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                                                       Calendar No. 123
112th Congress                                                   Report
                                 SENATE
 1st Session                                                     112-42

======================================================================



 
              CARING FOR CAMP LEJEUNE VETERANS ACT OF 2011

                                _______
                                

                 August 1, 2011.--Ordered to be printed

                                _______
                                

         Mrs. Murray, from the Committee on Veterans' Affairs, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 277]

    The Committee on Veterans' Affairs (hereinafter, ``the 
Committee''), to which was referred the bill (S. 277), to amend 
title 38, United States Code (hereinafter, ``U.S.C.''), to 
provide hospital care, medical services, and nursing home care 
to veterans who were stationed at Camp Lejeune, North Carolina, 
while the water was contaminated at Camp Lejeune, and for other 
purposes, having considered the same, reports favorably thereon 
with an amendment in the nature of a substitute, and recommends 
that the bill, as amended, do pass.

                              Introduction

    On February 3, 2011, Committee Ranking Member Richard Burr 
introduced S. 277, to provide hospital care, medical services, 
and nursing home care to veterans who were stationed at Camp 
Lejeune, North Carolina, while the water was contaminated at 
Camp Lejeune, and for other purposes. Senators Grassley, Hagan, 
and Nelson of Florida were original cosponsors. Senators 
Blumenthal, Graham, Harkin, Isakson, and Johanns were later 
added as cosponsors.
    On June 8, 2011, the Committee held a hearing on pending 
health and benefits legislation, including S. 277. Testimony 
was offered by: Robert L. Jesse, M.D., PhD., Principal Deputy 
Under Secretary for Health, Veterans Health Administration, 
Department of Veterans Affairs; Jeff Steele, Assistant 
Legislative Director, The American Legion; Joseph Violante, 
National Legislative Director, Disabled American Veterans; 
Raymond Kelley, Director, National Legislative Service, 
Veterans of Foreign Wars of the United States; and Jerry 
Ensminger, Master Sergeant, United States Marine Corps (Ret.).

                           Committee Meeting

    After carefully reviewing the testimony from the June 8, 
2011, hearing, the Committee met in open session on June 29, 
2011, to consider, among other legislation, an amended version 
of S. 277. The Committee voted without dissent to report 
favorably S. 277, as amended, to the Senate.

                     Summary of S. 277 as Reported

    S. 277, as reported (hereinafter, ``the Committee bill''), 
would furnish hospital care, medical services, and nursing home 
care to veterans who were stationed at Camp Lejeune, North 
Carolina, while the water was contaminated at Camp Lejeune, and 
for other purposes.
    Section 1 would establish the short title for the bill, 
``Caring for Camp Lejeune Veterans Act of 2011.''
    Section 2 would provide certain veterans and their families 
with eligibility for hospital care, medical services, and 
nursing home care through the Department of Veterans Affairs 
(hereinafter, ``VA'') if they were stationed or resided at Camp 
Lejeune, North Carolina, during the period that the water was 
contaminated on Camp Lejeune. It would also require the 
Department of Defense (hereinafter, ``DOD'') to reimburse VA 
for the costs of that care.
    Section 3 would require DOD to merge and consolidate the 
system of commissaries and exchange stores to achieve a single 
system of stores.

                       Background and Discussion

    In a few specific instances, Congress has acted to provide 
benefits and health care to veterans who may have been exposed 
to environmental hazards during their military service. On a 
few occasions, Congress has extended health care and benefits 
to the children of servicemembers and veterans based on a 
concern that they were born more susceptible to certain 
diseases or conditions because of a parent's exposure to an in-
service environmental hazard.
    At an October 8, 2009, hearing, one exposure that was 
specifically addressed by the Committee was the water 
contamination at Camp Lejeune. The extent of the exposure at 
Camp Lejeune is considered to have been the result of the 
largest domestic environmental contamination incident in the 
history of DOD and the complexity and scope of the 
contamination presented questions that were both significant 
and unprecedented because of exposure to military personnel and 
their dependents.
    Marine Corps base Camp Lejeune is an active military base 
located on 236 square miles of land in Onslow County, North 
Carolina, adjacent to the southern side of the City of 
Jacksonville. It was commissioned in 1942 as a training area to 
prepare Marines for combat and is the largest East Coast base 
of the United States Marine Corps.
    As explained by the Government Accountability Office 
(hereinafter, ``GAO''), the drinking water at Camp Lejeune is 
obtained from groundwater pumped from a freshwater aquifer 
located approximately 180 feet below the ground. Groundwater is 
pumped from wells located throughout the base. After the water 
is treated, it is stored in ground and elevated storage 
reservoirs. When needed, the treated water is pumped from the 
reservoirs and tanks to facilities such as offices, schools, or 
houses on the base. Camp Lejeune's only source of drinking 
water is ground water wells.
    According to the U.S. Marine Corps, Camp Lejeune officials 
in 1980 first became aware of volatile organic compounds 
(hereinafter, ``VOCs'') in finished drinking water (tap water) 
samples that were being collected to comply with future 
drinking water standards. After those results were compiled, 
none of the water supply wells were tested for VOCs. In January 
1982, the Navy Assessment and Control of Installation 
Pollutants (hereinafter, ``NACIP'') Program at Camp Lejeune 
began to identify potentially contaminated sites on the base. 
In 1982 and 1983, continued testing identified two VOCs--
trichloroethylene (hereinafter, ``TCE''), a metal degreaser 
used for industrial purposes on the base, and perchloroethylene 
(hereinafter, ``PCE''), a dry cleaning solvent--in two water 
systems that served Camp Lejeune base housing areas: Hadnot 
Point and Tarawa Terrace. Base officials stated they did not 
know the source of these VOCs; water treatment plants and 
piping infrastructure were investigated as the possible 
sources, but were eliminated as possible sources in 1983. 
Following that unsubstantiated explanation, there was no effort 
to test the water supply wells for VOCs.
    That same year, the NACIP initial assessment study was 
published. This study eventually led to the sampling of 
individual water supply wells in 1984. A direct association 
between VOCs in the Hadnot Point and Tarawa Terrace drinking 
water and VOCs in the wells and groundwater was established 
when the water supply wells were sampled beginning in July 
1984, but analysis of those samples was not received at Camp 
Lejeune until November 1984. Officials at Camp Lejeune 
confirmed the wells were impacted by VOCs in November 1984 and 
shut them down in late 1984 and early 1985.
    Measurements of mixed water samples suggest that supply 
wells TT-23 and TT-26 were major contributors to contamination 
of the Tarawa Terrace water supply. The Agency for Toxic 
Substances and Disease Registry (hereinafter, ``ATSDR'') lists 
16 wells that served the Tarawa Terrace water supply system. 
According to GAO, two wells, TT-23 and TT-26, were shut down on 
February 8, 1985, because of PCE contamination. However, well 
TT--23 was used briefly after that date--at least on March 11-
12, 1985, and on April 22, 23, and 29, 1985. ATSDR indicates 
that TT-23 was removed from service in May 1985.
    According to the National Research Council (hereinafter, 
``NRC''), which functions under the auspices of the National 
Academy of Sciences (hereinafter, ``NAS''), there were multiple 
sources of potential pollutants, including an industrial area, 
a drum dump, a transformer storage lot, an industrial fly ash 
dump, an open storage pit, a former fire training area, a site 
of a former on-base dry cleaner, a liquids disposal area, a 
former burn dump, a fuel-tank sludge area, and the site of the 
original base dump. The NRC stated that the contamination for 
the Tarawa Terrace area appears to have begun in the middle 
1950s and continued until the middle 1980s, when contaminated 
supply wells were shut down. According to the Marine Corps, 
nine of ten wells taken out of service have been permanently 
demolished (piping removed and holes filled in). One well was 
returned to service in 1993 following multiple clean samples. 
This well is in service today. Currently, drinking water is 
checked for VOCs quarterly to ensure water is not impacted.
    Camp Lejeune was placed on the Environmental Protection 
Agency (hereinafter, ``EPA'') National Priorities List in 1989. 
The National Priorities List is part of the Superfund cleanup 
process and lists the most hazardous environmental sites across 
the United States and its territories. It serves primarily for 
informational purposes, identifying for the states and the 
public those sites that appear to warrant remedial actions. 
Today, Camp Lejeune is still on that list, as are approximately 
130 other military installations.
    From 1991 to 1997, ATSDR conducted a public health 
assessment (hereinafter, ``PHA'') at Camp Lejeune that was 
required by law, under title 42, U.S.C., because of the 
installation's listing on the National Priorities List. ATSDR 
was particularly interested in routine drinking water tests, 
conducted in the 1980s, that found VOCs at detectable levels in 
some on-base drinking water supply wells. In 1998, ATSDR 
completed a birth outcome study of women who conceived or gave 
birth to children while at Camp Lejeune and concluded that 
drinking water contaminated with VOCs may be associated with 
decreased average birth weight-for-gestational-age births in 
infants born to mothers over the age of 35 or in women who had 
a history of adverse pregnancy outcomes. As reported by ATSDR, 
health outcomes linked to exposure to PCE and TCE include eye 
defects, miscarriages, fetal death, leukemia, and many forms of 
cancer.
    In response to concerns from many Marines and their 
families who had been present at Camp Lejeune and to supplement 
the few studies that had been undertaken and to help inform 
decisions about addressing health claims, Congress mandated in 
Public Law 109-364, the John Warner National Defense 
Authorization Act for Fiscal Year 2007, that the Secretary of 
the Navy enter into an agreement with the NAS to examine 
whether adverse health effects are associated with past 
contamination of the water supply at Camp Lejeune. The NRC 
published its report on June 13, 2009, listing possible health 
consequences of exposure to TCE and PCE in the contaminated 
water at Camp Lejeune during the period from 1957-1985. All the 
health outcomes listed in its report were placed into one of 
two categories: limited/suggestive evidence of an association 
or inadequate/insufficient evidence to determine whether an 
association exists between exposure to TCE and PCE and adverse 
health outcomes.
    The strongest evidence was in the category of limited/
suggestive evidence of an association, which means there is 
some evidence that people who were exposed to TCE or PCE were 
more likely to have a certain disease or disorder but that the 
studies were either few in number or had limitations. However, 
associations between exposures and diseases or disorders placed 
in the limited/suggestive evidence of an association category 
cannot be ruled out. The other health outcomes reviewed were 
placed in the category of inadequate/insufficient evidence to 
determine whether an association exists, which means that the 
studies were too few in number, limited in quality, 
inconsistent, or inclusive in results to make an informed 
assessment. Fourteen of the 59 health outcomes reviewed by the 
NRC were placed in the limited/suggestive evidence of an 
association category, and 45 were placed in the inadequate/
insufficient evidence category. According to the NRC, in many 
cases the study subjects were exposed to multiple chemicals, 
making it impossible to separate the effects of individual 
chemicals. It is informative to note that the EPA has issued a 
new draft risk assessment for TCE which classifies TCE as a 
``known human carcinogen.''
    In 2007, GAO reported that former residents and employees 
of Camp Lejeune had filed more than 750 claims against the 
federal government related to the contamination. Adjudication 
of these claims and similar claims filed since then has been 
postponed until completion of an ongoing study being performed 
by ATSDR. This study on specific birth defects and childhood 
cancers includes children born from 1968 through 1985 to 
mothers who, for some time during their pregnancies, were 
exposed to drinking water contaminated with VOCs at Camp 
Lejeune. It is scheduled to be completed in 2011. However, Dr. 
John R. Nuckols, a member of the NRC's Committee on 
Contaminated Drinking Water at Camp Lejeune, testified at a 
hearing in the 111th Congress that, because further research 
was unlikely to provide definitive information, his committee 
had concluded that there was no scientific justification for 
the Navy and Marine Corps to wait for the results of ATSDR's 
additional health studies before making policy decisions about 
how to follow up on the evident solvent exposures on the base 
and their possible health consequences.
    In 2009, ATSDR retracted the 1997 PHA after ATSDR 
acknowledged it had not fully investigated the extent of 
benzene contamination on the base. ATSDR will reissue a revised 
PHA and continues to conduct a series of studies and surveys to 
investigate the contamination of the water system at Camp 
Lejeune. The most prominent of these is a Water Model, which 
will synthesize the data from multiple samples of the water and 
other data in order to map out the most likely dispersion and 
concentration of the VOCs on various areas of the base. The 
Water Model and a Mortality Study of former base military 
personnel are expected to be completed by early 2012. ATSDR 
also began in July 2011 a Health Survey to be sent to 300,000 
former residents of the base, military and civilian. This 
survey is expected to be completed by 2014.
    At the June 8, 2011, hearing, Jerry Ensminger, a retired 
Marine Corps Master Sergeant, testified that his daughter, who 
was conceived, carried, and born at Camp Lejeune, died at age 
nine after she was diagnosed with acute lymphoblastic leukemia. 
Mr. Ensminger, a member of ATSDR's Community Assistance Panel 
for its Camp Lejeune studies, indicated that, since 2009, 
significant new information pertaining to extensive fuel leaks 
from underground tanks on the base and subsequent benzene 
contamination had been discovered by ATSDR during reviews of 
previously unavailable documents and that, in some of those 
documents, Navy contractors had estimated the magnitude of the 
fuel losses on the base at close to one million gallons over 
several decades. The ATSDR Water Model will ascertain the 
severity of benzene contamination in the base drinking water. 
VA's Dr. Jesse testified thatone million people may have been 
exposed to hazardous chemicals in the Camp Lejeune well water.
    Also of note, at the Louisville, Kentucky, Regional Office, 
VA has consolidated all disability claims based on exposure to 
contaminated drinking water at Camp Lejeune from veterans 
throughout the United States. A team of VA employees there is 
tasked with reviewing and adjudicating these claims. As of the 
June 8, 2011, hearing, that office had adjudicated 125 such 
claims and had granted service connection in 22 percent of 
those cases. That office had another 967 claims based on the 
contaminated water pending adjudication.
    Committee Bill. The Committee bill would authorize health 
care benefits through VA to certain veterans for any illness 
that is attributable to the contaminated drinking water on Camp 
Lejeune beginning in fiscal year 2013. The Committee bill would 
provide health care benefits to spouses and dependents of 
veterans for conditions associated with exposure to the 
contaminated drinking water on Camp Lejeune. The Committee bill 
would direct DOD to transfer funds to VA to cover the costs of 
the health care provided to these veterans and their families. 
In order to pay for the increase in funding for providing 
health care to veterans and their families, the Committee bill 
would decrease DOD spending by consolidating the systems of 
commissary and exchange stores in DOD.
    Section 2(a) of the Committee bill would amend section 
1710(e)(1) of title 38, U.S.C., to add a new subparagraph (F), 
that would authorize VA to provide veterans who were stationed 
at Camp Lejeune during the period the water was contaminated 
with hospital care, medical services, and nursing home care for 
any illness, despite insufficient evidence that the illness is 
attributable to the contamination.
    Section 2(b) of the Committee bill would amend subchapter 
VIII of chapter 17 of title 38, U.S.C., by adding a new section 
1787 that would make family members of Camp Lejeune veterans 
eligible for hospital care, medical services, and nursing home 
care for conditions that are associated with exposure to the 
VOCs known to have been in the water at Camp Lejeune, North 
Carolina. VA would be required to promulgate regulations that 
specify the conditions associated with the exposure, and 
disabilities related to those conditions.
    Section 2(c) of the Committee bill would amend section 8111 
of title 38, U.S.C., by adding new subsection (f) that would 
require DOD and VA to enter into an agreement for DOD to 
reimburse VA for the costs of providing hospital care to 
veterans and their dependents under this bill. The costs would 
include the overhead and administrative costs of the care and 
services provided to veterans and their dependents. The 
Committee believes that DOD should reimburse VA for costs of 
treating the Camp Lejeune veterans and their family members.
    Section 2(d) of the Committee bill would provide that the 
changes made by section 2 would take effect on October 1, 2012, 
and apply with respect to care provided on or after that date.
    Section 3 of the Committee bill would, in a freestanding 
provision, direct DOD to merge and consolidate the system of 
commissary stores and the system of exchange stores into a 
single system of commissary and exchange stores to eliminate 
duplicative administrative functions. This section would 
instruct DOD to achieve a single system of stores that would 
operate on a self-sufficient basis without the need for 
appropriated funds by September 30, 2015.
    It is the Committee's intent that this provision would 
create management efficiencies by consolidating management 
functions. It is not the Committee's intent to close or 
consolidate individual stores. The longstanding issue of the 
contaminated water on Camp Lejeune will not be resolved without 
a coordinated effort from the Committee on Armed Services of 
the Senate (hereinafter, ``SASC''), DOD, VA and this Committee. 
The Committee is not opposed to entertaining an alternative 
cost savings provision within the DOD budget that SASC may deem 
appropriate to fulfill the intent of this legislation.

                      Committee Bill Cost Estimate

    In compliance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate, the Committee, based on 
information supplied by the Congressional Budget Office 
(hereinafter, ``CBO''), estimates that enactment of the 
Committee bill would, relative to current law, reduce 
discretionary costs by about $2 billion over the 2012-2016 
period, but would not affect direct spending or revenues. 
Enactment of the Committee bill would not affect the budget of 
state, local, or tribal governments.
    The cost estimate provided by CBO, setting forth a detailed 
breakdown of costs, follows:

                               Congressional Budget Office,
                                     Washington, DC, July 25, 2011.
Hon. Patty Murray,
Chairman, Committee on Veterans' Affairs, U.S. Senate, Washington, DC.
    Dear Madam Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 277, the Caring for 
Camp Lejeune Veterans Act of 2011.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Ann E. 
Futrell.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                          Director.
    Enclosure.

S. 277--Caring for Camp Lejeune Veterans Act of 2011

    Summary: S. 277 would authorize a new federal health 
benefit for former military members who were stationed at Camp 
Lejeune, North Carolina, and their dependents whose health was 
affected by exposure to environmental contaminants while 
residing on the base. The bill also would consolidate the 
Department of Defense (DOD) Commissary and Exchange Systems. 
CBO estimates that implementing this bill would, in total, 
reduce discretionary costs by about $2 billion over the 2012-
2016 period, assuming appropriation actions consistent with the 
bill.
    Enacting S. 277 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    S. 277 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 277 is shown in the following table. The 
costs of this legislation fall within budget functions 050 
(national defense) and 700 (veterans benefits and services).

----------------------------------------------------------------------------------------------------------------
                                                               By fiscal year, in millions of dollars--
                                                     -----------------------------------------------------------
                                                        2012     2013     2014      2015       2016    2012-2016
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Camp Lejeune Health Benefits:
    Estimated Authorization Level...................        0       32      101        155        193        481
    Estimated Outlays...............................        0       29       93        149        188        459
Department of Defense Retail Consolidation:
    Estimated Authorization Level...................        0        0     -400     -1,000     -1,700     -3,100
    Estimated Outlays...............................        0        0     -300       -800     -1,400     -2,500
                                                     -----------------------------------------------------------
    Total Changes:
    Estimated Authorization Level...................        0       32     -299       -845     -1,507     -2,619
    Estimated Outlays...............................        0       29     -207       -651     -1,212     -2,041
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: For this estimate, CBO assumes the 
legislation will be enacted near the start of fiscal year 2012, 
that the authorized amounts will be provided near the start of 
fiscal year 2013 and each subsequent fiscal year, and that 
outlays will follow historical patterns for similar and 
existing programs.

Camp Lejeune Health Benefits

    Effective October 1, 2012, section 2 would authorize 
creation of a new federal health benefit for former military 
members who were stationed at Camp Lejeune, North Carolina, and 
their dependents whose health was affected by environmental 
contamination. The drinking water at Camp Lejeune was 
contaminated from 1957 through 1987, allegedly causing higher 
incidence rates of some cancers (for example, esophageal, 
breast, and kidney), birth defects, and other physical 
ailments.
    Based on information from the Department of Defense, CBO 
estimates that 650,000 people were stationed at Camp Lejeune 
during the period of contamination. However, CBO expects that 
less than 10 percent of those individuals would eventually be 
newly enrolled to receive certain health care benefits provided 
by the Department of Veterans Affairs. That estimate is based 
on take-up rates for two other government programs that provide 
compensation for occupational illnesses: the Radiation Exposure 
Compensation Program and the Energy Employees Occupational 
Illness Compensation Program (EEOICP). The number of people 
approved for benefits would be significantly smaller than the 
population potentially exposed because many of those potential 
beneficiaries either would not have adequate proof of an 
ailment connected to the contamination (for dependents), would 
not be able to be located, or would have died.
    Of those who enroll for health benefits in the first five 
years, CBO estimates that most--about 42,000--would be former 
military members, while the rest--about 3,000--would be spouses 
and children of former servicemembers. We expect that use of 
this program would phase in over time, with about 9,000 
individuals enrolling in the first year. CBO uses disease 
prevalence rates from the Surveillance Epidemiology and End 
Results Cancer Statistics Review to estimate roughly how many 
spouses and children may have diseases that would make them 
eligible for health benefits.
    Based on the cost of health benefits provided to veterans 
exposed to other environmental contamination, CBO estimates 
that the cost of health care for each eligible veteran would be 
about $2,700 in 2013. For spouses and children, CBO assumes 
higher health care costs similar to those for health benefits 
provided by EEOICP. CBO estimates that the annual cost of the 
new health benefit for dependents would be about $10,700 in 
2013 for each approved claim. Costs for dependents would be 
higher than the average annual medical costs for veterans 
because the bill specifies that spouses and children must be 
diagnosed with diseases and conditions directly related to the 
exposures in question. CBO estimates that per capita costs 
would increase by about 6 percent each year, based on national 
per capita health expenditure projections published by the 
Centers for Medicare and Medicaid Services.
    Based on costs for existing programs, CBO estimates 
administrative costs to process the new health claims would 
amount to $43 million over the 2013-2016 period. CBO assumes a 
gradual implementation rate to reflect the time necessary to 
establish regulations.
    In total, CBO estimates that providing health benefits to 
veterans and their family members previously stationed at Camp 
Lejeune would cost $459 million over the 2013-2016 period, 
assuming appropriation of the necessary amounts.

Department of Defense retail consolidation

    Section 3 would require DOD to combine their retail stores 
into a single system, beginning in fiscal year 2013. Currently 
DOD operates a network of grocery stores (commissaries) that 
serves all branches of the armed forces and three separate 
chains of general retail stores (exchanges). One system of 
exchanges serves the Army and Air Force, a second serves the 
Navy, and a third serves the Marine Corps. The bill would 
combine all those entities into one system, and require the 
consolidated system to be self-sustaining (that is, operate 
without appropriations) starting in fiscal year 2016.
    Currently the commissary system relies on appropriated 
funds to pay its operating costs. In fiscal year 2011, the 
commissary system has received appropriations of approximately 
$1.3 billion to pay for the salaries of employees, the 
transportation of its inventory, and other costs associated 
with operating and maintaining approximately 250 stores. The 
commissary's inventory is financed on a revolving basis, using 
the cash generated from sales of that inventory.
    The three exchange systems are less reliant on 
appropriations. Although certain expenses of the exchanges are 
paid for through appropriations--including the transportation 
of certain items and the salaries of military personnel 
employed by the exchanges--the majority of the exchanges' costs 
are funded from sales revenues generated by the exchanges. 
Based on information from DOD, CBO estimates that 
appropriations provided to DOD cover approximately $200 million 
of exchange-related costs annually.
    Overall, CBO estimates that DOD's retail system currently 
receives approximately $1.5 billion in appropriated funds each 
year, and, including the effects of inflation, those systems 
could expect to receive approximately $1.7 billion in 2016. For 
the retail system to operate without appropriated funds, CBO 
anticipates that two adjustments would be necessary: 
consolidating headquarters and certain operations and an 
increase in sales revenue. CBO estimates that the efficiencies 
that would result from consolidating operations would produce 
approximately 20 percent of the saving necessary for the 
combined system to achieve self-sufficiency.
    The remaining portion of the funds to operate a self-
sufficient system would need to be generated through increasing 
prices in the combined system. The commissary and exchange 
systems currently offer their patrons savings of approximately 
30 percent and 20 percent, respectively, as compared to retail 
operations in the private sector. CBO estimates that prices in 
the combined system would need to rise by approximately 7 
percent to generate sufficient revenue to offset the loss of 
appropriated funds. Assuming that the retail system is fully 
consolidated by 2015, that such a price increase is phased in 
gradually over the 2013-2016 period, and that appropriations 
are in turn reduced over the same period, CBO estimates that 
implementing section 3 of the bill would yield discretionary 
savings of $2.5 billion over the 2013-2016 period.
    Intergovernmental and private-sector impact: S. 277 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Federal Costs: Health Benefits--Ann 
E. Futrell; DOD Retail Consolidation--Jason Wheelock; Impact on 
State, Local, and Tribal Governments: Lisa Ramirez-Branum; 
Impact on the Private Sector: Elizabeth Bass.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                      Regulatory Impact Statement

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee on Veterans' 
Affairs has made an evaluation of the regulatory impact that 
would be incurred in carrying out the Committee bill. The 
Committee finds that the Committee bill would not entail any 
regulation of individuals or businesses or result in any impact 
on the personal privacy of any individuals and that the 
paperwork resulting from enactment would be minimal.

                 Tabulation of Votes Cast in Committee

    In compliance with paragraph 7(b) of rule XXVI of the 
Standing Rules of the Senate, the following is a tabulation of 
votes cast in person or by proxy by members of the Committee on 
Veterans' Affairs at its June 29, 2011, meeting. On that date, 
the Committee, by voice vote, without objection, ordered to 
favorably report S. 277, as amended.

                             Agency Report

    On June 8, 2011, Robert L. Jesse, M.D., Ph.D., Principal 
Deputy Under Secretary for Health, Veterans Health 
Administration, VA, appeared before the Committee and submitted 
testimony on, among other items, S. 277. Excerpts from this 
statement are reprinted below:

  ROBERT L. JESSE, M.D., PH.D., PRINCIPAL DEPUTY UNDER SECRETARY FOR 
 HEALTH, VETERANS HEALTH ADMINISTRATION, DEPARTMENT OF VETERANS AFFAIRS

    Good Morning Chairman Murray, Ranking Member Burr and 
Members of the Committee. Thank you for inviting me here today 
to present the Administration's views on several bills that 
would affect Department of Veterans Affairs (VA) benefits 
programs and services.

           *       *       *       *       *       *       *



          s. 277, caring for camp lejeune veterans act of 2011


    S. 277 would amend title 38 to extend special eligibility 
for hospital care, medical services and nursing home care for 
certain Vet- erans stationed at Camp Lejeune during a period in 
which well water was contaminated notwithstanding that there is 
insufficient scientific evidence to conclude that a particular 
illness is attributable to such contamination. It would also 
make family members of those Veterans who resided at Camp 
Lejeune eligible for the same services, but only for those 
conditions or disabilities associ- ated with exposure to the 
contaminants in the water at Camp Lejeune, as determined by the 
Secretary.
    VA takes the Camp Lejeune matter very seriously but has a 
variety of significant concerns with this bill. For example, 
although we believe that the intent of S. 277 is to provide 
these Veterans with the same enrollment and treatment authority 
as for Persian Gulf and post-Persian Gulf Veterans, the bill 
does not do so because it fails to amend section 1710(e)(2) to 
address the new special eligi- bility provision. As the 
legislation is written, VA would be required to provide 
treatment for any condition that cannot be specifically 
eliminated as related to the contaminated water at Camp 
Lejeune. This bill would not make the special eligibility of 
these Veterans subject to the limitation that care may not be 
provided ``with respect to a disability that is found, in 
accordance with guidelines issued by the Under Secretary for 
Health, to have resulted from a cause other than the service or 
testing described in such subparagraph.'' As a result, this 
bill grants these Veterans a broader special eligibility than 
that conferred on Persian Gulf and post-Persian Gulf Veterans.
    The Agency for Toxic Substances and Disease Registry 
(ATSDR) is conducting ongoing research related to the potential 
exposures at Camp Lejeune. Current ATSDR research is 
concentrating on refining hydrological modeling to determine 
the extent of benzene contamination. This information will then 
be used along with results from ongoing population studies to 
determine if the potentially exposed population at Camp Lejeune 
has experienced an increase in adverse health effects such as 
birth defects, cancers, and mortality. VA will closely monitor 
this research and will quickly consider the findings and take 
appropriate action. In addition, VA will support these studies 
by acting on ATSDR requests to confirm specific Veteran's 
health issues. VA has a close working relationship with ATSDR 
which allows the Department to stay informed about current 
research.
    We are also greatly concerned that the Department of 
Defense (DOD), and consequently VA, is unable to accurately 
identify those that may have visited for short periods of time 
at Camp Lejeune and surrounding areas during the period of 
potential exposure. While the legislation provides that the 
Secretary in conjunction with ATSDR shall determine the 
applicable period, discussion usually centers on the period of 
1957-1987. DOD records have proven problematic in identifying 
all potential beneficiaries, especially since the legislation 
does not provide for any limitations as to how long an 
individual had to be on base at Camp Lejeune. It is possible 
through the Defense Manpower Data Center to identify Veterans 
assigned to Camp Lejeune. However, it is impossible to identify 
those Veterans who visited Camp Lejeune for temporary duty and 
many of the family members who resided at or visited the base. 
We note that VA treatment of family members as prescribed by 
veterans.
    Veterans who are part of this cohort may apply to enroll in 
VA health care if they are otherwise eligible, and are 
encouraged to discuss any specific concerns they have about 
this issue with their health care provider. VA environmental 
health clinicians can provide these Veterans with information 
regarding the potential health effects of exposure to volatile 
organic compounds and VA's War-Related Illness and Injury Study 
Centers are also available as a resource to providers. Veterans 
are also encouraged to file a claim for VA disability 
compensation for any injury or illness they believe is related 
to their military service. Currently, Camp Lejeune disability 
claims are handled on a case by case basis and significant 
weight is given to the opinions provided by qualified medical 
examiners who are aware of the contaminants and their potential 
long-term health effects. In an effort to provide fair and 
consistent decisions based on service at Camp Lejeune during 
the period of water contamination, VA has consolidated claims 
processing at the Louisville Regional Office.
    Because of these concerns and others about the adequacy of 
the underlying scientific evidence, VA does not support this 
bill.
    It is unclear exactly how many people were potentially 
affected by the water contamination at Camp Lejeune, but some 
estimates place the number at one million Veterans and family 
members. VA estimates that the costs associated with this bill 
are $292 million in fiscal year 2012, $1.6 billion over five 
years, and $3.9 billion over ten years. In addition, the 
Department anticipates that this legislation would result in 
lost revenue associated with collections. VA estimates this 
loss of revenue to be $19.5 million in fiscal year 2012, $110 
million over five years, and $213 million over ten years.

           *       *       *       *       *       *       *

    On June 8, 2011, DOD submitted testimony for the record on, 
among other bills, S. 277. Excerpts from this statement are 
reprinted below:

              STATEMENT OF THE U.S. DEPARTMENT OF DEFENSE

    Chairman Murray, Ranking Member Burr, and members of this 
distinguished Committee thank you for extending the invitation 
to the Department of Defense to address pending legislation 
that would significantly affect our Servicemembers [including] 
S. 277, the proposed ``Caring for Camp Lejeune Veterans Act of 
2011.''

           *       *       *       *       *       *       *



                                 s. 277


    The Department does not support S. 277. S. 277 would 
furnish hospital care, medical services, and nursing home care 
implemented and funded by VA to veterans who were stationed at 
Camp Lejeune ``while the water was contaminated,'' as well as 
family members who accompanied them. As explained in testimony 
by the Department of Veterans Affairs (VA), there is 
insufficient medical evidence to support this approach.
    In addition, the Marine Corps notes that this bill creates 
inequities between veterans, family members, civilian 
employees, and government contractors. Section 2(a) of S. 277 
provides that veterans who were stationed at Camp Lejeune 
during the applicable period (to be determined by the VA 
Secretary in consultation with Agency for Toxic Substances and 
Disease Registry) would be eligible for hospital care, medical 
services, and nursing home care from the VA ``for any illness, 
notwithstanding that there is insufficient medical evidence to 
conclude that such illness is attributable'' to water that was 
contaminated by volatile organic compounds (VOCs). Section 2(b) 
of S. 277 states that family members of veterans who resided at 
Camp Lejeune during the applicable time would be ``eligible for 
hospital care, medical services, and nursing home care'' from 
the VA for any condition or disability associated with exposure 
to contaminants in the water. The legislation makes no 
provision for civilian employees and government contractors.

           *       *       *       *       *       *       *


                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 277 as amended, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, and existing law in which no change is 
proposed is shown in roman):

Title 10. Armed Forces

           *       *       *       *       *       *       *


Subtitle A. General Military Law

           *       *       *       *       *       *       *


Part IV. Service, Supply, and Procurement

           *       *       *       *       *       *       *


Chapter 147. Commissaries and Exchanges and Other Morale, Welfare, and 
Recreation Activities

           *       *       *       *       *       *       *



         Subchapter I. Defense Commissary and Exchange Systems

Sec.
[2481. Defense commissary and exchange systems: existence and purpose.]
2481. Commissary and exchange system: existence and purpose.

           *       *       *       *       *       *       *


[SEC. 2481. DEFENSE COMMISSARY AND EXCHANGE SYSTEMS: EXISTENCE AND 
                    PURPOSE]

SEC. 2481. COMMISSARY AND EXCHANGE SYSTEM: EXISTENCE AND PURPOSE

    (a) [Separate Systems.--] In General.--The Secretary of 
Defense shall operate, in the manner provided by this chapter 
and other provisions of law, [a world-wide system of commissary 
stores and a separate world-wide system of exchange stores. The 
stores of each system] may sell, at reduced prices, food and 
other merchandise to members of the uniformed services on 
active duty, members of the uniformed services entitled to 
retired pay, dependents of such members, and persons authorized 
to use the system under chapter 54 of this title.
    (b) [Purpose of Systems.--] Purpose of System.--The defense 
[commissary system and the exchange system] commissary and 
exchange system are intended to enhance the quality of life of 
members of the uniformed services, retired members, and 
dependents of such members, and to support military readiness, 
recruitment, and retention.
    (c) Oversight.--
          (1) The Secretary of Defense shall designate a senior 
        official of the Department of Defense to oversee the 
        operation of [both the defense commissary system and 
        the exchange system] the commissary and exchange 
        system.
          (2) The Secretary of Defense shall establish an 
        executive governing body to provide advice to the 
        senior official designated under paragraph (1) 
        regarding the operation of the defense commissary and 
        [exchange systems and to ensure the complementary 
        operation of the systems] exchange system.
    (d) Construction of References.--Any reference in this 
subchapter to a commissary store shall be deemed to be a 
reference to a store operated under the single system of 
commissary stores and exchange stores required by subsection 
(a). Any reference in this subchapter to the defense commissary 
system shall be deemed to be a reference to such system of 
commissary stores and exchange stores.
    (e) [(d)] Reduced Prices Defined.--In this section, the 
term ``reduced prices'' means prices for food and other 
merchandise determined using the price setting process 
specified in section 2484 of this title.

           *       *       *       *       *       *       *


   Subchapter II. Relationship, Continuation, and Common Policies of 
                Defense Commissary and Exchange Systems

Sec.
[2487. Relationship between defense commissary system and exchange 
          stores system]
[2488. Combined exchange and commissary stores]
2489. Overseas commissary and exchange stores: access and purchase 
          restrictions

[SEC. 2487. RELATIONSHIP BETWEEN DEFENSE COMMISSARY SYSTEM AND EXCHANGE 
                    STORES SYSTEM

    [(a) Separate Operation of Systems.--
          [(1) Except as provided in paragraph (2), the defense 
        commissary system and the exchange stores system shall 
        be operated as separate systems of the Department of 
        Defense.
          [(2) Paragraph (1) does not apply to the following:
                  [(A) Combined exchange and commissary stores 
                operated under the authority provided by 
                section 2489 of this title.
                  [(B) NEXMART stores of the Navy Exchange 
                Service Command established before October 1, 
                2003.
    [(b) Consolidation or Other Organizational Changes of 
Defense Retail Systems.--
          [(1) The operation and administration of the defense 
        retail systems may not be consolidated or otherwise 
        merged unless the consolidation or merger is 
        specifically authorized by an Act of Congress.
          [(2) In this subsection, the term ``defense retail 
        systems'' means the defense commissary system and 
        exchange stores system and other revenue-generating 
        facilities operated by nonappropriated fund 
        instrumentalities of the Department of Defense for the 
        morale, welfare, and recreation of members of the armed 
        forces.]

[SEC. 2488. COMBINED EXCHANGE AND COMMISSARY STORES

    [(a) Authority.--The Secretary of Defense may authorize a 
nonappropriated fund instrumentality to operate a military 
exchange and a commissary store as a combined exchange and 
commissary store on a military installation.
    [(b) Limitations.--
          [(1) Not more than ten combined exchange and 
        commissary stores may be operated pursuant to this 
        section.
          [(2) The Secretary may select a military installation 
        for the operation of a combined exchange and commissary 
        store under this section only if--
                  [(A) the installation is to be closed, or has 
                been or is to be realigned, under a base 
                closure law; or
                  [(B) a military exchange and a commissary 
                store are operated at the installation by 
                separate entities at the time of, or 
                immediately before, such selection and it is 
                not economically feasible to continue that 
                separate operation.
    [(c) Operation at Carswell Field.--Combined exchange and 
commissary stores operated under this section shall include the 
combined exchange and commissary store that is operated at the 
Naval Air Station Fort Worth, Joint Reserve Center, Carswell 
Field, Texas, under the authority provided in section 375 of 
the National Defense Authorization Act for Fiscal Year 1995 
(Public Law 103-337; 108 Stat. 2736).
    [(d) Adjustments and Surcharges.--Adjustments to, and 
surcharges on, the sales price of a grocery food item sold in a 
combined exchange and commissary store under this section shall 
be provided for in accordance with the same laws that govern 
such adjustments and surcharges for items sold in a commissary 
store of the Defense Commissary Agency.
    [(e) Use of Appropriated Funds.--
          [(1) If a nonappropriated fund instrumentality incurs 
        a loss in operating a combined exchange and commissary 
        store at a military installation under this section as 
        a result of the requirement set forth in subsection 
        (d), the Secretary may authorize a transfer of funds 
        available for the Defense Commissary Agency to the 
        nonappropriated fund instrumentality to offset the 
        loss.
          [(2) The total amount of appropriated funds 
        transferred during a fiscal year to support the 
        operation of a combined exchange and commissary store 
        at a military installation under this section may not 
        exceed an amount that is equal to 25 percent of the 
        amount of appropriated funds that was provided for the 
        operation of the commissary store of the Defense 
        Commissary Agency on that installation during the last 
        full fiscal year of operation of that commissary store.
    [(f) Nonappropriated Fund Instrumentality Defined.--In this 
section, the term ``nonappropriated fund instrumentality'' 
means the Army and Air Force Exchange Service, Navy Exchange 
Service Command, Marine Corps exchanges, or any other 
instrumentality of the United States under the jurisdiction of 
the armed forces which is conducted for the comfort, pleasure, 
contentment, or physical or mental improvement of members of 
the armed forces.]

           *       *       *       *       *       *       *


Title 38. Veterans' Benefits

           *       *       *       *       *       *       *


Part II. General Benefits

           *       *       *       *       *       *       *


Chapter 17. Hospital, Nursing Home, Domiciliary, and Medical Care

           *       *       *       *       *       *       *


Sec.

SUBCHAPTER VIII. HEALTH CARE OF PERSONS OTHER THAN VETERANS

           *       *       *       *       *       *       *


1786. Care for newborn children of women veterans receiving maternity 
          care.
1787. Health care of family members of veterans stationed at Camp 
          Lejeune, North Carolina, while the water was contaminated at 
          Camp Lejeune. 

           *       *       *       *       *       *       *


Subchapter II. Hospital, Nursing Home, or Domiciliary Care and Medical 
                               Treatment


SEC. 1710. ELIGIBILITY FOR HOSPITAL, NURSING HOME, AND DOMICILIARY CARE

           *       *       *       *       *       *       *


    (e)(1)(A) * * *

           *       *       *       *       *       *       *

    (F) Subject to paragraph (2), a veteran who, as a member of 
the Armed Forces, was stationed at Camp Lejeune, North 
Carolina, during a period, determined by the Secretary in 
consultation with the Agency for Toxic Substances and Disease 
Registry, in which the water at Camp Lejeune was contaminated 
by volatile organic compounds, including known human 
carcinogens and probable human carcinogens, is eligible for 
hospital care, medical services, and nursing home care under 
subsection (a)(2)(F) for any illness, notwithstanding that 
there is insufficient medical evidence to conclude that such 
illness is attributable to such contamination.

Subchapter VIII. Health Care of Persons Other Than Veterans

           *       *       *       *       *       *       *



SEC. 1787. HEALTH CARE OF FAMILY MEMBERS OF VETERANS STATIONED AT CAMP 
                    LEJEUNE, NORTH CAROLINA, WHILE THE WATER WAS 
                    CONTAMINATED AT CAMP LEJEUNE

    (a) In General.--A family member of a veteran described in 
subparagraph (F) of section 1710(e)(1) of this title who 
resided at Camp Lejeune during the period described in such 
subparagraph or who was in utero during such period while the 
mother of such family member resided at such location shall be 
eligible for hospital care, medical services, and nursing home 
care furnished by the Secretary for any condition, or any 
disability that is associated with such condition, that is 
associated with exposure to the contaminants in the water at 
Camp Lejeune during such period.
    (b) Limitation.--The Secretary may only furnish hospital 
care, medical services, and nursing home care under subsection 
(a) to the extent and in the amount provided in advance in 
appropriations Acts for such purpose.
    (c) Regulations.--The Secretary shall prescribe regulations 
that specify which--
          (1) conditions are associated with exposure to the 
        contaminants described in subsection (a); and
          (2) disabilities are associated with such conditions.

           *       *       *       *       *       *       *


Part VI. Acquisition and Disposition of Property

           *       *       *       *       *       *       *


   Chapter 81. Acquisition and Operation of Hospital and Domiciliary 
    Facilities; Procurement and Supply; Enhanced-Use Leases of Real 
Property

           *       *       *       *       *       *       *



Subchapter I. Acquisition and Operation of Medical Facilities

           *       *       *       *       *       *       *



SEC. 8111. SHARING OF DEPARTMENT OF VETERANS AFFAIRS AND DEPARTMENT OF 
                    DEFENSE HEALTH CARE RESOURCES

           *       *       *       *       *       *       *


    (f) Camp Lejeune.--(1) The Secretary of Defense shall enter 
into an agreement with the Secretary of Veterans Affairs under 
subsection (a) to reimburse the Secretary of Veterans Affairs, 
from amounts appropriated to the Secretary of Defense, for the 
costs of all hospital care, medical services, and nursing home 
care provided under sections 1710(e)(1)(F) and 1787 of this 
title.
    (2) Costs described in paragraph (1) shall include 
reasonable and customary charges associated with oversight and 
administration of the care and services described in such 
paragraph.
    (3) The Secretary of Veterans Affairs may use the authority 
provided under section 1781 of this title, or such other 
existing discretionary authorities as the Secretary considers 
appropriate, to arrange for care and services described in 
paragraph (1).
    (g) [(f)] Annual Joint Report.--

           *       *       *       *       *       *       *

    (h) [(g)] Definitions.--For the purposes of this section:

           *       *       *       *       *       *       *