G Eorge R. T Heiss v. Anthony J. Principi ( 2004 )

UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS
N O . 01-0906
G EORGE R. T HEISS, A PPELLANT ,
V.
ANTHONY J. PRINCIPI,
SECRETARY OF VETERANS AFFAIRS, APPELLEE.
On Appeal from the Board of Veterans' Appeals
(Argued September 9, 2003 Decided July 27, 2004 )
James R. Mason, III, with whom Michael P. Farris was on the brief, both of Purcellville,
Virginia, for the appellant.
Kathy A. Banfield, with whom Tim S. McClain, General Counsel; R. Randall Campbell,
Assistant General Counsel; and Darryl A. Joe, Acting Deputy Assistant General Counsel, were
on the brief, all of Washington, D.C., for the appellee.
Before KRAMER, Chief Judge, and STEINBERG and GREENE, Judges.
GREENE, Judge, filed the opinion of the Court. KRAMER, Chief Judge, filed a
concurring opinion.
GREENE, Judge: Veteran George R. Theiss appeals, through counsel, an April 6, 2001,
decision by the Board of Veterans' Appeals (Board) that determined that he was not entitled to
additional non-service-connected pension benefits for dependents under section 1521(c) of title
38, U.S. Code, for his 18-year-old son, who was attending a State-of-Wisconsin-approved home
school. Record (R.) at 6. The Board found that Mr. Theiss's son was not a "child" as defined
by section 101(4)(A)(iii) of title 38, U.S. Code, and 38 C.F.R. § 3.57 (2000), on the basis that
he was not attending an approved educational institution for VA purposes. R. at 4-5. Mr.
Theiss argues that the statutory provisions (i.e., 38 U.S.C. §§ 101(4) and 104) in question are
ambiguous; that any such interpretive doubt should be resolved in his favor, see Brown v. Gardner,
513 U.S. 115, 118 (1994); and that the Secretary's implementation of these statutory provisions
through his promulgation of 38 C.F.R. § 3.57(a)(1)(iii) (2001), a March 2000 regulatory
amendment based on a March 1998 VA General Counsel precedent opinion (VA Gen. Coun.
Prec. 3-98 (March 19, 1998) [hereinafter G.C. Prec. 3-98]), is erroneous and thwarts the
legislative intent. Appellant's (App.) Brief (Br.) at 3. He contends also that 38 C.F.R. § 3.57should be invalidated to the extent that it excludes home-schooled children from the definition
of "child." Mr. Theiss seeks a reversal of the Board decision and an award of benefits. Reply
Br. at 10. This appeal is timely, and the Court has jurisdiction under 38 U.S.C. §§ 7252(a)
and 7266. For the following reasons, the Board decision will be vacated and the matter
remanded for further adjudication.
I. FACTS
The facts are not in dispute. Mr. Theiss served honorably in the U.S. Armed Forces
on two occasions. From June 1967 to July 1969, he served in the U.S. Marine Corps,
including service in Vietnam (R. at 10), and from December 1976 to December 1977, he served
in the U.S. Army (R. at 9). In April 1993, a VA regional office (RO) awarded him non-service-
connected VA pension benefits, effective December 1991. R. at 21. He also received additional
pension benefits for his dependent children under 38 U.S.C. § 1521(c). R. at 35. In
September 1999, Mr. Theiss filed a VA Form 21-674C, "Request for Approval of School
Attendance" for his son, who would turn 18 years old on November 24, 1999; who, according
to the request, was attending the "Theiss Christian Home School"; and who was expected to
graduate on June 30, 2000. R. at 32. The RO denied Mr. Theiss additional benefits under
section 1115 for his son beyond his son's 18th birthday in November 1999. R. at 35. The RO
advised Mr. Theiss that G.C. Prec. 3-98 had determined that a person who is between 18 and
23 years of age and is enrolled in a home school is not a child because he was not pursuing a
course of instruction at an "educational institution" for purposes of sections 101(4)(A)(iii) and
104(a) of title 38, U.S. Code. R. at 35. In March 2000, Mr. Theiss advised the RO that
although his son no longer resided at home, Mr. Theiss wished to appeal the RO decision to
the Board because his son had been a full-time home-schooled student from December 1, 1999,
through February 29, 2000. R. at 74.
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In the April 6, 2001, Board decision here on appeal, the Board, relying on G.C. Prec.
3-98, found that the Secretary specifically had not approved home schools as "educational
institutions" for purposes of section 101(4)(A)(iii), and concluded, therefore, that Mr. Theiss's
son was not a "child" as defined by that section and thus also was not a child for purposes of
entitlement to additional pension benefits under 38 U.S.C. § 1521(c). R. at 5 (also concluding
that "the provisions of 38 C.F.R. § 3.57(a)(1)(iii) specifically note that . . . the term 'educational
institution' does not include home-school programs").
II. APPLICABLE LAW
The pertinent law applicable to this matter provides:
§ 101. Definitions
....
(4)(A) The term "child" means (except for purposes of chapter 19 of this title
(other than with respect to a child who is an insurable dependent under section
1965(10)(B) of such chapter) and section 8502(b) of this title) a person who is
unmarried and –
(i) who is under the age of eighteen years;
(ii) who, before attaining the age of eighteen years, became
permanently incapable of self-support; or
(iii) who, after attaining the age of eighteen years and until
completion of education or training (but not after attaining the age of twenty-three
years), is pursuing a course of instruction at an approved educational institution[.]
§ 104. Approval of educational institutions
(a) For the purpose of determining whether or not benefits are payable under
this title (except chapter 35 of this title) for a child over the age of eighteen years and
under the age of twenty-three years who is attending a school, college, academy,
seminary, technical institute, university, or other educational institution, the
Secretary may approve or disapprove such educational institutions.
(b) The Secretary may not approve an educational institution under this
section unless such institution has agreed to report to the Secretary the termination
of attendance of any child. If any educational institution fails to report any such
termination promptly, the approval of the Secretary shall be withdrawn.
§ 1521. Veterans of a period of war
3
....
(c) If the veteran is married and living with or reasonably contributing to the
support of such veteran's spouse, or if there is a child of the veteran in the custody
of the veteran or to whose support the veteran is reasonably contributing, pension
shall be paid to the veteran at the annual rate of $4,651 . . . . If the veteran has two
or more such family members, such annual rate shall be increased by $600 for each
such family member in excess of one.
38 U.S.C. §§ 101(4)(A)(iii), 104, 1521(c) (emphasis added in all three provisions).
The primary VA regulation implementing section 104 provided in pertinent part (the current
version is unchanged from the regulation applicable at the time of the Board decision):
§ 3.57 Child.
(a) General. (1) Except as provided in paragraphs (a)(2) and (3) of this section
[(which provisions are not relevant here)], the term child of the veteran means
[someone meeting criteria that are not disputed here]; and
(i) Who is under the age of 18 years; or
(ii) Who, before reaching the age of 18 years, became permanently incapable
of self-support; or
(iii) Who, after reaching the age of 18 years and until completion of
education or training (but not after reaching the age of 23 years) is pursuing a
course of instruction at an approved educational institution. For the purposes of this
section and § 3.667, the term "educational institution" means a permanent
organization that offers courses of instruction to a group of students who meet its
enrollment criteria. The term includes schools, colleges, academies, seminaries,
technical institutes, and universities, but does not include home-school programs.
38 C.F.R. §§ 3.57(a) (2003) (emphasis added).
III. ANALYSIS
A. G.C. Prec. 3-98
In this case, the Board, relying on § 3.57(a)(1)(iii) and G.C. Prec. 3-98, determined that
Mr. Theiss's 18-year-old son was not a "child" on the basis that by attending home school he
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was not in pursuit of a course of instruction at an "approved educational institution" for
purposes of section 101(4)(A)(iii). R. at 5. The Court observes that, according to the VA
regulatory history, § 3.57(a)(1)(iii) was promulgated to implement G.C. Prec. 3-98. See 65 Fed.
Reg. 12,116, 12,116 (March 8, 2000) (amending 38 C.F.R. § 3.57(a)(1)(iii) to accord with
conclusions in G.C. Prec. 3-98). Under 38 U.S.C. § 7104(c), the precedent opinions of the
VA General Counsel are binding on the Board. 38 U.S.C. § 7104(c); see Cycholl v. Principi,
15 Vet.App. 355, 360 (2000) (citing Herlehy v. Principi, 15 Vet.App. 33, 34 (2001) (per curiam
order)); see also 38 C.F.R. § 20.901(c) (2003). Therefore, the Board was required to follow the
VA General Counsel precedent opinion in this case.
That General Counsel opinion reached its conclusion by interpreting language from
38 U.S.C. §§ 101(4)(A)(iii) and 104. In order to review the Board decision here on appeal,
then, the Court must first examine the Secretary's interpretation of these statutory provisions.
"'The starting point in interpreting a statute is its language.'" Lee (Raymond) v. West, 13 Vet.App.
388, 394 (2000) (quoting Good Samaritan Hosp. v. Shalala, 508 U.S. 402, 409 (1993)).
The "plain meaning [of a statute] must be given effect unless a 'literal application
of [the] statute [or regulation] will produce a result demonstrably at odds with the
intention of its drafters.'" Gardner v. Derwinski, 1 Vet.App. 584, 586-87 (1991),
aff'd sub nom. Gardner v. Brown, 5 F.3d 1456 (Fed. Cir. 1993), aff'd, 513 U.S. 115. . . (1994); Fagan[ v. West], 13 Vet.App. [48,] 52 [(1999)]; Curtis[ v. West],
11 Vet.App. [129,] 133 [(1998)]. "If the intent of Congress is clear, that is the
end of the matter". Skinner v. Brown, 27 F.3d 1571, 1572 (Fed. Cir. 1994)
(quoting Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S.
837, 842 . . . (1984)), aff'ing 4 Vet.App. 141 (1993) (mem.).
Lee, supra. If, as here, the statute fails to define an operative term, that may leave a "gap" in the
statute, and the Secretary may undertake to fill that gap, but may not add requirements or
limitations to those set forth in the statute. See Ozer v. Principi, 14 Vet.App. 257, 264 (2001);
Davenport v. Brown, 7 Vet.App. 476, 482 (1995). Here, the Secretary has attempted to fill that
gap through the General Counsel opinion and through the subsequent amendment to
§ 3.47(a)(1)(iii). See 65 Fed. Reg. at 12,116.
In the precedent opinion, the General Counsel addressed the question "[w]hether a
person who is between 18 and 23 years of age and is pursuing a high school education in a
home-school program is pursuing a course of instruction at an educational institution for
purposes of 38 U.S.C. § 101(4)(A)(iii)." G.C. Prec. 3-98, at 1. The General Counsel's opinion
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answered that question by concluding that a home-school program did not fit within the
statutory scheme of section 101(4)(A)(iii) because "the program terminates when the child
completes his or her course of instruction or withdraws, does not have an ongoing enrollment,
and is operated for the sole purpose of serving the needs of a particular student." Id. at 3. In
reaching this conclusion, the General Counsel expressly relied upon the definition of
"institution" in Webster's Ninth New Collegiate Dictionary [hereinafter Webster's] (defining
"institution" as an "established organization or corporation (as a college or university) esp[ecially]
of a public character"), and gave Webster's meaning of that term to the term "educational
institution" in 38 U.S.C. § 101(4)(A)(iii). Id. at 2. Further, placing special emphasis on the
term "established organization," the General Counsel then opined that "[t]he word 'established'
implies a degree of permanency," and the word "organization" involves a group of people with
more or less constant membership. Id. (citing B LACK 'S L AW D ICTIONARY [hereinafter B LACK 'S]
546 (6th ed. 1990) and W EBSTER'S T HIRD N EW INTERNATIONAL D ICTIONARY 1590 (1976)
[hereinafter W EBSTER'S], respectively). Applying that definition, the General Counsel
determined that a home-school program did not meet the definition in section 101(4)(A)(iii) of
"educational institution" because it is operated for the sole purpose of serving the needs of one
particular student, and terminated when that individual ceases his or her studies. Id.Next, the General Counsel applied the statutory construction rule of ejusdem generis to
an interpretation of the term "educational institution" in sections 104(a) and (b). Id. at 2-3; see
B LACK 'S at 535 (defining "ejusdem generis" as "[a] canon of construction that when a general
word or phrase follows a list of specific persons or things, the general word or phrase will be
interpreted to include only persons or things of the same type as those listed"); 2A
S UTHERLAND 'S S TATUTORY C ONSTRUCTION § 47.17 ("Where general words follow specific words
in an enumeration describing the legal subject, the general words are construed to embrace only
objects similar in nature to those objects enumerated by the preceding specific words."). The
General Counsel stated that the institutions listed in section 104(a) before the phrase "other
educational institution" (that is, school, college, academy, seminary, technical institute, and
university) differ from a home-school program because a home-school program is not a
permanent organization, and is not offered to more than one student, but rather is created to
serve the needs of a particular student. G.C. Prec. 3-98 at 3.
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Initially, we observe that the General Counsel's reasons for rejecting a home-school
program as an educational institution are not as persuasive as the Board and the Secretary seem
to believe. Including home schools in the definition of an educational institution was rejected
by the General Counsel on two grounds: (1) "[T]he [home-school] program terminates when
the child completes his or her course of instruction or withdraws [and] does not have an
ongoing enrollment" and (2) a home-school program "is operated for the sole purpose of serving
the needs of a particular student." Id. However, as noted in the Board decision in this case:
"The veteran notes that all of his children attend the program and that his program has been
approved by the state of Wisconsin for over 12 years." R. at 5 (emphasis added). Thus, Mr.
Theiss's program did, in fact, have an ongoing enrollment and was not operated for the sole
purpose of serving the needs of one particular student, but rather served the needs of all his
children. The General Counsel assumed that a home-school program existed to serve the needs
of one child, and based its analysis on this point. However, as the facts in this case
demonstrate, such an assumption is not always accurate.
Unlike the Board, this Court is not bound by VA General Counsel precedent opinions.
See 38 U.S.C. § 7261. However, because G.C. Prec. 3-98 was applied in this case, and formed
the principal basis for the Board decision under review, as well as the basis for the March 2000
regulation revision, we must examine the reasoning in that opinion.
1. D ictio nary definitio ns: Interestingly, the General Counsel opinion chose to rely on
Webster's dictionary definition of "institution" to interpret the meaning of "educational
institution" in section 101(4)(A)(iii). In both Black's Law Dictionary and Ballentine's Law Dictionary,
however, there is, in addition to a definition of "institution," a specific, separate, definition for
the term "educational institution." B LACK 'S at 532 (7th ed. 1999); B ALLENTINE'S L AW
D ICTIONARY at 390 (3rd ed. 1969) [hereinafter B ALLENTINE'S]. The General Counsel provides
no rationale for selecting the definition of part of an operative term rather than the precise
definition of the full term, offered in a standard legal dictionary, and was mistaken in not giving
the definition of the operative phrase precedence over the definition of one portion of the
operative phrase. Cf. Sullivan v. Stroop, 496 U.S. 478, 482-83 (1990) ("where a phrase in a
statute appears to have become a term of art, . . . any attempt to break down the term into its
constituent words is not apt to illuminate its meaning").
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In pertinent part, Black's defines "educational institution" as "[a] school, seminary, college,
university, or other educational facility." B LACK 'S at 532 (7th ed. 1999). Using the same
methodology that the Secretary employed in the General Counsel opinion, we observe that
Black's does not define the term "facility"; thus, we turn to alternative sources and observe that
it is defined in Webster's (the same dictionary used by the Secretary), in pertinent part, as "a
building, special room, etc. that facilitates or makes possible some activity." W EBSTER'S at 485.
Using the same analytical model that the Secretary relies upon but applying a more precise
definition of "educational institution," Mr. Theiss's home-schooling program could be an
educational institution.
Similarly, Ballentine's defines "educational institution" as "[a]n institution for the teaching
and improvement of its students or pupils; a school, seminary, college, or university. . . . Art
galleries, museums, public libraries, even labor union buildings have at times been held to be
educational institutions." B ALLENTINE'S at 390. Ballentine's then defines "institution" as, in
pertinent part, "[s]omething that has been established, particularly a place where an educational
or charitable enterprise is conducted." B ALLENTINE 'S at 640. This definition (again using the
Secretary's methodology) is similar to the Black's/Webster's definition, i.e., a place for teaching.
Again, both definitions could encompass home schooling.
Even if we were to follow the General Counsel's narrow choice in defining only the word
"institution," his argument that home schooling cannot be considered an educational institution
will not pass muster. The Random House Dictionary of the English Language defines "institution" in
part as an "establishment . . . devoted to the promotion of a particular object," and defines
"establishment" in pertinent part as "a household." T HE R ANDOM H OUSE D ICTIONARY OF THE
E NGLISH L ANGUAGE at 737 (1967). Thus, if it can be said that Mr. Theiss's "household" is
devoted to the promotion of a particular religious-based education, it fits within this definition
of "institution." Further, The American Heritage Dictionary of the English Language defines
"institution" in part as "[a]n established organization or foundation," and then defines
"organization" in part as "[a] group of persons organized for a particular purpose." T HE
A MERICAN H ERITAGE D ICTIONARY OF THE E NGLISH L ANGUAGE at 936, 1275 (3rd Edition).
Obviously, in this case, the Theiss family could be a "group" of persons organized for the
education of Mr. Theiss's children, thus meeting this definition of "institution."
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Our criticism of the Secretary and General Counsel's reasoning in the above discussion
is not an attempt to establish here a definition for "educational institution." Rather, we
emphasize the problems presented by the General Counsel's method of defining the term (1)
because the Board relied on that General Counsel precedential opinion as a principal basis for
its decision and (2) in order to illustrate the varied meanings that can be given to "educational
institution" and to show that many of these meanings support rather than reject the inclusion of
home-school programs within a definition of "educational institution" in section 101 of title 38.
The selective use of a narrow set of definitions, and the selective use of terms from those
definitions, cannot, without more, stand as a basis for excluding a class of persons from the
definition of this statutory term. Giving determinative weight to one dictionary's definition of
a term, when other dictionaries define the term in a quite different manner, may very well
"exceed the bounds of the permissible." Chevron, 467 U.S. at 842.
We note that here on appeal the Secretary defends the General Counsel opinion's
selective use of dictionary definitions by noting that Gardner prohibits a "dueling dictionary
definition" argument. Secretary's (Sec'y) Br. at 12 (citing Gardner, 513 U.S. at 118). He makes
this argument, however, while also arguing that his dictionary definition should prevail. Id. at
12-13. The argument is contradictory and irrelevant. As stated earlier, the other available
dictionary definitions offered here are not an attempt to define the term, but are offered merely
to demonstrate that the General Counsel's efforts may very well have exceeded the bounds of
the permissible. We reject the Secretary's attempt to use Gardner to shield the faulty reasoning
of his General Counsel's opinion.
2. Ejusdem generis: Relying on the rule of ejusdem generis to support a conclusion that
a home school is not an "educational institution," the General Counsel opined that home
schooling, unlike the other "educational institutions" specifically enumerated in section 104(a),
is not offered to "other students" and is not a "permanent organization." We reject the General
Counsel's reliance on that rule. As with his use of dictionary definitions, the Secretary has here
focused solely on the characteristics that differentiate a home-school program from the specifically
enumerated educational institutions. There will, of course, be some measure of differences
between the items in a list of specifically enumerated items, but the General Counsel ignores
that home schooling has many things in common with all those enumerated programs: They are
9
all educational programs; they all have instructors and instructional material; they all involve
some form of accreditation, etc. See, e.g., Wisc. Stat. Ann. § 118.15(4). To argue that the
doctrine of ejusdem generis is applied properly in this context, the Secretary would have to
demonstrate that the educational programs listed in the statute share a commonality that is
essential to their characters, and that home schooling lacks this essential component. This
General Counsel opinion failed to do so; indeed, the General Counsel has not enumerated any
such commonality (focusing instead on those areas where home schooling differs), and has
therefore failed to demonstrate that home schooling lacks this essential commonality with the
specifically enumerated programs. Thus, the ejusdem generis argument in the General Counsel
opinion, and, in turn, in the Board decision under review (which was bound by this opinion,
see 38 U.S.C. § 7104(c); 38 C.F.R. § 19.5 (2000)), is legally unsupportable.
Against this background, the Secretary carries a heavy burden to demonstrate that the
interpretation given to "educational institution" is reasonable. Here, however, there is no explanation
in the General Counsel opinion for rejecting other dictionary definitions, i.e., those that favor
including home schooling within the definition of "educational institution," and basing its conclusion
on only those definitions that it has selected. Without a rational, comprehensive explanation, the
General Counsel opinion provides an invalid basis for the Board's decision. Thus, the Board's
statement of reasons or bases in relying on that opinion, as the Board was bound to provide, is
inadequate. See 38 U.S.C. § 7104(d)(1). Moreover, for the reasons set forth in part III.B. below,
in support of the Court's conclusion that regulation § 3.57(a)(1)(iii) is a substantive, legislative
rule and that that regulation was not adopted in accordance with the notice-and-public-comment
requirements of the Administrative Procedure Act, 5 U.S.C. §§ 552(a)(1), 553, the Court
concludes that the General Counsel opinion also constituted a substantive rule that was not
adopted pursuant to those notice and comment procedures and is thus invalid. See Splane v.
West, 216 F.3d 1058, 1062-64 (Fed. Cir. 2000).
B. 38 C.F.R. § 3.57(a)(1)(iii)
Finally, the Board decision also relied on the language in VA regulation 38 C.F.R.
§ 3.57(a)(1)(iii) to deny Mr. Theiss additional pension benefits. As indicated above,
§ 3.57(a)(1)(iii) was amended in March 2000 "to bring the regulations into conformance with
the governing statutes as interpreted by VA's General Counsel" by specifically excluding home-
10
school programs from the definition of an approved "educational institution." 65 Fed. Reg. at
12,116 (summary identifying VA Gen. Coun. Prec. 03-98). The Supplementary Information
to this amendment also explained: "This final rule interprets statutory provisions and makes
non-substantive changes. Accordingly, there is a basis under 5 U.S.C. [§] 553 to dispense with
prior notice and comment and a delayed effective date." 65 Fed. Reg. at 12,116.
In examining the General Counsel opinion itself, the Court notes that that opinion,
referring to paragraph 14.06 of part IV of the Veterans Benefits Administration Adjudication
Procedure Manual M21-1 [hereinafter Manual M21-1], stated that a lack of accreditation of a
school was a valid basis for VA to disapprove that school as an "educational institution." G.C.
Prec. 3-98 at 3. The opinion concluded: "We believe that these provisions in [Manual] M21-1
represent a substantive rule because they establish criteria for entitlement to compensation." Id.
at 4. The opinion concluded further that section 104(a), which gives the Secretary authority to
"approve or disapprove such educational institutions," would provide a legal basis for this
substantive rule. Id. at 4-5. The opinion recommended that, in accordance with the
Administrative Procedure Act, 5 U.S.C. §§ 552(a)(1) and 553, and 38 U.S.C. § 501, VA
should promulgate a regulation that would specify the criteria for an educational institution that
would satisfy the requirements of sections 101(4)(A)(iii) and 104(a). Id. at 5. The regulation
adopted by the Secretary, however, did not use accreditation as a basis to approve or disapprove
a school and did not set forth explicit criteria for an "educational institution" that would satisfy
sections 101 and 104. See 65 Fed. Reg. at 12,116.
The General Counsel was correct in stating that a rule that "establish[es] criteria for
entitlement to compensation," as does the rule in § 3.57(a)(1)(iii), would represent a substantive
rule. When published, however, the amendment claimed to be nonsubstantive in nature, even
though it established a criterion for entitlement to compensation – it excluded home-school
programs from the definition of "educational institution." (We note that the failure of the
amendment to adopt all the suggestions in the General Counsel opinion does not alter this
analysis, because the amendment did establish criteria for entitlement to compensation.)
Furthermore, by otherwise relying on the General Counsel's definition of "educational
institution," the amendment erected several de facto criteria for entitlement to compensation,
e.g., permanence of the institution, existing to serve the needs of more than one child, etc.
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Because the amendment established criteria for entitlement to benefits, we hold that the March
2000 amendment to 38 C.F.R. § 3.57(a)(1)(iii) was, as a matter of law, a substantive change in
the law.
Under section 553 of title 5, U.S. Code, substantive changes made by administrative
agencies in regulations are required to comply with certain "notice and comment" requirements.
5 U.S.C. § 553(b), (c). These requirements include publication of a notice of proposed
rulemaking in the Federal Register; an opportunity for interested persons to comment on that
notice; and, after consideration of these comments, publication of the final rule with a general
statement of its basis and purpose. Id. When the Secretary promulgated the amendment to
38 C.F.R. § 3.57(a)(1)(iii), he announced that that amendment "interpret[ed] statutory provisions
and ma[de] non-substantive changes." 65 Fed. Reg. at 12,116. If the changes were
nonsubstantive, VA would be exempt from the notice-and-comment rulemaking procedure,
under the exemption for interpretative rules. See 5 U.S.C. § 553(A) (except when notice or
hearing is required by statute, section 553(b) does not apply to "interpretative rules, general
statements of policy, or rules of agency organization, procedure, or practice"). We note that,
even if the Secretary's characterization of the amendment as nonsubstantive were accurate,
because the amendment was not subjected to notice-and-comment rulemaking procedures, it
would be entitled to deference only in proportion to its "power to persuade," and would not be
given the substantial deference afforded to rules promulgated according to the notice-and-
comment procedures. See United States v. Mead Corp., 533 U.S. 218, 231-36 (2001) (quoting
Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944)).
In determining whether an agency rule is interpretive or substantive for purpose of the
notice-and-comment requirements, the Court need not accept VA's characterization of the
action. See Hemp Indus. Ass'n v. Drug Enforcement Admin., 333 F.3d 1082, 1087 (9th Cir. 2003)
(court not constrained to accept agency's characterization of action). Indeed, the interpretive-rule
exception to the notice-and-comment rulemaking requirement is narrowly construed. See Reno-
Sparks Indian Colony v. U.S. EPA, 336 F.3d 899, 909 (9th Cir. 2003). Further, as the United
States Court of Appeals for the Fifth Circuit has stated, legislative (or substantive) rules grant
rights, impose obligations, and narrowly constrict the discretion of agency officials by largely
determining the issue addressed, whereas interpretative rules express the agency's intended
12
course of action or its tentative view of the meaning of a particular statutory term, and do not
foreclose alternative courses of action or conclusively affect rights of private parties. Avoyelles
Sportsmen's League, Inc. v. Marsh, 715 F.2d 897, 908-09 (5th Cir. 1983); see also Paralyzed Veterans
of America v. West, 138 F.3d 1434, 1436 (Fed. Cir. 1998) ("interpretative rules" are those that
clarify or explain existing law or regulation); Air India v. Brien, 261 F. Supp. 2d 134, 141
(E.D.N.Y. 2003) ("legislative rules" create new law, rights, or duties, in what amounts to
legislative act; "interpretive rules" do not create rights, but merely clarify an existing statute or
regulation). Here, although the Secretary announced that the amendment was a nonsubstantive
rule, the amendment in fact and law had the effect of "narrowly constrict[ing] the discretion of
agency officials by . . . determining the issue addressed." Ayoyelles Sportsmen's League, 715 F.2d
at 908-09. By determining conclusively that home-school programs do not meet the statutory
definition of "educational institution," the amendment to § 3.57(a)(1)(iii) foreclosed all discretion
of agency officials when deciding whether to approve an educational institution. Construing,
as we must, the interpretative-rule exception narrowly, the Court holds that this amendment
extended beyond merely clarifying or explaining the existing law; instead, it made new
substantive law, by excluding home-school programs wholesale from classification as part of the
category "educational institution." As such, because the amendment "affect[ed] individual rights
and obligations," it is a substantive, legislative rule. Paralyzed Veterans of Amer. v. West, 138 F.3d
1434, 1436 (Fed. Cir. 1998).
Therefore, we hold that the amendment to § 3.57(a)(1)(iii) is invalid for failure to comply
with the notice-and-comment rulemaking procedures that 5 U.S.C. § 553 requires of such
substantive rule changes. Because the Board relied in part on the amended regulation
(38 C.F.R. § 3.57(a)(1)(iii)), the Board decision on review is erroneous. If the Secretary, on
remand, seeks to promulgate an amendment to the regulation, the amendment must comply
with the notice-and-comment rulemaking procedures, as well as with the provisions of the
Regulatory Flexibility Act, 5 U.S.C. §§ 603-604. (We note in this regard that an attempt to
satisfy this Act with a bare certification, such as was presented in the regulatory amendment in
this case, would likely fail to satisfy that Act because such a certification must be accompanied
by "a statement providing the factual basis for such certification." Carpenter v. Sec'y of Veterans
13
Affairs, 343 F.3d 1347, 1356 (Fed. Cir. 2003) (quoting 5 U.S.C. § 605(b)). The certification
accompanying this regulatory amendment contained no such statement.)
IV. CONCLUSION
Upon consideration of the foregoing analysis, the ROA, and the parties' pleadings, the
Court holds that, for the reasons stated above, the Board committed prejudicial error.
Therefore, the Court vacates the April 6, 2001, Board decision and remands the matter to the
Board for expeditious readjudication consistent with this opinion. See 38 U.S.C. § 7112.
VACATED AND REMANDED.
KRAMER, Chief Judge, concurring: I agree that vacatur of the April 2001 Board of
Veterans' Appeals (Board) decision and remand of the matter are appropriate and do so on the
ground that the Board decision was based upon two VA issuances, VA Gen. Coun. Prec. 3-98
(Mar. 19, 1998) [hereinafter G.C. Prec. 3-98] and 38 C.F.R. § 3.57(a)(1)(iii) (2003) (defining child),
which did not comply with the notice and rulemaking procedures of the Administrative Procedures
Act (APA), see 5 U.S.C. § 553, and thus are invalid. See Splane v. West, 216 F.3d 1058, 1062-64
(Fed. Cir. 2000); Fugere v. Derwinski, 1 Vet.App. 103, 110 (1990) (invalidating VA's rescission of
VA issuance without reaching issue of Secretary's authority to act).
"VA is required under 5 U.S.C. § 552(a)(1) to 'state and currently publish in the Federal
Register,' among other things, 'rules of procedure, . . . substantive rules of general applicability
adopted as authorized by law, . . . [and] each amendment, revision, or repeal of the foregoing.'"
Disabled Amer. Veterans v. Gober, 234 F.3d 682, 688 (Fed. Cir. 2000) (quoting
5 U.S.C. § 552(a)(1)(C)-(E)); see Paralyzed Veterans of Amer. (PVA) v. West, 138 F.3d 1434, 1435
(Fed. Cir. 1998). Substantive, or legislative, rules are "those that effect a change in existing law or
policy or which affect individual rights and obligations." PVA, 138 F.3d at 1436. Section 553 of
title 5, U.S. Code, provides procedures for notice and rulemaking with which VA is required to
comply. See 5 U.S.C. § 553(b)-(e); PVA, supra.
In G.C. Prec. 3-98, the General Counsel excludes home schools from the definition of
"educational institution," 38 U.S.C. § 101(4)(A)(iii), which exclusion renders claimants with
14
home-schooled children, between 18 and 23 years old, ineligible to receive benefits for those
children pursuant to 38 U.S.C. § 1521(c) or 38 U.S.C. § 1115. Thus, because VA, in G.C. Prec.
3-98, has so limited eligibility for VA benefits, VA "effect[ed] a change in existing law or policy or
[VA] . . . affect[ed] individual rights and obligations." PVA, 138 F.3d at 1436. Further, the General
Counsel, in his opinion, appears to concede that provisions related to the approval of educational
institutions may be legislative because "they establish criteria for entitlement to compensation."
G.C. Prec. 3-98 at 3-4. However, VA did not publish the entire text of G.C. Prec. 3-98 in the Federal
Register. See 5 U.S.C. § 552(a)(1). Thus, I believe that G.C. Prec. 3-98 is legislative in nature and,
because VA failed to follow the APA's notice and rulemaking procedures, it is invalid. See 5 U.S.C.
§ 553; Splane, supra; Fugere, 1 Vet.App. at 109-11.
Similarly, VA revised 38 C.F.R. § 3.57(a)(1)(iii) based on G.C. Prec. 3-98 and published that
revision only as a final rule in the Federal Register. See 65 Fed. Reg. 12,116 (Mar. 8, 2000). That
regulation defines the term "child," inter alia, as a person "[w]ho, after reaching the age of 18 years
and until completion of education or training . . . is pursuing a course of instruction at an approved
educational institution." 38 C.F.R. § 3.57(a)(1)(iii). That revised regulation further provides that
"the term educational institution . . . . does not include home-school programs." Id. The effect of
this revision also is to limit claimants' eligibility to receive benefits for this group of home-schooled
children. Thus, because this promulgation excludes certain home-schooled children from the
definition of child, it "affect[ed] individual rights and obligations," PVA, 138 F.3d at 1436, and, as
the majority holds, it too is legislative. See ante at 14. However, in revising § 3.57(a)(1)(iii), VA
"dispense[d] with prior notice and comment." 65 Fed. Reg. at 12,116. Hence, because VA did not
follow the notice and rulemaking procedures, I agree with the majority that this promulgation is
invalid. See 5 U.S.C. § 553; Fugere, supra.
Thus, because the analysis in the April 2001 Board decision rests upon these two invalid
issuances, the decision must be vacated and the matter remanded. See Best v. Principi, 15 Vet.App.
18, 19 (2001) (per curiam order) ("[I]t has been the practice of this Court that[,] when a remand is
ordered because of an undoubted error that requires such a remedy, the Court will not, as a general
rule, address other putative errors raised by the appellant." (citing Dunn v. West, 11 Vet.App. 462,
467 (1998))); Fugere, supra.
15