Liesegang v. Secretary of Veterans Affairs

Decision Date10 December 2002
Docket NumberNo. 01-7109.,01-7109.
Citation312 F.3d 1368
PartiesRobert B. LIESEGANG, Sr., Roberto Sotelo, and Paul L. Fletcher, Petitioners, v. SECRETARY OF VETERANS AFFAIRS, Respondent.
CourtU.S. Court of Appeals — Federal Circuit

Barton F. Stichman, National Veterans Legal Services Program, of Washington, DC, argued for petitioners. With him on the brief was Louis J. George.

Gerald M. Alexander, Trial Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for respondent. With him on the brief were Robert D. McCallum, Jr., Assistant Attorney General; David M. Cohen, Director; and Deborah A. Bynum, Assistant Director. Of counsel on the brief were Richard J. Hipolit, Deputy Assistant General Counsel; and David J. Barrans, Attorney, Department of Veterans Affairs, of Washington, DC.

Before CLEVENGER, RADER and LINN, Circuit Judges.

CLEVENGER, Circuit Judge.

Robert B. Liesegang, Sr., Roberto Sotelo and Paul L. Fletcher (collectively, the "Petitioners") challenge the effective date that the Secretary of Veterans Affairs assigned to a regulation, published at 66 Fed. Reg. 23,166-69 (May 8, 2001), that creates a presumption of service connection benefits for Vietnam veterans who developed Type-2 diabetes. In challenging the rulemaking process that led to the final regulation and the final regulation itself, the Petitioners contend that the Department of Veterans Affairs (the "agency") erroneously assigned a later effective date to the disputed regulation. Because we hold that the agency misconstrued Congress's intent and that the effective date of the regulation is the date of publication in the Federal Register, we remand to the agency for further actions consistent with this opinion.

I

The crux of this challenge focuses on the effective date of the regulation: the agency assigned to the regulation an effective date of July 9, 2001, while the Petitioners assert that it should be April 8, 2001. By obtaining an earlier effective date, the Petitioners hope to benefit from the liberalizing provisions of 38 U.S.C. § 5110(g) that permit the agency to award benefits even before the claim was filed. However, section 5110(g) limits such liberality by providing that benefits "shall not be earlier than the effective date of the ... administrative issue." Accordingly, a ruling on the effective date determines whether the Petitioners and other veterans in their situation can receive additional months of benefits.

At bottom, the resolution of this dispute turns on the interpretation of, and the agency's compliance with, the controlling statute. That statute is the Agent Orange Act of 1991, Pub. L. No. 102-4, 105 Stat. 11 (1991) (codified in part at 38 U.S.C. § 1116) (the "AOA"). In relevant parts, the AOA establishes a procedure for the agency to identify diseases associated with exposure to Agent Orange during service and empowers the Secretary to promulgate regulations that would create presumptions of service connection for those identified diseases. 38 U.S.C. § 1116(a)(1)(B) and (b)(1) (2000); LeFevre v. Sec'y, Dep't of Veterans Affairs, 66 F.3d 1191, 1192-94 (Fed.Cir.1995) (discussing history and framework of the statute).

As part of the procedural framework, the AOA instructs the Secretary to take certain actions within a set timeframe. Thus, "[n]ot later than 60 days" after receiving a report from the National Academy of Science (the "NAS") regarding a certain disease, the Secretary must "determine whether a presumption of service connection is warranted for each disease covered by the report." 38 U.S.C. § 1116(c)(1)(A) (2000). Then, "[i]f the Secretary determines that such a presumption is warranted, the Secretary, not later than 60 days after making the determination, shall issue proposed regulations setting forth the Secretary's determination." Id. Subsequently, but "[n]ot later than 90 days after" issuing the proposed regulations, the Secretary must issue final regulations. Id. § 1116(c)(2). "Such regulations shall be effective on the date of issuance." Id. In part, the Petitioners claim that the Secretary failed to comply with those statutory requirements.

Neither party disputes the relevant facts in this case. In 2000, the Secretary requested that the NAS assess whether there was a connection between exposure to Agent Orange and the subsequent development of Type-2 diabetes. On October 11, 2000, the NAS issued its report, concluding that such connection appeared to exist.

Upon issuance of that report, the agency initiated the process of promulgating the appropriate regulation as required by the AOA. On November 9, 2000, which was 29 days instead of the statutory 60 days after receiving the NAS report, the Secretary issued a press release announcing his decision to establish a presumption of service connection for Type-2 diabetes under the AOA. On January 11, 2001, the agency published the proposed regulation. Published 63 days after the press release announcement, which was three days later than the statutory deadline, the proposed regulation established a presumption of service connection for Type-2 diabetes and provided 60 days for the public to submit comments. By the expiration of the deadline for public comment on March 12, 2001, the agency had received 14 comments to the proposed rule. Having reviewed those comments, the agency prepared a final-rule notice that addressed each of the comments and transmitted the notice to the Office of Management and Budget ("OMB") on April 19, 2001.

After receiving clearance from the OMB, the agency transmitted the final rule to the Office of the Federal Register on May 3, 2001 and requested an emergency filing of the document for May 7, 2001. In that request, the agency admitted that the statutory deadline for publication of the final rule should have been April 11, 2001. The next day, on May 8, 2001, which was 120 days after publication of the proposed regulation and thus 30 days later than the statute permitted, the Federal Register published the final rule with an effective date of July 9, 2001. See 66 Fed. Reg. 23,166-69 (May 8, 2001).

As part of the final rule, the agency rejected a comment that the regulation should be retroactive. Specifically, the agency stated that "[t]he effective date established by this rule is in accordance with 38 U.S.C. § 1116(c)(2) and 5 U.S.C. § 801 et seq."

On June 14, 2001, the Acting Director of the agency's Compensation and Pension Service issued Fast Letter 01-51 to the directors of all Veterans Administration Regional Offices ("regional offices"). The Fast Letter notified the regional offices of the new diabetes-herbicide regulation and provided instructions for implementing the new rule. As part of those instructions, the Fast Letter stated that "[t]he effective date of this regulation is July 9, 2001, and on that date, you should begin processing all pending claims using that effective date." Since the Fast Letter merely implements the final rule, its validity stands or falls with the underlying regulation.

After filing their claims under the regulation in August 2001, the Petitioners challenged the effective date contained in the final rule and the Fast Letter. The three Petitioners are honorably discharged veterans who served in Vietnam in the 1960s and currently suffer from Type-2 diabetes. We have jurisdiction pursuant to 38 U.S.C. § 502.

II

This case arises under our original jurisdiction pursuant to 38 U.S.C. § 502. Section 502 provides in relevant part:

An action of the Secretary to which section 552(a)(1) or 553 of title 5 (or both) refers ... is subject to judicial review. Such review shall be in accordance with chapter 7 of title 5 and may be sought only in the United States Court of Appeals for the Federal Circuit.

38 U.S.C. § 502 (2000). "[U]nder 38 U.S.C. § 502, we may review the [agency]'s procedural and substantive rules, any amendments to those rules, and the process in which those rules are made or amended." Disabled Am. Veterans v. Gober, 234 F.3d 682, 688 (Fed.Cir.2000) (citing Mortgage Investors Corp. of Ohio v. Gober, 220 F.3d 1375, 1378 (Fed.Cir.2000); Splane v. West, 216 F.3d 1058, 1062 (Fed. Cir.2000); LeFevre, 66 F.3d at 1196).

Such review follows the Administrative Procedure Act (the "APA"). See 38 U.S.C. § 502 (2000). The APA requires the reviewing court to "decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action." 5 U.S.C. § 706 (2000); see also Disabled Am. Veterans, 234 F.3d at 691. This court reviews questions of statutory interpretation without deference. RHP Bearings, Ltd. v. United States, 288 F.3d 1334, 1343 (Fed.Cir.2002); U.S. Steel Group v. United States, 225 F.3d 1284, 1286 (Fed.Cir.2000). Where a finding of fact or a discretionary action is involved, the APA requires the reviewing court to set aside agency actions that are:

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;

(B) contrary to constitutional right, power, privilege, or immunity;

(C) in excess of statutory jurisdiction, authority, or limitation, or short of statutory right; [or]

(D) without observance of procedure required by law....

5 U.S.C. § 706(2)(A)-(D) (2000). "This review is `highly deferential' to the actions of the agency." Disabled Am. Veterans, 234 F.3d at 691 (citing LeFevre, 66 F.3d at 1199 (quoting Ethyl Corp. v. Envtl. Prot. Agency, 541 F.2d 1, 34 (D.C.Cir.1976))).

III
A

The Petitioners contend that the agency misconstrued the AOA and improperly assigned to the disputed rule an effective date of July 9, 2001. Our review of the agency's interpretation is governed by the standards established in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778 81 L.Ed.2d 694 (1984). In Chevron, the Court stated:

First, always, is the...

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