date: january 19, 1994 o.g.c. precedent 1-94 from: general counsel (02) subj: improved-pension income -- application of $2,000 exclusion

Date: January 19, 1994 O.G.C. Precedent 1-94
From: General Counsel (02)
Subj: Improved-Pension Income -- Application of $2,000 Exclusion
of Tribal Per Capita Payments Under 25 U.S.C. § 1407
To: Director, Compensation and Pension Service (213B)
QUESTION PRESENTED:
Whether, in computing annual income for improved pension purposes, the
$2,000 exclusion provided by 25 U.S.C. § 1407 for certain Native
American tribal per-capita payments applies to the sum of all payments
received during an annual reporting period or applies to each
individual payment received during the reporting period.
COMMENTS:
1. In the two subject cases, the veterans have reported receiving
several per capita distributions from tribal trust funds during the
course of an annual reporting period. In both cases, the amount of
each payment was less than $2,000, but the aggregate of such payments
exceeded $2,000 for the reporting period. The veterans assert that the
$2,000 exclusion should apply to each per capita distribution,
resulting in exclusion of the entire amount of the per capita
distributions for pension-income purposes.
2. Pursuant to 38 U.S.C. § 1521, the amount of improved pension
payable to an eligible veteran must be reduced by the amount of the
veteran's annual income. Section 1503(a) of title 38, United States
Code, governing income computa­tion for improved-pension purposes,
provides that "all payments of any kind or from any source" shall be
included in annual income, with the exception of certain specified
categories. The legislative history of section 1503(a) indicates
Congress' intent "that a pensioner's total annual nonpension income
shall be included in determining the amount of pension payable, unless
a specific exclusion from
such income is authorized by law." S. Rep. No. 95-1329, 95th Cong., 2d
Sess. 22 (1978). Therefore, any payment received by a veteran must be
counted as income unless expressly excluded by statute.
3. One such statutory exclusion is found in 38 U.S.C. § 1503(a)(6),
which excludes from income "profit realized from the disposition of
real or personal property other
than in the course of a business." See also 38 C.F.R. § 3.272(e). As
noted in O.G.C. Prec. 71-90, this office indicated in a series of
unpublished opinions that pay-
ments to Native Americans from tribal trust funds which
are in the nature of compensation for relinquishment of property
interests may be considered a conversion of
assets and excluded from income under section 1503(a)(6). In O.G.C.
Prec. 81-90, we indicated that the section 1503(a)(6) exclusion
applies to funds derived from dis-
position of nonrenewable resources, e.g., removal of minerals from the
land, but not to income from renewable resources, e.g., rental of land
for grazing or planting.
In O.G.C. Prec. 12-89, we concluded that funds distributed by the
Federal government under the Alaskan Native Claims Settlement Act
(ANCSA), Pub. L. No. 92-203, 85 Stat. 688 (1971), as amended,
(codified at 43 U.S.C. §§ 1601-1629e) representing payment for the
relinquishment of land claims by the recipients, are excluded from
pension income under 38 U.S.C. § 1503(a)(6) because those payments
constitute profit from the disposition of property. We also stated in
that opinion that the underlying basis for a distribution under the
Indian Tribal Judgment Funds Use or Distribution Act, Pub. L. No.
93-134, 87 Stat. 466 (1973), as amended, [hereinafter the Judgment
Funds Distribution Act] must be examined to determine whether it
represents a conversion of assets from one form to another.
4. The claims files in the subject cases do not indicate the nature of
the funds distributed to the veterans as per capita payments.
Therefore, on the facts before us, we are unable to conclude whether
the payments may be considered profit from the disposition of property
so as to warrant application of the section 1503(a)(6) exclusion.
5. The other exclusions that may be applicable to the per capita
distributions in the subject cases are the exclusions under the
Judgment Funds Distribution Act, (codified, as amended, at 25 U.S.C.
§§ 1401-1408) and the so-called Per Capita Distributions Act, Pub. L.
No. 98-64, 97 Stat. 365 (1983) (codified at 25 U.S.C. §§ 117a-117c).
The former statute provides for the use and distribution of funds
appropriated in satisfaction of judgments of the Indian Claims
Commission and the United States Court of Federal Claims in favor of
Indian tribes. The latter statute provides for the per capita
distribution of "[f]unds which are held in trust by the Secretary of
the Interior . . .
for an Indian tribe." 25 U.S.C. § 117a. Section 7 of the Judgment
Funds Distribution Act, as amended by Pub. L.
No. 97-458, § 4, 96 Stat. 2512, 2513 (1983), (codified at 25 U.S.C. §
1407) provides that none of the funds distrib­uted per capita pursuant
to a plan approved under the Judgment Funds Distribution Act, as
amended, shall be "considered as income or resources . . . under the
Social Security Act or, except for per capita shares in excess
of $2,000, any Federal or federally assisted program." Additionally,
section 2(a) of the Per Capita Distributions Act (codified at 25
U.S.C. § 117b(a)) provides that dis-
tributions under that statute "shall be subject to the provisions of
section 7 of [the Judgment Funds Distribution Act], as amended."
Accordingly, per capita payments made under either statute are
excluded from income computation for VA improved-pension purposes
"except for per capita shares in excess of $2,000." See O.G.C. Prec.
71-90.
6. In O.G.C. Prec. 12-89, we responded to a question as to whether the
$2,000 exclusion in 25 U.S.C. § 1407 applies on an annual basis or on
one occasion only. We concluded that section 1407 provides an annual
exclusion of $2,000 from income and net worth for VA pension purposes.
We noted that the statute and its legislative history were ambiguous
as to the period for which the exclusion applies, but we identi­fied
two factors supporting an annual, rather than a one-time, exclusion.
First, the House and Senate committee reports concerning Pub. L. No.
97-458, which amended
section 7 of the Judgment Funds Distribution Act to add
the $2,000 exclusion applicable to Federal and federally-assisted
programs, both spoke of the $2,000 exclusion applying with respect to
determinations of "eligibility," thus suggesting that the exclusion
applies to the period with respect to which eligibility is determined.
Because
VA pension eligi­bility is determined based on twelve-month periods,
the $2,000 exclusion would, under this interpreta­tion, apply with
respect to each twelve-month period. Second, we noted that the
language of a similar, later-enacted $2,000 exclusion in 43 U.S.C. §
1626(c) provided guidance in the interpretation of 25 U.S.C. § 1407,
pur-
suant to the princi­ple that "interpretation of a doubtful statute may
be influenced by language of other statutes which are not specifically
related, but which apply to similar persons, things, or
relationships." 2B N. Singer, Sutherland Statutory Construction §
53.03 (5th ed. 1992). Section 1626(c) provides that, in determining
the eligibil­ity of a household of an Alaskan Native, an individual
Alaskan Native, or the descendent of an Alaskan Native to receive
Federal need-based benefits, cash received from a Native Corporation
shall not be considered as an asset or resource "to the extent that it
does not, in the aggregate, exceed $2,000 per individual per annum."
We noted that 25 U.S.C. § 1407 and 43 U.S.C. § 1626(c) both apply to
protect need-based benefits of Native Americans from diminution as a
result of certain payments intended for their benefit
and that it would be anomalous, in the absence of any
congressionally-expressed intention to the contrary, to apply a
different rule to treatment of the $2,000 exclusions under those
similar statutory provisions.
7. The claimants in the subject cases now assert that our conclusion
that the section 1407 exclusion applies annually is unnecessarily
restrictive and that the $2,000 exclusion should be interpreted to
apply to each individual distribu­tion received by them. The claimants
further assert that other Federal agencies, specifically including the
Social Security Administration (SSA), have concluded that the
exclusion applies to each payment, rather than annually.
8. We note initially that the SSA's treatment of payments under the
Per Capita Distributions Act and the Judgment Funds Distribution Act
is not relevant to our determination because that agency's treatment
of such payments is governed by a different statutory standard.
Section 1407 expressly provides that such payments will be excluded in
their en­tirety from income and resource computation for SSA pur-
poses, whereas only $2,000 received from such payments will be
excluded for purposes of determining eligibility for benefits
administered by other Federal agencies, including VA. Therefore, the
SSA has no reason to consider the scope of the $2,000 exclusion in 25
U.S.C. § 1407, and the SSA's treatment of per capita distributions
from tribal trust funds cannot be considered as an interpretation of
the $2,000 exclusion.
9. In a 1988 report to Congress, the United States General Accounting
Office (GAO) reviewed information received from the Department of
Agriculture, the Department of Housing
and Urban Development, and the Bureau of Indian Affairs and concluded
that Federal agencies administering need-based benefits had reached
conflicting conclusions as to whether 25 U.S.C. § 1407 excludes $2,000
per payment or per year. GAO, Welfare Eligibility: Programs Treat
Indian Tribal Trust Fund Payments Inconsistently, GAO/HRD-88-38, 23
(1988). We are not aware of any definitive analysis of the $2,000
exclusion by any of these agencies, either before or after the GAO
report. In view of the agencies' conflicting interpretations of the
$2,000 exclusion and the lack of articulated reasons for those
interpretations, we find no persuasive guidance in the treatment of 25
U.S.C. § 1407 by other Federal agencies.
10. As we noted in O.G.C. Prec. No. 12-89, the text of 25 U.S.C. §
1407 is ambiguous as to the application of the $2,000 exclusion.
However, "[a] provision that may seem ambiguous in isolation is often
clarified by the remainder of the statutory scheme -- because the same
terminology is used elsewhere in a context that makes its meaning
clear,
or because only one of the permissible meanings produces a substantive
effect that is compatible with the rest of the
law." United Savings Ass'n v. Timbers of Inwood Forest Associates,
Ltd., 484 U.S. 365, 371 (1988) (citations omitted). Here, other
provisions of the Judgment Funds Distribution Act provide guidance in
the interpretation of the $2,000 exclusion at 25 U.S.C. § 1407
(section 7 of the Judgment Funds Distribution Act, as amended).
11. Congress, in August 1993, amended section 8 of the Judgment Funds
Distribution Act (codified at 25 U.S.C. § 1408) to provide that "up to
$2,000 per year of income received by individual Indians" that is
derived from such individuals' interests in trust or restricted
property "shall not be considered income" in determining eligibility
for assistance under the Social Security Act or any other Federal or
federally-assisted program. Omnibus Budget Reconciliation Act of 1993,
Pub. L. No. 103-66, § 13736, 107 Stat. 312, 663 (emphasis added). This
exclusion in Pub. L. No. 103-66 pertains to individual income from
trust property, rather than per capita payments. However, it is
similar in its purpose to the exclusion in 25 U.S.C. § 1407 in
providing a partial exclusion from income of money derived from trust
funds or trust property. The establish­ment of an annual $2,000
exclusion in section 1408, which is similar in its purpose to 25
U.S.C. § 1407, is part of the same act, and immediately follows
section 1407 in the United States Code strongly suggests that the
$2,000 exclusion in section 1407 is also intended to apply on an
annual, rather than a per-payment, basis. Absent any expression of a
contrary congressional intent, it would be anomalous to conclude that
the $2,000 exclusions in those two related
and successive provisions were intended to be computed in different
manners.
12. The legislative history of the 1993 amendment to the Judgment
Funds Distribution Act provides further support for interpreting the
exclusion in 25 U.S.C. § 1407 consistently with that added to 25
U.S.C. § 1408 by section 13736 of Pub. L. No. 103-66. In a joint
explanatory statement on the 1993 amendment, the congressional
conference committee contrasted the then-existing difference in
treatment between income received by Native Americans from
tribally-owned trust lands and income received from individually-owned
trust or
restricted Native American lands. H.R. Conf. Rep. No. 213, 103d Cong.,
1st Sess. 875-76 (1993), reprinted in 1993 U.S.C.C.A.N. 1088, 1564-65.
The conference committee's discussion of the exclusion under 25 U.S.C.
§ 1407 for per capita payments suggests that Congress was cognizant of
the section-1407 exclusion applicable to per capita payments and
intended to create a similar exclusion for income from
individually-owned trust property. Surely, if Congress had intended
that the two related exclusions were to be applied in different
manners, it would have so specified. This leads us to conclude that
the exclusions in sections 1407 and 1408 should be applied in a
similar fashion, i.e., as annual exclusions.
13. Furthermore, we continue to believe that the $2,000-per-year
exclusion under 43 U.S.C. § 1626(c), discussed in paragraph 6, above,
is relevant to the interpretation of
the $2,000 exclusion under 25 U.S.C. § 1407, inasmuch as both statutes
have as their purpose the limitation of the extent to which certain
payments to Native Americans affect the amount of need-based Federal
benefits to which those individuals are entitled. See, e.g., Great
Northern Railway Co. v. United States, 315 U.S. 262, 277 (1942)
("'subsequent legislation may be considered to assist in the
interpreta­tion of prior legislation upon the same subject'"). There-
fore, the enactment of 43 U.S.C. § 1626(c) also suggests that the
$2,000 exclusion in 25 U.S.C. § 1407 is intended
to be an annual exclusion.
14. The fact that the other statutory exclusions from in­come
applicable to Native Americans for purposes of Federal benefits apply
on an annual basis strongly suggests that the similar exclusion in 25
U.S.C. § 1407 should also apply on an annual, rather than a
per-payment, basis. A contrary conclusion would be at odds with the
statutory scheme established by Congress in 25 U.S.C. § 1408 and 43
U.S.C. § 1626(c) for computing such exclusions for Native Americans on
an annual basis. Interpreting the section-1407 exclusion as an annual
exclusion is consistent with the language of the statute creating the
exclusion. Further, a contrary conclusion would result in potentially
inconsistent treat­ment of similarly situated claimants. For example,
if the
exclusion were construed as a per-payment exclusion, a Native American
who received three separate per capita distributions of $2,000 each in
a single year would have no countable income from such payments, but
another Native American who received a single payment of $6,000 would
have $4,000 of countable income from that payment. Even though these
persons would have received the same amount of money from per capita
trust-fund payments during the relevant one-year period for
determining pension eligibility, they would be treated differently for
purposes of that need-based benefit based solely on the manner in
which those payments were distributed. In the absence of any
indication of an intent to treat such persons differently, we would
not "attribute to Congress the intention to promulgate a rule which
would open the door to such obvious incongruities." United States v.
Dow, 357 U.S. 17, 25 (1958).
HELD:
For purposes of computing annual income under the improved-pension
statutes, 25 U.S.C. § 1407 authorizes the exclusion from a claimant's
income of no more than $2,000 of the aggregate amount received during
the relevant twelve-month period as per capita distributions from a
Native-American tribal trust fund.
Mary Lou Keener

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