TITLE:  ï¿½Whether Department of Veterans Affairs Memorandum is a Rule Under the Congressional Review Act, B-291906, February 28, 2003
BNUMBER:  B-291906
DATE:  February 28, 2003
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 Whether Department of Veterans Affairs Memorandum is a Rule Under the
Congressional Review Act, B-291906, February 28, 2003

   B-291906
    
    
February 28, 2003
    
    MACROBUTTON The Honorable Ted Strickland
House of Representatives
    
Subject:  Whether Department of Veterans Affairs Memorandum is a Rule
Under the Congressional Review Act
    
Dear Mr. Strickland:
    
This is in response to your letter of January 2, 2003, requesting our
opinion on whether a July 18, 2002, memorandum issued by the Department of
Veterans Affairs (VA) to all VA Network Directors regarding the VA's
marketing activities to enroll new veterans in the VA health care system
is a *rule* under the Congressional Review Act (CRA).
    
For the reasons discussed below, we conclude that under the CRA the VA
memorandum is not a *rule* that needs to be submitted to Congress.
    
Rules Subject to Congressional Review
    
Chapter 8 of title 5, United States Code, entitled *Congressional Review
of Agency Rulemaking,* is designed to keep Congress informed about the
rulemaking activities of federal agencies and to allow for congressional
review of rules.  The requirements of chapter 8 take precedence over any
other provision of law.  5 U.S.C. 806(a).
    
Section 801(a)(1) provides that before a rule becomes effective, the
agency promulgating the rule must submit to each House of Congress and to
the Comptroller General a report containing:
    
            *(i) a copy of the rule;
    
            *(ii) a concise general statement relating to the rule, including
whether
                    it is a major rule; and
    
            *(iii) the proposed effective date of the rule.*
    
On the date the report is submitted, the agency also must submit to the
Comptroller General and make available to each House of Congress certain
other documents, including a cost-benefit analysis, if any, and agency
actions relevant to the Regulatory Flexibility Act, 5 U.S.C. 601 et seq.,
and the Unfunded Mandates Reform Act of 1995, 5 U.S.C. 202 et seq., and
any other relevant information or requirements under any other legislation
or any relevant executive orders.  5 U.S.C. 801(a)(1)(B)(i)-(iv).
    
Once a rule is submitted in accordance with section 801(a)(1), special
procedures for congressional consideration of a joint resolution of
disapproval are available for a period of 60 session days in the Senate or
60 legislative days in the House.  5 U.S.C. 802.  These time periods can
be extended upon a congressional adjournment.  5 U.S.C. 801(d)(1).
    
Section 804(3) provides that for purposes of chapter 8, with some
exclusions, the term *rule* has the same meaning given the term in 5
U.S.C. 551(4), which defines rules subject to the Administrative Procedure
Act (APA).  The APA definition of a *rule* is as follows:
    
*the whole or part of an agency statement of general or particular
applicability and future effect designed to implement, interpret, or
prescribe law or policy or describing the organization, procedure, or
practice requirements of an agency and includes the approval or
prescription for the future of rates, wages, corporate or financial
structures or reorganizations thereof, prices, facilities, appliances,
services or allowances therefor or of valuations, costs, or accounting, or
practices bearing on any of the foregoing*.*
    
Chapter 8 contains several exclusions from the APA definition of *rule*:
    
*(A) any rule of particular applicability, including a rule that approves
or prescribes for the future rates, wages, prices, services, or allowances
therefore, corporate or financial structures, reorganizations, mergers, or
acquisitions thereof, or accounting practices or disclosures bearing on
any of the foregoing;
    
              *(B) any rule relating to agency management or personnel; or
    
*(C) any rule of agency organization, procedure, or practice that does not
substantially affect the rights or obligations of non-agency parties.*
5 U.S.C. 804(3).
    
The VA Memorandum
    
On July 18, 2002, the Deputy Under Secretary for Health for Operations and
Management issued the following memorandum to the VA Network Directors:
    
*1.  As you are aware, VHA is currently facing a growing crisis related to
the continued demand for healthcare services that exceeds our resources. 
The most recent enrollment summary (April) shows a 13.5% increase in users
this year compared to the same time last year and a 15% increase in
enrollment while expenditures rose 7.8%.  Preliminary actuarial
projections indicate that growth in enrollments and consequent demand is
expected to continue.  Against this backdrop is a very conservative OMB
budget guidance for 2004.  The outcome of this situation is a waiting list
for patients to be seen in many clinics across the country and general
waiting times that exceed VHA's standard of 30 days.  Moreover, actuarial
projections indicate a widening gap in the demand versus resource
availability.

   *2.  VHA has achieved significant advances in quality and coordination of
patient care.  However, the current situation puts those advances at
risk.  In this environment, marketing of VA services with such activities
as health fairs, veteran open houses to invite new veterans to the
facilities, or enrollment displays at VSO meetings, are inappropriate. 
Therefore, I am directing each Network Director to ensure that no
marketing activities to enroll new veterans occur within your networks. 
Even though some sites might have local capacity, as a national system,
all facilities are expected to abide by this policy.  Marketing activities
could include those mentioned above, as well as generalized mailings to
veterans, local newspaper or newsletter articles encouraging veterans to
enroll, or similar public service announcements.  Exclusions from this
mandate can only be considered for certain specialized clinical needs such
as homeless standdowns.  My office will approve plans for any such
activity to minimize different interpretations and to make notifications
as necessary.  It is important to attend veteran-focused events as part of
our responsibilities, but there is a difference between providing general
information and actively recruiting people into the system.

   *3.  I recognize that there are incentives within VERA to enroll and treat
additional patients and that this has been a significant incentive to
VHA's increased efficiency.  However, I will be asking the CFO and Finance
Subcommittee to address a mechanism to modulate this incentive given our
current situation.  Some facilities, in their last strategic plans, may
have targeted growth at certain levels.  Such plans are no longer viable.

   *4.  I appreciate that we are all in a difficult situation.  During this
period it is important to take those steps that will maintain patient
quality care both for our patients and to insure the credibility and
survival of the system.  I am counting on the VISN Directord {sic} of this
issue.  Thank you.*
    
Analysis
    
To determine whether the VA memorandum is a rule for the purposes of the
CRA, we must examine two issues.  First, whether the memorandum
constitutes a *rule* as defined by reference to the APA's definition of a
*rule*; and second, if so, whether the memorandum is excluded by one of
the exceptions provided by the CRA.
    
In determining whether the memorandum is a rule for the purposes of CRA,
we must be mindful that Congress intended that the CRA should be
interpreted broadly both as to the type and scope of rules covered.[1]  It
was intended to cover not only formal rulemaking, but also to cover rules
that are not subject to notice and comment requirements of the APA,
informal rulemaking under 5 U.S.C. 553(c), rules that must be published in
the Federal Register before taking effect (5 U.S.C. 552 (a)(1) and (2)),
and other guidance documents.[2]  Hence, the entire focus of the Act is to
require congressional review of agency actions that substantially affect
the rights or obligations of outside parties.[3] 
    
Under the CRA, a *rule* is an agency action that constitutes a *statement
of general or particular applicability and future effect designed to
implement, interpret, or prescribe law or policy.*  The courts have noted
that *rulemaking* is legislative in nature, primarily concerned with
policy considerations for the future and is not concerned with the
evaluation of past conduct based on evidentiary facts.  American Express
Co. v. U.S., 472 F.2d 1050, 1055 (C.C.P.A.1973); LeFevre v. Dept. of
Veterans Affairs, 66 F.3d 1191, 1196 (Fed. Cir.1995).
    
We find it unnecessary to answer the first question regarding the status
of the memorandum as a *rule* under the CRA because, even if the
memorandum were a rule, which issue we do not reach, it is clearly
excluded from the coverage of the CRA by one of the enumerated exceptions
found in 5 U.S.C 804(3).
    
The VA contends that the memorandum is excluded by section 804(3)(B) which
excludes *any rule relating to agency management or personnel.*  In your
January 2, 2003, letter to our Office, you contend that the memorandum is
not merely an agency management matter because the result of the
memorandum is to deprive veterans of significant benefits by preventing
additional enrollees to the health care program.  Therefore, you believe
the exception found in section 804(3)(C), which excludes *any rule of
agency organization, procedure, or practice that does not substantially
affect the rights or obligations of non-agency parties* is not available
to the VA.
    
Upon our review, we agree that the memorandum is a document of agency
procedure or practice under section 804(3)(C).  The critical issue is
whether the memorandum *affects the rights or obligations of non-agency
parties* (i.e., veterans).  We find that it does not.  Here, the VA has
made a decision to stop marketing activities regarding its health care
system. This is the type of internal agency rule that the courts have held
are mainly directed toward improving the efficient and effective operation
of an agency rather than determining the rights and interests of affected
parties.[4]
    
Here, no veteran is being denied the right to enroll in the system and no
enrolled veterans are being dropped from the program.  These are the
substantive rights that the memorandum would need to affect for it to be
considered a *rule.*  When veterans are discharged or released from active
service, they are advised in writing of all benefits and services for
which they may be eligible, as required by the Veterans Outreach Service
Program.[5]  We do not find the fact that the VA is no longer publicizing
its health care system at health fairs, veterans' open houses, or through
newspaper articles to have affected the rights of veterans such that the
memorandum would be considered a *rule* under the CRA.
    
We trust this responds to your inquiry.  If you have any questions, please
contact James Vickers, Assistant General Counsel, on 202-512-8210.
    
Sincerely yours,
    
    
               signed
    
Anthony H. Gamboa
General Counsel
    
    

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

   [1] *The committees intend this chapter to be interpreted broadly with
regard to the type and scope of rules that are subject to Congressional
review.*  142 Cong. Rec. S3687 (daily ed. Apr. 19, 1996) (Joint
Explanatory Statement of Senate Sponsors); 142 Cong Rec. E579 (daily ed.
Apr. 19, 1996) (Joint Explanatory Statement of House Sponsors.).
    
[2] Id.
    
[3] Id.
[4] McKenzie v. Heckler, 602 F. Supp. 1150 (D. Minn.1985).
    
[5] 38 U.S.C. 7722.