[00:00:20] Speaker 03:
Okay.

[00:00:20] Speaker 03:
The next case before the court, McKinney versus McDonald's case number 147093.

[00:00:30] Speaker 03:
And again, with respect to rebuttal, we are, uh, are you arguing?

[00:00:42] Speaker 03:
Okay.

[00:00:43] Speaker 03:
Um, you went three minutes for rebuttal.

[00:00:44] Speaker 03:
Is that correct?

[00:00:46] Speaker ?:
Okay.

[00:00:52] Speaker ?:
Okay.

[00:01:17] Speaker ?:
Okay.

[00:01:17] Speaker ?:
Okay.

[00:01:17] Speaker ?:
Okay.

[00:01:31] Speaker 03:
Okay, you may proceed.

[00:01:36] Speaker 04:
May it please the court.

[00:01:38] Speaker 04:
This case is about an unreasonable decision by the government that it can't defend.

[00:01:43] Speaker 04:
The 2011 regulation was a corrective regulation, and therefore it should have been made effective the day that the original rule was first applied.

[00:01:53] Speaker 04:
I want to make three key points about why the 2011 regulation's effective date is invalid.

[00:01:59] Speaker 04:
The first point I'll make

[00:02:01] Speaker 04:
is that the DVA's errors are what got us in this predicament.

[00:02:06] Speaker 04:
The second point will be about the DVA's authority to correct those errors.

[00:02:11] Speaker 04:
And finally, I'll discuss the ongoing arbitrary effects of the invalid 2011 regulations effective date.

[00:02:21] Speaker 04:
First, expanding on my first point.

[00:02:26] Speaker 04:
The reason that we're here talking about a 2011 regulation

[00:02:29] Speaker 04:
and whether it should have a 2003 effective date is entirely the result of the DVA's errors.

[00:02:36] Speaker 04:
Way back in 2003, the DVA selected an overly narrow arbitrary rule for a presumption of exposure for veterans who were serving in the Korean DMZ.

[00:02:47] Speaker 04:
The presumption applied to veterans who served while Agent Orange was actively sprayed, but excluded those veterans who were serving shortly thereafter.

[00:02:57] Speaker 04:
while the residuals of those same harmful chemicals were present in the environment.

[00:03:02] Speaker 03:
Your underlying premise, of course, is that that 2003 manual was actually a rule that required public notice and comment.

[00:03:10] Speaker 03:
What's your authority for that proposition?

[00:03:13] Speaker 04:
Yes, Your Honor, that's correct.

[00:03:15] Speaker 04:
Our authority for that is that substantive rules are rules that have the force of law.

[00:03:20] Speaker 04:
The DVA here acknowledges that the 2011 regulation is a substantive rule that was subject to notice and comment.

[00:03:26] Speaker 04:
and the 2003 rule was no different.

[00:03:28] Speaker 04:
It simply afforded the same conceded presumption of exposure, but for a narrower period of service.

[00:03:38] Speaker 04:
Continuing, the DVA adopted this arbitrarily narrow rule, and then it improperly began to apply it, because as we just discussed, it was substantive.

[00:03:50] Speaker 04:
It was subject to notice and comment rulemaking procedures, yet the DVA

[00:03:55] Speaker 04:
failed to notice it for six years.

[00:03:58] Speaker 04:
When the DVA finally did so, it received comments from veterans' organizations that led it to understand and acknowledge that the period of exposure it had adopted was overly narrow.

[00:04:11] Speaker 04:
The DVA even said so in the final rule notice for the 2011 regulation.

[00:04:15] Speaker 04:
It stated that it was going to be expanding the period of presumed exposure to include veterans who were there while residuals were present.

[00:04:25] Speaker 04:
in response to those comments from veterans organizations that it would have received six years prior if it had properly promulgated the rule.

[00:04:33] Speaker 03:
But even more... Well, what about the government's argument that the rule, the 2011 rule, is actually beneficial to veterans and so therefore gives them a broader presumptive

[00:04:48] Speaker 03:
a period of time, but it wasn't necessary for them to be beneficial to veterans.

[00:04:53] Speaker 03:
So in those circumstances, there's no obligation to make it retroactive.

[00:04:58] Speaker 04:
We agree that it was beneficial, and we don't argue with the substance of the period itself.

[00:05:04] Speaker 04:
But the DVA cannot act arbitrarily when it decides to act.

[00:05:09] Speaker 04:
And when Congress set forward a period or, excuse me,

[00:05:15] Speaker 04:
coverage for the children of these veterans, it was logical as the DVA to extend that coverage to the veterans themselves.

[00:05:22] Speaker 04:
When the DVA did so for both the children and the veterans, it should have included a period of residual exposure because Congress said that it would be appropriate to extend coverage to periods of residual exposure in the 2003 rule and it had said so prior in the Agent Orange Act

[00:05:40] Speaker 04:
when it created a presumption for Vietnam veterans.

[00:05:44] Speaker 03:
But the statute at issue here created a period of presumption with respect to the children of veterans, correct?

[00:05:52] Speaker 03:
Correct.

[00:05:53] Speaker 03:
Do you argue that the statute required regulations for presumptions as to the veterans themselves?

[00:06:00] Speaker 03:
No.

[00:06:01] Speaker 04:
This is an instance where the DVA was exercising its rulemaking authority to promulgate appropriate regulations to

[00:06:09] Speaker 04:
implement the laws of the Veteran's Benefit Statutes as intended by Congress, even if Congress has left a gap for it to fill.

[00:06:18] Speaker 01:
Go ahead.

[00:06:20] Speaker 01:
Let me ask this, Council.

[00:06:22] Speaker 01:
Would you agree with me that what we're arguing about here is not an actual taking or an award, but simply a change in the evidentiary standard that's applied?

[00:06:33] Speaker 04:
It is a property right, if that's what we're talking about.

[00:06:36] Speaker 01:
It is a right that veterans are... By changing the evidentiary standard away from a presumption in favor of to a requirement to produce affirmative proof of exposure, that is a property right?

[00:06:50] Speaker 01:
It's not just a simple change in the evidentiary standard to be applied?

[00:06:54] Speaker 04:
I agree that it's a change in the evidentiary standard, but it has the effect of changing a veteran's entitlement to property.

[00:07:01] Speaker 04:
to these benefits.

[00:07:02] Speaker 00:
As stated in Cushman, once the DVA is obligated to pay... It's a change in the ability of the veteran to show entitlement.

[00:07:15] Speaker 04:
Correct, Your Honor.

[00:07:15] Speaker 04:
And because entitlement... That ripens into a property right?

[00:07:20] Speaker 01:
That's your position?

[00:07:21] Speaker 04:
Yes.

[00:07:22] Speaker 01:
Let me follow up with this.

[00:07:27] Speaker 01:
Given that

[00:07:30] Speaker 01:
Mr. McKinney was deployed a month after in August 69, instead of July 69.

[00:07:36] Speaker 01:
Doesn't every new change require some start date somewhere and by putting it in July as opposed to August and him being unavoidably one of the first ones to be caught?

[00:07:50] Speaker 01:
Is that in and of itself arbitrary and capricious?

[00:07:53] Speaker 01:
How do we get over the arbitrary and capricious standard?

[00:07:56] Speaker 01:
That's what I need to hear from you.

[00:07:59] Speaker 04:
And I acknowledge that, you know, the DBA has broad discretion.

[00:08:03] Speaker 04:
The reason that it was arbitrary to draw that line when they did is that Congress had already said that's not where the line should be drawn.

[00:08:12] Speaker 04:
Congress had acknowledged back in 1991 through the Agent Orange Act that Vietnam veterans who served for multiple years in Vietnam after Agent Orange was sprayed should be entitled to a presumption of exposure because residuals were present.

[00:08:27] Speaker 04:
In the 2003 Veterans Benefits Act, Congress essentially parroted that and said, just like those Vietnam veterans, these Korean DMZ veterans should be entitled to coverage, excuse me, the children of the veterans, should be entitled to coverage beyond active spraying in 1969.

[00:08:43] Speaker 04:
So there was no reason, and it was illogical, for the DVA to implement a rule that didn't do so.

[00:08:50] Speaker 01:
Is illogical, arbitrary, capricious?

[00:08:52] Speaker 01:
I mean, give us their counsel.

[00:08:57] Speaker 04:
In the end, Congress has shown and recognized that it is really tough to establish evidence of actual exposure over four years ago.

[00:09:08] Speaker 04:
So whether a veteran was there during active spraying or shortly after when everyone acknowledges the residuals of these chemicals would have been in the ground, in the water, everywhere, it was necessary to presume exposure because it's very, very likely that people serving in those areas were exposed to these toxins.

[00:09:28] Speaker 04:
And so it's just arbitrary to deny those veterans that presumption when it was already 2003.

[00:09:35] Speaker 04:
We really had explored Agent Orange in depth and people knew that it stayed in the environment.

[00:09:42] Speaker 03:
We're not reviewing the logic of the 2003 manual, right?

[00:09:51] Speaker 03:
I mean, we're reviewing whether or not

[00:09:53] Speaker 03:
the decision to use the default presumption of non-retroactive effect was arbitrary or capricious as of 2011, right?

[00:10:04] Speaker 04:
Correct, Your Honor.

[00:10:06] Speaker 04:
The way the 2003 rule fits in is that it continues to apply as a result of the DBA's decision to select 2011 effective date.

[00:10:16] Speaker 04:
And so that

[00:10:18] Speaker 04:
this bad rule is still operating and on pending live claims for pre-2011 benefits.

[00:10:25] Speaker 04:
And because the DBA selected the 2011 regulation effective date knowing this would happen, that was an arbitrary and capricious selection.

[00:10:35] Speaker 01:
Let me ask you this, counsel.

[00:10:36] Speaker 01:
Is it possible that the DBA's failure to seek and receive public comment over an excessive period of six years

[00:10:48] Speaker 01:
when as you argue they have a duty to do so, could be construed as arbitrary and capricious.

[00:10:54] Speaker 01:
And if it is, what effect would that have?

[00:10:59] Speaker 04:
The DVAs delay could, I'm not sure it would be characterized as an arbitrary and capricious violation of the rulemaking procedures because they violate.

[00:11:11] Speaker 04:
That's a good question.

[00:11:13] Speaker 04:
Right.

[00:11:15] Speaker 04:
I guess I would say that it is.

[00:11:17] Speaker 04:
You know, there was no basis for it, and the arbitrary and capricious standard requires reasoned decision making.

[00:11:25] Speaker 04:
And there was no reasoned decision making in delaying comments for six years.

[00:11:30] Speaker 04:
And that's evidenced by the fact that the comments succeeded in changing the DVA's mind and correcting a problem.

[00:11:36] Speaker 04:
That's the whole reason we have the notice and comment period.

[00:11:42] Speaker 04:
I'll continue.

[00:11:44] Speaker 04:
So the DVA's errors got us here.

[00:11:47] Speaker 04:
The question is, did the DVA have the authority to issue an earlier effective date?

[00:11:53] Speaker 04:
Section 5110G does not constrain the DVA in this case.

[00:11:58] Speaker 04:
In the context of a corrective regulation such as this, the earliest effective date allowed is the date of the original administrative issue.

[00:12:07] Speaker 04:
And the DVA acknowledges that, excuse me, so the only question here really is, was it arbitrary for the DVA not to select a 2003 date for this regulation?

[00:12:17] Speaker 04:
The DVA acknowledges that when the court invalidates its regulations, it will apply retroactive effect to all pending claims.

[00:12:27] Speaker 04:
The same should happen when the DVA on its own starts formalized rulemaking, corrects an invalid rule.

[00:12:33] Speaker 04:
What happens to the pending claims?

[00:12:35] Speaker 04:
It should be the same result.

[00:12:36] Speaker 04:
They should get retroactive relief, just as if the court had acted.

[00:12:40] Speaker 04:
had acted, which it may have done had they not settled with Mallory or other veterans who were challenging these rules.

[00:12:49] Speaker 04:
Finally, I want to talk a little bit about the arbitrary effects of the 2011 regulations effective date and how they're ongoing.

[00:13:02] Speaker 04:
It is arbitrary to treat a veteran who was exposed to active herbicide spraying differently than one who was exposed to the residuals of those same toxic chemicals.

[00:13:14] Speaker 04:
The DVA is continuing to do this for pre-2011 claims.

[00:13:17] Speaker 04:
In fact, for the same veteran, based on the same service, the DVA will say that they suffered a service-connected injury for post-2011 claims, but for pre-2011 claims, will say that they didn't.

[00:13:31] Speaker 04:
and that is an arbitrary and capricious result.

[00:13:34] Speaker 04:
In conclusion, Your Honors, the 2011 regulation is not a typical regulation, and it shouldn't have a typical effective date.

[00:13:43] Speaker 04:
The DVA's own errors compel an earlier effective date in this case, and we respectfully request that you grant our petition and that the effective date be set aside.

[00:13:53] Speaker 03:
Thank you.

[00:13:58] Speaker 03:
Mr. Hockey?

[00:14:05] Speaker 02:
We're here to talk about the challenge, I think Judge Maile, as you indicated, to the regulation that was issued in 2011.

[00:14:15] Speaker 02:
I think we understood from our discussion just now that we are not challenging the manual provision itself.

[00:14:22] Speaker 02:
That kind of raises a response to a question you raised, Judge Gilstrap, about delays.

[00:14:31] Speaker 02:
There was nothing preventing anyone from challenging the manual provision in 2003 or 2004, saying that it was inconsistent with some statute.

[00:14:39] Speaker 02:
In fact... Well, you say it wasn't a substantive rule.

[00:14:43] Speaker 02:
I'm saying that there's nothing that prevents somebody from challenging it.

[00:14:46] Speaker 02:
We would have defended it by saying it wasn't a substantive rule.

[00:14:49] Speaker 03:
Right, you would have said it's just a manual.

[00:14:51] Speaker 02:
But to suggest that there wasn't a procedural vehicle by which someone could challenge it is wrong.

[00:14:56] Speaker 02:
Why did it take six years?

[00:15:00] Speaker 02:
take six years.

[00:15:01] Speaker 03:
This is the question.

[00:15:02] Speaker 03:
I mean, you put the 2011 out there for notice and comment.

[00:15:04] Speaker 03:
Why didn't you put... 2009 we issued... 2009.

[00:15:06] Speaker 03:
Why didn't you put the 2003 up for notice and comment?

[00:15:09] Speaker 02:
We didn't need to.

[00:15:11] Speaker 02:
We addressed... First of all, and I'm going to say this right away... It's a presumption you created.

[00:15:16] Speaker 03:
Why did you need to in 2009?

[00:15:18] Speaker 02:
We decided to create... Well, why didn't we create the presumption in 2009?

[00:15:22] Speaker 02:
I don't know actually what the decision maker in 2009 decided about.

[00:15:26] Speaker 02:
Why do we want to issue a regulation as opposed to continue with

[00:15:29] Speaker 02:
the manual provision which in some sense effectively accomplishes the same thing.

[00:15:34] Speaker 02:
But what we need to discuss here is for purposes of this petition, what is the basis by which this court can declare secretary's actions in issuing this regulation prospectively arbitrary and capricious?

[00:15:51] Speaker 02:
And I think this court's decision and Lee's gang particularly at page 1377 answers all of this

[00:15:58] Speaker 02:
by pointing out that you need basically three things.

[00:16:01] Speaker 02:
You need to have a statute that tells the agency to do something, issue a regulation.

[00:16:08] Speaker 02:
And that statute needs to tell the agency to do something, issue that regulation within some time period.

[00:16:14] Speaker 02:
And as the court noted in least gain, you need a third thing, which is that that statute needs to tell the agency that if they don't do that thing within a time period, there are going to be consequences.

[00:16:24] Speaker 03:
But isn't it true that Congress has spoken already twice

[00:16:28] Speaker 03:
with respect to these timeframes, not necessarily with this precise presumption as to these Korean veterans, but with respect to Vietnam veterans and with respect to the children of Korean veterans.

[00:16:40] Speaker 03:
I mean, Congress had already acknowledged the science as such, that it covers a multitude of things.

[00:16:46] Speaker 02:
Well, the dates actually stem from the compromise.

[00:16:48] Speaker 02:
The Senate bill in 2003 used the dates 68, 69, consisting with DOD's recognition that that's when the spraying occurred.

[00:16:58] Speaker 02:
included language or dates from 68 to 75, I believe.

[00:17:02] Speaker 02:
And there was a compromise to 71.

[00:17:04] Speaker 02:
So I don't think that we can simply say that one date or the other is right or wrong.

[00:17:09] Speaker 02:
Even at the time of the contemplation of the act, the Spina Bifida Act, you have a Senate having the same dates that the VA adopted based upon the statements from the DOD, which said we did the spraying in 68, 69.

[00:17:23] Speaker 02:
Yes, there's science.

[00:17:24] Speaker 02:
We're not disputing the fact that there is science.

[00:17:27] Speaker 02:
that might have exported a residual exposure.

[00:17:30] Speaker 02:
But what we are suggesting is that the only statute that anybody could identify that's even related to the 2011 regulation is the 2003 Veterans Benefits Act.

[00:17:41] Speaker 02:
But if we read the 2003 Veterans Benefits Act, not only does it not provide any kind of direction for the secretary to issue a presumptive regulation for the Korean veterans themselves, frankly, it doesn't direct the secretary to do anything with respect to the spina bifida.

[00:17:55] Speaker 02:
It says that the secretary may

[00:17:57] Speaker 02:
provide certain benefits to children suffering from spina bifida in the same way that Vietnam veteran children were already being covered.

[00:18:07] Speaker 02:
So the secretary is not required by the VBA of 2003 to issue any regulations.

[00:18:13] Speaker 02:
And you need that in lease gang to start the whole process.

[00:18:17] Speaker 02:
And then you don't even get to the two other prongs in lease gang that say, you have to have a language in the statute that says to the secretary, do this then.

[00:18:26] Speaker 02:
and also language that says, and if you don't, here are the consequences.

[00:18:29] Speaker 02:
We don't have a statute telling the secretary to issue this presumption.

[00:18:33] Speaker 02:
The secretary did it on his own, as counsel correctly stated.

[00:18:38] Speaker 02:
And the timing of it is our own.

[00:18:41] Speaker 02:
The same 1377 release game contains a footnote where you can look at this case different ways.

[00:18:48] Speaker 02:
I mean, retroactive is being thrown around a lot, but in a sense, what the petitions are really saying is we should have acted sooner.

[00:18:56] Speaker 02:
We should have acted in 2003.

[00:18:57] Speaker 02:
So that makes it really much more like lease gang.

[00:19:00] Speaker 02:
But there was no requirement to act.

[00:19:02] Speaker 02:
We don't have the statute telling us to do anything in 2003.

[00:19:05] Speaker 02:
What we did was we issued a manual provision on our own.

[00:19:08] Speaker 02:
We didn't even have to do that.

[00:19:09] Speaker 03:
And what supports your view that that manual provisions didn't have a substantive effect on the federal court?

[00:19:15] Speaker 02:
The problem for this court right now is that's not what's before the court.

[00:19:19] Speaker 02:
Nobody has challenged or nobody did challenge.

[00:19:22] Speaker 02:
Now, I think the Mallory case,

[00:19:23] Speaker 02:
There was an argument that it wasn't fair, and that case was settled.

[00:19:27] Speaker 02:
But before this court, it's not the issue of whether or not the 2003 manual provision should have been subject to notice and comment rulemaking.

[00:19:35] Speaker 03:
The Mallory case is one of the things that does trouble me.

[00:19:37] Speaker 03:
I mean, I find it hard to accept the government's argument that the footnote is ambiguous.

[00:19:44] Speaker 03:
I mean, it says that if there are similarly situated veterans, they'll be treated in a similar fashion.

[00:19:50] Speaker 02:
All I can say, Your Honor, at this point is how do we enforce this in this context?

[00:19:55] Speaker 02:
First of all, you can't.

[00:20:01] Speaker 02:
A footnote in a settlement between the government and a particular claimant creates a potential claim under the Tucker Act in contract.

[00:20:10] Speaker 02:
It does not bind the government and all the other regional offices and boards, even if an attorney representing the secretary says,

[00:20:18] Speaker 02:
we were going to try to treat these the same way.

[00:20:20] Speaker 02:
I mean, there are mechanisms by which people can get that kind of a treatment within the VA.

[00:20:26] Speaker 00:
My recollection of the wording of that footnote is it's even a little more Weasley than Wiltry.

[00:20:32] Speaker 00:
It seems to me it's something like Maytree.

[00:20:36] Speaker 02:
But for purposes of this case, that's not what this court needs to look at and all it needs to look at.

[00:20:42] Speaker 02:
And it needs to look at it through the prism of the very high deference that's afforded to the secretary, as we indicated in our brief

[00:20:48] Speaker 02:
28J, apologies for that, that there's a high level of discretion here.

[00:20:55] Speaker 02:
Most, as the Supreme Court has said and as this Court has said, the default in issuing a regulation is to issue it prospectively.

[00:21:03] Speaker 02:
There could be the exception, like this Court has said in Least Gang, like in the footnote in Least Gang where they basically said if there is some unambiguous direction that suggests that the Secretary should issue something

[00:21:17] Speaker 02:
coming from Congress, suggesting that the secretary should issue something retro, respectively, an effective date, then this court could say, you should do it.

[00:21:27] Speaker 00:
Here we don't even have a statute telling us to issue this regulation.

[00:21:31] Speaker 00:
Do you think in your break at 16, that although petitioners actually note VA has in some prior instances assigned retroactive effective dates to certain liberalizing regulations,

[00:21:45] Speaker 00:
these circumstances, these occurrences have been rare and for the most part involved clearly distinguishable circumstances.

[00:21:52] Speaker 00:
So of course, I wrote a marginal note to ask you, what's the other?

[00:21:56] Speaker 02:
Well, I think what we're probably trying to convey there is that certainly as pointed out in the blue brief, some of these retroactive regulations deal with herbicide exposure in Vietnam.

[00:22:07] Speaker 02:
The problem with relying upon those cases is that the VA was reacting to the district court in the name of litigation, which was essentially directing a lot of this traffic.

[00:22:18] Speaker 02:
We can argue about whether they should have been doing that, but they did.

[00:22:21] Speaker 02:
And so that's what happened.

[00:22:24] Speaker 02:
The VA reacted by following the direction of the district court.

[00:22:27] Speaker 02:
Now, I will add, as we point out in our brief, that that demonstrated to the VA how

[00:22:35] Speaker 02:
administratively difficult it was to monitor all these different claims and assign them the appropriate amounts in a retrospective fashion.

[00:22:44] Speaker 02:
And further leads to the conclusion we made in this regulations to not do something similar when we weren't being directed by the district court.

[00:22:54] Speaker 02:
And Congress itself, as we point out in subsequent legislation dealing with Agent Orange in Vietnam,

[00:23:01] Speaker 02:
required the issuance of the regulations to be prospectively, recognizing the VA's experience in trying to deal with the various directions coming from the district court.

[00:23:11] Speaker 02:
So these are all the classic reasons why this court should say the secretary acted appropriately and not arbitrarily when he followed the sort of default provisions of issuing a regulation prospectively.

[00:23:24] Speaker 03:
Well, I mean, that's part of my problem with Mallory.

[00:23:26] Speaker 03:
It sort of smacks of this feeling like

[00:23:29] Speaker 03:
OK, we've got a trial court that thinks we're not being fair.

[00:23:35] Speaker 03:
And so one trial court told us to take care of these Vietnam veterans.

[00:23:39] Speaker 03:
And we're afraid that if we go through with this Mallory appeal, there's going to be another court that tells us to take care of these Korean veterans.

[00:23:45] Speaker 03:
And so we're going to drop a footnote making it seem like we're going to take care of them.

[00:23:48] Speaker 02:
And then we don't.

[00:23:50] Speaker 02:
I cannot participate in that.

[00:23:53] Speaker 02:
I can say this.

[00:23:55] Speaker 02:
I don't think this court would question at all

[00:23:58] Speaker 02:
the government's right or the petitioner's right to resolve the matter to avoid a potential adverse decision.

[00:24:06] Speaker 02:
So it happens all the time.

[00:24:08] Speaker 02:
You have a bad fact pattern, you don't wanna get a bad law, you settle the case.

[00:24:14] Speaker 02:
Mallory was seeking his own benefits.

[00:24:16] Speaker 02:
The fact that he may have had counsel who was interested in a larger picture and tried to negotiate some language in the settlement agreement that says, and we're gonna do this in other cases.

[00:24:28] Speaker 02:
That doesn't do it for me.

[00:24:32] Speaker 02:
Settlement agreement is a contract.

[00:24:34] Speaker 02:
You're resolving your dispute with the government.

[00:24:38] Speaker 02:
And you can try to enforce that and go to a court and say, on behalf of somebody else, Ms.

[00:24:45] Speaker 02:
Jones should benefit from the settlement agreement we signed in Mallory.

[00:24:49] Speaker 02:
And the hard reality of it is the first question the court's going to ask is, was Ms.

[00:24:52] Speaker 02:
Jones a party to that agreement?

[00:24:54] Speaker 02:
And the answer is no.

[00:24:56] Speaker 01:
Council, let me get back to the facts in this case a little bit.

[00:25:01] Speaker 01:
Comment, if you will, on the reality of what we have today in light of what's been done such that competing veterans who all served in the same area at the same general time, exposed to the same chemicals, suffering the same results, are judged on two completely different standards given the 45 years or so that's intervened making the practical results of this that

[00:25:25] Speaker 01:
there are winners and there are ultimately losers.

[00:25:28] Speaker 01:
There are no losers with respect to the presumption because- So if somebody gets a presumption in their favor is in no worse position than somebody who has an affirmative duty to go back and offer proof from 45 years ago?

[00:25:41] Speaker 02:
I'll explain, I'll explain.

[00:25:42] Speaker 02:
I mean, in a normal civil litigation when you have a liberalizing rule for those folks who have already been through the process and concepts of race judicata

[00:25:54] Speaker 02:
will prevent that person from coming back and renewing their claim.

[00:25:58] Speaker 02:
And in that situation, like in all liberalizing rules, when a line is drawn, you have folks who are on the outside looking in.

[00:26:05] Speaker 02:
But the beautiful thing about the VA process, as I think the court knows, is they have new and material evidence claims.

[00:26:13] Speaker 02:
Basically, you can keep bringing your claim so that any veteran who was denied benefits in 2005 because they fell outside that narrow window can come back today or tomorrow

[00:26:24] Speaker 02:
and make the same claim saying, look, you guys now have a presumption with the larger window, which I now fall in, and he's granted its benefits.

[00:26:32] Speaker 02:
But he's only gets benefits from the date of his claim, because it's a liberalizing rule.

[00:26:36] Speaker 02:
So to answer your question specifically, Your Honor, there is a distinction.

[00:26:41] Speaker 02:
Those folks who did bring their action prior to the liberalizing rule and fell outside the period of service were denied at that time.

[00:26:50] Speaker 02:
They now can come in.

[00:26:52] Speaker 02:
The effect is, yes.

[00:26:53] Speaker 02:
there was some period of time in which they couldn't get the money.

[00:26:56] Speaker 02:
But the point is, in creating the regulation and the Secretary's decision to expand the service period, that's a liberalizing rule.

[00:27:08] Speaker 03:
Ten years of benefits for veterans these ages is a lot, is it not?

[00:27:13] Speaker 02:
Your Honor, I'm not going to deny the mathematics of that question, but the problem for this Court is,

[00:27:20] Speaker 02:
when the secretary is not even required to issue a presumption of regulation and does it on his own, can the failure to issue it retroactively provide this court with a basis to take away, to change the effective date?

[00:27:35] Speaker 02:
And I would respectfully suggest this court's own precedent says no in this case.

[00:27:39] Speaker 01:
So you're saying that unless there are very precise, specific, itemized obligations or requirements imposed on the secretary, which the secretary then ignores,

[00:27:50] Speaker 01:
you just can't be arbitrary and capricious.

[00:27:52] Speaker 02:
That's what this court said in Leesgang.

[00:27:54] Speaker 02:
In Leesgang, they actually had a statute that said, that kind of meant the first two prongs.

[00:27:58] Speaker 02:
It says, you go do this, and there was a time period by which everyone expected the secretary to do it.

[00:28:04] Speaker 02:
And even in that case, the court said, we're not going to require the secretary to issue something retroactively, because in issuing the direction, Congress didn't provide the consequences.

[00:28:15] Speaker 01:
So the same conduct.

[00:28:17] Speaker 01:
in the context of a specific directive that could be arbitrary and capricious can't be in the absence of very specific instructions.

[00:28:26] Speaker 02:
This runs up against the question you raised earlier, Your Honor, about the high level of deference owed to the agencies in issuing their own regulations.

[00:28:33] Speaker 02:
There has to be something pretty, pretty strong to be able to go in and say that you acted arbitrary and capricious.

[00:28:40] Speaker 02:
Some of this is pretty, pretty bad.

[00:28:42] Speaker 02:
But there's nothing, no, it's not.

[00:28:44] Speaker 02:
I think it's just, I think what- Well, you don't get to make that decision.

[00:28:47] Speaker 02:
We do.

[00:28:48] Speaker 02:
Well, but in this case, in order to make the decision that we did something wrong, you have to find, you know, what authority we ignored.

[00:28:57] Speaker 02:
And I'm respectfully suggesting to you that we didn't.

[00:28:59] Speaker 02:
We did do a beneficial thing here by creating the presumption.

[00:29:03] Speaker 02:
There's advantages, obviously, to having something take place in the form of a regulation and in a manual position.

[00:29:10] Speaker 02:
And by changing the evidentiary question and making it a regulation, it is now binding on all the ROs.

[00:29:17] Speaker 02:
It's binding on the board.

[00:29:19] Speaker 02:
And there's no question about whether the manual provision could survive a challenge.

[00:29:25] Speaker 02:
So this is an advantage to the veteran community.

[00:29:28] Speaker 02:
And yes, in 2003, maybe everyone would be happier.

[00:29:35] Speaker 02:
But that's a different question and a different action.

[00:29:40] Speaker 04:
Thank you.

[00:30:00] Speaker 04:
Your Honor, I just want to respond to a couple of points that Council made.

[00:30:05] Speaker 04:
First and perhaps most importantly, the disparate treatment here

[00:30:10] Speaker 04:
is that veterans who were serving during periods of active spraying can recover benefits going back to 2003.

[00:30:19] Speaker 04:
But veterans who were there while residuals were in the environment cannot.

[00:30:24] Speaker 03:
And that's arbitrary, that distinction.

[00:30:26] Speaker 03:
Where's the director?

[00:30:28] Speaker 03:
Mr. Hockey kept hammering on, we need a clear directive.

[00:30:31] Speaker 03:
So you're pointing to the

[00:30:33] Speaker 03:
Agent Orange Act and you're pointing to the 2003 Act, but isn't it true that the 2003 Act didn't address the veterans themselves, only their children?

[00:30:44] Speaker 03:
That's correct.

[00:30:45] Speaker 04:
It addressed their children.

[00:30:46] Speaker 04:
But the DBA has the authority to issue appropriate regulations in response to Congress's directive.

[00:30:54] Speaker 04:
And it did so here when it extended what Congress was talking about for children to the veterans themselves.

[00:31:01] Speaker 04:
But it failed for both groups

[00:31:03] Speaker 04:
to create an appropriate rule in response to that legislation.

[00:31:07] Speaker 04:
It limited the rule arbitrarily to active spraying and excluded residuals, even though Congress had said, as counsel acknowledged in the Veterans Benefits Act, that it was appropriate to extend coverage beyond 1969 when spraying ended.

[00:31:23] Speaker 03:
But the government's argument, I think, is that if they're allowed to make a rule, it can be less logical.

[00:31:31] Speaker 03:
than if they're required to make a rule, essentially.

[00:31:35] Speaker 04:
I think the government is bound to, they're always bound by the arbitrary and capricious standard and it cannot issue arbitrary and capricious regulations.

[00:31:45] Speaker 04:
I think that's clear from the judicial review that Congress has granted in section 502 and then governed by section 706 as arbitrary and capricious and contrary to law standard.

[00:31:57] Speaker 04:
Another point that I would like to make is that

[00:32:04] Speaker 04:
We've been kind of exploring the question of whether there's causal difference between a person who is serving in periods of active spraying versus a period of residual exposure, and there isn't.

[00:32:15] Speaker 04:
I mean, that's what everyone has concluded, and they concluded it before 2003.

[00:32:21] Speaker 04:
Finally, I just want to talk about a little, I just want to spend 20 seconds talking about why the presumption is a substantive rule.

[00:32:29] Speaker 04:
Here it has binding effect on veterans.

[00:32:31] Speaker 04:
It has the force of law because it changes their rights.

[00:32:34] Speaker 04:
In effect, through the presumption, they become entitled to service-connected benefits.

[00:32:39] Speaker 04:
Thank you, Your Honors.

[00:32:41] Speaker 04:
Again, we request that you grant our petition and the effective date be set aside.

[00:32:45] Speaker 04:
Thank you.

[00:32:45] Speaker 04:
The case will be submitted.