author: Justice Souter

text:
    NEW YORK STATE CONFERENCE OF BLUE CROSS & BLUE SHIELD PLANS et al. v. TRAVELERS INSURANCE CO. et al.
    No. 93-1408.
    Argued January 18, 1995
    Decided April 26, 1995

      Souter, J., delivered the opinion for a unanimous Court.

      M. Patricia Smith, Assistant Attorney General of New York, argued the cause for petitioners in all cases. With her on the briefs for petitioners in No. 93-1414 were G. Oliver Koppell, Attorney General, Jerry Boone, Solicitor General, Peter H. Schiff and Andrea Green, Deputy Solicitors General, and Jane Lauer Barker, Assistant Attorney General. Robert A. Bicks, Patricia Anne Kuhn, Alan C. Drewsen, Jeffrey D. Chansler, Bartley J Costello III, Eileen M. Considine, and Beverly Cohen filed briefs for petitioners in No. 93-1408. Jeffrey J. Sherrin, Philip Rosenberg, and H. Bartow Farr III filed briefs for petitioner in No. 93-1415.

      Deputy Solicitor General Kneedler argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Solicitor General Days, James A. Feldman, Allen H. Feldman, Nathaniel I. Spiller, and Judith D. Heimlich.

      Craig P. Murphy argued the cause for respondents Travelers Insurance Co. et al. in all cases. With him on the brief were Darrell M. Joseph, Stephen M. Shapiro, Kenneth S.

      Geller, Andrew J. Pincus, Charles Rothfeld, Donald M. Falk, Zoe Baird, Theresa L. Sorota, Philip E. Stano, and Raymond A. dAmico. Harold N. Iselin argued the cause for respondents New York State Health Maintenance Organization Conference et al. in all cases. With him on the brief were Wendy L. Ravitz and Glen D. Hager

      Together with No. 93-1414, Pataki, Governor of New York, et al. v. Travelers Insurance Co. et al., and No. 93-1415, Hospital Association of New York State v. Travelers Insurance Co. et al., also on certiorari to the same court.

       Briefs of amici curiae urging reversal were filed for the State of Minnesota et al. by Hubert H. Humphrey III, Attorney General of Minnesota, and Richard S. Slowes, Assistant Attorney General, Richard Blumenthal, Attorney General of Connecticut, and Phyllis E. Hyman, Assistant Attorney General, J. Joseph Curran, Jr., Attorney General of Maryland, and Stanley Lustman and Elizabeth M. Kameen, Assistant Attorneys General, Roland W. Burris, Attorney General of Illinois, Pamela Carter, Attorney General of Indiana, Scott Harshbarger, Attorney General of Massachusetts, Jeremiah W. (Jay) Nixon, Attorney General of Missouri, Joseph P. Mazurek, Attorney General of Montana, Ernest D. Preate, Jr., Attorney General of Pennsylvania, Dan Morales, Attorney General of Texas, Darrell V. McGraw, Jr., Attorney General of West Virginia, and Joseph B. Meyer, Attorney General of Wyoming; for the American Federation of State County and Municipal Employees, AFL-CIO, by Larry P. Weinberg, John C. Dempsey, Robert M. Weinberg, Ian D. Lanoff, and Andrew D. Roth; for the American Hospital Association et al. by Peter F. Nadel, Margaret J. Hardy, William T. McGrail, and Dorothy Grandolfi Wagg; and for the National Governors’ Association et al. by Richard Ruda and Lee Fennell.

      Briefs of amici curiae urging affirmance were filed for the Association of Private Pension and Welfare Plans et al. by Edward R. Mackiewicz; for Group Health Association of America, Inc., by Alan J. Davis and Brian D. Redraw; for the Federation of American Health Systems by Carl Weiss-burg and Robert E. Goldstein; for the National Carriers’ Conference Committee by Benjamin W. Boley, David P. Lee, and William H. Dempsey; for the National Coordinating Committee for Multiemployer Plans by Gerald M. Feder and Diana L. S. Peters; for the NYSA-ILA Welfare Fund et al. by C. Peter Lambos, Donato Caruso, Thomas W. Gleason, Ernest L. Mathews, Jr., and Kevin Marrinan; and for the Trustees of and the Pension Hospitalization Benefit Plan of the Electrical Industry et al. by Edward J. Groarke.

      Briefs of amici curiae were filed for the International Foundation of Employee Benefit Plans by Paul J. Ondrasik, Jr., and Sara E. Hauptfuehrer; and for the Self-Insurance Institute of America, Inc., by George J. Pantos.

   Justice Souter

delivered the opinion of the Court.

A New York statute requires hospitals to collect surcharges from patients covered by a commercial insurer but not from patients insured by a Blue Cross/Blue Shield plan, and it subjects certain health maintenance organizations (HMO’s) to surcharges that vary with the number of Medicaid recipients each enrolls. N. Y. Pub. Health Law § 2807-c (McKinney 1993). These cases call for us to decide whether the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829, as amended, 29 U. S. C. § 1001 et seq. (1988 ed. and Supp. V), pre-empts the state provisions for surcharges on bills of patients whose commercial insurance coverage is purchased by employee health-care plans governed by ERISA, and for surcharges on HMO’s insofar as their membership fees are paid by an ERISA plan. We hold that the provisions for surcharges do not “relate to” employee benefit plans within the meaning of ERISA’s preemption provision, § 514(a), 29 U. S. C. § 1144(a), and accordingly suffer no pre-emption.

I

A

New York’s Prospective Hospital Reimbursement Methodology (NYPHRM) regulates hospital rates for all in-patient care, except for services provided to Medicare beneficiaries. N. Y. Pub. Health Law §2807-c (McKinney 1993). The scheme calls for patients to be charged not for the cost of their individual treatment, but for the average cost of treating the patient’s medical problem, as classified under one or another of 794 Diagnostic Related Groups (DRG’s). The charges allowable in accordance with DRG classifications are adjusted for a specific hospital to reflect its particular operating costs, capital investments, bad debts, costs of charity care, and the like.

Patients with Blue Cross/Blue Shield coverage, Medicaid patients, and HMO participants are billed at a hospital’s DRG rate. N. Y. Pub. Health Law § 2807 — c(l)(a); see also Brief for Petitioners Pataki et al. 4. Others, however, are not. Patients served by commercial insurers providing inpatient hospital coverage on an expense-incurred basis, by self-insured funds directly reimbursing hospitals, and by certain workers’ compensation, volunteer firefighters’ benefit, ambulance workers’ benefit, and no-fault motor vehicle insurance funds, must be billed at the DRG rate plus a 13% surcharge to be retained by the hospital. N. Y. Pub. Health Law §2807-c(l)(b). For the year ending March 31, 1993, moreover, hospitals were required to bill commercially insured patients for a further 11% surcharge to be turned over to the State, with the result that these patients were charged 24% more than the DRG rate. § 2807 — c(ll)(i).

New York law also imposes a surcharge on HMO’s, which varies depending on the number of eligible Medicaid recipients an HMO has enrolled, but which may run as high as 9% of the aggregate monthly charges paid by an HMO for its members’ in-patient hospital care. §§2807-c(2-a)(a) to (2-a)(e). This assessment is not an increase in the rates to be paid by an HMO to hospitals, but a direct payment by the HMO to the State’s general fund.

B

ERISA’s comprehensive regulation of employee welfare and pension benefit plans extends to those that provide “medical, surgical, or hospital care or benefits” for plan participants or their beneficiaries “through the purchase of insurance or otherwise.” §3(1), 29 U. S. C. §1002(1). The federal statute does not go about protecting plan participants and their beneficiaries by requiring employers to provide any given set of minimum benefits, but instead controls the administration of benefit plans, see §2, 29 U. S. C. § 1001(b), as by imposing reporting and disclosure mandates, §§ 101-111, 29 U. S. C. §§ 1021-1031, participation and vesting requirements, §§201-211, 29 U. S. C. §§1051-1061, funding standards, §§301-308, 29 U. S. C. §§1081-1086, and fiduciary responsibilities for plan administrators, §§401-414, 29 U. S. C. §§1101-1114. It envisions administrative oversight, imposes criminal sanctions, and establishes a comprehensive civil enforcement scheme. §§501-515, 29 U. S. C. §§ 1131— 1145. It also pre-empts some state law. §514, 29 U. S. C. §1144.

Section 514(a) provides that ERISA “shall supersede any and all State laws insofar as they ... relate to any employee benefit plan” covered by the statute, 29 U. S. C. § 1144(a), although pre-emption stops short of “any law of any State which regulates insurance.” § 514(b)(2)(A), 29 U. S. C. § 1144(b)(2)(A). (This exception for insurance regulation is itself limited, however, by the provision that an employee welfare benefit plan may not “be deemed to be an insurance company or other insurer ... or to be engaged in the business of insurance . . . .” § 514(b)(2)(B), 29 U. S. C. § 1144(b)(2)(B).) Finally, ERISA saves from pre-emption “any generally applicable criminal law of a State.” § 514(b)(4), 29 U. S. C. § 1144(b)(4).

C

On the claimed authority of ERISA’s general pre-emption provision, several commercial insurers, acting as fiduciaries of ERISA plans they administer, joined with their trade associations to bring actions against state officials in United States District Court seeking to invalidate the 13%, 11%, and 9% surcharge statutes. The New York State Conference of Blue Cross and Blue Shield plans, Empire Blue Cross and Blue Shield (collectively the Blues), and the Hospital Association of New York State intervened as defendants, and the New York State Health Maintenance Organization Conference and several HMO’s intervened as plaintiffs. The District Court consolidated the actions and granted summary judgment to the plaintiffs. Travelers Ins. Co. v. Cuomo, 813 F. Supp. 996 (SDNY 1993). The court found that although the surcharges “do not directly increase a plan’s costs or [a]ffect the level of benefits to be offered” there could be “little doubt that the [surcharges at issue will have a significant effect on the commercial insurers and HMOs which do or could provide coverage for ERISA plans and thus lead, at least indirectly, to an increase in plan costs.” Id., at 1003 (footnote omitted). It found that the “entire justification for the [sjurcharges is premised on that exact result — that the [surcharges will increase the cost of obtaining medical insurance through any source other than the Blues to a sufficient extent that customers will switch their coverage to and ensure the economic viability of the Blues.” Ibid, (footnote omitted). The District Court concluded that this effect on choices by ERISA plans was enough to trigger pre-emption under § 514(a) and that the surcharges were not saved by § 514(b) as regulating insurance. Id., at 1003-1008. The District Court accordingly enjoined enforcement of “those surcharges against any commercial insurers or HMOs in connection with their coverage of . . . ERISA plans.” Id., at 1012.

The Court of Appeals for the Second Circuit affirmed, relying on our decisions in Shaw v. Delta Air Lines, Inc., 463 U. S. 85 (1983), and District of Columbia v. Greater Washington Bd. of Trade, 506 U. S. 125 (1992), holding that ERISA’s pre-emption clause must be read broadly to reach any state law having a connection with, or reference to, covered employee benefit plans. Travelers Ins. Co. v. Cuomo, 14 F. 3d 708, 718 (1994). In the light of our decision in Ingersoll-Rand Co. v. McClendon, 498 U. S. 133, 141 (1990), the Court of Appeals abandoned its own prior decision in Rebaldo v. Cuomo, 749 F. 2d 133, 137 (1984), cert. denied, 472 U. S. 1008 (1985), which had drawn upon the definition of the term “State” in ERISA § 514(c)(2), 29 U. S. C. § 1144(c)(2), to conclude that “a state law must ‘purpor[t] to regulate . .. the terms and conditions of employee benefit plans’ to fall within the preemption provision” of ERISA. 14 F. 3d, at 719 (internal quotation marks omitted). Rejecting that narrower approach to ERISA pre-emption, it relied on our statement in Ingersoll-Rand that under the applicable “ ‘broad common-sense meaning,’ a state law may ‘relate to’ a benefit plan, and thereby be pre-empted, even if the law is not specifically designed to affect such plans, or the effect is only indirect.” 498 U. S., at 139; see 14 F. 3d, at 718.

The Court of Appeals agreed with the trial court that the surcharges were meant to increase the costs of certain insurance and health care by HMO’s, and held that this “purpose[ful] interference] with the choices that ERISA plans make for health care coverage ... is sufficient to constitute [a] ‘connection with’ ERISA plans” triggering pre-emption. Id., at 719. The court’s conclusion, in sum, was that “the three surcharges ‘relate to’ ERISA because they impose a significant economic burden on commercial insurers and HMOs” and therefore “have an impermissible impact on ERISA plan structure and administration.” Id., at 721. In the light of its conclusion that the surcharge statutes were not otherwise saved by any applicable exception, the court held them pre-empted. Id., at 723. It recognized the apparent conflict between its conclusion and the decision of the Third Circuit in United Wire, Metal and Machine Health and Welfare Fund v. Morristown Memorial Hosp., 995 F. 2d 1179, 1191, cert. denied, 510 U. S. 944 (1993), which held that New Jersey’s similar ratesetting statute “does not relate to the plans in a way that triggers ERISA’s preemption clause.” See 14 F. 3d, at 721, n. 3. We granted certiorari to resolve this conflict, 513 U. S. 920 (1994), and now reverse and remand.

II

Our past cases have recognized that the Supremacy Clause, U. S. Const., Art. VI, may entail pre-emption of state law either by express provision, by implication, or by a conflict between federal and state law. See Pacific Gas & Elec. Co. v. State Energy Resources Conservation and Development Comm'n, 461 U. S. 190, 203-204 (1983); Rice v. Santa Fe Elevator Corp., 331 U. S. 218, 230 (1947). And yet, despite the variety of these opportunities for federal preeminence, we have never assumed lightly that Congress has derogated state regulation, but instead have addressed claims of pre-emption with the starting presumption that Congress does not intend to supplant state law. See Maryland v. Louisiana, 451 U. S. 725, 746 (1981). Indeed, in cases like this one, where federal law is said to bar state action in fields of traditional state regulation, see Hillsborough County v. Automated Medical Laboratories, Inc., 471 U. S. 707, 719 (1985), we have worked on the “assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.” Rice, supra, at 230. See, e. g., Cipollone v. Liggett Group, Inc., 505 U. S. 504, 516 (1992); id., at 532-533 (Blackmun, J., concurring in part, concurring in judgment in part, and dissenting in part); Metropolitan Life Ins. Co. v. Massachusetts, 471 U. S. 724, 740 (1985); Jones v. Rath Packing Co., 430 U. S. 519 (1977); Napier v. Atlantic Coast Line R. Co., 272 U. S. 605, 611 (1926).

Since pre-emption claims turn on Congress’s intent, Cipollone, supra, at 516; Shaw, supra, at 95, we begin as we do in any exercise of statutory construction with the text of the provision in question, and move on, as need be, to the structure and purpose of the Act in which it occurs. See, e. g., Ingersoll-Rand, supra, at 138. The governing text of ERISA is clearly expansive. Section 514(a) marks for preemption “all state laws insofar as they . . . relate to any employee benefit plan” covered by ERISA, and one might be excused for wondering, at first blush, whether the words of limitation (“insofar as they ... relate”) do much limiting. If “relate to” were taken to extend to the furthest, stretch of its indeterminacy, then for all practical purposes pre-emption would never run its course, for “[rjeally, universally, relations stop nowhere,” H. James, Roderick Hudson xli (New York ed., World’s Classics 1980). But that, of course, would be to read Congress’s words of limitation as mere sham, and to read the presumption against pre-emption out of the law whenever Congress speaks to the matter with generality. That said, we have to recognize that our prior attempt to construe the phrase “relate to” does not give us much help drawing the line here.

In Shaw, we explained that “[a] law ‘relates to’ an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan.” 463 U. S., at 96-97. The latter alternative, at least, can be ruled out. The surcharges are imposed upon patients and HMO’s, regardless of whether the commercial coverage or membership, respectively, is ultimately secured by an ERISA plan, private purchase, or otherwise, with the consequence that the surcharge statutes cannot be said to make “reference to” ERISA plans in any manner. Cf. Greater Washington Bd. of Trade, 506 U. S., at 130 (striking down District of Columbia law that “specifically refers to welfare benefit plans regulated by ERISA and on that basis alone is pre-empted”). But this still leaves us to question whether the surcharge laws have a “connection with” the ERISA plans, and here an uncritical literalism is no more help than in trying to construe “relate to.” For the same reasons that infinite relations cannot be the measure of pre-emption, neither can infinite connections. We simply must go beyond the unhelpful text and the frustrating difficulty of defining its key term, and look instead to the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive.

A

As we have said before, § 514 indicates Congress’s intent to establish the regulation of employee welfare benefit plans “as exclusively a federal concern.” Alessi v. Raybestos-Manhattan, Inc., 451 U. S. 504, 523 (1981). We have found that in passing § 514(a), Congress intended

“to ensure that plans and plan sponsors would be subject to a uniform body of benefits law; the goal was to minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government..., [and to prevent] the potential for conflict in substantive law ... requiring the tailoring of plans and employer conduct to the peculiarities of the law of each jurisdiction.” Ingersoll-Rand, 498 U. S., at 142.

This objective was described in the House of Representatives by a sponsor of the Act, Representative Dent, as being to “eliminate] the threat of conflicting and inconsistent State and local regulation.” 120 Cong. Rec. 29197 (1974). Senator Williams made the same point, that “with the narrow exceptions specified in the bill, the substantive and enforcement provisions . . . are intended to preempt the field for Federal regulations, thus eliminating the threat of conflicting or inconsistent State and local regulation of employee benefit plans.” Id., at 29933. The basic thrust of the pre-emption clause, then, was to avoid a multiplicity of regulation in order to permit the nationally uniform administration of employee benefit plans.

Accordingly in Shaw, for example, we had no trouble finding that New York’s “Human Rights Law, which prohibited] employers from structuring their employee benefit plans in a manner that discriminate^] on the basis of pregnancy, and [New York’s] Disability Benefits Law, which require[d] employers to pay employees specific benefits, clearly ‘relate[d] to’ benefit plans.” 463 U. S., at 97. These mandates affecting coverage could have been honored only by varying the subjects of a plan’s benefits whenever New York law might have applied, or by requiring every plan to provide all beneficiaries with a benefit demanded by New York law if New York law could have been said to require it for any one beneficiary. Similarly, Pennsylvania’s law that prohibited “plans from . . . requiring reimbursement [from the beneficiary] in the event of recovery from a third party” related to employee benefit plans within the meaning of § 514(a). FMC Corp. v. Holliday, 498 U. S. 52, 60 (1990). The law “prohibited] plans from being structured in a manner requiring reimbursement in the event of recovery from a third party” and “require[d] plan providers to calculate benefit levels in Pennsylvania based on expected liability conditions that differ from those in States that have not enacted similar antisubrogation legislation,” thereby “frustrat[ing] plan administrators’ continuing obligation to calculate uniform benefit levels nationwide.” Ibid. Pennsylvania employees who recovered in negligence actions against tortfeasors would, by virtue of the state law, in effect have been entitled to benefits in excess of what plan administrators intended to provide, and in excess of what the plan provided to employees in other States. Along the same lines, New Jersey could not prohibit plans from setting workers’ compensation payments off against employees’ retirement benefits or pensions, because doing so would prevent plans from using a method of calculating benefits permitted by federal law. Alessi, supra, at 524. In each of these cases, ERISA pre-empted state laws that mandated employee benefit structures or their administration. Elsewhere, we have held that state laws providing alternative enforcement mechanisms also relate to ERISA plans, triggering pre-emption. See Ingersoll-Rand, supra.

B

Both the purpose and the effects of the New York surcharge statute distinguish it from the examples just given. The charge differentials have been justified on the ground that the Blues pay the hospitals promptly and efficiently and, more importantly, provide coverage for many subscribers whom the commercial insurers would reject as unacceptable risks. The Blues’ practice, called open enrollment, has consistently been cited as the principal reason for charge differentials, whether the differentials resulted from voluntary negotiation between hospitals and payers as was the case prior to the NYPHRM system, or were created by the surcharges as is the case now. See, e. g., Charge Differential Analysis Committee, New York State Hospital Review and Planning Council, Report (1989), reprinted in Joint Appendix in No. 93-7132 (CA2), pp. 702, 705, 706 (J. A. CA2); J. Corcoran, Superintendent of Insurance, Update of 1984 Position Paper of The New York State Insurance Department on Inpatient Reimbursement Rate Differential Provided Non-Profit Insurers 6-7 (1988) (J. A. CA2, at 699-700); R. Trussell, Prepayment for Hospital Care In New York State 170 (1958) (J. A. CA2, at 664) (Trussell); Thorpe, Does All-Payer Rate Setting Work? The Case of the New York Prospective Hospital Reimbursement Methodology, 12 J. Health Politics, Policy, & Law 391, 402 (1987). Since the surcharges are presumably passed on at least in part to those who purchase commercial insurance or HMO membership, their effects follow from their purpose. Although there is no evidence that the surcharges will drive every health insurance consumer to the Blues, they do make the Blues more attractive (or less unattractive) as insurance alternatives and thus have an indirect economic effect on choices made by insurance buyers, including ERISA plans.

An indirect economic influence, however, does not bind plan administrators to any particular choice and thus function as a regulation of an ERISA plan itself; commercial insurers and HMO’s may still offer more attractive packages than the Blues. Nor does the indirect influence of the surcharges preclude uniform administrative practice or the provision of a uniform interstate benefit package if a plan wishes to provide one. It simply bears on the costs of benefits and the relative costs of competing insurance to provide them. It is an influence that can affect a plan’s shopping decisions, but it does not affect the fact that any plan will shop for the best deal it can get, surcharges or no surcharges.

There is, indeed, nothing remarkable about surcharges on hospital bills, or their effects on overall cost to the plans and the relative attractiveness of certain insurers. Rate variations among hospital providers are accepted examples of cost variation, since hospitals have traditionally “attempted to compensate for their financial shortfalls by adjusting their price . . . schedules for patients with commercial health insurance.” Thorpe, 12 J. Health Politics, Policy, & Law, at 394. Charge differentials for commercial insurers, even prior to state regulation, “varied dramatically across regions, ranging from 13 to 36 percent,” presumably reflecting the geographically disparate burdens of providing for the uninsured. Id., at 400; see id., at 398-399; see also, e. g., Trussell 170 (J. A. CA2, at 664); Bobinski, Unhealthy Federalism: Barriers to Increasing Health Care Access for the Uninsured, 24 U. C. D. L. Rev. 255, 267, and n. 44 (1990).

If the common character of rate differentials even in the absence of state action renders it unlikely that ERISA preemption was meant to bar such indirect economic influences under state law, the existence of other common state action with indirect economic effects on a plan’s costs leaves the intent to pre-empt even less likely. Quality standards, for example, set by the State in one subject area of hospital services but not another would affect the relative cost of providing those services over others and, so, of providing different packages of health insurance benefits. Even basic regulation of employment conditions will invariably affect the cost and price of services.

Quality control and workplace regulation, to be sure, are presumably less likely to affect premium differentials among competing insurers, but that does not change the fact that such state regulation will indirectly affect what an ERISA or other plan can afford or get for its money. Thus, in the absence of a more exact guide to intended pre-emption than § 514, it is fair to conclude that mandates for rate differentials would not be pre-empted unless other regulation with indirect effects on plan costs would be superseded as well. The bigger the package of regulation with indirect effects that would fall on the respondents’ reading of § 514, the less likely it is that federal regulation of benefit plans was intended to eliminate state regulation of health care costs.

Indeed, to read the pre-emption provision as displacing all state laws affecting costs and charges on the theory that they indirectly relate to ERISA plans that purchase insurance policies or HMO memberships that would cover such services would effectively read the limiting language in § 514(a) out of the statute, a conclusion that would violate basic principles of statutory interpretation and could not be squared with our prior pronouncement that “[p]re-emption does not occur ... if the state law has only a tenuous, remote, or peripheral connection with covered plans, as is the case with many laws of general applicability.” District of Columbia v. Greater Washington Bd. of Trade, 506 U. S., at 130, n. 1 (internal quotation marks and citations omitted). While Congress’s extension of pre-emption to all “state laws relating to benefit plans” was meant to sweep more broadly than “state laws dealing with the subject matters covered by ERISA[,] reporting, disclosure, fiduciary responsibility, and the like,” Shaw, 463 U. S., at 98, and n. 19, nothing in the language of the Act or the context of its passage indicates that Congress chose to displace general health care regulation, which historically has been a matter of local concern, see Hillsborough County v. Automated Medical Laboratories, Inc., 471 U. S., at 719; 1 B. Furrow, T. Greaney, S. Johnson, T. Jost, & R. Schwartz, Health Law §§ 1-6, 1-23 (1995).

In sum, cost uniformity was almost certainly not an object of pre-emption, just as laws with only an indirect economic effect on the relative costs of various health insurance packages in a given State are a far cry from those “conflicting directives” from which Congress meant to insulate ERISA plans. See 498 U. S., at 142. Such state laws leave plan administrators right where they would be in any case, with the responsibility to choose the best overall coverage for the money. We therefore conclude that such state laws do not bear the requisite “connection with” ERISA plans to trigger pre-emption.

C

This conclusion is confirmed by our decision in Mackey v. Lanier Collection Agency & Service, Inc., 486 U. S. 825 (1988), which held that ERISA pre-emption falls short of barring application of a general state garnishment statute to participants’ benefits in the hands of an ERISA welfare benefit plan. We took no issue with the argument of the Mackey plan’s trustees that garnishment would impose administrative costs and burdens upon benefit plans, id., at 831, but concluded from the text and structure of ERISA’s preemption and enforcement provisions that “Congress did not intend to forbid the use of state-law mechanisms of executing judgments against ERISA welfare benefit plans, even when those mechanisms prevent plan participants from receiving their benefits.” Id., at 831-832. If a law authorizing an indirect source of administrative cost is not pre-empted, it should follow that a law operating as an indirect source of merely economic influence on administrative decisions, as here, should not suffice to trigger pre-emption either.

The commercial challengers counter by invoking the earlier case of Metropolitan Life Ins. Co. v. Massachusetts, 471 U. S. 724 (1985), which considered whether a State could mandate coverage of specified minimum mental-health-care benefits by policies insuring against hospital and surgical expenses. Because the regulated policies included those bought by employee welfare benefit plans, we recognized that the law “directly affected” such plans. Id., at 732. Although we went on to hold that the law was ultimately saved from pre-emption by the insurance saving clause, § 514(b)(2)(A), 29 U. S. C. § 1144(b)(2)(A), respondents proffer the first steps in our decision as support for their argument that all laws affecting ERISA plans through their impact on insurance policies “relate to” such plans and are pre-empted unless expressly saved by the statute. The challengers take Metropolitan Life too far, however.

The Massachusetts statute applied not only to “ ‘[a]ny blanket or general policy of insurance ... or any policy of accident and sickness insurance’ ” but also to “ ‘any employees’ health and welfare fund which provide[d] hospital expense and surgical expense benefits.’” 471 U. S., at 730, n. 11. In fact, the State did not even try to defend its law as unrelated to employee benefit plans for the purpose of § 514(a). Id., at 739. As a result, there was no reason to distinguish with any precision between the effects on insurers that are sufficiently connected with employee benefit plans to “relate to” the plans and those effects that are not. It was enough to address the distinction bluntly, saying on the one hand that laws like the one in Metropolitan Life relate to plans since they “bea[r] indirectly but substantially on all insured benefit plans, . . . requiring] them to purchase the mental-health benefits specified in the statute when they purchase a certain kind of common insurance policy,” ibid., but saying on the other that “laws that regulate only the insurer, or the way in which it may sell insurance, do not ‘relate to’ benefit plans,” id., at 741. Even this basic distinction recognizes that not all regulations that would influence the cost of insurance would relate to employee benefit plans within the meaning of § 514(a). If, for example, a State were to regulate sales of insurance by commercial insurers more stringently than sales by insurers not for profit, the relative cost of commercial insurance would rise; we would nonetheless say, following Metropolitan Life, that such laws “do not ‘relate to’ benefit plans in the first instance.” Ibid. And on the same authority we would say the same about the basic tax exemption enjoyed by nonprofit insurers like the Blues since the days long before ERISA, see Marmor, New York’s Blue Cross and Blue Shield, 1934-1990: The Complicated Politics of Nonprofit Regulation, 16 J. Health Politics, Policy, & Law 761, 769 (1991) (tracing New York Blue Cross’s special tax treatment as a prepayment organization back to 1934); 1934 N. Y. Laws, ch. 595; and yet on respondents’ theory the exemption would necessarily be pre-empted as affecting insurance prices and plan costs.

In any event, Metropolitan Life cannot carry the weight the commercial insurers would place on it. The New York surcharges do not impose the kind of substantive coverage requirement binding plan administrators that was at issue in Metropolitan Life. Although even in the absence of mandated coverage there might be a point at which an exorbitant tax leaving consumers with a Hobson’s choice would be treated as imposing a substantive mandate, no showing has been made here that the surcharges are so prohibitive as to force all health insurance consumers to contract with the Blues. As they currently stand, the surcharges do riot require plans to deal with only one insurer, or to insure against an entire category of illnesses they might otherwise choose to leave without coverage.

D

It remains only to speak further on a point already raised, that any conclusion other than the one we draw would bar any state regulation of hospital costs. The basic DRG system (even without any surcharge), like any other interference with the hospital services market, would fall on a theory that all laws with indirect economic effects on ERISA plans are pre-empted under § 514(a). This would be an unsettling result and all the more startling because several States, including New York, regulated hospital charges to one degree or another at the time ERISA was passed, see, e. g., Cal. Ins. Code Ann. § 11505 (West 1972) (nonprofit hospitals); Colo. Rev. Stat. §§ 10-16-130, 10-17-108(2) to 108(3), 10-17-119(b) (1973); Conn. Gen. Stat. §§33-166, 33-172 (medical service corporations), §33-179k (health care centers) (1975); Md. Ann. Code, Art. 43, §§568H, 568U, 568W (Michie Supp. 1976); Mass. Gen. Laws Ann., ch. 176A, §§ 5, 6 (West 1958), as amended by 1968 Mass. Acts, ch. 432, § 2, and 1969 Mass. Acts, ch. 874, § 1 (hospital service corporations), Mass. Gen. Laws Ann., ch. 176B, §4 (West 1958 and Supp. 1987) (medical service corporations); Health Maintenance Organization Act, 1973 N. J. Laws, ch. 337, §8, N. J. Stat. Ann. § 26:2J-8(b) (West Supp. 1986); N. Y. Pub. Health Law §2807 (McKinney 1971); 1973 Wash. Laws, ch. 5, §15, Rev. Code Wash. Ann. §70.39.140 (West 1975). And yet there is not so much as a hint in ERISA’s legislative history or anywhere else that Congress intended to squelch these state efforts.

Even more revealing is the National Health Planning and Resources Development Act of 1974 (NHPRDA), Pub. L. 93-641, 88 Stat. 2225, §§ 1-3, repealed by Pub. L. 99-660, title VII, § 701(a), 100 Stat. 3799, which was adopted by the same Congress that passed ERISA, and only months later. The NHPRDA sought to encourage and help fund state responses to growing health care costs and the widely diverging availability of health services. § 2,88 Stat. 2226-2227; see generally National Gerimedical Hospital and Gerontology Center v. Blue Cross of Kansas City, 452 U. S. 378, 383-388 (1981). It provided for the organization and partial funding of regional “health systems agencies” responsible for gathering data as well as for planning and developing health resources in designated health service areas. 88 Stat. 2229-2242. The scheme called for designating state health planning and development agencies in qualifying States to coordinate development of health services policy. Id., at 2242-2244. These state agencies, too, would be eligible for federal funding, id., at 2249, including grants “[f]or the purpose of demonstrating the effectiveness of State Agencies regulating rates for the provision of health care .. . within the State.” Ibid. Exemption from ERISA pre-emption is nowhere mentioned as a prerequisite to the receipt of such funding; indeed, the only legal prerequisite to be eligible for rate regulation grants was “satisfactory evidence that the State Agency has under State law the authority to carry out rate regulation functions in accordance with this section . . . .” Ibid.

The Secretary was required to provide technical assistance to the designated agencies by promulgating “[a] uniform system for calculating rates to be charged to health insurers and other health institutions payors by health service institutions.” Id., at 2254. Although the NHPRDA placed substantive restrictions on the system the Secretary could establish, the subject matter (and therefore the scope of envisioned state regulation) covers the same ground that New York’s surcharges tread. The Secretary’s system was supposed to:

“(A) [b]e based on an all-inclusive rate for various categories of patients ...[,]
“(B) [p]rovide that such rates reflect the true cost of providing services to each such category of patients ...[,]
“(C) [pjrovide for an appropriate application of such system in the different types of institutions . . . [, and]
“(D) [p]rovide that differences in rates to various classes of purchasers (including health insurers, direct service payors, and other health institution payors) be based on justified and documented differences in the costs of operation of health service institutions made possible by the actions of such purchasers.” Id., at 2254-2255.

The last-quoted subsection seems to envision a system very much like the one New York put in place, but the significant point in any event is that the statute’s provision for comprehensive aid to state health care rate regulation is simply incompatible with pre-emption of the same by ERISA. To interpret ERISA’s pre-emption provision as broadly as respondents suggest would have rendered the entire NHPRDA utterly nugatory, since it would have left States without the authority to do just what Congress was expressly trying to induce them to do by enacting the NHPRDA. Given that the NHPRDA was enacted after ERISA and by the same Congress, it just makes good sense to reject such an interpretation.

III

That said, we do not hold today that ERISA pre-empts only direct regulation of ERISA plans, nor could we do that with fidelity to the views expressed in our prior opinions on the matter. See, e. g., Ingersoll-Rand, 498 U. S., at 139; Pilot Life Ins. Co. v. Dedeaux, 481 U. S. 41, 47-48 (1987); Shaw, 463 U. S., at 98. We acknowledge that a state law might produce such acute, albeit indirect, economic effects, by intent or otherwise, as to force an ERISA plan to adopt a certain scheme of substantive coverage or effectively restrict its choice of insurers, and that such a state law might indeed be pre-empted under § 514. But as we have shown, New York’s surcharges do not fall into either category; they affect only indirectly the relative prices of insurance policies, a result no different from myriad state laws in areas traditionally subject to local regulation, which Congress could not possibly have intended to eliminate.

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

It is so ordered.

       Medicare rates are set by the Federal Government unless States obtain an express authorization from the United States Department of Health and Human Services. See 42 U. S. C. § 1395 et seq.; see also Part II-D, infra.

       References are made to the laws of New York as they stood at the times relevant to this litigation.

       Under certain circumstances, New York law permits HMO’s to negotiate their own hospital payment schedules subject to state approval. § 2807-c(2)(b)(i).

       The District Court and the Court of Appeals both held that the injunctive remedy was not prohibited by the Tax Injunction Act, 28 U. S. C. § 1341, which provides that federal district courts “shall not enjoin, suspend or restrain the assessment... of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.” Although these courts considered the surcharges to be taxes, they found no “plain, speedy and efficient remedy” to exist in state court, since ERISA § 502(e), 29 U. S. C. § 1132(e)(1) (1988 ed., Supp. V), divests state courts of jurisdiction over such claims. See 813 F. Supp., at 1000-1001;
        Travelers Ins. Co. v. Cuomo, 14 F. 3d 708, 713-714 (CA2 1994). Neither party challenges this conclusion and we have no occasion to examine it.
      Nor do we address the surcharge statute insofar as it applies to self-insured funds. The trial court’s ERISA analysis originally led it to enjoin defendants “from enforcing those surcharges against any commercial insurers or HMOs in connection with their coverage of. . . ERISA plans,” without any further mention of self-insured funds. 813 F. Supp., at 1012. After staying its decision as to the 13% surcharge pending appeal, see id., at 1012-1015, it ordered all named parties, including the Travelers Insurance Company (which served as fiduciary to a self-insured plan), to pay that surcharge whenever required by state law, see Travelers Ins. Co. v. New York State Health Maintenance Conference, No. 92 Civ. 3999 (SDNY Apr. 27, 1993), reprinted in Brief for National Carriers’ Conference Committee as Amicus Curiae 29a-31a. The Court of Appeals, in turn, did not expressly address this application of the surcharge and, accordingly, we leave it for consideration on remand.

       Although respondents argue that the surcharges have become superfluous now that all insurers have become subject to certain open enrollment requirements, see Brief for Respondents Travelers Insurance Co. et al. 6-7, n. 5; 1992 N. Y. Laws, ch. 501, § 4 (effective Apr. 1,1993), N. Y. Ins. Law § 3231 (McKinney Supp. 1996), it is not our responsibility to review the continuing substantive rationale for the surcharges. Even so, the surcharges may well find support in an effort to compensate the Blues for the current makeup of their insurance pool, which presumably continues to reflect their longer history of open enrollment policies. See J. Corcoran, Superintendent of Insurance, Position Paper of New York State Insurance Department on Inpatient Reimbursement Rate Differential Provided Non-Profit Insurers 8 (1984) (J. A. CA2, at 679) (“If there is any possibility of an abrupt abandonment of the current hospital discount, consideration should be given to the past history of health insurance enrollment in New York which has left the Blue Cross/Blue Shield Plans with a core of uninsurables obtained over the years and the ongoing liability resulting from that enrollment”).

       The history of Medicare regulation makes the same point, confirming that Congress never envisioned ERISA pre-emption as blocking state health care cost control, but rather meant to encourage and rely on state experimentation like New York’s. See generally K. Davis, G. Anderson, D. Rowland, & E. Steinberg, Health Care Cost Containment 23-25, 81, 99 (1990). Since the time DRG systems were tried out in the 1960’s and 1970’s, Congress has consistently shown its awareness and encouragement of controlled payment alternatives to the federal regulatory scheme. The Social Security Amendments of 1967, Pub. L. 90-248, § 402(a), 81 Stat. 930-931, as amended 42 U. S. C. § 1395b-1, for example, granted the Secretary of Health, Education, and Welfare (now Health and Human Services) the authority to waive Medicare rules to allow for physician and hospital reimbursement according to approved state payment schedules. In the Social Security Amendments of 1972, Pub. L. 92-603, § 222(a)(5), 86 Stat. 1391, Congress specifically called upon the Secretary to report on prospective reimbursement schemes that had been thus favored already or could be in the future. Later on, after the development of all-payor ratesetting schemes like the NYPHRM and New Jersey’s Health Care Cost Reduction Act of 1978, 1978 N. J. Laws, ch. 83, Congress’s Medicare waiver provisions evolved to the point of explicit reference to a State’s commitment to apply its hospital reimbursement control system to a substantial portion of hospitals and inpatient services statewide. See 42 U. S. C. §§ 1395ww(c)(l), (c)(5)(A). Indeed, in its Report on the Social Security Amendments of 1983, the House Committee on Ways and Means recommended that States should not be held to traditional DRG-based reimbursement systems. “State systems provide a laboratory for innovative methods of controlling health care costs, and should, therefore, not be limited to one methodology.” H. R. Rep. No. 98-25, pt. 1, pp. 146-147 (1983). The Committee concluded that “State systems covering all payors have proven effective in reducing health costs and should be encouraged. Such State programs may be useful models for our national system." Id., at 147-148. While the history of Medicare waivers and implementing legislation enacted after ERISA itself is, of course, not conclusive proof of the congressional intent behind ERISA, the fact that Congress envisioned state experiments with comprehensive hospital reimbursement regulation supports our conclusion that ERISA was not meant to pre-empt basic rate regulation.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    UNITED STATES v. ROBERTSON
    No. 94-251.
    Argued February 27, 1995
    Decided May 1, 1995

      Miguel A. Estrada argued the cause for the United States. With him on the briefs were Solicitor General Days, Assistant Attorney General Harris, and Michael R. Dreeben, Acting Deputy Solicitor General.

      Glenn Stewart Warren, by appointment of the Coúrt, 513 U. S. 985, argued the cause and filed a brief for respondent.

        Jon May and Ephraim Margolin filed a brief for the National Association of Criminal Defense Lawyers as amicus curiae urging affirmance.

   Per Curiam.

Respondent, Juan Paul Robertson, was charged with various narcotics offenses, and with violating § 1962(a) of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U. S. C. § 1961 et seq. (1988 ed. and Supp. V), by investing the proceeds of those unlawful activities in the “acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce.” § 1962(a). He was convicted on some of the narcotics counts, and on the RICO count by reason of his investment in a certain gold mine. The United States Court of Appeals for the Ninth Circuit reversed the RICO conviction on the ground that the Government had failed to introduce sufficient evidence proving that the gold mine was “engaged in or affect[ed] interstate commerce.” 15 F. 3d 862, 868 (1994). We granted the United States’ petition for certiorari. 513 U. S. 945 (1994).

The facts relevant to the “engaged in or affecting interstate commerce” issue were as follows: Some time in 1985, Robertson entered into a partnership agreement with another man, whereby he agreed to finance a gold mining operation in Alaska. In fulfillment of this obligation, Robertson, who resided in Arizona, made a cash payment of $125,000 for placer gold mining claims near Fairbanks. He paid approximately $100,000 (in cash) for mining equipment and supplies, some of which were purchased in Los Angeles and transported to Alaska for use in the mine. Robertson also hired and paid the expenses for seven out-of-state employees to travel to Alaska to work in the mine. The partnership dissolved during the first mining season, but Robertson continued to operate the mine through 1987 as a sole proprietorship. He again hired a number of employees from outside Alaska to work in the mine. During its operating life, the mine produced between $200,000 and $290,000 worth of gold, most of which was sold to refiners within Alaska, although Robertson personally transported approximately $30,000 worth of gold out of the State.

Most of the parties’ arguments, here and in the Ninth Circuit, were addressed to the question whether the activities of the gold mine “affected” interstate commerce. We have concluded we do not have to consider that point. The “affecting commerce” test was developed in our jurisprudence to define the extent of Congress’ power over purely intrastate commercial activities that nonetheless have substantial mierstate effects. See, e. g., Wickard v. Filburn, 317 U. S. 111 (1942). The proof at Robertson’s trial, however, focused largely on the interstate activities of Robertson’s mine. For example, the Government proved that Robertson purchased at least $100,000 worth of equipment and supplies for use in the mine. Contrary to the Court of Appeals’ suggestion, all of those items were not purchased locally (“drawn generally from the stream of interstate commerce,” 15 F. 3d, at 869 (internal quotation marks omitted)); the Government proved that some of them were purchased in California and transported to Alaska for use in the mine’s operations. Cf. United States v. American Building Maintenance Industries, 422 U. S. 271, 285 (1975) (allegation that company had made local purchases of equipment and supplies that were merely manufactured out of state was insufficient to show that company was “engaged in commerce” within the meaning of § 7 of the Clayton Act). The Government also proved that, on more than one occasion, Robertson sought workers from out of state and brought them to Alaska to work in the mine. Cf. id., at 274. Furthermore, Robertson, the mine’s sole proprietor, took $30,000 worth of gold, or 15% of the mine’s total output, with him out of the State.

Whether or not these activities met (and whether or not, to bring the gold mine within the “affecting commerce” provision of RICO, they would have to meet) the requirement of substantially affecting interstate commerce, they assuredly brought the gold mine within § 1962(a)’s alternative criterion of “any enterprise . . . engaged in . . . interstate or foreign commerce.” As we said in American Building Maintenance, a corporation is generally “engaged ‘in commerce’” when it is itself “directly engaged in the production, distribution, or acquisition of goods or services in interstate commerce.” Id., at 283. See also Gulf Oil Corp. v. Copp Paving Co., 419 U. S. 186, 195 (1974).

The judgment of the Court of Appeals is

Reversed.


author: Chief Justice Rehnquist

text:
    KANSAS v. COLORADO
    No. 105, Orig.
    Argued March 21, 1995
    Decided May 15, 1995

      Rehnquist, C. J., delivered the opinion for a unanimous Court.

      John B. Draper, Special Assistant Attorney General of Kansas, argued the cause for plaintiff. With him on the briefs were Robert T. Stephan, Attorney General, John W.

      Campbell, Deputy Attorney General, and Leland E. Rolfs and Mary Ann Heckman, Assistant Attorneys General.

      David W. Robbins, Special Assistant Attorney General of Colorado, argued the cause for defendant. With him on the briefs were Gale Norton, Attorney General, Stephen K. Erkenbrack, Chief Deputy Attorney General, Timothy M. Tymkovich, Solicitor General, and Dennis M. Montgomery, Special Assistant Attorney General.

      Jeffrey R Minear argued the cause for the United States. With him on the brief were Solicitor General Days, Assistant Attorney General Schiffer, Deputy Solicitor General Kneedler, and Patricia L. Weiss.

        Joseph B. Meyer, Attorney General of Wyoming, Donald M. Gerstein, Assistant Attorney General, and Dennis C. Cook, Special Assistant Attorney General, filed a brief for the State of Wyoming as amicus curiae.

   Chief Justice Rehnquist

delivered the opinion of the Court.

This original action involves a dispute between Kansas, Colorado, and the United States over alleged violations of the Arkansas River Compact. The Special Master has filed a report (Report) detailing his findings and recommendations concerning the liability phase of the trial. Both Kansas and Colorado have filed exceptions to those findings and recommendations. We agree with the Special Master’s disposition of the liability issues. Accordingly, we overrule the parties’ exceptions.

I

The Continental Divide in the United States begins at the Canadian border in the mountains of northwestern Montana. From there, it angles southeast through Montana and Wyoming until it enters Colorado. It then runs roughly due south through Colorado, following first the crest of the Front Range of the Rocky Mountains, and then shifting slightly west to follow the crest of the Sawatch Range. The Arkansas River rises on the east side of the Continental Divide, between Climax and Leadville, Colorado. Thence it flows south and east through Colorado, Kansas, Oklahoma, and Arkansas, emptying into the Mississippi River, which in turn flows into the Gulf of Mexico. As if to prove that the ridge that separates them is indeed the Continental Divide, a short distance away from the source of the Arkansas, the Colorado River rises and thence flows southwest through Colorado, Utah, and Arizona, and finally empties into the Gulf of Baja, California.

The Arkansas River flows at a steep gradient from its source south to Canon City, Colorado, whence it turns east and enters the Royal Gorge. As it flows through the Royal Gorge, the Arkansas River is at some points half a mile below the summit of the bordering cliffs. The Arkansas River thence descends gradually through the high plains of eastern Colorado and western Kansas; its elevation at the Colorado-Kansas border is 3,350 feet. It then makes its great bend northward through Kansas, and from there flows southeasterly through northeastern Oklahoma and across Arkansas. The Arkansas River covers about 1,450 miles from its source in the Colorado Rockies to the point in southeastern Arkansas where it flows into the Mississippi River. It is the fourth longest river in the United States, and it drains in an area of 185,000 square miles.

The first Europeans to see the Arkansas River were members of the expedition of Francisco Coronado, in the course of their search for the fabled Seven Golden Cities of Cibola. In 1541, they crossed the Arkansas River near what is now the Colorado-Kansas border. One year later, those in the expedition of Hernando DeSoto would see the Arkansas River 1,000 miles downstream at its mouth. The western borders of the Louisiana Purchase, acquired from France in 1803, included within them most, if not all, of the Arkansas River drainage basin. Zebulon Pike, in his expedition of 1805-1806, in the course of which he sighted the mountain peak named after him, traveled up the Arkansas River. John C. Fremont traversed the river in the other direction in his expedition of 1843-1844.

Today, as a result of the Kerr McClellan Project, the Arkansas River is navigable for oceangoing vessels all the way from its mouth to Tulsa, Oklahoma. The Arkansas River is unique in that the pronunciation of its name changes from State to State. In Colorado, Oklahoma, and Arkansas, it is pronounced as is the name of the State of Arkansas, but in Kansas, it is pronounced Ar-KAN-sas.

The reach of the Arkansas River system at issue here is a fertile agricultural region that extends from Pueblo, Colorado, to Garden City, Kansas. This region has been developed in Colorado by 23 major canal companies and in Kansas by 6 canal companies, which divert the surface flows of the Arkansas River and distribute them to individual farmers. Report 35-38. Also relevant to this dispute, the United States has constructed three large water storage projects in the Arkansas River basin. Id,, at 43-48. The John Martin Reservoir, located on the Arkansas River about 60 miles west of the Kansas border, was authorized by Congress in 1936, 49 Stat. 1570, and was completed in 1948. It is the largest of the federal reservoirs, and initially it had a storage capacity of about 700,000 acre-feet. Report 45. The Pueblo Reservoir, located on the Arkansas River about 150 miles west of the Kansas border, was authorized by Congress in 1962, and was substantially completed in 1975. Id., at 44. In 1977, the storage capacity of the Pueblo Reservoir was estimated to be about 357,000 acre-feet. Ibid. Finally, the Trinidad Reservoir, located on the Purgatoire River (a major tributary of the Arkansas River) was approved by Congress in 1958, and was completed in 1977. Id., at 43. The total capacity of the Trinidad Reservoir is about 114,000 acre-feet. Ibid.

Twice before in this century, the States of Kansas and Colorado have litigated in this Court regarding their respective rights to the waters of the Arkansas River. See Kansas v. Colorado, 206 U. S. 46 (1907); Colorado v. Kansas, 320 U. S. 383 (1943). In the first suit, the Court denied Kansas’ request to enjoin diversions of the Arkansas River by Colorado because the depletions alleged by Kansas were insufficient to warrant injunctive relief. Kansas v. Colorado, supra, at 114-117. In the second suit, Colorado sought to enjoin lower court litigation brought against Colorado water users, while Kansas sought an equitable apportionment of the Arkansas River. Colorado v. Kansas, supra, at 388-389. The Court granted Colorado an injunction, but concluded that Kansas was not entitled to an equitable apportionment. 320 U. S., at 400. The Court suggested that the States resolve their differences by negotiation and agreement, pursuant to the Compact Clause of the Constitution. Id., at 392. See U. S. Const., Art. I, § 10, cl. 3.

In 1949, after three years of negotiations, Kansas and Colorado approved, and Congress ratified, the Arkansas River Compact (Compact). See 63 Stat. 145; see also Report 5-6; App. to Report 1-17 (reprinting text of Compact). Article VIII of the Compact creates the Arkansas River Compact Administration (Administration) and vests it with the power and responsibility for administering the Compact. Id., at 11-15. The Administration is composed of a nonvoting presiding officer designated by the President of the United States, and three voting representatives from each State. Each State has one vote, and every decision, authorization, or other action by the Administration requires a unanimous vote. Id., at 12-13 (Article VIII-D).

The Compact’s primary purposes are to “[s]ettle existing disputes and remove causes of future controversy . . . concerning the waters of the Arkansas River” and to “[ejquitably divide and apportion” the waters of the Arkansas River, “as well as the benefits arising from the construction, operation and maintenance by the United States of John Martin Reservoir.” Id., at 1-2 (Articles I-A, I-B). Article IV-D, the provision of the Compact most relevant to this dispute, states:

“This Compact is not intended to impede or prevent future beneficial development of the Arkansas River basin in Colorado and Kansas by Federal or State agencies, by private enterprise, or by combinations thereof, which may involve construction of dams, reservoir, and other works for the purposes of water utilization and control, as well as the improved or prolonged functioning of existing works: Provided, that the waters of the Arkansas River . . . shall not be materially depleted in usable quantity or availability for use to the water users in Colorado and Kansas under this Compact by such future development or construction.” Id., at 5 (emphasis added).

In 1983, Kansas conducted an independent investigation of possible violations of the Compact arising from the impact of increases in post-Compact well pumping in Colorado and the operation of two of the federal reservoirs. Report 9-10. In December 1985, Kansas brought this original action against the State of Colorado to resolve disputes arising under the Compact. Id., at 10. The Court granted Kansas leave to file its complaint, Kansas v. Colorado, 475 U. S. 1079 (1986), and appointed Judge Wade H. McCree, Jr., to serve as Special Master, Kansas v. Colorado, 478 U. S. 1018 (1986). Upon Judge McCree’s death, the Court appointed Arthur L. Littleworth as Special Master. Kansas v. Colorado, 484 U. S. 910 (1987).

Kansas advanced three principal claims, each involving an alleged Compact violation. See Report 58. First, Kansas alleged that increases in groundwater well pumping in Colorado in the years following adoption of the Compact have caused a significant decline in the Arkansas River’s surface flow in violation of Article IV-D of the Compact. Second, Kansas claimed that Colorado’s Winter Water Storage Program (WWSP) — a program whereby the Bureau of Reclamation of the Department of the Interior (Bureau of Reclamation) and Colorado use excess capacity at the Pueblo Reservoir to store a portion of the winter flow of the Arkansas River — violates the Compact. Third, Kansas claimed that Colorado’s failure to abide by the Trinidad Reservoir Operating Principles (Operating Principles) constituted a violation of the Compact. Ibid.

The Special Master bifurcated the trial into a liability phase and a remedy phase. At the conclusion of the liability phase, the Special Master filed his Report, outlining his findings and recommendations. In his Report, the Special Master recommended, among other things, that the Court: (1) find that post-Compact well pumping in Colorado has “materially depleted” the “usable” flow at the Colorado-Kansas border (stateline) in violation of Article IV-D of the Compact, Report 336; (2) find that “Kansas has failed to prove that operation of the [WWSP] program has violated the [C]ompact,” ibid.; and (3) “dismiss the Kansas claim arising from the operation of Trinidad Reservoir,” ibid.

Both Kansas and Colorado have filed exceptions to the Special Master’s Report. Kansas excepts to the Special Master’s rejection of its (1) Trinidad Reservoir claim, see id., at 373-433; (2) WWSP claim, see id., at 306-335; and (3) preferred method for determining the usability of depletions of stateline flows, see id., at 291-305. Colorado excepts to the Special Master’s determination that: (1) Kansas was not guilty of inexcusable delay in making its post-Compact well-pumping claim and that Colorado was not prejudiced by this delay, see id., at 147-170; (2) pre-Compact wells in Colorado are limited to pumping the highest amount pumped in the years during which the Compact was negotiated and that the highest amount of such pumping was 15,000 acre-feet per year, see id., at 182-200; (3) increases in usable state line flows resulting from the operating plan for the John Martin Reservoir adopted by the Administration in 1980 (1980 Operating Plan) were “separately bargained for” and, therefore, should not offset depletions caused by post-Compact well pumping in Colorado, see id., at 171-181; and (4) Kansas need only meet the “preponderance of the evidence” standard to prove a breach of Article IV-D of the Compact, see id., at 65-70.

We turn to the parties’ exceptions.

II

A

In 1958, Congress authorized construction of the Trinidad Project, a dam and a reservoir system on the Purgatoire River slightly upstream from the city of Trinidad, Colorado. See id., at 382-388. Recognizing that Article IV-D of the Compact prohibited any development of the Arkansas River basin that resulted in a material depletion of usable river flow, the Bureau of Reclamation conducted studies regarding the future operation of the Trinidad Project. Id., at 388-390. The Bureau of Reclamation established Operating Principles whereby the Trinidad Project could be administered “without adverse effect on downstream water users and the inflow to John Martin Reservoir.” Id., at 390 (internal quotation marks omitted). The Governor of Kansas reviewed the Bureau of Reclamation’s proposed Operating Principles and indicated that if five additional conditions were accepted, then “Kansas would be in a position to approve the amended Operating Principles and to support completion of the project.” Id., at 392-393. In June 1967, the Administration approved the Operating Principles as well as Kansas’ five additional conditions. Id., at 395.

In 1979, Colorado began storage of water at the Trinidad Reservoir. Id., at 396. Kansas immediately complained that the Operating Principles were being violated. Id., at 397. In 1988, at the request of the Administration, the Bureau of Reclamation conducted a study of the Trinidad Reservoir. It concluded that two storage practices at the Trinidad Reservoir constituted a ‘“departure from the intent of the operating principles.’” Ibid.

At trial, Kansas argued that the Operating Principles were binding on the State of Colorado and that any departure from them constituted a violation of the Compact “regardless of injury.” Id., at 408 (internal quotation marks omitted). Kansas, however, “offered no evidence, apart from the Bureau studies, to show that the actual operation of the Trinidad project caused it to receive less water than under historical, without-project conditions.” Id., at 412. Instead, Kansas sought to quantify depletions by “comparing the flows into John Martin Reservoir ‘as they would have occurred under the Operating Principles with the flows that occurred under actual operations.’ ” Id., at 409. The Special Master concluded that in order to prove a violation of the Compact, Kansas was required to demonstrate that “the Trinidad operations caused a material depletion within the meaning of Article IV-D.” Id., at 431. The Special Master recommends that we dismiss Kansas’ Trinidad claim because “Kansas has not established, and did not attempt to establish, such injury.” Ibid.

Kansas argues that “[departure from the Operating Principles is ipso facto a violation of the Compact, and it [is] entirely sufficient, for purposes of quantifying the effects of the violation, to compare the actual operation with simulated operation as it should have been under the Operating Principles.” Kansas’ Exceptions to Special Master’s Report 12. But, it must be recalled, this is an original action to enforce the terms of the Compact. Article IV-D provides that the Compact is not intended to prevent future beneficial development of the Arkansas River basin — including dams and reservoirs — provided that the river flow shall not be materially-depleted. The Compact thus permits the development of projects such as Pueblo Reservoir so long as their operation does not result in a material depletion of usable flow to Kansas users. For Kansas to prevail in its contention, it would have to show that the Operating Principles had the effect of amending the Compact by granting either party the right to sue the other for violation of the Operating Principles even though the violation resulted in no material depletion of usable flow at stateline. Although the Administration is empowered to “[prescribe procedures for the administration of th[e] Compact,” App. to Report 11 (Article VIII-B(2)), it must do so “consistent with the provisions of th[e] Compact,” ibid. (Article VIII-B(l)) (emphasis added); see also Report 416 (“[T]he Compact Administration was not delegated power to change the Compact”). The theory advocated by Kansas is inconsistent with Article IV-D, which allows for the development and operation of dams and reservoirs so long as there is no resultant material depletion of usable flows at stateline.

Thus Kansas, in order to establish a Compact violation based upon failure to obey the Operating Principles, was required to demonstrate that this failure resulted in a material depletion under Article IV-D. Kansas “has not established, and did not attempt to establish, such injury.” Id., at 431. We overrule Kansas’ exception to the Special Master’s dismissal of its Trinidad Reservoir claim.

B

In 1964, the Bureau of Reclamation and Colorado began planning a program to use excess capacity at Pueblo Reservoir in order to store a portion of the winter-time flow of the Arkansas River for beneficial use at other times. Under the WWSP, winter-time flow — much of which was used previously to flood uncultivated cropland — is instead stored at the Pueblo Reservoir. Kansas contends that the Special Master erred in finding that it had failed to prove that the WWSP had “materially depleted” usable stateline flows. We disagree.

In his Report, the Special Master concluded:

“Kansas has not proved that the WWSP has caused material Stateline depletions. Kansas’ case has not been helped by its own contradictions in quantifying impacts to usable flow — ranging during this trial from 255,000 acre-feet initially, to 44,000 to 40,000; nor by the fact that depletions are essentially eliminated if accretions are taken into account.” Report 335.

The Special Master examined the computer models submitted by Kansas and Colorado and determined that “the depletions shown by the Kansas model are well within the model’s range of error.” Id., at 334-335. As a result, “[o]ne [could not] be sure whether impact or error [was] being shown.” Id., at 335.

We believe that the Special Master gave Kansas every reasonable opportunity to meet its burden of proving its WWSP claim. Kansas, however, failed to prove that operation of the WWSP program resulted in material depletions of usable flows in violation of Article IV-D. See ibid. Therefore, we overrule Kansas’ exception to the Special Master’s conclusion that Kansas had failed to prove its WWSP claim.

C

Article IV-D of the Compact permits future development and construction along the Arkansas River Basin provided that it does not materially deplete stateline flows “in usable quantity or availability.” App. to Report 5 (Article IV-D) (emphasis added). In order to establish a violation of Article IV-D, Kansas was required to establish that development in Colorado resulted in material depletions of “usable” river flow. The Compact does not define the term “usable.” Cf. Colorado v. Kansas, 320 U. S., at 396-397 (“The critical matter is the amount of divertible flow at times when water is most needed for irrigation. Calculations of average annual flow, which include flood flows, are, therefore, not helpful in ascertaining the dependable supply of water usable for irrigation”). At trial, Kansas presented three methods for determining depletions of “usable” flow.

Kansas’ first expert, Timothy J. Durbin, analyzed flow data for the period between 1951 and 1985 by plotting actual river diversions in Kansas against actual stateline flows. Report 293-294. Using these data, Durbin developed criteria to determine what river flows were usable. Durbin concluded that during the summer months, April through October, (1) 78% of the stateline flows were diverted; (2) flows greater than 40,000 acre-feet per month were not usable; and (3) flows greater than 140,000 acre-feet for the whole period were not usable. Id., at 293. With respect to the winter months, November through March, Durbin concluded that (1) 24% of the winter flow was diverted; (2) flows greater than 7,500 acre-feet per month were not usable; and (3) flows greater than 40,000 acre-feet for the whole period were not usable. Id., at 293-294.

After Colorado isolated errors in Durbin’s analysis, Kansas presented a replacement case. Kansas’ second group of experts, led by Stephen P. Larson, adopted the same methodology but revised certain exhibits and made minor corrections in data. As a result, Larson modified Durbin’s coefficients, using 72% for the summer months and 25% for the winter months. Id., at 295.

Later, well after trial had begun, Kansas enlisted the aid of Brent Spronk, who proposed yet another method to quantify depletions of “usable” stateline flow. Id., at 300-305. Spronk attempted to determine the “percentage of days in each month when flows were being fully used in Kansas.” Id., at 301. Instead of seasonal averages, the Spronk approach yielded coefficients that varied from month to month. Spronk then multiplied these monthly coefficients by the estimated depletions in flow predicted by Kansas’ hydrological model. Id., at 301-302.

The Special Master concluded that “the Durbin approach, using Larson’s coefficients, is the best of the several methods presented for determining usable flow” and that it provided “a reasonable way in which to determine depletions of usable flow.” Id., at 305. We agree. Each of the three methods that Kansas proposed for calculating usable depletions required two steps: (1) a calculation of total depletions using the Kansas hydrological model, and (2) an application of “usability” criteria. See Brief for United States in Response to Exeptions of Kansas and Colorado 30. Each of the three methods proposed by Kansas was dependent on the Kansas hydrological model to estimate total depletions. The Spronk method required the Kansas hydrological model to predict accurately depletions for each and every month. Report 303. But as Durbin, Kansas’ first expert, testified, Kansas’ hydrological model was only a “‘good predictor’ when ‘looking at long periods of time.’” Id., at 303, n. 130 (quoting Durbin’s testimony). Thus, the Spronk method required the Kansas hydrological model to do something it was not designed to do, i. e., predict accurately depletions on a monthly basis. Id., at 303 (“The Spronk analysis assumes that the H-I model can accurately predict changes of State-line flow on a monthly basis”). Because the Spronk method for determining “usable” river flows was less compatible with Kansas’ hydrological model than the other methods proposed, we conclude that the Special Master properly rejected the Spronk method in favor of the Durbin approach, as modified by the Larson coefficients.

Ill

A

The Special Master concluded that Kansas was not guilty of inexcusable delay in making its well-pumping claim, and that Colorado had not been prejudiced by Kansas’ failure to press its claim earlier. Id., at 170. Colorado has excepted to this determination. Colorado argues that the equitable doctrine of laches should bar Kansas’ claim for relief. See Colorado’s Exceptions to Special Master’s Report (Colorado’s Exceptions) 24-64. We overrule Colorado’s exception.

The defense of laches “requires proof of (1) lack of diligence by the party against whom the defense is asserted, and (2) prejudice to the party asserting the defense.” Costello v. United States, 365 U. S. 265, 282 (1961); see also Black’s Law Dictionary 875 (6th ed. 1990) (“‘Doctrine of laches,’ is based upon maxim that equity aids the vigilant and not those who slumber on their rights. It is defined as neglect to assert a right or claim which, taken together with lapse of time and other circumstances causing prejudice to the adverse party, operates as bar in court of equity”). This Court has yet to decide whether the doctrine of laches applies in a case involving the enforcement of an interstate compact. Cf. Illinois v. Kentucky, 500 U. S. 380, 388 (1991) (in the context of an interstate boundary dispute, “the laches defense is generally inapplicable against a State”); Block v. North Dakota ex rel. Board of Univ. and School Lands, 461 U. S. 273, 294 (1983) (O’Connor, J., dissenting) (“The common law has long accepted the principle ‘nullum tempus occurrit regi’ — neither laches nor statutes of limitations will bar the sovereign”); Colorado v. Kansas, supra, at 394 (In the context of a suit seeking an equitable apportionment of river flows, facts demonstrating a delay in filing a complaint “might well preclude the award of the relief [requested]. But, in any event, they gravely add to the burden [the plaintiff] would otherwise bear”)- We need not, however, foreclose the applicability of laches in such cases, because we conclude that Colorado has failed to prove an element necessary to the recognition of that defense. See Costello, supra, at 282.

Colorado argues that Kansas knew or should have known by 1956, or at the latest, before 1968, that both the number of post-Compact wells and the amount of post-Compact pumping in Colorado had increased substantially. Colorado’s Exceptions 37, 39. Colorado argues that by 1956 Kansas had sufficient information about increased well pumping in Colorado and its potential impact on usable stateline flows to call for an investigation to determine if a Compact violation existed. Id., at 46.

The Special Master concluded that prior to 1984, Kansas had made no formal complaint to the Administration regarding post-Compact well pumping in Colorado. Report 155-156. Nevertheless, the Special Master concluded that Colorado’s evidence did not “deal with the issue of impact on usable flow at the Stateline,” id., at 161, and did “not demonstrate that [the Kansas officials] were aware of the nümber of wells, the extent of Colorado’s pumping, or the impact or even potential impact of pumping on usable Stateline flows,” id., at 164. The Special Master explained the difficulty of assessing the impact of increases in post-Compact well pumping on usable stateline flows because of changing conditions during the 1970’s and early 1980’s:

“The 1970s were generally dry years and some reduction in flow was to have been expected. Pueblo Dam came on line in 1976 and began to reregulate native flows. Transmountain imports increased, which to some extent provided an offset to pumping. The 1980 Operating Plan was placed into effect, which Colorado alleges offset the impacts of increased pumping downstream from John Martin Reservoir. The Winter Water Storage Program was instituted. Moreover, there was no quantitative or specific entitlement against which depletions to usable flow could be judged. Nor were there any agreed upon criteria for establishing what flows were usable.” Id., at 162-163.

As late as 1985, Colorado officials refused to permit an investigation by the Administration of well development in Colorado because they claimed that the evidence produced by Kansas did not “ ‘suggest that well development in Colorado has had an impact on usable stateline flows.’” Id., at 163 (quoting memorandum of J. William McDonald, chief of the Colorado delegation to the Administration). In light of the vague and conflicting evidence available to Kansas, we conclude that Colorado has failed to demonstrate lack of diligence, i. e., inexcusable delay, on the part of Kansas.

Accordingly, we overrule Colorado’s exception to the Special Master’s conclusion that the defense of laches should not bar Kansas’ well-pumping claim.

B

The Compact prohibits “future beneficial development of the Arkansas River basin” that “materially deplete [s]” the usable flows of the Arkansas River. App. to Report 5 (Article IV-D) (emphasis added). Because some wells in Colorado were in existence prior to the Compact, both parties agree that a certain amount of post-Compact well pumping is allowable under the Compact. Report 182. Kansas and Colorado, however, dispute the extent of this allowance. The Special Master determined that the “highest annual amount shown to have been pumped during the negotiations, namely 15,000 acre-feet, should be. allowed under the [Compact.” Id., at 200. Colorado makes both a legal and a factual challenge to this determination. Colorado’s Exceptions 66-73, 73-84.

Colorado argues as a legal matter that the Compact does not limit the pumping by pre-Compact wells to the highest amount actually pumped in pre-Compact years; rather, Colorado claims that the limit on its pre-Compact pumping is the maximum amount that Colorado law permitted or the maximum amount of pumping possible using wells existing prior to the Compact. Id., at 69-70. In support of its position, Colorado argues that the Special Master failed to consider the subsequent practice of the parties, i. e., Kansas’ failure to object to replacement of centrifugal pumps with turbine pumps or increased pumping by pre-Compact wells, and that Article VI-A(2) of the Compact supports its position.

We conclude that the clear language of Article IV-D refutes Colorado’s legal challenge. Article IV-D permits “future beneficial development of the Arkansas River basin ... which may involve construction of dams, reservoir, and other works for the purposes of water utilization and control, as well as the improved or prolonged functioning of existing works: Provided, that the waters of the Arkansas River ... shall not be materially depleted in usable quantity or availability . ...” App. to Report 5 (emphasis added). Regardless of subsequent practice by the parties, improved and increased pumping by existing wells clearly falls within Article IV-D’s prohibition against “improved or prolonged functioning of existing works,” if such action results in “materia[l] depletions] in usable” river flows. Ibid.; see Texas v. New Mexico, 462 U. S. 554, 564 (1983) (“[U]nless the compact to which Congress has consented is somehow unconstitutional, no court may order relief inconsistent with its express terms”). Article VI-A(2) of the Compact, which begins with the phrase, “Except as otherwise provided,” App. to Report 10, must be read in conjunction with and as limited by Article IV-D. We agree with the Special Master that “new wells, the replacement of centrifugal with turbine pumps, and increased pumping from [pre-Compact] wells all come within [Article IV-D].” Report 194.

Second, Colorado argues as a factual matter that the Special Master unreasonably relied upon faulty reports by the United States Geological Survey (USGS) and the Colorado Legislature to conclude that the greatest amount of annual pre-Compact pumping in Colorado was 15,000 acre-feet. Colorado’s Exceptions 73-74. The Special Master concluded:

“There is no precise answer to the amount of [preCompact] pumping.... That amount must simply remain as an estimate of water use that affected the general allocation of water between the states when the [Compact was being negotiated. Two responsible reports, one published by the USGS and one prepared for the Colorado legislature, reached similar conclusions as to the amounts of Colorado pumping during the 1940s. . . . They have since been used by the Colorado State Engineer. I have relied on these reports and recommend that the highest annual amount shown to have been pumped during the negotiations, namely 15,000 acre-feet, should be allowed under the [C]ompact.” Report 199-200.

Although the ultimate responsibility for deciding what are correct findings of fact remains with the Court, Colorado v. New Mexico, 467 U. S. 310, 317 (1984), in this instance, we are in full agreement with the Special Master. Accordingly, we overrule Colorado’s exception.

C

In April 1980, the Administration adopted a resolution concerning the method for operating John Martin Reservoir (1980 Operating Plan). Report 47. The 1980 Operating Plan divides the water conserved in John Martin Reservoir into separate accounts. Kansas is allocated 40% of the conservation storage, with the remaining 60% being divided in specified percentages among the nine canal companies in Colorado Water District 67. Id., at 173. The Special Master concluded that the 1980 Operating Plan for the John Martin Reservoir was “separately bargained for” and therefore should not offset depletions caused by post-Compact well pumping in Colorado. Id., at 180-181. Colorado takes exception to this ruling.

Colorado argues that increases in usable stateline flows resulting from the 1980 Operating Plan should offset depletions to usable stateline flows. Colorado’s Exceptions 85. Colorado maintains that the Administration adopted the 1980 Operating Plan “for more efficient utilization of water under its control because of changes in the regime of the Arkansas River,” id., at 91, “including [post-Compact] well pumping in Colorado and Kansas,” ibid.; see also App. to Report 107 (Resolution Concerning an Operating Plan for John Martin Reservoir) (“WHEREAS, the Arkansas River Compact Administration . . . recognizes that, because of changes in the regime of the Arkansas River, the present operation of the conservation features of John Martin Reservoir does not result in the most efficient utilization possible of the water under its control”). We disagree.

As Colorado acknowledges, the resolution adopting the 1980 Operating Plan “does not state that [post-Compact] well pumping in Colorado or Kansas was a cause of changes in the regime of the Arkansas River.” Colorado’s Exceptions 88. In fact, Colorado argues in a separate part of its brief that “Kansas had made no complaint about well pumping in Colorado to the Compact Administration . . . before 1984.” Id., at 32. The 1980 Operating Plan expressly reserves the parties’ rights under the Compact, stating that “[a]doption of this resolution does not prejudice the ability of Kansas or of any Colorado ditch to object or to otherwise represent its interest in present or future cases or controversies before the Administration or in a court of competent jurisdiction.” App. to Report 116. The Special Master concluded:

“The 1980 Operating Plan provided benefits to both Kansas and Colorado which were separately bargained for. There is no evidence to support the claim that benefits to Kansas were in settlement of its well claims. Colorado received ample consideration under the agreement for the 1980 plan without a waiver of Kansas’ well claims. The benefits received by Kansas under the plan should not be offset against compact violations, and should not be a bar to any of the Kansas claims in this case.” Report 180-181.

We agree with the Special Master’s resolution of Colorado’s claim. Accordingly, we overrule Colorado’s exception.

D

Finally, Colorado argues that Kansas is required to prove its well-pumping claim by clear and convincing evidence. Colorado’s Exceptions 91. The Special Master, relying upon Nebraska v. Wyoming, 507 U. S. 584 (1993), concluded that the proper burden of proof for enforcing an interstate compact is the preponderance of the evidence standard. Report 70. The Special Master noted that the Nebraska Court had drawn a distinction between actions seeking to “modify” a judicial decree and actions seeking to “enforce” a judicial decree. See Nebraska, supra, at 592 (“[W]e find merit in [the] contention that, to the extent that Nebraska seeks modification of the decree rather than enforcement, a higher standard of proof applies”). The Special Master concluded that an action seeking to enforce an interstate compact stood on the same footing as an action enforcing a judicial decree, and therefore was subject to the “preponderance of the evidence” standard. Report 70.

We need not, however, resolve this issue. The Special Master concluded that “regardless of which burden of proof applies” he had “no difficulty in concluding that [post-Compact] pumping in Colorado ha[d] caused material depletions of the usable Stateline flows of the Arkansas River, in violation of the Arkansas River Compact.” Id., at 263. We agree with this determination, and thus overrule Colorado’s exception.

IV

For these reasons, we overrule the exceptions filed by the States of Kansas and Colorado. We remand the case to the Special Master for determination of the unresolved issues in a manner not inconsistent with this opinion.

It is so ordered.

       An acre-foot is equivalent to 325,900 gallons of water; it represents the volume of water necessary to cover one acre of land with one foot of water. Report xvii.

       Colorado presented two counterclaims against Kansas. The Special Master recommended that the Court grant Kansas’ motions to dismiss those counterclaims. Report 337. Colorado has not filed exceptions to those recommendations. We adopt the Special Master’s recommendations on Colorado’s counterclaims.

       The Special Master did “not address the possible question of whether Kansas has a claim for violation of the Operating .Principles that is independent of the Compact, that is, a cause of action based upon a separate agreement with Colorado, or as a third party beneficiary under the repayment contract, or otherwise.” Report 408, n. 6. We express no view as to that question.

       Article VI-A(2) provides: “Except as otherwise provided, nothing in this Compact shall be construed as supplanting the administration by Colorado of the rights of appropriators of waters of the Arkansas River in said State as decreed to said appropriators by the courts of Colorado, nor as interfering with the distribution among said appropriators by Colorado, nor as curtailing the diversion and use for irrigation and other beneficial purposes in Colorado of the waters of the Arkansas River.” App. to Report 10 (emphasis added).