[Senate Report 108-169]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 316
108th Congress                                                   Report
                                 SENATE
 1st Session                                                    108-169

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



 
              VETERANS' BENEFITS ENHANCEMENTS ACT OF 2003

                                _______
                                

                October 21, 2003.--Ordered to be printed

                                _______
                                

  Mr. Specter, from the Committee on Veterans' Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 1132]

    The Committee on Veterans' Affairs, to which was referred 
the bill (S. 1132), to amend title 38, United States Code, to 
improve and enhance certain benefits for survivors of veterans, 
and for other purposes, having considered the same, reports 
favorably thereon with an amendment in the nature of a 
substitute, and recommends that the bill, as amended, do pass.

                              Introduction

    On May 22, 2003, Committee Chairman Arlen Specter 
introduced S. 1132, a bill to improve and enhance certain 
benefits for survivors of veterans. Committee Members Jim 
Bunning and Lindsey Graham are original cosponsors of S. 1132.
    On January 30, 2003, Senator Bill Nelson introduced S. 257, 
a bill to clarify the applicability of the prohibition on 
assignment of veterans' benefits to agreements regarding future 
receipt of compensation, pension, or dependency and indemnity 
compensation, and for other purposes. Committee Member Ben 
Nelson and Senators John McCain, Jeff Sessions, Daniel K. 
Inouye, Carl Levin, Jeff Bingaman, John F. Kerry, John B. 
Breaux, Kent Conrad, Tim Johnson, and Mary Landrieu are 
original cosponsors of S. 257. Senators Judd Gregg, Gordon 
Smith, Harry M. Reid, and Joseph I. Lieberman were later added 
as cosponsors.
    On March 5, 2003, Committee Member Patty Murray introduced 
S. 517, a bill to provide improved benefits to veterans who are 
former prisoners of war. Senators Maria Cantwell, Ron Wyden, 
Barbara A. Mikulski, Mark Dayton, and Richard J. Durbin were 
later added as cosponsors of S. 517.
    On May 22, 2003, Chairman Specter introduced S. 1131, a 
bill to increase, effective as of December 1, 2003, the rates 
of compensation for veterans with service-connected 
disabilities and the rates of dependency and indemnity 
compensation (hereinafter, ``DIC'') for the survivors of 
certain disabled veterans. Committee Member Bunning is an 
original cosponsor of S. 1131. Committee Member Rockefeller was 
later added as a cosponsor.
    On May 22, 2003, Chairman Specter introduced, at the 
request of the Administration, S. 1133, a bill to improve the 
authorities of the Department of Veterans Affairs (hereinafter, 
``VA'') relating to compensation, dependency and indemnity 
compensation, pension, education benefits, life insurance 
benefits, and memorial benefits, to improve the administration 
of benefits for veterans, and for other purposes.
    On May 23, 2003, Chairman Specter introduced S. 1156, a 
bill to improve and enhance the provision of long-term health 
care for veterans by VA, to enhance and improve authorities 
relating to the administration of personnel of VA, and for 
other purposes.
    On June 5, 2003, Committee Member Murray introduced S. 
1188, a bill to repeal the two-year limitation on the payment 
of accrued benefits that are due and unpaid by the Secretary of 
Veterans Affairs upon the death of a veteran or other 
beneficiary under laws administered by the Secretary, to allow 
for substitution of parties in the case of a claim for benefits 
provided by the Secretary when the applicant for such benefits 
dies while the claim is pending, and for other purposes.
    On June 9, 2003, Chairman Specter introduced, at the 
request of the Administration, S. 1213, a bill to enhance the 
ability of VA to improve benefits for Filipino veterans of 
World War II and survivors of such veterans, and for other 
purposes. Committee Member John E. Ensign and Senators George 
Allen, Maria Cantwell, and Charles E. Schumer were later added 
as cosponsors of S. 1213.
    On June 11, 2003, Committee Member Craig introduced S. 
1239, a bill to provide special compensation for former 
prisoners of war, and for other purposes.
    On June 18, 2003, Committee Ranking Member Bob Graham 
introduced S. 1281, a bill to presume additional diseases of 
former prisoners of war to be service-connected for 
compensation purposes, to enhance the Dose Reconstruction 
Program of the Department of Defense, to enhance and fund 
certain other epidemiological studies, and for other purposes. 
Committee Member Rockefeller was later added as a cosponsor of 
S. 1281.
    On June 26, 2003, Committee Ranking Member Graham 
introduced S. 1360, a bill to clarify the requirements for 
notices of disagreement for appellate review of Department of 
Veterans Affairs activities. Committee Member Rockefeller was 
later added as a cosponsor.

                           Committee Hearings

    On July 10, 2003, the Committee held a hearing on, among 
other bills, S. 257, S. 517, S. 1131, S. 1132, S. 1133, S. 
1188, S. 1199, S. 1213, S. 1239, S. 1281, and S. 1360. 
Testimony was heard from: The Honorable Daniel L. Cooper, Under 
Secretary for Benefits, Department of Veterans Affairs; Mr. 
Craig W. Duehring, Principal Deputy Assistant Secretary of 
Defense for Reserve Affairs, Department of Defense; Mr. Phillip 
R. Wilkerson, Deputy Manager of Operations and Training, 
Veterans Affairs and RehabilitationDivision, The American 
Legion; Mr. Dennis Cullinan, Director, National Legislative Service, 
Veterans of Foreign Wars of the United States; Mr. Rick Surratt, Deputy 
National Legislative Director, Disabled American Veterans; Mr. Carl 
Blake, Associate Legislative Director, Paralyzed Veterans of America; 
and Mr. Richard Jones, National Legislative Director, AMVETS.
    On July 29, 2003, the Committee held a hearing on, among 
other bills, S. 1156 and S. 1213. Testimony was heard from: The 
Honorable Tim S. McClain, General Counsel, Department of 
Veterans Affairs; Ms. Cathleen C. Wiblemo, Deputy Director of 
Health Care, The American Legion; Mr. Paul A. Hayden, Deputy 
Director, National Legislative Service, Veterans of Foreign 
Wars of the United States; Mr. Adrian M. Atizado, Associate 
National Legislative Director, Disabled American Veterans; Mr. 
Carl Blake, Associate Legislative Director; Paralyzed Veterans 
of America; and Mr. Richard Jones, National Legislative 
Director, AMVETS.

                           Committee Meeting

    After carefully reviewing the testimony from the foregoing 
hearings, the Committee met in open session on September 30, 
2003, and voted by unanimous voice vote to report favorably S. 
1132, as amended to include provisions from S. 257, S. 517, S. 
1132 as introduced, S. 1133, S. 1156, S. 1188, S. 1213, S. 
1239, S. 1281, S. 1360, and several original provisions.

               Summary of the Committee Bill as Reported

    S. 1132 as reported (hereinafter, ``the Committee bill'') 
contains various amendments to title 38 of U.S. Code and other 
freestanding provisions that would:
          (a) Provide monetary, health care, and vocational 
        benefits for spina bifida-afflicted children born of 
        veterans who served in or near the Korean demilitarized 
        zone in the late 1960's;
          (b) Permit VA to make payment of proceeds from 
        National Service Life Insurance and United States 
        Government Life Insurance policies to alternate 
        beneficiaries should a primary beneficiary not be 
        located;
          (c) Extend the period for eligibility for veterans' 
        survivors' education benefits to survivors who are 
        called to duty under title 32, U.S. Code, while serving 
        in the National Guard;
          (d) Increase monthly educational benefits for spouses 
        and dependent children of veterans who have severe 
        disabilities or who have died as a result of service-
        related causes;
          (e) Repeal the two-year limitation on accrued 
        benefits;
          (f) Permit States to receive burial plot allowances 
        for burial of all eligible veterans;
          (g) Allow remarried surviving spouses to be buried in 
        national cemeteries;
          (h) Make permanent the State Cemetery Grants Program;
          (i) Permit VA to provide headstones or markers for 
        graves which already have a private marker for veterans 
        whose deaths occurred on or after November 1, 1990;
          (j) Extend for two years the requirement to round 
        down to the nearest dollar compensation cost-of-living 
        increases;
          (k) Liberalize the internment threshold for former 
        prisoners-of-war seeking compensation on a presumptive 
        basis, and add cirrhosis of the liver to the list of 
        diseases presumed to be caused by a prisoner of war's 
        internment;
          (l) Repeal the 90-day minimum internment threshold 
        for former prisoners-of-war seeking outpatient dental 
        treatment;
          (m) Round down to the nearest dollar annual education 
        cost-of-living adjustments to educational assistance 
        benefits;
          (n) Terminate the education loan program;
          (o) Terminate the manufactured housing loan program;
          (p) Temporarily increase the fee charged for 
        ``subsequent use'' home loans guaranteed by VA;
          (q) Reinstate the VA vendee loan program;
          (r) Remove the funding cap limiting loans made in 
        fiscal year 2003 under the Native American Veteran 
        Housing Loan Program;
          (s) Make clarifying amendments relating to the 
        Veterans' Claims Assistance Act;
          (t) Clarify the current prohibition on the assignment 
        of veterans' benefits;
          (u) Extend for two years the authority of VA to gain 
        access to Internal Revenue Service records to verify 
        the incomes of VA beneficiaries who have applied for 
        ``means-tested'' benefits;
          (v) Require the forfeiture of benefits if 
        beneficiaries are convicted of certain subversive 
        activities;
          (w) Clarify notice of disagreement requirements for 
        claimants who desire to initiate the VA claims 
        appellate process;
          (x) Increase compensation and DIC payment rates to 
        Filipino veterans of World War II, and their eligible 
        survivors, residing in the United States;
          (y) Increase burial benefit rates to eligible 
        survivors of new Philippine Scouts residing in the 
        United States, and make new Philippine Scouts eligible 
        for national cemetery burial;
          (z) Extend the authority of VA to operate a regional 
        office in Manila, the Philippines;
          (aa) Require independent oversight of the Department 
        of Defense (hereinafter, ``DoD'') radiation dose 
        reconstruction program;
          (bb) Require an independent study on the disposition 
        of the Air Force Health Study on ``Operation Ranch 
        Hand'' veterans;
          (cc) Authorize additional funding for the Institute 
        of Medicine's Medical Follow-Up Agency;
          (dd) Extend for four years VA's Advisory Committee on 
        Minority Veterans;
          (ee) Extend through 2013 VA's Advisory Committee on 
        Education;
          (ff) Authorize a nationwide, five-year contract 
        medical examination pilot program; and
          (gg) Make certain technical amendments.

                               Discussion


Section 101: Benefits for children with spina bifida of veterans of 
        certain service in Korea

            Background
    Between 1962 and 1971, the U.S. military sprayed almost 19 
million gallons of herbicides over Vietnam. Those herbicides 
cleared dense foliage which helped conceal enemy forces and 
cleared the perimeters of U.S. base camps. A chemical 
preparation known as Agent Orange was used in the majority of 
the spraying. Its use was suspended in 1970 after a scientific 
report concluded that chemical components of Agent Orange could 
cause birth defects in laboratory animals. A 1996 report, 
Veterans and Agent Orange Update 1996, published by the 
Institute of Medicine's National Academy of Sciences 
(hereinafter, ``NAS'') analyzed associations between exposure 
to Agent Orange and the long-term health effects in exposed 
veterans and their offspring. The report concluded that 
``[t]here is limited/suggestive evidence of an association 
between exposure to the herbicides considered in this report 
and spina bifida [in the offspring of exposed veterans].'' 
Relying on that NAS report, Congress enacted section 421 of 
Public Law 104-204 to provide special benefits to certain 
children of Vietnam veterans who were born with spina bifida. 
The benefits provided through VA include monetary payments 
based on the severity of disability, health care, and 
vocational training and rehabilitation.
    Agent Orange was also used to clear foliage during the late 
1960's near the Korean demilitarized zone. It is estimated that 
12,056 military personnel were exposed.
    Under current law, if VA determines that a veteran was 
exposed to Agent Orange outside of Vietnam, and if that same 
veteran has a disease on the list of diseases presumed to be 
caused by herbicide exposure specified in 38 CFR Sec. 3.309(e), 
VA will presume service-connection, thus entitling the veteran 
to disability compensation and other VA benefits. However, VA 
has no authority to provide benefits to children of veterans 
exposed to herbicides outside of Vietnam who are born with 
spina bifida.
            Committee bill
    Section 101 would extend the benefits provided to children 
of Vietnam veterans born with spina bifida to the spina bifida-
afflicted children born of veterans who served in or near the 
Korea demilitarized zone between January 1, 1967, and December 
31, 1969, and who are determined by VA to have been exposed to 
herbicides.

Section 102: Alternate beneficiaries for National Service Life 
        Insurance and United States Government Life Insurance

            Background
    Section 1917 of title 38, United States Code, gives 
veterans insured under the VA's National Service Life Insurance 
(hereinafter, ``NSLI'') program the right to designate the 
beneficiary or beneficiaries of insurance policies maturing on 
or after August 1, 1946. It also specifies the modes of payment 
to beneficiaries when an insured dies, and sets forth the 
procedure to be followed when a beneficiary has not been 
designated or dies before the insured. Section 1949 of title 38 
gives veterans insured under the United States Government Life 
Insurance (hereinafter, ``USGLI'') program the right to change 
beneficiaries, and sections 1950 through 1952 of title 38 set 
out the modes of payment to designated beneficiaries and sets 
forth the procedure to be followed when a beneficiary either 
has not been designated or dies before the insured.
    For these two programs, the law does not specify the course 
of action VA is to take when no beneficiary can be found. At 
the Committee's July 10, 2003, hearing, VA Under Secretary for 
Benefits Daniel L. Cooper testified that there are 
approximately 4,000 existing NSLI and USGLI policies in which 
payment has not been made because VA cannot locate the primary 
beneficiary.
            Committee bill
    Section 102 would authorize the payment of NSLI and USGLI 
to alternate beneficiaries, in order of precedence and as 
designated by the insured veteran, if no claim is made by the 
primary beneficiary within two years of the insured veteran's 
death. If four years have elapsed since the death of the 
insured and no claim has been filed by a person designated by 
the insured as a beneficiary, section 102 would authorize VA to 
make payment to a person VA determines to be equitably entitled 
to such payment.

Section 103: Applicability to certain members of the National Guard of 
        authority for extension of eligibility for Survivors' and 
        Dependents' Educational Assistance

            Background
    In general, beneficiaries of the Survivors' and Dependents' 
Educational Assistance program (hereinafter, ``DEA'') have 10 
years (if the beneficiary is a surviving spouse), and 8 years 
(if the beneficiary is a surviving child), in which to use 
their education benefits. Section 3512(h) of title 38, United 
States Code, permits persons eligible for DEA benefits who are 
called to active duty service under various provisions of title 
10 (which deal with retired military and reserve component 
activation in times of war, national emergencies, or other 
exigencies) to have these ``delimiting periods'' extended by 
the length of time such persons are called to active duty, plus 
an additional four months. This protection is in place so that 
DEA beneficiaries whose pursuit, or planned pursuit, of 
educational opportunities was interrupted due to service to the 
Nation not be penalized. DEA beneficiaries who are members of 
the National Guard and who arecalled to service under section 
502(f) of title 32 (which deals with National Guard activation for 
training or other purposes) do not have the same delimiting period 
protections.
            Committee bill
    Section 103 would extend to persons ordered to full-time 
National Guard duty under section 502(f) of title 32 the same 
delimiting period extensions that exist for DEA beneficiaries 
called to active duty under title 10.

Section 104: Increase in rates of Survivors' and Dependents' 
        Educational Assistance

            Background
    The Veterans Education and Benefits Expansion Act of 2001, 
Public Law 107-103, raised DEA monthly benefits from $588 to 
$670 (for full-time study), from $441 to $503 (for three-
quarter-time study), and from $294 to $335 (for half-time 
study). Similar percentage increases were made to benefits paid 
to eligible persons--generally, spouses and dependents of 
veterans with total and permanent service-connected ratings, of 
veterans who died as a result of service-related injuries, or 
of service members who died while on active duty--pursuing a 
program of education on a less than half-time basis through 
institutional courses, farm cooperative programs, by 
correspondence courses, or by special restorative training or a 
program of apprenticeship or other approved on-the-job training 
programs. In addition, section 3511(a)(1) of title 38, United 
States Code, limits the total entitlement of DEA to 45 months 
(or the equivalent thereof in part-time training). Thus, 
multiplying the current full-time rate ($680 after a 2002 cost-
of-living increase) by the 45 months maximum entitlement yields 
a current, maximum aggregate benefit of $30,600.
    Despite this recent increase, DEA benefits have not kept 
pace with increases made to Montgomery GI Bill (hereinafter, 
``MGIB''), educational assistance benefits paid to active duty 
service members and eligible veterans. On October 1, 2003, the 
maximum monthly benefit under MGIB will be $985 and the 
aggregate benefit will be $35,460, almost $5,000 more than the 
DEA aggregate. VA's Under Secretary for Benefits, Daniel L. 
Cooper, testified at the July 10, 2003, Committee hearing that 
DEA benefits once equaled and, for a time, exceeded education 
benefits for veterans. Further, VA's Deputy Secretary, Dr. Leo 
Mackay, in connection with a Committee hearing on June 28, 
2001, stated that VA ``believe[s] it is only fair that these 
benefits should be at the same level as those provided to 
veterans.''
            Committee bill
    In combination with a planned cost-of-living increase 
expected at the end of 2003, section 104 would raise monthly 
survivors' and dependents' educational assistance benefits by 
15.8 percent over current levels. The new rates would be set at 
$788 for full-time study, $592 for three-quarter time study, 
and $394 for half-time study. A 15.8 percent increase would 
also be made to benefits paid to eligible persons pursuing a 
program of education on a less than half-time basis, through 
institutional courses, farm cooperative programs, by 
correspondence courses, or by special restorative training or a 
program of apprenticeship or other approved on-the-job training 
programs. The increases would take effect on July 1, 2004, and 
would result in the aggregate DEA benefit for full-time study 
equaling the aggregate MGIB benefit of $35,460.

Section 105: Repeal of two-year limitation on payment of accrued 
        benefits at death

            Background
    Section 5121 of title 38, United States Code, provides that 
VA monetary benefits to which an individual was entitled at 
death under existing ratings or decisions, or those based on 
evidence on file at the date of death, and due and unpaid for, 
at most, two years upon the date of death (so-called ``accrued 
benefits''), shall be payable to the claimant's eligible 
survivor(s). An application for accrued benefits must be filed 
within one year after the date of a claimant's death.
    Before the United States Court of Appeals for Veterans 
Claims (hereinafter, ``CAVC'') issued its decision in Bonny v. 
Principi, 16 Vet. App. 504 (2002), VA interpreted section 5121 
to limit the payment of accrued benefits to two years 
irrespective of whether the payment was based on an existing 
rating or decision or based on evidence on file at the date of 
death. In Bonny, however, the Court ruled that the limitation 
applies only to accrued benefits based on evidence in the file 
at the date of death and not to accrued benefits due under an 
individual's existing rating or decisions. In the latter case, 
then, the two-year limitation does not apply; under Bonny, such 
individuals are entitled to accrued benefits without regard to 
that limit.
    At the Committee's hearing on July 10, 2003, Under 
Secretary Cooper commented as follows: ``The distinction the 
Bonny decision draws between the two categories of claimants--
those whose claims had been approved and those whose 
entitlement had yet to be recognized when they died--is really 
one without a difference. In either case, a claimant's estate 
is deprived of the value of benefits to which the claimant was, 
in life, entitled.''
    Chapter 18 of title 38 authorizes monthly monetary 
allowances, vocational rehabilitation services, and health 
care, to children born of Vietnam veterans who are suffering 
from spina bifida and, in the case of children born of women 
Vietnam veterans, other covered birth defects. Currently, 
parents are not authorized to file claims for accrued benefits 
under section 5121 which are due to children eligible for 
benefits under Chapter 18 of title 38.
            Committee bill
    Section 105 would remove the two-year limitation on accrued 
benefits. It would also authorize parents to file claims for 
accrued benefits due to children eligible for benefits under 
Chapter 18 of title 38.

Section 201: Burial Plot Allowance

            Background
    Veterans who are discharged from active service as a result 
of a service-connected disability, veterans who are entitled to 
disability compensation or VA pension, and veterans who die in 
a VA facility, are eligible for a $300 VA ``plot allowance'' if 
they are not buried in a national cemetery. Section 2303(b)(1) 
of title 38, United States Code, allows State cemeteries to 
receive the $300 plot allowance payment for the interment of 
such veterans, and the interment of veterans of any war, if the 
cemeteries are used solely for the burial of veterans. However, 
states may not receive a plot allowance for burial of veterans 
who die as a result of a service-connected disability and whose 
survivors seek reimbursement of funeral expenses under section 
2307 of title 38 (which currently authorizes a $2,000 funeral 
expense benefit).
    The State Cemetery Grants Program, designed to complement 
VA's national cemetery system, was established in 1978 to 
assist States in meeting costs associated with building, 
expanding, or improving State cemeteries. Generally speaking, 
States provide the land where State cemeteries will be located, 
and they are responsible for funding the administration and 
maintenance of State cemeteries. VA assists, by making grants, 
in the construction of cemetery facilities on the State-
provided land. States typically use plot allowance money to 
help defray some of their administrative and maintenance costs.
            Committee bill
    Section 201 would expand existing law to allow States to 
receive the $300 plot allowance for the interment of veterans 
who did not serve during a wartime period and for the interment 
of veterans who died as a result of service-connected 
disabilities and whose survivors sought reimbursement of 
funeral expenses under section 2307 of title 38.

Section 202: Eligibility of surviving spouses who remarry for burial in 
        national cemeteries

            Background
    Section 2402(5) of title 38, United States Code, authorizes 
a veteran's spouse, surviving spouse, and eligible child to be 
buried along with the veteran in a national cemetery. If, 
however, a surviving spouse dies while he or she is remarried, 
there is no provision in law which grants that spouse the same 
national cemetery burial entitlement. In such cases, families 
must request a waiver from VA.
            Committee bill
    Section 202 would extend national cemetery burial 
eligibility to surviving spouses who have remarried.

Section 203: Permanent authority for State Cemetery Grants Program

            Background
    Section 2408(a) of title 38, United States Code, authorizes 
VA to make grants to any State to assist in establishing, 
expanding, or improving State veterans' cemeteries. The 
Secretary's authority to make such grants expires on Oct. 1, 
2004.
    The State Cemetery Grants Program has proven to be an 
important asset in helping VA meet the burial needs of 
veterans. The program has helped to fund 49 operational state 
cemeteries, and six more are now under construction. VA 
indicates that demand for grants under the program is high, and 
that permanently extending the program would assist in long-
term planning.
            Committee bill
    Section 203 would permanently authorize the State Cemetery 
Grants Program.

Section 204: Provision of markers for privately marked graves

            Background
    Section 502 of Public Law 107-103, the Veterans Education 
and Benefits Expansion Act of 2001, authorized VA to furnish a 
government headstone or marker for the grave of an eligible 
veteran buried in a non-veterans' cemetery irrespective of 
whether the grave was already marked with a private marker. The 
law applied to veterans whose deaths occurred on or after 
December 27, 2001. Public Law 107-330 extended this authority 
to include deaths occurring on or after September 11, 2001.
    From October 18, 1979, until November 1, 1990, VA paid a 
headstone or marker allowance to families who purchased a 
private headstone or marker in lieu of a Government headstone 
or marker. Thus, those families, like families of veterans who 
died on or after September 11, 2001, have had the opportunity 
to benefit from the VA-marker program regardless of whether a 
veteran's grave was previously marked. Only the families of 
veterans who died between November 1, 1990, and September 11, 
2001, have had no such opportunity.
            Committee bill
    Section 204 would amend the Veterans Education and Benefits 
Expansion Act of 2001 to authorize VA to furnish a government 
headstone or marker for the grave of an eligible veteran buried 
in a private cemetery, irrespective of whether the grave was 
already marked with a private marker, for deaths occurring on 
or after November 1, 1990.

Section 301: Two-year extension of round-down requirement for 
        compensation cost-of-living adjustments

            Background
    Sections 1104(a) and 1303(a) of title 38, United States 
Code, mandate that yearly cost-of-living adjustments made to 
rates of compensation and DIC be rounded down to the nearest 
whole dollar amount. This authority expires on September 30, 
2011.
            Committee bill
    Section 301 would extend the round down authority under 
sections 1104(a) and 1303(a) through fiscal year 2013.

Section 302: Presumptions of service-connection relating to diseases 
        and disabilities of former prisoners of war

            Background
    For purposes of establishing entitlement to disability 
compensation, section 1112(b) of title 38, United States Code, 
contains a list of 15 disabilities and diseases which are 
presumed to have been caused by the internment or detainment of 
former prisoners of war (hereinafter, ``POWs''), so long as 
such detainment or interment was for a period of 30 days or 
more. This presumptive list includes mental and physical 
diseases or disabilities which, based on available scientific 
evidence, are reasonably expected to manifest if POWs are 
traumatized, malnourished, or kept in unsanitary conditions for 
extended periods of time.
    POWs are often subjected to brutal treatment by their 
captors while interned. But even if they are treated humanely, 
they suffer extreme mental anguish. As Rick Jones of AMVETS 
testified at the Committee's July 10, 2003, hearing: ``The 
traumatic experience of meeting an enemy face-to-face, not 
knowing what is going to happen next, is sufficient stress even 
though a long period of incarceration does not follow.'' Thus, 
the 30-day minimum internment requirement for purposes of 
presumptive service-connection may be too restrictive for 
certain conditions. Under Secretary of Benefits Cooper 
concurred when he testified at the same hearing that ``[r]ecent 
experience has indicated, however, that, despite the shorter 
duration [of POW internments], the conditions of detention or 
internment may be such that these former POWs may suffer from 
many of the same diseases for which a presumption of service-
connection is available. * * *''
    On July 18, 2003, VA published a final rule adding 
cirrhosis of the liver to the list of diseases for which 
entitlement to service-connection is presumed for former POWs. 
VA took this action on the strength of an Institute of Medicine 
study which found a significantly higher risk of cirrhosis and 
cirrhosis mortality among former World War II POWs compared 
with control groups. The study found that alcohol consumption 
did not provide an explanation for the higher levels of 
cirrhosis mortality.
            Committee bill
    Section 302 would divide the current presumptive list of 
diseases for former POWs into two lists, and apply a different 
minimum internment threshold for each. The first presumptive 
list would require no minimum internment period and would 
include diseases associated with mental trauma, or acute 
physical trauma, which could plausibly be caused by even a 
single day of captivity. The first list would include 
psychosis, any of the anxiety states, dysthymic disorder (or 
depressive neurosis), organic residuals of frostbite (if the 
Secretary determines that a veteran was interned in conditions 
consistent with the occurrence of frostbite), and post-
traumatic osteoarthritis. Recognizing that the remaining 
diseases on the current presumptive list would more likely 
manifest after a prolonged internment, the second list retains 
the 30-day minimum internment requirement, but adds cirrhosis 
of the liver to that list. With the addition of cirrhosis of 
the liver, the second list would include avitaminosis, 
beriberi, chronic dysentery, helminthiasis, malnutrition, 
pellagra, any other nutritional deficiency, cirrhosis of the 
liver, peripheral neuropathy, irritable bowel syndrome, and 
peptic ulcer disease. The Committee notes that VA will 
establish a Workgroup on Medical Presumptive Conditions in 
Former POWs to establish procedures, guidelines, and standards 
to determine whether additional diseases should be added to the 
presumptive lists. The Committee expects that VA will continue 
to monitor research on the health effects of POW internment 
and, as with cirrhosis of the liver, make amendments to the 
presumptive list, as appropriate.

Section 303: Repeal of requirement for minimum period of internment of 
        prisoners of war for dental care

            Background
    Section 1712(a)(1)(F) of title 38, United States Code, 
authorizes free outpatient dental services to POWs interned for 
90 days or more.
            Committee bill
    In recognition of the sacrifices made by POWs, and without 
regard to whether a dental condition resulted from internment, 
section 303 would eliminate the 90-day internment period 
required for POW entitlement to outpatient dental services.

Section 304: Rounding down of certain cost-of-living adjustments on 
        education assistance

            Background
    Sections 3015(h) and 3564 of title 38, United States Code, 
provide for annual cost-of-living adjustments to both the 
Montgomery GI Bill and Survivors and Dependents Educational 
Assistance programs. Each section specifies that percentage 
increases be ``rounded to the nearest dollar.''
            Committee bill
    Section 304 would require annual percentage adjustments 
under sections 3015(h) and 3564 to be rounded down to the 
nearest dollar. This section would first apply to adjustments 
made at the start of fiscal year 2005.

Section 305: Termination of education loan program

            Background
    VA administers an education loan program, in effect since 
January 1, 1975, which makes loans of up to $2,500 per academic 
year to veterans' spouses and surviving spouses who have 
remaining entitlement to Survivors and Dependents Educational 
Assistance benefits but who are past the ``delimiting period'' 
for eligibility. No loan has been issued under this program for 
several years. There are currently 20 loans outstanding with a 
total pending balance of less than $15,000 collectively. It 
costs VA $70,000 per year to administer the program.
            Committee bill
    Section 305 would repeal the education loan program and 
waive any existing repayment obligations.

Section 306: Termination of authority to guarantee loans to purchase 
        manufactured homes and lots

            Background
    Section 3712 of title 38, United States Code, authorizes VA 
to guarantee loans for the purchase of a manufactured home and 
a lot on which it is sited. Only three loans have been 
guaranteed under this program since fiscal year 1995. Due to 
the low loan volume, lender interest in using the VA 
manufactured loan program is almost non-existent. In addition, 
of the loans VA has guaranteed under the program, 38.7 percent 
have gone to foreclosure over the past 30 years.
            Committee bill
    Section 306 would eliminate the authority of VA to 
guarantee loans to purchase a manufactured home and the lot on 
which it is sited. VA would continue servicing existing loans 
and pay claims on those loans. The Committee notes that VA 
would retain the ability to guarantee loans on manufactured 
homes under the authority of section 3710(a)(9) of title 38.

Section 307: Increase in loan fee for subsequent loans closed before 
        October 1, 2011

            Background
    Under VA's home loan guaranty program, VA may guaranty a 
portion of a loan made to eligible service members, veterans, 
reservists, and certain unremarried surviving spouses for the 
purchase (or refinancing) of houses, condominiums, and 
manufactured homes. Section 3729(b)(2) of title 38, United 
States Code, sets forth a loan fee table which lists funding 
fees (expressed as a percentage of the loan amount) for 
different types of loans. The funding fee for a beneficiary's 
initial home loan varies according to the amount of down-
payment paid by the beneficiary. The funding fee for the use of 
VA's loan guaranty on loans subsequent to the beneficiary's 
first such loan is currently set at three percent for all 
beneficiaries. On October 1, 2011, the funding fee will be 
reduced to one and one-quarter percent for veterans, service 
members, and surviving spouses, and reduced to two percent for 
reservists.
            Committee bill
    Section 307 would increase, effective October 1, 2004, the 
funding fee for subsequent use loans to three and one-half 
percent for all eligible beneficiaries. On October 1, 2011, the 
funding fee on subsequent use loans would still be reduced to 
one and one-quarter percent for veterans, service members, and 
surviving spouses, and two percent for reservists.

Section 308: Reinstatement of minimum requirements for sale of vendee 
        loans

            Background
    Section 3733(a) of title 38, United States Code, authorizes 
VA to finance the purchase of properties it has acquired, as 
guarantor, as a result of foreclosure. Until recently, this so-
called ``vendee loan'' authority was used as a tool to dispose 
of properties quickly at the highest possible return to the 
government.
    In its fiscal year 2003 budget submission, VA announced 
that it would administratively terminate the vendee loan 
program effective January 31, 2003. Before the termination of 
the program, VA financed approximately 60 percent of its 
property sales using vendee loan financing.
    The utility of vendee loans in selling properties quickly 
was validated by a March 28, 2000, report to VA by the 
consulting firm of Booz Allen & Hamilton. The Booz Allen report 
concluded that vendee financing enables VA to get a higher 
return on its properties than it could secure using ``cash-
only'' sales alone. The report stated that ``the comparison of 
revenues and expenses for properties and loans over the life 
cycle of VA's interest and liability indicates that properties 
sold via seller financing (term sales) achieve a higher net 
value to VA than do properties sold for cash (cash sales),'' 
and thus concluded that vendee financing ``has merit as an 
option for the sale of VA property.''
            Committee bill
    Section 308 would reinstate the vendee loan program as a 
property management tool, and would require VA to dispose of 
between 50 and 85 percent of acquired properties using vendee 
loans.

Section 309: Operation of Native American veteran housing loan program

            Background
    Subchapter V of chapter 37 of title 38, United States Code, 
directs VA to establish and implement a pilot program under 
which VA makes direct housing loans to Native American 
veterans. Under the Native American Veteran Direct Loan Program 
(hereinafter, ``NAVDLP''), loans are available for the 
purchase, construction, or improvements of homes on Native 
American trust lands, and for the refinancing of existing 
loans. A total of 289 loans have been made under the program 
from its inception in 1993 to September 30, 2002. The program 
is scheduled to expire on December 31, 2005.
    In a letter to Chairman Specter dated June 11, 2003, Under 
Secretary for Benefits Cooper wrote that VA was compelled to 
cease making loans under the NAVDLP pursuant to a statutory 
limitation, placed by Public Law 108-7, on the dollar value of 
new loans placed on the program. Title I of Division K of 
Section 3 of that statute, the Consolidated Appropriations 
Resolution of 2003, states that ``no new loans in excess of 
$5,000,000 may be made in fiscal year 2003.'' According to 
Under Secretary Cooper, the loan limitation was imposed due to 
technical budget requirements that require a loan level ceiling 
when a loan program has a negative subsidy rate. Fiscal Year 
2003 was the first time the NAVDLP had a negative subsidy rate. 
Because of historically low interest rates driving demand for 
loan refinances, VA quickly exceeded the loan limit, and has 
had to suspend loan payments to Native American veterans.
            Committee bill
    Section 309 would eliminate the cap on the statutory 
limitation on the dollar value of new loans placed on the 
NAVDLP during fiscal year 2003.

Section 310: Time limitations on receipt of claim information pursuant 
        to requests of Department of Veterans Affairs

            Background
    Section 5102(b) of title 38, United States Code, requires 
that VA, in cases where it receives an application for benefits 
that is not complete, notify the applicant of the information 
that is necessary to complete the application for benefits. 
Similarly, section 5103(a) of title 38 requires that VA, when 
it receives a complete or a substantially complete application 
for benefits, notify the applicant of any information or 
evidence necessary to substantiate the claim. Section 5103(b) 
states that if information or evidence requested under section 
5103(a) is not received within one year of the date of such 
notification, then no benefits may be paid by reason of that 
application for benefits.
    Prior to the enactment of the Veterans Claims Assistance 
Act of 2000 (hereinafter, ``VCAA''), Public Law 106-475, a one-
year time window was afforded to claimants for providing 
information and evidence necessary to complete an application 
for benefits. VCAA created a new one-year limitation with 
respect to the time claimants have to submit evidence necessary 
to substantiate claims, but the statute omitted to restate the 
one-year time limitation with respect to completion of an 
initial application for benefits. VA has informed the Committee 
that the omission could be construed to prohibit VA from ever 
closing an application as abandoned.
    VA has also expressed concern that VCAA's one-year time 
limitation on substantiating a claim might be construed to 
prohibit VA from issuing an initial decision on a claim prior 
to the lapse of a one-year period beginning with the date VA 
sent notice to a claimant requesting necessary information and 
evidence. Under such a construction, if VA were to have 
sufficient evidence to grant benefits, but it still lacked a 
particular piece of evidence requested of the claimant and 
previously thought necessary to substantiate the claim, VA 
would be required to wait a full year from the date the 
evidence was requested before it would award benefits. Such an 
interpretation would not advance the interests of VA claimants. 
Nor would it be consistent with VA's legitimate interests in 
timely adjudicating claims and reducing claims backlogs.
            Committee bill
    Section 310 would require that claimants who have submitted 
an incomplete application under section 5102(b) of title 38 and 
who have been notified that information is required to complete 
the application submit the information within one year of the 
date of notification or else no benefit would be paid by reason 
of the application. It would also clarify section 5103(b) by 
stating that that subsection would not be construed to prohibit 
VA from making a decision on a claim before the expiration of 
the one-year period. The Committee emphasizes that, in cases 
where VA has notified claimants of information or evidence 
necessary to substantiate their claims and no information or 
evidence is received within a reasonable period, VA may still, 
under the Committee Bill language, make a decision on the 
claim. In such cases, the one-year time period would still 
enable a claimant to submit the requested information or 
evidence and if benefits are granted on readjudication, assign 
an effective date of award as if VA had not made the initial 
decision.

Section 311: Clarification of applicability of prohibition on 
        assignment of veterans benefits to agreements on future receipt 
        of certain benefits

            Background
    Section 5301 of title 38, United States Code, prohibits the 
assignment of VA benefits and exempts such benefits from 
taxation and from the claims of creditors. Despite this 
prohibition, the Committee is informed that some companies 
offer up-front cash payments in return for future payments of 
veterans' disability compensation. Worse, Senator Bill Nelson 
testified at the Committee's July 10, 2003, hearing that such 
``up-front'' payments typically amountto pennies-on-the-dollar 
compared to forfeited compensation payments. The National Consumer Law 
Center, in a report highlighting consumer scams targeted at veterans, 
concluded that such arrangements are illegal under existing law. 
Nonetheless, they apparently persist.
            Committee bill
    Section 311 would clarify current statutory language 
prohibiting the assignment of benefits and specify that any 
agreement under which a VA beneficiary might purport to 
transfer to another person or entity the right to receive 
direct or indirect payments of compensation, pension, or DIC 
benefits shall be deemed to be a prohibited assignment. Section 
311 would also make it clear, however, that such prohibitory 
language would not bar loans to VA beneficiaries which might be 
repaid with funds derived from VA so long as each periodic 
payment made under the loan is separately and voluntarily 
executed by the beneficiary at the time the payment is made. 
This language is intended to make clear that the reach of 
section 311 is limited, and does not hamper veterans' access to 
credit from legitimate sources. The Committee expects that VA 
will continue its outreach efforts to notify veterans that 
benefit assignment schemes are not only inadvisable, they are 
legally unenforceable.

Section 312: Three-year extension of income verification authority

            Background
    Section 5317 of title 38, United States Code, directs VA to 
notify applicants for needs-based VA benefits--e.g., VA 
pension--that information collected from the applicants may be 
compared with income-related information obtained by VA from 
the Internal Revenue Service and the Department of Health and 
Human Services. The authority of the VA Secretary to obtain 
such information expires on September 30, 2008.
    Section 6103(l)(7)(D)(viii) of the Internal Revenue Code 
authorizes the release of income information by the Internal 
Revenue Service to VA. This authority expires on September 30, 
2008.
            Committee bill
    Section 312 would extend until September 30, 2011, the 
authority of the VA Secretary to obtain income information 
under section 5317 of title 38, and the authority of the 
Internal Revenue Service to share income information under 
section 6103(l)(7)(D)(viii) of the Internal Revenue Code.

Section 313: Forfeiture of benefits for subversive activities

            Background
    Section 6105 of title 38, United States Code, provides that 
individuals convicted of any of several enumerated offenses 
relating to subversive activities shall forfeit their claims to 
VA benefits.
            Committee bill
    Section 313 would expand the listing of criminal activities 
in section 6105 which would give rise to the forfeiture of VA 
benefits. Included would be offenses involving the use of 
biological or chemical weapons, offenses involving transactions 
in nuclear materials, and genocide, the use of weapons of mass 
destruction, and acts of terrorism transcending national 
boundaries.

Section 314: Clarification of notice of disagreement for appellate 
        review of Department of Veterans Affairs activities

            Background
    Claimants for VA benefits who disagree with an initial 
decision rendered by VA may initiate an appeals process by 
submitting a written notice of disagreement (hereinafter, 
``NOD'') within one year after the claimant was notified of the 
initial decision. Section 7105(b) of title 38, United States 
Code, states that an NOD ``must be in writing and filed with 
the activity which entered the determination with which 
disagreement is expressed.'' Upon the timely filing of an NOD, 
the VA is required to provide appellate review of its initial 
benefits rating decision.
    VA has promulgated regulations to implement section 7105 
which state that ``while special wording is not required, the 
Notice of Disagreement must be in terms which can be reasonably 
construed as disagreement with the determination and desire for 
appellate review.'' 38 CFR Sec. 20.201 (2002). In 2000, the 
U.S. Court of Appeals for Veterans' Claims held in Gallegos v. 
Gober, 14 Vet. App. 50 (2000), that VA's regulation was invalid 
because it required more of the claimant than was required by 
statute. However, the U.S. Court of Appeals for the Federal 
Circuit reversed CVAC's decision, see Gallegos v. Principi, 283 
F.3d 1309 (Fed. Cir. 2002), finding that VA was entitled to 
deference in promulgating this regulation because Congressional 
intent was unclear.
            Committee bill
    Section 314 would clarify section 7105(b) by requiring that 
VA deem any written document which expresses disagreement with 
a VA decision to be an NOD unless VA finds that the claimant 
has disavowed a desire for appellate review. This section would 
be effective with respect to documents filed on or after the 
date of enactment, and with respect to documents filed before 
the date of enactment and not treated by the VA as an NOD 
pursuant to part 20.201 of title 38, Code of Federal 
Regulations. Furthermore, a document filed as an NOD after 
March 15, 2002, and rejected by the Secretary as insufficient 
would, at VA motion or at the request of a claimant within one 
year of enactment, be deemed to be an NOD if the document 
expresses disagreement with a decision and VA finds that the 
claimant has not disavowed a desire for appellate review.

Section 321: Rate of payment of benefits for certain Filipino veterans 
        and their survivors residing in the United States

            Background
    Section 107 of title 38, United States Code, specifies that 
World War II service by Filipinos in the organized military 
forces of the Commonwealth of the Philippines (the so-called 
Philippine Commonwealth Army), including service in organized 
guerilla forces under U.S. command, shall be considered to be 
active service in U.S. forces for purposes of eligibility for 
veterans benefits, but only as provided by law. Similarly, that 
statute specifies that service as a so-called new Philippine 
Scout under section 14 of the Armed Forces Voluntary 
Recruitment Act of 1945 will be considered to be active service 
in U.S. forces for purposes of veterans benefits, but only as 
specified by law. Under the terms of section 107, WWII veterans 
of the Philippine Commonwealth Army and recognized guerilla 
forces (and their spouses and dependent children) are eligible 
for, among other benefits, VA disability compensation and VA 
dependency and indemnity compensation. For Commonwealth Army 
veterans residing outside the United States, such benefits are 
payable at the rate of $.50 for each dollar of benefit that 
would otherwise be paid. For Commonwealth Army veterans (or 
their spouses and dependent children) legally residing in the 
United States, however, compensation is payable at the full 
dollar rate, but DIC benefits are only payable at the $.50-on-
the-dollar rate. Veterans of the new Philippine Scouts (or 
their spouses and dependent children) are also eligible for 
compensation and DIC benefits under section 107, but both 
benefits are paid on a $.50-on-the-dollar basis whether the 
former new Philippine Scout resides in the United States or 
elsewhere.
    By letter dated May 12, 2003, VA Secretary Anthony J. 
Principi proposed legislation (S. 1213) on behalf of the 
Administration to modify the above-summarized statute, stating 
as follows:

        These limitations on benefit payments to certain 
        Filipino beneficiaries were intended to reflect the 
        differing economic conditions in the Philippines and 
        the United States. * * * Through the years, numerous 
        Filipino veterans and their dependents and survivors 
        have emigrated to this country, and many have become 
        permanent residents or citizens. It became evident that 
        the policy considerations underlying the restrictions 
        on payment of compensation and DIC to the affected 
        individuals are no longer relevant in the case of those 
        who reside in the United States.

            Committee bill
    Sections 321 would make Commonwealth Army veteran spouses 
and dependent children who are legally residing in the United 
States eligible for DIC at the full dollar rate. It would also 
make new Philippine Scout veterans (and their spouses and 
dependent children) who are legally residing in the United 
States eligible for compensation and DIC at the full dollar 
rate.

Section 322: Burial benefits for new Philippine Scouts residing in the 
        United States

            Background
    As is discussed above, WWII veterans of the Philippine 
Commonwealth Army, recognized guerilla forces, and former new 
Philippine Scouts are eligible for some--but not all--VA 
benefits. Commonwealth Army and guerilla force veterans are 
eligible for burial in VA national cemeteries; former new 
Philippine Scouts are not. Similarly, Commonwealth Army and 
guerilla force veterans are eligible for VA monetary burial 
benefits (at a full dollar rate if they were residing, at 
death, in the U.S.; otherwise, at a $.50-on-the-dollar rate); 
former new Philippine Scouts are not.
            Committee bill
    Section 322 would grant to former new Philippine Scouts who 
are residents of the United States at death eligibility for 
national cemetery burial. In addition, it would grant to former 
new Philippine Scouts who legally reside in the United States 
eligibility for cash burial benefits at the full dollar rate.

Section 323: Extension of authority to operate regional office in the 
        Philippines

            Background
    Section 315(b) of title 38, United States Code, authorizes 
VA to maintain a regional office in the Republic of the 
Philippines until December 31, 2003. VA has determined that it 
would be more costly, and less effective, to administer 
veterans' assistance activities in the Philippines through a 
Federal Benefits Unit attached to the Department of State than 
to maintain a VA regional office.
            Committee bill
    Section 323 would authorize VA to maintain a regional 
office in the Republic of the Philippines until December 31, 
2008.

Section 331: Dose reconstruction program of Department of Defense

            Background
    Section 3.311 of title 38, Code of Federal Regulations, 
sets out procedures for the adjudication of claims by VA for 
benefits premised on a veteran's exposure to ionizing radiation 
in service. For veterans who claim radiation exposure due to 
participation in nuclear atmospheric testing from 1945 through 
1962, or due to occupation duty in Hiroshima and Nagasaki prior 
to July 1, 1946, dose data are requested from DoD. DoD's 
Defense Threat Reduction Agency (hereinafter, ``DTRA'') pays a 
private contractor to estimate radiation exposure through a 
process called radiation dose reconstruction. VA relies on 
radiation dose reconstruction estimates to determine 
whetherdiseases suffered by radiation-exposed veterans are plausibly 
related to given levels of radiation exposure.
    Section 305 of Public Law 106-419 mandated that the 
Secretary of Defense contract for a report from the NAS to 
assess the accuracy of dose reconstruction estimates provided 
by DTRA and the overall validity of the radiation dose 
reconstruction process. The report, released on May 8, 2003, 
concluded that the radiation dose reconstruction program often 
underestimates exposure due to faulty or questionable 
assumptions about troop location and average dose readings 
contained on film badges. The report also determined that the 
contractor which provides the estimates for DTRA could benefit 
from the implementation of a quality control program. Finally, 
the report recommended the creation of an independent oversight 
system in order to monitor the radiation dose reconstruction 
program.
            Committee bill
    Section 331 would require VA and DoD to review, and report 
on, the mission, procedures, and administration of the 
radiation dose reconstruction program. It would also require VA 
and DoD to establish an advisory board to oversee the program. 
It is not the Committee's intent that VA and DoD duplicate the 
work of the NAS study. It does intend, however, that the 
agencies implement corrective actions recommended by the NAS 
report, and put into place an ongoing oversight and review 
program.

Section 332: Study on disposition of Air Force Health Study

            Background
    In the late 1970's, Congress urged the DoD to conduct an 
epidemiologic study of veterans of ``Operation Ranch Hand,'' 
the activity responsible for aerial spraying of herbicides 
during the Vietnam War. In response, the Air Force Health Study 
(hereinafter, ``AFHS'') was initiated in 1982 to examine the 
effects of herbicide exposure and health, mortality, and 
reproductive outcomes in veterans of Operation Ranch Hand. The 
study will conclude in 2006.
    Over the course of Operation Ranch Hand study, numerous 
medical documents, biological samples, and computer records 
have been collected on Ranch Hand participants and their family 
members. It is anticipated that these records and samples will 
no longer be maintained once the study is concluded.
            Committee bill
    Section 332 would direct VA to enter into an agreement with 
NAS under which NAS would to report on the following: (1) the 
scientific merit of retaining AFHS data after the Ranch Hand 
study is terminated; (2) obstacles to retaining the AFHS data 
which may exist; (3) the advisability of providing independent 
oversight of the data; (4) the advisability and prospective 
costs of extending the study, and the identity of an entity 
which would be suited to continue the study; and (5) the 
advisability of making lab specimens from the study available 
for independent research.

Section 333: Funding of Medical Follow-Up Agency of Institute of 
        Medicine of National Academy of Sciences for Epidemiological 
        Research on members of the Armed Forces and Veterans

            Background
    The Medical Follow-Up Agency (hereinafter, ``MFUA'') is a 
panel of the Institute of Medicine which researches military 
health issues. MFUA studies are relied upon by VA to evaluate 
whether specific environmental exposures during service might 
have long-term health effects, and whether such effects might 
suggest a need for veterans' benefits, new treatments, or 
further research. Public Law 102-585 requires that VA and DoD 
each contribute $250,000 in annual core funding to MFUA for a 
period of 10 years.
    At the Committee's July 10, 2003, hearing, VA Under 
Secretary Cooper was very direct about the importance of MFUA's 
studies to VA and veterans. He stated as follows: ``In short, 
the MFUA is a critical asset for VA.''
            Committee bill
    Section 333 would mandate VA and DoD funding for MFUA, at 
current levels, from fiscal year 2004 through 2013.

Section 341: Four-year extension of advisory Committee on Minority 
        Veterans

            Background
    Section 544 of title 38, United States Code, mandates that 
VA establish an Advisory Committee on Minority Veterans. The VA 
Secretary must, on a regular basis, consult with and seek the 
advice of the Advisory Committee with respect to issues 
relating to the administration of benefits for minority group 
veterans. The Secretary must also consult with and seek the 
advice of the Committee with respect to reports and studies 
pertaining to such veterans, and the needs of such veterans for 
compensation, health care, rehabilitation, outreach, and other 
benefits and programs administered by the VA. The Advisory 
Committee is required to submit an annual report providing its 
assessment of the needs of minority veterans, VA programs 
designed to meet those needs, and any recommendations the 
Advisory Committee considers appropriate. The authorization for 
the Advisory Committee expires on December 31, 2003.
            Committee bill
    Section 341 would extend the authorization of the Advisory 
Committee on Minority Veterans until December 31, 2007.

Section 342: Veterans' Advisory Committee on Education

            Background
    Section 3692 of title 38, United States Code, authorizes 
the establishment in VA of the Veterans' Advisory Committee on 
Education, and specifies that Advisory Committee members shall 
include veterans representative of each war and peacetime era 
beginning with World War II. The authorization for the Advisory 
Committee is scheduled to expire on December 31, 2003.
            Committee bill
    Section 342 would extend the Advisory Committee's 
authorization through the year 2013. Section 342 would also 
maintain the existing requirement that the Advisory Committee's 
membership include veteran-representatives drawn from each war 
and peacetime era, but only as practicable.

Section 343: Temporary authority for performance of medical 
        disabilities examinations by contract physicians

            Background
    In order that VA might determine the type and severity of 
disabilities of veterans filing for VA compensation or pension 
benefits, VA often requires thorough medical disability 
examinations. Because these exams form the basis of disability 
ratings, their accurate and timely completion is essential. The 
majority of the approximately 400,000 disability exams 
requested yearly are performed by staff of VA's Veterans Health 
Administration (hereinafter, ``VHA'').
    In order that the effectiveness of the private sector's 
ability to perform specialized disability examinations might be 
gauged, section 504 of Public Law 104-275 authorized a contract 
disability examination pilot program to be carried out through 
ten VA regional offices. Currently, one contractor--QTC 
Management, Inc.--performs all of the examinations under the 
pilot program. About half of the examinations performed at the 
ten regional offices are performed by contract physicians; the 
other half are performed by VHA staff.
    The pilot program has been judged a successful complement 
to VHA-provided examinations. The 2001 report issued by the VA 
Claims Processing Task Force entitled VA Claims Processing Task 
Force: Report to the Secretary of Veterans Affairs (October 
2001), gave high marks to the contractor's performance and 
recommended that the contract disability examination pilot 
program be expanded. The report stated as follows: ``The 
quality of QTC Management exams has been reported to exceed a 
99 percent adequacy rate, and the Task Force found high 
approval from Regional Office employees. Reported medical 
examination timeliness was within contract compliance with 
positive feedback in customer service surveys.'' Id. at 70.
    Veterans groups are also pleased with the program's 
performance. The Independent Budget for Fiscal Year 2004, a 
product of four major veterans' service organizations--AMVETS, 
Disabled American Veterans, Paralyzed Veterans of America, and 
the Veterans of Foreign Wars--stated the following regarding 
the pilot program:

          Experience gained from a pilot project and a contract 
        authorized by Public Law 104-275 demonstrates that a 
        private contractor can economically provide adequate 
        and timely disability examinations to veterans at 
        locations near their homes with a high level of veteran 
        satisfaction. Authority for contract examinations at 
        all its regional offices would allow VA to improve 
        claims processing nationwide.

The Independent Budget for Fiscal Year 2004: A Comprehensive 
Budget and Policy Document Created by Veterans for Veterans 
(2003) at 27. The American Legion, in testimony given by Ms. 
Cathleen Wiblemo at the Committee's hearing on July 28, 2003, 
also expressed its desire to see the contract medical 
examination authority expanded and made permanent.
            Committee bill
    Section 343 would authorize VA, using funds subject to 
appropriation, to contract for disability examinations from 
non-VA providers at all VA regional offices. Such examinations 
would be conducted pursuant to contracts entered into and 
administered by the Under Secretary for Benefits. The 
Secretary's authority under this section would expire on 
December 31, 2009. No later than four years after the section's 
enactment, the Secretary would be required to submit a report 
assessing the cost, timeliness, and thoroughness of disability 
examinations performed under this section. VA's existing 
authority to contract for medical exams at ten regional 
offices, paid out of the compensation and pension account, 
would continue in force notwithstanding the enactment of 
section 343.
    The Committee expects that the expanded contract authority 
specified in this provision would serve as a complement to, and 
not a substitute for, examinations performed by VHA staff. The 
Committee is aware of the tremendous backlog of patients 
seeking medical care at many VA medical centers and clinics and 
views the expanded contract authority provided by this section, 
if used judiciously, as one way VA may free VHA resources to 
focus on the provision of direct medical care to veterans.

Section 344: Technical amendment

            Background
    Section 403 of the Homeland Security Act of 2002, Public 
Law 107-296, transferred the functions, personnel, assets, and 
liabilities of the United States Coast Guard from the 
Department of the Transportation to the newly-created 
Department of Homeland Security.
    Section 1974(a)(5) of title 38, United States Code, 
specifies the officials who shall be members of VA's Advisory 
Council onServicemembers' Group Life Insurance. Among the 
officials listed is the Secretary of Transportation. As was stated in 
H. Report No. 91-1025 at 3 accompanying the legislation, Public Law 91-
291 (1970), which added The Department of Transportation to the listing 
of agencies specified in section 1974, ``the Secretary of 
Transportation [is added] to the Advisory Council of SGLI since that 
official now has responsibility for the Coast Guard.''
            Committee bill
    Section 344 of the Committee bill substitutes ``Secretary 
of Homeland Security'' for ``Secretary of Transportation'' in 
38 U.S.C. Sec. 1974(a)(5). The Secretary of Homeland Security 
now has responsibility for the Coast Guard.

                             Cost Estimate

    In compliance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate, the Committee, based on 
information supplied by the Congressional Budget Office 
(hereinafter, ``CBO''), estimates that enactment of the 
Committee bill would reduce direct spending for veterans 
programs by $346 million in 2004, increase direct spending by 
$2 million over the 2004-2008 period, and reduce direct 
spending by $7 million over the 2004-2013 period. In addition, 
CBO estimates that implementing the Committee bill would cost 
$129 million in 2004 and almost $1.4 billion over the 2004-2008 
period, assuming appropriation of necessary amounts. Enactment 
of the Committee bill would not affect the budgets of state, 
local, or tribal governments.
    The cost estimate provided by CBO, setting forth a detailed 
breakdown of costs, follows:
                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 16, 2003.
Hon. Arlen Specter,
Chairman, Committee on Veterans' Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office (CBO) 
has prepared the enclosed cost estimate for S. 1132, the 
Veterans' Benefits Enhancements Act of 2003.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sunita 
D'Monte.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

Veterans' Benefits Enhancements Act of 2003

    Summary: S. 1132 would affect several veterans programs, 
including housing, readjustment benefits, compensation, 
pensions, burial, and health care. CBO estimates that enacting 
this legislation would reduce direct spending for veterans 
programs by $46 million in 2004, increase direct spending by $2 
million over the 2004-2008 period, and reduce direct spending 
by $7 million over the 2004-2013 period. In addition, CBO 
estimates that implementing S. 1132 would cost $129 million in 
2004 and almost $1.4 billion over the 2004-2008 period, 
assuming appropriation of the necessary amounts.
    S. 1132 contains no intergovernmental or private-sector 
mandates as defined by the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 1132 is shown in Table 1. This estimate 
assumes that the legislation will be enacted by the end of 
calendar year 2003. The costs of this legislation fall within 
budget functions 700 (veterans benefits and services), and 050 
(national defense).

                                 TABLE 1.--ESTIMATED BUDGETARY IMPACT OF S. 1132
                                    [By fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                       2004     2005     2006     2007     2008
----------------------------------------------------------------------------------------------------------------
                                         CHANGES IN DIRECT SPENDING \1\

Estimated Budget Authority.........................................      -46        *       18       22        7
Estimated Outlays..................................................      -46        *       18       22        7

                                CHANGES IN SPENDING SUBJECT TO APPROPRIATION \1\

Estimated Authorization Level......................................      130      300      312      325      334
Estimated Outlays..................................................      130      282      303      323     333
----------------------------------------------------------------------------------------------------------------
\1\ Five-year costs in the text differ slightly from a summation of the annual costs listed here because of
  rounding.

Note.--* = Savings of less than $500,000.

    Basis of estimate: S. 1132 would increase direct spending 
by $2 million over the next five years, and would cost about 
$1.4 billion in new discretionary spending, assuming 
appropriation of the necessary amounts.

Direct spending--summary

    S. 1132 would affect direct spending in veterans' programs 
for housing, readjustment benefits, compensation, pensions, and 
burial. Table 2 summarizes those effects, and the individual 
provisions that would affect direct spending are described 
below. In total, CBO estimates that enacting this legislation 
would reduce direct spending for veterans programs by $46 
million in 2004, increase direct spending by $2 million over 
the 2004-2008 period, and reduce direct spending by $7 million 
over the 2004-2013 period.

Direct spending--housing

    Three sections of the bill would affect direct spending on 
veterans' housing programs. Together, CBO estimates that 
enacting these provisions would lower direct spending by $68 
million in 2004, $257 million over the 2004-2008 period, and 
$480 million over the 2004-2013 period. (Higher savings would 
occur in 2004 than in later years because of lower interest 
rate assumptions for that year compared to those projected for 
the 2005-2013 period.) In preparing this estimate, CBO 
accounted for the interactions between the individual 
provisions; savings could be lower if only one or two of these 
provisions were enacted. Costs or savings for each individual 
provision, estimated as if they were enacted alone, are 
described below.

                                              TABLE 2.--ESTIMATED CHANGES IN DIRECT SPENDING UNDER S. 1132
                                                    [By fiscal year, outlays in millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  2004     2005     2006     2007     2008     2009     2010     2011     2012     2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         HOUSING

Spending Under Current Law....................................      567      552      535      547      560      572      588      601      917      938
Proposed Changes..............................................      -68      -54      -42      -45      -48      -50      -50      -53      -34      -36
Spending Under S. 1132........................................      499      498      493      502      512      522      538      548      883      902

                                                             VETERANS' READJUSTMENT BENEFITS

Spending Under Current Law....................................    2,575    2,749    2,923    3,100    3,259    3,406    3,543    3,696    3,820    3,947
Proposed Changes..............................................       10       42       48       49       49       50       50       50       50       51
Spending Under S. 1132........................................    2,585    2,791    2,971    3,149    3,308    3,456    3,593    3,746    3,870    3,998

                                                     COMPENSATION, PENSION, AND BURIAL BENEFITS \1\

Spending Under Current Law....................................   29,796   34,353   32,288   29,992   33,121   33,621   34,170   37,661   33,048   36,743
Proposed Changes..............................................       12       12       12       18        6        6       -3       -7       -9      -27
Spending Under S. 1132........................................   29,808   34,365   32,300   30,010   33,127   33,627   34,167   37,654   33,039   36,716

Total Proposed Changes \1\....................................      -46        *       18       22        7        6       -3      -10        7     -12
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Five- and 10-year costs in the text differ slightly from a summation of the annual costs shown here because of rounding.

Note.--* = Savings of less than $500,000.

    Reinstatement of Vendee Home Loan Program. Section 308 
would reinstate the vendee home loan program which was 
discontinued by the Department of Veterans Affairs (VA) on 
January 31, 2003. Before that date, when a veteran defaulted on 
his mortgage and the home went into foreclosure, VA often 
acquired the property and issued a new direct loan when the 
property was sold. These loans are called vendee loans. CBO 
estimates that reinstating the program would save VA $357 
million over the 2004-2013 period, or roughly $35 million a 
year. The bill also would require VA to finance between 50 
percent and 85 percent of such sales through the vendee loan 
program. Before the program was terminated, VA financed roughly 
60 percent of such sales with vendee financing and CBO 
estimates that it would continue to do so under the bill. The 
estimated savings for this provision is the net effect of three 
individual program effects (two with savings and one with 
costs), as explained below.
    Based on historical data, CBO estimates that under the bill 
roughly 14,000 vendee loans would be made each year with an 
average loan amount of $98,000. Vendee loans lower the subsidy 
cost of the VA home loan program in two ways. First, VA 
receives more money for homes sold with vendee financing than 
those sold with other financing (16 percent more in 2002). 
Since the proceeds from these home sales are considered 
recoveries of losses from the guaranteed loans that were 
foreclosed, enacting this section would increase recoveries and 
therefore lower subsidy costs in the guaranteed loan portfolio. 
CBO estimates that VA would save an average of $68 million a 
year in guaranteed loan subsidies over the 2004-2013 period. 
Second, because vendee loans have lower prepayment and default 
rates than other direct loans made by VA, this provision also 
would lower subsidy costs for direct loans by an average of $28 
million a year over the 2004-2013 period. Finally, before the 
program was terminated in 2003, VA sold most vendee loans on 
the secondary mortgage market and guaranteed their timely 
repayment; CBO estimates that it would continue to do so under 
the bill. Based on historical data, CBO estimates that VA would 
sell an average of $1.2 billion in vendee loans annually, at a 
subsidy cost of roughly $60 million a year.
    Increases in Loan Fees. Section 307 would increase the fee 
charged for repeated use of the home loan benefit (when a 
veteran uses the benefit more than once) by 50 basis points for 
the 2005-2011 period. CBO estimates that this provision would 
reduce direct spending by $20 million in 2005 and $139 million 
over the 2005-2011 period.
    Loans for Manufactured Homes and Lots. Under current law, 
VA has the authority to guarantee loans for the purchase of 
manufactured homes or for the purchase of lots for existing or 
new manufactured homes. Section 306 would terminate this 
authority on December 31, 2003. In the last five years, VA has 
guaranteed only one loan for a manufactured home at a subsidy 
cost of a few hundred dollars. CBO estimates this provision 
would reduce direct spending by less than $500,000 a year over 
the 2004-2013 period.

Direct spending--veterans' readjustment benefits

    S. 1132 contains several provisions that would affect 
direct spending for education benefits for veterans and their 
survivors and dependents, and for other readjustment benefits 
(see Table 3). Together these provisions would increase direct 
spending by about $10 million in 2004, $200 million over the 
2004-2008 period, and $450 million over the 2004-2013 period.

        TABLE 3.--ESTIMATED CHANGES IN DIRECT SPENDING FOR VETERANS' READJUSTMENT BENEFITS UNDER S. 1132
                                [By fiscal year, outlays in millions of dollars]
----------------------------------------------------------------------------------------------------------------
       Description of provisions          2004   2005   2006   2007   2008   2009   2010   2011    2012    2013
----------------------------------------------------------------------------------------------------------------
Survivors' and Dependents' Education        10     43     50     53     55     57     59      61      63      65
 Assistance............................
Education Cost-of-Living Adjustments...      0     -1     -2     -4     -6     -7     -9     -11     -13     -14
Other Provisions.......................      *      *      *      *      *      *      *       *       *       *
                                        ------------------------------------------------------------------------
      Total Changes in Veterans'            10     42     48     49     49     50     50      50      50     51
       Readjustment Benefits...........
----------------------------------------------------------------------------------------------------------------
Note.--* = Less than $500,000.

    Survivors' and Dependents' Education Assistance. Effective 
July 1, 2004, section 104 would increase the survivors' and 
dependents' education benefit to $788 a month, an increase of 
13 percent over the current rate. Based on our analysis of the 
effects of previous benefit increases, CBO assumes this hike in 
the benefit level would increase the number of beneficiaries 
from an average of 53,000 a year over the 2004-2013 period to 
54,000, and would enable more of these students to attend 
school full time rather than part time. CBO estimates enacting 
this provision would increase direct spending for readjustment 
benefits by $10 million in 2004, $211 million over the 2004-
2008 period, and $516 million over the 2004-2013 period.
    Education Cost-of-Living Adjustments (COLA). Section 304 
would reduce outlays for education benefits by changing the 
method for calculating the monthly stipends paid under the 
Montgomery GI Bill and Survivors' and Dependents' Education 
Assistance programs. Under current law, the benefit amounts are 
rounded to the nearest dollar. Under section 304, after 
calculating the annual COLA increase, the monthly rates would 
each be rounded down to the next lower whole dollar. There 
would be no savings in 2004, as the benefit rates for this year 
have already been set. Based on our projections of the number 
of beneficiaries and the number of payments made each year, CBO 
estimates that enacting this section would result in direct 
spending savings of $13 million over the 2005-2008 period and 
$67 million over the 2005-2013 period.
    Other Provisions. The following provisions would have an 
insignificant budgetary impact on direct spending for 
readjustment benefits:
     Section 103 would extend the period of eligibility 
for survivors and dependents education benefits for those 
members of the National Guard who are ordered involuntarily to 
full-time National Guard duty under section 502(f) of Title 32 
of the U.S. Code. This expanded eligibility would be 
retroactive toSeptember 11, 2001. Based on information from VA 
and Department of Defense (DoD), CBO estimates that very few National 
Guard members would be affected by this change and that the cost would 
be less than $500,000 over the 2004-2013 period.
    Section 305 would repeal the Education Loan Program and 
forgive any remaining debts owed to the fund. No loans have 
been made through this fund in 10 years and the currently 
outstanding debt is about $100,000. Forgiving the remaining 
debt would constitute a loan modification, which would increase 
direct spending by less than $100,000 (in fiscal year 2004, the 
assumed year of enactment).

Direct spending--compensation, pensions, and burial benefits

    Several sections of the bill would affect spending for 
veterans' disability compensation, pensions, and burial 
benefits (see Table 4). Some provisions affecting burial 
benefits or disability compensation would increase direct 
spending while other provisions would reduce such spending. On 
balance, CBO estimates that enacting those provisions would 
increase direct spending by $12 million in 2004, $61 million 
over the 2004-2008 period, and $24 million over the 2004-2013 
period.
    Extension of Provision to Round-Down COLA. Section 301 
would extend through 2013 a provision of law that requires the 
increased monthly rates due to the COLA to be rounded down to 
the next lower whole dollar. This provision of law applies to 
both disability compensation and dependency and indemnity 
compensation payments. These provisions are currently due to 
expire at the end of 2011. Based on projections of the number 
of beneficiaries and number of payments made each year, CBO 
estimates that this section would result in direct spending 
savings of $50 million over the 2012-2013 period.
    Disability Benefits for Filipino Veterans. Section 321 
would expand benefits for Filipino veterans who served in the 
Philippine Commonwealth Army and the New Philippine Scouts, and 
their survivors. In sum, CBO estimates that enacting section 
321 would cost $4 million in 2004, $20 million over the 2004-
2008 period, and $44 million over the 2004-2013 period.
    Dependency and Indemnity Compensation (DIC). Under current 
law, surviving spouses and dependents of Filipino veterans who 
served in the Philippine Commonwealth Army or the New 
Philippine Scouts during World War II and live in the United 
States are eligible to receive half the amount of the DIC 
payment that survivors of veterans of the U.S. armed forces 
receive. Section 321 of the bill would require that these 
survivors be paid at the full DIC rate.

 TABLE 4.--ESTIMATED CHANGES IN DIRECT SPENDING FOR VETERANS' COMPENSATION, PENSIONS, AND BURIAL BENEFITS UNDER
                                                     S. 1132
                                [By fiscal year, outlays in millions of dollars]
----------------------------------------------------------------------------------------------------------------
       Description of provisions         2004   2005   2006   2007   2008   2009   2010    2011    2012    2013
----------------------------------------------------------------------------------------------------------------
Extension of Provision to Round Down        0      0      0      0      0      0       0       0     -16     -34
 Cost-of-Living Adjustments...........
Disability Benefits for Filipino            4      4      4      4      4      4       5       5       5       5
 Veterans.............................
Extension of Income Verification......      0      0      0      0      0     -5     -10     -14       0       0
Alternate Beneficiaries...............      0      0      0     11      1      6       1       1       1       1
Markers for Privately Marked Graves...      7      7      7      2      0      0       0       0       0       0
Repeal of Limitation on Payments of         1      1      1      1      1      1       1       1       1       1
 Accrued Benefits.....................
Burial Plot Allowance.................      *      *      *      *      *      *       *       *       *       *
Spina Bifida Benefits.................      *      *      *      *      *      *       *       *       *       *
Disability Benefits for Former              *      *      *      *      *      *       *       *       *       *
 Prisoners of War.....................
                                       -------------------------------------------------------------------------
      Total Changes in Compensation,       12     12     12     18      6      6      -3      -7      -9    -27
       Pensions, and Burial Benefits*.
----------------------------------------------------------------------------------------------------------------
\1\ Five- and 10-year costs in the text differ slightly from a summation of the annual costs shown here because
  of rounding.

Note.--* = Less than $500,000.

    Based on information provided by VA, CBO estimates that 
about 420 survivors of Filipino veterans who served in the 
Philippine Commonwealth Army or the New Philippine Scouts 
currently receive DIC payments at the 50 percent rate and that 
about 120 additional survivors would become eligible for these 
payments over the 2004-2013 period. CBO assumes that the 
survivors of these Filipino veterans received about half of the 
average DIC payment in fiscal year 2002. (The average DIC 
payment in fiscal year 2002 was $12,244.) After adjusting for 
cost-of-living increases, CBO estimates that, under the bill, 
the average DIC payment to these survivors would be $15,157 for 
2004, an increase of $7,578. After accounting for the expected 
mortality of these veterans and their eligible survivors, CBO 
estimates that enacting this provision would raise direct 
spending for DIC by about $3 million in 2004, $18 million over 
the 2004-2008 period, and about $40 million over the 2004-2013 
period.
    Disability Compensation Benefits. Under current law, former 
New Philippine Scouts residing in the United States are 
eligible to receive half the amount of disability compensation 
currently available to veterans of the U.S. armed forces. 
Section 321 would increase disability compensation for these 
veterans to the full rate. Based on information provided by VA, 
CBO estimates that there are currently about 100 former New 
Philippine Scouts residing in the United States today. In 
fiscal year 2002, the average disability compensation payment 
was $7,334. CBO assumes that eligible former New Philippine 
Scouts received about half that amount. After adjusting for 
cost-of-living increases, CBO estimates that the average 
disability compensation payment to these veterans would total 
$8,531 for fiscal year 2004, an increase of $4,265 from what 
they would receive under current law. After accounting for 
expected mortality rates, CBO estimates that enacting this 
provision would increase direct spending for veterans' 
disability compensation by less than $500,000 in 2004, about $2 
million over the 2004-2008 period, and about $3 million over 
the 2004-2013 period.
    Extension of Income Verification. Section 312 would extend 
authorities under current law that allow VA to acquire 
information on income reported to the Internal Revenue Service 
(IRS) to verify income reported by recipients of VA pension 
benefits. The authorization allowing the IRS to provide income 
information to VA is scheduled to expire on September 30, 2008, 
and the authorization allowing VA to acquire the information is 
also scheduled to expire on that date. Section 312 would extend 
these authorities through September 30, 2011, for both the IRS 
and VA.
    According to VA, the department saved approximately $4 
million in pension benefit overpayments from verifying 
veterans' incomes in 2002 and an average of $5 million over the 
1997-2002 period. Using that information, CBO estimates that 
enacting section 312 would result in direct spending savings of 
$29 million over the 2009-2011 period.
    Alternate Beneficiaries. Section 102 would allow payments 
of proceeds to alternate beneficiaries of certain VA life 
insurance policies. U.S. Government Life Insurance (USGLI) and 
National Service Life Insurance (NSLI) are programs that were 
established during World War I and World War II to provide life 
insurance coverage to servicemembers, many of whom could not 
afford the high premiums associated with commercial policies. 
Under current law, there is no time limitation within which a 
named beneficiary is required to file a claim. Because these 
policies are old, VA sometimes has great difficulty finding the 
individuals to whom the proceeds should be paid. Moreover, an 
alternate beneficiary cannot be paid unless VA determines that 
the principal beneficiary died before the policyholder. VA is 
required to hold the unclaimed funds indefinitely as a 
liability to honor any possible future claims.
    Section 102 would allow VA to pay USGLI or NSLI proceeds to 
a named alternate beneficiary if the principal beneficiary has 
not made a claim within two years after the death of the 
policyholder or October 1, 2004, whichever is later. If no 
claim has been made by any named beneficiary within four years 
of the policyholder's death or bill enactment, the Secretary 
may pay the proceeds to any person deemed entitled to the 
funds.
    VA estimates there are currently about 4,000 policies with 
no locatable primary beneficiary. VA also predicts that an 
additional 200 policies will require settlement each year where 
the primary beneficiaries cannot be found. According to VA, the 
current policies have an average face value of $5,750 and new 
policies would have an average face value of $9,600. CBO 
assumes that VA will be able to find another beneficiary for 
two-thirds of the policies and that two-thirds of these will be 
paid after two years with the other third paid after four 
years. CBO estimates the cost of section 102 would be $11 
million in 2007, $12 million over the 2007-2008 period, and $22 
million over the 2007-2013 period. (CBO also estimates that 
implementing this section would increase spending subject to 
appropriation by less than $100,000 a year over the 2004-2008 
period, assuming appropriation of the estimated amounts. CBO's 
estimate of those costs is discussed below under the heading of 
``Spending Subject to Appropriation.'')
    Markers for Privately Marked Graves. Under current law, 
veterans buried in a private cemetery may receive a second 
commemorative headstone or marker from VA if the veteran died 
on or after September 11, 2001. Veterans buried in national or 
state veterans' cemeteries automatically receive a 
commemorative headstone or marker. Under current law, this 
provision would expire on December 31, 2006. Section 204 would 
allow veterans who died on or after November 1, 1990, and are 
buried in a private cemetery, to receive a second commemorative 
headstone or marker from VA.
    Based on data from VA regarding the number of veterans who 
died between November 1, 1990, and September 11, 2001 (about 
6.4 million veterans), and the estimated number of veterans who 
receive casket burials (almost 67 percent), CBO estimates that 
about 230,000 requests for markers would be made over the next 
five years. The estimate reflects information from a VA study 
that showed only 27 percent of private cemeteries allow second 
markers and an assumption that only 20 percent of those 
eligible would request a marker. With an average cost of about 
$100 for each marker, CBO estimates that this provision would 
increase direct spending for burial benefits by $7 million in 
2004 and $23 million over the 2004-2007 period.
    Repeal of Limitation on Payment of Accrued Benefits. Under 
current law, when an individual applies for benefits 
administered by VA, any benefits that are awarded are paid 
retroactive to the date of application. If the applicant dies 
before receiving his or her retroactive benefits, certain 
survivors can apply to receive up to two years' worth of the 
unpaid benefits. VA refers to these benefits that are due but 
unpaid to deceased applicants as ``accrued benefits.''
    Before December 2002, VA applied the two-year limit on 
accrued benefits to all cases in which the applicant died 
before receiving payment. On December 10, 2002, the United 
States Court of Appeals for Veterans Claims (CAVC) decided in 
Bonny v. Principithat the two-year limit applies differently to 
the following two groups:
           Applicants who die before VA makes the final 
        decision on the application, and
           Applicants who die after VA makes the final 
        decision on the application but before receiving 
        payment.
    CAVC ruled that if the applicant dies before receiving 
payment but after VA approves the claim, eligible survivors 
should receive the entire amount of the award due to the 
applicant. Survivors of applicants who die during the 
processing of the claim but before VA makes a final decision, 
however, are eligible for only two years of accrued benefits.
    Section 105 would add surviving parents of children with 
spina bifida who claimed benefits according to definitions set 
forth in chapter 18 of Title 38, to the list of eligible 
survivors and would eliminate the two-year limit on accrued 
benefits for all eligible survivors, regardless of whether VA 
has made a final decision on the claim. Based on information 
provided by VA, CBO estimates that VA awards accrued benefits 
payments to about 3,700 survivors a year and that, under 
current law (reflecting the Bonny decision), about 18 percent 
or 670 of these cases would be paid the full amount. Based on 
information provided by VA, CBO estimates that no more than 10 
percent of the roughly 3,000 remaining accrued benefits 
payments would reflect more than two years of unpaid benefits.
    VA only tracks data on the number of claims processed for 
accrued benefits payments and is unable to identify the number 
of claims it approves, the type of benefit approved, or the 
amount of the average payment. Absent this information, CBO 
assumes that all accrued benefits payments would be for 
veterans disability compensation because the majority of 
applications for VA benefits are for such payments. We also 
assume that all accrued benefits would be paid at an average 
disability rating of 30 percent, consistent with average 
benefit payments for new compensation cases, and that, on 
average, each of these 300 cases would receive an extra six 
months worth of payments.
    According to data provided by VA, in 2002 the average 
annual compensation payment for a disability rating of 30 
percent was $4,092. Such payments are adjusted annually for 
increases in the cost of living. Thus, CBO estimates that 
enacting section 105 would increase direct spending by about $1 
million in 2004, $3 million over the 2004-2008 period, and $7 
million over the 2004-2013 period.
    Burial Plot Allowance. Section 201 would extend eligibility 
for up to a $300 burial plot allowance to veterans who are 
buried in state-owned cemeteries and served in the military 
during peacetime and veterans who were discharged from active 
military, naval, or air service for a service-connected 
disability. Under current law, veterans are eligible for this 
benefit if the veteran:
           Dies in a VA facility,
           Is eligible for compensation or pension 
        payments when he or she dies,
           Was discharged from active duty for an 
        injury incurred or aggravated on duty,
           Has no reachable next of kin or resources to 
        provide for burial, or
           Is a veteran of any war.
    According to VA, the department paid a burial plot 
allowance for about 11,000 veterans who were buried in state-
owned cemeteries in 2002. Using information from VA on the 
projected number of veteran deaths over the 2004-2013 period 
and the number of veterans buried in state-owned cemeteries who 
did not qualify for this benefit under current law, CBO 
estimates that an additional 1,400 veterans on average would 
qualify for the benefit under section 201. Thus, CBO estimates 
that enacting this section would increase in direct spending by 
less than $500,000 in 2004, about $2 million over the 2004-2008 
period, and about $4 million over the 2004-2013 period.
    Spina Bifida Benefits. Exposure to certain herbicides used 
by DoD during the Vietnam War from 1962 to 1971 has been 
associated with a range of diseases from cancer to birth 
defects. Under current law, children with spina bifida who were 
born to veterans of the Vietnam War are entitled to monetary 
allowances, vocational rehabilitation benefits, and medical 
benefits administered by VA. Section 101 would expand 
eligibility for these benefits to children with spina bifida 
who were born to veterans who served in the demilitarized zone 
(DMZ) in the Republic of Korea between January 1, 1967, and 
December 31, 1969.
    According to DoD, herbicides were used in the DMZ in Korea 
in those years. DoD estimates that up to 78,000 veterans may 
have served in the demilitarized zone during that time period, 
but that the number of veterans exposed could be much lower.
    According to VA, under current law the department provides 
benefits to about 1,100 children born to Vietnam veterans out 
of a total of about 3.1 million veterans who served within the 
borders of Vietnam. In 2002, the costs of benefits provided by 
VA to children with spina bifida born to Vietnam veterans 
ranged, depending on the severity of the disease, from $2,736 
to $16,248 a year per child for disability compensation and, on 
average, about $11,300 a year per child for medical benefits.
    Based on VA's experience with benefits for children with 
spina bifida born to Vietnam veterans, CBO estimates that less 
than 15 children with spina bifida born to veterans who served 
in the DMZ between January 1, 1967, and December 31, 1969, 
would begin to receive benefits under section 101. CBO 
estimates that the increase in direct spending resulting from 
enacting section 101 would be less than $200,000 in 2004, about 
$1 million over the 2004-2008 period, and about $2 million over 
the 2004-2013 period. (CBO estimates that implementing this 
section also would increase spending subject to appropriation 
by about $1 million over the 2004-2008 period, assuming 
appropriation of the estimated amounts. CBO's estimate of those 
costs is discussed below under the heading of ``Spending 
Subject to Appropriation.'')
    Disability Benefits for Former Prisoners of War (POWs). 
Under current law, VA generally deems a disability or disease 
to be service-connected for the purposes of disability 
compensation based onmilitary medical records and physical 
examinations. Prior to July 18, 2003, for former POWs who were held 
captive for 30 days or more, VA followed a list of 15 diseases and 
disabilities that the department assumed were service-connected. 
Military medical records do not cover periods of captivity and may not 
provide adequate documentation for eligibility for disability 
compensation benefits. On July 18, 2003, VA issued a regulation 
amending Part 3 of Title 38 of the Code of Federal Regulations to 
include cirrhosis of the liver to the list of diseases for which 
entitlement to service-connection is presumed for former POWs.
    Section 302 also would add cirrhosis of the liver to the 
list of presumed service-connected disabilities for former POWs 
who were held captive for 30 days or more. Since the regulation 
has already taken effect, this portion of the provision would 
have no cost.
    Section 302 also would eliminate the requirement that a POW 
be held prisoner for 30 days or more to qualify for presumed 
service-connection for five of the 16 presumed service-
connected disabilities included under current law--
specifically, psychosis, any of the anxiety states, dysthymic 
disorder (or depressive neurosis), organic residuals of 
frostbite, and post-traumatic osteoarthritis. Based on 
information provided by VA, CBO estimates that of the 39,000 
living former POWs, no more than 400 were held captive for less 
than 30 days. About 70 percent, or around 280, of these former 
POWs are already receiving disability compensation based on 
their eligibility as a veteran. Due to the small number of 
former POWs who would become eligible for the new benefit and 
the fact that many are already receiving disability 
compensation, CBO estimates that the increase in direct 
spending from eliminating the 30-day requirement for these five 
disabilities would be less than $100,000 a year over the 2004-
2013 period.
    Clarification of Notice of Disagreement. Section 314 would 
clarify that a notice of disagreement for appellate review of 
VA activities must be filed within one year of when VA mailed 
the notification of the results of its initial review or 
determination to the veteran and must satisfy two 
requirements--the notice must be in writing and filed with the 
agency of original jurisdiction; and the notice must be filed 
by the claimant, the claimant's legal guardian, or legal 
representative. CBO cannot estimate the savings associated with 
enacting this provision because we have no basis on which to 
predict the number of veterans that might become ineligible to 
file for appellate review under this provision.
    Other Provisions Affecting Spending for Compensation, 
Pension, and Burial Benefits. The following provisions would 
have an insignificant budgetary impact on direct spending for 
compensation, pension, and burial benefits:
     Section 310 would allow VA to close claims after a 
year if the veteran had not cooperated in providing needed 
information to continue a claim after being given notification 
by VA of incomplete or missing information. This provision 
would be effective as if enacted on November 9, 2000. CBO 
estimates that any savings in direct spending that would result 
from closing claims early would be insignificant.
     Under current law, a veteran who commits certain 
criminal acts loses eligibility for veterans' benefits that he 
or she would otherwise be due. Section 313 would include 
additional criminal acts to the list of crimes that would cause 
a veteran to lose eligibility for veterans' benefits--
specifically, criminal acts involving chemical, biological, or 
nuclear weapons, genocide, and the murder of U.S. citizens 
outside of the United States. CBO estimates that any savings in 
direct spending that would result from not paying veterans who 
commit these crimes would be insignificant.
     Under current law, veterans who die of service-
connected disabilities are eligible for a $2,000 burial 
benefit. Veterans who receive compensation or pension benefits 
but die of a nonservice-connected condition are eligible for a 
$300 burial and funeral expenses benefit and another $300 
allowance if the veteran is not interred in a cemetery that is 
under U.S. government jurisdiction. Veterans of the New 
Philippine Scouts are currently eligible for half of the burial 
benefit amounts provided to veterans of the U.S. armed forces. 
Under section 322, veterans of the New Philippine Scouts would 
receive burial and plot allowances at the full rate if they are 
naturalized U.S. citizens living in the United States. Based on 
information provided by VA, CBO estimates that only a handful 
of these veterans would become eligible for the increase in 
burial benefits each year. Thus, CBO estimates that enacting 
section 322 would have no significant effect on direct spending 
over the 2004-2013 period.

Spending subject to appropriation

    Table 5 shows the estimated effects of S. 1132 on 
discretionary spending for veterans' programs. CBO estimates 
that implementing S. 1132 would increase discretionary spending 
for veterans benefits by $130 million in 2004 and almost $1.4 
billion over the 2004-2008 period, assuming appropriation of 
the necessary amounts.

 TABLE 5.--ESTIMATED CHANGES IN SPENDING SUBJECT TO APPROPRIATION UNDER
                                 S. 1132
                [By fiscal year, in millions of dollars]
------------------------------------------------------------------------
    Description of provisions      2004    2005    2006    2007    2008
------------------------------------------------------------------------
Examinations by Contract
 Physicians:
    Estimated Authorization          125     261     272     284     296
     Level......................
    Estimated Outlays...........     125     261     272     284     296
State Cemetery Grants:
    Estimated Authorization            0      33      34      35      35
     Level......................
    Estimated Outlays...........       0      15      25      33      34
Regional Office in Manila,
 Philippines:
    Estimated Authorization            3       4       4       4       1
     Level......................
    Estimated Outlays...........       3       4       4       4       1
Spina Bifida Benefits:
    Estimated Authorization            *       *       *       *       *
     Level......................
    Estimated Outlays...........       *       *       *       *       *
Other Provisions:
    Estimated Authorization            1       1       1       1       1
     Level......................
    Estimated Outlays...........       1       1       1       1       1
Total Changes 1:
    Estimated Authorization          130     300     312     325     334
     Level......................
    Estimated Outlays...........     130     282     303     323    333
------------------------------------------------------------------------
\1\ Five-year costs in the text differ slightly from a summation of the
  annual costs shown here because of rounding.

Note.--* = Less than $500,000.

    Examinations by Contract Physicians. Section 342 would 
temporarily allow VA to contract with non-VA physicians to 
conduct examinations to determine the medical disabilities of 
veterans applying for compensation benefits. The authority 
would expire on December 31, 2009. Under current law, VA has 
the authority to contract with non-VA physicians to conduct 
these examinations at 10 benefit centers and VA expects to 
spend about $50 million in 2003 for these examinations. The 
spending under current law for those examinations is considered 
direct spending.
    Under the bill, VA would be allowed to contract with non-VA 
physicians for these exams at all of the 47 remaining centers, 
but all spending for these new contracts would be subject to 
appropriation. CBO assumes that the average cost for the new 
centers would be similar to the average cost for the 10 centers 
that currently contract with non-VA physicians. Assuming that 
the new contracts take effect in April 2004, CBO estimates that 
implementing this proposal would cost about $125 million in 
2004 and $1.2 billion over the 2004-2008 period, assuming 
appropriation of the estimated amounts. If VA were to use non-
VA physicians to conduct exams to determine the degree of 
disability in veterans seeking compensation benefits, VA 
physicians would be able to treat more veterans seeking medical 
care at VA facilities. Thus, CBO does not expect that using 
non-VA physicians to conduct those exams would result in any 
discretionary savings.
    State Cemetery Grants. Current law authorizes VA to make 
grants to build and improve state veterans' cemeteries through 
fiscal year 2004. Section 203 would extend this authority 
indefinitely. CBO estimates that implementing this section 
would cost $107 million over the 2005-2008 period, assuming 
appropriation of the necessary amounts.
    Regional Office in Manila, Philippines. Section 323 would 
authorize VA to maintain the regional office located in Manila, 
through December 31, 2008. Under current law, the authorization 
for this regional office will expire on December 31, 2003. 
Based on information provided by VA, CBO estimates that 
implementing section 323 would cost $3 million in 2004 and $16 
million over the 2004-2008, assuming appropriation of the 
necessary amounts.
    Spina Bifida Benefits. Under current law, children with 
spina bifida who were born to veterans of the Vietnam War are 
entitled to medical benefits administered by VA. Section 101 
would expand eligibility for these benefits to children with 
spina bifida who were born to veterans who served in the 
demilitarized zone in the Republic of Korea between January 1, 
1967, and December 31, 1969. Based on VA's experience with 
benefits for children with spina bifida born to Vietnam 
veterans, CBO estimates that less than 15 children with spina 
bifida would begin to receive benefits under section 101. 
According to VA, the average annual cost for providing medical 
benefits to these children was about $11,300 per child in 2002. 
Assuming appropriation of the estimated amounts, CBO estimates 
that implementing section 101 would cost less than $200,000 in 
2004 and about $1 million over the 2004-2008 period.
    Other Provisions. Other provisions in the bill would have 
an insignificant impact on discretionary spending. Taken 
together, CBO estimates that implementing all of them would 
cost about $1 million a year over the 2004-2008 period, subject 
to the availability of appropriated funds.
    a. Section 102 would allow payments of proceeds to 
alternate beneficiaries of certain VA life insurance policies. 
Under current law, there is no time limitation within which a 
named beneficiary is required to file a claim. Because these 
policies are old, VA sometimes has great difficulty finding the 
individuals to whom the proceeds should be paid. Moreover, an 
alternate beneficiary cannot be paid unless VA determines that 
the principal beneficiary died before the policyholder. VA is 
required to hold the unclaimed funds indefinitely as a 
liability to honor any possible future claims. Based on data 
provided by VA, CBO estimates that VA would need to hire two 
additional employees to handle the larger caseload associated 
with paying claims to alternate beneficiaries of these 
insurance policy proceeds. Since the surplus from the insurance 
trust funds would cover almost all of the costs of new hires, 
CBO estimates this provision would cost less than $10,000 a 
year.
    b. Under current law, surviving spouses of veterans lose 
eligibility for burial in a national cemetery if they remarry. 
Survivingspouses can only regain eligibility if the subsequent 
remarriage ends in death of the subsequent spouse or divorce. Section 
202 would change the eligibility requirements for surviving spouses so 
that remarriage would not affect their eligibility for burial in a 
national cemetery. This provision would apply to deaths occurring on or 
after the date of enactment of this act. CBO estimates that the 
potential increase in costs resulting from an increased number of 
burials in national cemeteries would be insignificant.
    c. Section 303 would allow all former prisoners of war to 
receive free dental care from VA regardless of the length of 
their internment. Under current law, only those prisoners of 
war who were interned or detained for 90 days or more are 
eligible for free dental care from VA. Using data from VA and 
DoD, CBO estimates that in 2004 there will be about 36,000 
former prisoners of war and of those about 5,000 were interned 
for less than 90 days. Many of those former prisoners of war 
are already eligible for dental care because of their service-
connected disabilities. Accounting for those veterans, and 
based on the number of former prisoners of war who currently 
receive dental care from VA, CBO estimates that about 1,000 
former prisoners of war would receive dental care from VA under 
this provision. Based on information from VA about the cost of 
providing dental care, CBO estimates that implementing this 
provision would cost less than $500,000 in 2004 and would total 
about $1 million over the 2004-2008 period, assuming 
appropriation of the estimated amounts.
    d. U.S. veterans are eligible for burial in a national 
cemetery if they were discharged or separated from active duty 
under conditions other than dishonorable. Members of the armed 
forces who die on active duty and spouses and minor children of 
veterans are also eligible. Section 322 would extend this 
eligibility to veterans of the New Philippine Scouts and their 
dependents. Based on information provided by VA, CBO estimates 
that only a handful of these veterans and their dependents 
would request burial in a national cemetery each year. Thus, 
CBO estimates that this new eligibility would not lead to a 
significant increase in the number of burials in national 
cemeteries.
    e. Section 333 would require both VA and DoD to make 
available $250,000 in each fiscal year through 2013 to the 
National Academy of Sciences for the purposes of 
epidemiological research on members of the Armed Forces and 
veterans. CBO estimates that implementing this provision would 
cost $500,000 in 2004 and $2.5 million over the 2004-2008 
period, assuming appropriation of the authorized amounts.
    f. Section 341 would modify the charter of the Advisory 
Committee on Minority Veterans so that the committee would 
continue to operate until December 31, 2007. Under current law, 
the committee would cease to exist after December 31, 2003. 
Based on information from the General Services Administration's 
Federal Advisory Committee Database, CBO estimates that 
implementing this provision would cost about $120,000 a year 
over the 2004-2008 period, assuming the availability of 
appropriated funds.
    g. Section 342 would modify the charter of the Veterans' 
Advisory Committee on Education so that the committee would 
continue to operate until December 31, 2013. Based on 
information from the General Services Administration's Federal 
Advisory Committee Database, CBO estimates that implementing 
this provision would cost less than $100,000 a year over the 
2004-2013 period, assuming the availability of appropriated 
funds.
    Intergovernmental and private-sector impact: S. 1132 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Previous CBO estimates: On July 14, 2003, CBO transmitted a 
cost estimate for H.R. 2297, the Veterans Benefits Act of 2003, 
as ordered reported by the House Committee on Veterans' Affairs 
on June 26, 2003. Several sections of S. 1132 are similar or 
identical to sections of H.R. 2297 and would have similar 
costs.
    On May 19, 2003, CBO transmitted a cost estimate for H.R. 
1460, the Veterans Entrepreneurship and Benefits Improvement 
Act of 2003, as ordered reported by the House Committee on 
Veterans' Affairs on May 15, 2003. Section 308 of S. 1132 is 
similar to section 5 of H.R. 1460, and the estimated savings 
are identical.
    On March 20, 2003, CBO transmitted a cost estimate for H.R. 
241, the Veterans' Beneficiary Fairness Act of 2003, as 
introduced on January 8, 2003. Section 105 of S. 1132 is 
similar to H.R. 241, and the estimated savings are identical.
    Estimate prepared by: Federal Costs: Compensation: Melissa 
E. Zimmerman and Dwayne M. Wright; Health Care: Sam Papenfuss; 
Housing: Sunita D'Monte; Readjustment Benefits: Sarah T. 
Jennings; Impact on State, Local, and Tribal Governments: 
Melissa Merrell; and Impact on the Private Sector: Allison 
Percy.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                      Regulatory Impact Statement

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee on Veterans' 
Affairs has made an evaluation of the regulatory impact that 
would be incurred in carrying out the Committee bill. The 
Committee finds that the Committee bill would not entail any 
regulation of individuals or businesses or result in any impact 
on the personal privacy of any individuals and that the 
paperwork resulting from enactment would be minimal.

                 Tabulation of Votes Cast in Committee

    In compliance with paragraph 7 of rule XXVI of the Standing 
Rules of the Senate, the following is a tabulation of votes 
cast in person or by proxy by members of the Committee on 
Veterans' Affairs at its September 30, 2003, meeting. On that 
date, the Committee, by unanimous voice vote, ordered H.R. 
1132, a bill to amend title 38, United States Code, to improve 
and enhance certain benefits for survivors of veterans, and for 
other purposes, as amended, reported favorably to the Senate.

                             Agency Report

    On July 10, 2003, VA Under Secretary for Benefits, the 
Honorable Daniel L. Cooper, appeared before the Committee on 
Veterans' Affairs and submitted testimony on, among other 
things, S. 1132 as introduced and also on the following 
additional bills from which provisions in S. 1132, as amended, 
are derived: S. 257, S. 517, S. 1133, S. 1188, S. 1213, S. 
1239, S. 1281, and S. 1360. In addition, VA's General Counsel, 
the Honorable Tim S. McClain, appeared before the Committee and 
submitted testimony on, among other things, Section 304 of S. 
1156, a provision relating to VA authority to contract with 
outside entities for disability examinations in connection with 
the adjudication of claims for veterans benefits, that has been 
added to S. 1132, as amended. Excerpts from these statements 
are reprinted below:

Statement of Daniel L. Cooper, Under Secretary for Benefits, Department 
                          of Veterans Affairs

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

           *         *         *         *         *



                                 s. 257


    S. 257, the ``Veterans Benefits and Pensions Protection Act 
of 2003,'' would amend VA's anti-assignment statute, 38 U.S.C. 
Sec. 5301, by adding language to prohibit certain agreements, 
as well as collateral security arrangements, between persons 
receiving monetary VA benefits and third parties. Third parties 
use these agreements to acquire for consideration rights to 
receive monetary benefits paid to VA beneficiaries. Besides 
prohibiting these agreements and arrangements, S. 257 would 
subject third parties who enter into such agreements or 
arrangements to penalties of fine, imprisonment, or both. The 
bill would also require VA to ``carry out a program of 
outreach'' to inform veterans and other beneficiaries of the 
prohibition and would authorize $3,000,000 in appropriations 
for such outreach for FY 2004 through 2008.
    Let me first assure the Committee that, because 38 U.S.C. 
Sec. 5301 generally bars assignment of VA benefits, VA regional 
offices have not and do not honor such agreements. 
Nevertheless, once funds are paid to a beneficiary, VA lacks 
the ability to oversee how those funds are used, unless the 
beneficiary has been found mentally incompetent. While we would 
certainly counsel veterans, their dependents, and survivors to 
very carefully consider the full ramifications of assigning 
their benefits, we believe they should be free to decide how 
best to manage their own personal finances. Therefore, we do 
not support enactment of S. 257.


                           s. 517 and s. 1281


POWs--Minimum Confinement Periods
    Section 2(a) and (b) of S. 517 would eliminate the current 
requirements that a former prisoner of war (POW) be detained or 
interned for at least thirty days in order to be eligible for a 
presumption of service connection for certain diseases, and at 
least ninety days in order to be eligible to receive VA care 
and treatment for a dental condition or disability.
    VA supports section 2(a) and (b) of S. 517, which are 
virtually identical to provisions in a draft bill we recently 
submitted to Congress. Currently, 38 U.S.C. Sec. 1112(b) 
provides a presumption of service connection for certain 
diseases for former POWs who were detained or interned for at 
least thirty days. Also, 38 U.S.C. Sec. 1712(a)(1)(F) provides 
eligibility for VA outpatient dental care services and 
treatment, and related dental appliances for dental conditions 
or disabilities of former POWs who were detained or interned 
for at least ninety days. Recent military engagements involving 
the United States instruct that, because of our Nation's 
advanced technology and superior warfare capability, actual 
combat may end in a far shorter period of time than in previous 
wars. As a result of this phenomenon, American soldiers who are 
detained or interned by the enemy are likely to be held for 
less than 90 days, or even 30 days, as was the case with the 
United States soldiers held as POWs during Operation Iraqi 
Freedom. Recent experience has indicated, however, that, 
despite the shorter duration, the conditions of detention or 
internment may be such that these former POWs may suffer from 
many of the same diseases for which a presumption of service 
connection is available pursuant to section 1112(b) and from 
dental conditions or disabilities for which dental care and 
treatment is currently available pursuant to section 
1712(a)(1)(F) for former POWs who were held for longer periods. 
We believe it would be equitable to eliminate the requirement 
of a particular duration of detention or internment so that all 
former POWs would be eligible for the presumption of service 
connection for the diseases specified in section 1112(b) and 
for dental care and treatment pursuant to section 
1712(a)(1)(F). We estimate that enactment of section 2(a) and 
(b) would have mandatory costs of $3.3 million in FY 2004 and 
$61 million over ten years.
POWs--Diseases Presumed Service Connected
    Section 2(c) of S. 517 would add heart disease, stroke, 
liver disease, diabetes (type 2), and osteoporosis to the list 
of diseases for which a presumption of service connection is 
available pursuant to 38 U.S.C. Sec. 1112(b). Section 2 of S. 
1281 would add cardiovascular disease (heart disease), 
cerebrovascular disease (stroke), and chronic liver disease, 
including cirrhosis and primary liver carcinoma, to the 
presumptive diseases in section 1112(b).
    Section 2(c) of S. 517 would also authorize the Secretary 
to promulgate regulations creating a presumption of service 
connection for any other disease which the Secretary determines 
has a ``positive association with the experience of being a 
[POW].'' A ``positive association'' would exist ``if the 
credible evidence for the association is equal to or outweighs 
the credible evidence against the association.'' In deciding 
whether to promulgate such a regulation, the Secretary would be 
required to consider the recommendations of the Advisory 
Committee on Former POWs and any other available sound medical 
and scientific information and analyses. VA would have 60 days 
from receipt of an Advisory Committee recommendation to make a 
determination as to whether a presumption of service connection 
is warranted, and then another 60 days to publish in the 
Federal Register either proposed regulations, if VA determines 
that a presumption is warranted, or a notice explaining the 
scientific basis for a determination that a presumption is not 
warranted.
    VA continues to investigate the long-term health 
consequences of the conditions of POW internment or detention, 
such as malnutrition, vitamin deficiency, and exposure to 
parasitic and infectious diseases. In severe forms, such 
conditions of internment or detention could likely be 
associated with the conditions specified in section 2(c) of S. 
517 and section 2 of S. 1281. It is also true that many POWs 
suffered physical and mental torture and maltreatment, which 
could lead to long-term stress and anxiety, which in turn have 
been shown to have adverse effects on the health of many 
individuals. VA is committed to properly compensating former 
POWs for the disabilities resulting from their service to our 
Nation. In light of the potential connection between the POW 
experience and the diseases listed in the subject bills, we 
could support enactment of section 2(c) of S. 517 and section 2 
of S. 1281 only if the Committee can identify offsetting 
savings, since most of these costs are not in the President's 
FY 2004 Budget. We estimate that enactment of all of the S. 517 
provisions, i.e., elimination of the minimum confinement period 
and additional diseases presumed to be service connected, would 
result in benefit costs of $29.4 million in FY 2004 and $517.3 
million over the ten-year period FY 2004 through FY 2013. If S. 
517 were enacted, the most significant presumptions of S. 1281 
would be addressed. If the S. 517 presumptions were not 
enacted, we estimate the benefit costs of S. 1281 would be 
$20.9 million in FY 2004 and $364.7 million over ten years.
    We also note that, in its December 20, 2002 report, the 
Advisory Committee on Former POWs recommended to VA that 
cardiovascular disease be established as a presumptive 
condition. In response to this and previous recommendations by 
the Advisory Committee to add presumptive conditions, VA is 
establishing a Workgroup on Medical Presumptive Conditions in 
Former POWs to establish procedures, guidelines, and standards 
to determine whether a disease should be designated by VA as 
presumptively service connected in former POWs. We contemplate 
that the Workgroup will be comprised of representatives of the 
Under Secretaries for Benefits and Health, General Counsel, and 
Chairman of the Advisory Committee on Former POWs. The 
activities of this Workgroup will assist VA in determining 
whether scientific and medical evidence supports further 
expansion of the list of conditions presumed to be service 
connected in former POWs. In our view, these activities will 
render unnecessary the procedures for establishment of new 
presumptions based on consideration of recommendations from the 
Advisory Committee on Former POWs, as proposed in section 2(c) 
of S. 517.
Review of Dose Reconstruction Program of Department of Defense
    Section 3 of S. 1281 would require the Secretary of Defense 
and the Secretary of Veterans Affairs to conduct a joint review 
of the mission, procedures, and administration of the DoD Dose 
Reconstruction Program for preparing radiation dose estimates 
and to report to Congress on their findings within 90 days 
after the bill is enacted. The bill would also require the 
Secretaries to provide for ongoing independent review and 
oversight of the Dose Reconstruction Program and would require 
establishment of an advisory board as one method of providing 
such ongoing review. VA does not support this provision.
    DoD has statutory responsibility for preparing radiation 
dose estimates. VA uses those dose estimates in adjudicating 
some claims for service-connected benefits filed by veterans 
exposed to radiation in service or their family members. A 
recent review by the National Research Council (NRC) of the 
National Academy of Sciences identified several concerns 
regarding certain methods and assumptions employed by DoD that 
may have caused underestimation of the upper-bound limits of 
exposure in some cases. We understand that DoD is presently in 
the process of revising its Dose Reconstruction Program to 
address the concerns identified by the NRC. Correspondingly, VA 
is working to identify claims previously decided based on dose 
reconstructions from DoD. Once we have identified those claims, 
we intend to seek revised dose estimates from DoD, if the 
claimant potentially could benefit from a revised dose 
estimate.
    We believe the provisions of this legislation requiring VA 
and DoD to jointly review and report on the Dose Reconstruction 
Program would be superfluous in view of the comprehensive NRC 
report. The committee of highly qualified experts assembled by 
the NRC spent more than two years reviewing the Dose 
Reconstruction Program. The NRC report discusses in detail the 
specific concerns identified in the Dose Reconstruction Program 
and provides a clear framework for DoD's current efforts to 
revise its program. We do not believe that a further review of 
the same matters by VA and DoD would provide any significant 
additional information to aid in identifying and correcting any 
problems in the Dose Reconstruction Program. The oversight 
responsibilities that would be required by this legislation 
would unnecessarily divert VA resources from the task of 
identifying and reviewing potentially affected claims.
    Dose estimates prepared by DoD are often an important piece 
of evidence VA must consider in adjudicating claims for 
benefits based on radiation exposure. In view of the importance 
of this information and the difficult and sensitive nature of 
the adjudicative issues involved in such claims, we consider it 
important to avoid even the appearance that VA is influencing 
DoD's procedures and methods of preparing the dose estimates. 
Assigning VA an oversight role in matters affecting the 
creation of such evidence may result in a perception among some 
veterans that the estimates lack objectivity.
    For these reasons, we do not support this provision. We 
estimate that this provision, if enacted, would result in 
approximately $350,000 in annual costs to VA.
Disposition of Ranch Hand Study
    Section 4 of S. 1281 would require VA, not later than 60 
days after the date of the enactment of this Act, to contract 
with the National Academy of Sciences (NAS), or other 
appropriate organization, to determine the appropriate 
disposition of the Air Force's well-known ``Ranch Hand'' 
epidemiologic study when it terminates in 2006. Among other 
things, the NAS would be required to address, and ultimately 
report on, the advisability of extending the study and the 
disposition of the specimens, medical records, and other data 
collected in the course of this long-term study.
    VA generally supports the suggestion for independent review 
of the merits of the Ranch Hand study, as proposed. VA has 
never been involved in the funding, conduct, or direction of 
DoD's ``Ranch Hand'' study. As a result, VA cannot provide 
close oversight of the NAS contract, as proposed in section 4 
of the bill. Were VA required to enter into the contract 
required by section 4, we estimate the costs associated with 
enactment of this provision to be $1.5 million, which would be 
redirected from veterans' Medical Care funds.
    Section 5 of the bill would require both VA and DoD to make 
available to NAS in each of fiscal years 2004 through 2013, 
$250,000 each from their respective appropriations for the 
Medical Follow-Up Agency (MFUA). MFUA would use these funds for 
epidemiological research on members of the Armed Forces and 
veterans.
    We support the continued funding of the MFUA whose 
independence and outstanding scientific reputation lend a high 
degree of credibility to critical studies that have a direct 
bearing on VA health care and compensation policies. As you 
know, the MFUA has been essential to VA for conducting a number 
of critical studies on veterans' health issues, including a 
study on Shipboard Hazard and Defense (SHAD) veterans, studies 
on actual hepatitis rates among veterans, and a congressionally 
mandated study on hearing loss among military personnel. In 
short, the MFUA is a critical asset for VA.

           *         *         *         *         *



                                s. 1132


    Mr. Chairman, S. 1132, the ``Veterans' Survivors Benefits 
Enhancements Act of 2003,'' contains several provisions that 
would improve benefits for survivors and certain dependents of 
veterans under the Department's various programs.
    Specifically, section 2 of this bill would increase 
educational assistance benefits under the chapter 35 VA's 
Survivors' and Dependents' Educational Assistance program by 
44.8 percent, from $680 to $985 per month for full-time course 
pursuit, from $511 to $740 for three-quarter time pursuit, and 
from $340 to $492 per month for half-time pursuit, effective 
for months of course pursuit on or after October 1, 2003. It 
would also raise the basic monthly rate payable for Special 
Restorative Training (SRT) to $985. Similarly, the optional 
supplement to the SRT basic rate would be increased to pay the 
amount of tuition and fee charges that, on a monthly basis, 
would exceed $307 for FY 2004.
    Given this benefits increase, the measure would suspend the 
statutory annual Consumer Price Index-based adjustment in 
chapter 35 educational assistance rates for FY 2004.
    Chapter 35 benefit rates earlier equaled rates payable 
under the Vietnam Era GI Bill to a veteran with no dependents 
and, for a time, exceeded chapter 30 Montgomery GI Bill (MGIB) 
rates. In more recent years, however, chapter 35 benefits have 
lost ground. The current $680 chapter 35 monthly rate is 
significantly below the MGIB rate payable to eligible veterans 
with 3 years or more of service, which will be $985 per month 
in FY 2004 under legislation already enacted. Section 2 of S. 
1132 would remedy this, ensuring that chapter 35 spouses, 
surviving spouses, and children would receive educational 
assistance equal to that of veterans receiving such educational 
assistance under the MGIB. Mr. Chairman, although we appreciate 
your efforts to restore this balance, the President's FY 2004 
Budget does not include this proposal.
    VA estimates the effect of the rate increase in section 2 
of this measure could raise obligations by approximately $1.4 
billion over the 10-year period FY 2004 through FY 2013.

           *         *         *         *         *

    Section 5 would amend 38 U.S.C. Sec. 2402(5) to make a 
veteran's surviving spouse who marries a non-veteran after the 
veteran's death eligible for burial in a VA national cemetery 
based on his or her marriage to the veteran. This provision is 
similar to a VA proposal sent to Congress on April 25, 2003. 
Our full rationale and justification for this proposal, as well 
as our cost estimates, are contained in Secretary Principi's 
April 25, 2003 letter to the President of the Senate.
    Unlike VA's proposal, section 5 of S. 1132 would make the 
burial eligibility of remarried surviving spouses of veterans 
retroactive to deaths occurring on or after January 1, 2000. We 
estimate that the additional costs associated with this 
retroactivity would be negligible. Although it is difficult to 
determine how many families of already deceased, and presumably 
interred, remarried surviving spouses of veterans would want to 
disinter their loved ones and then re-inter them with their 
veteran spouses in a national cemetery, we believe the number 
of such families would not be significant.
    Section 6 would amend chapter 18 of title 38, United States 
Code, to authorize VA to provide a monetary allowance and other 
benefits to a person suffering from spina bifida who is natural 
child, regardless of age or marital status, of a veteran who 
served in the active military, naval, or air service in or near 
the Korean demilitarized zone (DMZ) between January 1, 1967, 
and December 31, 1969, if the person was conceived after such 
service began and if the veteran is determined by VA, in 
consultation with the DoD, to have been exposed to a herbicide 
agent during such service. The term ``herbicide agent'' would 
be defined as a chemical in a herbicide used in support of 
United States and allied military operations in or near the 
Korean DMZ, as determined by VA in consultation with DoD during 
the specified period.
    VA is still formulating its views and cost estimates on 
this provision. As soon as those views and estimates are 
cleared for transmittal, we will provide them to the Committee.


                                s. 1133


    Mr. Chairman, we very much appreciate your courtesy in 
introducing S. 1133 at the Department's request. Our full 
rationale and justification for these proposals, as well as our 
cost estimates, are contained in Secretary Principi's April 25, 
2003 letter to the President of the Senate and will not be 
repeated here. Several of this bill's provisions are also 
covered in other bills that are on the agenda for today's 
hearing.
    All of the provisions in VA's proposal are significant to 
the programs administered by VA and the veterans served by 
those programs. Among the important proposals in S. 1133 that 
have not been otherwise introduced in the Senate are:
    Sections 3 and 4, which would repeal the 45-day rule for 
effective dates of death pension awards and exclude lump-sum 
life insurance proceeds from determinations of annual income 
for pension purposes. These changes are necessary to eliminate 
unequal treatment of death pension applicants and to uphold one 
of the fundamental principles of the pension program--insuring 
that those with the greatest need receive the greatest benefit.
    Section 6, which would authorize VA to pay unclaimed 
National Service Life Insurance and United States Government 
Life Insurance proceeds to an alternative beneficiary. This 
proposal would allow VA to ensure that the proceeds of 
insurance policies are paid to an appropriate beneficiary and 
to avoid adding to the 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.
    Section 7, which would clarify VA's authority both to 
declare a claim abandoned where it is not completed within one 
year of VA's notice of what is required to complete it, and to 
decide claims before the end of the one year the claimant has 
to provide the evidence to substantiate the claim. Such early 
adjudications are subject to revision based on evidence 
submitted within the year, and the effective date of any 
decision so revised will be the earlier date on which the claim 
was made.
    Section 11, which would make permanent the State Cemetery 
Grants Program, an important supplement to the National 
Cemetery system. This program authorizes VA to make grants to 
states to assist them in establishing, expanding, or improving 
state veterans' cemeteries.
    Section 15, which would extend the date on which 
eligibility for education benefits ends for individuals ordered 
to full-time National Guard service under title 32 of the 
United States Code in the same manner the delimiting date is 
now extended for those who are activated under title 10.
    All of the proposals in S. 1133 would improve veterans 
programs and their administration, and we commend them to the 
Committee's careful consideration.


                                s. 1188


    S. 1188, the ``Veterans' Survivor Benefits Act of 2003,'' 
would, in section 2, eliminate a discrepancy regarding the 
limitation on the period for which retroactive benefits due and 
unpaid a claimant may be paid to others after the claimant's 
death. In the interest of fairness, we support enactment of 
this provision.
    Under 38 U.S.C. Sec. 5121, periodic monetary benefits to 
which an individual was entitled at death under existing 
ratings or decisions or based on evidence on file with VA at 
the date of death are paid upon the individual's death to 
specified classes of survivors according to a prescribed order 
of preference. Before a recent court decision, VA had construed 
section 5121 to limit the payment of any benefits under that 
section to the retroactive period specified in the statute, 
regardless of whether the payment was based on an existing 
rating or decision or on evidence on file at the date of death. 
The retroactive payment period, originally one year, was 
extended to two years by Public Law 104-275, the ``Veterans' 
Benefits Improvements Act of 1996.''
    On December 10, 2002, the United States Veterans Court 
issued its decision in Bonny v. Principi, 16 Vet. App. 504 
(2002). The court held that 38 U.S.C. Sec. 5121(a) specifies 
two kinds of benefits: benefits that have been awarded to an 
individual in existing ratings or decisions but not paid before 
the individual's death, and benefits that could have been 
awarded based on evidence in the file at the date of death. The 
court held that, in the case of the first type of benefits, the 
statute requires that an eligible survivor is to receive the 
entire amount of the award; only the latter type of ``accrued'' 
benefits is subject to section 5121(a)'s two-year limitation. 
The court based its interpretation of the statute primarily on 
section 5121(a)'s punctuation.
    The Veterans Court's Bonny decision has resulted in 
differing entitlements under section 5121 based on the status 
of the deceased's claim at the date of his or her death. S. 
1188 would eliminate this discrepancy by eliminating the two-
year limitation on payment of retroactive benefits for all 
classes of beneficiaries under that statute.
    The distinction the Bonny decision draws between the two 
categories of claimants--those whose claims had been approved 
and those whose entitlement had yet to be recognized when they 
died--is really one without a difference. In either case, a 
claimant's estate is deprived of the value of benefits to which 
the claimant was, in life, entitled. Section 2 of S. 1188 would 
remove this inequitable distinction, and we support its 
enactment.
    We note that section 2 of S. 1188 would also add a new 
class of claimants eligible for accrued benefits. Chapter 18 of 
title 38, United States Code, authorizes monetary benefits for 
Vietnam veterans' children with birth defects. This provision 
would ensure that, upon the death of a child entitled to 
benefits under chapter 18, the child's surviving parents would 
be eligible for accrued benefits.
    In addition, we note one technical change needed in section 
2 of S. 1188 should it be enacted. The comma in current section 
5121(a) following ``existing ratings or decisions'' should be 
deleted to clarify, for purposes of 38 U.S.C. Sec. Sec. 5121(b) 
and (c) and 5122, that the term ``accrued benefits'' includes 
both benefits that have been awarded to an individual in 
existing ratings or decisions but not paid before the 
individual's death, as well as benefits that could be awarded 
based on evidence in the file at the date of death.

           *         *         *         *         *

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

           *         *         *         *         *



                                s. 1213


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


s. 1239

           *         *         *         *         *



Dental Care for Former Prisoners of War
    Section 4 of S. 1239 would require VA to provide outpatient 
dental services and treatment, and related dental appliances, 
for any non-service-connected dental condition or disability 
from which a veteran who is a former POW is suffering. 
Currently, a veteran who is a former POW may receive dental 
benefits for non-service-connected dental conditions or 
disabilities only if the veteran was incarcerated for 90 days 
or more. By eliminating the 90-day requirement, section 4 would 
authorize VA to treat all former POWs the same, regardless of 
their length of captivity, with respect to dental care for a 
non-service-connected condition or disability. It would also 
make the eligibility rules for dental benefits for former POWs 
the same as for other health-care services for former POWs.
    This provision is identical to VA's recent proposal, and we 
strongly support its enactment.
    Costs resulting from enactment of this provision would be 
insignificant.

           *         *         *         *         *



                                s. 1360


    Section 1(a) of S. 1360 would amend 38 U.S.C. Sec. 7105(b) 
to provide, in effect, that a writing filed by a claimant, a 
claimant's legal guardian, an accredited representative, 
attorney, or authorized agent, or a legal guardian expressing 
disagreement with a decision of an agency of original 
jurisdiction shall be recognized as a notice of disagreement 
(NOD). The amendment made by section 1(a) would apply to any 
document filed on or after the date of enactment of S. 1360 and 
any document filed prior to the date of enactment that was not 
rejected as an NOD by VA as of that date. Section 1(b) of S. 
1360 would provide that, if a document filed as an NOD between 
March 15, 2002, and the date of enactment of S. 1360 meets the 
requirements of section 1(a) for an NOD, but VA determined that 
it did not constitute an NOD pursuant to 38 C.F.R. Sec. 20.201, 
VA would have to treat the document as an NOD if the claimant 
makes a request, or VA makes a motion, within one year after 
the date of enactment, to treat it as a NOD.
    S. 1360 would overturn the decision of the United States 
Court of Appeals for the Federal Circuit in Gallegos v. 
Principi, in which that court held that 38 C.F.R. Sec. 20.201, 
defining an NOD as a writing expressing a desire for appellate 
review, is a reasonable and permissible construction of 38 
U.S.C. Sec. 7105, which sets forth the necessary steps for 
appellate review by the Board. Defining a writing as an NOD 
irrespective of whether it expresses a desire for appellate 
review would represent a major change in the statutory scheme 
of 38 U.S.C. Sec. 7105, which refers to an NOD only in the 
context of initiating an appeal to the Board.
    It does not serve veterans to initiate appeals of their 
claims against their wishes. However, requiring VA to treat any 
document disagreeing with an initial VA determination or 
decision on a claim as an NOD, without regard to whether it 
expresses a desire for appellate review, would impose a 
substantial burden on the VA claims adjudication system and 
hinder us in achieving our objective of improving the 
efficiency of claim adjudications and reducing the time 
necessary to resolve claims. VA is inundated on a daily basis 
by myriad correspondence from claimants and their 
representatives. Under the proposed amendment, in any case in 
which such correspondence could be construed as expressing 
disagreement with an initial claim decision, VA would be 
required to initiate a time-consuming, multi-step process under 
which it is obligated to reexamine the claim and determine if 
additional review or development is warranted and, ultimately, 
prepare a statement of the case summarizing the evidence, 
citing applicable laws and explaining their affect, and 
providing the reasons for making the determination in question. 
This process would apparently be required even in cases where, 
although a claimant has expressed disagreement with a VA 
decision, it is quite plain from the claimant's submission that 
the claimant has no desire for appellate review of the 
decision.
    VA opposes S. 1360 and believes that the goal of the bill 
can better be achieved by amending VA's procedures to assure 
that VA ascertains the intent of a claimant who expresses 
disagreement with an initial VA claim decision.
    That concludes my statement, Mr. Chairman. I would be happy 
now to entertain any questions you or the other members of the 
Committee may have.

           *         *         *         *         *


 Statement of Tim S. McClain, General Counsel, Department of Veterans 
                                Affairs

    Good afternoon Mr. Chairman and Members of the Committee. I 
am pleased to be here to present the Administration's views on 
six bills that pertain primarily to the veterans health-care 
system.

           *         *         *         *         *

    Section 304 of S. 1156 would broaden the authority of the 
Veterans Benefits Administration to contract with outside 
entities for disability examinations in connection with the 
adjudication of claims for veterans benefits. Current law 
allows VBA to do so at no more than 10 regional offices on a 
pilot basis. Section 304 would remove the 10-office limitation. 
The pilot has been a success, however, there are funding issues 
and we do not yet have cleared views and estimates on this 
provision. We will supply them when they are available.

           *         *         *         *         *


    Changes in Existing Law Made by the Committee Bill, as Reported

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the Committee bill, as reported, are shown as follows (existing 
law proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

TITLE 26--UNITED STATES CODE

           *       *       *       *       *       *       *


Sec. 6103. Confidentiality and disclosure of returns and return 
                    information

           *       *       *       *       *       *       *


    (l) Disclosure of Returns and Return Information for 
Purposes Other Than Tax Administration.--
          (1) * * *

           *       *       *       *       *       *       *

          (7) Disclosure of return information to Federal, 
        state, and local agencies administering certain 
        programs under the Social Security Act, the Food Stamp 
        Act of 1977 or title 38, United States Code, or certain 
        housing assistance programs.--
                  (A) * * *

           *       *       *       *       *       *       *

                  (D) Programs to which rule applies.--The 
                programs to which this paragraph applies are:
                          (i) * * *

           *       *       *       *       *       *       *

Only return information from returns with respect to net 
earnings from self employment and wages may be disclosed under 
this paragraph for use with respect to any program described in 
clause (viii)(IV). Clause (viii) shall not apply after 
September 30, [2008] 2011.

           *       *       *       *       *       *       *


TITLE 38--UNITED STATES CODE

           *       *       *       *       *       *       *


CHAPTERS OF TITLE 38

           *       *       *       *       *       *       *



                       PART II--GENERAL BENEFITS

Chapter                                                          Section
        11. * * *
     * * * * * * *
    18. Benefits for children of Vietnam Veterans [who are 
1802born with spina bifida] and certain other veterans......

           *       *       *       *       *       *       *


Sec. 107. Certain service deemed not to be active service

           *       *       *       *       *       *       *


    (b) Service in the Philippine Scouts under section 14 of 
the Armed Forces Voluntary Recruitment Act of 1945 shall not be 
deemed to have been active military, naval, or air service for 
the purposes of any of the laws administered by the Secretary 
except--
          (1) with respect to contracts of National Service 
        Life Insurance entered into (A) before May 27, 1946, 
        (B) under section 620 or 621 of the National Service 
        Life Insurance Act of 1940, or (C) under section 1922 
        of this title; and
          (2) chapters 11 [and], 13 (except section 1312(a)), 
        23, and 24 (to the extent provided for in section 
        2402(8)) of this title.
[Payments] Except as provided in subsection (c) or (d), 
payments under such chapters shall be made at a rate of $0.50 
for each dollar authorized, and where annual income is a factor 
in entitlement to benefits, the dollar limitations in the law 
specifying such annual income shall apply at a rate of $0.50 
for each dollar.
    (c) In the case of benefits under subchapters II and IV of 
chapter 11 of this title and subchapter II of chapter 13 
(except section 1312(a)) of this title paid by reason of 
service described in subsection (a) or (b) to an individual 
residing in the United States who is a citizen of, or an alien 
lawfully admitted for permanent residence in, the United 
States, the second sentence [of subsection (a)] of the 
applicable subsection shall not apply.
    (d)(1) With respect to benefits under chapter 23 of this 
title, in the case of an individual described in paragraph (2), 
the second sentence of subsection (a) or (b), as applicable, 
shall not apply.
    (2) Paragraph (1) applies to any individual whose service 
is described in subsection (a) and who dies after November 1, 
2000, or whose service is described in subsection (b) and who 
dies after the date of enactment of the Veterans' Benefits 
Enhancements Act of 2003, if the individual, on the 
individual's date of death--
          (A) is a citizen of, or an alien lawfully admitted 
        for permanent residence in, the United States;
          (B) is residing in the United States; and
          (C) either--
                  (i) is receiving compensation under chapter 
                11 of this title; or
                  (ii) if the individual's service had been 
                deemed to be active military, naval, or air 
                service, would have been paid pension under 
                section 1521 of this title without denial or 
                discontinuance by reason of section 1522 of 
                this title.

           *       *       *       *       *       *       *


Sec. 315. Regional Offices

           *       *       *       *       *       *       *


    (b) The Secretary may maintain a regional office in the 
Republic of the Philippines until December 31, [2003] 2008.

           *       *       *       *       *       *       *


Sec. 544. Advisory Committee on Minority Veterans

           *       *       *       *       *       *       *


    (e) The Committee shall cease to exist December 31, [2003] 
2007.

           *       *       *       *       *       *       *


Sec. 1104. Cost-of-living adjustments

    (a) In the computation of cost-of-living adjustments for 
fiscal years 1998 through [2011] 2013 in the rates of, and 
dollar limitations applicable to, compensation payable under 
this chapter, such adjustments shall be made by a uniform 
percentage that is no more than the percentage equal to the 
social security increase for that fiscal year, with all 
increased monthly rates and limitations (other than increased 
rates or limitations equal to a whole dollar amount) rounded 
down to the next lower whole dollar amount.

           *       *       *       *       *       *       *


Sec. 1112. Presumptions relating to certain diseases and disabilities

           *       *       *       *       *       *       *


    (b)(1) For the purposes of section 1110 of this title and 
subject to the provisions of section 1113 of this title, in the 
case of a veteran who is a former prisoner of war [and who was 
detained or interned for not less than thirty days, the disease 
of]--
    [(1) avitaminosis,
    [(2) beriberi (including beriberi heart disease),
    [(3) chronic dysentery,
    [(4) helminthiasis,
    [[(5) malnutrition (including optic atrophy associated with 
malnutrition),
    [(6) pellagra,
    [(7) any other nutritional deficiency,
    [(8) psychosis,
    [(9) any of the anxiety states,
    [(10) dysthymic disorder (or depressive neurosis),
    [(11) organic residuals of frostbite, if the Secretary 
determines that the veteran was interned in climatic conditions 
consistent with the occurrence of frostbite,
    [(12) post-traumatic osteoarthritis,
    [(13) peripheral neuropathy except where directly related 
to infectious causes,
    [(14) irritable bowel syndrome, or
    [(15) peptic ulcer disease,
[which became manifest to a degree of 10 percent or more after 
active military, naval, or air service shall be considered to 
have been incurred in or aggravated by such service, 
notwithstanding that there is no record of such disease during 
the period of service.]
          (A) a disease specified in paragraph (2) which became 
        manifest to a degree of 10 percent or more after active 
        military, naval, or air service shall be considered to 
        have been incurred or aggravated by such service, 
        notwithstanding that there is no record of such disease 
        during the period of service; and
          (B) if the veteran was detained or interned as a 
        prisoner of war for not less than thirty days, a 
        disease specified in paragraph (3) which became 
        manifest to a degree of 10 percent or more after active 
        military, naval, or air service shall be considered to 
        have been incurred in or aggravated by such service, 
        notwithstanding that there is no record of such disease 
        during the period of service.
    (2) The diseases specified in this paragraph are the 
following:
          (A) Psychosis.
          (B) Any of the anxiety states.
          (C) Dysthymic disorder (or depressive neurosis).
          (D) Organic residuals of frostbite, if the Secretary 
        determines that the veteran was detained or interned in 
        climatic conditions consistent with the occurrence of 
        frostbite.
          (E) Post-traumatic osteoarthritis.
    (3) The diseases specified in this paragraph are the 
following:
          (A) Avitaminosis.
          (B) Beriberi (including beriberi heart disease).
          (C) Chronic dysentery.
          (D) Helminthiasis.
          (E) Malnutrition (including optic atrophy associated 
        with malnutrition).
          (F) Pellagra.
          (G) Any other nutritional deficiency.
          (H) Cirrhosis of the liver.
          (I) Peripheral neuropathy except where directly 
        related to infectious causes.
          (J) Irritable bowel syndrome.
          (K) Peptic ulcer disease.

           *       *       *       *       *       *       *


Sec. 1303. Cost-of-living adjustments

    (a) In the computation of cost-of-living adjustments for 
fiscal years 1998 through [2011] 2013 in the rates of 
dependency and indemnity compensation payable under this 
chapter, such adjustments (except as provided in subsection 
(b)) shall be made by a uniform percentage that is no more than 
the percentage equal to the social security increase for that 
fiscal year, with all increased monthly rates (other than 
increased rates equal to a whole dollar amount) rounded down to 
the next lower whole dollar amount.

           *       *       *       *       *       *       *


Sec. 1712. Dental care; drugs and medicines for certain disabled 
                    veterans; vaccines (a)(1) Outpatient dental service 
                    and treatment, and related dental appliances, shall 
                    be furnished under this section only for a dental 
                    condition or disability--

          (A) * * *

           *       *       *       *       *       *       *

          (F) from which a veteran who is a former prisoner of 
        war [and who was detained or interned for a period of 
        not less than 90 days] is suffering.

           *       *       *       *       *       *       *


CHAPTER 18--BENEFITS FOR CHILDREN OF VIETNAM VETERANS AND CERTAIN OTHER 
VETERANS

           *       *       *       *       *       *       *



  Subchapter III--Children of Certain Korea Service Veterans Born With 
                              Spina Bifida

1821. Benefits for children of certain Korea service veterans born with 
          spina bifida

                 Subchapter [III] IV--General Provisions

[1821] 1831. Definitions.
[1822] 1832. Applicability of certain administrative provisions.
[1823] 1833. Treatment of receipt of monetary allowance and other 
          benefits.
[1824] 1834. Nonduplication of benefits.
     * * * * * * *

Sec. 1811. Definitions

    In this subchapter:
          (1) The term ``eligible child'' means an individual 
        who--
                  (A) is the child (as defined in section 
                [1821(1)] 1831(1) of this title) of a woman 
                Vietnam veteran; and
                  (B) was born with one or more covered birth 
                defects.
          (2) The term ``covered birth defect'' means a birth 
        defect identified by the Secretary under section 1812 
        of this title.

           *       *       *       *       *       *       *


 Subchapter III--Children of Certain Korea Service Veterans Born With 
                              Spina Bifida

Sec. 1821. Benefits for children of certain Korea service veterans born 
                    with spina bifida

    (a) Benefits Authorized.--The Secretary may provide to any 
child of a veteran of covered service in Korea who is suffering 
from spina bifida the health care, vocational training and 
rehabilitation, and monetary allowance required to be paid to a 
child of a Vietnam veteran who is suffering from spina bifida 
under subchapter I of this chapter as if such child of a 
veteran of covered service in Korea were a child of a Vietnam 
veteran who is suffering from spina bifida under such 
subchapter.
    (b) Spina Bifida Conditions Covered.--This section applies 
with respect to all forms and manifestations of spina bifida, 
except spina bifida occulta.
    (c) Veteran of Covered Service in Korea.--For purposes of 
this section, a veteran of covered service in Korea is any 
individual, without regard to the characterization of that 
individual's service, who--
          (1) served in the active military, naval, or air 
        service in or near the Korean demilitarized zone (DMZ), 
        as determined by the Secretary in consultation with the 
        Secretary of Defense, during the period beginning on 
        January 1, 1967, and ending on December 31, 1969; and
          (2) is determined by the Secretary, in consultation 
        with the Secretary of Defense, to have been exposed to 
        a herbicide agent during such service in or near the 
        Korean demilitarized zone.
    (d) Herbicide Agent.--For purposes of this section, the 
term ``herbicide agent'' means a chemical in a herbicide used 
in support of United States and allied military operations in 
or near the Korean demilitarized zone, as determined by the 
Secretary in consultation with the Secretary of Defense, during 
the period beginning on January 1, 1967, and ending on December 
31, 1969.

                 Subchapter [III] IV_General Provisions


[1821] Sec. 1831. Definitions.

    In this chapter:
          (1) The term ``child'' means [an individual, 
        regardless of age or marital status, who] the 
        following--
                  (A) [is the natural child of a Vietnam 
                veteran; and] For purposes of subchapters I and 
                II of this chapter, an individual, regardless 
                of age or marital status, who--
                          (i) is the natural child of a Vietnam 
                        veteran; and
                          (ii) was conceived after the date on 
                        which that veteran first entered the 
                        Republic of Vietnam during the Vietnam 
                        era.
                  (B) [was conceived after the date on which 
                that veteran first entered the Republic of 
                Vietnam during the Vietnam era.] For purposes 
                of subchapter III of this chapter, an 
                individual, regardless of age or marital 
                status, who--
                          (i) is the natural child of a veteran 
                        of covered service in Korea (as 
                        determined for purposes of section 1821 
                        of this title); and
                          (ii) was conceived after the date on 
                        which that veteran first entered 
                        service described in subsection (c) of 
                        that section.

           *       *       *       *       *       *       *


Sec. [1822] 1832. Applicability of certain administrative provisions.

           *       *       *       *       *       *       *


Sec. [1823] 1833. Treatment of receipt of monetary allowance and other 
                    benefits.

           *       *       *       *       *       *       *


Sec. [1824] 1834. Nonduplication of benefits.

    (a) Monetary Allowance.--In the case of an eligible child 
under subchapter II of this chapter whose only covered birth 
defect is spina bifida, a monetary allowance shall be paid 
under subchapter I of this chapter. In the case of an eligible 
child under subchapter II of this chapter who has spina bifida 
and one or more additional covered birth defects, a monetary 
allowance shall be paid under subchapter II of this chapter. In 
the case of a child eligible for benefits under subchapter I or 
II of this chapter who is also eligible for benefits under 
subchapter III of this chapter, a monetary allowance shall be 
paid under the subchapter of this chapter elected by the child.

           *       *       *       *       *       *       *


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

           *       *       *       *       *       *       *


    (f)(1) Following the death of the insured and in a case not 
covered by subsection (d)--
          (A) if the first beneficiary otherwise entitled to 
        payment of the insurance does not make a claim for such 
        payment within two years after the death of the 
        insured, payment may be made to another beneficiary 
        designated by the insured, in the order of precedence 
        as designated by the insured, as if the first 
        beneficiary had predeceased the insured; and
          (B) if, within four years after the death of the 
        insured, no claim has been filed by a person designated 
        by the insured as a beneficiary and the Secretary has 
        not received any notice in writing that any such claim 
        will be made, payment may (notwithstanding any other 
        provision of law) be made to such person as may in the 
        judgment of the Secretary be equitably entitled 
        thereto.
    (2) Payment of insurance under paragraph (1) shall be a bar 
to recovery by any other person.

           *       *       *       *       *       *       *


Sec. 1952. Optional settlement

           *       *       *       *       *       *       *


    (c)(1) Following the death of the insured and in a case not 
covered by section 1950 of this title--
          (A) if the first beneficiary otherwise entitled to 
        payment of the insurance does not make a claim for such 
        payment within two years after the death of the 
        insured, payment may be made to another beneficiary 
        designated by the insured, in the order of precedence 
        as designated by the insured, as if the first 
        beneficiary had predeceased the insured; and
          (B) if, within four years after the death of the 
        insured, no claim has been filed by a person designated 
        by the insured as a beneficiary and the Secretary has 
        not received any notice in writing that any such claim 
        will be made, payment may (notwithstanding any other 
        provision of law) be made to such person as may in the 
        judgment of the Secretary be equitably entitled 
        thereto.
    (2) Payment of insurance under paragraph (1) shall be a bar 
to recovery by any other person.

           *       *       *       *       *       *       *


Sec. 1974. Advisory Council on Servicemembers' Group Life Insurance

    (a) There is an Advisory Council on Servicemembers' Group 
Life Insurance. The council consist of--
          (1) the Secretary of the Treasury, who is the 
        chairman of the council;
          (2) the Secretary of Defense;
          (3) the Secretary of Commerce;
          (4) the Secretary of Health and Human Services;
          (5) the Secretary of [Transportation] Homeland 
        Security; and
          (6) the Director of the Office of Management and 
        Budget.
    Members of the council shall serve without additional 
compensation.

           *       *       *       *       *       *       *


Sec. 2303. Death in Department facility; plot allowance

           *       *       *       *       *       *       *


    (b) In addition to the benefits provided for under section 
2302 of this title and subsection (a) of this section, in the 
case of a veteran who is eligible for [a burial allowance under 
such section 2302, or under such subsection, who was discharged 
from the active military, naval, or air service for a 
disability incurred or aggravated in line of duty, or who is a 
veteran of any war] burial in a national cemetery under section 
2402 of this title and who is not buried in a national cemetery 
or other cemetery under the jurisdiction of the United States--
          (1) * * *
          (2) if such veteran [(other than a veteran whose 
        eligibility for benefits under this subsection is based 
        on being a veteran of any war)] is eligible for a 
        burial allowance under section 2302 of this title or 
        under subsection (a) of this section, or was discharged 
        from the active military, naval, or air service for a 
        disability incurred or aggravated in line of duty, and 
        such veteran is buried in a cemetery, or a section of a 
        cemetery, other than as described in clause (1) of this 
        subsection, the Secretary shall pay a sum not exceeding 
        $300 as a plot or interment allowance to such person as 
        the Secretary prescribes, except that if any part of 
        the plot or interment costs of a burial to which this 
        clause applies has been paid or assumed by a State, an 
        agency or political subdivision of a State, or a former 
        employer of the deceased veteran, no claim for such 
        allowance shall be allowed for more than the difference 
        between the entire amount of the expenses incurred and 
        the amount paid or assumed by any or all of the 
        foregoing entities.

           *       *       *       *       *       *       *


Sec. 2402. Persons eligible for interment in national cemeteries

    Under such regulations as the Secretary may prescribe and 
subject to the provisions of section 6105 of this title, the 
remains of the following persons may be buried in any open 
national cemetery under the control of the National Cemetery 
Administration:
          (1) * * *

           *       *       *       *       *       *       *

          (5) The spouse, surviving spouse (which for purposes 
        of this chapter includes [an unremarried surviving 
        spouse who had a subsequent remarriage which was 
        terminated by death or divorce] a surviving spouse who 
        had a subsequent remarriage), minor child (which for 
        purposes of this chapter includes a child under 21 
        years of age, or under 23 years of age if pursuing a 
        course of instruction at an approved educational 
        institution), and, in the discretion of the Secretary, 
        unmarried adult child of any of the persons listed in 
        paragraphs (1) through (4) and paragraph (7).

           *       *       *       *       *       *       *

          (8) Any individual whose service is described in 
        section 107(a) or (b) of this title if such individual 
        at the time of death--
                  (A) was a citizen of the United States or an 
                alien lawfully admitted for permanent residence 
                in the United States; and
                  (B) resided in the United States.

Sec. 2408. Aid to States for establishment, expansion, and improvement 
                    of veterans' cemeteries

    (a)[(1)] Subject to subsection (b) of this section, the 
Secretary may make grants to any State to assist such State in 
establishing, expanding, or improving veterans' cemeteries 
owned by such State. Any such grant may be made only upon 
submission of an application to the Secretary in such form and 
manner, and containing such information, as the Secretary may 
require.
    [(2) There is authorized to be appropriated such sums as 
may be necessary for fiscal year 1999 and for each succeeding 
fiscal year through fiscal year 2004 for the purpose of making 
grants under paragraph (1).]

           *       *       *       *       *       *       *

    (e) [Sums appropriated under subsection (a) of this 
section] Amounts appropriated to carry out this section shall 
remain available until expended. If all funds from a grant 
under this section have not been utilized by a State for the 
purpose for which the grant was made within three years after 
such grant is made, the United States shall be entitled to 
recover any such unused grant funds from such State.

           *       *       *       *       *       *       *


Sec. 3015. Amount of basic educational assistance

           *       *       *       *       *       *       *


    (h) With respect to any fiscal year, the Secretary shall 
provide a percentage increase (rounded down to the nearest 
dollar) in the rates payable under subsections (a)(1) and 
(b)(1) equal to the percentage by which--
          (1) the Consumer Price Index (all items, United 
        States city average) for the 12-month period ending on 
        the June 30 preceding the beginning of the fiscal year 
        for which the increase is made, exceeds
          (2) such Consumer Price Index for the 12-month period 
        preceding the 12-month period described in paragraph 
        (1).

           *       *       *       *       *       *       *


Sec. 3462. Time limitations for completing a program of education

                    DELIMITING PERIOD FOR COMPLETION

    (a)(1) Subject to paragraph (4) of this subsection, no 
educational assistance shall be afforded an eligible veteran 
under this chapter beyond the date 10 years after the veteran's 
last discharge or release from active duty after January 31, 
1955; except that, in the case of any eligible veteran who was 
prevented from initiating or completing such veteran's chosen 
program of education within such time period because of a 
physical or mental disability which was not the result of such 
veteran's own willful misconduct, such veteran shall, upon 
application made within one year after (A) the last date of the 
delimiting period otherwise applicable under this section, (B) 
the termination of the period of such mental or physical 
disability, or (C) October 1, 1980, whichever is the latest, be 
granted an extension of the applicable delimiting period for 
such length of time as the Secretary determines, from the 
evidence, that such veteran was so prevented from initiating or 
completing such program of education. When an extension of the 
applicable delimiting period is granted a veteran under the 
preceding sentence, the delimiting period with respect to such 
veteran will again begin running on the first day following 
such veteran's recovery from such disability on which it is 
reasonably feasible, as determined in accordance with 
regulations which the Secretary shall prescribe, for such 
veteran to initiate or resume pursuit of a program of education 
with educational assistance under this chapter.
    [(2)(A) Notwithstanding the provisions of paragraph (1) of 
this subsection, any veteran shall be permitted to use any of 
such veteran's unused entitlement under section 3461 of this 
title for the purposes of eligibility for an education loan, 
pursuant to the provisions of subchapter III of chapter 36 of 
this title [38 USCS Sec. Sec. 3698 et seq.], after the 
delimiting date otherwise applicable to such veteran under such 
paragraph (1), if such veteran was pursuing an approved program 
of education on a full-time basis at the time of the expiration 
of such veteran's eligibility.
    [(B) Notwithstanding any other provision of this chapter 
[38 USCS Sec. Sec. 3451 et seq.] or chapter 36 of this title 
[38 USCS Sec. Sec. 3670 et seq.], any veteran whose delimiting 
period is extended under subparagraph (A) of this paragraph may 
continue to use any unused loan entitlement under this 
paragraph as long as the veteran continues to be enrolled on a 
full-time basis in pursuit of the approved program of education 
in which such veteran was enrolled at the time of expiration of 
such veteran's eligibility (i) until such entitlement is 
exhausted, (ii) until the expiration of two years after 
November 23, 1977, or the date of the expiration of the 
delimiting date otherwise applicable to such veteran under 
paragraph (1) of this subsection, whichever is later, or (iii) 
until such veteran has completed the approved program of 
education in which such veteran was enrolled at the end of the 
delimiting period referred to in paragraph (1) of this 
subsection, whichever occurs first.]
    [(3) [Repealed]]
    [(4)] (2) For purposes of paragraph (1) of this subsection, 
a veteran's last discharge or release from active duty shall 
not include any discharge or release from a period of active 
duty of less than 90 days of continuous service unless the 
individual involved is discharged or released for a service-
connected disability, for a medical condition which preexisted 
such service and which the Secretary determines is not service 
connected, for hardship, or as a result of a reduction in force 
as described in section 3011(a)(1)(A)(ii)(III) of this title.

           *       *       *       *       *       *       *


Sec. 3485. Work-study allowance

    (a)(1) * * *

           *       *       *       *       *       *       *

    (e)(1) Subject to paragraph (2) of this subsection, the 
Secretary may, notwithstanding any other provision of law, 
enter into an agreement with an individual under this section, 
or a modification of such an agreement, whereby the individual 
agrees to perform services of the kind described in clauses (A) 
through (E) of subsection (a)(1) of this section and agrees 
that the Secretary shall, in lieu of paying the work-study 
allowance payable for such services, as provided in subsection 
(a) of this section, deduct the amount of the allowance from 
the amount which the individual has been determined to be 
indebted to the United States by virtue of such individual's 
participation in a benefits program under this chapter, chapter 
30, 31, 32, 35, or 36 [(other than an education loan under 
subchapter III)] of this title, or chapter 106 of title 10 
(other than an indebtedness arising from a refund penalty 
imposed under section 2135 of such title).

           *       *       *       *       *       *       *


Sec. 3512. Periods of eligibility

    (a) * * *

           *       *       *       *       *       *       *

    [(f) Any eligible person (as defined in section 
3501(a)(1)(B), (C), or (D) of this chapter) shall be entitled 
to an additional period of eligibility for an education loan 
under subchapter III of chapter 36 of this title beyond the 
maximum period provided for in this section pursuant to the 
same terms and conditions set forth with respect to an eligible 
veteran in section 3462(a)(2) of this title.]

           *       *       *       *       *       *       *


Sec. 3512. Periods of eligibility

           *       *       *       *       *       *       *


    (h) Notwithstanding any other provision of this section, if 
an eligible person, during the delimiting period otherwise 
applicable to such person under this section, serves on active 
duty pursuant to an order to active duty issued under section 
688, 12301(a), 12301(d), 12301(g), 12302, or 12304 of title 10, 
or is involuntarily ordered to full-time National Guard duty 
under section 502(f) of title 32, such person shall be granted 
an extension of such delimiting period for the length of time 
equal to the period of such active duty plus four months.

           *       *       *       *       *       *       *


Sec. 3532. Computation of educational assistance allowance

    (a)(1) The educational assistance allowance on behalf of an 
eligible person who is pursuing a program of education 
consisting of institutional courses shall be paid at the 
monthly rate of [$670] $788 for full-time, [$503] $592 for 
three-quarter time, or [$335] $394 for half-time pursuit.
    (2) The educational assistance allowance on behalf of an 
eligible person pursuing a program of education on less than a 
half-time basis shall be paid at the rate of the lesser of (A) 
the established charges for tuition and fees that the 
educational institution involved requires similarly 
circumstanced nonveterans enrolled in the same program to pay; 
or (B) [$670] $788 per month for a full-time course[, whichever 
is the lesser].
    (b) The educational assistance allowance to be paid on 
behalf of an eligible person who is pursuing a full-time 
program of education which consists of institutional courses 
and alternate phases of training in a business or industrial 
establishment with the training in the business or industrial 
establishment being strictly supplemental to the institutional 
portion, shall be computed at the rate of [$670] $788 per 
month.
    (c)(1) * * *

           *       *       *       *       *       *       *

    (2) The monthly educational assistance allowance to be paid 
on behalf of an eligible person pursuing a farm cooperative 
program under this chapter shall be [$541] $636 for full time, 
[$406] $477 for three-quarter-time, or [$271] $319 for half-
time pursuit.

           *       *       *       *       *       *       *


Sec. 3534. Apprenticeship or other on-job training; correspondence 
                    courses.

           *       *       *       *       *       *       *


    (b) Any eligible spouse or surviving spouse shall be 
entitled to pursue a program of education exclusively by 
correspondence and be paid an educational assistance allowance 
as provided in section 3686 (other than subsection (a)(2)) of 
this title and the period of such spouse's entitlement shall be 
charged with one month for each [$670] $788 which is paid to 
the spouse as an educational assistance allowance for such 
course.

           *       *       *       *       *       *       *


Sec. 3542. Special training allowance

    (a) While the eligible person is enrolled in and pursuing a 
full-time course of special restorative training, the eligible 
person shall be entitled to receive a special training 
allowance computed at the basic rate of [$670] $788 per month. 
If the charges for tuition and fees applicable to any such 
course are more than [$210] $247 per calendar month, the basic 
monthly allowance may be increased bythe amount that such 
charges exceed [$210] $247 a month, upon election by the eligible 
person to have such person's period of entitlement reduced by one day 
for each such increased amount of allowance that is equal to one-
thirtieth of the full-time basic monthly rate of special training 
allowance.

           *       *       *       *       *       *       *


Sec. 3564. Annual adjustment of amounts of educational assistance

    With respect to any fiscal year, the Secretary shall 
provide a percentage increase (rounded down to the nearest 
dollar) in the rates payable under sections 3532, 3534(b), and 
3542(a) of this title equal to the percentage by which--
          (1) the Consumer Price Index (all items, United 
        States city average) for the 12-month period ending on 
        the June 30 preceding the beginning of the fiscal year 
        for which the increase is made, exceeds
          (2) such Consumer Price Index for the 12-month period 
        preceding the 12-month period described in paragraph 
        (1).

           *       *       *       *       *       *       *


           CHAPTER 36--ADMINISTRATION OF EDUCATIONAL BENEFITS


                 Subchapter I--State Approving Agencies

Sec.
3670 * * *
     * * * * * * *

                    [Subchapter III--Education Loans]

[3698. Eligibility for loans; amount and conditions of loans; interest 
          rate on loans.
[3699. Revolving fund; insurance]

           *       *       *       *       *       *       *


Sec. 3687. Apprenticeship or other on-job training

    (a) * * *

           *       *       *       *       *       *       *

    (b)(1) * * *

           *       *       *       *       *       *       *

    (2) The monthly training assistance allowance of an 
eligible person pursuing a program described under subsection 
(a) shall be [$488] $574 for the first six months, [$365] $429 
for the second six months, [$242] $285 for the third six 
months, and [$122] $144 for the fourth and any succeeding six-
month period[s] of training.

           *       *       *       *       *       *       *


Sec. 3692. Advisory committee

    (a) There shall be a Veterans' Advisory Committee on 
Education formed by the Secretary which shall be composed of 
persons who are eminent in their respective fields of 
education, labor, and management and of representatives of 
institutions and establishments furnishing education to 
eligible veterans or persons enrolled under chapter 30, 32, or 
35 of this title and chapter [106] 1606 of title 10. The 
committee shall also, to the maximum extent practicable, 
include veterans representative of World War II, the Korean 
conflict era, the post-Korean conflict era, the Vietnam era, 
the post-Vietnam era, and the Persian Gulf War. The Assistant 
Secretary of Education for Postsecondary Education (or such 
other comparable official of the Department of Education as the 
Secretary of Education may designate) and the Assistant 
Secretary of Labor for Veterans' Employment and Training shall 
be ex officio members of the advisory committee.
    (b) The Secretary shall consult with and seek the advice of 
the committee from time to time with respect to the 
administration of this chapter, [chapter] chapters 30, 32, and 
35 of this title, and chapter [106] 1606 of title 10. The 
committee may make such reports and recommendations as it 
considers desirable to the Secretary and the Congress.
    (c) The committee shall remain in existence until December 
31, [2003] 2013.

           *       *       *       *       *       *       *


                   [SUBCHAPTER III--EDUCATION LOANS]


[Sec. 3698. Eligibility for loans; amount and conditions of loans; 
                    interest rate on loans]

    [(a)(1) Subject to paragraph (2) of this subsection, each 
eligible veteran shall be entitled to a loan under this 
subchapter (if the program of education is pursued in a State) 
in an amount determined under, and subject to the conditions 
specified in, subsection (b)(1) of this section if the veteran 
satisfies the requirements set forth in subsection (c) of this 
section and the criteria established under subsection (g) of 
this section.
    [(2) Except in the case of a veteran to whom section 
3462(a)(2) of this title is applicable, no loan may be made 
under this subchapter after September 30, 1981.
    [(b)(1) Subject to paragraph (3) of this subsection, the 
amount of the loan to which an eligible veteran shall be 
entitled under this subchapter for any academic year shall be 
equal to the amount needed by such veteran to pursue a program 
of education at the institution at which the veteran is 
enrolled, as determined under paragraph (2) of this subsection.
    [(2)(A) The amount needed by a veteran to pursue a program 
of education at an institution for any academic year shall be 
determined by subtracting (i) the total amount of financial 
resources (as defined in subparagraph (B) of this paragraph) 
available to the veteran which may be reasonably expected to be 
expended by such veteran for educational purposes in any year 
from (ii) the actual cost of attendance (as defined in 
subparagraph (C) of this paragraph) at the institution in which 
such veteran is enrolled.
    [(B) The term ``total amount of financial resources'' of 
any veteran for any year means the total of the following:
          [(i) The annual adjusted effective income of the 
        veteran less Federal income tax paid or payable by such 
        veteran with respect to such income.
          [(ii) The amount of cash assets of the veteran.
          [(iii) The amount of financial assistance received by 
        the veteran under the provisions of title IV of the 
        Higher Education Act of 1965.
          [(iv) Educational assistance received by the veteran 
        under this title other than under this subchapter.
          [(v) Financial assistance received by the veteran 
        under any scholarship or grant program other than those 
        specified in clauses (iii) and (iv).
    [(C) The term ``actual cost of attendance'' means, subject 
to such regulations as the Secretary may provide, the actual 
per-student charges for tuition, fees, room and board (or 
expenses related to reasonable commuting), books, and an 
allowance for such other expenses as the Secretary determines 
by regulation to be reasonably related to attendance at the 
institution at which the veteran is enrolled.
    [(3) The aggregate of the amounts any veteran may borrow 
under this subchapter may not exceed $ 376 multiplied by the 
number of months such veteran is entitled to receive 
educational assistance under section 3461 of this title, but 
not in excess of $2,500 in any one regular academic year.
    [(c) An eligible veteran shall be entitled to a loan under 
this subchapter if such veteran--
          [(1) is in attendance at an educational institution 
        on at least a half-time basis and (A) is enrolled in a 
        course leading to a standard college degree, or (B) is 
        enrolled in a course, the completion of which requires 
        six months or longer, leading to an identified and 
        predetermined professional or vocational objective, 
        except that the Secretary may waive the requirements of 
        subclause (B) of this clause, in whole or in part, if 
        the Secretary determines, pursuant to regulations which 
        the Secretary shall prescribe, it to be in the interest 
        of the eligible veteran and the Federal Government;
          [(2) enters into an agreement with the Secretary 
        meeting the requirements of subsection (d) of this 
        section; and
          [(3) satisfies any criteria established under 
        subsection (g) of this section.
[No loan shall be made under this subchapter to an eligible 
veteran pursuing a program of correspondence, or apprenticeship 
or other on-job training.
    [(d) Any agreement between the Secretary and a veteran 
under this subchapter--
          [(1) shall include a note or other written obligation 
        which provides for repayment to the Secretary of the 
        principal amount of, and payment of interest on, the 
        loan in installments
                  [(A) over a period beginning nine months 
                after the date on which the borrower ceases to 
                be at least a half-time student and ending ten 
                years and nine months after such date; or
                  [(B) over such shorter period as the 
                Secretary may have prescribed under subsection 
                (g) of this section;
          [(2) shall include provision for acceleration of 
        repayment of all or any part of the loan, without 
        penalty, at the option of the borrower;
          [(3) shall provide that the loan shall bear interest, 
        on the unpaid balance of the loan, at a rate prescribed 
        by the Secretary, at the time the loan is contracted 
        for which rate shall be comparable to the rate of 
        interest charged students at such time on loans insured 
        by the Secretary of Education, under part B of title IV 
        of the Higher Education Act of 1965, but in no event 
        shall the rate so prescribed by the Secretary exceed 
        the rate charged students on such insured loans, and 
        shall provide that no interest shall accrue prior to 
        the beginning date of repayment; and
          [(4) shall provide that the loan shall be made 
        without security and without endorsement.
    [(e)(1) Except as provided in paragraph (2) of this 
subsection, whenever the Secretary determines that a default 
has occurred on any loan made under this subchapter, the 
Secretary shall declare an overpayment, and such overpayment 
shall be recovered from the veteran concerned in the same 
manner as any other debt due the United States.
    [(2) If a veteran who has received a loan under this 
section dies or becomes permanently and totally disabled, then 
the Secretary shall discharge the veteran's liability on such 
loan by repaying the amount owed on such loan.
    [(f) Payment of a loan made under this section shall be 
drawn in favor of the eligible veteran and mailed promptly to 
the educational institution in which such veteran is enrolled. 
Such institution shall deliver such payment to the eligible 
veteran as soon as practicable after receipt thereof. Upon 
delivery of such payment to the eligible veteran, such 
educational institution shall promptly submit to the Secretary 
a certification, on such form as the Secretary shall prescribe, 
of such delivery, and such delivery shall be deemed to be an 
advance payment under section 3680(d)(4) of this title for 
purposes of section 3684(b) of this title.
    [(g)(1) The Secretary shall conduct, on a continuing basis, 
a review of the default experience with respect to loans made 
under this section.
    [(2)(A) To ensure that loans are made under this section on 
the basis of financial need directly related to the costs of 
education, the Secretary may, by regulation, establish (i) 
criteria for eligibility for such loans, in addition to the 
criteria and requirements prescribed by subsections (c) and (d) 
of this section, in order to limit eligibility for such loans 
to eligible veterans attending educational institutions with 
relatively high rates of tuition and fees, and (ii) criteria 
under which the Secretary may prescribe a repayment period for 
certain types of loans made under this section that is shorter 
than the repayment period otherwise applicable under subsection 
(d)(1)(A) ofthis section. Criteria established by the Secretary 
under clause (i) of the preceding sentence may include a minimum amount 
of tuition and fees that an eligible veteran may pay in order to be 
eligible for such a loan (except that any such criterion shall not 
apply with respect to a loan for which the veteran is eligible as a 
result of an extension of the period of eligibility of such veteran for 
loans under this section provided for by section 3462(a)(2) of this 
title.
    [(B) In prescribing regulations under subparagraph (A) of 
this paragraph, the Secretary shall take into consideration 
information developed in the course of the review required by 
paragraph (1) of this subsection.
    [(C) Regulations may be prescribed under subparagraph (A) 
of this paragraph only after opportunity has been afforded for 
public comment thereon.]

           *       *       *       *       *       *       *


[Sec. 3699. Revolving fund; insurance]

    [(a) There is hereby established in the Treasury of the 
United States a revolving fund to be known as the ``Department 
of Veterans Affairs Education Loan Fund'' (hereinafter in this 
section referred to as the ``Fund'').
    [(b) The Fund shall be available to the Secretary, without 
fiscal year limitation, for the making of loans under this 
subchapter.
    [(c) There shall be deposited in the Fund (1) by transfer 
from current and future appropriations for readjustment 
benefits such amounts as may be necessary to establish and 
supplement the Fund in order to meet the requirements of the 
Fund, and (2) all collections of fees and principal and 
interest (including overpayments declared under section 3698(e) 
of this title) on loans made under this subchapter.
    [(d) The Secretary shall determine annually whether there 
has developed in the Fund a surplus which, in the Secretary's 
adjustment, is more than necessary to meet the needs of the 
Fund, and such surplus, if any, shall be deemed to have been 
appropriated for readjustment benefits.
    [(e) A fee shall be collected from each veteran or person 
obtaining a loan made under this subchapter for the purpose of 
insuring against defaults on loans made under this subchapter; 
and no loan shall be made under this subchapter until the fee 
payable with respect to such loan has been collected and 
remitted to the Secretary. The amount of the fee shall be 
established from time to time by the Secretary, but shall in no 
event exceed 3 percent of the total loan amount. The amount of 
the fee may be included in the loan to the veteran or person 
and paid from the proceeds thereof.]

           *       *       *       *       *       *       *


Sec. 3712. Loans to purchase manufactured homes and lots

    (a)(1) * * *

           *       *       *       *       *       *       *

    (m) The authority of the Secretary to guarantee loans under 
this section shall expire on December 31, 2003.

           *       *       *       *       *       *       *


Sec. 3729. Loan fee

           *       *       *       *       *       *       *


    (b) Determination of Fee.--(1) The amount of the fee shall 
be determined from the loan fee table in paragraph (2). The fee 
is expressed as a percentage of the total amount of the loan 
guaranteed, insured, or made, or, in the case of a loan 
assumption, the unpaid principal balance of the loan on the 
date of the transfer of the property.
    (2) The loan fee table referred to in paragraph (1) is as 
follows:

                             LOAN FEE TABLE
------------------------------------------------------------------------
                                   Active duty                  Other
           Type of loan              veteran     Reservist     obligor
------------------------------------------------------------------------
(A)(i) Initial loan described in          2.00         2.75           NA
 section 3710(a) to purchase or
 construct a dwelling with 0-
 down, or any other initial loan
 described in section 3710(a)
 other than with 5-down or 10-
 down (closed before October 1,
 2011............................
(A)(ii) Initial loan described in         1.25         2.00           NA
 section 3710(a) to purchase or
 construct a dwelling with 0-
 down, or any other initial loan
 described in section 3710(a)
 other than with 5-down or 10-
 down (closed on or after October
 1, 2011.........................
(B)(i) Subsequent loan described        [3.00]       [3.00]           NA
 in section 3710(a) to purchase
 or construct a dwelling with 0-
 down, or any other subsequent
 loan described in section
 3710(a) (closed before October
 1, 2011)........................
(B)(ii) Subsequent loan described         1.25         2.00           NA
 in section 3710(a) to purchase
 or construct a dwelling with 0-
 down, or any other subsequent
 loan described in section
 3710(a) (closed on or after
 October 1, 2011)................
(C)(i) Loan described in section          1.50         2.25           NA
 3710(a) to purchase or construct
 a dwelling with 5-down (closed
 before October 1, 2011).........
(C)(ii) Loan described in section         0.75         1.50           NA
 3710(a) to purchase or construct
 a dwelling with 5-down (closed
 on or after October 1, 2011)....
(D)(i) Initial loan described in          1.25         2.00           NA
 section 3710(a) to purchase or
 construct a dwelling with 10-
 down (closed before October 1,
 2011)...........................
(D)(ii) Initial loan described in         0.50         1.25           NA
 section 3710(a) to purchase or
 construct a dwelling with 10-
 down (closed on or after October
 1, 2011)........................
(E) Interest rate reduction               0.50         0.50           NA
 refinancing loan................
(F) Direct loan under section             1.00         1.00           NA
 3711............................
(G) Manufactured home loan under          1.00         1.00           NA
 section 3712 (other than an
 interest rate reduction
 refinancing loan)...............
(H) Loan to Native American               1.25         1.25           NA
 veteran under section 3762
 (other than an interest rate
 reduction refinancing loan).....
(I) Loan assumption under section         0.50         0.50         0.50
 3714............................
(J) Loan under section 3733(a)...         2.25         2.25         2.25
------------------------------------------------------------------------

                                                             

           *       *       *       *       *       *       *
Sec. 3733. Property management

    (a)(1) Of the number of purchases made during any fiscal 
year of real property acquired by the Secretary as the result 
of a default on a loan guaranteed under this chapter for a 
purpose described in section 3710(a) of this title, not more 
than [65] 85 percent, nor less than 50 percent, of such 
purchases may be financed by a loan made by the Secretary. [The 
maximum percentage stated in the preceding sentence may be 
increased to 80 percent for any fiscal year if the Secretary 
determines that such an increase is necessary in order to 
maintain the effective functioning of the loan guaranty 
program.]
    [(2) After September 30, 1990, the percentage limitations 
described in paragraph (1) of this subsection shall have no 
effect.]
    [(3)] (2) The Secretary may, beginning on October 1, 1990, 
sell any note evidencing a loan referred to in paragraph (1)--
          (A) with recourse; or
          (B) without recourse, but only if the amount received 
        is equal to an amount which is not less than the unpaid 
        balance of such loan.
    [(4)] (3)(A)--Except as provided in subparagraph (B) of 
this paragraph, the amount of a loan made by the Secretary to 
finance the purchase of real property from the Secretary 
described in paragraph (1) [of this subsection] may not exceed 
an amount equal to 95 percent of the purchase price of such 
real property.
    (B)(i) The Secretary may waive the provisions of 
subparagraph (A) of this paragraph in the case of any loan 
described in paragraph [(5) of this subsection] (4).
    (ii) A loan described in subparagraph (A) of this paragraph 
may, to the extent the Secretary determines to be necessary in 
order to market competitively the property involved, exceed 95 
percent of the purchase price.
    [(5)] (4) The Secretary may include, as part of a loan to 
finance a purchase of real property from the Secretary 
described in paragraph (1) [of this subsection], an amount to 
be used only for the purpose of rehabilitating such property. 
Such amount may not exceed the amount necessary to rehabilitate 
the property to a habitable state, and payments shall be made 
available periodically as such rehabilitation is completed.
    [(6)] (5) The Secretary shall make a loan to finance the 
sale of real property described in paragraph (1) [of this 
subsection] at an interest rate that is lower than the 
prevailing mortgage market interest rate in areas where, and to 
the extent, the Secretary determines, in light of prevailing 
conditions in the real estate market involved, that such lower 
interest rate is necessary in order to market the property 
competitively and is in the interest of the long-term stability 
and solvency of the Veterans Housing Benefit Program Fund 
established by section 3722(a) of this title.

           *       *       *       *       *       *       *


Sec. 5102. Application forms furnished upon request; notice to 
                    claimants of incomplete applications

    (a) * * *

           *       *       *       *       *       *       *

    (c) Time Limitation.--(1) If information that a claimant 
and the claimant's representative, if any, are notified under 
subsection (b) is necessary to complete an application is not 
received by the Secretary within one year from the date of such 
notification, no benefit may be paid or furnished by reason of 
the claimant's application
    (2) This subsection shall not apply to any application or 
claim for Government life insurance benefits.

           *       *       *       *       *       *       *


Sec. 5103. Notice to claimants of required information and evidence

           *       *       *       *       *       *       *


    (b)(1) * * *

           *       *       *       *       *       *       *

    (3) The limitation in paragraph (1) shall not be construed 
to prohibit the Secretary from making a decision on a claim 
before the expiration of the period referred to in that 
subsection.

           *       *       *       *       *       *       *


Sec. 5121. Payment of certain accrued benefits upon death of a 
                    beneficiary

    (a) Except as provided in sections 3329 and 3330 of title 
31, periodic monetary benefits (other than insurance and 
servicemen's indemnity) under laws administered by the 
Secretary to which an individual was entitled at death under 
existing ratings or decisions[,] or those based on evidence in 
the file at date of death (hereinafter in this section and 
section 5122 of this title referred to as ``accrued benefits'') 
and due and unpaid [for a period not to exceed two years], 
shall, upon the death of such individual be paid as follows:
          (1) * * *

           *       *       *       *       *       *       *

          (4) Upon the death of a child, to the surviving 
        children of the veteran who are entitled to death 
        compensation, dependency and indemnity compensation, or 
        death pension; [and]
          (5) Upon the death of a child claiming benefits under 
        chapter 18 of this title, to the surviving parents; and
          [5] (6) In all other cases, only so much of the 
        accrued benefits may be paid as may be necessary to 
        reimburse the person who bore the expense of last 
        sickness and burial.

           *       *       *       *       *       *       *


Sec. 5301. Nonassignability and exempt status of benefits

    (a)(1) Payments of benefits due or to become due under any 
law administered by the Secretary shall not be assignable 
except to the extent specifically authorized by law, and such 
payments made to, or on account of, a beneficiary shall be 
exempt from taxation, shall be exempt from the claim of 
creditors, and shall not be liable to attachment, levy, or 
seizure by or under any legal or equitable process whatever, 
either before or after receipt by the beneficiary. The 
preceding sentence shall not apply to claims of the United 
States arising under such laws nor shall the exemption therein 
contained as to taxation extend to any property purchased in 
part or wholly out of such payments. The provisions of this 
section shall not be construed to prohibit the assignment of 
insurance otherwise authorized under chapter 19 of this title, 
or of servicemen's indemnity. [For the purposes of this 
subsection, in any case where a payee of an educational 
assistance allowance has designated the address of an attorney-
in-fact as the payee's address for the purpose ofreceiving a 
benefit check and has also executed a power of attorney giving the 
attorney-in-fact authority to negotiate such benefit check, such action 
shall be deemed to be an assignment and is prohibited.]
    (2) For the purposes of this subsection, in any case where 
a payee of an educational assistance allowance has designated 
the address of an attorney-in-fact as the payee's address for 
the purpose of receiving a benefit check and has also executed 
a power of attorney giving the attorney-in-fact authority to 
negotiate such benefit check, such action shall be deemed to be 
an assignment and is prohibited.
    (3)(A) This subsection is intended to clarify that, in any 
case where a beneficiary entitled to compensation, pension, or 
dependency and indemnity compensation enters into an agreement 
with another person under which agreement such other person 
acquires for consideration the right to receive payment of such 
compensation, pension, or dependency compensation, as the case 
may be, whether by payment from the beneficiary to such other 
person, deposit into an account from which such other person 
may make withdrawals, or otherwise, such agreement shall be 
deemed to be an assignment and is prohibited.
    (B) Notwithstanding subparagraph (A), nothing in this 
subsection is intended to prohibit a loan to a beneficiary 
under the terms of which the beneficiary may use some of the 
benefits to repay the loan, so long as each of the periodic 
payments made to repay the loan is separately and voluntarily 
executed by the beneficiary at the time such periodic payment 
is made.
    (C) Any agreement or arrangement for collateral for 
security for an agreement that is prohibited under subparagraph 
(A) is also prohibited and is void ab initio.

           *       *       *       *       *       *       *


Sec. 5317. Use of income information from other agencies: notice and 
                    verification

           *       *       *       *       *       *       *


    (g) The authority of the Secretary to obtain information 
from the Secretary of the Treasury or the Secretary of Health 
and Human Services under section 6103(l)(7)(D)(viii) of the 
Internal Revenue Code of 1986 expires on September 30, [2008] 
2011.

           *       *       *       *       *       *       *


Sec. 6105. Forfeiture for subversive activities

           *       *       *       *       *       *       *


    (b) The offenses referred to in subsection (a) of this 
section are those offenses for which punishment is prescribed 
in--
          (1) sections 894, 904, and 906 of title 10 (articles 
        94, 104, and 106 of the Uniform Code of Military 
        Justice);
          (2) [sections 792, 793, 794, 798, 2381, 2382, 2383, 
        2384, 2385, 2387, 2388, 2389, 2390, and chapter 105 of 
        title 18] sections 175, 229, 792, 793, 794, 798, 831, 
        1091, 2332a, 2332b, 2381, 2382, 2383, 2384, 2385, 2387, 
        2388, 2389, 2390, and chapter 105 of title 18;
          (3) sections 222, 223, 224, 225, and 226 of the 
        Atomic Energy Act of 1954 (42 U.S.C. 2272, 2273, 2274, 
        2275, and 2276); and (4) section 4 of the Internal 
        Security Act of 1950 (50 U.S.C. 783).

           *       *       *       *       *       *       *


Sec. 7105. Filing of notice of disagreement and appeal

           *       *       *       *       *       *       *


    (b)(1) * * *

           *       *       *       *       *       *       *

    (3) A document that meets the requirements of the second 
sentence of paragraph (1) and the first sentence of paragraph 
(2) shall be recognized as a notice of disagreement for 
purposes of this section unless the Secretary finds that the 
claimant has disavowed a desire for appellate review.

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