author: Justice Scalia

text:
    AUER et al. v. ROBBINS et al.
    No. 95-897.
    Argued December 10, 1996
    Decided February 19, 1997

      Michael T Leibig argued the cause and filed briefs for petitioners.

      Irving L. Gornstein argued the cause for the United States as amicus curiae urging affirmance. With him on the brief were Acting Solicitor General Dellinger, Deputy Solicitor General Kneedler, J. Davitt McAteer, Allen H. Feldman, Nathaniel I. Spiller, and Mark S. Flynn.

      John B. Renick argued the cause for respondents. With him on the brief were James N. Foster, Jr., and Judith Anne Ronzio.

      Briefs of amici curiae urging reversal were filed for the American Federation of Labor and Congress of Industrial Organizations by Jonathan P. Hiatt; for the International Union of Police Associations AFL-CIO et al. by Richard Cobb; for the National Association of Police Organizations, Inc., by William J. Johnson; for the National Employment Law Project, Inc., by Kenneth E. Labowitz; and for Non-Union Employees in the Private and Public Sectors by Brenda J. Carter. for the State of
      the Private Briefs of amici curiae urging affirmance were filed for the State of Wisconsin et al. by James E. Doyle, Attorney General of Wisconsin, Richard Briles Moriarty, Assistant Attorney General, and by the Attorneys General for their respective States as follows: Jeff Sessions of Alabama, Grant Woods of Arizona, Winston Bryant of Arkansas, Daniel E. Lungren of California, Gale A Norton of Colorado, Richard Blumentkal of Connecticut, Robert A Butterworth of Florida, Michael J. Bowers of Georgia, Alan G. Lance of Idaho, James E. Ryan of Illinois, Thomas J. Miller of Iowa, Carla J. Stovall of Kansas, J. Joseph Curran, Jr., of Maryland, Frank J. Kelley of Michigan, Hubert H. Humphrey III of Minnesota, Mike Moore of Mississippi, Joseph P. Mazurek of Montana, Frankie Sue Del Papa of Nevada, Dennis C. Vacco of New York, Thomas W. Corbett, Jr., of Pennsylvania, James S. Gilmore III of Virginia, and Christine 0. Gre-goire of Washington; for the Chamber of Commerce of the United States of America et al. by William J. Kilberg, Mark Snyderman, Stephan A. Bokat, and Mona C. Zeiberg; for the New York City Transit Authority by Richard Schoolman; for the Department of Water and Power of the City of Los Angeles by James K. Hahn, Thomas C. Hokinson, and Olga Hernandez Garau; for the Labor Policy Association by Sandra J. Boyd and Daniel V. Yager; and for the National League of Cities et al. by Richard Ruda, James I. Crowley, and Ronald S. Cooper. Florida, by John

        Ruda, Briefs of amici curiae were filed for Broward County, Florida, by John J. Copelan, Jr., and Anthony C. Musto; for the City of New York by Paul A Crotty, Leonard J. Koerner, and Timothy J. O’Shaughnessy; for the League of California Cities et al. by Arthur A Hartinger, Louise H. Renne, and Jonathan V. Holtzman; and for the International Association of Chiefs of Police, Inc., by Jody M. Litchford, Wayne W. Schmidt, James P. Manak, and Roy Caldwell Kime.

   Justice Scalia

delivered the opinion of the Court.

The Fair Labor Standards Act of 1938 (FLSA), 52 Stat. 1060, as amended, 29 U. S. C. §§201 et seq., exempts “bona fide executive, administrative, or professional” employees from overtime pay requirements. This case presents the question whether the Secretary of Labor’s “salary-basis” test for determining an employee’s exempt status reflects a permissible reading of the statute as it applies to public-sector employees. We also consider whether the Secretary has reasonably interpreted the salary-basis test to deny an employee salaried status (and thus grant him overtime pay) when his compensation may “as a practical matter” be adjusted in ways inconsistent with the test.

I

Petitioners are sergeants and a lieutenant employed by the St. Louis Police Department. They brought suit in 1988 against respondents, members of the St. Louis Board of Police Commissioners, seeking payment of overtime pay that they claimed was owed under § 7(a)(1) of the FLSA, 29 U. S. C. § 207(a)(1). Respondents argued that petitioners were not entitled to such pay because they came within the exemption provided by § 213(a)(1) for “bona fide executive, administrative, or professional” employees.

Under regulations promulgated by the Secretary, one requirement for exempt status under § 213(a)(1) is that the employee earn a specified minimum amount on a “salary basis.” 29 CFR §§ 541.1(f), 541.2(e), 541.3(e) (1996). According to the regulations, “[a]n employee will be considered to be paid 'on a salary basis’... if under his employment agreement he regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of his compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed.” § 541.118(a). Petitioners contended that the salary-basis test was not met in their case because, under the terms of the St. Louis Metropolitan Police Department Manual, their compensation could be reduced for a variety of disciplinary infractions related to the “quality or quantity” of work performed. Petitioners also claimed that they did not meet the other requirement for exempt status under § 213(a)(1): that their duties be of an executive, administrative, or professional nature. See §§541.1(a)-(e), 541.2(a)-(d), 541.3(aMd).

The District Court found that petitioners were paid on a salary basis and that most, though not all, also satisfied the duties criterion. The Court of Appeals affirmed in part and reversed in part, holding that both the salary-basis test and the duties test were satisfied as to all petitioners. 65 F. 3d 702 (CA8 1995). We granted certiorari. 518 U. S. 1016 (1996).

II

The FLSA grants the Secretary broad authority to “de-fin[e] and delimi[t]” the scope of the exemption for executive, administrative, and professional employees. § 213(a)(1). Under the Secretary’s chosen approach, exempt status requires that the employee be paid on a salary basis, which in turn requires that his compensation not be subject to reduction because of variations in the “quality or quantity of the work performed,” 29 CFR § 541.118(a) (1996). Because the regulation goes on to carve out an exception from this rule for “[penalties imposed ... for infractions of safety rules of major significance,” § 541.118(a)(5), it is clear that the rule embraces reductions in pay for disciplinary violations. The Secretary is of the view that employees whose pay is adjusted for disciplinary reasons do not deserve exempt status because as a general matter true “executive, administrative, or professional” employees are not “disciplined” by piecemeal deductions from their pay, but are terminated, demoted, or given restricted assignments.

A

The FLSA did not apply to state and local employees when the salary-basis test was adopted in 1940. See 29 U. S. C. § 203(d) (1940 ed.); 5 Fed. Reg. 4077 (1940) (salary-basis test). In 1974 Congress extended FLSA coverage to virtually all public-sector employees, Pub. L. 93-259, § 6, 88 Stat. 58-62, and in 1985 we held that this exercise of power was consistent with the Tenth Amendment, Garcia v. San Antonio Metropolitan Transit Authority, 469 U. S. 528 (1985) (overruling National League of Cities v. Usery, 426 U. S. 833 (1976)). The salary-basis test has existed largely in its present form since 1954, see 19 Fed. Reg. 4405 (1954), and is expressly applicable to public-sector employees, see 29 CFR §§ 553.2(b), 553.32(c) (1996).

Respondents concede that the FLSA may validly be applied to the public sector, and they also do not raise any general challenge to the Secretary’s reliance on the salary-basis test. They contend, however, that the “no disciplinary deductions” element of the salary-basis test is invalid for public-sector employees because as applied to them it reflects an unreasonable interpretation of the statutory exemption. That is so, they say, because the ability to adjust public-sector employees’ pay — even executive, administrative or professional employees’ pay — as a means of enforcing compliance with work rules is a necessary component of effective government. In the public-sector context, they contend, fewer disciplinary alternatives to deductions in pay are available.

Because Congress has not “directly spoken to the precise question at issue,” we must sustain the Secretary’s approach so long as it is “based on a permissible construction of the statute.” Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, 842-843 (1984). While respondents’ objections would perhaps support a different application of the salary-basis test for public employees, we cannot conclude that they compel it. The Secretary’s view that public employers are not so differently situated with regard to disciplining their employees as to require wholesale revision of his time-tested rule simply cannot be said to be unreasonable. We agree with the Seventh Circuit that no “principle of public administration that has been drawn to our attention . . . makes it imperative” that public-sector employers have the ability to impose disciplinary pay deductions on individuals employed in genuine executive, administrative, or professional capacities. Mueller v. Reich, 54 F. 3d 438, 442 (1995), cert. pending, No. 95-586.

Respondents appeal to the “quasi military” nature of law enforcement agencies such as the St. Louis Police Department. The ability to use the full range of disciplinary tools against even relatively senior law enforcement personnel is essential, they say, to maintaining control and discipline in organizations in which human lives are on the line daily. It is far from clear, however, that only a pay deduction, and not some other form of discipline — for example, placing the offending officer on restricted duties — will have the necessary effect. Because the FLSA entrusts matters of judgment such as this to the Secretary, not the federal courts, we cannot say that the disciplinary-deduction rule is invalid as applied to law enforcement personnel.

B

The more fundamental objection respondents have to the disciplinary-deduction rule is a procedural one: The Secretary has failed to give adequate consideration to whether it really makes sense to apply the rule to the public sector. Respondents’ amici make the claim more specific: The Secretary’s failure to revisit the rule in the wake of our Garcia decision was “arbitrary” and “capricious” in violation of the Administrative Procedure Act (APA), 5 U. S. C. § 706(2)(A).

It is certainly true that application of the disciplinary-deduction rule to public-sector employees raises distinct issues that may warrant the Secretary’s formal consideration; this much is suggested by the veritable flood of post-Garcia litigation against public employers in this area, see, e. g., Carpenter v. Denver, 82 F. 3d 353 (CA10 1996), cert. pending, No. 95-2088; Bankston v. Illinois, 60 F. 3d 1249 (CA7 1995); Shockley v. Newport News, 997 F. 2d 18 (CA4 1993); Atlanta Professional Firefighters Union, Local 134 v. Atlanta, 920 F. 2d 800 (CA11 1991). But respondents’ complaints about the failure to amend the disciplinary-deduction rule cannot be raised in the first instance in the present suit. A court may certainly be asked by parties in respondents’ position to disregard an agency regulation that is contrary to the substantive requirements of the law, or one that appears on the public record to have been issued in violation of procedural prerequisites, such as the “notice and comment” requirements of the APA, 5 U. S. C. § 553. But where, as here, the claim is not that the regulation is substantively unlawful, or even that it violates a clear procedural prerequisite, but rather that it was “arbitrary” and “capricious” not to conduct amendatory rulemaking (which might well have resulted in no change), there is no basis for the court to set aside the agency’s action prior to any application for relief addressed to the agency itself. The proper procedure for pursuit of respondents’ grievance is set forth explicitly in the APA: a petition to the agency for rulemaking, § 553(e), denial of which must be justified by a statement of reasons, § 555(e), and can be appealed to the courts, §§ 702, 706.

III

A primary issue in the litigation unleashed by application of the salary-basis test to public-sector employees has been whether, under that test, an employee’s pay is “subject to” disciplinary or other deductions whenever there exists a theoretical possibility of such deductions, or rather only when there is something more to suggest that the employee is actually vulnerable to having his pay reduced. Petitioners in effect argue for something close to the former view; they contend that because the police manual nominally subjects all department employees to a range of disciplinary sanctions that includes disciplinary deductions in pay, and because a single sergeant was actually subjected to a disciplinary deduction, they are “subject to” such deductions and hence nonexempt under the FLSA.

The Court of Appeals rejected petitioners’ approach, saying that “[t]he mere possibility of an improper deduction in pay does not defeat an employee’s salaried status” if no practice of making deductions exists. 65 F. 3d, at 710-711. In the Court of Appeals’ view, a “one-time incident” in which a disciplinary deduction is taken under “unique circumstances” does not defeat the salaried status of employees. Id., at 711. (In this case the sergeant in question, who had violated a residency rule, agreed to a reduction in pay as an alternative to termination of his employment.) The requirement of actual deductions was also imposed in an earlier ruling by the Eighth Circuit, McDonnell v. Omaha, 999 F. 2d 293, 296-297 (1993), cert. denied, 510 U. S. 1163 (1994), and in an Eleventh Circuit case, Atlanta Professional Firefighters Union, Local 134 v. Atlanta, supra, at 805. Other Circuits have rejected the requirement, Yourman v. Dinkins, 84 F. 3d 655, 656 (CA2 1996), cert. pending, No. 96-152; Carpenter v. Denver, supra, at 359-360; Bankston v. Illinois, supra, at 1253; Kinney v. District of Columbia, 994 F. 2d 6, 10-11 (CADC 1993); Abshire v. County of Kern, 908 F. 2d 483, 486-488 (CA9 1990), cert. denied, 498 U. S. 1068 (1991); or else have imposed a requirement of actual deductions only in the face of vagueness or ambiguity in the governing policy, Michigan Assn. of Governmental Employees v. Michigan Dept. of Corrections, 992 F. 2d 82, 86 (CA6 1993).

The Secretary of Labor, in an amicus brief filed at the request of the Court, interprets the salary-basis test to deny exempt status when employees are covered by a policy that permits disciplinary or other deductions in pay “as a practical matter.” That standard is met, the Secretary says, if there is either an actual practice of making such deductions or an employment policy that creates a “significant likelihood” of such deductions. The Secretary’s approach rejects a wooden requirement of actual deductions, but in their absence it requires a clear and particularized policy — one which “effectively communicates” that deductions will be made in specified circumstances. This avoids the imposition of massive and unanticipated overtime liability (including the possibility of substantial liquidated damages, see, e. g., Kinney v. District of Columbia, supra, at 12) in situations in which a vague or broadly worded policy is nominally applicable to a whole range of personnel but is not “significantly likely” to be invoked against salaried employees.

Because the salary-basis test is a creature of the Secretary’s own regulations, his interpretation of it is, under our jurisprudence, controlling unless “ ‘plainly erroneous or inconsistent with the regulation.’” Robertson v. Methow Valley Citizens Council, 490 U. S. 332, 359 (1989) (quoting Bowles v. Seminole Rock & Sand Co., 325 U. S. 410, 414 (1945)). That deferential standard is easily met here. The critical phrase “subject to” comfortably bears the meaning the Secretary assigns. See American Heritage Dictionary 1788 (3d ed. 1992) (def. 2: defining “subject to” to mean “prone; disposed”; giving as an example “a child who is subject to colds”); Webster’s New International Dictionary 2509 (2d ed. 1950) (def. 3: defining “subject to” to mean “[ejxposed; liable; prone; disposed”; giving as an example “a country subject to extreme heat”).

The Secretary’s approach is usefully illustrated by reference to this ease. The policy on which petitioners rely is contained in a.section of the police manual that lists a total of 58 possible rule violations and specifies the range of penalties associated with each. All department employees are nominally covered by the manual, and some of the specified penalties involve disciplinary deductions in pay. Under the Secretary’s view, that is not enough to render petitioners’ pay “subject to” disciplinary deductions within the meaning of the salary-basis test. This is so because the manual does not “effectively communicate” that pay deductions are an anticipated form of punishment for employees in petitioners’ category, since it is perfectly possible to give full effect to every aspect of the manual without drawing any inference of that sort. If the statement of available penalties applied solely to petitioners, matters would be different; but since it applies both to petitioners and to employees who are unquestionably not paid on a salary basis, the expressed availability of disciplinary deductions may have reference only to the latter. No clear inference can be drawn as to the likelihood of a sanction’s being applied to employees such as petitioners. Nor, under the Secretary’s approach, is such a likelihood established by the one-time deduction in a sergeant’s pay, under unusual circumstances.

Petitioners complain that the Secretary’s interpretation comes to us in the form of a legal brief; but that does not, in the circumstances of this ease, make it unworthy of deference. The Secretary’s position is in no sense a “post hoc rationalization]” advanced by an agency seeking to defend 'past agency action against attack, Bowen v. Georgetown Univ. Hospital, 488 U. S. 204, 212 (1988). There is simply no reason to suspect that the interpretation does not reflect the agency’s fair and considered judgment on the matter in question. Petitioners also suggest that the Secretary’s approach contravenes the rule that FLSA exemptions are to be “narrowly construed against... employers” and are to be withheld except as to persons “plainly and unmistakably within their terms and spirit.” Arnold v. Ben Kanowsky, Inc., 361 U. S. 388, 392 (1960). But that is a rule governing judicial interpretation of statutes and regulations, not a limitation on the Secretary’s power to resolve ambiguities in his own regulations. A rule requiring the Secretary to construe his own regulations narrowly would make little sense, since he is free to write the regulations as broadly as he wishes, subject only to the limits imposed by the statute.

h-H <

One small issue remains unresolved: the effect upon the exempt status of Sergeant Guzy, the officer who violated the residency requirement, of the one-time reduction in his pay. The Secretary’s regulations provide that if deductions which are inconsistent with the salary-basis test — such as the deduction from Guzy’s pay — are made in circumstances indicating that “there was no intention to pay the employee on a salary basis,” the exemption from the FLSA is “[not] applicable to him during the entire period when such deductions were being made.” 29 CFR § 541.118(a)(6) (1996). Conversely, “where a deduction not permitted by [the salary-basis test] is inadvertent, or is made for reasons other than lack of work, the exemption will not be considered to have been lost if the employer reimburses the employee for such deductions and promises to comply in the future.” Ibid.

Petitioners contend that the initial condition in the latter provision (which enables the employer to take corrective action) is not satisfied here because the deduction from Guzy’s pay was not inadvertent. That it was not inadvertent is true enough, but the plain language of the regulation sets out “inadvertence]” and “made for reasons other than lack of work” as alternative grounds permitting corrective action. Petitioners also contend that the corrective provision is unavailable to respondents because Guzy has yet to be reimbursed for the residency-based deduction; in petitioners’ view, reimbursement must be made immediately upon the discovery that an improper deduction was made. The language of the regulation, however, does not address the timing of reimbursement, and the Secretary’s amicus brief informs us that he does not interpret it to require immediate payment. Respondents are entitled to preserve Guzy’s exempt status by complying with the corrective provision in § 541.118(a)(6).

* *■ *

Petitioners have argued, finally, that respondents failed to carry their affirmative burden of establishing petitioners’ exempt status even under the Secretary’s interpretation of the salary-basis test. Since, however, that argument was inadequately preserved in the prior proceedings, we will not consider it here. See Adickes v. S. H. Kress & Co., 398 U. S. 144, 147, n. 2 (1970). The judgment of the Court of Appeals is affirmed.

It is so ordered.

       Respondents contend that the District Court lacked jurisdiction over petitioners’ suit by virtue of the Eleventh Amendment. The Board of Police Commissioners, however, does not share the immunity of the State of Missouri. While the Governor appoints four of the board’s five members, Mo. Rev. Stat. § 84.030 (1994), the city of St. Louis is responsible for the board’s financial liabilities, §84.210, and the board is not subject to the State’s direction or control in any other respect. It is therefore not an “arm of the State” for Eleventh Amendment purposes. Hess v. Port Authority Trans-Hudson Corporation, 513 U. S. 30, 47-51 (1994); Lake Country Estates, Inc. v. Tahoe Regional Planning Agency, 440 U. S. 391, 401-402 (1979).

       Petitioners also contend that additional sergeants were actually subjected to disciplinary deductions, but that fact is not established by the portions of the record petitioners cite.


source: Caselaw Access Project

author: Justice Stevens Justice Scalia,

license: Public Domain

text:
    DUNN et al. v. COMMODITY FUTURES TRADING COMMISSION et al.
    No. 95-1181.
    Argued November 13, 1996
    Decided February 25, 1997

      Gary D. Stumpp argued the cause for petitioners. With him on the briefs was Adam M. Bond.

      Jeffrey P. Minear argued the cause for respondents. With him on the brief for respondent Commodity Futures Trading Commission were Acting Solicitor General Dellin-ger, Deputy Solicitor General Kneedler, Pat G. Nicolette, Jay L. Within, and Gracemary Rizzo.

      Briefs of amici curiae urging reversal were filed for Credit Lyonnais et al. by John M. Quitmeyer, Danforth Newcomb, Kent T. Stauffer, and David M. Lindley; and for the Foreign Exchange Committee et al. by Kenneth M. Raisler, Edward J. Rosen, Peter Buscemi, and Maris M. Rodgon. the Board
      Briefs of amici curiae urging affirmance were filed for the Board of Trade of the City of Chicago by Kenneth W. Starr, Mark D. Young, and Richard A. Cordray; and for the Chicago Mercantile Exchange by Jerrold E. Salzman and James T. Malysiak.

   Justice Stevens

delivered the opinion of the Court.

The question presented is whether Congress has authorized the Commodity Futures Trading Commission (CFTC or Commission) to regulate “off-exchange” trading in options to buy or sell foreign currency.

I

The CFTC brought this action in 1994, alleging that, beginning in 1992, petitioners solicited investments in and operated a fraudulent scheme in violation of the Commodity-Exchange Act (CEA), 7 U. S. C. § 1 et seq., and CFTC regulations. App. 10. See 7 U. S. C. §6c(b); 17 CFR §32.9 (1996). The CFTC’s complaint, affidavits, and declarations submitted to the District Court indicate that customers were told their funds would be invested using complex strategies involving options to purchase or sell various foreign currencies. App. 8. Petitioners apparently did in fact engage in many such transactions. Ibid.; 58 F. 3d 50, 51 (CA2 1995). To do so, they contracted directly with international banks and others without making use of any regulated exchange or board of trade. In the parlance of the business, petitioners traded in the “off-exchange” or “over-the-counter” (OTC) market. Ibid. No options were ever sold directly to petitioners' customers. However, their positions were tracked through internal accounts, and investors were provided weekly reports showing the putative status of their holdings. Petitioners and their customers suffered heavy losses. Id., at 51-52. Subsequently, the CFTC commenced these proceedings.

Rejecting petitioners’ defense that off-exchange transactions in foreign currency options are exempt from the CEA, the District Court appointed a temporary receiver to take control of their property for the benefit of their customers. App. to Pet. for Cert. 5b-6b. Relying on Circuit precedent, and acknowledging a conflict with another Circuit, the Court of Appeals affirmed. 58 F. 3d, at 54. We granted certiorari to resolve the conflict. 517 U. S. 1219 (1996). For the reasons that follow, we reverse and remand for further proceedings.

II

The outcome of this case is dictated by the so-called “Treasury Amendment” to the CEA. 88 Stat. 1395, 7 U. S. C. §2(ii). We have previously reviewed the history of the CEA and generally described how it authorizes the CFTC to regulate the “volatile and esoteric” market in futures contracts in fungible commodities. See Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U. S. 353, 356, 357-367 (1982). As a part of the 1974 amendments that created the CFTC and dramatically expanded the coverage of the statute to include nonagricultural commodities “in which contracts for future delivery are presently or in the future dealt in,” see 88 Stat. 1395, 7 U. S. C. §2 (1970 ed., Supp. IV), Congress enacted the following exemption, which has come to be known as the “Treasury Amendment”:

“Nothing in this chapter shall be deemed to govern or in any way be applicable to transactions in foreign currency, security warrants, security rights, resales of installment loan contracts, repurchase options, government securities, or mortgages and mortgage purchase commitments, unless such transactions involve the sale thereof for future delivery conducted on a board of trade.” 7 U. S. C. §2(ii) (emphasis added).

The narrow issue that we must decide is whether the italicized phrase (“transactions in foreign currency”) includes transactions in options to buy or sell foreign currency. An option, as the term is understood in the trade, is a transaction in which the buyer purchases from the seller for consideration the right, but not the obligation, to buy or sell an agreed amount of a commodity at a set rate at any time prior to the option’s expiration. We think it plain that foreign currency options are “transactions in foreign currency” within the meaning of the statute. We are not persuaded by any of the arguments advanced by the CFTC in support of a narrower reading that would exempt futures contracts (agreements to buy or sell a specified quantity of a commodity at a particular price for delivery at a set future date) without exempting options.

III

“[A]bsent any ‘indication that doing so would frustrate Congress’s clear intention or yield patent absurdity, our obligation is to apply the statute as Congress wrote it.’ ” Hubbard v. United States, 514 U. S. 695, 703 (1995) (quoting BFP v. Resolution Trust Corporation, 511 U. S. 531, 570 (1994) (Souter, J., dissenting)). The CFTC argues, and the Court of Appeals held, that an option is not itself a transaction “in” foreign currency, but rather is just a contract right to engage in such a transaction at a future date. Brief for CFTC 30-31; 58 F. 3d, at 53. Hence, the Commission submits that the term “transactions in foreign currency” includes only the “actual exercise of an option (i. e., the actual purchase or sale of foreign currency)” but not the purchase or sale of an option itself. Brief for CFTC 31. That reading of the text seems quite unnatural to us, and we decline to adopt it.

The more normal reading of the key phrase encompasses all transactions in which foreign currency is the fungible good whose fluctuating market price provides the motive for trading. The CFTC’s interpretation violates the ordinary meaning of the key word “in,” which is usually thought to be “synonymous with [the] expressions ‘in regard to,’ ‘respecting,’ [and] ‘with respect to.’” Black’s Law Dictionary 758 (6th ed. 1990); see Babbitt v. Sweet Home Chapter, Communities for Great Ore., 515 U. S. 687, 697-698 (1995). There can be no question that the purchase or sale of a foreign currency option is a transaction “respecting” foreign currency. We think it equally plain as a matter of ordinary meaning that such an option is a transaction “in” foreign currency for purposes of the Treasury Amendment.

Indeed, adopting the Commission’s reading would deprive the exemption of the principal effect Congress intended. The CFTC acknowledges that futures contracts fall squarely within the Treasury Amendment’s exemption, Brief for CFTC 30, and there is no question that the exemption of off-exchange foreign currency futures from CFTC regulation was one of Congress’ primary goals. Yet on the CFTC’s reasoning the exemption’s application to futures contracts could not be sustained.

A futures contract is no more a transaction “in” foreign currency as the Commission understands the term than an option. The Commission argues that because a futures contract creates a legal obligation to purchase or sell currency on a particular date, it is somehow more clearly a transaction “in” the underlying currencies than an option, which generates only the right to engage in a transaction. Id., at 30-32. This reasoning is wholly unpersuasive. No currency changes hands at the time a futures contract is made. And, the existence of a futures contract does not guarantee that currency will actually be exchanged. Indeed, the Commission concedes that, in most cases, futures contracts are “extinguished before delivery by entry into an offsetting futures contract.” Id., at 30 (citing 1 T. Snider, Regulation of the Commodities Futures and Options Markets §2.05 (2d ed. 1995) (hereinafter Snider)); see also Munn & Garcia 414. Adopting the CFTC’s reading would therefore place both futures and options outside the exemption, in clear contravention of Congress' intent. the Treas-

Furthermore, this interpretation would leave the Treasury Amendment’s exemption for “transactions in foreign currency” without any significant effect at all, because it would limit the scope of the exemption to “forward contracts” (agreements that anticipate the actual delivery of a commodity on a specified future date) and “spot transactions” (agreements for purchase and sale of commodities that anticipate near-term delivery). Both are transactions “in” a commodity as the CFTC would have us understand the term. But neither type of transaction for any commodity was subject to intensive regulation under the CEA at the time of the Treasury Amendment’s passage. See 7 U. S. C. § 2 (1970 ed., Supp. IV) (“term ‘future delivery,’ as used in this chapter, shall not include any sale of any cash commodity for deferred shipment or delivery”); Snider § 9.01; J. Markham, The History of Commodity Futures Trading and Its Regulation 201-203 (1987). Our reading of the exemption is therefore also consonant with the doctrine that legislative enactments should not be construed to render their provisions mere sur-plusage. See Babbitt, 515 U. S., at 698 (noting “reluctance to treat statutory terms as surplusage”); Mountain States Telephone & Telegraph Co. v. Pueblo of Santa Ana, 472 U. S. 237, 249 (1985).

Finally, including options in the exemption is consistent with Congress’ purpose in enacting the Treasury Amendment. Although at the time the Treasury Amendment was drafted a thriving off-exchange market in foreign currency futures was in place, the closely related options market at issue here had not yet developed. See City of New York Bar Association Committee on Futures Regulation, The Evolving Regulatory Framework for Foreign Currency Trading 18, 23 (1986). The CFTC therefore suggests that Congress could not have intended to exempt foreign currency options from the CE A’s coverage. Brief for CFTC 41-42. The legislative history strongly suggests to the contrary that Congress’ broad purpose in enacting the Treasury Amendment was to provide a general exemption from CFTC regulation for sophisticated off-exchange foreign currency trading, which had previously developed entirely free from supervision under the commodities laws.

In explaining the Treasury Amendment, the Senate Committee Report notes in broad terms that the amendment “provides that inter-bank trading of foreign currencies and specified financial instruments is not subject to Commission regulation.” S. Rep. No. 93-1131, p. 6 (1974). Elsewhere, the Report again explains in general terms — without making reference to any distinction between options and futures— that the legislation

“included an amendment to clarify that the provisions of the bill are not applicable to trading in foreign currencies and certain enumerated financial instruments unless such trading is conducted on a formally organized futures exchange. A great deal of the trading in foreign currency in the United States is carried out through an informal network of banks and tellers. The Committee believes that this market is more properly supervised by the bank regulatory agencies and that, therefore, regulation under this legislation is unnecessary.” Id., at 23.

Similarly, the Treasury Department submitted to the Chairman of the relevant Senate Committee a letter that was the original source of the Treasury Amendment. While focusing on the need to exempt the foreign currency futures market from CFTC regulation, the letter points out that the “participants in this market are sophisticated and informed institutions,” and “the [CFTC] would clearly not have the expertise to regulate a complex banking function and would confuse an already highly regulated business sector.” Id., at 50 (letter of Donald Ritger, Acting General Counsel). The Department further explained that “new regulatory limitations and restrictions could have an adverse impact on the usefulness and efficiency of foreign exchange markets for traders and investors.” Ibid.

Although the OTC market for foreign currency options had not yet developed in 1974, the reasons underlying the Treasury Department’s express desire at that time to exempt off-exchange commodity futures trading from CFTC regulation apply with equal force to options today. Foreign currency options and futures are now traded in the same off-exchange markets, by the same entities, for quite similar purposes. See Brief for Foreign Exchange Committee et al. as Amici Curiae 19. Contrary to the Commission’s suggestion, we therefore think the purposes underlying the Treasury Amendment are most properly fulfilled by giving effect to the plain meaning of the language as Congress enacted it. should

The CFTC rejoins that the Treasury Amendment should be construed in the light of Congress’ history of regulating options more strictly than futures. See Snider §§7.03-7.04; Brief for CFTC 38-39. The Commission submits that this distinction was motivated by the view that options lend themselves more readily to fraudulent schemes than futures contracts. Hence, the CFTC argues that Congress would have acted reasonably and consistently with prior practice had it regulated commodities differently from options. While that may be true, we give only slight credence to these general historical considerations, which are unsupported by statutory language, or any evidence evocative of the particular concerns focused on by the legislators who enacted the Treasury Amendment. We think the history of the Treasury Amendment suggests — contrary to the CFTC’s view— that it was intended to take all transactions relating to foreign currency not conducted on a board of trade outside of the CEA’s ambit. This interpretation is consistent with the fact that, prior to the enactment of the CEA in 1974, foreign currency trading had been entirely unregulated under the commodities laws.

Our interpretation is also consonant with the history of evolving congressional regulation in this area. That history has been one of successively broadening the coverage of regulation by the addition of more and more commodities to the applicable legislation. It seems quite natural in this context to read the Treasury Amendment’s exemption of transactions in foreign currencies as a complete exclusion of that commodity from the regulatory scheme, except, of course, to the extent that the proviso for transactions “conducted on a board of trade” qualifies that exclusion. See 7 U. S. C. § 2(ii).

IV

To buttress its reading of the statute, the CFTC argues that elsewhere in the CEA Congress referred to transactions “involving” a particular commodity to describe options or used other “more encompassing terminology,” rather than what we are told is the narrower term transactions “in” the commodity, which was reserved for futures, spot transactions, and forward contracts. Brief for CFTC 30-33. Not only do we think it unlikely that Congress would adopt such a subtle method of drawing important distinctions, there is little to suggest that it did so. consistent.

Congress’ use of these terms has been far from consistent. Most strikingly, the use of the word “involving” in the Treasury Amendment itself completely eviscerates the force of the Commission’s argument. After setting forth exemptions for, inter alia, “transactions in foreign currency,” the amendment contains a proviso sweeping back into the statute’s coverage “such transactions involvfing] the sale thereof for future delivery conducted on a board of trade.” 7 U. S. C. §2(ii) (emphasis added). As we have already noted, the CFTC agrees that futures contracts are a subset of “transactions in foreign currency.” The Commission further submits that the proviso uses the word “involve” to make the exemption inapplicable to those futures contracts that are conducted on a board of trade. This contradicts the “in” versus “involving” distinction. We would expect on the Commission’s reasoning that this provision would refer to “transactions in futures.” The use of the term “involving” instead, within the very amendment that the CFTC claims embraces this distinction, weighs heavily against the view that any such distinction was intended by Congress.

The CFTC argues further that the proviso properly understood aids its cause. The proviso sweeps back into the CFTC’s jurisdiction otherwise exempt “transactions in foreign currency” that “involve the sale thereof for future delivery” and are “conducted on a board of trade.” Since the proviso refers to futures without mentioning options, the Commission submits that the exemption itself should be read only to cover futures because Congress cannot reasonably have intended to regulate exchange trading in foreign currency futures without also regulating exchange trading in such options. We agree that Congress intended no such anomaly. But we are satisfied that the anomaly is best avoided by reading the proviso broadly rather than reading the exemption narrowly.

The proviso’s language fairly accommodates inclusion of both options and futures. To fall within the proviso, a transaction must “involve the sale [of foreign currency] for future delivery.” §2(ii) (emphasis added). Because options convey the right to buy or sell foreign currency at some future time prior to their expiration, they are transactions “involv[ing]” or related to the sale of foreign currency for future delivery. Thus, both futures and options are covered by both the exemption and the proviso. While that may not be the only possible reading of the literal text, and we do not intend to suggest that a similar construction would be required with respect to other provisions of the CEA, our interpretation is faithful to the “contemporary legal context” in which the Treasury Amendment was drafted. Cannon v. University of Chicago, 441 U. S. 677, 699 (1979); see also Massachusetts v. Morash, 490 U. S. 107, 115 (1989) (noting that “ fin expounding a statute, we [are] not. .. guided by a single sentence or member of a sentence, but look to the provisions of the whole law, and to its object and policy’ ”) (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U. S. 41, 51 (1987)).

Finally, the CFTC calls our attention to statements in the 'legislative history of a 1982 amendment to the CEA, indicating that the drafters of that amendment believed that the CFTC had the authority to regulate foreign currency options “when they are traded other than on a national securities exchange.” See S. Rep. No. 97-384, p. 22 (1982). Those statements, at best, might be described as “legislative dicta” because the 1982 amendment itself merely resolved a conflict between the Securities Exchange Commission and the CFTC concerning their respective authority to regulate transactions on an exchange. See Snider § 10.24. The amendment made no change in the law applicable to off-exchange trading. Although these “dicta” are consistent with the position that the CFTC advocates, they shed no light on the intent of the authors of the Treasury Amendment that had been adopted eight years earlier. See, e. g., Mackey v. Lanier Collection Agency & Service, Inc., 486 U. S. 825, 839-840 (1988).

V

Underlying the statutory construction question before us, we recognize that there is an important public policy dispute — with substantial' arguments favoring each side. Petitioners, their amici, and the Treasury Department argue that if off-exchange foreign currency options are not treated as exempt from CEA regulation, the increased costs associated with unnecessary regulation of the highly sophisticated OTC foreign currency markets might well drive this business out of the United States. The Commission responds that to the extent limited exemptions from regulation are necessary, it will provide them, but argues that options are particularly susceptible to fraud and abuse if not carefully policed. Brief for CFTC 26, 49. As the Commission properly acknowledges, however, these are arguments best addressed to the Congress, not the courts. See United States v. Rutherford, 442 U. S. 544, 555 (1979). Lacking the expertise or authority to assess these important competing claims, we note only that “a literal construction of a statute” does not “yiel[dj results so manifestly unreasonable that they could not fairly be attributed to congressional design.” Ibid.

The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

Justice Scalia,

concurring in part and concurring in the judgment.

I agree with the Court that “the purposes underlying the Treasury Amendment are most properly fulfilled by giving effect to the plain meaning of the language as Congress enacted it,” ante, at 474, which includes options to buy or sell foreign currency. This principle is contradicted, however, by the Court’s extensive discussion of legislative history, see ante, at 471, n. 8, 473-474, 478-479, as though that were necessary to confirm the “plain meaning of the language,” or (worse) might have power to overcome it. I join all except those portions of the opinion, which achieve nothing useful and sow confusion in the law.

       The complaint names as defendants William C. Dunn, Delta Consultants, Inc., Delta Options, Ltd., and Nopkine Co., Ltd. App. 6-7. Only Dunn and Delta Consultants are petitioners here.

       The statute provides: “No person shall offer to enter into, enter into or confirm the execution of, any transaction involving any commodity regulated under this chapter which is of the character of, or is commonly known to the trade as, an ‘option’... contrary to any rule, regulation, or order of the Commission prohibiting any such transaction or allowing any such transaction under such terms and conditions as the Commission shall prescribe.” 7 U. S. C. § 6e(b). The regulations at issue here further make it unlawful “for any person directly or indirectly ... [t]o cheat or defraud or attempt to cheat or defraud any other person;... [t]o make or cause to be made to any other person any false report or statement thereof or cause to be entered for any person any false record thereof;. . . [or] [t]o deceive or attempt to deceive any other person by any means whatsoever . . . in or in connection with an offer to enter into, the entry into, or the confirmation of the execution of, any commodity option transaction.” 17 CFR §32.9 (1996).

       We are informed by amici that participants in the “highly evolved, sophisticated” OTC foreign currency markets include “commercial and investment banks, . . . foreign exchange dealers and brokerage companies, corporations, money managers (including pension, mutual fund and commodity pool managers), commodity trading advisors, insurance companies, governments and central banks.” Brief for Foreign Exchange Committee et al. as Amici Curiae 8. These markets serve a variety of functions, including providing ready access to foreign currency for international transactions, and allowing businesses to hedge against the risk of exchange rate movements. Id., at 8-9.

       58 F. 3d 50, 53 (CA2 1995) (citing Commodity Futures Trading Comm’n v. American Bd. of Trade, 803 F. 2d 1242 (CA2 1986)).

       58 F. 3d, at 54 (citing Salomon Forex, Inc. v. Tauber, 8 F. 3d 966 (CA4 1993), cert. denied, 511 U. S. 1031 (1994)).

       See G. Munn & F. Garcia, Encyclopedia of Banking and Finance 736 (8th ed. 1983) (hereinafter Munn & Garcia); C. Luca, Trading in the Global Currency Markets 243 (1995) (hereinafter Luca). Participants in these markets refer to an option that provides the right to sell currency as a “put,” and one that provides the right to buy as a “call.” Munn & Garcia 737; Luca 270,272. Options can themselves be traded, at values that vary depending upon the exchange rate of the underlying currencies prior to the option’s expiration. Brief for Foreign Exchange Committee et al. as Amici Curiae 5, n. 5.

       See Munn & Garcia 414; City of New York Bar Association Committee on Futures Regulation, The Evolving Regulatory Framework for Foreign Currency Trading 9 (1986).

       The amendment was enacted on the suggestion of the Treasury Department at the time of a dramatic expansion in the scope of federal commodities regulation. The Department expressed concerns in a letter to the relevant congressional committee that this development might lead, inter alia, to the unintended regulation of the off-exchange market in foreign currency futures. See S. Rep. No. 93-1131, pp. 49-50 (1974) (“The Department feels strongly that foreign currency futures trading, other than on organized exchanges, should not be regulated by the new agency”) (letter of Donald Ritger, Acting General Counsel). The Treasury Amendment, which tracks almost verbatim the language proposed by the Department, cf. id., at 51, was included in the legislation to respond to these concerns. Id., at 23. The CFTC is therefore plainly correct to reject the suggestion of its amici that the Treasury Amendment’s exemption be construed not to include futures contracts within its coverage. See Brief for Chicago Mercantile Exchange as Amicus Curiae 17-18; Brief for Board of Trade of City of Chicago as Amicus Curiae 10.

       See Snider §9.01 (defining “spot transactions” and “forward contracts”).

       Similarly, the Conference Committee Report points out that the Treasury Amendment “provides that interbank trading of foreign currencies and specified financial instruments is not subject to Commission regulation.” H. R. Conf. Rep. No. 93-1383, p. 35 (1974).

       The Grain Futures Act, enacted by Congress in 1922 to authorize the Secretary of Agriculture to supervise trading in grain futures on “contract markets,” defined the regulated commodities to include “wheat, corn, oats, barley, rye, flax, and sorghum.” 42 Stat. 998. In 1936 Congress expanded the coverage of the legislation to add further agricultural commodities, including cotton, rice, butter, eggs, and Irish potatoes. Ch. 545, 49 Stat. 1491. (The contrast between the title of the 1936 Act — “Commodity Exchange Act” — and the title of its predecessor — “Grain Futures Act”— suggests that an easy way to describe the coverage of the legislation is to identify the commodities that it regulates.) In 1968 the coverage of the legislation was again expanded, this time to include livestock and livestock products. 82 Stat. 26. The 1974 amendment expanded the coverage of the statute to include nonagrieultural commodities and, appropriately, replaced regulation by the Secretary of Agriculture with regulation by a new commission whose title included the word “Commodity.”

       Similarly, the statute refers at one point to “[transactions in commodities involving the sale thereof for future delivery . . . and known as ‘futures.’ ” 7 U. S. C. § 5 (emphasis added). Had Congress meant to maintain the Commission’s distinction, we would not have expected the Legislature to use the words “in” and “involving” loosely in the same sentence to refer to futures, which the CFTC informs us are transactions “in” (but not “involving”) foreign currency. Similarly, the statute refers elsewhere to “transaction[s] in an option on foreign currency.” §6c(f) (emphasis added). If Congress had spoken in the manner the CFTC suggests, that provision would instead use the phrase “transactions involving an option.”
      The statute’s general jurisdictional provision also fails to maintain the distinction the Commission presses. The CEA provides that the CFTC “shall have exclusive jurisdiction... with respect to accounts, agreements (including any transaction which is of the character of, or is commonly known to the trade as, an ‘option’ . . .), and transactions involving contracts of sale of a commodity for future delivery.” § 2(i) (emphasis added). The Commission submits that this language gives the CFTC regulatory authority over options on futures contracts, see Snider § 10.11, and argues that the use of the word “involving” is therefore in keeping with its interpretation of the statutory scheme. See Brief for CFTC 32. But §2(i) provides the CFTC with exclusive jurisdiction over far more. Among other things, it explicitly grants jurisdiction over any “transactio[n] involving contracts of sale of a commodity for future delivery,” plainly meaning at a minimum ordinary futures contracts, which the Commission otherwise insists are transactions “in” commodities.

       Futures Trading Act of 1982, Tit. I, §102, 96 Stat. 2296, 7 U.S.C. §6c(f).

       Though the CFTC’s brief disclaims any need for it, Brief for CFTC 48, at oral argument the Commission requested for the first time that we give deference to its interpretation of the Treasury Amendment as the agency, “charged with administering” it. Smiley v. Citibank (South Dakota), N. A., 517 U. S. 785, 739 (1996); Tr. of Oral Arg. 54; see Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984). If Chevron principles were applicable, we are unsure that the CFTC’s position would be the one owed deference. As the Commission concedes, Brief for CFTC 25, the Treasury Department has taken a quite different view of the statute — one consonant with the interpretation set forth here — to which petitioners argue deference is owed if Chevron is invoked. A reasonable argument could be made that Congress intended to charge Treasury, rather than the Commission, with administering the dimensions of the aptly named Treasury Amendment, which was specifically enacted at the behest of Treasury to confine the CFTC’s activities. Cf. Smiley, 517 U. S., at 740-741 (explaining that Chevron deference arises out of background presumptions of congressional intent); Martin v. Occupational Safety and Health Review Comm’n, 499 U. S. 144,157-158 (1991) (allocating power “authoritatively to interpret . . . regulations” after assessing “available indicia of legislative intent”). We need not “resolve the difficult issues regarding deference which would be lurking in other circumstances.” Estate of Cowart v. Nicklos Drilling Co., 505 U. S. 469, 477 (1992). Because “the statute, as a whole, clearly expresses Congress’ intention” to include foreign currency options within the Treasury Amendment’s exemption, administrative deference is improper. Dole v. Steelworkers, 494 U. S. 26, 42 (1990).

       Brief for Petitioners 23-25; Brief for Credit Lyonnais et al. as Amici Curiae 3; Brief for Foreign Exchange Committee et al. as Amici Curiae 6; Brief for CFTC 25.