[Federal Register Volume 67, Number 15 (Wednesday, January 23, 2002)]
[Rules and Regulations]
[Pages 3099-3106]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1536]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Parts 19 and 20

RIN 2900-AK91


Board of Veterans' Appeals: Obtaining Evidence and Curing 
Procedural Defects Without Remanding

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: This document amends the Appeals Regulations and Rules of 
Practice of the Board of Veterans' Appeals (Board) to permit the Board 
to obtain evidence, clarify the evidence, cure a procedural defect, or 
perform any other action essential for a proper appellate decision in 
any appeal properly before it without having to remand the appeal to 
the agency of original jurisdiction. It also allows the Board to 
consider additional evidence without having to refer the evidence to 
the agency of original jurisdiction for initial consideration and 
without having to obtain the appellant's waiver. By reducing the number 
of appeals remanded, VA intends to shorten appeal processing time and 
to reduce the backlog of claims awaiting decision.

DATES: Effective Date: These amendments are effective February 22, 
2002.
    Applicability Date: These amendments apply to appeals for which the 
notice of disagreement was filed on or after February 22, 2002, and to 
appeals pending, whether at the Board of Veterans' Appeals, the United 
States Court of Appeals for Veterans Claims, or

[[Page 3100]]

the United States Court of Appeals for the Federal Circuit, on February 
22, 2002.

FOR FURTHER INFORMATION CONTACT: Steven L. Keller, Senior Deputy Vice 
Chairman, Board of Veterans' Appeals ((202) 565-5978), or Michael J. 
Timinski, Attorney, Office of General Counsel ((202) 273-6327), 
Department of Veterans Affairs, 810 Vermont Avenue, NW, Washington, DC 
20420.

SUPPLEMENTARY INFORMATION: The Board of Veterans' Appeals (Board) is 
the component of the Department of Veterans Affairs (VA) in Washington, 
DC, that decides appeals from denials of claims for veterans' benefits.
    On August 6, 2001, VA published a notice of proposed rulemaking 
(NPRM) which would permit the Board to obtain evidence and correct 
procedural defects without remanding the case to the agency of original 
jurisdiction. 66 FR 40942 (2001). We received seven comments: Two from 
individuals; three from veterans service organizations; one from a 
state department of veterans affairs; and one from an association of 
attorneys.
    For the reasons described below, we are adopting the regulations 
largely as proposed, but with some amendments based on the comments and 
other concerns.

Changes to Proposed Regulations

    One commenter suggested extensive changes to Rule 903 (38 CFR 
20.903), relating to notification of evidence secured and law to be 
considered by the Board and opportunity for response. While we decline 
to follow all of the suggestions, we have amended Rule 903 to clarify 
that the appellant may, within the 60-day period, submit evidence and 
argument relating to the evidence or law. Proposed Rule 1304(b)(2) (38 
CFR 20.1304(b)) implicitly provided the right to submit evidence and 
argument in connection with the Board's consideration of evidence or 
law not previously considered by the agency of original jurisdiction.
    We decline to adopt the commenter's suggestion that the Board's 
notice include a statement of the weight the Board intends to assign to 
new evidence or law, an assessment of whether the evidence or law is 
``determinative, significant or of minimal impact,'' a statement of 
whether the new evidence or law will likely result in the denial of the 
appeal, and a list of the claimant's options. These matters are 
generally not determined until the Board weighs the evidence and 
decides the appeal. The purpose of our amendments to Sec. 20.903 is to 
ensure that an appellant receives adequate notice of new evidence 
obtained by the Board and of law that the Board intends to consider, as 
well as an opportunity to respond with additional evidence or argument; 
the purpose is not to give an appellant advance notice of the decision 
the Board intends to make in an appeal. Our purpose is adequately 
served by providing the appellant with a copy of the evidence obtained 
by the Board, a copy or summary of the law to be considered, and an 
opportunity to submit relevant evidence or argument in response.
    Another commenter suggested that, in connection with the Board's 
consideration of law not already considered by the agency of original 
jurisdiction, we should provide a copy or summary of the law, rather 
than a copy or ``reference'' to the law. We think this is a good 
suggestion and have incorporated it into Rule 903(c).
    The same commenter suggested that, when the Board secures evidence 
not provided by the appellant, the Board should provide a copy of that 
evidence to the appellant. Because that was our intent, we have 
clarified Rule 903(b) to make it explicit.
    Further, that commenter asserted that the record development 
procedures in 38 CFR 19.9 lack provisions to make this record 
development comply with the notice and other requirements of the 
Veterans Claims Assistance Act of 2000 (VCAA), Pub. L. 106-475, 114 
Stat. 2096. We agree and have amended proposed Sec. 19.9(a)(2) to 
clarify that any development undertaken by the Board will comply with 
38 CFR 3.159(a) and (c)-(f), which implements the VCAA. Those 
provisions delineate the obligations of VA and the claimant with 
respect to obtaining evidence. Section 3.159(b) relates to notices VA 
must give when it receives a substantially complete or incomplete 
application. Because that notice is normally given in the earliest 
stages of claim processing, even before evidence gathering begins, 
Sec. 3.159(b) was designed for implementation by regional offices. 
Application of those provisions to the Board would be inapt. 
Nevertheless, because under Sec. 19.9(a)(2) the Board could provide the 
notice, we have made other amendments to Sec. 19.9(a)(2) to provide the 
same protections afforded by the VCAA.
    We have added a provision (38 CFR 19.9(a)(2)(ii)) to ensure two 
things: First, if the Board undertakes to provide the notice required 
by 38 U.S.C. 5103(a) and/or 38 CFR 3.159(b)(1), the appellant shall 
have not less than 30 days in which to respond to that notice. Second, 
because 38 U.S.C. 5103(b) appears to give the claimant one year to 
provide the evidence requested of the claimant in the notice, we have 
clarified that, if the appellant submits relevant evidence within one 
year of the notice but after the Board's decision, the evidence will be 
referred to the agency of original jurisdiction. If that agency makes a 
favorable determination based on that evidence, the effective date of 
the determination will be the same as if the Board had granted the 
appeal. This latter rule is based on Rule 1304(b)(1), which relates to 
evidence submitted to the Board before its decision, but not accepted 
in connection with the appeal.
    We have modified Rule 903(c) to make explicit that, in two 
situations, the Board need not notify the appellant that it intends to 
consider a law not considered by the regional office: (1) If the Board 
intends to grant the benefit; or (2) if the appellant or the 
appellant's representative has advanced or otherwise argued 
consideration of the law in question. If the Board intends to grant the 
benefit, there is no need to delay the claim with notice. Similarly, if 
the appellant has raised the applicability of a law, then he or she has 
already been heard with respect to the law, and Rule 903(c)'s purpose 
has been satisfied. Accordingly, there would be no need to go through 
these notice procedures in either of these situations.
    We have also corrected an erroneous reference in proposed 
Sec. 20.903(b).

Alternative Approach

    One commenter suggested an alternative approach. Under this 
approach, if a case requires additional evidence, a Board member would 
prepare a memorandum listing such evidence. Personnel from the Veterans 
Benefits Administration (VBA), the part of VA that operates the 
regional offices, would be temporarily assigned to the Board and would 
complete the required development. When the development was completed, 
the appellant would be given the choice, as under prior regulatory 
procedures, of having the Board decide the case or first having the 
regional office make another decision, based on the additional 
evidence.
    The chief efficiency in this approach would probably be that 
experienced VBA personnel would be developing the evidence, rather than 
the Board, which has essentially no experience in such matters. On the 
other hand, the approach would not eliminate remands to the regional 
offices to decide a claim based on new evidence, since the appellant 
could decline to waive initial regional office consideration.
    While we appreciate this thoughtful suggestion, we do not believe 
that it

[[Page 3101]]

would do as much to relieve pressure on the regional offices.

Hearings

    One commenter suggested that the Board's rules should provide a 
right to a hearing when the Board is considering new evidence. While we 
understand the concern motivating this suggestion, we think that Rule 
1304(b), which permits a hearing upon a showing of good cause, is 
sufficient to protect the appellant's right to due process.
    First, there should be no question that these regulations provide 
substantial due process protections when the Board develops new 
evidence: We have amended 38 CFR 20.903(b) to provide that, if the 
Board obtains pertinent evidence not submitted by the appellant, the 
Board will provide the appellant a copy of the evidence and 60 days to 
submit additional evidence or argument in response.
    Second, evidence submitted after an appeal is transferred to the 
Board is not a new situation. The Board has dealt with it for many 
years. Compare 38 CFR 20.709 (2001) (procurement of additional evidence 
following a hearing) with 38 CFR 19.164 (1983) (same), published in 48 
FR 6961 (1983); also compare 38 CFR 20.1304(b) (evidence submitted 
after certification and transfer) with 38 CFR 19.174 (1983) (same), 
published in 48 FR 6961 (1983). While in the past, Board consideration 
in the first instance required the appellant to waive initial 
consideration by the regional office, 38 CFR 20.1304(c) (2001), a 
hearing would have been available--and is still available--upon a 
showing of good cause, id. 20.1304(b).
    We think this time-tested approach will adequately serve the 
interests of veterans both in being heard and in receiving a prompt 
decision on appeal. In sum, we believe we are protecting the important 
due process rights of all appellants.

Objections

    The veterans service organizations and the association of attorneys 
opposed the proposed rule. In general, their reasons for opposition 
fell into four categories: (1) Procedural issues relating to the 
rulemaking; (2) alleged legal barriers to implementation of the 
proposed rules; (3) alleged conflicts with the VCAA; and (4) policy 
issues which allegedly make adoption of the rule unwise. In addition, 
one commenter raised questions concerning the effective date of these 
rules.
    We do not agree with these objections. We will address them in 
turn.

1. Procedural Issues

    One commenter felt the 30-day comment period was too short and 
suggested that, in connection with publication of the final rule, we 
announce another 30-day comment period. We decline to do so.
    As we explained in our NPRM, 66 FR at 40944, we chose a 30-day 
comment period because of the exigent nature of the backlog of claims 
at our regional offices. We received thoughtful comments from a number 
of commenters. While we are always interested in comments from the 
public relating to our rules, we do not see any particular interest 
that would be served by reopening the comment period.

2. Legal Barriers to Regulations

    Several commenters suggested that provisions of the proposed rule 
conflict with general legal principles or particular statutes that 
would prevent the rule's adoption.
a. The Board's Status as an Appellate Body Prevents it From Developing 
Evidence
    Three commenters asserted that the Board does not have the 
authority to develop evidence because it is an appellate tribunal and 
hence limited to review of the record below. We have examined the 
applicable statutes and court decisions interpreting them. We do not 
agree that the nature of the Board's administrative appellate review 
excludes the possibility of securing and ruling on evidence or ruling 
on issues of law that were not decided by the agency of original 
jurisdiction.
    As a general matter, an agency's administrative appellate body has 
all the power the agency has in the initial decision process--in VA's 
case, the process at the regional offices--and the power to receive 
additional or supplemental evidence. 2 Am. Jur. 2d Administrative Law 
Secs. 372, 375 (2000). Other agencies have issued regulations 
authorizing their administrative appellate bodies to secure and review 
new evidence. See 42 CFR 404.976(b)(2) (in appeals from decisions of 
Social Security Administration administrative law judges, Appeals 
Council has authority to obtain additional evidence if needed); 29 CFR 
1614.404(a) (in appeals from decisions of administrative judges, the 
Equal Employment Opportunity Commission may supplement the record by 
investigation or other procedures); see also Chrysler Corp. v. Federal 
Trade Comm'n, 561 F.2d 357, 362-63 (1977) (on appeal from initial 
decision, FTC could supplement record with evidence it obtained). 
Because the statutes governing the Board do not withhold the power to 
receive additional evidence, which is generally held by administrative 
appellate bodies, we believe the Board also holds that power.
    Moreover, in our view, VA's statutory scheme supports the Board's 
development of evidence. For example, the United States Court of 
Appeals for Veterans Claims (CAVC) has held that 38 U.S.C. 7109, which 
authorizes the Board to obtain expert medical opinions from outside VA, 
is an enabling provision which supplements the Board's inherent 
authority to secure medical opinions from within VA. Winsett v. West, 
11 Vet. App. 420, 426 (1998) (Board has the authority, and in many 
cases the duty, to obtain an expert medical opinion irrespective of 
section 7109), aff'd, 217 F.3d 854 (Fed. Cir. 1999) (unpublished 
opinion). Furthermore, the CAVC has indicated that evidentiary 
development by the Board is consistent with statutory authority also 
suggestive of a Board fact-finding role. Austin v. Brown, 6 Vet. App. 
547, 551 (1994); see also Gilbert v. Derwinski, 1 Vet. App. 49, 52 
(1990) (Board is an administrative tribunal which functions as a fact 
finder in a manner similar to that of a trial court, although, for the 
most part, in a non-adversarial setting).
    To support its assertion that the Board's status as an appellate 
body prevents the Board from developing evidence, one commenter cited a 
number of cases, including Nolen v. Gober, 222 F.3d 1356 (Fed. Cir. 
2000); Winters v. Gober, 219 F.3d 1375 (Fed. Cir. 2000); Hensley v. 
West, 212 F.3d 1255 (Fed. Cir. 2000); Smith v. Brown, 35 F.3d 1516 
(Fed. Cir. 1994); and McCormick v. Gober, 14 Vet. App. 39 (2000). We 
have reviewed those cases. While some of them deal with the nature of 
review by the CAVC, none of them stands for the proposition--or even 
implies the proposition--that the Board cannot develop evidence.
    With respect to the Board applying law not considered by the 
regional office, the CAVC has never held that the Board is barred from 
such consideration, only that the appellant must be given notice and 
the opportunity to submit evidence and argument on that point. e.g., 
Sutton v. Brown, 9 Vet. App. 553, 564-67 (1994). Our amendment to Rule 
903 meets this standard.
    Accordingly, we conclude that the Board's status as an appellate 
body does not bar it from developing evidence or considering law not 
considered by the regional office.

[[Page 3102]]

b. Statutes Prohibit the Board From Developing Evidence or Curing 
Procedural Defects
    Several commenters asserted that various statutes, 38 U.S.C. 511, 
7101, 7104, 7105, and 7105A, prohibit the Board from developing 
evidence. We have carefully reviewed those statutes. We find nothing in 
any of them prohibiting or precluding the Board from developing 
evidence.
    One commenter referred extensively to what various statutes 
``contemplated.'' For example, this commenter stated that 38 U.S.C. 
7104(a) ``does not contemplate that the Board is to cure procedural 
defects.'' This is the text of that statute:

    All questions in a matter which under section 511(a) of this 
title is subject to decision by the Secretary shall be subject to 
one review on appeal to the Secretary. Final decisions on such 
appeals shall be made by the Board. Decisions of the Board shall be 
based on the entire record in the proceeding and upon consideration 
of all evidence and material of record and applicable provisions of 
law and regulation.

    Nothing in the statute refers to procedural defects, much less to 
curing them. The commenter provided no authority for its conclusion. 
Because we disagree with the commenters that any statute prohibits or 
precludes the Board from engaging in the activities mentioned in the 
proposed rule, we decline to make any change based on these comments.
    That same commenter asserted that VA had never before interpreted 
38 U.S.C. 7104(a) to authorize the Board to obtain evidence or cure 
procedural defects. While that may be true, the Board has long been 
authorized by statute to collect evidence in connection with a hearing, 
38 U.S.C. 7107(b), and in connection with a request for independent 
medical opinions, id. 7109. Further, the commenter ignores the fact 
that the substance of Rule 901(a) (38 CFR 20.901(a)), relating to Board 
requests for medical opinions from VA's Under Secretary for Health 
(formerly the Chief Medical Director), has been in the Board's 
published rules of practice for more than 35 years. See 38 CFR 19.144 
(1965) (expert medical opinions), published in 29 FR 1464, 1468 (1964). 
The commenter also fails to consider the Board's ability to cure some 
procedural defects, e.g., clarification of the issues on appeal or 
whether the appellant wants a hearing before the Board, without remand, 
which has been in the Board's appeals regulations since 1996. See 38 
CFR 19.9(a). Regardless of whether VA has previously interpreted 
section 7104(a) to permit the Board to obtain evidence and cure 
procedural defects, that interpretation is consistent with all 
governing statutes.
    Accordingly, we do not accept the proposition that statutes in 
title 38, United States Code, bar the Board from obtaining evidence or 
curing procedural defects.
c. Statutes Require Waiver of Consideration by the Regional Office When 
Evidence is Developed by the Board
    One commenter asserted that the proposed amendment to 38 CFR 
20.1304, which would allow the Board to consider evidence that it 
obtains or that is submitted to it, without having to refer the 
evidence to the agency of original jurisdiction for initial 
consideration in the absence of the appellant's waiver, is inconsistent 
with the statutory language of 38 U.S.C. 7104(a), 7105(a), 7109(a), and 
7109(c). This commenter offered no authority for this proposition, 
other than to assert that, (1) as an appellate body, the Board is 
limited to the record before the Secretary, and (2) the amendment 
represents a change.
    As discussed above, we think administrative appellate bodies 
generally are not limited to the evidence developed below, and that the 
Board in particular is not so limited. With respect to the comment that 
these amendments represent a change in policy, we agree. However, VA 
has the right to amend its regulations as long as the amendments do not 
conflict with statutes. We have carefully reviewed the cited statutes, 
and find nothing in them that would prohibit or preclude the change. 
Accordingly, we reject this objection.
    Another commenter argued that 38 U.S.C. 7101 and 7104 prevent the 
Board from generating determinations which have not been subject to 
prior agency adjudication and review. The commenter offers no other 
authority for this proposition. We have reviewed those provisions 
carefully and find in their text no support for the commenter's 
argument. We reject this argument.
    The same commenter argued that, by considering laws not considered 
by the regional office, the Board would unlawfully relieve the regional 
office of its obligation to follow all applicable statutes and 
regulations. The argument appears to be this: If the Board considers a 
law not considered by the regional office and decides the case without 
remand, it will have sanctioned the regional office's failure to 
consider the law.
    The only authority the commenter offers for this proposition is a 
case which reiterates the axiom that agencies must act in accordance 
with applicable statutes and regulations. Paralyzed Veterans of America 
v. West, 136 F.3d 1434, 1436 (Fed. Cir. 1998). That axiom provides no 
support for the proposition that an administrative tribunal has no 
authority to apply law not applied by an inferior tribunal. If a 
regional office has failed to consider an applicable law, it is 
important that the law be considered in connection with the claim, but 
whether the consideration is made by the Board in the first instance or 
by the regional office on remand from the Board is not important. The 
Board's functions include correction of errors by the regional offices. 
For the reasons stated in the NPRM, we have decided to have the Board 
make such consideration in the first instance. We therefore reject the 
commenter's argument.

3. Conflicts With the VCAA

a. The Board Has No Jurisdiction To Implement the VCAA
    Two commenters asserted that any evidence development by VA 
requires application of the VCAA and that, because the Board has no 
authority to implement that Act, the Board cannot develop evidence. The 
only argument advanced in support of this proposition is that the VCAA 
specifies that the Secretary provide assistance but does not mention 
the Board.
    The VCAA requires the Secretary of Veterans Affairs to provide 
certain types of assistance in connection with a claim for benefits. By 
statute, the Board stands in place of the Secretary in connection with 
appeals. 38 U.S.C. 7104(a). Even if we were to associate some 
significance with the fact that the VCAA does not mention the Board--
which, since it also does not mention agencies of original 
jurisdiction, we do not--the Secretary can delegate his VCAA 
obligations, which he is doing by publishing this regulation. 
Therefore, we reject this argument.
b. The Regulation's 60-Day Time Periods for Response Conflict With the 
One-year Time Period Set Forth in the VCAA
    One commenter, without specifying any statutory or regulatory 
provisions other than ``the VCAA,'' asserted that an appellant is 
always entitled to a one-year response period because of the VCAA. We 
do not agree.
    New Rule 903, relating to notification of evidence secured and law 
to be considered by the Board and opportunity for response, provides a 
60-day response period. The VCAA does not prohibit or preclude such a 
period.

[[Page 3103]]

    The only one-year period provided by the VCAA is mentioned in 38 
U.S.C. 5103(b). Under 38 U.S.C. 5103(a), when VA receives a 
substantially complete application for benefits, it must notify the 
claimant of any information, and any medical or lay evidence, not 
previously provided to the Secretary that is necessary to substantiate 
the claim. In the case of information or evidence that VA tells the 
claimant he or she must provide, section 5103(b)(1) provides that, if 
such information or evidence is not received by VA within one year from 
the date of the notification, no benefit may be paid or furnished by 
reason of the claimant's application.
    This one-year period in the VCAA is expressly applicable to 
information and evidence requested from a claimant in VA's notification 
in response to receiving a substantially complete application. The 
limitation in section 5103(b)(1) simply does not apply to an 
appellant's opportunity to respond to an opinion, evidence, or law, as 
set forth in new Rule 903.
    We therefore reject this argument.

4. Policy Issues

    Several commenters raised questions as to whether this increased 
authority for the Board made sense from a policy perspective.
a. Quality Problems at the Regional Offices
    Three commenters were concerned that, to the extent these 
regulations curtailed the Board's remand function, the quality of 
regional office determinations would suffer. As one commenter stated:

    Appellate review is a quality control function. The goal (and 
perhaps intensity) of quality review is lost if the quality reviewer 
must itself correct the mistakes it finds. If the Board must correct 
the mistakes of the agency of original jurisdiction, the agency of 
original jurisdiction has no incentive to improve performance, and 
without having to ever acknowledge and correct its own mistakes, the 
agency of original jurisdiction is deprived of the means to learn 
from them.

    We are sensitive to these concerns. However, a remand does not 
always connote error on the part of the regional office. For example, 
during the period October 2000 through March 2001, more than 27% of the 
Board's remands were based primarily on the need for the regional 
office to apply law which was not in effect at the time of the original 
decision. Similarly, during the period October 1998 through March 2001, 
between 5% and 10% of the Board's remands were based primarily on the 
appellant's request for a Board hearing at the regional office, which 
may have been submitted subsequent to the filing of the appeal. In any 
event, we believe that VBA's quality-review programs will solve any 
perceived problem with quality.
b. Inefficient Use of Resources
    One commenter opposed the regulations in part because they would 
foster inefficient use of resources. Specifically, this commenter 
argued that Board employees possess a higher level of expertise than 
regional office employees, and that that higher expertise should be 
used where most appropriate, i.e., in reviewing regional office 
decisions, not in duplicating the regional offices' work.
    As described in our NPRM, VA is now concerned with the very large 
backlog at the regional offices. At the end of August 2001, there were 
367,000 original and reopened claims for service-connected disability 
compensation pending in VA's regional offices, double the number 
pending at the end of August 2000. Of the August 2001 cases, 40% 
(146,000 of 367,000) had been pending for more than 180 days, and 11% 
had been pending for more than a year (40,000 of 367,000). (The 
corresponding percentages in August 2000 were 28% and 8%, 
respectively.) We think employing the Board to help develop appealed 
claims will take pressure off the regional offices so that they can 
deal with these pending claims.
c. If Board Applies New Law, Claims Will Be Denied
    One commenter argued that, if the Board decides a case based on law 
not applied by the regional office, the Board will deny the appeal 
because of inadequately developed records. The argument is essentially 
that the Board will consider the new law without providing the 
appellant an opportunity to submit evidence or argument.
    The commenter does not take into account new Rule 903(c), which 
provides for notice to the claimant that the Board intends to consider 
such law and provides 60 days for a response. This approach is 
consistent with the CAVC's holding in Sutton, supra, and provides the 
appellant with an opportunity to present evidence and argument.
    In addition, we have modified all three paragraphs in Rule 903 to 
clarify that the appellant may submit evidence and/or argument in 
response to the Board's notice.
d. Issues Relating to the Supplemental Statement of the Case
    Two commenters raised questions relating to supplemental statements 
of the case (SSOC).
    Generally, after a claimant files a notice of disagreement with a 
regional office decision, the regional office must prepare what the law 
calls a ``statement of the case'' (SOC). 38 U.S.C. 7105(d). An SOC 
includes a summary of pertinent evidence in the case, a citation to 
pertinent laws and regulations, a discussion of how those laws and 
regulations affect the decision, and a summary of the reasons for the 
decision. Id. 7105(d)(1)(A)-(C).
    VA's regulations require the regional office to prepare an SSOC if 
the regional office receives additional pertinent evidence or the SOC 
is otherwise inadequate, such as where the regional office must apply 
new law in a case and the subsequent decision does not grant the 
benefits sought. 38 CFR 19.31. An SSOC is a document prepared by the 
regional office to inform the appellant of any material changes in, or 
additions to, the information included in the SOC or any prior SSOC.
    One commenter appeared to assume that the Board would issue an SSOC 
if it considers new evidence or new law. It will not. The purpose of 
the SSOC is to provide the claimant with the reasons for the regional 
office decision so that the claimant can make an informed decision on 
whether to continue the appeal to the Board. Once a regional office 
transfers an appeal to the Board, this stage of the appeal is passed 
and there no longer is a need for an SSOC.
    One commenter asserted that the Board's failure to provide an SSOC 
would eliminate a ``substantive due process right'' of the claimant. As 
discussed above, once an appeal has reached the Board, there is no 
reason to provide an SSOC, so no right is being eliminated.
    We reject these arguments.

5. Effective Date

    One commenter asserted that the new rules cannot apply to appeals 
pending on the date the rules become effective. Accordingly, it 
objected to our proposal that the amendments apply to appeals for which 
the notice of disagreement was filed on or after the effective date of 
these amendments and to appeals that were pending on that date. 66 FR 
at 40944.
    As this commenter argues, retroactivity is not favored in 
regulations. Bowen v. Georgetown Univ. Hospital, 488 U.S. 204, 208 
(1988). However, the effective date provisions in this rule do not make 
it retroactive.

[[Page 3104]]

    The fact that a regulation applies to pending matters does not make 
it retroactive. As the Supreme Court has said, a statute has 
retroactive effect if it ``impairs rights a party possessed when he 
acted, increases a party's liability for past conduct, or imposes new 
duties with respect to transactions already completed.'' Landgraf v. 
USI Film Prods., 511 U.S. 244, 280 (1994). And as the Federal Circuit 
has said, ``an effective date, unless expressly conditioned on other 
events, governs the application of a new rule.'' Schockley v. Arcan, 
Inc., 248 F.3d 1349, 1358-59 (Fed. Cir. 2001) (where reissue patent was 
pending when new rule took effect, the new rule applies); cf. Demars v. 
First Service Bank for Savings, 907 F.2d 1237, 1239-40 (1st Cir. 1990) 
(where substantive rights are not affected and there is no manifest 
injustice, new regulatory provisions apply to pending cases).
    Under the new regulations, according to the commenter, appellants 
will lose their ``rights'' to have regional offices secure evidence and 
to have the regional offices adjudicate claims under laws those offices 
did not previously consider. In our view, which office within VA that 
will attempt to obtain evidence on behalf of a claimant or which office 
will adjudicate the effect of a law not previously considered are 
procedural matters. The appellant's rights to submit evidence and 
argument, as well as the right to have his or her regional office 
denial reviewed by the Board, are unabridged by these amendments.
    Accordingly, we believe that it is proper to apply these rules to 
all pending appeals.
    We do note, however, that these rules in no way abridge the 
appellant's right, under Stegall v. West, 11 Vet. App. 268, 271 (1998), 
to have VA comply with all remand orders, whether from the CAVC or from 
the Board. Accordingly, with respect to cases remanded by the Board, 
whether before or after the effective date of these amendments, VA's 
regional offices will continue to execute the remand orders, as well as 
prepare a SSOC when appropriate.

Paperwork Reduction Act

    All collections under the Paperwork Reduction Act (44 U.S.C. 3501-
3520) referenced in this document have existing Office of Management 
and Budget approval. This document makes no changes to those 
collections of information other than to change which VA component 
collects the information. Under this rule, the Board would collect some 
information currently collected by VA regional offices.

Executive Order 12866

    The Office of Management and Budget has reviewed this document 
under Executive Order 12866.

Regulatory Flexibility Act

    The Secretary hereby certifies that this regulatory amendment will 
not have a significant economic impact on a substantial number of small 
entities as they are defined in the Regulatory Flexibility Act, 5 
U.S.C. 601-612. This rule affects only individuals. Therefore, pursuant 
to 5 U.S.C. 605(b), this regulatory amendment is exempt from the 
initial and final regulatory flexibility analysis requirements of 
sections 603 and 604.

List of Subjects in 38 CFR Parts 19 and 20

    Administrative practice and procedure, Claims, Veterans.

    Approved: November 14, 2001.
Anthony J. Principi,
Secretary of Veterans Affairs.
    For the reasons stated in the preamble, 38 CFR parts 19 and 20 are 
amended as follows:

PART 19--BOARD OF VETERANS' APPEALS: APPEALS REGULATIONS

    1. The authority citation for part 19 continues to read as follows:

    Authority: 38 U.S.C. 501(a), unless otherwise noted.

Subpart A--Operation of the Board of Veterans' Appeals

    2. Section 19.9 is revised to read as follows:


Sec. 19.9  Further development.

    (a) General. If further evidence, clarification of the evidence, 
correction of a procedural defect, or any other action is essential for 
a proper appellate decision, a Board Member or panel of Members may:
    (1) Remand the case to the agency of original jurisdiction, 
specifying the action to be undertaken; or
    (2) Direct Board personnel to undertake the action essential for a 
proper appellate decision.
    (i) Any such action shall comply with the provisions of 
Sec. 3.159(a) and (c)-(f) of this chapter (relating to VA's assistance 
to claimants in developing claims).
    (ii) If the Board undertakes to provide the notice required by 38 
U.S.C. 5103(a) and/or Sec. 3.159(b)(1) of this chapter, the appellant 
shall have not less than 30 days to respond to the notice. If, 
following the notice, the Board denies a benefit sought in the pending 
appeal and the appellant submits relevant evidence after the Board's 
decision but before the expiration of one year following the notice, 
that evidence shall be referred to the agency of original jurisdiction. 
If any evidence so referred, together with the evidence already of 
record, is subsequently found to be the basis of an allowance of that 
benefit, the award's effective date will be the same as if the Board 
had granted the benefit in the appeal pending when the notice was 
provided.
    (b) Examples. A remand to the agency of original jurisdiction is 
not necessary:
    (1) To clarify a procedural matter before the Board, including the 
appellant's choice of representative before the Board, the issues on 
appeal, and requests for a hearing before the Board; or
    (2) For the Board to consider an appeal in light of law, including 
but not limited to statute, regulation, or court decision, not already 
considered by the agency of original jurisdiction.
    (c) Scope.  This section does not apply to:
    (1) The Board's request for an opinion under Rule 901 (Sec. 20.901 
of this chapter);
    (2) The Board's supplementation of the record with a recognized 
medical treatise; and
    (3) Matters over which the Board has original jurisdiction 
described in Rules 609 and 610 (Secs. 20.609 and 20.610 of this 
chapter).

    (Authority: 38 U.S.C. 7102, 7103(c), 7104(a)).

    3. Section 19.31 is revised to read as follows:


Sec. 19.31  Supplemental statement of the case.

    (a) Purpose and limitations. A ``Supplemental Statement of the 
Case,'' so identified, is a document prepared by the agency of original 
jurisdiction to inform the appellant of any material changes in, or 
additions to, the information included in the Statement of the Case or 
any prior Supplemental Statement of the Case. In no case will a 
Supplemental Statement of the Case be used to announce decisions by the 
agency of original jurisdiction on issues not previously addressed in 
the Statement of the Case, or to respond to a notice of disagreement on 
newly appealed issues that were not addressed in the Statement of the 
Case. The agency of original jurisdiction will respond to notices of 
disagreement on newly appealed issues not addressed in the Statement of 
the Case using the procedures in Secs. 19.29 and 19.30 of this part 
(relating to statements of the case).
    (b) When furnished. The agency of original jurisdiction will 
furnish the

[[Page 3105]]

appellant and his or her representative, if any, a Supplemental 
Statement of the Case if:
    (1) The agency of original jurisdiction receives additional 
pertinent evidence after a Statement of the Case or the most recent 
Supplemental Statement of the Case has been issued and before the 
appeal is certified to the Board of Veterans' Appeals and the appellate 
record is transferred to the Board;
    (2) A material defect in the Statement of the Case or a prior 
Supplemental statement of the Case is discovered; or
    (3) For any other reason the Statement of the Case or a prior 
Supplemental Statement of the Case is inadequate.
    (c) Pursuant to remand from the Board. The agency of original 
jurisdiction will issue a Supplemental Statement of the Case if, 
pursuant to a remand by the Board, it develops the evidence or cures a 
procedural defect, unless:
    (1) The only purpose of the remand is to assemble records 
previously considered by the agency of original jurisdiction and 
properly discussed in a prior Statement of the Case or Supplemental 
Statement of the Case; or
    (2) The Board specifies in the remand that a Supplemental Statement 
of the Case is not required.

(Authority: 38 U.S.C. 7105(d)).

PART 20--BOARD OF VETERANS' APPEALS: RULES OF PRACTICE

    4. The authority citation for part 20 continues to read as follows:

    Authority: 38 U.S.C. 501(a) and as noted in specific sections.

Subpart J--Action by the Board

    5. Section 20.903 is revised to read as follows:


Sec. 20.903  Rule 903. Notification of evidence secured and law to be 
considered by the Board and opportunity for response.

    (a) If the Board obtains a legal or medical opinion. If the Board 
requests an opinion pursuant to Rule 901 (Sec. 20.901 of this part), 
the Board will notify the appellant and his or her representative, if 
any. When the Board receives the opinion, it will furnish a copy of the 
opinion to the appellant's representative or, subject to the 
limitations provided in 38 U.S.C. 5701(b)(1), to the appellant if there 
is no representative. A period of 60 days from the date the Board 
furnishes a copy of the opinion will be allowed for response, which may 
include the submission of relevant evidence or argument. The date the 
Board furnishes a copy will be presumed to be the same as the date of 
the letter or memorandum that accompanies the copy of the opinion for 
purposes of determining whether a response was timely filed.
    (b) If the Board obtains other evidence. If, pursuant to 
Sec. 19.9(a) or Sec. 19.37(b) of this chapter, the Board obtains 
pertinent evidence that was not submitted by the appellant or the 
appellant's representative, the Board will notify the appellant and his 
or her representative, if any, of the evidence obtained by furnishing a 
copy of such evidence. A period of 60 days from the date the Board 
furnishes the notice will be allowed for response, which may include 
the submission of relevant evidence or argument. The date the Board 
furnishes the notice will be presumed to be the same as the date of the 
letter or memorandum that accompanies the notice for purposes of 
determining whether a response was timely filed.
    (c) If the Board considers law not already considered by the agency 
of original jurisdiction. If the Board intends to consider law not 
already considered by the agency of original jurisdiction and such 
consideration could result in denial of the appeal, the Board will 
notify the appellant and his or her representative, if any, of its 
intent to do so and that such consideration in the first instance by 
the Board could result in denial of the appeal. The notice from the 
Board will contain a copy or summary of the law to be considered. A 
period of 60 days from the date the Board furnishes the notice will be 
allowed for response, which may include the submission of relevant 
evidence or argument. The date the Board furnishes the notice will be 
presumed to be the same as the date of the letter that accompanies the 
notice for purposes of determining whether a response was timely filed. 
No notice is required under this paragraph if the Board intends to 
grant the benefit being sought or if the appellant or the appellant's 
representative has advanced or otherwise argued the applicability of 
the law in question.

(Authority: 38 U.S.C. 7104(a), 7109(c)).

Subpart N--Miscellaneous

    6. Section 20.1304 is amended by:
    a. Revising the last sentence in paragraph (a);
    b. Revising paragraph (b);
    c. Removing paragraph (c); and
    d. Redesignating paragraph (d) as paragraph (c).
    The revisions read as follows:


Sec. 20.1304  Rule 1304. Request for change in representation, request 
for personal hearing, or submission of additional evidence following 
certification of an appeal to the Board of Veterans' Appeals.

    (a) * * * Any pertinent evidence submitted by the appellant or 
representative is subject to the requirements of paragraph (c) of this 
section if a simultaneously contested claim is involved.
    (b) Subsequent request for a change in representation, request for 
a personal hearing, or submission of additional evidence--(1) General 
rule. Subject to the exception in paragraph (b)(2) of this section, 
following the expiration of the period described in paragraph (a) of 
this section, the Board of Veterans' Appeals will not accept a request 
for a change in representation, a request for a personal hearing, or 
additional evidence except when the appellant demonstrates on motion 
that there was good cause for the delay. Examples of good cause 
include, but are not limited to, illness of the appellant or the 
representative which precluded action during the period; death of an 
individual representative; illness or incapacity of an individual 
representative which renders it impractical for an appellant to 
continue with him or her as representative; withdrawal of an individual 
representative; the discovery of evidence that was not available prior 
to the expiration of the period; and delay in transfer of the appellate 
record to the Board which precluded timely action with respect to these 
matters. Such motions must be in writing and must include the name of 
the veteran; the name of the claimant or appellant if other than the 
veteran (e.g., a veteran's survivor, a guardian, or a fiduciary 
appointed to receive VA benefits on an individual's behalf); the 
applicable Department of Veterans Affairs file number; and an 
explanation of why the request for a change in representation, the 
request for a personal hearing, or the submission of additional 
evidence could not be accomplished in a timely manner. Such motions 
must be filed at the following address: Director, Administrative 
Service (014), Board of Veterans' Appeals, 810 Vermont Avenue, NW., 
Washington, DC 20420. Depending upon the ruling on the motion, action 
will be taken as follows:
    (i) Good cause not shown. If good cause is not shown, the request 
for a change in representation, the request for a personal hearing, or 
the additional evidence submitted will be referred to the agency of 
original jurisdiction upon completion of the Board's action on the 
pending appeal without action by the Board concerning the request or

[[Page 3106]]

additional evidence. Any personal hearing granted as a result of a 
request so referred or any additional evidence so referred may be 
treated by that agency as the basis for a reopened claim, if 
appropriate. If the Board denied a benefit sought in the pending appeal 
and any evidence so referred which was received prior to the date of 
the Board's decision, or testimony presented at a hearing resulting 
from a request for a hearing so referred, together with the evidence 
already of record, is subsequently found to be the basis of an 
allowance of that benefit, the effective date of the award will be the 
same as if the benefit had been granted by the Board as a result of the 
appeal which was pending at the time that the hearing request or 
additional evidence was received.
    (ii) Good cause shown. If good cause is shown, the request for a 
change in representation or for a personal hearing will be honored. Any 
pertinent evidence submitted by the appellant or representative will be 
accepted, subject to the requirements of paragraph (c) of this section 
if a simultaneously contested claim is involved.
    (2) If the Board obtains evidence or considers law not considered 
by the agency of original jurisdiction. The motion described in 
paragraph (b)(1) of this section is not required to submit evidence in 
response to the notice described in paragraph (b) or (c) of Rule 903 
(paragraph (b) or (c) of Sec. 20.903 of this part).
* * * * *
(Authority: 38 U.S.C. 7104, 7105, 7105A).

[FR Doc. 02-1536 Filed 1-22-02; 8:45 am]
BILLING CODE 8320-01-P