A federal appeals court has delivered a stinging defeat to 'Blue Water' sailors and Coast Guard veterans of the Vietnam War who have been fighting for disability compensation from illnesses they contend resulted from shipboard exposure to deadly herbicides including Agent Orange.

A three-judge panel for the U.S. Court of Appeals for the Federal Circuit ruled 2-1 on May 8 that the Department of Veterans Affairs acted lawfully and reasonably in 2002 when it cut off Agent Orange-related disability payments and began to deny new claims from veterans who served on ships off the coast of Vietnam but never actually "set foot" in country.

The decision reversed a 2006 ruling by the U.S. Court of Appeals for Veterans Claims in the case of Haas v. Nicholson. That three-judge panel unanimously rejected as "unduly restrictive" VA's interpretation, by revised regulation, of qualifying "service" in Vietnam under the Agent Orange Act.

The U.S. military sprayed herbicides over Vietnam from 1962 through 1971 to strip away foliage under which enemy forces could hide, to destroy crops and to clear vegetation from around facilities and fire bases.

Over the last two decades, Congress and VA expanded the list of illnesses linked to Agent Orange exposure and for which veterans can receive disability compensation. The list of ailments includes prostate cancer, type-2 diabetes, non-Hodgkin's lymphoma, certain soft-tissue sarcomas, chloracne and skin conditions, Hodgkin's disease, various respiratory cancers, leukemia and multiple myeloma.

VA officials worried that if the 2006 Haas decision survived a government appeal, the pool of veterans eligible for disability pay if they contract illnesses tied Agent Orange would jump by 830,000 and VA benefit costs would rise by $3.3 billion over 10 years.

But from 1991 until early 2002, the VA was paying Agent Orange-related claims filed by sailors who only served off waters of Vietnam, said Barton F. Stichman, an attorney with the National Veterans Legal Services Program. NVLSP lawyers have represented the claimant in this case, Jonathan L. Haas, a retired Navy Reserve commander.

Stichman said sea service veterans for a decade won claims based on ailments linked to Agent Orange with relative ease. A manual used by VA claim adjudicators advised them to make awards based on presumptive service-connection of certain diseases if sea service veterans had received the Vietnam Service Medal. The VSM had been awarded to all military members who served from July 3, 1965 through March 28, 1973, in Vietnam, its contiguous waters or even in its airspace.

Haas served on an ammunition supply ship, USS Mount Katmai from August 1967 to April 1969. The ship operated off Vietnam but didn't dock there and he never went ashore. By 2001, Haas had developed type-2 diabetes, peripheral neuropathy and loss of eyesight which he claimed were caused by herbicide exposure off Vietnam.

His regional VA office denied the claim, saying service connection couldn't be established because Haas had not gone ashore. The Board of Veterans Appeals agreed. It turned out VA had reinterpreted the Agent Orange Act of 1991 regarding the phrase "service in the Republic of Vietnam," requiring at least a brief visit on land to be considered exposed to Agent Orange and eligible for disability pay for herbicide-related ailments.

The veterans' claims court reviewed Haas' appeal with a three-judge panel so the decision would affect all claims filed by Blue Water veterans. It found the VA was being too restrictive, in part because ships along the coast might have been exposed to at least as much toxin from windborne coastal area spraying as service members deemed exposed from brief visits ashore.

But the U.S. Court of Appeals for the Federal District, in a 51-page opinion, has reversed the decision for Haas and fellow sailors, finding VA's stricter interpretation of service in Vietnam permissible.

The court acknowledged that in a 1990 regulation VA had defined service in Vietnam to include veterans offshore. It also noted that, even today, a VA regulation informed by a Center for Disease Control study allows presumption of service-connected Agent Orange exposure for sailors who served only offshore in Vietnam but suffer from non-Hodgkin's lymphoma.

The two-judge majority said Congress left ambiguous the meaning of having "served in the Republic of Vietnam" under the Agent Orange Act, and Haas pointed to no single clarifying statement in the legislative record. But Congress did give to the VA authority to interpret such ambiguities and those interpretations are "entitled to substantial deference," the court said.

But the third appeals court judge, Jeremy Fogel, dissented. He said judicial deference to administrative agencies is important but the appeals court should note that the intent of Congress has been to make it easier, not more difficult, for veterans to assert claims for exposure to Agent Orange.

"I agree with the Veterans Court," Fogel wrote, "that in the absence of any scientific evidence in the records that support a 'foot on land' requirement, the VA's position is unreasonable."

Stichman said Haas will seek a fresh review of the case from a full or en banc panel of seven appeals court judges. Such reviews are granted only sparingly. If that fails, an appeal to the Supreme Court will be weighed.

Veterans can learn more about the lawsuit on line at www.nvlsp.org or at bluewaternavy.org