source: Caselaw Access Project

author: Mr. Justice Stewart Mr. Chief Justice Burger, Mr. Justice White, Mr. Justice Powell,

license: Public Domain

text:
    GEORGIA et al. v. UNITED STATES
    No. 72-75.
    Argued February 21-22, 1973
    Decided May 7, 1973

      Stewart, J., delivered the opinion of the Court, in which Douglas, Brennan, Marshall, and Blackmun, JJ., joined. Burger, C. J., filed an opinion concurring in the result, post, p. 541. White, J., filed a dissenting opinion in which Powell and Rehnquist, JJ., joined, post, p. 542. Powell, J., filed a dissenting opinion, post, p. 545.

      Harold N. Hill, Jr., Executive Assistant Attorney General of Georgia, argued the cause for appellants. With him on the briefs were Arthur K. Bolton, Attorney General, and Robert J. Castellani and Dorothy Y. Kirkley, Assistant Attorney General.

      Deputy Solicitor General Wallace argued the cause for the United States. With him on the brief were Solicitor General Griswold, Assistant Attorney General Norman, James P. Turner, William Bradford Reynolds, and John C. Hoyle

         Stephen J. Pollak, Richard M. Sharp, and Armand Derfner filed a brief for the National Association for the Advancement of Colored People et al. as amici curiae urging affirmance.

   Mr. Justice Stewart

delivered the opinion of the Court.

The Attorney General of the United States brought this suit under § 12 (d) of the Voting Rights Act of 1965 as amended, 42 U. S. C. § 1973j (d), to enjoin the State of Georgia from conducting elections for its House of Representatives under the 1972 legislative reapportionment law. A three-judge District Court in the Northern District of Georgia agreed that certain aspects of the reapportionment law came within the ambit of § 5 of the Act, 42 U. S. C. § 1973c, and that the State, which is subject to the provisions of § 5, had not obtained prior clearance from either the Attorney General or the District Court for the District of Columbia. Accordingly, and without reaching the question whether the reapportionment plan had the purpose or effect of “denying or abridging the right to vote on account of race or color,” 42 U. S. C. § 1973c, the District Court issued the requested injunction. The State brought this appeal. We noted probable jurisdiction, staying enforcement of the District Court judgment pending disposition of the appeal. 409 U. S. 911.

Following the 1970 Census, the Georgia Legislature set out to reapportion its State House of Representatives, State Senate, and federal congressional electoral districts. We are here concerned only with the reapportionment plan for the State House of Representatives. The result of the legislature’s deliberations was a plan (hereinafter the 1971 plan) that, as compared with the prior 1968 scheme, decreased the number of districts from 118 to 105, and increased the number of multimember districts from 47 to 49. Whereas the prior apportionment plan had generally preserved county lines, the 1971 plan did not: 31 of the 49 multimember districts and 21 of the 56 single-member districts irregularly crossed county boundaries. The boundaries of nearly all districts were changed, and in many instances the number of representatives per district was altered. Residents of some 31 counties formerly in single-member districts were brought into multimember districts. Under continuing Georgia law, a candidate receiving less than a majority of the votes cast for a position was required to participate in a majority runoff election. Ga. Code Ann. § 34-1513. And in the multimember districts, each candidate was required to designate the seat for which he was running, referred to as the “numbered post.” Ga. Code Ann. § 34-1015.

Section 5 of the Voting Rights Act forbids States subject to the Act from implementing any change in a “voting qualification or prerequisite to voting, or standard, practice, or procedure with respect to voting” without first obtaining a declaratory judgment from the District Court for the District of Columbia that the proposed change “does not have the purpose and will not have the effect of denying or abridging the right to vote on account of race or color,” or submitting the plan to the Attorney General of the United States and receiving no objection within 60 days. 42 U. S. C. § 1973c. Pursuant to this requirement, the State of Georgia submitted the 1971 plan to the Attorney General on November 5, 1971. Two weeks later, a representative of the Department of Justice wrote to the State Attorney General, requesting further information needed to assess the racial impact of the tendered plan. This information was received on January 6, 1972, and on March 3, 1972, the Attorney General of the United States formally objected to the State’s plan. The objection letter cited the combination of multimember districts, numbered posts, majority runoff elections, and the extensive departure from the State’s prior policy of adhering to county lines. On the basis of these changes, plus particular changes in the structure of potential black majority single-member districts, the Attorney General was “unable to conclude that the plan does not have a discriminatory racial effect on voting.” The letter stated that the Attorney General therefore felt obligated to “interpose an objection to changes submitted by these reapportionment plans.”

The State Legislature immediately enacted a new reapportionment plan and repealed its predecessor. The 1972 plan increased the number of districts from 105 to 128, and decreased the number of multimember districts from 49 to 32. Twenty-two of the multimember districts and 37 of the single-member districts still crossed county boundaries.

This 1972 plan was submitted to the Attorney General on March 15, and he objected on March 24. The Assistant Attorney General’s letter stated, in part:

“After a careful analysis of the Act redistricting the Georgia House of Representatives, I must conclude that this reapportionment does not satisfactorily remove the features found objectionable in your prior submission, namely, the combination of multi-member districts, numbered posts, and a majority (runoff) requirement discussed in my March 3, 1972, letter to you interposing an objection to your earlier Section 5 submission. Accordingly, and for the reasons enunciated in my March 3, 1972, letter I must, on behalf of the Attorney General, object to S. B. 690 reapportioning the Georgia House of Representatives.”

When the Georgia Legislature resolved that it would take no further steps to enact a new plan, the Attorney General brought the present lawsuit.

The State of Georgia claims that § 5 is inapplicable to the 1972 House plan, both because the Act does not reach “reapportionment” and because the 1972 plan does not constitute a change from procedures “in force or effect on November 1, 1964.” If applicable, the Act is claimed to be unconstitutional as applied. The State also challenges two aspects of the Attorney General’s conduct of the § 5 objection procedure, claiming, first, that the Attorney General cannot object to a state plan without finding that it in fact has a discriminatory purpose or effect, and, second, that the Attorney General’s objection to the 1971 plan was not made within the 60-day time period allowed for objection under the Act.

I

Despite the fact that multimember districts, numbered posts, and a majority runoff requirement were features of Georgia election law prior to November 1, 1964, the changes that followed from the 1972 reapportionment are plainly sufficient to invoke § 5 if that section of the Act reaches the substance of those changes. Section 5 is not concerned with a simple inventory of voting procedures, but rather with the reality of changed practices as they affect Negro voters. It seems clear that the extensive reorganization of voting districts and the creation of multimember districts in place of single-member districts in certain areas amounted to substantial departures from the electoral state of things under previous law. The real question is whether the substance of these changes undertaken as part of the state reapportionment are “standards, practices, or procedures with respect to voting” within the meaning of § 5.

The prior decisions of this Court compel the conclusion that changes of the sort included in Georgia’s 1972 House reapportionment plan are cognizable under § 5. In South Carolina v. Katzenbach, 383 U. S. 301, we upheld the basic constitutionality of the Voting Rights Act. Mr. Justice Black dissented from that judgment to the extent that it held every part of § 5 is constitutional, precisely describing the broad sweep of § 5:

“Section 5 goes on to provide that a State covered by § 4 (b) can in no way amend its constitution or laws relating to voting without first trying to persuade the Attorney General of the United States or the Federal District Court for the District of Columbia that the new proposed laws do not have the purpose and will not have the effect of denying the right to vote to citizens on account of their race or color.” 383 U. S., at 356 (concurring and dissenting opinion).

The applicability of § 5 to election law changes such as those enacted by Georgia in its 1972 plan was all but conclusively established by the opinion of this Court in Allen v. State Board of Elections, 393 U. S. 544. The Allen opinion, dealing with four companion cases, held that § 5 applied to a broad range of voting law changes, and was constitutional as applied. With respect to the reach of § 5, we held that “[t]he legislative history on the whole supports the view that Congress intended to reach any state enactment which altered the election law of a covered State in even a minor way.” Id., at 566. One of the companion cases, Fairley v. Patterson, involved a claim that a change from district to at-large voting for county supervisor was a change in a “standard, practice, or procedure with respect to voting.” The challenged procedure was held to be covered by § 5. We noted that “[t]he right to vote can be affected by a dilution of voting power as well as by an absolute prohibition on casting a ballot. See Reynolds v. Sims, 377 U. S. 533, 555 (1964).” Id., at 569. In holding that § 5 reached voting law changes that threatened to dilute Negro voting power, and in citing Reynolds v. Sims, we implicitly recognized the applicability of § 5 to similar but more sweeping election law changes arising from the reapportionment of state legislatures. 393 U. S., at 565-566, 583-586 (Harlan, J., concurring and dissenting).

Had Congress disagreed with the interpretation of § 5 in Allen, it had ample opportunity to amend the statute. After extensive deliberations in 1970 on bills to extend the Voting Rights Act, during which the Allen case was repeatedly discussed, the Act was extended for five years, without any substantive modification of § 5. Pub. L. 91-285, 84 Stat. 314, 315. We can only conclude, then, that Allen correctly interpreted the congressional design when it held that “the Act gives a broad interpretation to the right to vote, recognizing that voting includes 'all action necessary to make a vote effective.” 393 U. S., at 565-566.

Another measure of the decisiveness with which Allen controls the present case is the actual practice of covered States since the Allen case was decided. Georgia, for example, submitted its 1971 plan to the Attorney General because it clearly believed that plan was covered by § 5. Its submission was “made pursuant to § 5,” and the State Attorney General explained in his submission that the 1968 reapportionment of the Georgia House of Representatives “was not submitted because at that time, prior to Allen v. Board of Elections, ... it was believed to be unnecessary to submit reapportionment plans to the United States Attorney General pursuant to the Voting Rights Act of 1965.” When the Attorney General objected, Georgia changed its House plan and resubmitted it pursuant to § 5. Other States covered by the Act have also read Allen as controlling. The brief for the United States advises us that as of December 1, 1972, 381 post-Allen reapportionment plans had been presented to the Attorney General by various States for § 5 approval.

In the present posture of this case, the question is not whether the redistricting of the Georgia House, including extensive shifts from single-member to multimember districts, in fact had a racially discriminatory purpose or effect. The question, rather, is whether such changes have the potential for diluting the value of the Negro vote and are within the definitional terms of § 5. It is beyond doubt that such a potential exists, cf. Whitcomb v. Chavis, 403 U. S. 124, 141-144. In view of the teaching of Allen reaffirmed in Perkins v. Matthews, 400 U. S. 379, we hold that the District Court was correct in deciding that the changes enacted in the 1972 reapportionment plan for the Georgia House of Representatives were within the ambit of § 5 of the Voting Rights Act. And for the reasons stated at length in South Carolina v. Katzenbach, 383 U. S., at 308-337, we reaffirm that the Act is a permissible exercise of congressional power under § 2 of the Fifteenth Amendment.

II

By way of implementing the performance of his obligation to pass on state submissions under § 5, the Attorney General has promulgated and published in the Federal Register certain administrative regulations, 28 CFR Part 51. The appellants claim these regulations are without legislative authorization, and object in particular to the application in the present case of two regulations which set forth the standards for decision on submissions and more fully define the 60-day time period provided in the Act.

It is true, as the appellants contend, that § 5 itself does not authorize the Attorney General to promulgate any regulations. But § 5 is also silent as to the procedures the Attorney General is to employ in deciding whether or not to object to state submissions, as to the standards governing the contents of those submissions, and as to the meaning of the 60-day time period in which the Attorney General is to object, if at all. Rather than reading the statute to grant him unfettered discretion as to procedures, standards, and administration in this sensitive area, the Attorney General has chosen instead to formulate and publish objective ground rules. If these regulations are reasonable and do not conflict with the Voting Rights Act itself, then 5 U. S. C. § 301, which gives to “[t]he head of an Executive department” the power to “prescribe regulations for the government of his department, . . . [and] the distribution and performance of its business . . . ,” is surely ample legislative authority for the regulations. See United States v. Morehead, 243 U. S. 607; Smith v. United States, 170 U. S. 372.

In 28 CFR § 51.19, the Attorney General has set forth the standards to be employed in deciding whether or not to object to a state submission. The regulation states that the burden of proof is on the submitting party, and that the Attorney General will refrain from objecting only if his review of the material submitted satisfies him that the proposed change does not have a racially discriminatory purpose or effect. If he is persuaded to the contrary, or if he cannot within the 60-day time period satisfy himself that the change is without a discriminatory purpose or effect, the regulation states that the Attorney General will object to the submission. In objecting to the 1971 plan, the Assistant Attorney General wrote that he was “unable to conclude that the plan does not have a discriminatory racial effect on voting.” The objection letter to the 1972 plan did not specify a degree of certainty as to the plan’s discriminatory impact, but instead stated that the new plan had not remedied the features found objectionable in its predecessor.

Although both objections were consistent with the Attorney General’s regulations, the appellants in effect attack the legitimacy of the regulation described above in contending that the Attorney General is without power to object unless he has actually found that the changes contained in a submission have a discriminatory purpose or effect.

In assessing this claim, it is important to focus on the entire scheme of § 5. That portion of the Voting Rights Act essentially freezes the election laws of the covered States unless a declaratory judgment is obtained in the District Court for the District of Columbia holding that a proposed change is without discriminatory purpose or effect. The alternative procedure of submission to the Attorney General “merely gives the covered State a rapid method of rendering a new state election law enforceable.” Allen v. State Board of Elections, 393 U. S., at 549.

It is well established that in a declaratory judgment action under § 5, the plaintiff State has the burden of proof. What the Attorney General’s regulations do is to place the same burden on the submitting party in a § 5 objection procedure. Though the choice of language in the objection letter sent to the State of Georgia was not a model of precision, in the context of the promulgated regulations the letter surely notified the State with sufficient clarity that it had not sustained its burden of proving that the proposed changes were free of a racially discriminatory effect. It is not necessary to hold that this allocation of the burden of proof by the Attorney General was his only possible choice under the Act, in order to find it a reasonable means of administering his § 5 obligation. Any less stringent standard might well have rendered the formal declaratory judgment procedure a dead letter by making available to covered States a far smoother path to clearance. The Attorney General’s choice of a proof standard was thus at least reasonable and consistent with the Act, and we hold that his objection pursuant to that standard was lawful and effective.

The appellant’s final contention is that the Attorney General’s objection to the 1971 plan was untimely, and so the submitted plan should have been held by the District Court to have gone into effect. It is far from clear that this claim is not simply moot, since the state enactment establishing the 1972 plan explicitly repealed the 1971 plan, and the objection to the 1972 plan was clearly within the statutory time period. In any event, the claim is without merit.

In promulgating regulations, the Attorney General dealt with several aspects of the 60-day time limit established by § 5 of the Act. The regulations provide that all calendar days count as part of the allotted period, that parties whose submissions are objected to may seek reconsideration on the basis of new information and obtain a ruling within 60 days of that request, and that the 60-day period shall commence from the time the Department of Justice receives a submission satisfying the enumerated requirements. 28 CFR § 51.3 (b)-(d).

In the present case, the Attorney General found the initial submission of the 1971 plan incomplete under the regulations. Two weeks after receiving it, he requested additional information. His letter referred to 28 CFR § 51.18, a regulation providing for a request for additional information, and noted the additional regulatory provision that the 60-day period would not commence until the information was received. The State did not submit the requested data until January 6, 1972. Under the above-mentioned regulation the 60-day period commenced on that date, and the Department of Justice made its objection within 60 days — on March 3.

The appellants argue that the Attorney General has granted himself more time than the statute provides by promulgating regulations suspending the time period until a complete submission is received. Here again, the question is whether the regulation is a reasonable administrative effectuation of § 5 of the Act. The judgment that the Attorney General must make is a difficult and complex one, and no one would argue that it should be made without adequate information. There is no serious claim in this case that the additional information requested was unnecessary or irrelevant to § 5 evaluation of the submitted reapportionment plan. Yet, if the Attorney General were denied the power to suspend the 60-day period until a complete submission were tendered, his only plausible response to an inadequate or incomplete submission would be simply to object to it. He would then leave it to the State to submit adequate information if it wished to take advantage of this means of clearance under § 5. This result would only add acrimony to the administration of § 5. We conclude, therefore, that this facet of the Attorney General’s regulations is wholly reasonable and consistent with the Act.

III

For the foregoing reasons, the judgment of the District Court is affirmed. Since, however, elections were conducted under the disputed 1972 plan by reason of this Court’s stay order, it would be inequitable to require new elections at this time.

The case is remanded to the District Court with instructions that any future elections under the Georgia House reapportionment plan be enjoined unless and until the State, pursuant to § 5 of the Voting Rights Act, tenders to the Attorney General a plan to which he does not object, or obtains a favorable declaratory judgment from the District Court for the District of Columbia.

It is so ordered.

Mr. Chief Justice Burger,

concurring in the result.

I concur in the result reached by the Court but I do so under the mandate of Allen v. State Board of Elections, 393 U. S. 544 (1969). I have previously expressed my reservations as to the correctness of that holding. See Perkins v. Matthews, 400 U. S. 379, 397 (1971) (Blackmun, J., concurring in judgment).

Mr. Justice White,

with whom Mr. Justice Powell and Mr. Justice Rehnquist join,

dissenting.

Section 5 of the Voting Rights Act of 1965' provides that a covered State may not put into effect any change in voting qualifications or voting standards, practices, or procedures until it either procures a declaratory judgment from the United States District Court for the District of Columbia to the effect that the alteration does not have the purpose and will not have the effect of denying or abridging the right to vote on account of race or color, or submits the alteration to the Attorney General and an objection has not been interposed by that official during the ensuing 60 days. In this case, the Attorney General interposed an objection on March 24, 1972, to the March 9 reapportionment plan of the Georgia House of Representatives and shortly thereafter sued to enjoin the use of that plan on the ground that the State had obtained neither the approval of the Attorney General nor a declaratory judgment. The District Court held § 5 was applicable to changes in state apportionment plans and that the section prevented the March 9 reapportionment from going into effect.

I agree that in the light of our prior cases and congressional re-enactment of § 5, that section must be held to reach state reapportionment statutes. Contrary to the Court, however, it is my view that the Attorney General did not interpose an objection contemplated by § 5 and that there was therefore no barrier to the March 9 reapportionment going into effect.

It is arguable from the sparse language of the Act, which merely says that the State’s modification will go into effect unless the Attorney General enters an objection, that any objection whatsoever filed by that official will suffice to foreclose effectiveness of the new legislation and force the State into the District Court with the burden of proving that its law is not unconstitutional. I cannot believe, however, that Congress intended to visit upon the States the consequences of such uncontrolled discretion in the Attorney General. Surely, objections by the Attorney General would not be valid if that officer considered himself too busy to give attention to § 5 submissions and simply decided to object to all of them, to one out of 10 of them or to those filed by States with governors of a different political persuasion. Neither, I think, did Congress anticipate that the Attorney General could discharge his statutory duty by simply stating that he had not been persuaded that a proposed change in election procedures would not have the forbidden discriminatory effect. It is far more realistic and reasonable to assume that Congress expected the Attorney General to give his careful and good-faith consideration to § 5 submissions and, within 60 days after receiving all information he deemed necessary, to make up his mind as to whether the proposed change did or did not have a discriminatory purpose or effect, and if it did, to object thereto.

Although the constitutionality of § 5 has long since been upheld, South Carolina v. Katzenbach, 383 U. S. 301 (1966), it remains a serious matter that a sovereign State must submit its legislation to federal authorities before it may take effect. It is even more serious to insist that it initiate litigation and carry the burden of proof as to constitutionality simply because the State has employed a particular test or device and a sufficiently low percentage of its citizens has voted in its elections. And why should the State be forced to shoulder that burden where its proposed change is so colorless that the country’s highest legal officer professes his inability to make up his mind as to its legality? If he is to object, must he not himself conclude that the proposed change will have the forbidden purpose or effect? Given such a proper objection, the matter would take on a familiar adversary cast; and there would then appear to be a solid basis — at least the probable cause that a federal charge usually imports — for insisting on judicial clearance. Moreover, the issues between the State and the United States, as well as the litigative burden the State would have to bear, could be known and examined and intelligent decision made as to whether to institute suit in the District Court. As it is, the State may be left more or less at sea; for the Attorney General need merely announce that he is not at all convinced that the law submitted to him is not discriminatory.

My idea as to the obligation of the Department of Justice with respect to a submission under § 5 is similar to what Congress itself has provided in § 4, 42 U. S. C. § 1973b (a). Under that provision, a State otherwise covered by the Act can terminate coverage as to it by securing a declaratory judgment that no discriminatory test or device has been used during the past 10 years. In that litigation, the section goes on to provide, the Attorney General must consent to the entry of such a judgment if “he has no reason to believe” that a discriminatory test or device has been used during the 10 years preceding the filing of the action. Thus, in even the far more important context of determining whether a State is in any respect covered by the Act, the Attorney General, if he is to object to a decree favorable to the State, must have reason to believe, and so state, that tests or devices with the prohibited effect have been employed in the past. Surely, where the issue is not termination vel non, but the purpose and effect of a single statute, regulation, or other modification of voting procedures, it is not untoward to insist that the Attorney General not object to the implementation of the change until and unless he has reason to believe that the amendment has the prohibited purpose or effect. He should not be able to object by simply saying that he cannot make up his mind or that the evidence is in equipoise.

Mr. Justice Powell,

dissenting.

For the reasons stated in his opinion, I agree with Mr. Justice White that the Attorney General did not comply with § 5 of the Voting Rights Act, 42 U. S. C. § 1973c, and that therefore Georgia's reapportionment act should have been allowed to go into effect. It is indeed a serious intrusion, incompatible with the basic structure of our system, for federal authorities to compel a State to submit its legislation for advance review. As a minimum, assuming the constitutionality of the Act, the Attorney General should be required to comply with it explicitly and to invoke its provisions only when he is able to make an affirmative finding rather than an ambivalent one.

       A State is subject to § 5 if it qualifies under § 4 (b), 42 U. S. C. § 1973b (b). Covered States are those which on November 1, 1964, employed any of several enumerated tests or devices as a prerequisite to voting, and in which less than 50% of eligible voters were registered to vote or actually voted in the November 1964 presidential election. States that meet identical criteria with respect to the 1968 presidential election are also covered under the amended Act. It is stipulated that Georgia is covered under §4 (b).

       351 F. Supp. 444, 446-447.

       No objection was interposed with respect to the State Senate or federal congressional districts.

       The Justice Department asked for census maps of the 1964 and 1968 House districts; the distribution of white and nonwhite population within the 1964, 1968, and 1971 districts; a history of the primary and general elections in which Negro candidates ran; data, including race, with respect to all elected state representatives; and the legislative history of all redistricting bills.

       See, e. g., Hearings before Subcommittee No. 5 of the House Committee on the Judiciary on H. R. 4249, H. R. 5538, and Similar Proposals, 91st Cong., 1st Sess., 1, 4, 18, 83, 130-131, 133, 147-149, 154-155, 182-184, 402-454; Hearings before the Subcommittee on Constitutional Rights of the Senate Committee on the Judiciary on Bills to Amend the Voting Rights Act of 1965, 91st Cong., 1st and 2d Sess., 48, 195-196, 369-370, 397-398, 426-427, 469. David L. Norman, then Deputy Assistant Attorney General, Civil Rights Division, testified that, from court decisions, all these redistricting plans are going to have to be submitted to the Attorney General for his approval because they are voting changes.” Senate Hearings, supra, at 507.

       The appellants point to language in the Allen opinion that, they say, left open the question of the applicability of § 5 to a state reapportionment law. The cited passage in Allen is as follows:
      “Appellees in No. 25 [Fairley v. Patterson] also argue that § 5 was not intended to apply to a change from district to at-large voting, because application of § 5 would cause a conflict in the administration of reapportionment legislation. They contend that under such a broad reading of § 5, enforcement of a reapportionment plan could be enjoined for failure to meet the § 5 approval requirements, even though the plan had been approved by a federal court. Appellees urge that Congress could not have intended to force the States to submit a reapportionment plan to two different courts.
      “We must reject a narrow construction that appellees would give to § 5. . . .
      “. . . The argument that some administrative problem might arise in the future does not establish that Congress intended that § 5 have a narrow scope; we leave to another case a consideration of any possible conflict.” 393 U. S. 544, 56A-565, 569.
      The caveat implicit in this language would support the appellants’ position only if practical problems of administration had emerged in the period that has elapsed since Allen was decided. This does not appear to have been the case. The brief of the United States advises us that the Department of Justice has adopted procedures designed to minimize any conflicts between § 5 administrative review and federal court litigation based on Fourteenth or Fifteenth Amendment attacks upon state reapportionment plans. Where a Teapportionment plan has been prescribed by federal judicial decree, the Attorney General does not review it. See Connor v. Johnson, 402 U. S. 690, 691. Where a plan has been submitted to the Attorney General and is at the same time being litigated with respect to a Fifteenth Amendment claim, the Attorney General has deferred to the judicial determination regarding racial discrimination. Finally, the number of instances presenting an administrative-judicial overlap has been small. Of the 381 reapportionments submitted to the Attorney General, only 19 of the objected-to submissions were involved in litigation when submitted.

         Georgia has argued that § 5 approval is needed only with respect to those electoral districts in which a change in a “standard, practice, or procedure with respect to voting” occurred. In an appropriate case, a State might establish that a reapportionment plan left some districts unaffected by even a minor change with the potential for diluting the value of the Negro vote. We do not decide whether Georgia could show the existence of any unaffected districts in this case, and we leave that issue for consideration by the District Court on remand.

       Title 28 CFR §51.19, in pertinent part, states that: “the burden of proof on the submitting authority is the same in submitting changes to the Attorney General as it would be in submitting changes to the District Court for the District of Columbia. ... If the Attorney General is satisfied that the submitted change does not have a racially discriminatory purpose or effect, he will not object to the change and will so notify the submitting authority. If the Attorney General determines that the submitted change has a racially discriminatory purpose or effect, he will enter an objection and will so notify the submitting authority. If the evidence as to the purpose or effect of the change is conflicting, and the Attorney General is unable to resolve the conflict within the 60-day period, he shall, consistent with the above-described burden of proof applicable in the District Court, enter an objection and so notify the submitting authority.”

       The very effect of § 5 was to shift the burden of proof with respect 'to racial discrimination in voting. Rather than requiring affected parties to bring suit to challenge every changed voting practice, States subject to § 5 were required to obtain prior clearance before proposed changes could be put into effect. The burden of proof is on “the areas seeking relief.” South Carolina v. Katzenbach, 383 U. S. 301, 335.

       See Ga. Senate Bill 690, Mar. 9, 1972.

       The letter sent to the Attorney General of Georgia stated that a “preliminary examination” of the materials submitted led the Department of Justice to conclude “that the data sent to the Attorney General are insufficient to evaluate properly the changes you have submitted. In accordance with Sections 51.10 (a) (6) and 51.18 (a) of the Procedures for the Administration of Section 5 of the Voting Rights Act of 1965 . . . would you-please assist us by providing this Department the following additional information: . . . .”
      The promulgated regulations define in 28 CFR § 51.10 the contents of a submission. Section 51.10 (a)(6) states:
      “With respect to redistricting, annexation, and other complex changes, other information which the Attorney General determines is required to enable him to evaluate the purpose or effect of the change. Such other information may include items listed under paragraph (b) of this section. When such other information is required, the Attorney General shall notify the submitting authority in the manner provided in § 51.18 (a).”
      Section 51.10 (b) “strongly urges” submitting authorities to produce the information enumerated to the extent it is available and relevant to the submitted changes. Virtually all of the information requested in this case, see n. 4, supra, falls within the enumerated categories of §51.10 (b).

       See n. 4, supra.

       The appellants contend that to allow the Attorney General to promulgate this regulation is to open the way to frivolous and repeated delays by the Justice Department of laws of vital concern to the covered States. No such conduct by the Attorney General is presented here, and by upholding the basic validity of the regulation we most assuredly do not prejudge any ease in which such unwarranted administrative conduct may be shown. Furthermore, a submission to the Attorney General is not the exclusive mode of preclearance under § 5. If a State finds the Attorney General’s delays unreasonable, or if he objects to the submission, the State “may still enforce the legislation upon securing a declaratory judgment in the District Court for the District of Columbia.” Allen v. State Board of Elections, 393 U. S., at 549.

       As Mr. Justice Black stated, the power vested in federal officials under § 5 of the Act to veto state laws in advance of their effectiveness “distorts our constitutional structure of government.” South Carolina v. Katzenbach, 383 U. S. 301, 358 (1966) (concurring and dissenting). A similar appraisal was made by Mr. Justice Harlan, who characterized § 5, as construed by the Court, as “a revolutionary innovation in American government.” Allen v. State Board of Elections, 393 U. S. 544, 585 (1969) (concurring and dissenting). I have no doubt as to the power of the Congress under the Fifteenth Amendment to enact appropriate legislation to assure that the rights of citizens to vote shall not be denied, abridged, or infringed in any way “on account of race, color, or previous condition of servitude.” Indeed, in my view there is more than a power to enact such legislation, there is a duty. My disagreement is with the unprecedented requirement of advance review of state or local legislative acts by federal authorities, rendered the more noxious by its selective application to only a few States.


author: Mr. Justice White Mr. Justice Stewart,

text:
    UNITED STATES v. CARTWRIGHT, EXECUTOR
    No. 71-1665.
    Argued January 16, 1973
    Decided May 7, 1973
    White, J., delivered the opinion of the Court, in which Douglas, Brennan, Marshall, Blacicmun, and Powell, JJ., joined. Stewart, J., filed a dissenting opinion, in which Burger, C. J., and Rehnquist, J., joined, post, p. 557.

      Solicitor General Griswold argued the cause for the United States. With him on the brief were Assistant Attorney General Crampton, Richard B. Stone, Boring W. Post, and David English Carmack.

      Ralph J. Gregg argued the cause for respondent. With him on the brief was George M. Zimmermann.

         Meyer Eisenberg and Robert L. Augenblick filed a brief for the Investment Company Institute as amicus curiae urging affirmance.

   Mr. Justice White

delivered the opinion of the Court.

The Internal Revenue Code of 1954 requires that, for estate tax purposes, the “value” of all property held by a decedent at the time of death be included in the gross estate. 26 U. S. C. § 2031. By regulation, the Secretary of the Treasury has determined that shares in open-end investment companies, or mutual funds, are to be valued at their public offering price or “asked” price at the date of death. Treas. Reg. on Estate Tax § 20.2031-8 (b) (1963). The question this case presents is whether that determination is reasonable in the context of the market for mutual fund shares.

At the time of her death in 1964, Ethel B. Bennett owned approximately 8,700 shares of three mutual funds that are regulated by the Investment Company Act of 1940, 54 Stat. 789, as amended, 15 U. S. C. § 80a-1 et seq. The 1940 Act seeks generally to regulate publicly held companies that are engaged in investing in securities. Open-end investment companies, or mutual funds, “dominate” this industry. 1966 SEC Report 43. Unquestionably, the unique characteristic of mutual funds is that they are permitted, under the Act, to market their shares continuously to the public, but are required to be prepared to redeem outstanding shares at any time. §80a-22(e). The redemption “bid” price that a shareholder may receive is set by the Act at approximately the fractional value per share of the fund’s net assets at the time of redemption. § 80a-2 (a) (32). In contrast, the “asked” price, or the price at which the fund initially offers its shares to the public, includes not only the net asset value per share at the time of sale, but also a fixed sales charge or “sales load” assessed by the fund’s principal underwriter who acts as an agent in marketing the fund’s shares. § 80a-2 (a) (35). Sales loads vary within fixed limits from mutual fund to mutual fund, but all are paid to the fund’s underwriters; the charges do not become part of the assets of the fund. The sales loads of the funds held by the decedent ranged from seven and eight percent to one percent of the fractional net asset value of the funds’ shares.

Private trading in mutual fund shares is virtually nonexistent. Thus, at any given time, under the statutory scheme created by the Investment Company Act, shares of any open-end mutual fund with a sales load are being sold at two distinct prices. Initial purchases by the public are made from the fund, at the “asked” price, which includes the load. But shareholders “sell” their shares back to the fund at the statutorily defined redemption or bid price.

Respondent is the executor of the decedent's estate. On the federal estate tax return, he reported the value of the mutual fund shares held by the decedent at their redemption price, which amounted to about $124,400. The Commissioner assessed a deficiency based upon his valuation of the shares at their public offering or asked price, pursuant to Treas. Reg. § 20.2031-8 (b). Valued on that basis, the shares were worth approximately $133,300. Respondent paid the deficiency of about $3,100, including interest, filed a timely claim for a refund, and, when that claim was denied, commenced a refund action in Federal District Court on the ground that the valuation based on § 20.2031-8 (b) was unreasonable. The District Court agreed with respondent and held the Regulation invalid. 323 F. Supp. 769. The Court of Appeals affirmed. 457 F. 2d 567. We granted the Government’s petition for certiorari, 409 U. S. 840, because of the conflict among the circuits.

We recognize that this Court is not in the business of administering the tax laws of the Nation. Congress has delegated that task to the Secretary of the Treasury, 26 U. S. C. § 7805 (a), and regulations promulgated under his authority, if found to “implement the congressional mandate in some reasonable manner,” must be upheld. United States v. Correll, 389 U. S. 299, 307 (1967). See Bingler v. Johnson, 394 U. S. 741, 749-751 (1969); Commissioner v. South Texas Lumber Co., 333 U. S. 496, 501 (1948). But that principle is to set the framework for judicial analysis; it does not displace it. We find that the contested regulation is unrealistic and unreasonable, and therefore affirm the judgment of the Court of Appeals.

In implementing 26 U. S. C. § 2031, the general principle of the Treasury Regulations is that the value of property is to be determined by its fair market value at the time of the decedent’s death. “The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” Treas. Reg. § 20.2031-1 (b). The willing buyer-willing seller test of fair market value is nearly as old as the federal income, estate, and gifts taxes themselves, and is not challenged here. Under this test, it is clear that if the decedent had owned ordinary corporate stock listed on an exchange, its “value” for estate tax purposes would be the price the estate could have obtained if it had sold the stock on the valuation date, that price being, under Treas. Reg. § 20.2031-2 (b), the mean between the highest and lowest quoted selling prices on that day. Respondent urges that similar treatment be given mutual fund shares and that, accordingly, their value be measured by the redemption price at the date of death, the only price that the estate could hope to obtain if the shares had been sold.

Respondent’s argument has the clear ring of common sense to it, but the United States maintains that the redemption price does not reflect the price that a willing buyer would pay, inasmuch as the mutual fund is under a statutory obligation to redeem outstanding shares whenever they are offered. According to the Government, the only market for mutual fund shares that has both willing buyers and willing sellers is the public offering market. Therefore, the price in that market, the asked price, is an appropriate basis for valuation. The central difficulty with this argument is that it unrealistically bifurcates the statutory scheme for the trading in mutual fund shares. To be sure, the fund is under an obligation to redeem its shares at the stated price. 15 U. S. C. § 80a-22 (e). But, at the time of the original purchases, both the fund and the purchasers are aware of that duty and both willingly enter into the sale transactions nonetheless. As Judge Winner correctly observed in Hicks v. United States, 335 F. Supp. 474, 481 (Colo. 1971):

“Viewing the contract in this light meets every test of the ‘willing buyer-willing seller’ definition usually applied in the determination of market value. The ‘willing buyer’ is the fully informed person who agrees to buy the shares, agreeing at that time to sell them to the fund' — -the only available repurchaser — -at the redemption price. The ‘willing seller’ is the fund which sells the shares at market value plus a load charge, and which agrees to buy the shares back at market less the load charge. That is the market, and it is the only market. It is a market made up of informed buyers and an informed seller, all dealing at arm’s length.”

In the context of the Investment Company Act, the redemption price may thus be properly viewed only as the final step in a voluntary transaction between a willing buyer and a willing seller. As a matter of statutory law, holders of mutual fund shares cannot obtain the “asked” price from the fund. That price is never paid by the fund; it is used by the fund when selling its shares to the public — and even then the fund receives merely the net asset value per share from the sale, with the sales load being paid directly to the underwriter. In short, the only price that a shareholder may realize and that the fund — the only buyer — will pay is the redemption price. In the teeth of this fact, Regulation § 20.2031-8 (b) purports to assign a value to mutual fund shares that the estate could not hope to obtain and that the fund could not offer.

In support of the Regulation, the Government stresses that many types of property are taxed at values above those which could be realized during an actual sale. For example, ordinary corporate stock is valued at its fair market price without taking into account the brokerage commission that a seller must generally pay in order to sell the stock. Respondent does not contend that that approach is inappropriate or that, for example, the value of ordinary stock in an estate should be the market price at the time less anticipated brokerage fees. But § 20.2031-8 (b) operates in an entirely different fashion. The regulation includes as an element of value the commission cost incurred in the hypothetical purchase of the mutual fund shares already held in the decedent’s estate. If that principle were carried over to the ordinary stock situation, then a share traded at $100 on the date of death would be valued, not at $100 as it now is, but at, say, $102, representing the "value” plus the fee that a person buying the stock on that day would have to pay. It hardly need be said that such a valuation method is at least inconsistent with long-established Treasury practice and would appear at odds with the basic notions of valuation embodied in the Internal Revenue Code. See Estate of Wells v. Commissioner, 50 T. C. 871, 880 (1968) (Tannenwald, J., dissenting).

Even if it were assumed that the public offering price were somehow relevant to the value of mutual fund shares privately held, there would still be the difficulty that shares so held are, in important respects, similar to ordinary corporate stock held subject to a restrictive agreement (such as a first-refusal right at a specified price). With respect to the value of such stock, the Treasury Regulations have provided that the price that may be obtained in the marketplace does not control. Rather, so long as the restriction is a bona fide one, the value of the shares in the hands of the restricted stockholder is determined in accordance with the terms of the restriction. Treas. Reg. § 20.2031-2 (h). Outstanding mutual fund shares are likewise held subject to a restriction, as the Court of Appeals noted. 457 F. 2d, at 571. Those shares may not be “sold” at the public offering price. By statute, they may be “sold” back to the mutual fund only at the redemption price. We see no valid justification for disregarding this reality connected with the ownership of mutual fund shares.

The Government nevertheless argues that Treas. Reg. § 20.2031-8 (b) reasonably values the “bundle of rights” that is transferred with the ownership of the mutual fund shares. For this argument, heavy reliance is placed on this Court’s decisions in Guggenheim v. Rasquin, 312 U. S. 254 (1941); Powers v. Commissioner, 312 U. S. 259 (1941); United States v. Ryerson, 312 U. S. 260 (1941), which held that the cash-surrender value of a single-premium life insurance policy did not necessarily represent its only taxable value for federal gift tax purposes. In Guggenheim,, the lead case, the taxpayer purchased single-premium life insurance policies with an aggregate face value of one million dollars for approximately $852,000 and, shortly thereafter, gave the policies to her children. On the gift tax return, the policies were listed at their cash-surrender value of about $717,000— admittedly the only amount the donor or the donees could receive, if the policies were surrendered. But the Commissioner valued the gift at the cost of the policies, and this Court upheld that valuation: “the owner of a fully paid life insurance policy has more than the mere right to surrender it; he has the right to retain it for its investment virtues and to receive the face amount of the policy upon the insured’s death. That these latter rights are deemed by purchasers of insurance to have substantial value is clear from the difference between the cost of a single-premium policy and its immediate or early cash-surrender value . . . .” 312 U. S., at 257. Because the “entire bundle of rights in a single-premium policy” is so difficult to give a realistic value to, the Court deferred to the Commissioner’s determination and permitted valuation to be based on cost: “Cost is cogent evidence of value.” Id., at 258. But as the District Court observed, 323 F. Supp., at 773, shares in mutual funds are quite unlike insurance policies, particularly in light of the policyowner’s right to receive the full face value of the policy upon the insured’s death. Moreover, mutual fund shares present no analogous difficulties in valuation. On any given day, their commercial value may be determined by turning to the financial pages of a newspaper. Obviously, with respect to mutual funds, there are “investment virtues” and the prospects of capital gains or dividends. But that is true of any corporate security. Nonetheless, shareholders in mutual funds are singled out by the Regulation and their holdings valued at an unrealistic replacement cost — -which includes “brokers’ commissions” — while other shareholdings are valued without regard to such commissions.

The unrealistic nature of this difference in treatment may be demonstrated by comparing the treatment of shares in load funds, such as the decedent’s, with shares in no-load funds. Obviously, even if it could be argued that there are relevant differences between mutual fund shares generally and corporate stock, there are no differences in terms of “investment virtues” or related interests between no-load and load fund shares. Indeed, as the terms imply, the only real distinction between the two is that one imposes an initial sales charge and the other does not. Nonetheless, under the Regulation, a share in a no-load fund is valued at its net asset value while a share in a load fund is valued at net asset value plus sales charge. To further illustrate, consider a decedent who had purchased one share in each of two no-load mutual funds, at $100 per share. The decedent died before either appreciated, but after one of the funds had changed to a load fund. Although both shares are still worth $100, and could be redeemed for only that amount, the Regulation would require that one be valued at $100 and the other at $100 plus the new load charge. A regulation that results in such differing treatment of identical property should be supported by something more than a transparent analogy to life insurance.

We recognize that normally “Treasury regulations must be sustained unless unreasonable and plainly inconsistent with the revenue statutes.” Commissioner v. South Texas Lumber Co., 333 U. S., at 501. But even if the Regulation contested here is not, on its face, technically inconsistent with § 2031 of the Internal Revenue Code, it is manifestly inconsistent with the most elementary provisions of the Investment Company Act of 1940 and operates without regard for the market in mutual fund shares that the Act created and regulates. Cf. L. E. Shunk Latex Products, Inc. v. Commissioner, 18 T. C. 940 (1952). Congress surely could not have intended § 2031 to be interpreted in such a manner. The Regulation also imposes an unreasonable and unrealistic measure of value. We agree with Judge Tannenwald, who stated at the very outset of the dispute over Regulation § 20.2031-8 (b), that “it does not follow that, because [the Commissioner] has a choice of alternatives, his choice should be sustained where the alternative chosen is unrealistic. In such a situation the regulations embodying that choice should be held to be unreasonable.” Estate of Wells v. Commissioner, 50 T. C., at 878 (dissenting opinion).

The judgment of the Court of Appeals is affirmed.

It is so ordered.

Mr. Justice Stewart,

with whom The Chief Justice and Mr. Justice Rehnquist join,

dissenting.

This case presents a narrow issue of law regarding the valuation of certain assets — shares in an open-end investment company or “mutual fund” — for purposes of the federal estate tax. The case turns upon a single question of law: whether or not § 20.2031-8 (b) of the Treasury Regulations, which provides a specific method for valuing such shares, represents a reasonable implementation of the legislation enacted by Congress.

On December 4, 1964, Mrs. Ethel Bennett died testate leaving, among other property, several thousand shares in three separate mutual funds. Each of the funds in question is managed by a firm known as Investors Diversified Services, Inc., and all are subject to regulation by the Securities and Exchange Commission under the Investment Company Act of 1940. In his tax return for the estate, the respondent, Mrs. Bennett's executor, valued these shares at their so-called “net asset value,” that is, the amount at which the estate is entitled, as a matter of law, to have the shares redeemed by the issuer. The net asset value of a mutual fund share is calculated daily by the issuing company, and is equivalent to the fractional value per share of the fund’s total net assets on that day. In addition to serving as a gauge for the redemption value of fund shares already issued, net asset value is also employed by the issuing companies in determining the price at which they will offer new shares in the fund to the public on any given day. In general, such shares are sold to the public at their net asset value plus a sales charge or “load.” The load is a varying percentage of the value of the shares sold, and fluctuates in accordance with the size of the purchase. In the case of Mrs. Bennett’s shares, the maximum allowable sales load at the time of her death ranged between 7% and 8%, and the minimum was 1%.

Upon receipt of respondent’s return, the Commissioner, acting in accordance with Treas. Reg. § 20.2031-8 (b), assessed a deficiency, contending that the value of Mrs. Bennett’s shares for federal estate tax purposes was their public offering price on the date of her death, that is, the price which a member of the public would have had to pay to acquire similar shares from the issuer. This price would, of course, encompass not only the net asset value of the shares, but also the applicable sales load. Such a method of valuation for mutual fund shares is expressly prescribed by the Treasury Regulation noted above. Thus, the sole question before us is whether that Regulation constitutes a reasonable exercise by the Commissioner of his statutory power to prescribe “all needful rules” for the proper enforcement of the tax laws, see 26 U. S. C. § 7805, or whether the Regulation is so inherently unreasonable and inconsistent with the statute as to be invalid. United States v. Correll, 389 U. S. 299; Bingler v. Johnson, 394 U. S. 741. Upon the facts presented by this case, I cannot say that the Commissioner’s Regulation is invalid, and I therefore dissent from the decision of the Court.

At the outset, it may be well to note the basic general rule with respect to valuation that prevails under our estate tax laws. This rule is embodied in Treas. Reg. § 20.2031-1 (b), and provides that the value of property includable in a decedent’s estate shall be the fair market value of such property at the date of the decedent’s death. “The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” 26 CFR § 20-2031-1 (b).

The difficulty in applying this rule to mutual fund shares — a difficulty which, no doubt, led the Commissioner to promulgate Regulation § 20.2031-8 (b) — is that such shares once issued are not subject to disposition in a market of “willing buyers” and “willing sellers.” Indeed, as both the District Court and the Court of Appeals noted, the only practical means of disposing of mutual fund shares once acquired is redemption, and redemption cannot be deemed a sale of the sort described in the general rule (26 CFR § 20.2031-1 (b)), since the party purchasing (the issuing company) is under an absolute obligation to redeem the shares when tendered, and the party selling has no practical alternative, if he wishes to liquidate his holdings, other than to offer them to the issuing company for redemption.

This being the case, the Commissioner was faced with the problem of establishing a method of valuing the shares most nearly equal to their inherent worth. In doing so, he chose not to treat their redemption value as dispositive of this question. In promulgating his Regulation, he might rationally have considered that “on demand” redemption at net asset value is but one of many rights incident to the ownership of mutual fund shares.

For example, in the case of Mrs. Bennett’s shares, her estate had not only the right to redeem them “on demand,” but also to retain them; and if it had done so it would have possessed not only the normal dividend and capital gains rights associated with most investments, but also the right to have such dividends and capital gains as accrued applied toward the purchase of additional shares at a price below that which a member of the general public would have had to pay for such shares. In addition, under the investment contracts involved here, Mrs. Bennett’s estate would have had the right to exchange her shares in any one of the three mutual funds involved for those of either or both of the other funds managed by Investors Diversified Services, Inc. — without paying the usual sales charge or load.

The Commissioner has determined that the proper method of valuing all the rights, both redemptive and otherwise, incident to the ownership of mutual fund shares is to determine what a member of the general pub-lie, acting under no constraints, would have had to pay for these rights if purchased on the open market. And, as noted earlier, although no such market exists for mutual fund shares once issued to an investor, a perfectly normal market of willing buyers and sellers does exist with respect to such shares prior to their issuance. Thus, the Commissioner took the price at which the shares would have sold on this market as fairly reflective of their inherent worth. I cannot say that this method of valuation adopted by the Commissioner, and embodied in Regulation § 20.2031-8 (b), is so unreasonable and inconsistent with the statute as to render it invalid.

The respondent’s claim that the regulation is invalid is grounded upon two principal arguments. First, he says, the estate is being taxed on an amount in excess of what it can, as a practical matter, realize from the disposition of the mutual fund shares. But this is equally true of many other assets subject to taxation under our estate tax laws. For example, real property passing into an estate is taxed upon its full fair market value, despite the fact that as a practical matter the estate must usually pay some percentage of that sum in brokerage fees if it wishes to dispose of the property and receive cash in its stead. This attack upon the Regulation thus amounts to no less than an attack upon the whole system of valuation embodied in the Treasury Regulations on Estate Tax, based as it is upon fair value in an open market. I am not ready to hold that this long-established and long-accepted system is basically invalid.

The respondent’s second argument is that the Regulation places a higher valuation on mutual fund shares than is placed upon registered common stock shares and other similarly traded securities. This argument assumes that the redemption or net asset value óf a mutual fund share is identical to the fair market value of a traded security, and, by a parity of reasoning, that the sales charge or load associated with mutual fund purchases is equivalent to the commission that a stockbroker charges a purchaser of securities. Under this view, the Commissioner would be entitled to tax mutual fund shares passing into an estate only on their net asset value, since in the allegedly comparable situation of common stock shares no consideration may be given to brokers’ commissions in arriving at an appropriate valuation for estate tax purposes. See 26 CFR § 20.2031-2 (b).

Although this argument has a certain superficial appeal, the analogy on which it relies is hardly an exact one. For an estate in disposing of marketable securities must pay a brokerage commission on their sale, and will thus realize less than the amount at which the securities have been valued, while an estate turning in mutual fund shares for redemption pays no commission or other surcharge whatever. Moreover, unlike traditional securities, there is no open trading market for mutual fund shares once issued and in the hands of an investor. If such a market of willing buyers and sellers did exist, the Commissioner would doubtless be bound to treat mutual fund shares exactly like other securities. But where no market for an asset exists, there simply is no market price to provide a readily identifiable standard for valuation. Under these circumstances, it is the Commissioner’s duty under the statute to establish criteria for determining the true worth of the totality of rights and benefits incident to ownership of the asset. This the Commission has done in Regulation § 20.2031-8 (b) by providing that the value of a mutual fund share for federal estate tax purposes shall be the price a member of the general public would have to pay to acquire such share. Such an approach to the valuation of assets not regularly traded in a market of willing buyers and sellers has already been sustained by this Court in a case closely akin to the case before us. See Guggenheim v. Rasquin, 312 U. S. 254.

Given the peculiar characteristics of mutual fund shares, it is arguable that the Commissioner might reasonably have adopted a method of valuation different from that which he has chosen. But that is a question that is not for us to decide. “[We] do not sit as a committee of revision to perfect the administration of the tax laws. Congress has delegated to the Commissioner, not to the courts, the task of prescribing 'all needful rules and regulations for the enforcement’ of the Internal Revenue Code. 26 U. S. C. § 7805 (a). In this area of limitless factual variations, it is the province of Congress and the Commissioner, not the courts, to make the appropriate adjustments.’ ” United States v. Correll, 389 U. S., at 306-307. See Bingler v. Johnson, 394 U. S., at 750.

I would reverse the judgment of the Court of Appeals and sustain the validity of the Regulation.

       The decedent owned 2,568.422 shares of Investors Mutual, Inc., in her own name, and 2,067.531 shares as trustee for her daughter. The decedent also owned 2,269.376 shares of Investors Stock Fund, Inc., and 1,869.159 shares of Investors Selective Fund, Inc.
      For thorough discussions of the operations of open-end investment companies, see SEC Report on Public Policy Implications of Investment Company Growth, H. R. Rep. No. 2337, 89th Cong., 2d Sess. (1966) (hereinafter 1966 SEC Report); SEC Report of Special Study of Securities Markets, c. XI, Open-End Investment Companies (Mutual Funds), H. R. Doc. No. 95, pt. 4, 88th Cong., 1st Sess. (1963) (hereinafter 1963 Special Study).

       A number of mutual funds are so-called “no-load funds”; in such cases the bid and asked prices are the same. See 1966 SEC Report 58-59. The underwriter for all three funds involved in this case is Investors Diversified Services, Inc. (IDS), which is not itself an open-end investment company. IDS also serves as the investment manager of the funds, for which it receives separate management fees. See 15 U. S. C. § 80a-15.

       The 1963 Special Study 96-97 explained the trading in mutual fund shares as follows:
      “Mutual fund shares are not traded on exchanges or generally in the over-the-counter market, as are other securities, but are sold by the fund through a principal underwriter, and redeemed by the fund, at prices which are related to 'net asset value.’ The net asset value per share is normally computed twice daily by taking the market value at the time of all portfolio securities, adding the value of other assets and subtracting liabilities, and dividing the result by the number of shares outstanding. Shares of most funds are sold for a price equal to their net asset value plus a sales charge or commission, commonly referred to as the 'sales load,’ and usually ranging from 7.5 to 8.5 percent of the amount paid, or 8.1 to 9.3 percent of the amount invested. A few funds, however, known as ‘no-load’ funds, offer their shares for sale at net asset value without a sales charge. Shares of most funds are redeemed or repurchased by the funds at their net asset value, although a few funds charge a small redemption fee. The result of this pricing system, it is apparent, is that the entire cost of selling fund shares is generally borne exclusively by the purchaser of new shares and not by the fund itself. In this respect the offering of mutual fund shares differs from, say, the offering of new shares by a closed-end investment company or an additional offering 'at the market’ of shares of an exchange-listed security, where at least a portion of the selling cost is borne by the company selling the shares.” (Footnote omitted.)

       See Estate of Wells v. Commissioner, 50 T. C. 871, 873 (1968), aff’d sub nom. Ruehlmann v. Commissioner, 418 F. 2d 1302 (CA6 1969), cert, denied, 398 U. S. 950 (1970); 1966 SEC Report 42; and 1963 Special Study 96.

       The regulation reads, in part, as follows:
      “(b) Valuation of shares in an open-end investment company. (1) The fair market value of a share in an open-end investment company (commonly known as a 'mutual fund’) is the public offering price of a share, adjusted for any reduction in price available to the public in acquiring the number of shares being valued. In the absence of an affirmative showing of the public offering price in effect at the time of death, the last public offering price quoted by the company for the date of death shall be presumed to be the applicable public offering price. . . .
      “(2) The provisions of this paragraph shall apply with respect to estates of decedents dying after October 10, 1963.”
      This regulation was promulgated in 1963, T. D. 6680, 28 Fed. Reg. 10872, after some years of confusion within the Treasury Department and between that Department and the Department of Justice. See the District Court’s opinion, 323 F. Supp. 769, 777. A corresponding regulation was adopted for gift tax purposes. Treas. Reg. §25.2512-6 (b).

       In Estate of Wells v. Commissioner, supra, the Tax Court sustained the regulation, with six judges dissenting. That decision was affirmed by the Sixth Circuit in Ruehlmann v. Commissioner, 418 F. 2d 1302 (1969), cert, denied, 398 II. S. 950 (1970). The companion gift tax regulation was upheld in Howell v. United States, 414 F. 2d 45 (CA7 1969). Regulation § 20.2031-8 (b) was held invalid in Davis v. United States, 460 F. 2d 769 (CA9 1972), aff’g 306 F. Supp. 949 (CD Cal. 1969). See also Hicks v. United States, 335 F. Supp. 474 (Colo. 1971), appeal pending in the Tenth Circuit, No. 72-1360.

       See Treas. Reg. 63 Relating to Estate Tax Under the Revenue Act of 1921, Art. 13 (1922 ed.) (“The criterion of such value is the price which a willing buyer will pay to a willing seller for the property in question under the circumstances existing at the date of the decedent’s death . . .”); Treas. Reg. 105 Relating to the Estate Tax Under the Internal Revenue Code (of 1939), § 81.10 (1942).

       Whatever the situations may be where it is realistic and appropriate under Treas. Reg. § 20.2031-1 (b) to use a standardized retail price to measure value for estate tax purposes, it is sufficient to note here that, for the reasons given, the valuation of mutual fund shares does not present one of those situations.

       The Government argues that, as a practical matter, an estate would rarely be hurt by valuation of mutual fund shares at the asked price, because Treas. Reg. § 20.2053-3 (d) (2) permits an estate to deduct the difference between the asked and bid prices if the shares are sold to pay certain enumerated expenses. By its terms, however, that regulation applies only if “the sale is necessary” to pay those expenses. (Emphasis added.) In any event, the regulation is inapplicable altogether if the shares are transferred in kind to an heir or legatee.

       It is no coincidence that the contested regulation was placed in Treas. Reg. §20.2031-8, which deals with “[v]aluation of certain life insurance and annuity contracts . . . .” But we agree with Judge Winner:
      “The Commissioner cannot cross-breed life insurance and investment trust shares by the simple expedient of discussing them in separate paragraphs of a single regulation.” Hicks v. United States, 335 F. Supp., at 482.

       See 1966 SEC Report 51-59.

       The text of the regulation, insofar as relevant here, reads as follows: “The fair market value of a share in an open-end investment company (commonly known as a 'mutual fund’) is the public offering price of a share, adjusted for any reduction in price available to the public in acquiring the number of shares being valued. . . .” There is a companion Gift Tax Regulation of identical import. See 26 CFR §25.2512-6 (b).