author: Justice Souter

text:
    BROWN, SECRETARY OF VETERANS AFFAIRS v. GARDNER
    No. 93-1128.
    Argued October 31, 1994
    Decided December 12, 1994
    Souter, J.,. delivered the opinion for a unanimous Court.

      Edward C. DuMont argued the cause for petitioner. With him on the briefs were Solicitor General Days, Deputy Solicitor General Bender, and Tresa M. Schlecht.

      Joseph M. Hannon, Jr., argued the cause for respondent. With him on the briefs was William S. Mailander.

       Briefs of amici curiae urging affirmance were filed for the State of Texas by Dan Morales, Attorney General, and Jorge Vega, First Assistant Attorney General; for the National Veterans Legal Services Project by Ronald S. Flagg and Gershon M. Ratner; and for the Paralyzed Veterans of America et al. by Robert L. Nelson, Lawrence B. Hagel, and Irving R. M. Panzer.

   Justice Souter

delivered the opinion of the Court.

In this case we decide whether a regulation of the Department of Veterans Affairs, 38 CFR § 3.358(c)(3) (1993), requiring a claimant for certain veterans’ benefits to prove that disability resulted from negligent treatment by the VA or an accident occurring during treatment, is consistent with the controlling statute, 38 U. S. C. § 1151 (1988 ed., Supp. V). We hold that it is not.

I

Fred R Gardner, a veteran of the Korean conflict, received surgical treatment in a VA facility for a herniated disc unrelated to his prior military service. Gardner then had pain and weakness in his left calf, ankle, and foot, which he alleged was the result of the surgery. He claimed disability benefits under § 1151, which provides that the VA will compensate for “an injury, or an aggravation of an injury,” that occurs “as the result of hospitalization, medical or surgical treatment, or the pursuit of a course of vocational rehabilitation” provided under any of the laws administered by the VA, so long as the injury was “not the result of such veteran’s own willful misconduct. . . .” The VA and the Board of Veterans’ Appeals denied Gardner’s claim for benefits, on the ground that § 1151, as interpreted by 38 CFR § 3.358(c)(3) (1993), only covers an injury if it “proximately resulted [from] carelessness, negligence, lack of proper skill, error in judgment, or similar instances of indicated fault” on the part of the VA, or from the occurrence during treatment or rehabilitation of an “accident,” defined as an “unforeseen, untoward” event. The Court of Veterans Appeals reversed, holding that § 1151 neither imposes, nor authorizes adoption of the fault-or-accident requirement set out in § 3.358(c)(3), Gardner v. Derwinski, 1 Vet. App. 584 (1991), and the Court of Appeals for the Federal Circuit affirmed, 5 F. 3d 1456 (1993). We granted certiorari, 511 U. S. 1017, and now affirm.

II

Despite the absence from the statutory language of so much as a word about fault on the part of the VA, the Government proposes two interpretations in attempting to reveal a fault requirement implicit in the text of § 1151, the first being that fault inheres in the concept of compensable “injury.” We think that no such inference can be drawn in this instance, however. Even though “injury” can of course carry a fault connotation, see Webster’s New International Dictionary 1280 (2d ed. 1957) (an “actionable wrong”), it just as certainly need not do so, see ibid. (“[d]amage or hurt done to or suffered by a person or thing”). The most, then, that the Government could claim on the basis of this term is the existence of an ambiguity to be resolved in favor of a fault requirement (assuming that such a resolution would be possible after applying the rule that interpretive doubt is to be resolved in the veteran’s favor, see King v. St. Vincent's Hospital, 502 U. S. 215, 220-221, n. 9 (1991)). But the Government cannot plausibly make even this claim here. Ambiguity is a creature not of definitional possibilities but of statutory context, see id., at 221 (“[T]he meaning of statutory language, plain or not, depends on context”), and this context negates a fault reading. Section 1151 provides com-pensability not only for an “injury,” but for an “aggravation of an injury” as well. “Injury” as used in this latter phrase refers to a condition prior to the treatment in question, and hence cannot carry with it any suggestion of fault attributable to the VA in causing it. Since there is a presumption that a given term is used to mean the same thing throughout a statute, Atlantic Cleaners & Dyers, Inc. v. United States, 286 U. S. 427, 433 (1932), a presumption surely at its most vigorous when a term is repeated within a given sentence, it is virtually impossible to read “injury” as laden with fault in the sentence quoted.

Textual cross-reference confirms this conclusion. “Injury” is employed elsewhere in the veterans’ benefits statutes as an instance of the neutral term “disability,” appearing within a series whose other terms exemplify debility free from any fault connotation. See 38 U. S. C. § 1701(1) (1988 ed., Supp. V) (“The term ‘disability’ means a disease, injury, or other physical or mental defect”). The serial treatment thus indicates that the same fault-free sense should be attributed to the term “injury” itself. Jarecki v. G. D. Searle & Co., 367 U. S. 303, 307 (1961) (“[A] word is known by the company it keeps”). Moreover, in analogous statutes dealing with service-connected injuries the term “injury” is again , used without any suggestion of fault, as the administrative regulation applicable to these statutes confirms by its failure to impose any fault requirement. Compare 38 U. S. C. § 1110 (1988 ed., Supp. V) (“disability resulting from personal injury suffered or disease contracted in line of duty, or for aggravation of a preexisting injury suffered or disease contracted in line of duty, . . . during a period of war,” is compensable) and 38 U. S. C. § 1131 (1988 ed., Supp. V) (“dis-. ability resulting from personal injury suffered or disease contracted in line of duty, of for aggravation of a preexisting injury suffered or disease contracted in line of duty,... during other than a period of war,” is compensable) with 38 CFR § 3.310(a) (1993) (“Disability which is proximately due to or the result of a service-connected disease or injury shall be service connected. When service connection is thus established for a secondary condition, the secondary condition shall be considered a part of the original condition”).

In a second attempt to impose a VA-fault requirement, the Government suggests that the “as a result of” language of § 1151 signifies a proximate cause requirement that incorporates a fault test. Once again, we find the suggestion implausible. This language is naturally read simply to impose the requirement of a causal connection between the “injury” or “aggravation of an injury” and “hospitalization, medical or surgical treatment, or the pursuit of a course of vocational rehabilitation.” Assuming that the connection is limited to proximate causation so as to narrow the class of compensable cases, that narrowing occurs by eliminating remote consequences, not by requiring a demonstration of fault. See generally W. Keeton, D. Dobbs, R. Keeton, & D. Owen, Pros-ser and Keeton on Law of Torts §42 (5th ed. 1984). The eccentricity of reading a fault requirement into the “result of” language is underscored by the incongruity of applying it to the fourth category for which compensation is available under § 1151, cases of injury resulting from a veteran’s “pursuit of vocational rehabilitation.” If Congress had meant to require a showing of VA fault, it would have been odd to refer to “the pursuit [by the veteran] of vocational rehabilitation” rather than to “the provision [by the VA] of vocational rehabilitation.”

The poor fit of this language with any implicit requirement of VA fault is made all the more obvious by the statute’s express treatment of a claimant’s fault. The same sentence of §1151 that contains the terms “injury” and “as a result of” restricts compensation to those whose additional disability was not the result of their “own willful misconduct.” This reference to claimant’s fault in a statute keeping silent about any fault on the VA’s part invokes the rule that “[w]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.” Russello v. United States, 464 U. S. 16, 23 (1983) (internal quotation marks omitted). Without some mention of the VA’s fault, it would be unreasonable to read the text of § 1151 as imposing a burden of demonstrating it upon seeking compensation for a further disability.

In sum, the text and reasonable inferences from it give a clear answer against the Government, and that, as we have said, is “‘the end of the matter.’” Good Samaritan Hospital v. Shalala, 508 U. S. 402, 409 (1993) (quoting Chevron U S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, 842 (1984)). Thus this clear textually grounded conclusion in Gardner’s favor is fatal to the remaining principal arguments advanced against it.

The Government contends that Congress ratified the VA’s practice of requiring a showing of fault when it reenacted the predecessor of § 1151 in 1934, or, alternatively, that Congress’s legislative silence as to the VA’s regulatory practice over the last 60 years serves as an implicit endorsement of its fault-based policy. There is an obvious trump to the reenactment argument, however, in the rule that “[w]here the law is plain, subsequent reenactment does not constitute an adoption of a previous administrative construction.” Demarest v. Manspeaker, 498 U. S. 184, 190 (1991). See also Massachusetts Trustees of Eastern Gas & Fuel Associates v. United States, 377 U. S. 235, 241-242 (1964) (congressional reenactment has no interpretive effect where regulations clearly contradict requirements of statute). But even without this sensible rule, the reenactment would not carry the day. Setting aside the disputed question whether the VA used a fault rule in 1934, the record of congressional discussion preceding reenactment makes no reference to the VA regulation, and there is no other evidence to suggest that Congress was even aware of the VA’s interpretive position. “In such circumstances we consider the . . . re-enactment to be without significance.” United States v. Calamaro, 354 U. S. 351, 359 (1957).

Congress’s post-1934 legislative silence on the VA’s fault approach to § 1151 is likewise unavailing to the Government. As we have recently made clear, congressional silence “ ‘lacks persuasive significance,’ ” Central Bank of Denver, N. A. v. First Interstate Bank of Denver, N. A., 511 U. S. 164, 187 (1994) (quoting Pension Benefit Guaranty Corporation v. LTV Corp., 496 U. S. 633, 650 (1990)), particularly where administrative regulations are inconsistent with the controlling statute, see Patterson v. McLean Credit Union, 491 U. S. 164, 175, n. 1 (1989) (“Congressional inaction cannot amend a duly enacted statute”). See also Zuber v. Allen, 396 U. S. 168, 185-186, n. 21 (1969) (“The verdict of quiescent years cannot be invoked to baptize a statutory gloss that is otherwise impermissible. . . . Congressional inaction frequently betokens unawareness, preoccupation, or paralysis”).

Finally, we dispose of the Government’s argument that the VA’s regulatory interpretation of § 1151 deserves judicial deference due to its undisturbed endurance for 60 years. A regulation’s age is no antidote to clear inconsistency with a statute, and the fact, again, that § 3.358(c)(3) flies against the plain language of the statutory text exempts courts from any obligation to defer to it. Dole v. Steelworkers, 494 U. S. 26, 42-43 (1990); Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., supra, at 842-843. But even if this were a close case, where consistent application and age can enhance the force of administrative interpretation, see Zenith Radio Corp. v. United States, 437 U. S. 443, 450 (1978), the Government’s position would suffer from the further factual embarrassment that Congress established no judicial review for VA decisions until 1988, only then removing the VA from what one congressional Report spoke of as the agency’s “splendid isolation.” H. R. Rep. No. 100-963, pt. 1, p. 10 (1988). As the Court of Appeals for the Federal Circuit aptly stated: “Many VA regulations have aged nicely simply because Congress took so long to provide for judicial review. The length of such regulations’ unscrutinized and unscrutinizable existence” could not alone, therefore, enhance any claim to deference. 5 F. 3d, at 1463-1464.

Ill

Accordingly, the judgment of the Court of Appeals is affirmed.

It is so ordered.

       Section 1151 is invoked typically to provide benefits to veterans for nonservice related disabilities, although it is not so limited by its terms. See Pet. for Cert. 6, n. 3. The statute’s history begins in 1924 when Congress enacted § 213 of the World War Veterans’ Act, 1924, ch. 320, 43 Stat. 623. Section 213 was repealed in 1933, as part of the Economy Act of 1933, ch. 3, Tit. I, § 17, 48 Stat. 11-12, and reenacted in nearly the same form in 1934, Act of Mar. 28, 1934, ch. 102, Tit. Ill, §31, 48 Stat. 526.

       “Fault” is shorthand for fault-or-accident, the test imposed by the regulation. Section 3.358(c)(3) leaves the additional burden imposed by the “accident” requirement unclear, defining the term to mean simply an “unforeseen, untoward” event. Although the appropriate scope of the “accident” requirement is not before us, on one plausible reading of the regulation some burden additional to the statutory obligation would be imposed as an alternative to fault.

       We do not, of course, intend to east any doubt on the regulations insofar as they exclude coverage for incidents of a disease’s or injury’s natural progression, occurring after the date of treatment. See 38 CFR § 3.358(b)(2) (1993). VA action is not the cause of the disability in these situations. Nor do we intend to exclude application of the doctrine volenti non fit injuria. See generally M. Bigelow, Law of Torts 39-43 (8th ed. 1907). It would be unreasonable, for example, to believe that Congress intended to compensate veterans for the necessary consequences of treatment to which they consented (i. e., compensating a veteran who consents to the amputation of a gangrenous limb for the loss of the limb).

         At the time of the 1934 reenactment, the regulation in effect precluded compensation for the “ ‘usual after[-]results of approved medical care and treatment properly administered.’” See Brief for Respondent 31.


source: Caselaw Access Project

author: Justice Thomas

license: Public Domain

text:
    NEBRASKA DEPARTMENT OF REVENUE v. LOEWENSTEIN
    No. 93-823.
    Argued October 11, 1994
    Decided December 12, 1994

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

      L. Jay Bartel, Assistant Attorney General of Nebraska, argued the cause for petitioner. With him on the briefs was Don Stenberg, Attorney General.

      Terry R. Wittier argued the cause for respondent. With him on the brief was Larry A. Hollé.

      Briefs of amici curiae urging reversal were filed for the State of California et al. by Daniel E. Lungren, Attorney General of California, Timothy G. Laddish, Assistant Attorney General, Joyce E. Hee, Deputy Attorney General, and Patrick J. Kusiak, and by the Attorneys General for their respective jurisdictions as follows: James H. Evans of Alabama, Grant Woods of Arizona, Charles M. Oberly III of Delaware, Roland W. Burris
        of Illinois, Pamela Carter of Indiana, Chris Gorman of Kentucky, Richard P. Ieyoub of Louisiana, J. Joseph Curran, Jr., of Maryland, Scott Harsh-barger of Massachusetts, Frank J. Kelley of Michigan, Jeffrey R. Howard of New Hampshire, Deborah T. Poritz of New Jersey, Tom Udall of New Mexico, G. Oliver Koppell of New York, Heidi Heitkamp of North Dakota, Susan Brimer Loving of Oklahoma, Theodore R. Kulongoski of Oregon, Jan Graham of Utah, Jeffrey L. Amestoy of Vermont, James S. Gilmore 111 of Virginia, and James E. Doyle of Wisconsin; and for the Council of State Governments'et al. by Richard Ruda and Lee Fennell.

      Briefs of amici curiae urging affirmance were filed for The Dreyfus Corporation by Jeffrey S. Sion; and for the Investment Company Institute by Albert G. Lauber, Jr., Paul Schott Stevens, and Catherine Heron.

        Thomas C. Baxter, Jr., filed a brief for the Federal Reserve Bank of New York as amicus curiae.

   Justice Thomas

delivered the opinion of the Court.

We took this case to decide whether States may tax interest income derived from repurchase agreements involving federal securities. If the income that taxpayers earn by participating in such agreements constitutes interest on federal securities, then the taxation violates 31 U. S. C. § 3124(a), which exempts interest on “obligations of the United States Government” from taxation by States. On the other hand, if that income constitutes interest on loans to a private party, the taxation is not prohibited by the statute. With respect to the repurchase agreements at issue in this case, we conclude that for purposes of § 3124(a), the interest earned by taxpayers is interest on loans to a private party, not interest on federal securities. Accordingly, we hold that § 3124(a) does not prohibit States from taxing such income.

I

Respondent is a Nebraska resident who owns shares in two mutual funds, the Trust for Short-Term U. S. Government Securities and the Trust for U. S. Treasury Obligations (Trusts). The Trusts earn a portion of their income by participating in “repurchase agreements” that involve debt securities issued by the United States Government and its agencies (federal securities). A typical repurchase agreement used by the Trusts, see App. 65-81, establishes a two-part transaction, commonly called a “repo,” between a party who holds federal securities and seeks cash (Seller-Borrower) and a party who has available cash and seeks to earn interest on its idle funds (in this case, the Trusts). In part one of the repo, the Seller-Borrower “transfers” specified federal securities to the Trusts on the records of the Federal Reserve System’s commercial book-entry system. Simultaneously, the Trusts transfer a specified amount of cash to the Seller-Borrower’s bank account.

In part two of the transaction — which occurs at a later date fixed by agreement or, in the absence of any agreement, upon demand of either party — the Trusts “deliver” the federal securities back to the Seller-Borrower on the Federal Reserve’s records, and the Seller-Borrower credits the Trusts’ bank account in an amount equal to the sum of the original cash transfer plus “interest” at an agreed-upon rate. This interest rate bears no relation to the yield on the underlying federal securities — either when they were issued by the United States Government or when they later came into the hands of the Seller-Borrower — but is based instead on the current market rate paid on investments with maturities equal to the term of the repo, not to the original or current maturities of the underlying securities.

After deducting administrative costs, the Trusts distribute this interest income to respondent in proportion to his ownership of shares in the Trusts. The State of Nebraska generally taxes interest income, but it does not tax “interest or dividends received by the owner of obligations of the United States . . . but exempt from state income taxes under the laws of the United States.” Neb. Rev. Stat. § 77-2716(l)(a) (Supp. 1994). For purposes of Nebraska’s income tax law, if interest would be exempt from tax in the hands of the Trusts, then respondent’s proportionate share of such interest will be exempt. § 77-2716(l)(b).

A decade ago petitioner considered whether the interest income derived from repurchase agreements involving federal securities and then distributed to respondent and similarly situated individuals was subject to Nebraska’s income tax. Petitioner concluded that it was. Neb. Rev. Rul. 22-85-1, Brief for Petitioner 4-5, n. 1. In 1988, respondent brought a declaratory judgment action in the District Court of Lancaster County, Nebraska, asking that Revenue Ruling 22-85-1 be declared invalid as contrary to 31 U. S. C. § 3124(a) and the Supremacy Clause of the United States Constitution. The District Court granted the requested relief. On appeal, the Supreme Court of Nebraska affirmed, concluding that “the income received by [respondent] from, repo transactions executed by the [T]rusts involving federal, securities is exempt from state taxation under §3124.”’ Loewenstein v. State, 244 Neb. 82, 90, 504 N. W. 2d 800, 805 (1993).

As the Nebraska Supreme Court itself acknowledged, see id., at 88-90, 504 N. W. 2d, at 804-805, several state courts have reached directly contrary conclusions, and two Federal Courts of Appeals have ruled that interest income derived from repos involving municipal bonds is not exempt from federal taxation under § 103(a)(1) of the Internal Revenue Code. We granted certiorari to resolve this conflict, 510 U. S. 1176 (1994), and we now reverse.

II

We begin with the text of 31 U. S. C. § 3124(a). It provides in relevant part:

“[Obligations of the United States Government are exempt from taxation by a State or political subdivision of a State. The exemption applies to each form of taxation that would require the obligation, the interest on the obligation, or both, to be considered in computing a tax ....”

Under this provision, a state tax may consider neither the federal “obligation” itself nor the “interest on the obligation.” The obligation itself is “considered” when its value is “taken into account, or included in the accounting,” Ameri can Bank & Trust Co. v. Dallas County, 463 U. S. 855, 862 (1983), in computing the taxable value of a taxpayer’s assets or net worth for the purpose of a property tax or the like. See, e. g., First Nat. Bank of Atlanta v. Bartow County Bd. of Tax Assessors, 470 U. S. 583, 585-586 (1985) (property tax on bank shares). By contrast, the interest on the obligation is “considered” when that interest is included in computing the taxpayer’s net income or earnings for the purpose of an income tax or the like. See, e. g., Memphis Bank & Trust Co. v. Garner, 459 U. S. 392, 393-394 (1983) (tax on net earnings of banks).

By participating in repos involving federal securities, the Trusts (and thus respondent) earned interest income, and Nebraska’s income tax admittedly considered that interest in computing respondent’s taxable income. We must decide whether for purposes of § 3124(a) the interest earned by the Trusts from these repos is interest on “obligations of the United States Government” or interest on loans of cash from the Trusts to the Seller-Borrower. We conclude that it is the latter, and we accordingly hold that Nebraska’s taxation of the income derived by respondent from the repos does not violate § 3124(a).

An investor may earn interest income from a federal security in one or both of two ways. First, the investor may receive periodic payments from the United States Government at the interest rate stated on the face of the security. Such payments are traditionally known as “coupon interest.” Second, the investor may acquire the security at a discount from the amount for which it will ultimately be redeemed by the Government at maturity. This discount is also considered interest for purposes of taxation. Although “discount interest” accrues during the term of the security, the investor does not receive it in cash until the security is redeemed or transferred to a third party.

Our examination of the typical repurchase agreement used by the Trusts convinces us that they did not earn either kind of interest on federal securities. Certainly, none of the income the Trusts earn by participating in repos can be attributed to redemptions of the securities or payments of coupon interest by the Government: The Trusts must “pay over to [the Seller-Borrower] as soon as received all principal, interest and other sums paid by or on behalf of the issuer in respect of the Securities and collected by the [Trusts].” App. 69.

Nor can we conclude that the Trusts receive discount interest when the federal securities are transferred back to the Seller-Borrower in part two of the repo. Under the typical repurchase agreement, any individual repo transaction may involve a mix of federal securities with varying maturities, and therefore varying yields. During the term of the repo, these securities earn discount interest based on their respective yields (and on whether they pay coupon interest). The Trusts, however, earn interest from the Seller-Borrower at an agreed-upon rate that is not based on any of these yields, or any combination of them. Thus, the interest that the Trusts earn by participating in the repo will bear no relation to the discount interest earned on federal securities during the same period.

We conclude instead that for purposes of § 3124(a), the interest income earned by the Trusts is interest on loans from the Trusts to the Seller-Borrower, and that the federal securities are involved in the repo transactions as collateral for these loans. Several features of the repos lead to this conclusion. First, at the commencement of a repo, the Trusts pay the Seller-Borrower a fixed sum of money; at the repo’s termination, the Seller-Borrower repays that sum with “interest.” As explained above, this repo interest bears no relation to either the coupon interest paid or the discount interest accrued on the federal securities during the term of the repo.

Second, if the Seller-Borrower defaults on its obligation to pay its debt, the Trusts may liquidate the federal securities. But like any lender who liquidates collateral, the Trusts may retain the proceeds of liquidation only up to the amount of the debt plus expenses; any excess must be paid to the Seller-Borrower. Moreover, if the proceeds are insufficient to satisfy the debt, the Trusts may recover the deficiency from the Seller-Borrower.

Third, if the market value of the federal securities involved in the repo falls below 102% of the amount the Trusts originally paid to the Seller-Borrower, the latter must immediately deliver cash or additional securities to the Trusts to restore the value of the securities held by the Trusts to 102% of the original payment amount. On the other hand, if the market value of the securities rises above 102% of this amount, the Seller-Borrower may require the Trusts to return some of the securities to the Seller-Borrower. These provisions are consistent with a lender-borrower relationship in which a prudent lender desires to protect the value of its collateral, while a prudent borrower attempts to pledge as little collateral as possible.

Fourth, the Seller-Borrower may, during the term of the repo, “substitute” federal securities of equal market value for the federal securities initially involved in the transaction. A lender, of course, is indifferent to the particular collateral pledged by the borrower, so long as that collateral has sufficient value and liquidity.

The parties have stipulated that the Trusts (or their agents) take “Delivery” of the federal securities at the commencement of a repo. App. 63. But even this fact is consistent with understanding repos as loans of cash from the Trusts to the Seller-Borrower: “Delivery” of the securities perfects the Trusts’ security interests in their collateral. Under the most recent version of § 8-321(1) of the Uniform Commercial Code (U. C. C.), “[a] security interest in a security is enforceable and can attach only if it is transferred to the secured party ... pursuant to a provision of [§]8-313(1).” 2C U. L. A. 459 (1991). Section 8-313(l)(a) provides that transfer of a security interest in a security occurs when the secured party “acquires possession of a certificated security.” Id., at 402. Of course, possession of the federal securities allows the Trusts to effect an expeditious, nonjudicial liquidation of the securities if the Seller-Borrower defaults. Cf. U. C. C. §9-504(1), 3B U. L. A. 127 (1992). The ability to liquidate immediately is obviously critical in the context of repo transactions, which may have a lifespan of only a single day.

Based on the foregoing analysis, we conclude that the interest income earned by the Trusts from repurchase agreements involving federal securities is not interest on “obligations of the United States Government.” For purposes of 31 U. S. C. § 3124(a), the income is instead interest on loans from the Trusts to the Seller-Borrower. Because § 3124(a) exempts only the former type of interest from state taxation, Nebraska did not violate that statute when it taxed respondent’s interest income.

Ill

Respondent offers two objections to this interpretation of § 3124(a). We find neither of them persuasive.

A

The typical repurchase agreement at issue in this case explicitly identifies the original transfer of the federal securities to the Trusts as a “sale” and the subsequent transfer back to the Seller-Borrower as a “repurchase.” Respondent maintains we should honor this characterization because the repos were structured by the Trusts and the Seller-Borrower as sales and repurchases for valid business and regulatory reasons independent of tax considerations. Respondent relies on our statement in Frank Lyon Co. v. United States, 435 U. S. 561, 583-584 (1978):

“[W]here . . . there is a genuine multiple-party transaction with economic substance which is compelled or encouraged by business or regulatory realities, is imbued with tax-independent considerations, and is not shaped solely by tax-avoidance features that have meaningless labels attached, the Government should honor the allocation of rights and duties effectuated by the parties.”

We do not believe it matters for purposes of § 3124(a) whether the repo is characterized as a sale and subsequent repurchase. A sale-repurchase characterization presumably would make the Trusts the “owners” of the federal securities during the term of the repo. But the dispositive question is whether the Trusts earned interest on “obligations of the United States Government,” not whether the Trusts “owned” such obligations. As respondent himself concedes, “[t]he concept of ‘ownership’ is simply not an issue under 31 U. S. C. § 3124.” Brief for Respondent 10.

Even if it did matter how repos were characterized for purposes of § 3124(a), Frank Lyon Co. does not support respondent’s position. Whatever the language relied on by respondent may mean, our decision in that case to honor the taxpayer’s characterization of its transaction as a “sale-and-leaseback” rather than a “financing transaction” was founded on an examination of “the substance and economic realities of the transaction.” 435 U. S., at 582. This examination included identification of 27 specific facts. See id., at 582-583. The substance and economic realities of the Trusts’ repo transactions, as manifested in the specific facts discussed above, are that the Trusts do not receive either coupon interest or discount interest from federal securities by participating in repos. Rather, in economic reality, the Trusts receive interest on cash they have lent to the Seller-Borrower.

Respondent does not specifically dispute this conclusion but argues that repos are characterized as ordinary sales and repurchases for purposes of federal securities, bankruptcy, and banking law as well as commercial and local government law. We need not examine the accuracy of these assertions, for we are not called upon in this case to interpret any of those bodies of law. Our decision today is an interpretation only of 31 U. S. C. § 3124(a) — not the Securities Exchange Act of 1934, the Bankruptcy Code, or any other body of law.

B

At oral argument, respondent advanced another argument against the interpretation of § 3124(a) adopted here: Although petitioner’s Revenue Ruling nominally acknowledges the right of the Seller-Borrower to claim the exemption granted by § 3124(a), Nebraska’s income tax scheme will not allow the Seller-Borrower to realize the full amount of the federal exemption. This would allegedly frustrate Congress’ purpose in granting the exemption. According to respondent, after the Seller-Borrower has subtracted from its taxable income any “interest or dividends received by [it as] the owner of obligations of the United States,” pursuant to subsection (a) of Neb. Rev. Stat. § 77-2716(1) (Supp. 1994), it will then be forced to add back “any interest on indebtedness incurred to carry the [federal] obligations,” pursuant to subsection (e)(i) of §77-2716(1). Respondent conjectures that the interest paid by the Seller-Borrower to the Trusts in the course of repos may constitute just such interest. Respondent therefore hypothesizes that if the Seller-Borrower receives, for example, $100 in interest as the holder of federal securities and pays out $90 to the Trusts in the course of repos involving those securities, Nebraska might give the Seller-Borrower an income tax exemption worth only $10 ($100 minus $90), rather than the $100 exemption that Congress arguably intended.

There is a short answer to respondent’s multilayered hypothesis: this case does not involve the construction or validity of Nebraska’s add-back rule as applied in the repo context. The Nebraska Supreme Court did not cite §77-2716(l)(e)(i) in its opinion, and we did not grant certiorari to consider that provision.

IV

Finally, respondent argues that Nebraska’s taxation of income from repos involving federal securities violates the Supremacy Clause of the Constitution. First, respondent contends that Nebraska discriminates against federal obligations because it does not tax income from repos involving Nebraska’s own state and local obligations. Although Nebraska Revenue Ruling 22-85-1 concerns repos involving “federal government obligations” and does not mention their Nebraska counterparts, respondent has pointed to no statute, revenue ruling, or other manifestation of Nebraska policy treating “state” repos any different from “federal” repos for tax purposes.

Second, respondent cites our decision in Rockford Life Ins. Co. v. Illinois Dept. of Revenue, 482 U. S. 182, 190 (1987), in which we stated that “the intergovernmental tax immunity doctrine ... is based on the proposition that the borrowing power is an essential aspect of the Federal Government’s authority and, just as the Supremacy Clause bars the States from directly taxing federal property, it also bars the States from taxing federal obligations in a manner which has an adverse effect on the United States’ borrowing ability.” According to respondent, undisputed expert testimony in the record establishes that the taxation at issue in this case will make it more difficult and expensive for the Federal Government to finance the national debt.

This expert testimony essentially consists of a 1986 affidavit sworn by Peter D. Sternlight, a former official of the Federal Reserve Bank of New York. In our view, Stern-light’s affidavit has no relevance to this case. It concluded only that “an impairment of the repo market would make it less attractive for [government securities] dealers to perform [their] very useful . . . function [of underwriting a sizeable portion of Treasury securities], thus adding to Treasury interest costs.” App. 42. But the “impairment” that worried Sternlight would result “[i]f repurchase agreements were to lose their present characteristics of flexibility and liquidity,” or if repos became “unavailable” to certain kinds of public and private institutional investors. Id., at 42, 43. These possibilities might develop if repos were to be characterized as secured loans for purposes of federal bankruptcy and banking law or of commercial and local government law. Our decision today, however, says nothing about how repos should be characterized for those purposes.

Disregarding the inapplicable Sternlight affidavit, we find no evidence in the record that the taxation at issue will impair the market in federal securities or otherwise impair the borrowing ability of the Federal Government. Rockford Life confirmed the rule that “‘when effort is made ... to establish the unconstitutional character of a particular tax by claiming its remote effect will be to impair the borrowing power of the government, courts . . . ought to have something more substantial to act upon than mere conjecture. The injury ought to be obvious and appreciable.’ ” 482 U. S., at 190, n. 10 (quoting Plummer v. Coler, 178 U. S. 115, 137-138 (1900)). Respondent has shown us no “obvious and appreciable” injury to the borrowing power of the United States Government as a result of Nebraska’s taxation of the repo income earned by the Trusts. Rather, he has given us “mere conjecture.” In these circumstances, we cannot justifiably conclude that Nebraska’s taxation of income derived from repos involving federal securities violates the Supremacy Clause of the Constitution.

For the foregoing reasons, the judgment of the Supreme Court of Nebraska is reversed, and the case is remanded for further proceedings not inconsistent with this opinion.

It is so ordered.

       A repurchase agreement is so called because the parties to the agreement identify part one of the transaction as a “sale” of federal securities from the Seller-Borrower to the Trusts and part two a “repurchase” of the securities by the Seller-Borrower from the Trusts. Because the accuracy of these labels is part of the dispute in this case, we use more neutral terms to describe the transaction.

       See Hammond Lead Products, Inc. v. State Tax Commissioners, 575 N. E. 2d 998 (Ind. 1991); Department of Revenue v. Page, 541 So. 2d 1270 (Fla. App. 1989); Capital Preservation Fund, Inc. v. Wisconsin Dept. of Revenue, 145 Wis. 2d 841, 429 N. W. 2d 551 (App. 1988); Andras v. Illinois Dept. of Revenue, 154 Ill. App. 3d 37, 506 N. E. 2d 439 (1987), cert. denied, 485 U. S. 960 (1988).
      As Justice Caporale pointed out in dissent below, see 244 Neb., at 91-92, 504 N. W. 2d, at 806, at least five other state courts also have reached a result contrary to that of the majority. See Everett v. State Dept. of Revenue and Finance, 470 N. W. 2d 13 (Iowa 1991); Comptroller of the Treasury, Income Tax Div. v. First United Bank & Trust, 320 Md. 352, 578 A. 2d 192 (1990); Borg v. Department of Revenue of Oregon, 308 Ore. 34, 774 P. 2d 1099 (1989); Massman Constr. Co. v. Director of Revenue of Missouri, 765 S. W. 2d 592 (Mo. 1989); In re Sawyer Estate, 149 Vt. 541, 546 A. 2d 784 (1987). Accord, H. J. Heinz Co. v. Department of Treasury, 197 Mich. App. 210, 494 N. W. 2d 850 (1992) (distinguishing Matz v. Department of Treasury, 155 Mich. App. 778, 401 N. W. 2d 62 (1986) (per curiam)).

       See Union Planters Nat. Bank of Memphis v. United States, 426 F. 2d 115 (CA6), cert. denied, 400 U. S. 827 (1970); American Nat. Bank of Austin v. United States, 421 F. 2d 442 (CA5), cert. denied, 400 U. S. 819 (1970). Accord, First American Nat. Bank of Nashville v. United States, 467 F. 2d 1098 (CA6 1972) (per curiam). Cf. Citizens Nat. Bank of Waco v. United States, 213 Ct. Cl. 236, 248-251, 551 F. 2d 832, 839-840 (1977) (agreeing that these decisions were correct, but distinguishing them on the facts of the case).
      The Internal Revenue Service also has concluded that a taxpayer in the position of the Trusts who derives interest income by participating in repurchase agreements does not earn interest on the securities involved in those agreements. See Rev. Rul. 74-27, 1974-1 Cum. Bull. 24; Rev. Rul. 77-59,1977-1 Cum. Bull. 196; Rev. Rul. 79-108,1979-1 Cum. Bull. 75.

       For example, Treasury notes and bonds, which have maturities of at least one year, pay coupon interest on a semiannual basis and may be issued at discount, par (face amount), or premium, depending on market conditions. See 31 CFR §§ 356.5(b), (c), 356.30 (1994). Treasury bills, by contrast, have maturities of not more than one year, pay no coupon interest, and are always issued at a discount. See § 356.5(a). “For purposes of taxation the amount of discount at which Treasury bills are originally sold by the United States shall be considered to be interest.” §309.4. See generally M. Stigum, The Money Market 36-37 (3d ed. 1990) (hereinafter Stigum).

       The parties have also stipulated that delivery of the federal securities is effected “through the Federal Reserve book entry system.” App. 63. Although securities held in that system exist not in the form of certificates but only as entries in the records of a Federal Reserve bank, see generally Stigum 636-638, regulations issued by the Treasury Department and other federal agencies indulge in the fiction that transferees acquire possession of certificated securities. See, e.g., 31 CFR § 306.118(a) (1994) (transfer of Treasury notes and bonds); § 350.4(a) (transfer of Treasury bills). Of course, these regulations and their relationship to the U. C. C. are not before us here.

       It follows from our analysis that it is the Seller-Borrower who earns the interest on the federal securities during the pendency of the repo. Nebraska Revenue Ruling 22-85-1 concludes as much: “The interest earned on the United States government obligations remains the income of the [party] who submitted the securities as collateral for the loan.” Brief for Petitioner 4-5, n. 1.

       See also Brief for Federal Reserve Bank of New York as Amicus Curiae 9-10 (“The Sternlight Affidavit was filed by the New York Fed in 1986 as amicus curiae in [a case] which had nothing to do with state taxation of repo income.... Mr. Sternlight did not opine on the economic effect of state taxation of repo transaction income on [the market for] the underlying government securities”); Hearings on H. R. 2852 and H. R. 3418 before the Subcommittee on Monopolies and Commercial Law of the House Committee on the Judiciary, 98th Cong., 2d Sess., 106-107 (1984) (letter of Peter D. Sternlight) (“[W]hile the Federal Reserve has gone on record as favoring purchase-and-sale characterization of repurchase agreements, that statement is limited to a bankruptcy context and should not be taken as an endorsement of purchase-and-sale characterization for tax, accounting, or other purposes” (emphasis added)).


author: Justice Kennedy

text:
    INTERSTATE COMMERCE COMMISSION v. TRANSCON LINES et al.
    No. 93-1318.
    Argued November 1, 1994
    Decided January 10, 1995

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

      Deputy Solicitor General Wallace argued the cause for petitioner. With him on the briefs were Solicitor General Days, Assistant Attorney General Hunger, Michael R. Dreeben, Anthony J. Steinmeyer, Henri F. Rush, Ellen D. Hanson, and Evelyn G. Kitay.

      Leonard L. Gumport argued the cause for respondents. With him on the briefs were Joseph L. Steinfeld, Jr., Robert B. Walker, John T. Siegler, and Richard S. Berger.

      Briefs of amici curiae urging reversal were filed for the Health and Personal Care Distribution Conference, Inc., et al. by Daniel J. Sweeney, Frederic L. Wood, and Nicholas J. DiMichael; and for the Transportation Claims and Prevention Council by William J. Augello and Mary Kay Reynolds.

      Briefs of amici curiae urging affirmance were filed for the International Brotherhood of Teamsters by Marc J. Fink, Judith A. Scott, and James A. McCall; and for Lloyd T. Whitaker as Trustee for the Estate of Olympia Holding Corp. by Kim D. Mann.

   Justice Kennedy

delivered the opinion of the Court.

Though recent Acts of Congress have made substantial changes in the regulation of interstate motor carriers, see Negotiated Rates Act of 1993, 107 Stat. 2044; Trucking Industry Regulatory Reform Act of 1994, 108 Stat. 1683, this case arises under the law in effect before those enactments. We address once again the Interstate Commerce Act’s filed rate requirements, 49 U. S. C. §§ 10761(a), 10762(a)(1), and their bearing on the authority of the Interstate Commerce Commission (ICC) to enforce related provisions of the Act and regulations adopted under it.

Under the filed rate doctrine applicable to the transactions here in question, motor carriers were required to publish their shipping rates in tariffs filed with the ICC and to receive only the published rates. Ibid. Our cases have taught the necessity of strict compliance with this scheme. E. g., Maislin Industries, U. S., Inc. v. Primary Steel, Inc., 497 U. S. 116 (1990); Louisville & Nashville R. Co. v. Maxwell, 237 U. S. 94, 97 (1915). The question now presented is whether the filed rate doctrine bars the ICC from obtaining injunctive relief to enforce its credit regulations in a manner that would prevent collection of a rate filed in a published tariff. We hold that the filed rate doctrine does not bar the injunction the ICC seeks.

I

Transcon Lines (Transcon) was once the 12th largest motor carrier in the United States, operating under authorization from the ICC. Like many other carriers, Transcon became a victim of the heightened competition resulting from Congress’ partial deregulation of the motor carrier industry in 1980. See Motor Carrier Act of 1980, 94 Stat. 793. In May 1990, Transcon consented to an order for relief pursuant to an involuntary bankruptcy petition filed against it under Chapter 11. The trustee appointed by the Bankruptcy Court followed the practice of some other trustees for the estates of bankrupt carriers and sought to collect undercharges from Transcon’s former customers. The trustee sought not only to collect unpaid freight charges but also to collect liquidated damages for late payment. Some 3,000 adversary proceedings brought by the trustee against Transcon’s former customers are pending, and the ICC estimates the liquidated damages in question total about $15 million.

The Act bars common carriers subject to the ICC’s jurisdiction from extending credit for their services except “fu]nder regulations of the [ICC] governing the payment for transportation and service and preventing discrimination.” 49 U. S. C. §§ 10743(b)(1), 10743(a). By regulations under this express statutory delegation, the ICC has set out in detail the exclusive means by which common carriers can extend credit to shippers. See 49 CFR pt. 1320 (1994). Under the regulations, carriers are authorized to establish credit periods of up to 30 calendar days, §§ 1320.2(c), (d), and, if shippers fail to pay their charges within the established credit period, to assess service (or interest) charges, § 1320.2(e). Carriers also may assess liquidated damages to cover collection costs, either by a tariff rule or through contract terms in their bills of lading. §§ 1320.2(g)(1), (3). Before collecting liquidated damages by tariff rule, however, a carrier must follow specified procedural requirements.

First, the timing and conditions of any potential liquidated damages must be described clearly in the carrier’s filed tariff. § 1320.2(g)(2)(i). Second, the original bill sent to the shipper must set forth any liquidated damages that would be assessed for failure to make timely payment of the freight charges. § 1320.3(e). Third, within 90 days after expiration of the authorized credit period the carrier must “issu[e] a revised freight bill or notice of imposition of collection expense charges for late payment.” § 1320.2(g)(2)(vi). Finally, liquidated damages “[s]hall be applied only to the nonpayment of original, separate and independent freight bills and shall not apply to aggregate balance-due claims sought for collection on past shipments by a bankruptcy trustee, or any other person or agent....” § 1320.2(g)(2)(iii).

Upon satisfying these requirements, carriers may assess liquidated damages through a tariff rule by one of two methods. The first is “to assess liquidated damages as a separate additional charge to the unpaid freight bill.” § 1320.2(g)(1) (i). The second is to charge the shipper a “full, nondis-counted rate instead of the discounted rate [that might otherwise be] applicable.” § 1320.2(g)(1)(ii). Transcon used the second, so-called loss-of-discount method to assess liquidated damages. The measure of liquidated damages under this method is prescribed by an ICC regulation. It provides:

“The difference between the discount and the full rate constitutes a carrier’s liquidated damages for its collection effort. Under this method the tariff shall identify the discount rates that are subject to the condition precedent and which require the shipper to make payment by a date certain.” Ibid.

Transcon’s customers had been charged discount rates, expressed as a percentage of a generic bureau rate. To collect liquidated damages, the trustee demanded the nondiscount bureau rate from former customers who had failed to pay their original discount charges on time.

The ICC sued in the United States District Court for the Central District of California to enjoin the trustee from collecting loss-of-discount liquidated damages. It did not allege that Transcon had failed to state its liquidated damages provisions in its filed tariff. Transcon had specified in its “rules tariff” that “discounts ... shall apply only when tariff charges are paid within 90 calendar days from date of shipment.” ICC TCON 103-A, Item 210, 1 Supplemental Excerpts of Record 41. The ICC did assert, though, that Transcon had violated each of the three other liquidated damages requirements set out above. Transcon’s original bills did not advise shippers of the consequences of late payment, as required by § 1320.3(c); revised bills were not issued until several years after the 90-day period provided in § 1320.2(g)(2)(vi); and the loss-of-discount provision was being applied by a bankruptcy trustee on an aggregate basis, contrary to § 1320.2(g)(2)(iii). The requested injunction would prohibit the trustee from pursuing claims in violation of those requirements.

The District Court granted summary judgment for respondents, and the United States Court of Appeals for the Ninth Circuit affirmed in relevant part, ICC v. Transcon Lines, 990 F. 2d 1503 (1993) (as amended on denial of rehearing and rehearing en banc). The Court of Appeals understood that the ICC as a general matter is authorized to enforce its credit regulations by seeking an injunction, see 49 U. S. C. §§ 11702(a)(4), (a)(6). It also recognized, or at least implied, that the credit regulations are valid on their face, but said that “ [regulations, however valid in other contexts, cannot furnish the reason for letting the carrier abandon the filed rate.” Transcon, supra, at 1514. Relying on our decision in Maislin Industries, U. S., Inc. v. Primary Steel, Inc., 497 U. S. 116 (1990), that the filed rate doctrine bars the ICC from interpreting the unreasonable practice rule to prevent collection of a filed rate where a carrier had agreed to a lower one, the court concluded that “[t]he ICC’s interpretation of [the liquidated damages] regulations ... has no greater force than the policy rejected in Maislin.” 990 F. 2d, at 1514. It held that “the filed rate doctrine trumps the manner in which the ICC seeks to regulate carrier credit in this case.” Ibid.

After the Court of Appeals issued its opinion, we decided Reiter v. Cooper, 507 U. S. 258 (1993). The Court addressed whether a shipper’s unreasonable rate claim could be raised in a carrier’s suit to collect the difference between the amount charged and the higher amount due under the tariff, or whether the shipper’s claim had to be raised in a separate proceeding before the ICC. We held the filed rate doctrine does not bar shippers from raising claims and defenses accorded by the Act, even if this results in defeating collection of a filed rate, and allowed the shipper to allege, subject to the ordinary rules governing counterclaims, an unreasonable-rate counterclaim to the carrier’s undercharge action. Id., at 262-267. In light of Reiter, we vacated the Court of Appeals’ judgment in the instant matter and remanded for farther consideration. .

On remand, the Court of Appeals adhered to its earlier determination. 9 F. 3d 64 (CA9 1993). It found Reiter distinguishable but concluded that, even if it were apposite, Reiter did no more than require a balancing of the carrier’s argument based on the filed rate doctrine against the ICC’s argument based on the credit regulations. 9 F. 3d, at 66. It thought the balance tilted in favor of disallowing relief. A grant of an injunction would, the Court of Appeals reasoned, “permit an end-run around the filed rate doctrine” by allowing a carrier and shipper to negotiate a private discount from the filed rate, while denying the injunction would still leave the ICC with “a wide array of tools for enforcing its credit regulations.” Id., at 67.

We again granted certiorari, 511 U. S. 1029 (1994), and now reverse.

II

Just as Reiter was in important respects “a sequel to our decision in Maislin,” 507 U. S., at 260, this case is a sequel to our decision in Southern Pacific Transp. Co. v. Commercial Metals Co., 456 U. S. 336 (1982). In Commercial Metals, the carrier released goods to the consignee before payment, but failed to investigate the consignee’s credit standing, as ICC regulations required, 49 CFR § 1320.1 (1981). See 456 U. S., at 339, 341, and n. 6. When collection against the consignee proved fruitless and the carrier turned to the shipper for payment, the shipper sought to raise the carrier’s violation as a defense. We held the defense improper when raised by the shipper, noting our reluctance to grant the shipper an implied remedy when the statutory scheme did not grant an express one. Id., at 345-348. We went on to say, however, that the case would have been quite different had it involved the ICC’s seeking injunctive relief, a remedy for which it has specific authority under the Act. We held that “[t]he remedies for a carrier’s violations of the regulations are best left to the ICC for such resolution as it thinks proper,” and specified that “the ICC has ample authority to police the credit practices of carriers ... [by] seeking] a federal-court injunction requiring a carrier to comply with the regulations . . . .” Id., at 352, 349. We conclude that the ICC here is exercising the enforcement powers we acknowledged in Commercial Metals.

The Act grants the ICC broad authority to bring civil actions to enforce the statute and regulations or orders issued under it. 49 U. S. C. § 11702. As respondents themselves concede, the trustee is attempting in this case to collect liquidated damages in violation of the ICC’s credit regulations. See Brief in Opposition 4-5. To the extent the injunction applies to “a bankruptcy trustee” applying liquidated damages “to aggregate balance-due claims sought for collection on past shipments,” the ICC seeks a prospective bar to the trustee’s violation of 49 CFR § 1320.2(g)(2)(iii) (1994). This aspect of the ICC’s suit is, in effect, a compliance action— the precise relief the Court approved in Commercial Metals. To the extent the ICC seeks to enjoin collection of liquidated damages as a remedy for Transcon’s lack of notification in the original bills, see 49 CFR § 1320.3(e) (1992), and nonissuance of revised bills within 90 days, see § 1320.2(g)(2)(vi), this remedy too is appropriate.

The Court’s observation in Commercial Metals that the choice of remedies for violation of its regulations is “best left to the ICC,” 456 U. S., at 352, was a particular invocation of the general principle that “the relation of remedy to policy is peculiarly a matter for administrative competence,” Phelps Dodge Corp. v. NLRB, 313 U. S. 177, 194 (1941); ICC v. American Trucking Assns., Inc., 467 U. S. 354, 355 (1984) (ICC “has- discretion to fashion remedies in furtherance of its statutory responsibilities”) (citing Trans Alaska Pipeline Rate Cases, 436 U. S. 631, 654 (1978)). Although the ICC’s authority to determine proper remedies for violations under the Act is not without limits, its judgment that a particular remedy is an appropriate exercise of its enforcement authority under 49 U. S. C. § 11702(a)(4) is entitled to some deference. Two substantial reasons support our conclusion that the remedy chosen by the agency is an appropriate one.

First, its remedy appears to the ICC, and to us, necessary to the effective enforcement of its regulations. See Commercial Metals, supra, at 350, 352; see also Hewitt-Robins Inc. v. Eastern Freight-Ways, Inc., 371 U. S. 84, 88 (1962) (remedy allowed where its absence would “plac[e] the shipper entirely at the mercy of the carrier”). Were we to disallow the injunction, respondents and other trustees of bankrupt carriers would be immune, in effect, from enforcement of the credit regulations. Relief limited to prospective injunctions requiring carriers to provide notice of liquidated damages and to send revised bills could have no effect on bankrupt carriers and their trustees. Nor do the Act’s remedies for unlawful rates, see 49 U. S. C. §§ 10704(b)(1), 11705(b)(3), allow for adequate enforcement of the credit regulations, for not every credit violation will result in an unlawful rate.

Second, unlike the credit regulation violated in Commercial Metals, which was intended to protect carriers, 456 U. S., at 345-346, the requirements for notice of liquidated damages are to protect shippers from the imposition of penalties without warning. When a carrier fails to provide notice, it is an appropriate remedy for the ICC to bar collection of the liquidated damages, for the remedy serves the regulations’ intended beneficiaries. Cf. id., at 344-345 (regulations do not “intimate that a carrier’s violation of the credit rules [there at issue] automatically precludes it from collecting the lawful freight charge”).

In short, whether or not we would allow shippers to defend against a carrier’s collection action by relying on the carrier’s violation of credit regulations, it follows from Commercial Metals and our construction of the controlling statute that the ICC has the authority and the discretion to determine appropriate remedies for these violations. Where, as here, the remedy involves “a federal-court injunction requiring a carrier to comply with the regulations,” id., at 349; constitutes a reasonable and necessary means to effect enforcement of the ICC’s credit regulations; and protects the intended beneficiaries of the violated regulations, we believe the injunction is authorized under the Act.

In Maislin we concluded the ICC’s policy and its interpretation of the Act were “flatly inconsistent with the statutory scheme as a whole.” 497 U. S., at 131. We rejected the ICC’s enforcement policy, just as we had declined to permit general, nonstatutory equitable defenses in a collection suit. Our concern was that the policy would undercut the whole filed rate system, thus permitting shippers to enforce secret, negotiated, unfiled rates and allowing carriers to discriminate in favor of certain customers. Id., at 130-131.

Neither Maislin nor our other filed rate cases suggest that the filed rate doctrine prohibits the ICC from requiring departure from a filed rate when necessary to enforce other specific and valid regulations adopted under the Act, regulations that are consistent with the filed rate system and compatible with its effective operation. Carriers must comply with the comprehensive scheme provided by the statute and regulations promulgated under it, and their failure to do so may justify departure from the filed rate. In Reiter, for example, we confirmed that the filed rate doctrine “assuredly does not preclude avoidance of the tariff rate . . . through claims and defenses that are specifically accorded by the [Act] itself.” 507 U. S., at 266 (emphasis deleted). Here, of course, the ICC can and does rely upon Commercial Metals, governing the powers of the ICC and not the defenses available to shippers. As we acknowledged in Maislin, the ICC can require that filed rates be “ ‘suspended or set aside’ ” in various circumstances. 497 U. S., at 126 (quoting Keogh v. Chicago & Northwestern R. Co., 260 U. S. 156, 163 (1922)); see also ICC v. American Trucking Assns., supra, at 360 (“[T]he Commission may conduct an investigation into a tariff’s lawfulness at any time after it has gone into effect,” and where a tariff violates the Act, “the Commission has authority to cancel the tariff and require that a reasonable and nondiscriminatory rate apply in the future. § 10704(b)(1)”).

Any remaining doubts as to the appropriateness of the relief sought are dispelled upon close examination of respondents’ particular contention that an injunction here would displace the tariff system by substituting a private agreement for the filed rate. This is not so. The charge that cannot be collected is, as respondents themselves concede, Tr. of Oral Arg. 24, the charge for liquidated damages. The ICC has said in a regulation promulgated under the Act that “[t]he difference between the discount and the full rate constitutes a carrier’s liquidated damages for its collection effort.” 49 CFR § 1320.2(g)(l)(ii) (1994); see 49 U. S. C. § 10743(b)(1) (Act authorizes the extension of credit — and therefore any liquidated damages resulting from the extension of credit — only pursuant to ICC regulations). The regulation is entitled to deference as an interpretation of the Act. Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984). Thus, the ICC is not seeking to enforce a secret, unfiled rate in place of a filed rate, but is seeking to enforce the rate for shipping over the rate for shipping plus collection efforts. See Hewitt-Robins Inc. v. Eastern Freight-Ways, Inc., 371 U. S., at 88 (enforcing lower of two filed rates in no manner “hampers the efficient administration of the Act”).

Ill

The Act by express terms authorizes the ICC to promulgate credit regulations. It also gives the ICC “the power to seek a federal-court injunction requiring a carrier to comply with [its credit] regulations.” Commercial Metals, 456 U. S., at 349 (citation omitted). The injunctive relief sought by the ICC is both necessary and appropriate to effective enforcement of its valid credit regulations, and does not “permi[t] the very price discrimination that the Act by its terms seeks to prevent.” Maislin, 497 U. S., at 130. 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.