PREC 7-2003   Application of Veterans Claims Assistance Act to Claims Pending on Date of Enactment Citation:  Vet. Aff. Op. Gen. Couns. Prec. 7-2003, VAOPGCPREC 7-2003, 2003

QUESTIONS PRESENTED:

A.  What effect does the decision of the United States Court of Appeals for the Federal Circuit in Kuzma v. Principi, 341 F.3d 1327 (Fed. Cir. 2003), have upon the rule set forth by the United States Court of Appeals for Veterans Claims (CAVC) in Karnas v. Derwinski, 1 Vet. App. 308 (1991), concerning the applicability of changes in law?

B.  Do the standards governing the retroactive application of statutes and regulations differ from those governing the retroactive application of rules announced in judicial decisions?

C.  How should the Department of Veterans Affairs (VA) determine whether applying a new statute or regulation to a pending claim would have a prohibited retroactive effect?

D.  In determining the applicability of a change in law, is there a difference between claims that were pending before VA when the change occurred and claims that had already been decided by the Board of Veterans’ Appeals (Board) and were pending on direct appeal to a court when that change occurred? 

E.  If certain provisions of the Veterans Claims Assistance Act of 2000 (VCAA) were held to be inapplicable to claims filed before November 9, 2000 (the date the VCAA was enacted) and still pending before VA on that date, would VA have authority, from sources other than the VCAA, to continue applying its regulations implementing the VCAA to claims filed before that date?

F.  Does VAOPGCPREC 11-2000 remain viable in light of the holdings in Kuzma, Dyment v. Principi, 287 F.3d 1377 (Fed. Cir. 2002), and Bernklau v. Principi, 291 F.3d 795 (Fed. Cir. 2002)?

HELD:

A.  In Kuzma v. Principi, 341 F.3d 1327 (Fed. Cir. 2003), the United States Court of Appeals for the Federal Circuit overruled Karnas v. Derwinski, 1 Vet. App. 308 (1991), to the extent it conflicts with the precedents of the Supreme Court and the Federal Circuit.  Karnas is inconsistent with Supreme Court and Federal Circuit precedent insofar as Karnas provides that, when a statute or regulation changes while a claim is pending before the Department of Veterans Affairs (VA) or a court, whichever version of the statute or regulation is most favorable to the claimant will govern unless the statute or regulation clearly specifies otherwise.  Accordingly, that rule adopted in Karnas no longer applies in determining whether a new statute or regulation applies to a pending claim.  Pursuant to Supreme Court and Federal Circuit precedent, when a new statute is enacted or a new regulation is issued while a claim is pending before VA, VA must first determine whether the statute or regulation identifies the types of claims to which it applies.  If the statute or regulation is silent, VA must determine whether applying the new provision to claims that were pending when it took effect would produce genuinely retroactive effects.  If applying the new provision would produce such retroactive effects, VA ordinarily should not apply the new provision to the claim.  If applying the new provision would not produce retroactive effects, VA ordinarily must apply the new provision.

B.  Different standards govern the retroactive application of statutes and regulations and the retroactive application of rules announced in judicial decisions.  As a general matter, rules announced in judicial decisions apply retroactively to all cases still open on direct review when the new rule is announced.  Statutes and regulations, in contrast, are presumed not to apply in any manner that would produce genuinely retroactive effects, unless the statute or regulation itself provides for such retroactivity.

C.  There is no simple test for determining whether applying a new statute or regulation to a particular claim would produce retroactive effects.  Generally, a statute or regulation would have a disfavored retroactive effect if it attaches new legal consequences to events completed before its enactment or extinguishes rights that previously accrued.  Provisions affecting only entitlement to prospective benefits ordinarily do not produce any retroactive effects when applied to claims that were pending when the new provision took effect.  Changes in procedural rules often may be applied to pending cases without raising concerns about retroactivity, but may have a prohibited retroactive effect if applied to cases in which the procedural events governed by the new rule had previously been completed, such as cases pending on appeal to a court when a new rule of agency procedure is issued.  In considering whether a new statute or regulation would produce retroactive effects, VA should consider whether the provision is substantive or procedural, whether it would impose new duties with respect to completed transactions or would only affect prospective relief, whether it would attach new legal consequences to events completed before its enactment or extinguish rights that previously accrued, and whether application of the new provision would be consistent with notions of fair notice and reasonable reliance.  VA should consider the effects on the Government as well as the claimant and should consider the procedural posture of the pending claim in relation to the foregoing factors.  Most statutes and regulations liberalizing the criteria for entitlement to a benefit may be applied to pending claims because they would affect only prospective relief.  Statutes or regulations restricting the right to a benefit may have disfavored retroactive effects to the extent their application to a pending claim would extinguish the claimant’s right to benefits for periods before the statute or regulation took effect.

D.  In determining whether application of a new statute or regulation would produce retroactive effects, there may be a difference in some circumstances between cases that were pending in different procedural postures on the date the new provision took effect.  New provisions affecting procedural matters in many cases would not produce retroactive effects as applied to claims that were pending at a procedural stage to which the new provision applies, but may produce disfavored retroactive effects if applied to pending claims in which the stage of proceedings to which the new provision applies has already been completed.  However, the procedural posture of the claim is not the sole determinative factor in all cases.  Even among cases in the same procedural posture, distinctions may be drawn based on the circumstances of the particular case and considerations of fairness to the specific parties.

E.  Even if applying the amendments made by section 3(a) of the  VCAA to claims that were pending before VA on November 9, 2000, were construed to have retroactive effects on VA, VA would have the authority to apply 38 C.F.R. § 3.159, the regulation implementing these amendments, to such claims.  VA has the authority to provide for the retroactive application of its procedural regulations where such regulations are beneficial to claimants and not inconsistent with the governing statutes and VA has expressly provided for their retroactive application.  The provisions of section 3.159 are beneficial to claimants and not inconsistent with the VCAA or any other statute, and VA has expressly provided that they will apply to claims that were pending before VA on November 9, 2000.  Consequently, VA has authority to apply its regulations implementing the VCAA to claims filed before the date of enactment of the VCAA and still pending before VA as of that date.

F.  In VAOPGCPREC 11-2000, we concluded that all of the VCAA’s provisions apply to claims that were filed before November 9, 2000, but had not been finally decided as of the date.  Because VA’s August 2001 final-rule notice amending

38 C.F.R. § 3.159 expressly and validly provided that VA’s regulations implementing the VCAA will apply to all claims that were pending before VA as of November 9, 2000, any further reliance on VAOPGCPREC 11-2000  is unnecessary.  We hereby withdraw VAOPGCPREC 11-2000.