Paralyzed Veterans v. Sec. of Veterans Affairs, 02-7007.

• Decision Date: 22 September 2003
• Docket Number: No. 02-7008.,No. 02-7009.,No. 02-7010.,No. 02-7007.,02-7007.,02-7008.,02-7009.,02-7010.
• Parties: Paralyzed Veterans of America, Petitioner, and Disabled American Veterans, Petitioner, and National Organization of Veterans' Advocates, Inc., Petitioner, and National Association of Black Veterans, John J. Castillo, and Joseph Holmes, Petitioners, v. SECRETARY OF VETERANS AFFAIRS, Respondent.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1334

345 F.3d 1334

Paralyzed Veterans of America, Petitioner, and Disabled American Veterans, Petitioner, and National Organization of Veterans' Advocates, Inc., Petitioner, and National Association of Black Veterans, John J. Castillo, and Joseph Holmes, Petitioners, v. SECRETARY OF VETERANS AFFAIRS, Respondent.

No. 02-7007.

No. 02-7008.

No. 02-7009.

No. 02-7010.

United States Court of Appeals, Federal Circuit.

DECIDED: September 22, 2003.

Errata Filed December 19, 2003.

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Michael P. Horan, Paralyzed Veterans of America, of Washington, DC, for petitioner Paralyzed Veterans of America. With him on the brief was Lawrence B. Hagel, General Counsel.

William F. Fox, Jr., The Catholic University of America, School of Law, of Washington, DC, argued for petitioner Disabled American Veterans. With him on the brief was Ronald L. Smith, Chief Appellate Counsel.

Kenneth M. Carpenter, Carpenter Chartered, of Topeka, KS, for petitioner National Organization of Veterans' Advocates, Inc.

Tanya Y. Bartucz, Sidley Austin Brown & Wood LLP, of Washington, DC, argued for petitioners National Association of Black Veterans, John J. Castillo, and Joseph Holmes. With her on the brief were Stephen B. Kinnaird and Ronald S. Flagg. Of counsel on the brief were Barton F. Stichman and Louis George, National Veterans Legal Services Program, of Washington, DC.

Martin F. Hockey, Jr., Senior Trial Counsel, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for respondent. With him on the brief was David M. Cohen, Director. Of counsel on the brief were Donald E. Zeglin, Deputy Assistant General Counsel; and Michael J. Timinski, Staff Attorney, Department of Veterans Affairs, of Washington, DC.

Before CLEVENGER, GAJARSA, and PROST, Circuit Judges.

Opinion for the court filed by Circuit Judge PROST. Circuit Judge GAJARSA concurs-in-part, dissents-in-part.

PROST, Circuit Judge.

Paralyzed Veterans of America ("PVA"), Disabled American Veterans ("DAV"), National Organization of Veterans' Advocates, Inc. ("NOVA"), and National Organization of Black Veterans, John J. Castillo, and Joseph Holmes ("NABVETS") (collectively "Petitioners") challenge the validity of various regulations promulgated by the Department of Veterans Affairs ("VA" or "Secretary") to implement the Veterans Claims Assistance Act of 2000, Pub.L. No. 106-475, 114 Stat. 2096 ("VCAA"), dealing with the assistance VA must provide to an individual claiming veterans benefits ("claimant"). Specifically, Petitioners argue that certain regulations codified at 38 C.F.R. §§ 3.156 and 3.159 are on their face arbitrary, capricious, and contrary to various statutory provisions, including 5 U.S.C. §§ 5103(b) and 5103A.¹ We hold that the regulation codified at 38 C.F.R. § 3.159(b)(1) is invalid because it imposes on claimants an arbitrary new deadline that does not represent a reasonable exercise of VA's authority. However, we hold that the other regulations challenged by Petitioners are valid because they were issued in compliance with applicable rule-making procedures and are not arbitrary, capricious, an abuse of discretion, or otherwise contrary to law.

BACKGROUND

I.

Subchapter 1 of chapter 51 of title 38, United States Code, generally governs claims for VA benefits. Former § 5103(a) of title 38, United States Code, required VA, if a claimant's application for benefits was incomplete, to notify that claimant of the evidence necessary to complete the application. 38 U.S.C. § 5103(a) (1994). It further provided that no benefits could be provided pursuant to that application if the evidence requested was not received within one year from the date of such notification. Id. Former § 5107(a) of title 38, United States Code, imposed on a claimant the burden of submitting evidence sufficient to justify a belief by a fair and impartial individual that his or her claim was well grounded. Id. § 5107(a). It further required VA to assist "such a claimant" in developing the facts pertinent to the claim. Id. In 1999, the Court of Appeals for Veterans Claims ("CAVC") held that § 5107(a) precluded VA from assisting a claimant in any way unless that claimant had first established that his or her claim was well-grounded.² Morton v. West, 12 Vet.App. 477, 485 (1999), withdrawn and appeal dismissed, Morton v. Gober, 14 Vet.App. 174 (2000).

On November 9, 2000, Congress enacted the VCAA, Pub.L. No. 106-475, 114 Stat. 2096 (codified in scattered sections of 38 U.S.C.), which "amend[ed] title 38, United States Code, to reaffirm and clarify the duty for the Secretary of Veterans Affairs to assist claimants for benefits under laws administered by the Secretary, and for other purposes." Among other things, the VCAA removed the requirement of former § 5107(a) that a claimant first establish a well-grounded claim before VA was to begin providing assistance. Further, it amended existing §§ 5102 and 5103 and added new §§ 5100 and 5103A, expanding VA's duty to assist claimants in several respects. Specifically, new § 5103A(a) imposes on VA a duty to assist a claimant by making reasonable efforts to assist him or her in obtaining evidence necessary to substantiate a claim for benefits. 38 U.S.C. § 5103A(a). Further provisions outline the details of providing such assistance in obtaining information, evidence, and records from government and private sources; informing the claimant if VA is unable to obtain pertinent evidence; and providing a medical examination or medical opinion when necessary to resolve the claim.

II.

The Secretary of the Department of Veterans Affairs is authorized under 38 U.S.C. § 501(a) to prescribe rules and regulations that are necessary or appropriate to carry out the laws administered by VA. Further, § 5103A(e) of the VCAA provides that "[t]he Secretary shall prescribe regulations to carry out this section." 38 U.S.C. § 5103A(e).

On April 4, 2001, VA published a notice of proposed rulemaking in the Federal Register inviting comments from the public concerning the rules it proposed for implementing the VCAA. Duty to Assist, 66 Fed.Reg. 17,834 (proposed Apr. 4, 2001). After receiving comments, VA published notice of the existence of the final regulations in the Federal Register on August 29, 2001. Duty to Assist, 66 Fed.Reg. 45,620 (Aug. 29, 2001) (to be codified at 38 C.F.R. pt. 3). VA made the regulations effective, retroactively, to November 9, 2000, except for an amendment to 38 C.F.R. § 3.156(a), which became effective on August 29, 2001.

III.

Petitioners timely filed their petitions for review pursuant to 38 U.S.C. § 502. We have jurisdiction to directly review the validity of both the rulemaking process and the challenged VA regulations pursuant to 38 U.S.C. § 502, which states that "[a]n action of the Secretary to which section 552(a)(1) or 553 of title 5 (or both) refers ... is subject to judicial review." See also Griffin v. Sec'y of Veterans Affairs, 288 F.3d 1309, 1317 (Fed.Cir.2002) (citation omitted); E. Paralyzed Veterans Ass'n, Inc. v. Sec'y of Veterans Affairs, 257 F.3d 1352, 1355-56 (Fed.Cir.2001). "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. Thus, under 38 U.S.C. § 502, we may review VA's procedural and substantive regulations, and the process by which those regulations are made or amended. See Disabled Am. Veterans v. Gober, 234 F.3d 682 (Fed.Cir.2000).

DISCUSSION

I. Standard of Review

We review petitions under 38 U.S.C. § 502 in accordance with the standard set forth in the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701-706. See Nyeholt v. Sec'y of Veterans Affairs, 298 F.3d 1350, 1355 (Fed.Cir.2002) (citing Disabled Am. Veterans, 234 F.3d at 691). As such, we must "hold unlawful and set aside agency action" that we find to be arbitrary, capricious, an abuse of discretion, or otherwise contrary to law. 5 U.S.C. § 706(2); see also Mortgage Investors Corp. v. Gober, 220 F.3d 1375, 1378 (Fed.Cir.2000). "This review is `highly deferential' to the actions of the agency." Nat'l Org. of Veterans' Advocates, Inc. v. Sec'y of Veterans Affairs, 260 F.3d 1365, 1372 (Fed.Cir.2001) (citing Disabled Am. Veterans, 234 F.3d at 691).

Our review of an agency's interpretation of a statute that the agency is charged with administering is further governed by the standards articulated by the Supreme Court in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). See also Disabled Am. Veterans, 234 F.3d at 691. Under Chevron, we must first determine "whether Congress has directly spoken to the precise question at issue." 467 U.S. at 842, 104 S.Ct. 2778. If we conclude that it did, "that is the end of the matter," and the only question remaining is whether the regulation at issue is in accordance with congressional intent. Id.; see also Delverde, SrL v. United States, 202 F.3d 1360, 1363 (Fed.Cir.2000). If, however, "the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute." Chevron, 467 U.S. at 843, 104 S.Ct. 2778. As the Supreme Court stated in Chevron, "`[t]he power of an administrative agency to administer a congressionally created ... program necessarily requires the formulation of policy and the making of rules to fill any gap left, implicitly or explicitly, by Congress.'" Id. (quoting Morton v. Ruiz, 415 U.S. 199, 231, 94 S.Ct. 1055, 39 L.Ed.2d 270 (1974)). Consistent with this principle, the court may not simply substitute its own construction of a statutory provision for a reasonable interpretation made by an agency. Id. at 844, 104 S.Ct. 2778. Finally, if the court finds an ambiguity in the relevant veterans' benefit statute, "`interpretative doubt is to...