  United States Court of Appeals
      for the Federal Circuit
                ______________________

    NATIONAL ORGANIZATION OF VETERANS
             ADVOCATES, INC.,
                Petitioner,

                           v.

      SECRETARY OF VETERANS AFFAIRS,
                 Respondent.
            ______________________

                      2011-7191
                ______________________

   On petition for review pursuant to 38 U.S.C. Section
502.
                ______________________

  ROMAN MARTINEZ, Latham & Watkins, LLP, of Wash-
ington, DC, argued for petitioner.

 JOHN J. TODOR, Trial Attorney, Commercial Litigation
Branch, Civil Division, United States Department of
Justice, of Washington, DC, argued for respondent. With
him on the brief were STUART F. DELERY, Acting Assistant
Attorney General, JEANNE E. DAVIDSON, Director, and
TODD M. HUGHES, Deputy Director. Of counsel on the
brief were MICHAEL J. TIMINSKI, Deputy Assistant Gen-
eral Counsel, and JONATHAN TAYLOR, Attorney, United
States Department of Veterans Affairs, of Washington,
DC,
2                      NATIONAL ORG OF VET ADV   v. SHINSEKI


Before O’MALLEY, PLAGER, AND REYNA, Circuit Judges.
PLAGER, Circuit Judge.
                 ______________________
                         ORDER
                 ______________________
    The National Organization of Veterans’ Advocates,
Inc. (NOVA) petitioned us to review a rule promulgated
by the Department of Veterans Affairs (VA). The rule
eliminated certain procedural and appellate rights for
veterans appearing before the agency’s Board of Veterans’
Appeals (Board). During the briefing process before this
court, it became clear to all parties involved that the
promulgated rule was invalid. In spite of this—and
contrary to express promises from VA to NOVA and this
court—the Board in subsequent decisions was allowed to
continue to follow the invalid rule.
    Because we find the Government’s conduct in this
case to be potentially sanctionable, this is an Order for
the Government to show cause why sanctions should not
be imposed on the responsible officials. So there will be
no misunderstanding, we explain in detail the conduct we
consider sanctionable. We also identify the harms we
consider to have resulted from the Government’s conduct,
and suggest ways these harms could be alleviated; the
Government’s showing in response to this Order will bear
on whether sanctions are imposed, and the nature and
extent of any such sanctions.
                      BACKGROUND
    The Department of Veterans Affairs administers the
laws providing benefits and other services to veterans.
See 38 U.S.C. § 301 (2006); see also Henderson v. Shinseki,
131 S. Ct. 1197, 1200 (2011). A veteran seeking benefits
 NATIONAL ORG OF VET ADV   v. SHINSEKI                  3
may submit a claim to a VA regional office, which pro-
cesses the claim and decides whether to grant benefits to
the veteran. If the veteran disagrees with the regional
office’s decision, the veteran may request that the Board
of Veterans’ Appeals review the regional office’s determi-
nation. See 38 U.S.C. § 7104.
    The veterans’ benefits system has been calibrated
with uniquely pro-claimant principles. Hodge v. West, 155
F.3d 1356, 1362 (Fed. Cir. 1998) (“This court and the
Supreme Court both have long recognized that the char-
acter of the veterans’ benefits statutes is strongly and
uniquely pro-claimant.”). Consistent with these pro-
claimant principles, and pursuant to statute, the VA
regulations in 38 C.F.R. § 3.103 provide for certain proce-
dural due process and appellate rights for veterans in-
volved in VA adjudications.
    These procedural and appellate rights require VA offi-
cials to “explain fully the issues and suggest the submis-
sion of evidence which the claimant may have overlooked
and which would be of advantage to the claimant’s posi-
tion.” § 3.103(c)(2). They also require the VA “to assist a
claimant in developing the facts pertinent to [his or her]
claim” and “to render a decision which grants every
benefit that can be supported in law while protecting the
interests of the Government.” § 3.103(a). Importantly,
the VA has consistently applied the § 3.103 rights both to
hearings conducted at the regional offices level and in
appellate hearings conducted before the Board of Veter-
ans’ Appeals. See, e.g., Douglas v. Derwinski, 2 Vet. App.
435, 440–42 (1992), aff’g on this ground Douglas v. Der-
winski, 2 Vet. App. 103, 110 (1992); Costantino v. West, 12
Vet. App. 517, 520 (1999).
    On August 23, 2011, VA issued an immediately-
effective new rule (the “2011 Rule”) that eliminated some
of the rights previously provided under § 3.103. See Rules
Governing Hearings Before the Agency of Original Juris-
4                      NATIONAL ORG OF VET ADV   v. SHINSEKI
diction and the Board of Veterans’ Appeals, Clarification,
76 Fed. Reg. 52,572-01 (Aug. 23, 2011). The 2011 Rule
limited the provisions governing hearings under § 3.103
so that they applied “only to hearings conducted before
the VA office having original jurisdiction over the claim.”
Id. at 52,574 (emphasis added). In other words, veterans
would no longer have the previously available procedural
due process and appellate rights during board appeals.
Despite this significant departure from the pro-claimant
procedures espoused by § 3.103, VA stated that the
change “merely clarifie[d] current procedures” and there-
fore was excepted from the notice-and-comment and
delayed effective date requirements of the Administrative
Procedure Act, 5 U.S.C. § 500 et seq. (APA). Id. at 52,573.
    On September 9, 2011, NOVA petitioned us to review
the 2011 Rule, arguing that VA promulgated the 2011
Rule without following the mandatory notice-and-
comment requirements of the APA set forth in 5 U.S.C. §
553. NOVA subsequently argued that VA’s written
explanation for the 2011 Rule also contained significant
errors of fact and logic, rendering it arbitrary and capri-
cious under 5 U.S.C. § 706(2)(A).
     While NOVA initially petitioned us to review the va-
lidity of the 2011 Rule, VA’s conduct during the briefing
process before this court quickly generated another dis-
pute. NOVA submitted its opening brief to us on Decem-
ber 22, 2011. Several days before VA’s responsive brief
was due, VA petitioned for a first enlargement of time to
file its brief due to “other important matters.” Resp’t’s
Mot. at 2, January 27, 2012. We granted VA’s petition,
stating that no further extensions should be expected.
    On March 5, 2012, VA petitioned for a second en-
largement of time. VA stated in its petition that it
planned to publish a repeal of the 2011 Rule in the Feder-
al Register. In discussions with VA regarding the peti-
tion, NOVA had indicated that it would not oppose VA’s
 NATIONAL ORG OF VET ADV   v. SHINSEKI                    5
petition, but only if VA promised not to apply the invalid
2011 Rule moving forward. VA agreed. VA represented
to both NOVA and to this court that “the Department of
Veterans Affairs (including the Board of Veterans’ Ap-
peals) will not apply the provisions of the August 23, 2011
amendment between now and when the repeal of that
amendment takes effect,” and thus, “the requested exten-
sion would not create any prejudice to petitioner.”
Resp’t’s Second Mot. at 3. In light of these representa-
tions, we once again granted VA’s petition, indicating that
no further extensions should be anticipated.
    Having already received two extensions of time, on
April 27, 2012, VA petitioned for a third enlargement of
time. VA stated that it wanted to allow the then pub-
lished repeal to become effective prior to submitting its
brief. 1 VA’s third petition was prefaced upon and recon-
firmed the Government’s commitment not to apply the
provisions of the 2011 Rule—which VA by that point had
publicly admitted was a violation of the APA. NOVA
opposed the extension of time with well-founded concerns
that any additional delay would result in more cases
becoming final—making it significantly harder, and
perhaps impossible, for some veterans harmed by the
invalid rule to obtain relief. In response, VA stated that it
was not aware of “any instances” in which the 2011 Rule
was applied after March 5, 2012, but if NOVA identified
any cases, the cases would be “investigated and dealt with
by the VA Office of the General Counsel.” Reply Supp.
Resp’t’s Third Mot. at 5, May 3, 2012. In light of these


    1   The VA issued a repeal on April 18, 2012, stating
that the VA “should have followed the notice-and-
comment procedure of the Administrative Procedure Act
(APA).” Rules Governing Hearings Before the Agency of
Original Jurisdiction and the Board of Veterans’ Appeals;
Repeal of Prior Rule Change, 77 Fed. Reg. 23,128-01,
23,128 (April 18, 2012).
6                      NATIONAL ORG OF VET ADV   v. SHINSEKI
representations, we ignored our twice stated unwilling-
ness to allow further extensions and granted this third
extension of time.
    Despite VA’s repeated commitment not to apply the
invalid 2011 Rule, NOVA has submitted papers to this
court indicating that the Board relied upon the 2011 Rule
in a substantial number of cases after March 5, 2012.
NOVA provided a list of the cases to VA in hopes that the
VA would live up to its word to investigate and deal with
the cases; VA has declined to do so.
    Jurisdiction to review this case arose under 38 U.S.C.
§ 502. We also have jurisdiction to review the Govern-
ment’s misconduct as a collateral issue, regardless of any
concession VA now makes regarding the continued vitali-
ty of the 2011 Rule. See Cooter & Gell v. Hartmarx Corp.,
496 U.S. 384, 395–96 (1990) (noting that proceedings
relating to costs, attorneys’ fees, contempt(s), and other
sanctions are collateral to the original proceeding and
may be heard even after the original proceeding has been
terminated).
                       DISCUSSION
                            I.
    We first address the validity of the 2011 Rule. In its
brief, NOVA argued that VA promulgated the 2011 Rule
without following the mandatory notice-and-comment
requirements set forth in 5 U.S.C. § 553 of the APA.
NOVA argued that the 2011 Rule was a substantive rule
and VA’s actions ran afoul of our decision in Military
Order of Purple Heart of USA v. Sec’y of Veterans Affairs,
580 F.3d 1293 (Fed. Cir. 2009).
    We find NOVA’s arguments regarding VA’s violations
of the APA compelling, and ultimately, so did the Gov-
ernment. In fact, to its credit the Department of Justice
refused to defend the procedural validity of the 2011 Rule,
and VA issued a repeal of the Rule. This court also noted
 NATIONAL ORG OF VET ADV   v. SHINSEKI                  7
from the bench at oral argument—and Government
counsel agreed—that the 2011 Rule was void ab initio.
After oral argument, VA issued an addendum to its repeal
of the 2011 Rule confirming that the repeal is retroactive
and “appl[ies] to decisions issued by the Board on or after
August 23, 2011,” the date that the Rule at issue was first
promulgated.     Rules Governing Hearings Before the
Agency of Original Jurisdiction and the Board of Veter-
ans’ Appeals; Repeal of Prior Rule Change, 77 Fed. Reg.
70,686-01, 70,686 (November 27, 2012). The official
repeal of the 2011 Rule and the concessions made at oral
argument confirm the invalidity of the 2011 Rule, and
render any further discussion regarding the validity of the
Rule unnecessary.
                             II.
    The issue remaining before us is what action we
should take in response to VA’s conduct, including its
failure to abide by its commitments. We first address why
we believe that action on our part is appropriate.
                             A.
    The VA’s conduct in this matter troubles the court on
multiple levels. First, VA’s conduct did not involve an
isolated mistake. Starting on March 5, 2012, VA began
representing in court filings and in other communications
with NOVA that it would immediately stop applying the
2011 Rule. VA also made various representations imply-
ing that the Board was not applying the Rule. In spite of
these representations, NOVA identified sixty cases in
which the invalid 2011 Rule may have been applied—and
that was just in the month of March. Thirty of these
cases expressly refer to the invalid 2011 Rule, and many
if not all of these thirty cases declare that the Rule ren-
ders § 3.103 inapplicable. 2 We are only left to wonder

   2    For purposes of this Order we accept NOVA’s da-
ta, although the Government is entitled to challenge the
8                      NATIONAL ORG OF VET ADV   v. SHINSEKI
how VA was able to represent to us in its May Supple-
mental Reply that it was not aware of “any instances” in
which the Board applied the 2011 Rule after March 5th.
    In more than one instance, VA said that it would in-
vestigate and rectify or deal with any application of the
invalid 2011 Rule that occurred after March 5, 2012.
Indeed, the Government concedes that it “repeatedly” told
NOVA that if NOVA found any mistakes, then the Gov-
ernment would “inform the VA Office of the General
Counsel to rectify the matter.” Reply Supp. Resp’t’s Third
Mot. at 5, May 3, 2012. NOVA identified cases to VA, and
from the record before us, it appears that VA has failed to
honor its commitments. 3
    As a consequence, VA’s conduct resulted in harm to
NOVA, its attorneys, and this court. Each has been
required to divert resources from other important activi-
ties in order to address conduct that should never have
occurred in the first place. Worse yet, VA’s conduct has
potentially harmed not just plaintiff NOVA’s organization
but the very individuals it represents and that VA is
tasked with assisting. At least as early as March 5, 2012,
the Government acknowledged that the 2011 Rule was
invalid under the APA, but VA allowed the Rule to be
applied well beyond that date. Applying the invalid 2011
Rule stripped veterans of assistance that the Board would
have otherwise been required to provide. Given this
context, VA’s failure promptly to stop the Board from
using the 2011 Rule is entirely unacceptable.

numbers in its response. We are mindful that the exact
number of affected veterans is not the issue—if one of the
injured veterans represented by NOVA was denied the
benefits the law provides, it would be one too many.

    3   Apparently VA started analyzing cases but that
effort was not carried out.
 NATIONAL ORG OF VET ADV   v. SHINSEKI                  9
    Finally, VA’s conduct troubles the court because, ra-
ther than remedy harm caused by its broken promises,
VA attempted to shift the burden to others such as
NOVA, attorneys assisting veterans (oftentimes on a pro-
bono basis), or to the harmed veterans themselves. In
particular, VA indicated in a letter to NOVA dated No-
vember 5, 2012, 4 that the routine appellate (or post-
decisional, in the case of Board reconsiderations) process
was the most appropriate venue for resolving affected
cases. VA indicated in its 2011 Rule addendum that
motions for reconsideration and appeals provided “ade-
quate avenues of relief to any claimants who may have
been adversely affected by the repealed rule.” Rules
Governing Hearings Before the Agency of Original Juris-
diction and the Board of Veterans’ Appeals; Repeal of
Prior Rule Change, 77 Fed. Reg. 70,686-01, 70,687 (No-
vember 27, 2012). The usual procedural processes, initi-
ated by the claimant, for relief from erroneous decisions
may be appropriate under usual circumstances; here they
are not.
    VA attempted to justify its conduct at oral argument,
arguing that it did not intentionally violate its commit-
ments and that its actions were not in bad faith. But the
petitions for extension of time were not based upon repre-
sentations of intent to perform certain actions, but rather
were based upon representations that those actions were
actually being performed. VA’s commitments required
VA to ensure that its statements to NOVA and this court
were true and that the invalid Rule was not being ap-
plied; only by doing so could VA avoid harming the parties
involved. The unwarranted denial of benefits means real-



   4   Letter from John J. Todor, Senior Trial Counsel,
U.S. Dep’t of Justice, to Roman Martinez, Esq., counsel
for NOVA (November 5, 2012) (submitted in Notice of
Supplemental Authority Pursuant to Rule 28(j)).
10                      NATIONAL ORG OF VET ADV   v. SHINSEKI
world consequences to veterans. Promises of hypothetical
relief do not pay for food or provide needed medical care.
    Additionally, VA’s conduct and written communica-
tions refute its assertions that its violations were unin-
tentional. For example, VA effectively stated that it
would not investigate and deal with illegal application of
the 2011 Rule because it would burdensome. 5 In other
words, VA was well aware of this commitment and inten-
tionally elected not to fulfill it.
    VA also alleges that it instructed the Board to cease
applying the Rule. VA went as far as to label NOVA’s
concerns unfounded because the Board had supposedly
been instructed to cease applying the rule on March 5,
2012. See Reply Supp. Resp’t’s Third Mot. at 5, May 3,
2012. However, the only communication that VA con-
firms actually reached the Board members and their staff
was a memorandum circulated on April 4, 2012, one
month after the promised date. VA also alleged that the
Board’s Principal Deputy Vice Chairman had stated that
her office would instruct the Board to cease applying the
amendments to § 3.103. 6 The record VA presented to the
court, however, never confirms if (or when) this instruc-
tion actually occurred. And the Board’s extensive reliance
on the invalid 2011 Rule throughout the month of March
2012 confirms that—irrespective of what VA alleges that
it did—VA failed to ensure that the 2011 Rule was not
being applied by the Board.

     5  “Upon review, the VA Office of General Counsel
concluded that your request that VA identify and remedy
any cases of prejudice due to the Board’s application of
the August 23 amendments since March 5, 2012, would
involve extensive review and would be likely to identify
very few, if any, cases of specific and remediable preju-
dice.” Letter from John J. Todor, supra note 4.

     6   See Letter from John J. Todor, supra note 4.
 NATIONAL ORG OF VET ADV   v. SHINSEKI                   11
                             B.
   VA’s failure to abide by its commitments to this court
and opposing counsel raises the question of whether we
should exercise our inherent or statutory powers to issue
sanctions against the agency and the responsible officials.
    Courts of justice are vested by their very creation with
power “to impose silence, respect, and decorum, in their
presence, and submission to their lawful mandates.”
Anderson v. Dunn, 19 U.S. 204, 227 (1821). These powers
include the power to “manage their own affairs so as to
achieve the orderly and expeditious disposition of cases.”
Link v. Wabash R. Co., 370 U.S. 626, 630–31 (1962). A
court may rely on its inherent powers to award monetary
sanctions when a party has acted in “bad faith, vexatious-
ly, wantonly, or for oppressive reasons.” Chambers v.
NASCO, Inc., 501 U.S. 32, 45–46 (1991).
     Courts of justice also have the ability to “fashion an
appropriate sanction for conduct which abuses the judicial
process.” Id. at 44–45. And while sanctions must be
fashioned with restraint and discretion, courts of justice
can fashion appropriate monetary and nonmonetary
sanctions to rectify misbehavior. Examples of sanctions
fashioned by courts include: awarding attorneys’ fees (see
id. at 55–58); barring a criminal defendant who disrupts a
trial from the courtroom (see Illinois v. Allen, 397 U.S. 337
(1970)); ordering a new trial on all issues (see Schreiber
Foods, Inc. v. Beatrice Cheese, Inc., 402 F.3d 1198, 1206
(Fed. Cir. 2005)); and issuing reprimands (see In re Bailey,
182 F.3d 860, 864–65 (Fed. Cir. 1999)).
    Given the Government’s conduct in this case, the
court orders the Government to show cause why it should
not be sanctioned under this court’s inherent authority. It
seems that sanctions may be needed to motivate VA in
the future to treat its commitments and representations
to this court and opposing counsel with the seriousness to
which they are entitled.
12                     NATIONAL ORG OF VET ADV   v. SHINSEKI
    While the court is prepared to consider sanctions for
misconduct by the Government and its responsible offi-
cials, we recognize that doing so imposes additional
burdens on all the parties as well as this court. As an
alternative to entering into sanctions proceedings, we are
willing to first receive and review a submission from the
Government that 1) provides a plan for how VA intends to
identify and rectify harms caused by VA’s failure to abide
by its representations, and 2) explains why VA’s plan
renders sanctions proceedings unnecessary. VA may
already be undertaking such a plan due to VA’s emphasis
on accountability. 7
   In preparing a plan for submission to this court, the
Government may wish to address the following concerns:
     1. Does the VA propose to provide individual notice
        of the problem to every veteran who, during the
        relevant time period, may have had a case affect-
        ed by the Board’s erroneous application of the
        2011 Rule? 8


     7  VA proclaims to “perform in a manner at all times
that makes [VA] accountable, responsible, and answera-
ble to veterans and their families . . . .” Mission, Vision,
Core Values & Goals, U.S. Dep’t of Veterans Affairs
(October 3, 2011) http://www.va.gov/about va/mission.asp.

     8  The relevant time period ends the last date the
Board may have applied the invalid Rule to cases before
it. At a minimum it includes all cases heard or acted
upon beginning March 5, 2012. Further, VA may wish to
explain its intentions with regard to cases heard or acted
upon from the date the invalid Rule was first promulgat-
ed, August 2011; the Government has acknowledged that
the Rule was void ab initio, and has publically declared
that the repeal of the Rule “appl[ies] to decisions issued
by the Board on or after August 23, 2011.” See supra.
 NATIONAL ORG OF VET ADV   v. SHINSEKI                  13
   2. Does the VA intend to conduct reviews of the cas-
      es heard or decided by the Board during the rele-
      vant time period, and take appropriate corrective
      action?
   3. Does the VA’s proposed plan satisfy or remedy
      each of its broken commitments to this court and
      to NOVA, including its commitments not to apply
      the 2011 Rule and to rectify harm caused thereby?
   4. Does the plan address any procedural and timeli-
      ness hurdles that may impact affected veterans
      who seek redress for the harms caused by the in-
      valid Rule, including those who seek redress di-
      rectly from the VA?
    We expect that the Government will choose to confer
with NOVA regarding its proposed plan so that any plan
submitted to the court fully addresses the harms caused
by the Government’s conduct and minimizes the need for
further orders by this court.
                      CONCLUSION
     Accordingly, we grant the Government a period of six-
ty (60) days to respond to this Order To Show Cause. If
necessary, NOVA will have a period of thirty (30) days
following the Government’s submission in which to file a
formal response with its comments and recommendations.
                      SO ORDERED
                                    FOR THE COURT

  March 21, 2013                    /s/ S. Jay Plager
      Date                          S. Jay Plager
                                    Circuit Judge
