration of the Service Members 
        Occupational Conversion and Training Act of 1992 (10 
        U.S.C. 1143 note).
  (g) Construction.--Funds appropriated for Construction, Major 
Projects, and for Construction, Minor Projects, are available, 
with respect to a project, for the following purposes:
          (1) Planning.
          (2) Architectural and engineering services.
          (3) Maintenance or guarantee period services costs 
        associated with equipment guarantees provided under the 
        project.
          (4) Services of claims analysts.
          (5) Offsite utility and storm drainage system 
        construction costs.
          (6) Site acquisition.
  (h) Construction, Minor Projects.--In addition to the 
purposes specified in subsection (g), funds appropriated for 
Construction, Minor Projects, are available for--
          (1) repairs to any of the nonmedical facilities under 
        the jurisdiction or for the use of the Department which 
        are necessary because of loss or damage caused by a 
        natural disaster or catastrophe; and
          (2) temporary measures necessary to prevent or to 
        minimize further loss by such causes.

           *       *       *       *       *       *       *


                          CHAPTER 7--EMPLOYEES

Sec.
701.    Placement of employees in military installations.
     * * * * * * *
[712.    Full-time equivalent positions: limitation on reduction.]

           *       *       *       *       *       *       *


[Sec. 712. Full-time equivalent positions: limitation on reduction

  [(a) Notwithstanding any other provision of law, the number 
of full-time equivalent positions in the Department of Veterans 
Affairs during the period beginning on the date of the 
enactment of this section and ending on September 30, 1999, may 
not (except as provided in subsection (c)) be less than 
224,377.
  [(b) In determining the number of full-time equivalent 
positions in the Department of Veterans Affairs during a fiscal 
year for purposes of ensuring under section 5(b) of the Federal 
Workforce Restructuring Act of 1994 (Public Law 103-226; 108 
Stat. 115; 5 U.S.C. 3101 note) that the total number of full-
time equivalent positions in all agencies of the Federal 
Government during a fiscal year covered by that section does 
not exceed the limit prescribed for that fiscal year under that 
section, the total number of full-time equivalent positions in 
the Department of Veterans Affairs during that fiscal year 
shall be the number equal to--
          [(1) the number of such positions in the Department 
        during that fiscal year, reduced by
          [(2) the sum of the following:
                  [(A) The number of such positions in the 
                Department during that fiscal year that are 
                filled by employees whose salaries and benefits 
                are paid primarily from funds other than 
                appropriated funds.
                  [(B) The number of such positions in the 
                Department during that fiscal year held by 
                persons involved in providing health-care 
                resources under section 8111 or 8153 of this 
                title or under section 201 of the Veterans 
                Health Care Act of 1992 (Public Law 102-585; 
                106 Stat. 4949; 38 U.S.C. 8111 note).
  [(c) The Secretary shall not be required to make a reduction 
in the number of full-time equivalent positions in the 
Department unless such reduction--
          [(1) is necessary due to a reduction in funds 
        available to the Department; or
          [(2) is required under a law that is enacted after 
        the date of the enactment of this section and that 
        refers specifically to this section.
  [(d) The Secretary shall submit to the Committees on 
Veterans' Affairs of the Senate and House of Representatives an 
annual report, through the year 2000, on the number and type of 
full-time equivalent positions in the Department that are 
reduced under this section. The report shall include a 
justification for the reductions and shall be submitted with 
the materials provided in support of the budget for the 
Department contained in the President's budget submitted to 
Congress for a fiscal year pursuant to section 1105 of title 
31.]

           *       *       *       *       *       *       *


PART II--GENERAL BENEFITS

           *       *       *       *       *       *       *


CHAPTER 11--COMPENSATION FOR SERVICE-CONNECTED DISABILITY OR DEATH

           *       *       *       *       *       *       *


SUBCHAPTER II--WARTIME DISABILITY COMPENSATION

           *       *       *       *       *       *       *


Sec. 1116. Presumptions of service connection for diseases associated 
                    with exposure to certain herbicide agents

  (a)(1) * * *
  (2) The diseases referred to in paragraph (1)(A) of this 
subsection are the following:
          (A) * * *

           *       *       *       *       *       *       *

          (H) Diabetes Mellitus (Type 2).

           *       *       *       *       *       *       *


Sec. 1117. Compensation for disabilities occurring in Persian Gulf War 
                    veterans

  (a) The Secretary may pay compensation under this subchapter 
to any Persian Gulf veteran suffering from a chronic disability 
resulting from an undiagnosed illness (or combination of 
undiagnosed illnesses) or fibromyalgia, chronic fatigue 
syndrome, a chronic multisymptom illness, or any other illness 
that cannot be clearly defined (or combination of illnesses 
that cannot be clearly defined) that--
          (1) * * *

           *       *       *       *       *       *       *

  (c)(1) Whenever the Secretary determines under section 
1118(c) of this title that a presumption of service connection 
for an undiagnosed illness (or combination of undiagnosed 
illnesses) or fibromyalgia, chronic fatigue syndrome, a chronic 
multisymptom illness, or any other illness that cannot be 
clearly defined (or combination of illnesses that cannot be 
clearly defined) previously established under this section is 
no longer warranted--
          (A) a veteran who was awarded compensation under this 
        section for such illness (or combination of illnesses) 
        on the basis of the presumption shall continue to be 
        entitled to receive compensation under this section on 
        that basis; and
          (B) a survivor of a veteran who was awarded 
        dependency and indemnity compensation for the death of 
        a veteran resulting from the disease on the basis of 
        the presumption before that date shall continue to be 
        entitled to receive dependency and indemnity 
        compensation on that basis.

           *       *       *       *       *       *       *

  (g) For purposes of this section, signs or symptoms that may 
be a manifestation of an undiagnosed illness include the 
following:
          (1) Fatigue.
          (2) Unexplained rashes or other dermatological signs 
        or symptoms.
          (3) Headache.
          (4) Muscle pain.
          (5) Joint pain.
          (6) Neurologic signs or symptoms.
          (7) Neuropsychological signs or symptoms.
          (8) Signs or symptoms involving the respiratory 
        system (upper or lower).
          (9) Sleep disturbances.
          (10) Gastrointestinal signs or symptoms.
          (11) Cardiovascular signs or symptoms.
          (12) Abnormal weight loss.
          (13) Menstrual disorders.
  (h)(1) If the Secretary determines with respect to a medical 
research project sponsored by the Department that it is 
necessary for the conduct of the project that Persian Gulf 
veterans in receipt of compensation under this section or 
section 1118 of this title participate in the project without 
the possibility of loss of service connection under either such 
section, the Secretary shall provide that service connection 
granted under either such section for disability of a veteran 
who participated in the research project may not be terminated.
  (2) Paragraph (1) does not apply in a case in which--
          (A) the original award of compensation or service 
        connection was based on fraud; or
          (B) it is clearly shown from military records that 
        the person concerned did not have the requisite service 
        or character of discharge.
  (3) The Secretary shall publish in the Federal Register a 
notice of each determination made by the Secretary under 
paragraph (1) with respect to a medical research project.

Sec. 1118. Presumptions of service connection for illnesses associated 
                    with service in the Persian Gulf during the Persian 
                    Gulf War

  (a)(1) * * *

           *       *       *       *       *       *       *

  (4) For purposes of this section, signs or symptoms that may 
be a manifestation of an undiagnosed illness include the signs 
and symptoms listed in section 1117(g) of this title.

           *       *       *       *       *       *       *


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

           *       *       *       *       *       *       *


 SUBCHAPTER II--HOSPITAL, NURSING HOME OR DOMICILIARY CARE AND MEDICAL 
TREATMENT

           *       *       *       *       *       *       *


Sec. 1710B. Extended care services

  (a) * * *

           *       *       *       *       *       *       *

  (c)(1) * * *
  (2) Paragraph (1) shall not apply--
          (A) * * *
          (B) with respect to an episode of extended care 
        services that a veteran is being furnished by the 
        Department on November 30, 1999.

           *       *       *       *       *       *       *


   SUBCHAPTER III--MISCELLANEOUS PROVISIONS RELATING TO HOSPITAL AND 
NURSING HOME CARE AND MEDICAL TREATMENT OF VETERANS

           *       *       *       *       *       *       *


Sec. 1722A. Copayment for medications

  (a) * * *

           *       *       *       *       *       *       *

  (d) The provisions of subsection (a) expire on September 30, 
[2002] 2006.

           *       *       *       *       *       *       *


Sec. 1729B. Health Services Improvement Fund

  (a) * * *
  (b) Amounts received or collected after the date of the 
enactment of this section under any of the following provisions 
of law shall be deposited in the fund:
          [(1) Section 1713A of this title.]
          [(2)] (1) Section 1722A(b) of this title.
          [(3)] (2) Section 8165(a) of this title.
          [(4)] (3) Section 113 of the Veterans Millennium 
        Health Care and Benefits Act.
  (c) [Amounts in the fund are hereby available,] Subject to 
the provisions of appropriations Acts, amounts in the fund 
shall be available, without fiscal year limitation, to the 
Secretary for the purposes stated in subparagraphs (A) and (B) 
of section 1729A(c)(1) of this title.

           *       *       *       *       *       *       *


CHAPTER 19--INSURANCE

           *       *       *       *       *       *       *


SUBCHAPTER I--NATIONAL SERVICE LIFE INSURANCE

           *       *       *       *       *       *       *


Sec. 1917. Insurance maturing on or after August 1, 1946

  (a) * * *

           *       *       *       *       *       *       *

  (f)(1) Following the death of the insured--
          (A) if the first beneficiary otherwise entitled to 
        payment of the insurance proceeds does not make a claim 
        for such payment within three years after the death of 
        the insured, payment of the proceeds 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 five 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 of the insurance proceeds may 
        (notwithstanding any other provision of law) be made to 
        such person as may in the judgment of the Secretary be 
        equitably entitled to the proceeds of the policy.
  (2) Payment of insurance proceeds under paragraph (1) shall 
be a bar to recovery by any other person.

           *       *       *       *       *       *       *


SUBCHAPTER II--UNITED STATES GOVERNMENT LIFE INSURANCE

           *       *       *       *       *       *       *


Sec. 1951. Payment of insurance

  (a) United States Government life insurance, except as 
provided in this subchapter, shall be payable in two hundred 
and forty equal monthly installments. When the amount of an 
individual monthly payment is less than $5, such amount may in 
the discretion of the Secretary be allowed to accumulate 
without interest and be disbursed annually.
  (b)(1) Following the death of the insured--
          (A) if the first beneficiary otherwise entitled to 
        payment of the insurance proceeds does not make a claim 
        for such payment within three years after the death of 
        the insured, payment of the proceeds 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 five 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 of the insurance proceeds may 
        (notwithstanding any other provision of law) be made to 
        such person as may in the judgment of the Secretary be 
        equitably entitled to the proceeds of the policy.
  (2) Payment of insurance proceeds under paragraph (1) shall 
be a bar to recovery by any other person.

           *       *       *       *       *       *       *


CHAPTER 36--ADMINISTRATION OF EDUCATIONAL BENEFITS

           *       *       *       *       *       *       *


SUBCHAPTER II--MISCELLANEOUS PROVISIONS

           *       *       *       *       *       *       *


Sec. 3695. Limitation on period of assistance under two or more 
                    programs

  (a) The aggregate period for which any person may receive 
assistance under two or more of the provisions of law listed 
below may not exceed 48 months (or the part-time equivalent 
thereof):
          (1) * * *

           *       *       *       *       *       *       *

          (5) Chapters 107, 1606, and [1610] 1611 of title 10.

           *       *       *       *       *       *       *


CHAPTER 37--HOUSING AND SMALL BUSINESS LOANS

           *       *       *       *       *       *       *


SUBCHAPTER II--LOANS

           *       *       *       *       *       *       *


Sec. 3714. Assumptions; release from liability

  (a) * * *

           *       *       *       *       *       *       *

  [(d) The Secretary shall provide that the mortgage or deed of 
trust and any other instrument evidencing the loan entered into 
by a person with respect to a loan guaranteed, insured, or made 
under this chapter shall contain provisions, in such form as 
the Secretary shall specify, implementing the requirements of 
this section, and shall bear in conspicuous position in capital 
letters on the first page of the document in type at least 2 
and 1/2 times larger than the regular type on such page the 
following: This loan is not assumable without the approval of 
the Department of Veterans Affairs or its authorized agent.]
  (d) With respect to a loan guaranteed, insured, or made under 
this chapter, the Secretary shall provide, by regulation, that 
at least one instrument evidencing either the loan or the 
mortgage or deed of trust therefor, shall conspicuously 
contain, in such form as the Secretary shall specify, a notice 
in substantially the following form: ``This loan is not 
assumable without the approval of the Department of Veterans 
Affairs or its authorized agent''.

           *       *       *       *       *       *       *


    SUBCHAPTER V--NATIVE AMERICAN VETERAN HOUSING LOAN PILOT PROGRAM

Sec. 3761. Pilot program

  (a) * * *

           *       *       *       *       *       *       *

  (c) No loans may be made under this subchapter after December 
31, [2001] 2005.

Sec. 3762. Direct housing loans to Native American veterans

  (a) The Secretary may make a direct housing loan to a Native 
American veteran if--
          (1)(A) the Secretary has entered into a memorandum of 
        understanding with respect to such loans with the 
        tribal organization that has jurisdiction over the 
        veteran; [and] or
          (B) the tribal organization that has jurisdiction 
        over the veteran has entered into a memorandum of 
        understanding with any department or agency of the 
        United States with respect to direct housing loans to 
        Native Americans that the Secretary determines 
        substantially complies with the requirements of 
        subsection (b); and

           *       *       *       *       *       *       *


PART V--BOARDS, ADMINISTRATIONS, AND SERVICES

           *       *       *       *       *       *       *


     CHAPTER 72--UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS

               subchapter i--organization and jurisdiction

Sec.
7251.    Status.
     * * * * * * *

                subchapter iii--miscellaneous provisions

     * * * * * * *
7285.    [Practice fee] Practice and registration fees.
7286.    Judicial Conference of the Court.
7287.    Administration.
     * * * * * * *

SUBCHAPTER II--PROCEDURE

           *       *       *       *       *       *       *


Sec. 7266. Notice of appeal

  (a)[(1)] In order to obtain review by the Court of Appeals 
for Veterans Claims of a final decision of the Board of 
Veterans' Appeals, a person adversely affected by such decision 
shall file a notice of appeal with the Court within 120 days 
after the date on which notice of the decision is mailed 
pursuant to section 7104(e) of this title.
  [(2)] (b) An appellant shall file a notice of appeal under 
this section by delivering or mailing the notice to the Court.
  [(3)] (c) A notice of appeal shall be deemed to be received 
by the Court as follows:
          [(A)] (1) On the date of receipt by the Court, if the 
        notice is delivered.
          [(B)] (2) On the date of the United States Postal 
        Service postmark stamped on the cover in which the 
        notice is posted, if the notice is properly addressed 
        to the Court and is mailed.
  [(4)] (d) For a notice of appeal mailed to the Court to be 
deemed to be received under [paragraph (3)(B)] subsection 
(c)(2) on a particular date, the United States Postal Service 
postmark on the cover in which the notice is posted must be 
legible. The Court shall determine the legibility of any such 
postmark and the Court's determination as to legibility shall 
be final and not subject to review by any other Court.
  [(b) The appellant shall also furnish the Secretary with a 
copy of such notice, but a failure to do so shall not 
constitute a failure of timely compliance with subsection (a) 
of this section.]

           *       *       *       *       *       *       *


SUBCHAPTER III--MISCELLANEOUS PROVISIONS

           *       *       *       *       *       *       *


Sec. 7285. [Practice fee] Practice and registration fees

  (a) The Court of Appeals for Veterans Claims may impose a 
periodic registration fee on persons admitted to practice 
before the Court. The frequency and amount of such fee shall be 
determined by the Court, except that such amount may not exceed 
$30 per year. The Court may also impose registration fees on 
persons participating in a judicial conference convened 
pursuant to section 7286 of this title or any other court-
sponsored activity.
  (b) Amounts received by the Court under subsection (a) of 
this section shall be available to the Court [for the purposes 
of (1) employing independent counsel to pursue disciplinary 
matters, and (2) defraying administrative costs for the 
implementation of the standards of proficiency prescribed for 
practice before the Court] for the following purposes:
          (1) Conducting investigations and proceedings, 
        including employing independent counsel, to pursue 
        disciplinary matters.
          (2) Defraying the expenses of--
                  (A) judicial conferences convened pursuant to 
                section 7286 of this title; and
                  (B) other activities and programs that are 
                designed to support and foster bench and bar 
                communication and relationships or the study, 
                understanding, public commemoration, or 
                improvement of veterans law or of the work of 
                the Court.

           *       *       *       *       *       *       *


Sec. 7287. Administration

  Notwithstanding any other provision of law, the Court of 
Appeals for Veterans Claims may exercise, for purposes of 
management, administration, and expenditure of funds, the 
authorities provided for such purposes by any provision of law 
(including any limitation with respect to such provision) 
applicable to a court of the United States as defined in 
section 451 of title 28, except to the extent that such 
provision of law is inconsistent with a provision of this 
chapter.

           *       *       *       *       *       *       *

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    SECTION 1001 OF THE VETERANS' BENEFITS IMPROVEMENTS ACT OF 1994

SEC. 1001. REPORTS ON ACTIVITIES OF THE DEPARTMENT OF VETERANS AFFAIRS 
                    TO ASSIST HOMELESS VETERANS.

  (a) Annual Report.--(1) * * *
  (2) The report shall--
          (A) * * *

           *       *       *       *       *       *       *

          (C) provide any other information on those programs 
        and on the provision of such assistance that the 
        Secretary considers appropriate; [and]

           *       *       *       *       *       *       *

                              ----------                              


SECTION 12 OF THE HOMELESS VETERANS COMPREHENSIVE SERVICE PROGRAMS ACT 
                                OF 1992

SEC. 12. AUTHORIZATION OF APPROPRIATIONS.

  There are authorized to be appropriated [to carry out this 
Act (other than section 8) $48,000,000 for each of fiscal years 
1993 through 1997 and $50,000,000 for each of fiscal years 2000 
and 2001] to carry out this Act $50,000,000 for fiscal year 
2001. Nothing in this Act shall be construed to diminish funds 
for, continuation of, or expansion of existing programs 
administered by the Secretary of Veterans Affairs to serve 
veterans.

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