[Federal Register Volume 72, Number 87 (Monday, May 7, 2007)]
[Proposed Rules]
[Pages 25930-25944]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-8642]



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Part IV





Department of Veterans Affairs





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38 CFR Parts 1, 14, 19 and 20



 Accreditation of Agents and Attorneys; Agent and Attorney Fees; 
Proposed Rule

  Federal Register / Vol. 72, No. 87 / Monday, May 7, 2007 / Proposed 
Rules  

[[Page 25930]]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Parts 1, 14, 19 and 20

RIN 2900-AM62


Accreditation of Agents and Attorneys; Agent and Attorney Fees

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: The Department of Veterans Affairs (VA) proposes to amend its 
regulations governing the representation of claimants for veterans 
benefits in order to implement provisions of the Veterans Benefits, 
Health Care, and Information Technology Act of 2006, and to reorganize 
and clarify existing regulations. The proposed regulations would 
establish the procedures and rules necessary for VA to facilitate the 
paid representation of claimants by accredited agents and attorneys 
after a notice of disagreement has been filed with respect to a case. 
The intended effect of these regulations is to fulfill Congress' 
direction that agents and attorneys may be paid for services rendered 
after a notice of disagreement is filed with respect to a decision by 
an agency of original jurisdiction while ensuring that claimants for 
veterans benefits have responsible qualified representation in the 
preparation, presentation, and prosecution of claims for veterans 
benefits.

DATES: Comment Date: Comments must be received by VA on or before June 
6, 2007.

ADDRESSES: Written comments may be submitted by through 
www.Regulations.gov; by mail or hand-delivery to Director, Regulations 
Management (00REG), Department of Veterans Affairs, 810 Vermont Ave., 
NW., Room 1068, Washington, DC 20420; or by fax to (202) 273-9026. 
Comments should indicate that they are submitted in response to ``RIN 
2900-AM62--Accreditation of Agents and Attorneys; Agent and Attorney 
Fees.'' Copies of comments received will be available for public 
inspection in the Office of Regulation Policy and Management, Room 
1063B, between the hours of 8 a.m. and 4:30 p.m., Monday through Friday 
(except holidays). Please call (202) 273-9515 for an appointment. (This 
is not a toll free number.) In addition, during the comment period, 
comments are available online through the Federal Docket Management 
System (FDMS) at www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: Michael G. Daugherty, Staff Attorney, 
Office of the General Counsel (022G2), Department of Veterans Affairs, 
810 Vermont Avenue, NW., Washington, DC 20420, (202) 273-6315. (This is 
not a toll free number.)

SUPPLEMENTARY INFORMATION: 

Statutory Authority--Section 101 of Public Law 109-461

    Section 101 of Public Law 109-461, the Veterans Benefits, Health 
Care, and Information Technology Act of 2006, amends chapter 59 of 
title 38, United States Code, governing the recognition of individuals 
for the preparation, presentation, and prosecution of claims for 
benefits before VA. Prior to the amendments, 38 U.S.C. 5904(a) 
authorized VA to accredit individuals who show that they are of good 
character and reputation and qualified to provide competent 
representation. In current 38 CFR 14.629, VA implemented section 
5904(a) by requiring agents to establish their good character and 
reputation through an application process and pass a written 
examination administered by VA as a prerequisite to accreditation. 
Attorneys were presumed to be qualified for VA accreditation based upon 
membership in good standing of a State bar. The amendments to chapter 
59 require VA to: (1) Regulate the qualifications and standards of 
conduct applicable to accredited agents and attorneys; (2) annually 
collect information about accredited agents' and attorneys' standing to 
practice or appear before any court, bar, or Federal or State agency; 
(3) proscribe accreditation of individuals who have been suspended or 
disbarred by any such entity without reinstatement; (4) add to the list 
of grounds for suspension or exclusion of agents or attorneys from 
further practice before VA; and (5) subject veterans service 
organization representatives and individuals recognized for a 
particular claim to suspension and exclusion from further practice 
before VA on the same grounds as apply to agents and attorneys.
    Section 101 of Public Law 109-461 also amends the fee provisions in 
chapter 59 including the point in the VA appeals process at which an 
agent or attorney can charge fees for representation. The VA appeals 
process begins when an individual disagrees with a decision made by an 
Agency of Original Jurisdiction (AOJ), such as a VA Regional Office 
(RO). To appeal a decision, an individual must file a Notice of 
Disagreement (NOD) with the AOJ expressing disagreement with the 
decision and a desire for appellate review. If the AOJ receives a 
timely NOD, it will change its decision or send the claimant a 
Statement of the Case (SOC) designed to provide information necessary 
to appeal the case to the Board of Veterans' Appeals (Board). After 
submitting a timely NOD, and following the receipt of a SOC, an 
individual may complete his or her appeal to the Board by timely filing 
a substantive appeal. Once the appeal has been submitted and assuming 
the Board has sufficient information to reach a decision, the Board 
will issue a final administrative decision in the case. Prior to the 
amendments, section 5904(c)(1) proscribed the charging of fees by 
agents and attorneys for services provided before a first final 
decision of the Board in a case. Under the amendments, accredited 
agents and attorneys may charge fees for services provided after the 
claimant files a NOD.
    The amendments also authorize VA to: (1) Restrict the amount of 
fees agents or attorneys may charge and subject fee agreements between 
agents or attorneys and claimants to review by VA, such review to be 
appealable to the Board; and (2) collect an assessment from any agent 
or attorney to whom VA pays fees directly from past-due benefits. 
Further, the amendments eliminate fee matters as grounds for criminal 
penalties under 38 U.S.C. 5905.
    To implement the amendments to chapter 59 and to reorganize and 
clarify existing regulations, VA proposes to amend 38 CFR parts 14, 19 
and 20 relating to the representation of claimants for veterans 
benefits, the accreditation of individuals who may provide 
representation, and the limitation on fees. VA also proposes to move 
regulations relating to remote access to computerized veterans' claims 
records from part 14 to 38 CFR part 1 concerning release of information 
from claimant records. VA has made no substantive changes to the remote 
access regulations and is moving these regulations to part 1 because 
they are similar in content to other part 1 regulations governing the 
disclosure of claimant information and will be easier to locate in that 
part.

Section 14.627--Definitions

    We propose to define ``agency of original jurisdiction,'' 
``service,'' and ``representation'' to clarify current regulations and 
assist in implementation of other provisions discussed below. With 
respect to ``agency of original jurisdiction,'' in Bates v. Nicholson, 
398 F.3d 1355 (Fed. Cir. 2005), the United States Court of Appeals for 
the Federal Circuit held that the VA General Counsel's final decision 
to cancel the accreditation of a representative, agent, or attorney may 
be

[[Page 25931]]

appealed to the Board. Accordingly, for purposes of part 14, we propose 
to clearly state that ``agency of original jurisdiction'' means the VA 
activity or administration that made the initial determination on a 
claim or matter, including the General Counsel's cancellation-of-
accreditation decisions under 38 CFR 14.633 and decisions regarding the 
reasonableness of fees and expenses under 38 CFR 14.636 and 14.637. 
Current Sec.  14.627 provides that an ``attorney'' is a member in good 
standing of a State bar. We propose to amend that definition consistent 
with 38 U.S.C. 5904 to additionally provide that an ``attorney'' is an 
individual who has met the standards and qualifications established by 
VA in proposed Sec.  14.629(b).

Section 14.629--Requirements for Accreditation of Representatives; 
Agents; and Attorneys

    The introductory text to current Sec.  14.629 tasks the VA Regional 
Counsel of jurisdiction with resolving any question concerning the 
current qualifications of an accredited service organization 
representative, agent, or attorney. Current 38 CFR 14.632 also tasks 
the Regional Counsel of jurisdiction with determining the 
qualifications of prospective representatives, agents, and attorneys. 
Consistent with current practice, we propose to amend the introductory 
text to Sec.  14.629 to provide that it is the Assistant General 
Counsel of jurisdiction or his or her designee who manages VA's 
accreditation program and makes initial determinations concerning the 
qualifications of prospective representatives, agents, and attorneys. 
The Assistant General Counsel would accredit qualified individuals and 
would notify other individuals concerning the reasons for disapproval, 
an opportunity to submit additional information, and any restrictions 
on further application for accreditation. The Assistant General 
Counsel's determination concerning the current qualifications of an 
applicant is a final decision unless appealed by the applicant to the 
General Counsel. Any such appeal must be in writing, limited to the 
evidence before the Assistant General Counsel, and filed with the 
General Counsel not later than 30 days from the date on which the 
Assistant General Counsel's decision was mailed. The General Counsel's 
decision concerning the current qualifications of an applicant is a 
final decision of the agency not subject to further review. Questions 
regarding the current qualifications of accredited representatives, 
agents, and attorneys would be resolved using the procedures in Sec.  
14.633.
    Section 5904(a)(2) requires agents and attorneys, as a condition of 
accreditation, to establish that they are of good character and 
reputation; are qualified to render claimants valuable service, and are 
otherwise competent to assist claimants in presenting claims; possess 
the level of experience or specialized training specified by VA; and 
certify to VA that they have satisfied the qualification standards 
established by VA. Section 5904(a)(3) requires VA to annually collect 
information about accredited agents' and attorneys' standing to 
practice or appear before any court, bar, or Federal or State agency, 
and section 5904(a)(4) prohibits VA from recognizing any agent or 
attorney who has been suspended or disbarred by any court, bar, or 
Federal or State agency to which the agent or attorney was previously 
admitted and not subsequently reinstated.
    To implement the accreditation requirements established by 
Congress, we propose to establish a two-step process for accrediting 
agents and attorneys that is similar to the process for agents under 
current Sec.  14.629(b). Individuals desiring accreditation would be 
required to file with the Office of the General Counsel a written 
application (VA Form 21a) on which they provide background information 
relevant to a determination of good character and reputation. Pursuant 
to the requirements of section 5904(a)(4), applicants would also be 
required to provide information about their standing to practice or 
appear before any court, bar, or Federal or State agency, to include a 
certification of good standing that may be available from the court, 
bar, or agency, and would be required to provide VA with a release to 
enable VA to obtain such other information that may be necessary to 
process the application. Upon a determination that the prospective 
agent or attorney is of good character and reputation, an applicant 
would then be given the opportunity to demonstrate his or her 
qualification to render valuable service to claimants and competence to 
assist claimants in presenting claims by achieving a score of 75 
percent or more on a written examination administered at the office of 
a VA Regional Counsel or the VA Central Office. Currently, VA notifies 
prospective claims agents that they will be tested on information 
available in the United States Code and the Code of Federal 
Regulations. To assist agents and attorneys in preparing for future 
accreditation examinations, VA would make relevant materials available 
in a format widely available to the general public.
    In section 5904(a)(2), Congress gave VA the option of requiring a 
specific ``level of experience'' or ``specialized training'' as a 
condition of accreditation. VA has determined that successful 
completion of a written examination that covers veterans benefits law 
and procedures would provide the best proof that an agent or attorney 
has the requisite qualifications for accreditation under section 
5904(a)(2). First, State licensing authorities generally require an 
examination to be admitted to the bar. Accordingly, attorneys are 
familiar with written examinations as an objective measure of their 
skill, competence, and qualifications to represent clients. Second, 
written examinations are a practical means of carrying out Congress' 
intent to allow veterans to choose their own counsel. An attorney who 
meets the character and reputation requirements and possesses the 
requisite knowledge of veterans benefits law could take the examination 
without waiting to achieve a specific ``level of experience'' or 
attending ``specialized training,'' which may not be readily available 
or adequately demonstrate the competence desired by Congress. Third, 
under current Sec.  14.629(b), VA Regional Counsels administer exams to 
applicants for accreditation as claims agents and that procedure could 
be made available to attorneys at each of the Regional Counsel's local 
offices. Finally, Congress has also authorized the United States Patent 
and Trademark Office (PTO) to accredit agents and attorneys for 
purposes of practice before that agency. Under that authority, the PTO 
determined that, among other requirements not relevant to VA's 
accreditation program, objective testing would suffice for purposes of 
making qualification determinations. We believe that successful 
completion of a written examination demonstrates that an agent or 
attorney possesses a level of knowledge better than mere evidence of 
training or a period of experience. Therefore, proposed Sec.  14.629(b) 
would implement a testing requirement that is based upon our experience 
in accrediting agents under current procedures and the PTO's experience 
in accrediting agents and attorneys under 37 CFR part 11.
    In proposed Sec.  14.629(b), VA would also expand its inquiry into 
an applicant's background to provide a more complete basis for the 
Department's determination of good character and reputation. In 
addition, proposed Sec.  14.629(b) would provide specific examples of 
conduct that would

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demonstrate a lack of good character and reputation for purposes of 
accreditation.
    Proposed Sec.  14.629(c) would amend provisions relating to 
representation provided by attorneys, law firms, law students and 
paralegals to clarify that a claimant must use a VA Form 21-22a to 
appoint an accredited attorney. As will be discussed further below, a 
VA Form 21-22a, signed by the claimant, is also necessary to authorize 
VA to disclose protected claimant information to an agent or attorney. 
VA intends to facilitate efficient adjudication of claims through 
universal use of this form. VA's field personnel cannot efficiently or 
accurately sort through a variety of appointment forms and releases, 
many of which would require further legal review to determine whether 
VA could lawfully release a claimant's information.

Section 14.630--Authorization for a Particular Claim

    Section 5903 authorizes VA to recognize any individual for purposes 
of providing representation on one claim, provided that the individual 
certifies that he or she will not charge a fee for the representation 
and files the appropriate power of attorney. Proposed Sec.  14.630 
would clarify that a properly executed VA Form 21-22a is necessary to 
allow VA to disclose claimant information to a person providing 
representation under the authority of this section. This change is 
necessary to comply with 38 CFR part 1, which implements the disclosure 
provisions of the Privacy Act, 38 U.S.C. 5701, and 38 U.S.C. 7332. It 
would also commit an individual providing representation under this 
section to comply with the laws administered by VA and the rules of 
conduct in proposed Sec.  14.632. New paragraph (d) would implement 
section 5903(b), which authorizes VA to suspend or exclude an 
individual providing representation under this section on the same 
basis as accredited agents or attorneys.

Section 14.631--Powers of Attorney; Disclosure of Claimant Information

    We propose to amend Sec.  14.631(a) to clarify that a properly 
executed VA Form 21-22a, signed by the claimant and the accredited 
representative, agent, attorney, or individual authorized to provide 
representation for a particular claim, is required for purposes of both 
representation and VA's disclosure of claimant information to the 
individual designated on the form.
    Current Sec.  14.631(b), which permits attorneys to submit 
declarations of representation on letterhead, would be removed to 
reflect Congress' amendment of section 5904 and to comply with the 
disclosure provisions in 38 CFR part 1. VA acknowledges that this 
change would impose some additional responsibilities in the near-term 
for attorneys who use letterhead declarations in their veterans' law 
practice. However, the use of a standard authorization form, with 
language that VA has approved as legally sufficient, will expedite VA's 
correspondence with attorneys and ensure that claimant information is 
released only according to law.
    Redesignated Sec.  14.631(c) would not include the procedure for an 
organization or individual to decline representation, which we propose 
to remove consistent with the signature requirement in proposed Sec.  
14.631(a). In its place we propose to provide guidance regarding the 
circumstances under which an individual or organization may withdraw 
from representation and the procedure for withdrawing.
    Redesignated Sec.  14.631(f) would clarify that agents and 
attorneys may limit the scope of their representation regarding a 
particular claim by describing the limitation in writing on the VA Form 
21-22a. This clarification is necessary to ensure that claimants and 
their agents or attorneys understand the scope of representation.

Section 14.632--Standards of Conduct for Persons Providing 
Representation Before the Department

    We propose to remove current Sec.  14.632 consistent with our above 
discussion of amendments to the introductory text to Sec.  14.629. In 
its place, we propose to add new provisions governing the standards of 
conduct for accredited representatives, agents, and attorneys as 
required by Congress in section 5904(a). In developing the proposed 
standards of conduct, we reviewed both the American Bar Association's 
Model Rules of Professional Conduct and other Federal agency rules of 
practice. We propose to establish general affirmative duties of 
honesty, competence, and diligence for all persons providing 
representation before VA. The proposed rules would also list specific 
conduct and behavior expressly prohibited in representing claimants 
before VA. Finally, in addition to the requirement concerning VA's 
standards of conduct, the rules would also require attorneys to conform 
to the standards of conduct established by the jurisdictions in which 
they are admitted to practice. Violation of VA's standards of conduct 
or those of the jurisdiction in which an attorney is admitted to 
practice, would be a basis for cancellation of accreditation under 
proposed 38 CFR 14.633.

Section 14.633--Cancellation of Accreditation of Representatives, 
Agents, and Attorneys

    Proposed Sec.  14.633(c) would implement sections 5904(b)(6) 
through (9) by adding to the list of grounds for suspension or 
exclusion of agents or attorneys from further practice before VA.
    We propose to further amend Sec.  14.633 to clarify the roles and 
responsibilities of VA personnel during cancellation-of-accreditation 
proceedings. Currently Sec.  14.633(d) requires the Regional Counsel of 
jurisdiction to initiate an inquiry upon the receipt of information 
indicating that a representative, agent, or attorney no longer meets 
accreditation requirements, has engaged in improper conduct, or has 
demonstrated a lack of competence in providing representation. However, 
the accreditation program is managed by an Assistant General Counsel at 
VA's Central Office, and, generally, allegations of misconduct are 
initially directed to the Central Office for evaluation. As a result, 
we have determined that it would be more efficient for the Assistant 
General Counsel managing the program to handle all inquiries and 
forward certain investigative tasks to a Regional Counsel as necessary. 
Accordingly, in proposed Sec.  14.633(d), we state that the Assistant 
General Counsel of jurisdiction shall conduct the inquiry into 
allegations that may warrant suspension or cancellation of 
accreditation under Sec.  14.633(b) through (d).
    Currently, Sec.  14.633(e) distinguishes representatives from 
agents and attorneys in that representatives are immediately suspended 
upon notification of the General Counsel's intent to cancel 
accreditation. However, section 5901(b)(2) subjects representatives to 
suspension and exclusion on the same basis as agents and attorneys. 
Because all individuals providing representation for VA claimants are 
held to the same standards of conduct, and subject to suspension and 
exclusion on the same basis, we propose to amend Sec.  14.633(e) to 
provide accredited representatives and individuals providing 
representation under Sec.  14.630 with the same procedural rights as 
are afforded to accredited agents and attorneys.
    Additionally, the process for notifying agents and attorneys of 
VA's intent to cancel accreditation in current Sec.  14.633(e) provides 
a period of only 10

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days for an agent or attorney to decide whether a hearing is 
appropriate or to submit additional evidence and does not require an 
agent or attorney to answer VA's notice. In proposed Sec.  14.633(e), 
we propose to notify the individual providing representation under 
Sec.  14.630, representative, agent or attorney of VA's intent to 
cancel accreditation, the right to submit additional evidence, and the 
right to request a hearing by certified or registered mail. We would 
also require the individual to provide VA with an answer, in oath or 
affidavit form or the form specified for unsworn declarations under 
penalty of perjury in 28 U.S.C. 1746, responding to VA's notice. The 
answer would include a statement of facts that constitute the 
individual's defense to VA's reasons for cancellation and would admit 
or deny each allegation contained in VA's notice of intent to cancel 
accreditation. Failure to deny an allegation would be treated as an 
admission of the allegation. Individuals receiving notice of intent to 
cancel accreditation would have 30 days from the date the notice was 
mailed to provide the answer to VA, submit additional evidence, and 
request a hearing on the matter. Any request for a hearing would be 
made in the answer. Failure to file an answer or request a hearing 
within the time allowed would result in the Assistant General Counsel 
closing the evidentiary record at the end of the 30-day period and 
forwarding the record and a recommendation to the General Counsel for a 
final decision.
    Currently, Sec.  14.633(f) through (g) provides that the General 
Counsel may cancel an accreditation after notice and opportunity for a 
hearing conducted by a hearing officer who is not an employee of the 
Office of the Regional Counsel. However, in some cases, the VA Central 
Office is a more appropriate forum for the hearing because the evidence 
required to conduct a hearing is located at or near the Central Office, 
or the events and circumstances providing the basis for the hearing 
took place at or near the Central Office. As a result, referral to a 
Regional Office for a hearing may unnecessarily delay cancellation 
proceedings. In Sec.  14.633(f), we propose to establish an alternate 
hearing location at the VA Central Office following the same general 
procedure as exists in current rules for a Regional Office hearing with 
the exception that the Director of the Compensation and Pension Service 
would appoint the hearing officer and the Assistant General Counsel or 
the Assistant General Counsel's designee would present the evidence for 
VA. In both instances, the General Counsel would make the final 
decision on suspension or cancellation of accreditation based on the 
recommendation of the Assistant General Counsel.
    Current Sec.  14.633(f) does not restrict VA's ability to schedule 
a hearing in disaccreditation proceedings. As discussed above, proposed 
Sec.  14.633(e) requires individuals served with notice of intent to 
cancel accreditation to file an answer with the Office of the General 
Counsel within 30 days from the date the notice was mailed. To ensure 
that an individual receives adequate notice of a hearing conducted 
under Sec.  14.633 and to prevent a hearing from being scheduled during 
the 30-day period allowed for an answer, we propose to require that a 
hearing officer provide notice of a hearing at least 21 days before the 
date of the hearing and to prohibit hearings from being scheduled 
during the 30-day period allowed for an answer.
    In a proceeding under Sec.  14.633, current Sec.  14.633(f) does 
not establish a deadline for the introduction of evidence by VA or by 
an individual providing representation under Sec.  14.630, 
representative, agent or attorney. Unlike a benefits claim, in a Sec.  
14.633 proceeding, the evidence of record associated with a decision to 
suspend or cancel accreditation should be sufficiently developed at the 
completion of a hearing such that no additional evidence relevant to 
the General Counsel's decision is likely to exist, and, as a result, 
the record can be closed at the completion of the hearing. Accordingly, 
in proposed Sec.  14.633(g), we state that, if an individual has not 
provided VA with an answer within 30 days from the date the notice was 
mailed, the record will be closed; otherwise the record will be closed 
10 days after the completion of the hearing. The procedures in Sec.  
14.633(g) are necessary to provide individuals an expeditious decision 
on cancellation of their accreditation and to ensure that veterans 
receive competent representation.
    To maintain the integrity of the record and ensure expeditious 
processing, we would also make corresponding technical amendments in 
parts 19 and 20 to prohibit the parties from introducing additional 
evidence after the record is closed and before the Board of Veterans' 
Appeals renders a decision on the matter. A decision of the General 
Counsel to close the record in a Sec.  14.633 proceeding at the 
completion of a hearing in no way limits the ability of the Board of 
Veterans' Appeals to conduct a de novo review of the material issues of 
fact and law in the record on appeal or to remand to the General 
Counsel under 38 CFR 19.9 for any action essential for a proper 
appellate decision.
    Under current Sec.  14.633(g), the decision of the General Counsel 
to suspend or cancel the accreditation of an individual providing 
representation under Sec.  14.630, representative, agent, or attorney 
is final. However, the regulation does not prescribe the procedure 
required to appeal such a decision. We propose to amend Sec.  14.633(g) 
to provide that appeals of a General Counsel decision cancelling 
accreditation would be initiated and processed according to the 
provisions in 38 CFR parts 19 (subpart B) and 20 (subpart C). Proposed 
Sec.  14.633(g) would also clarify that closing the record 30 days 
after the date the notice of intent to cancel accreditation was mailed 
or 10 days after the completion of the hearing would not affect the 
General Counsel's ability to issue a supplemental statement of the case 
pursuant to a remand from the Board as provided in Sec.  19.9 of this 
title or to correct a deficient statement of the case as provided in 
Sec.  19.31 of this title.
    In section 5904(a)(4), Congress prohibited VA from recognizing any 
agent or attorney suspended or disbarred by any court, bar, or Federal 
or State agency to which the individual was admitted to practice and 
not subsequently reinstated. Similarly, in section 5904(b)(7), Congress 
added as grounds for suspension or exclusion of agents and attorneys 
from practice before the Department suspension or disbarment by any 
court, bar, or Federal or State agency to which the individual was 
admitted to practice and not subsequently reinstated. We interpret 
these provisions to reflect Congress' intent that the Office of the 
General Counsel should act upon any information that it receives 
concerning accredited agents and attorneys who have been barred from 
practice before any court, bar, or agency. Further, consistent with 
Congress' intent to maintain the integrity of judicial and 
administrative proceedings by excluding persons subject to disciplinary 
sanctions, we believe it is appropriate for VA to notify courts, bars, 
or agencies of VA's disciplinary proceedings. Accordingly, we propose 
in Sec.  14.633(h) to provide notice, at the discretion of the General 
Counsel, of any suspension or cancellation of VA accreditation to the 
courts, bars, agencies, or jurisdictions in which the agent or attorney 
is admitted to practice.

[[Page 25934]]

Section 14.636--Payment of Fees for Representation by Agents and 
Attorneys in Proceedings Before the Agency of Original Jurisdiction and 
Before the Board of Veterans' Appeals

    Current 38 CFR 20.609, codified in the Board's Rules of Practice, 
governs the payment of fees for representation provided by accredited 
agents and attorneys. In section 5904(c)(1), Congress directed that 
agents and attorneys may be paid for services provided after a notice 
of disagreement is filed in a case, directed that fee agreements shall 
be filed with the Secretary rather than with the Board, and authorized 
VA to review fee agreements and order a reduction in the fee if it is 
found unreasonable or excessive, such decisions being appealable to the 
Board. Accordingly, we have determined that the fee provisions in 
current Sec.  20.609 are no longer appropriate for inclusion in the 
Board's Rules of Practice and should be moved to part 14. We propose to 
redesignate Sec.  20.609 as Sec.  14.636, and amend it consistent with 
section 5904(c).
    Proposed Sec.  14.636(c) would implement section 5904(c)(1) by 
providing that agents and attorneys may charge fees for services 
rendered on a particular claim or claims only after an agency of 
original jurisdiction has rendered a decision on such particular claim 
or claims and a notice of disagreement has been filed with respect to 
the decision.
    Proposed Sec.  14.636(d)(2)(i) would clarify that a ``disinterested 
third party'' means an organization, government entity, or person that 
will not benefit financially from resolution of a claim. This 
clarification is necessary to prevent agents and attorneys from 
charging and/or receiving fees for representation provided before a 
notice of disagreement is filed in a case from third parties who will 
directly benefit from the outcome of a case. We intend to preclude 
conflicts of interest that would arise as a result of agents and 
attorneys receiving fees from these third parties by proposing, in 
Sec.  14.636(g), that fee agreements involving alleged disinterested 
third-party payers must identify the relationship between the third-
party payer and the veteran, claimant or appellant.
    Proposed Sec.  14.636(g) would establish new requirements for fee 
agreements between claimants and agents or attorneys. Agents and 
attorneys would be required to file fee agreements with the Office of 
the General Counsel in Washington, DC, and clearly specify in the 
agreements whether VA is to directly pay agent or attorney fees out of 
an award of past-due benefits. Any fee agreement calling for fees 
exceeding 20 percent of past-due benefits would not be considered a 
direct-pay fee agreement and, as a result, the agent or attorney would 
be responsible for collecting any fees for representation from the 
claimant without assistance from VA.
    Current Sec.  20.609 provides that the Board may review a fee 
agreement between a claimant or appellant and an attorney or agent upon 
its own motion or that of any party to the agreement and may order a 
reduction in the fee called for if it finds that the fee is excessive 
or unreasonable. Proposed Sec.  14.636(i) implements section 5904(c) by 
shifting the authority to review fee agreements for reasonableness to 
the Office of the General Counsel, subject to review by the Board. We 
also propose to clarify that, following a decision by the Office of the 
General Counsel that the terms of the fee agreement are unreasonable, 
the agent or attorney must refund any excess payment to the claimant 
unless the agent or attorney files a notice of disagreement concerning 
the General Counsel's decision. Such refund must occur within the time 
allowed for filing a notice of disagreement.
    Current provisions in Sec.  20.609 do not clearly establish a 
deadline for the introduction of evidence in a motion for review of a 
fee agreement. For the reasons discussed above concerning proceedings 
under Sec.  14.633, we propose in Sec.  14.636 to close the record in 
proceedings to review fee agreements 15 days after the date on which 
the agent or attorney files a response to the motion with the Office of 
the General Counsel or 30 days after the moving party served the motion 
on the agent or attorney if there is no response. The Assistant General 
Counsel will forward the record and a recommendation to the General 
Counsel for a final decision. To maintain the integrity of the record, 
we would also make corresponding technical amendments in parts 19 and 
20 to prohibit the parties from introducing additional evidence after 
the record is closed and before the Board of Veterans' Appeals renders 
a decision on the matter. A decision of the General Counsel to close 
the record in a fee review proceeding in no way limits the ability of 
the Board to conduct a de novo review of the material issues of fact 
and law in the record on appeal or to remand to the General Counsel 
under 38 CFR 19.9 for any other action essential for a proper appellate 
decision.
    Provisions in current 38 CFR part 3 provide that the amount of 
compensation or pension paid to incarcerated veterans shall be reduced. 
Provisions in current 38 CFR part 1 provide that a debt owed to VA 
resulting from participation in a benefits program may be collected 
through administrative offset. Current Sec.  20.609 states that VA's 
payment of fees out of past-due benefits is to be paid out of a cash 
award to the claimant. We propose to clarify in Sec.  14.636(h)(3)(iv) 
that, under current law, the amount of fees paid to an agent or 
attorney representing a claimant shall be based upon the amount of 
past-due benefits actually paid to the claimant after all applicable 
reductions.
    In proposed Sec.  14.636(h), we would implement section 5904(a)(6), 
which provides that VA may collect an assessment out of the fees paid 
directly to agents or attorneys from past-due benefits. Such an 
assessment would be equal to five percent of the amount of the fee 
required to be paid to the agent or attorney, not to exceed $100 for 
each such payment.

Section 14.637--Payment of the Expenses of Agents and Attorneys in 
Proceedings Before the Agency of Original Jurisdiction and Before the 
Board of Veterans' Appeals

    We propose to redesignate and amend current Sec.  20.610 governing 
payment of expenses to agents and attorneys as Sec.  14.637 for the 
same reasons as discussed above concerning current Sec.  20.609.
    Current provisions in Sec.  20.610 do not clearly establish a 
deadline for the introduction of evidence in a motion for review of 
expenses. For the reasons discussed above concerning proceedings under 
Sec.  14.633, we propose in Sec.  14.637 to close the record in 
proceedings to review expenses 15 days after the date on which the 
agent or attorney files a response to the motion with the Office of the 
General Counsel or 30 days after the moving party served the motion on 
the agent or attorney if there is no response. The Assistant General 
Counsel will forward the record and a recommendation to the General 
Counsel for a final decision. To maintain the integrity of the record, 
we would also make corresponding technical amendments in parts 19 and 
20 to prohibit the parties from introducing additional evidence after 
the record is closed and before the Board of Veterans' Appeals renders 
a decision on the matter. A decision of the General Counsel to close 
the record in a review of expenses in no way limits the ability of the 
Board to conduct a de novo review of the material issues of fact and 
law in the record on appeal or to remand to the General Counsel under 
38

[[Page 25935]]

CFR 19.9 for any other action essential for a proper appellate 
decision.

Paperwork Reduction Act

    In accordance with section 3507(d) of the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501 et seq.), the information collection 
requirements included in this proposed regulation are revisions of 
existing collections under Office of Management and Budget (OMB) 
Control No. 2900-0321, which pertains to the appointment of an 
individual as a claimant's representative, and OMB Control No. 2900-
0605, which pertains to the application for accreditation as a claims 
agent.
    We note that the proposed rules would affect two other collections 
of information. In proposed Sec.  14.629(b), the appeal to the General 
Counsel of a decision by the Assistant General Counsel to deny an 
application for accreditation would involve a new collection of 
information; however, under the current regulations VA denies less than 
ten applications every year, which is outside the scope of the 
Paperwork Reduction Act. See 5 CFR 1320.3(c)(4). In proposed Sec.  
14.633, the General Counsel's decision to cancel accreditation is 
appealable to the Board. The Board currently maintains a collection of 
information under OMB Control No. 2900-0085 pertaining to appeals. In 
the last three years, accreditation cancellation actions have resulted 
in three appeals to the Board. Based on the infrequent nature of such 
appeals, a revision of the Board's existing collection of information 
is unwarranted under the Paperwork Reduction Act.
    Comments on the information collections included in this proposed 
rule should be submitted to the Office of Management and Budget, 
Attention: Desk Officer for the Department of Veterans Affairs, Office 
of Information and Regulatory Affairs, Washington, DC 20503, with 
copies sent by mail or hand delivery to the Director, Regulations 
Management (00REG), Department of Veterans Affairs, 810 Vermont Avenue, 
NW., Room 1068, Washington, DC 20420; fax to (202) 273-9026; e-mail 
through http://www.Regulations.gov. Comments should indicate that they 
are submitted in response to ``RIN 2900-AM62,'' and must be received on 
or before June 6, 2007.
    Comments by the public on proposed collections of information will 
help VA in--
    Evaluating whether the proposed collections of information are 
necessary for the proper performance of the functions of the 
Department, including whether the information will have practical 
utility;
    Evaluating the accuracy of the Department's estimate of the burden 
of the proposed collections of information, including the validity of 
the methodology and assumptions used; and
    Enhancing the quality, usefulness, and clarity of the information 
to be collected; and Minimizing the burden of the collections of 
information on those who are to respond, including through the use of 
appropriate automated, electronic, mechanical, or other technological 
collection techniques or other forms of information technology, e.g., 
permitting electronic submission of responses.
    OMB assigns control numbers to collections of information it 
approves. VA may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number.
    Title: Accreditation of Service Organization Representatives and 
Agents.
    Summary of collection of information: Section 14.629(b)--Under this 
section, VA requires individuals seeking accreditation to establish 
their good character, reputation, and qualifications to represent 
claimants before the Department. VA proposes to require attorneys to 
file with the Office of the General Counsel VA Form 21a, on which they 
would provide information relevant to establishing their good 
character, reputation, and qualifications for representing claimants. 
After an affirmative determination of character and fitness, VA 
proposes to require attorneys to demonstrate experience and training in 
veterans benefits law and procedure by successfully passing a written 
examination with a score of 75 percent or more. To initially 
demonstrate fitness for representation and annually thereafter, VA 
proposes to require agents and attorneys to provide information about 
any court, bar, or Federal or State agency to which the agent or 
attorney is admitted to practice or otherwise authorized to appear. 
Additionally, attorneys shall annually provide VA with a certification 
of good standing for every jurisdiction admitted.
    Section 14.631(a)--Under this section, VA requires claimants to 
identify to VA the individual acting on their behalf in the 
preparation, presentation, and prosecution of claims before the 
Department. VA proposes to require all persons providing representation 
before the Department to sign this form to indicate acceptance of 
appointment of representation, and proposes to require agents and 
attorneys to indicate on the form whether the agent or attorney desires 
to limit the scope of their representation with this claimant to a 
particular claim and, if so, to identify the limits of such 
representation.
    Description of need for information and proposed use of 
information: The collection of information is necessary to ensure that 
claimants for VA benefits have responsible, qualified representation in 
the preparation, presentation, and prosecution of claims. VA will use 
this information to determine whether particular individuals are 
qualified to represent claimants before VA and to ensure that claimants 
obtain representation and understand the limits of such representation.
    Description of likely respondents: Individuals applying for 
accreditation as agents and attorneys to provide representation before 
the Department; individuals accepting appointment for purposes of 
representation before the Department.
    Estimated number of respondents: For applications for accreditation 
under 38 CFR 14.629(b), in addition to the 20 applications we normally 
receive from prospective agents in a given year, at a minimum, we 
anticipate receiving 117 responses from attorneys seeking accreditation 
in 2007. This number (117) represents the number of attorneys who filed 
fee agreements with the Board under the predecessor law. For 
individuals accepting appointment for purposes of representation under 
38 CFR 14.631(a), we anticipate receiving a signature from each person 
accepting appointment for purposes of representation. Because each 
accredited service organization representative, agent, and attorney 
normally represents more than one claimant, we initially estimate 703 
respondents (agents and attorneys) will indicate acceptance for 
purposes of representing an estimated 6,400 claimants before the 
Department.
    It is important to note that our estimated number of respondents 
for collections of information under both 38 CFR 14.629(a) and 
14.631(b) reflects data relating to representation under prior law. We 
anticipate that the number of respondents will increase slightly in 
2007 and to a greater extent in future years based upon increased 
opportunities for paid agent and attorney representation, but we 
currently lack the information necessary to develop a reasonably 
accurate estimate. We may revise our estimated number of respondents 
based on comments received during the applicable public comment period.

[[Page 25936]]

    Estimated frequency of responses: For applications for 
accreditation under 38 CFR 14.629(b), once with the initial application 
for accreditation, and annually thereafter for accredited agents and 
attorneys. For individuals accepting appointment for purposes of 
representation under 38 CFR 14.631(a), once for each case.
    Estimated average burden per response: For applications for 
accreditation under 38 CFR 14.629(b), 45 minutes. For individuals 
accepting appointment for purposes of representation under 38 CFR 
14.631(a), 5 minutes.
    Estimated total annual reporting burden: For applications for 
accreditation under 38 CFR 14.629(b), 102 hours in 2007. For 
individuals accepting appointment for purposes of representation under 
38 CFR 14.631(a), 533 hours in 2007.

Regulatory Flexibility Act

    The Secretary hereby certifies that this proposed rule would 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 et seq. At a minimum, this proposed rule would affect the 
117 attorneys who filed fee agreements with the Board under the 
predecessor law and the 47 agents currently accredited by VA. However, 
it would not have a significant economic impact on these individuals 
because it would only impose accreditation requirements the costs of 
which would not be significant. Therefore, pursuant to 5 U.S.C. 605(b), 
this proposed amendment is exempt from the initial and final regulatory 
flexibility analysis requirements of sections 603 and 604.

Executive Order 12866

    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, when regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety, 
and other advantages; distributive impacts; and equity). The Executive 
Order classifies a ``significant regulatory action,'' requiring review 
by the Office of Management and Budget (OMB) unless OMB waives such 
review, as any regulatory action that is likely to result in a rule 
that may: (1) Have an annual effect on the economy of $100 million or 
more or adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities; (2) create a serious inconsistency or otherwise interfere 
with an action taken or planned by another agency; (3) materially alter 
the budgetary impact of entitlements, grants, user fees, or loan 
programs or the rights and obligations of recipients thereof; or (4) 
raise novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in the Executive 
Order. VA has examined the economic, legal, and policy implications of 
this proposed rule and has concluded that it is a significant 
regulatory action under Executive Order 12866.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any year. This final rule would have no such effect on 
State, local, and tribal governments, or on the private sector.

Catalog of Federal Domestic Assistance Numbers and Titles

    There are no Federal Domestic Assistance programs associated with 
this proposed rule.

List of Subjects

38 CFR Part 1

    Administrative practice and procedure, Archives and records, 
Cemeteries, Claims, Courts, Crime, Flags, Freedom of information, 
Government contracts, Government employees, Government property, 
Infants and children, Inventions and patents, Parking, Penalties, 
Privacy, Reporting and recordkeeping requirements, Seals and insignia, 
Security measures, Wages.

38 CFR Part 14

    Administrative practice and procedure, Claims, Courts, Foreign 
relations, Government employees, Lawyers, Legal services, Organization 
and functions (Government agencies), Reporting and recordkeeping 
requirements, Surety bonds, Trusts and trustees, Veterans.

38 CFR Parts 19 and 20

    Administrative practice and procedure, Claims, Veterans.

    Approved: March 23, 2007.
Gordon H. Mansfield,
Deputy Secretary of Veterans Affairs.

    For the reasons set forth in the preamble, the Department of 
Veterans Affairs proposes to amend 38 CFR parts 1, 14, 19 and 20 as 
follows:

PART 14--LEGAL SERVICES, GENERAL COUNSEL, AND MISCELLANEOUS CLAIMS

    1. The authority citation for part 14 continues to read as follows:

    Authority: 5 U.S.C. 301; 28 U.S.C. 2671-2680; 38 U.S.C. 501(a), 
512, 515, 5502, 5902-5905; 28 CFR part 14, appendix to part 14, 
unless otherwise noted.

    2. Redesignate Sec. Sec.  14.640 through 14.643 as Sec. Sec.  1.600 
through 1.603 respectively.
    3. Revise Sec.  14.626 to read as follows:


Sec.  14.626  Purpose.

    The purpose of the regulation of representatives, agents, 
attorneys, and individuals is to ensure that claimants for Department 
of Veterans Affairs (VA) benefits have responsible, qualified 
representation in the preparation, presentation, and prosecution of 
claims for veterans' benefits.

(Authority: 38 U.S.C. 501(a), 5902, 5903, 5904)

4. Amend Sec.  14.627 by:
    a. Revising the introductory text.
    b. Revising paragraph (a).
    c. Redesignating paragraphs (b) through (l) and (m) and (n) as 
paragraphs (c) through (m) and (p) and (q), respectively.
    d. Adding new paragraphs (b), (n), and (o).
    e. Revising newly redesignated paragraphs (d), (e), (g), (l), and 
(m).
    The revisions read as follows:


Sec.  14.627  Definitions.

    As used in regulations on representation of VA claimants:
    (a) Accreditation means recognition by VA of representatives, 
attorneys, and agents to represent claimants.
    (b) Agency of original jurisdiction means the VA activity or 
administration that made the initial determination on a claim or 
matter, including the proceedings before the General Counsel under part 
14 of this chapter to suspend or cancel accreditation or to review fee 
agreements and expenses for reasonableness.
* * * * *
    (d) Attorney means a member in good standing of a State bar who has 
met the standards and qualifications in Sec.  14.629(b).
    (e) Benefit means any payment, service, commodity, function, or 
status, entitlement to which is determined under laws administered by 
the VA pertaining to veterans, dependents, and survivors.
* * * * *

[[Page 25937]]

    (g) Claim means application made under title 38 U.S.C., and 
implementing directives, for entitlement to VA benefits, reinstatement, 
continuation, or increase of benefits, or the defense of a proposed 
agency adverse action concerning benefits.
* * * * *
    (l) Recognition means certification by VA of organizations to 
represent claimants.
    (m) Representative means a person who has been recommended by a 
recognized organization and accredited by VA.
    (n) Representation means the acts associated with the preparation, 
presentation, and prosecution of claims under laws administered by VA 
for a claimant as defined in paragraph (h) of this section. 
Representation includes but is not limited to counseling on veterans 
benefits, gathering information necessary to file a claim for benefits, 
preparing claim forms, submitting claim information to VA, and 
communicating with VA on behalf of a claimant.
    (o) Service means the delivery of a motion, response, or reply to a 
person or entity to which it is directed. Proof of service consists of 
a statement by the person who made service certifying (1) the date and 
manner of service, (2) the names of the persons served, and (3) the 
addresses of the place of delivery. For service by mail, proof of 
service shall include the date and manner by which the document was 
mailed.
* * * * *
    5. Amend Sec.  14.629 by:
    a. Revising the introductory text.
    b. In paragraph (a)(1), removing ``the Department of Veterans 
Affairs, and adding, in its place, ``VA''.
    c. Revising paragraph (b) heading.
    d. Redesignating paragraph (b)(2) as (b)(6), and paragraph (b)(1) 
as new paragraph (b)(2).
    e. Adding a new paragraph (b)(1).
    f. Revising newly redesignated paragraph (b)(2) introductory text 
and paragraph (b)(2)(i).
    g. Redesignating paragraphs (b)(2)(vii) and (viii) as paragraphs 
(b)(2)(viii) and (ix), respectively.
    h. Adding a new paragraph (b)(2)(vii).
    i. Adding new paragraphs (b)(2)(x), (b)(3), (b)(4), and (b)(5).
    j. Revising newly redesignated paragraph (b)(6).
    k. Revising paragraph (c) heading.
    l. Revising paragraphs (c)(1) and (c)(3).
    m. Revising the note following paragraph (c)(4).
    The additions and revisions read as follows:


Sec.  14.629  Requirements for accreditation of service organization 
representatives; agents; and attorneys.

    The Assistant General Counsel of jurisdiction will conduct an 
inquiry and make an initial determination regarding any question 
relating to the qualifications of a prospective service organization 
representative, agent, or attorney. If the Assistant General Counsel 
determines that the prospective service organization representative, 
agent, or attorney meets the requirements for accreditation in 
paragraphs (a) or (b) of this section, notification of accreditation 
will be issued by the Assistant General Counsel or the Assistant 
General Counsel's designee and will constitute authority to prepare, 
present, and prosecute claims before an agency of original jurisdiction 
or the Board of Veterans' Appeals. If the Assistant General Counsel 
determines that the prospective representative, agent, or attorney does 
not meet the requirements for accreditation, notification will be 
issued by the Assistant General Counsel concerning the reasons for 
disapproval, an opportunity to submit additional information, and any 
restrictions on further application for accreditation. The 
determination of the Assistant General Counsel regarding the 
qualifications of a prospective service organization representative, 
agent, or attorney may be appealed by the applicant to the General 
Counsel. Appeals must be in writing and filed with the Office of the 
General Counsel (022D), 810 Vermont Avenue, NW., Washington, DC 20420, 
not later than 30 days from the date on which the Assistant General 
Counsel's decision was mailed. In deciding the appeal, the General 
Counsel's decision shall be limited to the evidence of record before 
the Assistant General Counsel. A decision of the General Counsel is a 
final agency decision not subject to appeal.
* * * * *
    (b) Accreditation of Agents and Attorneys. (1) No individual may 
provide representation to claimants before the Department as an agent 
or attorney unless he or she has first been accredited by VA for such 
purpose. The accreditation process consists of a character and fitness 
determination, and after an affirmative determination of character and 
fitness, a written examination.
    (2) An individual desiring accreditation as an agent or attorney 
must establish that he or she is of good character and reputation, is 
qualified to render valuable assistance to claimants, and is otherwise 
competent to advise and assist claimants in the preparation, 
presentation, and prosecution of their claim(s) before the Department. 
An individual desiring accreditation as an agent or attorney must file 
a completed application (VA Form 21a) with the Office of the General 
Counsel (022D), 810 Vermont Avenue, NW., Washington, DC 20420, on which 
the applicant submits the following:
    (i) His or her full name and home and business addresses;
* * * * *
    (vii) Information concerning the applicant's level of education and 
academic history;
* * * * *
    (ix) Information relevant to whether the applicant has any physical 
limitations that would interfere with the completion of a comprehensive 
written examination administered under the supervision of a VA Regional 
Counsel; and
    (x) Certification that the applicant has satisfied the 
qualifications and standards required for accreditation as prescribed 
by VA in this section, and that the applicant will abide by the 
standards of conduct prescribed by VA in section 14.632 of this part.
    (3) Evidence showing lack of good character and reputation 
includes, but is not limited to, one or more of the following: 
Conviction of a felony, conviction of a misdemeanor involving fraud, 
bribery, deceit, theft, or misappropriation; suspension or disbarment 
from a court, bar, or Federal or State agency on ethical grounds; or 
resignation from admission to a court, bar, or Federal or State agency 
while under investigation to avoid sanction.
    (4) As a further condition of initial accreditation and annually 
thereafter, each person seeking accreditation as an agent or attorney 
shall submit to VA information about any court, bar, or Federal or 
State agency to which the agent or attorney is admitted to practice or 
otherwise authorized to appear. Applicants shall provide identification 
numbers and membership information for each jurisdiction in which the 
applicant is admitted and a certification that the agent or attorney is 
in good standing in every jurisdiction in which admitted.
    (5) VA will not accredit an individual as an agent or attorney if 
the individual has been suspended by any court, bar, or Federal or 
State agency in which the individual was previously admitted and not 
subsequently reinstated.
    (6) After an affirmative determination of character and fitness for 
practice before the Department, applicants must achieve a score of 75 
percent or more on

[[Page 25938]]

a written examination administered by VA as a prerequisite to 
accreditation. No applicant shall be allowed to sit for the examination 
more than twice in any 6-month period.
    (c) Representation by Attorneys, Law Firms, Law Students and 
Paralegals. (1) After accreditation by the General Counsel, an attorney 
may represent a claimant upon submission of a VA Form 21-22a, 
(Appointment of Attorney or Agent as Claimant's Representative).
* * * * *
    (3) A legal intern, law student, or paralegal may not be 
independently accredited to represent claimants under this paragraph. A 
legal intern, law student, or certified paralegal may assist in the 
preparation, presentation, or prosecution of a claim, under the direct 
supervision of an attorney of record designated under Sec.  14.631(a), 
if the claimant's written consent is furnished to VA. Such consent must 
specifically state that participation in all aspects of the claim by a 
legal intern, law student, or paralegal furnishing written 
authorization from the attorney of record is authorized. In addition, 
suitable authorization for access to the claimant's records must be 
provided in order for such an individual to participate. The 
supervising attorney must be present at any hearing in which a legal 
intern, law student, or paralegal participates. The written consent 
must include the name of the veteran, or the name of the 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 VA file number; the name of the attorney-at-law; the 
consent of the appellant for the use of the services of legal interns, 
law students, or paralegals and for such individuals to have access to 
applicable VA records; and the names of the legal interns, law 
students, or paralegals who will be assisting in the case. The signed 
consent must be submitted to the agency of original jurisdiction and 
maintained in the claimant's file. In the case of appeals before the 
Board in Washington, DC, the signed consent must be submitted to: 
Director, Management and Administration (01E), Board of Veterans' 
Appeals, 810 Vermont Avenue, NW., Washington, DC 20420. In the case of 
hearings before a Member or Members of the Board at VA field 
facilities, the consent must be presented to the presiding Member of 
the hearing as noted in paragraph (d).
* * * * *

    Note to Sec.  14.629: A legal intern, law student, paralegal, or 
veterans service organization support-staff person, working under 
the supervision of an individual designated under Sec.  14.631(a) as 
the claimant's representative, attorney, or agent, may qualify for 
read-only access to pertinent Veterans Benefits Administration 
automated claims records as described in Sec. Sec.  1.600 through 
Sec.  1.603 in part 1 of this chapter.

* * * * *
    6. Amend Sec.  14.630 by:
    a. Revising paragraph (a).
    b. Revising paragraph (b)(1) introductory text.
    c. Adding paragraphs (c) and (d) immediately preceding the 
authority citation at the end of the section.
    The revisions and additions read as follows:


Sec.  14.630  Authorization for a particular claim.

    (a) Any person may be authorized to prepare, present, and prosecute 
one claim. A power of attorney executed on VA Form 21-22a (Appointment 
of Attorney or Agent as Claimant's Representative), and a statement 
signed by the person and the claimant that no compensation will be 
charged or paid for the services, shall be filed with the agency of 
original jurisdiction where the claim is presented. The power of 
attorney identifies to VA the claimant's appointment of representation 
and authorizes VA's disclosure of information to the person 
representing the claimant.
    (b) * * * (1) The number of accredited representatives, agents, and 
attorneys operating in the claimant's geographic region;
* * * * *
    (c) Persons providing representation under this section must comply 
with the laws administered by VA and with the regulations governing 
practice before VA including the rules of conduct in Sec.  14.632 of 
this part.
    (d) Persons providing representation under this section are subject 
to suspension and or exclusion from representation of claimants before 
VA on the same grounds as apply to representatives, agents, and 
attorneys in Sec.  14.633 of this part.
* * * * *
    7. Amend Sec.  14.631 by:
    a. Revising the section heading.
    b. Revising paragraph (a) introductory text.
    c. Adding paragraph (a)(1)(iv).
    d. In paragraph (a)(2), removing ``Department of Veterans Affairs'' 
and adding, in its place, ``VA''.
    e. Removing paragraph (b).
    f. Redesignating paragraphs (c) through (g) as paragraphs (b) 
through (f).
    g. Revising newly redesignated paragraph (c).
    h. In newly redesignated paragraph (e)(1), removing ``the 
Department of Veterans Affairs'' and add, in its place, ``VA''.
    i. Revising newly redesignated paragraph (f).
    The revisions and addition read as follows:


Sec.  14.631  Powers of attorney; disclosure of claimant information.

    (a) A power of attorney, executed on either VA Form 21-22 
(Appointment of Veterans Service Organization as Claimant's 
Representative) or VA Form 21-22a (Appointment of Attorney or Agent as 
Claimant's Representative), is required to represent a claimant before 
VA and to authorize VA's disclosure of information to any person or 
organization representing a claimant before the Department. Without the 
signature of a person providing representation for a particular claim 
under Sec.  14.630 of this part or an accredited veterans service 
organization representative, agent, or attorney, the appointment is 
invalid, and the person appointed to provide representation is under no 
obligation to do so. The power of attorney shall meet the following 
requirements:
    (1) * * *
    (iv) An individual providing representation on a particular claim 
under Sec.  14.630 of this part or an accredited veterans service 
organization representative, agent, or attorney; and
* * * * *
    (b) VA may, for any purpose, treat a power of attorney naming as a 
claimant's representative an organization recognized under Sec.  
14.628, a particular office of such an organization, or an individual 
representative of such an organization as an appointment of the entire 
organization as the claimant's representative, unless the claimant 
specifically indicates in the power of attorney a desire to appoint 
only the individual representative. Such specific indication must be 
made in the space on the power-of-attorney form for designation of the 
representative and must use the word ``only'' with reference to the 
individual representative.
    (c) An organization, individual providing representation on a 
particular claim under Sec.  14.630, representative, agent, or attorney 
named in a power of attorney executed pursuant to paragraph (a) of this 
section may withdraw from representation if such withdrawal would not 
adversely impact the claimant's interests. Withdrawal is also 
permissible if a claimant persists in a course of action that the 
organization or individual providing representation reasonably believes 
is fraudulent or

[[Page 25939]]

criminal and is furthered through the representation of the 
organization or individual; the claimant fails to uphold an obligation 
to the organization or individual providing representation regarding 
the services of the organization or individual; or other good cause for 
withdrawal exists. An organization or individual providing 
representation withdraws from representation by notifying both the 
claimant and the agency of original jurisdiction in writing prior to 
taking any action to withdraw and takes steps necessary to protect the 
claimant's interests including, but not limited to, giving advance 
notice to the claimant, allowing time for appointment of alternative 
representation, and surrendering any documents provided by VA in the 
course of the representation.
* * * * *
    (f)(1) A power of attorney may be revoked at any time, and an agent 
or attorney may be discharged at any time. Unless a claimant 
specifically indicates otherwise, the receipt of a new power of 
attorney executed by the claimant and the organization or individual 
providing representation shall constitute a revocation of an existing 
power of attorney.
    (2) If an agent or attorney limits the scope of his or her 
representation regarding a particular claim by so indicating on VA Form 
21-22a, or a claimant authorizes a person to provide representation in 
a particular claim under Sec.  14.630, such specific authority shall 
constitute a revocation of an existing general power of attorney filed 
under paragraph (a) of this section only as it pertains to, and during 
the pendency of, that particular claim. Following the final 
determination of such claim, the general power of attorney shall remain 
in effect as to any new or reopened claim.
* * * * *
    8. Revise Sec.  14.632 to read as follows:


Sec.  14.632  Standards of conduct for persons providing representation 
before the Department.

    (a)(1) All persons acting on behalf of a claimant shall faithfully 
execute their duties as individuals providing representation on a 
particular claim under Sec.  14.630, representatives, agents, or 
attorneys.
    (2) All individuals providing representation are required to be 
truthful in their dealings with claimants and VA, and shall conduct 
themselves in accordance with the non-adversarial nature of practice 
before the agency of original jurisdiction and the Board. The general 
provision on non-adversarial practice does not apply in proceedings 
before the General Counsel conducted under part 14 of this chapter to 
cancel accreditation or to review fee agreements and expenses for 
reasonableness.
    (b) An individual providing representation on a particular claim 
under Sec.  14.630, representative, agent, or attorney shall:
    (1) Provide claimants with competent representation before VA. 
Competent representation requires the knowledge, skill, thoroughness, 
and preparation necessary for the representation. This includes 
understanding the issues of fact and law relevant to the claim as well 
as the applicable provisions of title 38, United States Code, and title 
38, Code of Federal Regulations;
    (2) Act with reasonable diligence and promptness in representing 
claimants. This includes responding promptly to VA requests for 
information or assisting a claimant in responding promptly to VA 
requests for information.
    (c) An individual providing representation on a particular claim 
under Sec.  14.630, representative, agent, or attorney shall not:
    (1) Violate the standards of conduct as described in this section;
    (2) Circumvent a rule of conduct through the actions of another;
    (3) Engage in conduct involving fraud, deceit, misrepresentation, 
or dishonesty;
    (4) Violate any of the provisions of title 38, United States Code, 
or title 38, Code of Federal Regulations;
    (5) Enter into an agreement for, charge, solicit, or receive a fee 
that is clearly unreasonable, excessive, or otherwise prohibited by law 
or regulation;
    (6) Solicit, receive, or enter into agreements for gifts in lieu of 
fees for representation provided before a notice of disagreement is 
filed with respect to the case;
    (7) Delay, without good cause, the processing of a claim at any 
stage of the administrative process;
    (8) Mislead, threaten, coerce, or deceive a claimant regarding 
benefits or other rights under programs administered by VA;
    (9) Engage in, or counsel or advise a claimant to engage in acts or 
behavior prejudicial to the fair and orderly conduct of administrative 
proceedings before VA;
    (10) Disclose, without the claimant's authorization, any 
information provided by VA for purposes of representation; or
    (11) Engage in any other unlawful, unprofessional, or unethical 
conduct.
    (d) In addition to complying with standards of conduct for practice 
before VA in paragraphs (a) through (c), an attorney shall not, in 
providing representation to a claimant before VA, engage in behavior or 
activities prohibited by the rules of professional conduct of any 
jurisdiction in which the attorney is licensed to practice law.

(Authority: 38 U.S.C. 501(a), 5902, 5904)

    9. Amend Sec.  14.633 by:
    a. Revising the section heading.
    b. Revising paragraphs (a), (b), (c) introductory text, and (c)(1).
    c. Redesignating paragraph (c)(4) as paragraph (c)(7).
    d. Revising newly redesignated paragraph (c)(7).
    e. Adding new paragraphs (c)(4), (c)(5), and (c)(6).
    f. Revising paragraphs (d) through (g).
    g. Adding new paragraph (h).
    The revisions and additions read as follows:


Sec.  14.633  Termination of accreditation of individuals providing 
representation under Sec.  14.630, representatives, agents, and 
attorneys.

    (a) Accreditation or authority to provide representation on a 
particular claim under Sec.  14.630 may be canceled at the request of 
an organization, individual providing representation under Sec.  
14.630, representative, agent, or attorney.
    (b) Accreditation shall be canceled at such time as a determination 
is made by the General Counsel that any requirement of Sec.  14.629 is 
no longer met by a representative, agent, or attorney.
    (c) Accreditation or authority to provide representation on a 
particular claim shall be canceled when the General Counsel finds, by 
clear and convincing evidence, one or more of the following:
    (1) Violation of or refusal to comply with the laws administered by 
VA or with the regulations governing practice before VA including the 
standards of conduct in Sec.  14.632;
* * * * *
    (4) Presenting to VA a frivolous claim, issue, or argument. A 
claim, issue, or argument is frivolous if the individual providing 
representation under Sec.  14.630, representative, agent, or attorney 
is unable to make a good faith argument on the merits of the position 
taken or to support the position taken by a good faith argument for an 
extension, modification, or reversal of existing law;
    (5) Suspension or disbarment by any court, bar, or Federal or State 
agency to which such individual providing representation under Sec.  
14.630, representative, agent, or attorney was previously admitted to 
practice, or disqualification from participating in or

[[Page 25940]]

appearing before any court, bar, or Federal or State agency and lack of 
subsequent reinstatement;
    (6) Charging excessive or unreasonable fees for representation as 
determined by VA, the Court of Appeals for Veterans Claims, or the 
United States Court of Appeals for the Federal Circuit; or
    (7) Any other unlawful, unprofessional, or unethical practice.
    (d) Accreditation or authority to provide representation on a 
particular claim shall be canceled when the General Counsel finds that 
the performance of an individual providing representation under Sec.  
14.630, representative, agent, or attorney before VA demonstrates a 
lack of the degree of competence necessary to adequately prepare, 
present, and prosecute claims for veteran's benefits.
    (e) As to cancellation of accreditation under paragraphs (c) or (d) 
of this section, upon receipt of information from any source indicating 
improper conduct, or incompetence, the Assistant General Counsel of 
jurisdiction shall initiate an inquiry into the matter. If the matter 
involves an accredited representative of a recognized organization, 
this inquiry shall include contact with the representative's 
organization.
    (1) If the result of the inquiry does not justify further action, 
the Assistant General Counsel will close the inquiry and maintain the 
record for 3 years.
    (2) If the result of the inquiry justifies further action, the 
Assistant General Counsel shall:
    (i) Inform the General Counsel of the result of the inquiry and 
notify the individual providing representation under Sec.  14.630, 
representative, agent or attorney of an intent to cancel accreditation 
or authority to provide representation on a particular claim. The 
notice will be sent to individuals providing representation on a 
particular claim by certified or registered mail to the individual's 
last known address of record as indicated on the VA Form 21-22a on file 
with the agency of original jurisdiction. The notice will be sent to 
accredited individuals by certified or registered mail to the 
individual's last known address of record as indicated in VA's 
accreditation records. The notice will state the reason(s) for the 
cancellation proceeding and advise the individual to file an answer, in 
oath or affidavit form or the form specified for unsworn declarations 
under penalty of perjury in 28 U.S.C. 1746, within 30 days from the 
date the notice was mailed, responding to the stated reasons for 
cancellation and explaining why he or she should not be suspended or 
excluded from practice before VA. The notice will also advise the 
individual of the right to submit additional evidence and the right to 
request a hearing on the matter. Requests for hearings must be made in 
the answer. If the individual does not file an answer with the Office 
of the General Counsel within 30 days of the date that the Assistant 
General Counsel mailed the notice, the Assistant General Counsel shall 
close the record and forward it with a recommendation to the General 
Counsel for a final decision.
    (ii) In the event that a hearing is not requested, the Assistant 
General Counsel shall close the record and forward it with a 
recommendation to the General Counsel for a final decision.
    (iii) The Assistant General Counsel may extend the time to file an 
answer or request a hearing for a reasonable period upon a showing of 
sufficient cause.
    (f) If a hearing is requested, at the discretion of the General 
Counsel, it may be held at a VA Regional Office or at the VA Central 
Office. For hearings conducted at a Regional Office, the Regional 
Office Director involved will appoint a hearing officer and the 
Regional Counsel of jurisdiction or his or her designee will present 
the evidence. For hearings conducted at the VA Central Office, the 
Director of the Compensation and Pension Service shall appoint a 
hearing officer and the Assistant General Counsel or his or her 
designee shall present the evidence. The hearing officer shall not be 
from the Office of the General Counsel and shall provide notice of the 
hearing to the individual providing representation under Sec.  14.630, 
representative, agent, or attorney by certified or registered mail at 
least 21 days before the date of the hearing. Hearings shall not be 
scheduled before the completion of the 30-day period for filing an 
answer to the notice of intent to cancel accreditation. The hearing 
officer will have authority to administer oaths. The party requesting 
the hearing will have a right to counsel, to present evidence, and to 
cross-examine witnesses. Upon request of the individual requesting the 
hearing, an appropriate VA official designated in Sec.  2.1 of this 
chapter may issue subpoenas to compel the attendance of witnesses and 
the production of documents necessary for a fair hearing. The hearing 
shall be conducted in an informal manner and court rules of evidence 
shall not apply. Testimony shall be recorded verbatim. The evidentiary 
record shall be closed 10 days after the completion of the hearing. The 
hearing officer shall submit the entire hearing transcript, any 
pertinent records or information, and a recommended finding to the 
Assistant General Counsel within 30 days of closing the record. The 
Assistant General Counsel will review the record and forward it to the 
General Counsel with a recommendation for a final decision.
    (g) The decision of the General Counsel is a final adjudicative 
determination of an agency of original jurisdiction and may be appealed 
to the Board of Veterans' Appeals. The effective date for cancellation 
of accreditation or authority to provide representation on a particular 
claim shall be the date upon which the General Counsel's final decision 
is rendered. Notwithstanding provisions in this section for closing the 
record at the end of the 30-day period for filing an answer or 10 days 
after a hearing, appeals shall be initiated and processed using the 
procedures in 38 CFR parts 19 and 20. Nothing in this section shall be 
construed to limit the Board's authority to remand a matter to the 
General Counsel under 38 CFR 19.9 for any action that is essential for 
a proper appellate decision or the General Counsel's ability to issue a 
supplemental statement of the case under 38 CFR 19.31.
    (h) In cases where the accreditation of an agent or attorney is 
cancelled, the Office of the General Counsel may notify all agencies, 
courts, and bars to which the agent or attorney is admitted to 
practice.
* * * * *
    10. Add Sec.  14.636 to read as follows:


Sec.  14.636.  Payment of fees for representation by agents and 
attorneys in proceedings before Agencies of Original Jurisdiction and 
before the Board of Veterans' Appeals.

    (a) Applicability of rule. The provisions of this section apply to 
the services of accredited agents and attorneys with respect to 
benefits under laws administered by VA in all proceedings before the 
agency of original jurisdiction or before the Board of Veterans' 
Appeals regardless of whether an appeal has been initiated.
    (b) Who may charge fees for representation. Only accredited agents 
and attorneys may receive fees from claimants or appellants for their 
services provided in connection with representation. Recognized 
organizations (including their accredited representatives when acting 
as such) and individuals recognized under Sec.  14.630 of this part are 
not permitted to receive fees. An agent or attorney who may also be an 
accredited representative of a recognized

[[Page 25941]]

organization may not receive such fees unless he or she has been 
properly designated as an agent or attorney in accordance with Sec.  
14.631 of this part in his or her individual capacity as an accredited 
agent or attorney.
    (c) Circumstances under which fees may be charged. Except as noted 
in paragraph (d) of this section, agents and attorneys may charge 
claimants and appellants for representation provided on a particular 
claim or claims within a case only after an agency of original 
jurisdiction has rendered a decision on such particular claim or claims 
and a notice of disagreement has been filed with respect to the 
decision.
    (d) Exceptions--(1) Chapter 37 loans. With respect to services of 
agents and attorneys provided after October 9, 1992, a reasonable fee 
may be charged or paid in connection with any proceeding in a case 
arising out of a loan made, guaranteed, or insured under chapter 37, 
United States Code, even though the conditions set forth in paragraph 
(c) of this section are not met.
    (2) Payment of fee by disinterested third party. (i) An agent or 
attorney may receive a fee or salary from an organization, governmental 
entity, or other disinterested third party for representation of a 
claimant or appellant even though the conditions set forth in paragraph 
(c) of this section have not been met. An organization, governmental 
entity, or other third party is considered disinterested only if the 
entity or individual does not stand to benefit financially from the 
successful outcome of the claim. In no such case may the attorney or 
agent charge a fee which is contingent, in whole or in part, on whether 
the matter is resolved in a manner favorable to the claimant or 
appellant.
    (ii) For purposes of this part, a person shall be presumed not to 
be disinterested if that person is the spouse, child, or parent of the 
claimant or appellant, or if that person resides with the claimant or 
appellant. This presumption may be rebutted by clear and convincing 
evidence that the person in question has no financial interest in the 
success of the claim.
    (iii) The provisions of paragraph (g) of this section (relating to 
fee agreements) shall apply to all payments or agreements to pay 
involving disinterested third parties. In addition, the agreement shall 
include or be accompanied by the following statement, signed by the 
attorney or agent: ``I certify that no agreement, oral or otherwise, 
exists under which the claimant or appellant will provide anything of 
value to the third-party payer in this case in return for payment of my 
fee or salary, including, but not limited to, reimbursement of any fees 
paid.''
    (e) Fees permitted. Fees permitted for services of an agent or 
attorney admitted to practice before VA must be reasonable. They may be 
based on a fixed fee, hourly rate, a percentage of benefits recovered, 
or a combination of such bases. Factors considered in determining 
whether fees are reasonable include:
    (1) The extent and type of services the representative performed;
    (2) The complexity of the case;
    (3) The level of skill and competence required of the 
representative in giving the services;
    (4) The amount of time the representative spent on the case;
    (5) The results the representative achieved, including the amount 
of any benefits recovered;
    (6) The level of review to which the claim was taken and the level 
of the review at which the representative was retained;
    (7) Rates charged by other representatives for similar services; 
and
    (8) Whether, and to what extent, the payment of fees is contingent 
upon the results achieved.
    (f) Presumption of reasonableness. Fees which do not exceed 20 
percent of any past-due benefits awarded as defined in paragraph (h)(3) 
of this section shall be presumed to be reasonable. This presumption 
may be rebutted by a preponderance of the evidence relating to the 
factors in paragraph (e) of this section establishing that such fees 
are not reasonable.
    (g) Fee agreements. All agreements for the payment of fees for 
services of agents and attorneys (including agreements involving fees 
or salary paid by an organization, governmental entity or other 
disinterested third party) must be in writing and signed by both the 
claimant or appellant and the agent or attorney.
    (1) To be valid, a fee agreement must include the following:
    (i) The name of the veteran,
    (ii) The name of the claimant or appellant if other than the 
veteran,
    (iii) The name of any disinterested third-party payer (see 
paragraph (d)(2) of this section) and the relationship between the 
third-party payer and the veteran, claimant, or appellant,
    (iv) The applicable VA file number, and
    (v) The specific terms under which the amount to be paid for the 
services of the attorney or agent will be determined.
    (2) Fee agreements must also clearly specify if VA is to pay the 
agent or attorney directly out of past due benefits. A direct-pay fee 
agreement is a fee agreement between the claimant or appellant and an 
agent or attorney providing for payment of fees out of past-due 
benefits awarded directly to an agent or attorney. A fee agreement 
calling for payment of an amount exceeding 20 percent of past-due 
benefits shall be considered to be an agreement in which the agent or 
attorney is responsible for collecting any fees for representation from 
the claimant without assistance from VA.
    (3) A copy of the agreement must be filed with the Office of the 
General Counsel within 30 days of its execution by mailing the copy to 
the following address: Office of the General Counsel (022D), 810 
Vermont Avenue, NW., Washington, DC 20420.
    (h) Payment of fees by Department of Veterans Affairs directly to 
an agent or attorney from past-due benefits. (1) Subject to the 
requirements of the other paragraphs of this section, including 
paragraphs (c) and (e), the claimant or appellant and an agent or 
attorney may enter into a fee agreement providing that payment for the 
services of the agent or attorney will be made directly to the agent or 
attorney by VA out of any past-due benefits awarded in any proceeding 
before VA or the United States Court of Appeals for Veterans Claims. VA 
will charge and collect an assessment out of the fees paid directly to 
agents or attorneys from past-due benefits awarded. The amount of such 
assessment shall be equal to five percent of the amount of the fee 
required to be paid to the agent or attorney, but in no event shall the 
assessment exceed $100. Such an agreement will be honored by VA only if 
the following conditions are met:
    (i) The total fee payable (excluding expenses) does not exceed 20 
percent of the total amount of the past-due benefits awarded,
    (ii) The amount of the fee is contingent on whether or not the 
claim is resolved in a manner favorable to the claimant or appellant, 
and
    (iii) The award of past-due benefits results in a cash payment to a 
claimant or an appellant from which the fee may be deducted. (An award 
of past-due benefits will not always result in a cash payment to a 
claimant or an appellant. For example, no cash payment will be made to 
military retirees unless there is a corresponding waiver of retirement 
pay. (See 38 U.S.C. 5304(a) and Sec.  3.750 et seq. of this chapter.)
    (2) For purposes of this paragraph, a claim will be considered to 
have been resolved in a manner favorable to the

[[Page 25942]]

claimant or appellant if all or any part of the relief sought is 
granted.
    (3) For purposes of this paragraph, ``past-due benefits'' means a 
nonrecurring payment resulting from a benefit, or benefits, granted on 
appeal or awarded on the basis of a claim reopened after a denial by 
the Board of Veterans' Appeals or the lump sum payment which represents 
the total amount of recurring cash payments which accrued between the 
effective date of the award, as determined by applicable laws and 
regulations, and the date of the grant of the benefit by the agency of 
original jurisdiction, the Board of Veterans' Appeals, or an appellate 
court.
    (i) When the benefit granted on appeal, or as the result of the 
reopened claim, is service connection for a disability, the ``past-due 
benefits'' will be based on the initial disability rating assigned by 
the agency of original jurisdiction following the award of service 
connection. The sum will equal the payments accruing from the effective 
date of the award to the date of the initial disability rating 
decision. If an increased evaluation is subsequently granted as the 
result of an appeal of the disability evaluation initially assigned by 
the agency of original jurisdiction, and if the agent or attorney 
represents the claimant or appellant in that phase of the claim, the 
agent or attorney will be paid a supplemental payment based upon the 
increase granted on appeal, to the extent that the increased amount of 
disability is found to have existed between the initial effective date 
of the award following the grant of service connection and the date of 
the rating action implementing the appellate decision granting the 
increase.
    (ii) Unless otherwise provided in the fee agreement between the 
claimant or appellant and the agent or attorney, the agent's or 
attorney's fees will be determined on the basis of the total amount of 
the past-due benefits even though a portion of those benefits may have 
been apportioned to the claimant's or appellant's dependents.
    (iii) If an award is made as the result of favorable action with 
respect to several issues, the past-due benefits will be calculated 
only on the basis of that portion of the award which results from 
action taken on issues concerning which the criteria in paragraph (c) 
of this section have been met.
    (iv) In cases where an award of past-due benefits is reduced by law 
including administrative offset to collect a debt or overpayment, VA 
will calculate the amount of fees to be paid to an agent or attorney 
based on the cash payment to the claimant or appellant after all 
applicable reductions.
    (4) In addition to filing a copy of the fee agreement with the 
Office of the General Counsel as required by paragraph (g) of this 
section, the agent or attorney must notify the agency of original 
jurisdiction within 30 days of the date of execution of the agreement 
of the existence of an agreement providing for the direct payment of 
fees out of any benefits subsequently determined to be past due and 
provide that agency with a copy of the fee agreement.
    (i) Motion for review of fee agreement. The Office of the General 
Counsel may review a fee agreement between a claimant or appellant and 
an agent or attorney upon its own motion or upon the motion of the 
claimant or appellant and may order a reduction in the fee called for 
in the agreement if it finds that the fee is excessive or unreasonable 
in light of the standards set forth in paragraph (e) of this section. 
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, and the applicable VA file number. Such motions must set forth 
the reason, or reasons, why the fee called for in the agreement is 
excessive or unreasonable and must be accompanied by all evidence the 
moving party desires to submit.
    (1) A claimant's or appellant's motion for review of a fee 
agreement must be served on the agent or attorney and must be filed at 
the following address: Office of the General Counsel (022D), 810 
Vermont Avenue, NW., Washington, DC 20420. The agent or attorney may 
file a response to the motion, with any relevant evidence, with the 
Office of the General Counsel not later than 30 days from the date on 
which the claimant or appellant served the motion on the agent or 
attorney. Such responses must be served on the claimant or appellant. 
The claimant or appellant then has 15 days from the date on which the 
agent or attorney served a response to file a reply with the Office of 
the General Counsel. Such replies must be served on the agent or 
attorney.
    (2) The Assistant General Counsel shall initiate the Office of the 
General Counsel's review of a fee agreement on its own motion by 
serving the motion on the agent or attorney and the claimant or 
appellant. The agent or attorney may file a response to the motion, 
with any relevant evidence, with the Office of the General Counsel 
(022D), 810 Vermont Avenue, NW., Washington, DC 20420, not later than 
30 days from the date on which the Office of the General Counsel served 
the motion on the agent or attorney. Such responses must be served on 
the claimant or appellant.
    (3) The Office of the General Counsel shall close the record in 
proceedings to review fee agreements 15 days after the date on which 
the agent or attorney served a response on the claimant or appellant, 
or 30 days after the claimant, appellant, or the Office of the General 
Counsel served the motion on the agent or attorney if there is no 
response. The Assistant General Counsel may, for a reasonable period 
upon a showing of sufficient cause, extend the time for an agent or 
attorney to serve an answer or for a claimant or appellant to serve a 
reply. The Assistant General Counsel shall forward the record and a 
recommendation to the General Counsel for a final decision. Unless 
either party files a notice of disagreement with the Office of the 
General Counsel, the agent or attorney must refund any excess payment 
to the claimant or appellant not later than the expiration of the time 
within which the General Counsel's decision may be appealed to the 
Board of Veterans' Appeals.
    (j) In addition to whatever other penalties may be prescribed by 
law or regulation, failure to comply with the requirements of this 
section may result in proceedings under Sec.  14.633 of this chapter to 
terminate the agent's or attorney's accreditation to practice before 
VA.
    (k) Notwithstanding provisions in this section for closing the 
record at the end of the 30-day period for serving a response or 15 
days after the date on which the agent or attorney served a response, 
appeals shall be initiated and processed using the procedures in 38 CFR 
parts 19 and 20. Nothing in this section shall be construed to limit 
the Board's authority to remand a matter to the General Counsel under 
38 CFR 19.9 for any action that is essential for a proper appellate 
decision or the General Counsel's ability to issue a supplemental 
statement of the case under 38 CFR 19.31.



    (Authority: 38 U.S.C. 5902, 5904, 5905)

    (The Office of Management and Budget has approved the 
information collection requirements in this section under control 
number 2900-0085)

    11. Add Sec.  14.637 to read as follows:


Sec.  14.637.  Payment of the expenses of agents and attorneys in 
proceedings before Agencies of Original Jurisdiction and before the 
Board of Veterans' Appeals.

    (a) Applicability of rule. The provisions of this section apply to 
the

[[Page 25943]]

services of accredited agents and attorneys with respect to benefits 
under laws administered by VA in all proceedings before the agency of 
original jurisdiction or before the Board of Veterans' Appeals 
regardless of whether an appeal has been initiated.
    (b) General. Any agent or attorney may be reimbursed for expenses 
incurred on behalf of a veteran or a veteran's dependents or survivors 
in the prosecution of a claim for benefits pending before VA. Whether 
such an agent or attorney will be reimbursed for expenses and the 
method of such reimbursement is a matter to be determined by the agent 
or attorney and the claimant or appellant in the fee agreement filed 
with the Office of the General Counsel under Sec.  14.636 of this part. 
Expenses are not payable directly to the agent or attorney by VA out of 
benefits determined to be due to a claimant or appellant.
    (c) Nature of expenses subject to reimbursement. ``Expenses'' 
include nonrecurring expenses incurred directly in the prosecution of a 
claim for benefits on behalf of a claimant or appellant. Examples of 
such expenses include expenses for travel specifically to attend a 
hearing with respect to a particular claim, the cost of copies of 
medical records or other documents obtained from an outside source, and 
the cost of obtaining the services of an expert witness or an expert 
opinion. ``Expenses'' do not include normal overhead costs of the agent 
or attorney such as office rent, utilities, the cost of obtaining or 
operating office equipment or a legal library, salaries of the 
representative and his or her support staff, and the cost of office 
supplies.
    (d) Expense charges permitted; motion for review of expenses. 
Reimbursement for the expenses of an agent or attorney may be obtained 
only if the expenses are reasonable. The Office of the General Counsel 
may review the expenses charged by an agent or attorney upon its own 
motion or the motion of the claimant or appellant and may order a 
reduction in the expenses charged if it finds that they are excessive 
or unreasonable. 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, and the applicable VA file number. Such motions must 
specifically identify which expenses charged are unreasonable; must set 
forth the reason, or reasons, why such expenses are excessive or 
unreasonable and must be accompanied by all evidence the claimant or 
appellant desires to submit. Factors considered in determining whether 
expenses are excessive or unreasonable include the complexity of the 
case, the potential extent of benefits recoverable, and whether travel 
expenses are in keeping with expenses normally incurred by other 
representatives.
    (1) A claimant's or appellant's motion for review of expenses must 
be served on the agent or attorney and must be filed at the following 
address: Office of the General Counsel (022D), 810 Vermont Avenue, NW., 
Washington, DC 20420. The agent or attorney may file a response to the 
motion, with any accompanying evidence, with the Office of the General 
Counsel not later than 30 days from the date on which the claimant or 
appellant served the motion on the agent or attorney. Such responses 
must be served on the claimant or appellant. The claimant or appellant 
then has 15 days from the date on which the agent or attorney served a 
response to file a reply with the Office of the General Counsel. Such 
replies must be served on the agent or attorney.
    (2) The Assistant General Counsel shall initiate the Office of the 
General Counsel's review of expenses on its own motion by serving the 
motion on the agent or attorney and the claimant or appellant. The 
agent or attorney may file a response to the motion, with any 
accompanying evidence, with the Office of the General Counsel (022D), 
810 Vermont Avenue, NW., Washington, DC 20420, not later than 30 days 
from the date on which the Office of the General Counsel served the 
motion on the agent or attorney. Such responses must be served on the 
claimant or appellant.
    (3) The Office of the General Counsel shall close the record in 
proceedings to review expenses 15 days after the date on which the 
agent or attorney served a response on the claimant or appellant, or 30 
days after the claimant, appellant, or the Office of the General 
Counsel served the motion on the agent or attorney if there is no 
response. The Assistant General Counsel may, for a reasonable period 
upon a showing of sufficient cause, extend the time for an agent or 
attorney to serve an answer or for a claimant or appellant to serve a 
reply. Unless either party files a notice of disagreement with the 
General Counsel's decision, the attorney or agent must refund any 
excess payment to the claimant or appellant not later than the 
expiration of the time within which the General Counsel's decision may 
be appealed to the Board of Veterans' Appeals.
    (e) In addition to whatever other penalties may be prescribed by 
law or regulation, failure to comply with the requirements of this 
section may result in proceedings under Sec.  14.633 of this part to 
terminate the agent's or attorney's accreditation to practice before 
VA.
    (f) Notwithstanding provisions in this section for closing the 
record at the end of the 30-day period for serving a response or 15 
days after the date on which the agent or attorney served a response, 
appeals shall be initiated and processed using the procedures in 38 CFR 
parts 19 and 20. Nothing in this section shall be construed to limit 
the Board's authority to remand a matter to the General Counsel under 
38 CFR 19.9 for any action that is essential for a proper appellate 
decision or the General Counsel's ability to issue a supplemental 
statement of the case under 38 CFR 19.31.

(Authority: 38 U.S.C. 5904)


    (The Office of Management and Budget has approved the 
information collection requirements in this section under control 
number 2900-0085)

PART 1--GENERAL PROVISIONS

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

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

    13. Amend newly redesignated Sec.  1.600 by:
    a. Adding an undesignated center heading before the section 
heading.
    b. In paragraph (a) introductory text, removing ``14.640 through 
14.643'' and adding, in its place, ``1.600 through 1.603''.
    c. In paragraph (b)(1), removing ``14.640 through 14.643'' and 
adding, in its place, ``1.600 through 1.603''.
    d. In paragraph (b)(4), removing ``14.640 through 14.643'' and 
adding, in its place, ``1.600 through 1.603''.
    e. In paragraph (d) introductory text, removing ``14.640 through 
14.643'' and adding, in its place, ``1.600 through 1.603''.
    The revision and addition read as follows:

Expanded Remote Access to Computerized Veterans Claims Records by 
Accredited Representatives


Sec.  1.600  Purpose.

* * * * *


Sec.  1.602  [Amended]

    14. Amend newly redesignated Sec.  1.602 by:
    a. In paragraph (b), removing ``14.643'' and adding, in its place, 
``1.603''.
    b. In paragraph (c)(3), removing ``14.640 through 14.643'' and 
adding, in its place, ``1.600 through 1.603''.

[[Page 25944]]

Sec.  1.603  [Amended]

    15. Amend newly redesignated Sec.  1.603 by:
    a. In paragraph (b)(1), removing ``14.640 through 14.643'' and 
adding, in its place, ``1.600 through 1.603''.
    b. In paragraph (c), removing ``14.643'' and adding, in its place, 
``1.603''.

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

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

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

    17. Amend Sec.  19.31 by adding a paragraph (d) and revising the 
authority citation at the end of the section to read as follows.


Sec.  19.31  Supplemental statement of the case.

* * * * *
    (d) Exception. Paragraph (b)(1) of this section does not apply in 
proceedings before the General Counsel conducted under part 14 of this 
chapter to cancel accreditation or to review fee agreements and 
expenses for reasonableness.

(Authority: 38 U.S.C. 7105(d); 38 U.S.C. 5902, 5903, 5904)


    18. Amend Sec.  19.36 by adding a sentence at the end of the 
paragraph and revising the authority citation to read as follows:


Sec.  19.36  Notification of certification of appeal and transfer of 
appellate record.

    * * * Provisions in this section for submitting additional evidence 
and references to Sec.  20.1304 do not apply in proceedings before the 
General Counsel conducted under part 14 of this chapter to suspend or 
cancel accreditation or to review fee agreements and expenses for 
reasonableness.

(Authority: 38 U.S.C. 7105; 38 U.S.C. 5902, 5903, 5904)


    19. Amend Sec.  19.37 by adding a paragraph (c) and revising the 
authority citation at the end of the section to read as follows.


Sec.  19.37  Consideration of additional evidence received by the 
agency of original jurisdiction after an appeal has been initiated.

* * * * *
    (c) The provisions of this section do not apply in proceedings 
before the General Counsel conducted under part 14 of this chapter to 
cancel accreditation or to review fee agreements and expenses for 
reasonableness.

(Authority: 38 U.S.C. 7105(d)(1), 5902, 5903, 5904)

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

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

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


Sec. Sec.  20.609 and 20.610  [Removed]

    21. Remove Sec. Sec.  20.609 and 20.610.
    22. Amend Sec.  20.800 by adding a sentence at the end of the 
paragraph and revising the authority citation to read as follows:


Sec.  20.800  Rule 800. Submission of additional evidence after 
initiation of appeal.

    * * * The provisions of this section do not apply in proceedings 
before the General Counsel conducted under part 14 of this chapter to 
cancel accreditation or to review fee agreements and expenses for 
reasonableness.

(Authority: 38 U.S.C. 7105(d)(1); 38 U.S.C. 5902, 5903, 5904)


    23. Amend Sec.  20.1304 by adding a paragraph (e) and revising the 
authority citation at the end of the section to 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.

* * * * *
    (e) Relationship to proceedings before the General Counsel to 
cancel accreditation or to review the reasonableness of fees and 
expenses. The provisions of paragraphs (a), (b), and (d) of this 
section allowing appellants to submit additional evidence do not apply 
in proceedings before the General Counsel conducted under part 14 of 
this chapter to cancel accreditation or to review fee agreements and 
expenses for reasonableness.

(Authority: 38 U.S.C. 7104, 7105, 7105A; 38 U.S.C. 5902, 5903, 5904)


 [FR Doc. E7-8642 Filed 5-4-07; 8:45 am]
BILLING CODE 8320-01-P