source: Caselaw Access Project

author: Mr. Justice White

license: Public Domain

text:
    RENEGOTIATION BOARD v. GRUMMAN AIRCRAFT ENGINEERING CORP.
    No. 73-1316.
    Argued January 14, 1975
    Decided April 28, 1975

      White, J., delivered the opinion of the Court, in which Burger, C. J., and Brennan, Stewart, Marshall, Blackmun, and Rehnquist, JJ., joined. Douglas, J., dissented. Powell, J., took no part in the consideration or decision of the case.

      Allan Abbot Tuttle argued the cause for petitioner. With him on the brief were Solicitor General Bork, Assistant Attorney General Hills, Leonard Schaitman, and David M. Cohen.

      Tom M. Schaumberg argued the cause for respondent. With him on the brief was Frederick B. Abramson

         Melvin L. Wulf, Carol A. Cowgill, and Marvin M. Karpatkin filed a brief for the American Civil Liberties Union et al. as amici curiae urging affirmance.

   Mr. Justice White

delivered the opinion of the Court.

The issue in this case is whether certain documents— documents generated by the Renegotiation Board (Board) and by its Regional Boards in performing their task of deciding whether certain Government contractors have earned, and must refund, “excessive profits” on their Government contracts — are “final opinions” explaining the reasons for agency decisions already made, and thus expressly subject to disclosure pursuant to the Freedom of Information Act (Act), 5 U. S. C. § 552 (a)(2)(A), or are instead predecisional consultative memoranda exempted from disclosure by § 552 (b)(5). See NLRB v. Sears, Roebuck & Co., ante, p. 132.

I

Essential to the consideration of whether the documents at issue in this case must be disclosed pursuant to the relevant provisions of the Act is an understanding of the renegotiation process, a process that itself serves to define the documents in issue and hereinafter described. Under the Renegotiation Act of 1951, 65 Stat. 7, as amended, 50 U. S. C. App. § 1211 et seq., the Government is entitled to recoup from those who hold contracts or subcontracts with certain departments of the Government any “excessive profits” received by such persons on such contracts. The amount of the profits which will be considered “excessive” in connection with a particular contract depends upon the statutory factors which are set forth in the margin. As the Board’s name suggests, it endeavors to, and in fact does, conclude the vast majority of its cases by agreement. 50 U. S. C. App. § 1215 (a) (1970 ed., Supp. I). Absent an agreement, however, the Board must decide either to issue a “clearance,” i. e., a unilateral determination that the contractor realized no excessive profits during the year in issue, or to issue a unilateral order fixing excessive profits at a specified amount and directing the contractor to refund them. The unilateral order is final unless a de novo determination regarding excessive profits is sought within 90 days before the Court of Claims. It is in those cases not terminated by agreement that the documents at issue in this case were generated. With this in mind, we turn to the details of the renegotiation process as it existed during the period relevant to the decision in this case.

Persons holding contracts or subcontracts with certain departments of the Government were required to file financial statements as prescribed by the Board, 50 U. S. C. App. § 1215 (e)(1) (1964 ed.); 32 CFR Part 1470, if their receipts from those contracts met the requisite jurisdictional amount, 50 U. S. C. App. § 1215 (f). These statements were reviewed by the staff of the Board, and, if that initial review indicated the possibility that the contractor realized “excessive” profits, the “case” was referred to one of two Regional Boards for further action. At the time of this assignment, each case was designated as a Class A case or a Class B case: the former if the contractor had reported profits of more than $800,000 on the relevant contracts covered in his financial statement, and the latter in all other cases. The principal difference between Class A cases and Class B cases was that the Regional Boards had some final decisional authority in the latter and none in the former. 32 CFR §§ 1471.2 (b), 1473.2 (a), 1474.3 (a), and 1475.3 (a). Since the documents sought by respondent in this case were all generated in Class A cases, only the procedure applicable to those cases will be discussed.

After reference to a Regional Board, a case was usually assigned to a staff team consisting of an accountant and a renegotiator. This team, after determining what further information from the contractor was required, secured such information and received any submissions the contractor might have wanted to make with regard to his case, including his position concerning the statutory factors that largely determined whether he had received “excessive profits,” 50 U. S. C. App. § 1213 (e). A document entitled “Report of Renegotiation” was then prepared by the team. Part IA of that report, the accountant’s section, contained pertinent financial and accounting data and was furnished to the contractor upon request. Part II of the Report of Renegotiation, prepared by the renegotiator, and not furnished to the contractor, generally contained “an analysis and evaluation of the case; and a recommendation with respect to the amount, if any, of excessive profits for the fiscal year under review.” 32 CPR § 1472.3 (d). According to testimony given in this case, a Part II in outline form would be as follows:

“A. Sources of Information
“B. Application of Statutory Factors:
“1. Character of Business
“2. Capital Employed
“3. Extent of Risk Assumed
“4. Contribution to the Defense Effort
“5. Efficiency
“6. Reasonableness of Costs and Profiits
“(a) Costs
“(b) Pricing
“(c) Profits
“C. Special Matters
“D. Conclusion and Recommendation.”

After a Report of Renegotiation was prepared, but prior to its submission to the Regional Board, the team assigned to the case endeavored to meet with the contractor to resolve “any issues or disputed matters of fact, law or accounting.” 32 CFR § 1472.3 (b). The report was then submitted to the Regional Board.

After reviewing the Report of Renegotiation and the case file, the Regional Board would make a “tentative recommendation with respect to the amount of excessive profits realized in the fiscal year under review.” 32 CFR § 1472.3 (e). This “tentative recommendation” could “be in an amount greater than, equal to, or less than the amount recommended in the Report of Renegotiation.” Ibid. After a “tentative recommendation” was made, the contractor, unless he declined, attended a meeting with the renegotiation team at which he was informed of the tentative recommendation of the Regional Board, as well as the Regional Board’s reasons therefor, and was afforded the opportunity to respond. The Regional Board would then enter a “final recommendation” either that a clearance be issued or that excessive profits be found in an amount greater than, equal to, or less than the. tentative recommendation reached previously. If this final recommendation of the Regional Board corresponded to that of the staff team or panel, the report would be signed by the chairman of the Regional Board, signifying the approval of the staff or panel recommendation; if the Regional Board’s final recommendation differed from the prior recommendation, an addendum would be attached to the report. The Report of Renegotiation with addenda, if any, will hereafter be referred to for convenience as the Regional Board Report.

(i)

Assuming the Regional Board did not recommend a clearance, it notified the contractor of its final recommendation in an effort to obtain an agreement. Toward this end, the contractor, upon request, would be furnished a “summary of the facts and reasons” (Summary) upon which the recommendation was based. 32 CFR § 1472.3 (i). If a contractor did not request such a document, there is no indication that one was ever prepared in his case.

If the contractor declined to enter into an agreement, the case was then reassigned to the Board, to which the case file including the Regional Board Report was transmitted. The case was then assigned to a “division” of the Board, usually consisting of three of its five members, which would undertake a study of the case. Staff personnel would go over both Part IA and Part II of the Regional Board Report and indicate, in memoranda, their agreement or disagreement with the recommendation made by the Regional Board. At an appropriate juncture, the contractor would be afforded an opportunity to meet with the division members to discuss his case and submit additional relevant material. The division, in due course, would reach its own decision as to what recommendation should be made to the Board, “not . . . bound or limited in any manner by any evaluation, recommendation or determination of the Regional Board.” 32 CFR § 1472.4 (b). The division would then submit to the full Board a report of the case, prepared by one of the members (Division Report), and including a recommendation for final disposition along with additional or contrary views, if any, of the other division members. The Division Report is one of the categories of documents sought by respondent under the Act.

The Board would then meet, each member having had the opportunity to study the case file and the report submitted on behalf of the division, discuss the case, and vote on a final disposition. Neither the Board nor any of its members were bound by any prior recommendations. The Board was free, after discussion, to reject the proposed conclusion reached in the Division Report, or to accept it for reasons other than those set forth in the report. 32 CFR § 1472.4 (d). Assuming the Board did not decide that a clearance should issue, the contractor was then notified of the Board’s conclusion and would be given, at his request, a Summary to enable him to decide whether to enter into an agreement with the Board. If an agreement was not reached, the Board would then enter a unilateral order within a specified time, 32 CFR Part 1475, and would issue, pursuant to statute, at the request of the contractor, a “statement of such determination, of the facts used as a basis therefor, and of its reasons for such determination.” 50 U. S. C. App. § 1215 (a) (Statement). Absent a contractor’s request for a Statement, there is no indication that one was ever prepared in his case. For this type of case, the renegotiation process thus came to an end.

(Ü)

If the Regional Board concluded that no excessive profits had been realized by a particular contractor and that a clearance should therefore issue — or if the contractor agreed with the Regional Board as to an amount of excessive profits before the case was reassigned to the Board — then a Division Report was never created in that case. Instead, a “final recommendation” that a clearance be issued or that the agreement be consummated was sent to the Board, and the Board considered the case on the basis of the Regional Board Report, together with comments made by the Board’s accounting and review divisions. After meeting and discussing the case on the basis of these documents, the Board decided whether to approve the Regional Board’s conclusion. If it did, appropriate closing documents were prepared by the Regional Board. No explanation of the Board’s reasons for agreeing with the Regional Board’s recommendation was prepared or sent to the contractor; and it is not possible to know whether the Board agreed with the reasoning of the Regional Board Report or just its conclusion. If the conclusion of the Regional Board was not approved, the case was either returned to the Regional Board for further factfinding, or assigned to a division of the Board as though no recommendation agreeable to the contractor had ever been made. The Regional Board Reports in the category of cases in which clearances were recommended and approved by the Board — and therefore in which no Division Report was created — is the other type of document in issue in this case.

II

Against the foregoing backdrop, respondent filed a complaint, pursuant to the Act, in the District Court on June 27, 1968, seeking disclosure of “certain final opinions, orders and identifiable records” related to or issued during renegotiation proceedings involving 14 other companies during the period 1962-1965. Respondent additionally sought certain documents related to its then-pending renegotiation proceedings before the Board for 1965, but later agreed that it was not seeking access to “ [i]ntraagency memoranda and communications consisting of ad-

visory opinions, conclusions, recommendations, and analyses prepared by personnel and members of the Board” in its own case. 138 U. S. App. D. C. 147, 150, 425 F. 2d 578, 581 (1970). The District Court denied relief. On appeal, the Court of Appeals appears to have assumed that the “opinions” sought by respondent were limited to Statements and Summaries as defined in 32 CFR § 1480.8. 138 U. S. App. D. C., at 148, and n. 2, 425 F. 2d, at 579, and n. 2. On this basis, the Court of Appeals reversed, rejecting the claim of the Renegotiation Board that the documents sought were “completely immune” from disclosure under 5 U. S. C. § 552 (b)(4), the provision of the Act exempting certain privileged or confidential information submitted to the Government by any person. The court, stating that the Board was required to make available “ 'final opinions, including concurring and dissenting opinions,’” remanded the case to the District Court for further proceedings in which the requested documents were to be made available after “suitable deletions.” 138 U. S. App. D. C., at 150, 425 F. 2d, at 581.

Subsequent to the remand of the case by the Court of Appeals, the Board turned over to respondent certain documents, including Statements and Summaries, in attempted compliance with the mandate of that court. Respondent, not satisfied with the documents so disclosed, moved in the District Court for the disclosure, inter alia, of (1) Division Reports in all cases in which neither “Statements” nor “Summaries” were created; (2) Regional Board Reports resulting in a clearance; and (3) any document concurring in or dissenting from (1) and (2) above.

On the question whether these documents were “final opinions, including concurring and dissenting opinions, as well as orders, made in the adjudication of cases,” 5 U. S. C. § 552 (a)(2)(A), the District Court permitted respondent to take the deposition of the then Chairman of the Board. That deposition of the Chairman constitutes almost the only evidence of record in this case bearing on this question other than the pertinent statutes and regulations. Although conceding, as it had to on the basis of the Chairman's deposition, that only the Board had final decisional authority, and that it studies and considers, but does not adopt Regional Board or Division Reports, the District Court held that these reports were “final opinions” for purposes of the Act and rejected the Board’s contention that the documents were specifically exempted from disclosure under subsection (b) (5) of the Act, 5 U. S. C. §552 (b)(5) (Exemption 5), which encompasses:

“inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency.”

As to the Regional Board Reports in clearance cases, the court characterized the clearance as the “decision” of the Regional Board “unless the Board is not in accord”; and held that “[i]n order for the public to be fully informed, the reasons behind the clearance . . . must be made available and in this type of case such . . . reasons are found in the Regional Board’s report.” As to the Division Reports, the court said that, although the Board may disagree with the reasoning of the report, “[i]t is in fact the last document which explains reasons for the Board’s decision,” it should “at the very least... reflect the analysis of one member,” and thus it must be disclosed at least as a “concurring [or] dissenting opinion.” 5 U. S. C. § 552 (a)(2)(A). On appeal, the Court of Appeals affirmed the “findings of fact” and “conclusions” reached by the District Court and found two additional grounds supportive of the lower court’s judgment as to the Regional Board Reports. The court held that, even if the Regional Board Reports recommending a clearance subsequently approved by the Board were not “final opinions” of the Board, they were disclosable as final opinions of the Regional Board: the Regional Board itself was to be considered an “agency” for purposes of the Act, and the reports were certainly its “final opinions” and, as such, they were disclosable under the express provisions of 5 U. S. C. § 552 (a) (2) (A) and therefore outside the scope of Exemption 5. In concluding that the Regional Boards are agencies, the court relied in part on the power of the Regional Boards finally to dispose of certain Class B eases. In concluding that its decisions were “final,” notwithstanding inevitable Board review, it analogized the power of the Regional Board in Class A cases to the power of a United States district court: the former’s decisions being reviewable by the Board and the latter’s by a United States court of appeals. The fact that the Regional Board’s decisions were subject to review did not obviate the fact, any more than it does in the case of a United States district court, that its decisions are “final,” 157 U. S. App. D. C. 121, 128, 482 F. 2d 710, 717 (1973), and that its report leading to a clearance was perforce a “final opinion” of an “agency” subject to disclosure under the Act. The Court of Appeals additionally held that the Regional Board Reports were, in any event, “identifiable records,” 5 U. S. C. § 552 (a)(3), which are disclosable, unless exempt, and that these reports were not within the purview of Exemption 5 of the Act, because they “are not solely part of the consultative and deliberative process, but rather reflect actual decisions communicated outside the agency.” 157 U. S. App. D. C., at 129, 482 F. 2d, at 718. See NLRB v. Sears, Roebuck & Co., ante, p. 132.

The Board brought the case to this Court and we granted certiorari, 417 U. S. 907 (1974), setting the case for argument with NLRB v. Sears, Roebuck & Co., ante, p. 132, in order to resolve the important questions presented particularly with respect to the proper construction and interpretation of Exemption 5 of the Act. For reasons set forth hereafter, we reverse the judgment of the Court of Appeals.

Ill

Strictly speaking, the issue in this case is whether the Division Reports and the Regional Board Reports fall within Exemption 5, pertaining to “inter-agency or intraagency memorandums . . . which would not be available by law to a party other than an agency in litigation with the agency.” 5 U. S. C. § 552 (b)(5). As we hold today in the companion case of NLRB v. Sears, Roebuck & Co., ante, at 149, Exemption 5 incorporates the privileges which the Government enjoys under the relevant statutory and case law in the pretrial discovery context; and both Exemption 5 and the case law which it incorporates distinguish between predecisional memoranda prepared in order to assist an agency decision-maker in arriving at his decision, which are exempt from disclosure, and postdecisional memoranda setting forth the reasons for an agency decision already made, which are not. Because only the full Board has the power by law to make the decision whether excessive profits exist; because both types of reports involved in this case are prepared prior to that decision and are used by the Board in its deliberations; and because the evidence utterly fails to support the conclusion that the reasoning in the reports is adopted by the Board as its reasoning, even when it agrees with the conclusion of a report, we con-elude that the reports are not final opinions and do fall within Exemption 5.

A. Regional Board Reports

It is undisputed that the Regional Boards had no legal authority to decide whether a contractor had received “excessive profits” in Class A cases. In such cases, the Regional Boards could investigate and recommend, but only the Board could decide. 32 CFR §§ 1472.3-1472.4. The reports were prepared long before the Board reached its decision. The Board used the Regional Board Report as a basis for discussion and, even when it agreed with the Regional Board’s conclusion, it often did so as a result of an analysis of. "the flexible statutory factors completely different from that contained in the Regional Board Report. Chairman Hartwig testified:

“[W]hen the recommendation clearance of the Regional Board comes up on the Board agenda, the Board simply approves or disapproves the clearance. It does not adopt any of the memoranda that are before it. It does not ratify or adopt any of these staff memoranda. It simply, in the exercise of its judgment, says it is a clearance or it isn’t a clearance. And there is no Board-adopted document which you could call an opinion.” App. 79.

The Regional Board Reports are thus precisely the kind of predecisional deliberative advice and recommendations contemplated by Exemption 5 which must remain uninhibited and thus undisclosed, in order to supply maximum assistance to the Board in reaching its decision. Moreover, absent indication that its reasoning has been adopted, there is little public interest in disclosure of a report. “The public is only marginally concerned with reasons supporting a [decision] which an agency has rejected, or with reasons which might have supplied, but did not supply, the basis for a [decision] which was actually adopted on a different ground.” NLRB v. Sears, Roebuck & Co., ante, at 152. Indeed, release of the Regional Board’s reports on the theory that they express the reasons for the Board’s decision would, in those cases in which the Board had other reasons for its decision, be affirmatively misleading. Sterling Drug, Inc. v. FTC, 146 U. S. App. D. C. 237, 246-247, 450 F. 2d 698, 707-708 (1971); International Paper Co. v. FPC, 438 F. 2d 1349, 1358 (CA2), cert. denied, 404 U. S. 827 (1971). Accordingly, these reports are not “final opinions,” they do fall within the protection of Exemption 5, and they are not subject to compulsory disclosure pursuant to the Act.

The Court of Appeals’ attempt to impute decisional authority to Regional Boards by analogizing their final recommendations to the final decisions of United States district courts must fail. The decision of a United States district court, like the decision of the General Counsel of the NLRB discussed in NLRB v. Sears, Roebuck & Co., ante, at 158-159, n. 25, has real operative effect independent of “review” by a court of appeals: absent appeal by one of the parties, the decision has the force of law; and, even if an appeal is filed, the court of appeals will be bound, within limits, by certain of the district court’s conclusions. The recommendation of a Regional Board, by contrast, has no operative effect independent of the review: consideration of the case by the Board is not dependent on the decision by a party to “appeal” — such consideration is an inevitable event without which there is no agency decision; and the recommendation of the Regional Board carries no legal weight whatever before the Board — review by the latter is, as the Court of Appeals conceded, de novo. Indeed, “review” is an entirely inappropriate word to describe the process by which the Board decides whether to issue a clearance following a recommendation to that effect by the Regional Board. The latter’s recommendation is functionally indistinguishable from the recommendation of any agency staff member whose judgment has earned the respect of a decisionmaker. There is simply no sense in which Regional Boards have the power to make “final dispositions” and thus no sense in which the explanations of their recommendations can be characterized as “final opinions.” See NLRB v. Sears, Roebuck & Co., ante, at 158-159.

In concluding that the Regional Board Reports are within the scope of Exemption 5, it is unnecessary to decide whether, as respondent strenuously argues and the Court of Appeals concluded, the Regional Boards are themselves “agencies” for the purposes of the Act. Respondent and the court below proceed on the premise that the final written product of an “agency’s” deliberations may never fall within Exemption 5, and reason that since the Regional Board Report is the final product of the Regional Board, it must therefore be disclosable if the Regional Board is a separate agency. The premise is faulty, however, overlooking as it does the fact that Exemption 5 does not distinguish between inter-agency and intra-agency memoranda. By including inter-agency memoranda in Exemption 5, Congress plainly intended to permit one agency possessing decisional authority to obtain written recommendations and advice from a separate agency not possessing such decisional authority without requiring that the advice be any more disclosable than similar advice received from within the agency. Thus, if the Regional Boards are agencies for Class A purposes, their final recommendations are inter-agency memoranda; and, if they are not agencies separate from the Board, their recommendations are intra-agency memoranda. In either event, the Regional Boards’ total lack of decisional authority brings their reports within Exemption 5 and prevents them from being “final opinions.”

B. Division Reports

It is equally clear that a division of the Board has no legal authority to decide. Once again, it may analyze and recommend, but the power to decide remains with the full Board. The evidence is uncontradicted that the Division Reports were prepared before the Board reached its decision, were used by the full Board as a basis for discussion, and, as the Chairman testified, were “prepared for and designed to assist the members of the Board in their deliberations”; nor is the discussion limited to the material and analysis contained in the Division Report. Following the discussion, any Board member may disagree with the report’s conclusion or agree with it for reasons other than those contained in the report. Indeed, as Chairman Hartwig testified, it is likely that this will occur because of the highly judgmental nature of the Board’s decisions given the number and generality of the statutory criteria. In any event, the reasoning of the Division Report is never adopted — though its conclusion may be — and no effort is made to reach agreement on anything but the result.

It is true that those who participate in the writing of the Division Report are among those who participate in the Board’s decision, and that, human nature being what it is, they may not change their minds after discussion by the full Board. This creates a greater likelihood that the Board’s decision will be in accordance with the Division Report than is the case with respect to a Regional Board Report and that, where the Board’s decision is different, the Division Report will reflect the final views of at least one of the Board’s members. See NLRB v. Sears, Roebuck & Co., ante, at 158-159, n. 25. However, this is not necessarily so. The Board obviously considers its discussion following the creation of the Division Report to be of crucial importance to its decision for, notwithstanding the fact that a division is made up of a majority of the Board, it has been delegated no decisional authority. The member of the Board who wrote the report may change his mind as a result of the discussion or, consistent with the philosophy of Exemption 5, he may have included thoughts in the report with which he was not in agreement at the time he wrote it. The point is that the report is created for the purpose of discussion, and we are unwilling to deprive the Board of a thoroughly uninhibited version of this valuable deliberative tool by making Division Reports public on the unsupported assumption that they always disclose the final views of at least some members of the Board.

The effect of this decision is that, in those cases in which Statements and Summaries were not issued, the public will be largely uninformed as to the basis for decisions by the Renegotiation Board. Indeed, the decisions of both courts below — conceding as they both did the absence of decisional authority in either the Regional Boards or divisions of the statutory board — appear to have rested in the final analysis on the notion that the Renegotiation Board has an affirmative obligation under the Act to make public the reasons for its decisions; and that it must disclose its opinion or the nearest thing to an opinion in every case. However, Congress explicitly exempted the Renegotiation Board from all provisions of the Administrative Procedure Act except for the Public Information Section. 50 U. S. C. App. § 1221. Thus the opinion-writing section of the APA, 5 U. S. C. § 557— which itself applies only to “adjudication required by statute to be determined on the record after opportunity for an agency hearing” and even then only if the agency decision is not subject to de novo court review, 5 U. S. C. § 554 — is inapplicable to Board decisions. The Freedom of Information Act imposes no independent obligation on agencies to write opinions. It simply requires them to disclose the opinions which they do write. NLRB v. Sears, Roebuck & Co., ante, p. 132. If the public interest suffers by reason of the failure of the Board to explain some of its decisions, the remedy is for Congress to require it to do so. It is not for us to require disclosure of documents, under the purported authority of the Act, which are not final opinions, which do not accurately set forth the reasons for the Board’s decisions, and the disclosure of which would impinge on the Board’s predecisional processes.

The judgment of the Court of Appeals is

Reversed.

Me. Justice Douglas dissents.

Mr. Justice Powell took no part in the consideration or decision of this case.

       See generally S. Rep. No. 93-927, pp. 1-2 (1974); Staff Review of Recommendations Made on the Renegotiation Process: A Preliminary Report 3-5 (1974) (prepared for the use of the House Committee on Ways and Means and the Senate Committee on Finance by the staff of the Joint Committee on Internal Revenue Taxation (hereinafter Staff Review)).

       Title 50 U. S. C. App. § 1213 (e) reads as follows:
      “(e) The term ‘excessive profits’ means the portion of the profits derived from contracts with the Departments and subcontracts which is determined in accordance with this title [§§ 1211 to 1224 of this Appendix] to be excessive. In determining excessive profits favorable recognition must be given to the efficiency of the contractor or subcontractor, with particular regard to attainment of quantity and quality production, reduction of costs, and economy in the use of materials, facilities, and manpower; and in addition, there shall be taken into consideration the following factors:
      “(1) Reasonableness of costs and profits, with particular regard to volume of production, normal earnings, and comparison of war and peacetime products;
      “(2) The net worth, with particular regard to the amount and source of public and private capital employed;
      “ (3) Extent of risk assumed, including the risk incident to reasonable pricing policies;
      “(4) Nature and extent of contribution to the defense effort, including inventive and developmental contribution and cooperation with the Government and other contractors in supplying technical assistance;
      “(5) Character of business, including source and nature of materials, complexity of manufacturing technique, character and extent of subcontracting, and rate of turn-over;
      “(6) Such other factors the consideration of which the public interest and fair and equitable dealing may require, which factors shall be published in the regulations of the Board from time to time as adopted.”
      These statutory “factors” were developed by the War Contracts Price Adjustment Board during World War II, were incorporated.by Congress into the original Renegotiation and Revenue Acts of that era, were continued in the Renegotiation Act of 1951, and have undergone little change since their initial development. Staff Review, supra, n. 1, at 23, and nil. 34-36.

       Prior to July 1971, de novo review was by the Tax Court. See 85 Stat. 98.

       Through June 30, 1970, 3,524 out of 4,006 eases not resulting in clearances terminated by agreement. Of the remaining 482 cases, the Board’s unilateral orders were challenged in court in 203 cases.

       The description of the renegotiation process is of the process existing between 1962 through 1965 — the period in which the documents relevant to this case were generated within the Board — notwithstanding changes made since. Unless otherwise indicated, all citations to the Code of Federal Regulations throughout this opinion are to the Renegotiation Board’s regulations in efféct during this period (i. e., the Code as revised January 1, 1967).

       The reference is normally made on the basis of geographical considerations, 32 CFR § 1471.2 (a). These Regional Boards were established in 1952 by regulation, 32 CFR § 1451.32, pursuant to statutory authorization, 50 U. S. C. App. § 1217 (d). Unlike members of the Board, who are appointed to the Board by the President, Regional Board members are civil servants.

       Under certain circumstances, cases may be redesignated after their initial designation.. 32 CFR § 1471.2 (f).

       During the years 1962-1965, a renegotiator might be a staff member employed by the Regional Board or a member of the Regional Board itself. Under the Board’s current regulations, a member of the Regional Board who acts as a renegotiator in a specific case is thereafter barred from participation in the case as a member of the Regional Board. 32 CFR § 1472.3 (d) (1974). There was no comparable regulation in effect during the period relevant to this case.

       32 CFR §1472.3 (d). Under 1972 amendments to the regulations, the Report of Renegotiation was discontinued and was replaced by other reports not relevant to this case. See generally 32 CFR §§ 1472.3 (e)-(g), and (i) (1974).

       Under current regulations, the Regional Board no longer makes this “tentative recommendation” in Class A cases, 32 CFR §§ 1472.3 (k) and (1) (1974).

       This document was made available to the general public by regulation on February 24,1971. 32 Fed Reg. 3808,32 CFR § 1480.5 (a) (1972). When the Board first made the summaries of facts and reasons available to the public by regulation, it specifically stated that its action was taken “[w]ithout regard to the provisions of 5 U. S. C. [§] 552 (a) (2)____” Ibid. Subsequent to the effective date of that regulation, the District Court in this case, notwithstanding the fact that the controversy over respondent’s access to the summaries of facts and reasons sought in this action had apparently been mooted, held that these documents must be made available under the Act as “final opinions’’ of either the Board or the Regional Board, except in certain circumstances. 325 F. Supp. 1146, 1151-1152 (DC 1971). The Board has since amended its regulations, indicating that its own interpretation of the Act as to these documents is now consistent with that of the District Court. 32 CtR § 1480.5 (a) (1974). Under current Board regulations, the contractor automatically receives a document entitled “Proposed Opinion,” if he has not indicated a willingness to enter into an agreement with the Board. 32 CFR § 1477.3 (a) (1974).

       The “Summaries” and “Statements” were similar in both format and content. App. 35-41; 32 CFR § 1477.4. Under current Board regulations, the Regional Board now issues to the contractor a “Proposed Opinion,” in lieu of the “summary of facts and reasons” discussed above, and furnishes to the contractor a “Regional Board Opinion” when the Regional Board’s recommendation is forwarded to the Board. 32 CFR §§ 1477.3 (a) and (c) (1974). The Board also issues a “Final Opinion” in place of the Statement at the same time as it enters a unilateral order. 32 CFR §1477.3 (b) (1974). All of these documents are available to the public. 32 CFR § 1480.5 (a) (1974).

       A dissatisfied contractor had the right at this point to bring an action in the Tax Court, which had jurisdiction to determine de novo whether excessive profits had been realized (see n. 3, supra); jurisdiction of these cases has subsequently been transferred to the Court of Claims. See Renegotiation Board v. Bannercraft Clothing Co., 415 U. S. 1, 15 and n. 14 (1974).

       By reference in its complaint to correspondence between it and the Board of April 26, 1968, respondent requested access to “final opinions, determinations, unilateral orders, agreements, . clearance notices and letters not to proceed issued in the adjudication of renegotiation cases” and “written summaries of the facts and reasons upon which such final opinions, determinations, unilateral orders and agreements have been reached.” Nothing in the complaint or the letter suggests that, at that time, respondent sought the Regional Board Report, or the Division Report, ill any of these renegotiation cases.

       Title 32 CFR § 1480.8 read in pertinent part:
      “Except as authorized . . . opinions and orders will not be published or made available to the public . . . inasmuch as they are regarded as confidential ... by reason of the confidential data furnished by contractors. ... For the purposes of this paragraph, the term ‘opinion’ includes a statement furnished pursuant to [32 CFR Part 1477] and the term ‘order’ includes an agreement to eliminate excessive profits, as well as a unilateral determination. Opinions and orders are not cited as precedents in any renegotiation proceedings.”
      Part 1477, as written during the period 1962-1967, included only Statements and Summaries.

       Title 5 U. S. C. § 552 (b) (4) exempts from disclosure “trade secrets and commercial or financial information obtained from a person and privileged or confidential matters.”

       138 U. S. App. D. C., at 149, 425 F. 2d, at 580, quoting from 5 U. S. C. §552 (a)(2)(A).

       A more detailed description of the documents sought is set out in the opinion written by the District Court after the initial remand from the Court of Appeals, 325 F. Supp., at 1151.

       The District Court had held the reports of Regional Boards to be disclosable only in instances where a Regional Board made a final recommendation for a clearance and the Board concurred in the recommendation. Id., at 1154. The Court of Appeals did not purport to extend the holding of the District Court to Regional Board Reports in other contexts.

       157 U. S. App. D. C. 121, 126-127, and nn. 20 and 23, 482 F. 2d 710, 715-716, and nn. 20 and 23 (1973).

       Grumman claims that the documents are “final opinions” expressly made disclosable, pursuant to 5 U. S. C. § 552 (a) (2) (A). However, as we noted in the companion case of NLRB v. Sears, Roebuck & Co., ante, at 147-148, a conclusion that the documents are within Exemption 5 would be dispositive in the Government’s favor, since the Act “does not apply” to such documents; and a contrary conclusion would be dispositive against the Government, since it concedes that the documents are “identifiable records” otherwise disclosable pursuant to 5 U. S. C. § 552 (a) (3). Thus, strictly speaking, the question whether the documents are “final opinions” is relevant only in deciding whether Exemption 5 applies to them and is important only because we have construed Exemption 5 in NLRB v. Sears, Roebuck & Co., ante, at 153-154, not to include “final opinions” within the meaning of 5 U. S. C. § 552 (a) (2) (A).

       We decline to consider whether this case would be different if the Regional Boards had de facto decisional authority — i. e., if, instead of making up its own mind in each case, the Board "reviewed” the Regional Board’s recommendation under a clearly erroneous or some other deferential standard; or if the Board failed even to review the vast bulk of the reports, absent special circumstances. There is no evidence in the record indicating that the Regional Boards had such de facto authority. Indeed, the evidence is to the contrary. In a recent review by the Comptroller General of 209 cases, the Board concurred in the Regional Board’s recommendation only 85 times. Comptroller General, Report to the Congress: The Operations and Activities of the Renegotiation Board 33-34 (B-163520 — May 1973).

       Fact determinations, for example, are reviewable under a “clearly erroneous” standard and certain legal judgments only for abuse of discretion.

       The distinction, between “recommendations” and “final opinions” subject to review, for Exemption 5 purposes is compelling. In order that a decisionmaker consider all the arguments in support of all the options, those who recommend should be encouraged to make arguments which they would not make in public and with which they may even disagree. However, if their recommendations were to have operative effect and thus qualify as decisions — even though subject to review — they should be discouraged from basing their decisions on arguments which they would not make publicly and with which they disagree.

       We note in passing that, while the conclusion of the court below that the Regional Board’s status as ah agency stemmed from its power to issue “orders” in Class B cases finds support in the cases, International Paper Co. v. FPC, 438 F. 2d 1349, 1358-1359 (CA2), cert. denied, 404 U. S. 827 (1971); Washington Research Project, Inc. v. Department of HEW, 164 U. S. App. D. C. 169, 504 F. 2d 238 (1974), cert. pending, No. 74r-736, the Court of Appeals never considered the possibility that the Regional Board might be an agency for Class B purposes and not for Class A purposes.

       Since all of the members of the division are free to change their minds after deliberation and are free to place thoughts or arguments in the Division Reports which were only tentative in the first place, we need not reach .the question whether a concurring or dissenting opinion must be disclosed even where no opinion expressing the view of the agency is written.
      Respondent argues that Division Reports, as well as concurrences or dissents thereto, constitute “final opinions” of the Board or individual members of the Board, relying on a specific reference, assertedly made to such documents, in the House Report which accompanied the Act, H. R. Rep. No. 1497, 89th Cong., 2d Sess. (1966). That report, in speaking to the Committee’s understanding of what is now codified as 5 U. S. C. § 552 (a) (2) (A), stated:
      “[Subsection (A)] requires concurring and dissenting opinions to be made available for public inspection. The present law, requiring most final opinions and. orders to be made public, implies that dissents and concurrences need not be disclosed. As a result of a Government Information Subcommittee investigation a number of years ago, two major regulatory agencies agreed to make public the dissenting opinions of their members, but a recent survey indicated that five agencies — including . . . the Renegotiation Board — do not make public the minority views of their members.” H. R. Rep. No. 1497, supra, at 8.
      This statement from the legislative history of the Act supports the proposition that Congress intended the Board to be subject to the Act’s provisions, Renegotiation Board v. Bannercraft Clothing Co., 415 U. S., at 16, and at first blush lends support to respondent’s contention that Congress assumed, in passing the Act, that the Board was issuing “final opinions” in cases, that the Board was withholding concurrences and dissents to those final opinions, and that § 552 (a) (2) (A) was designed to put an end to this practice. Our research convinces us, however, that this language from the House Report is not to be so read. The "survey” referred to in the report was conducted in 1963 by the Foreign Operations and Government Information Subcommittee of the Committee on Government Operations of the House. The unpublished data gathered during that survey indicate that, in response to three questions submitted by the subcommittee to the Board, concerning its practices with respect to opinion writing and publication, the Board stated:
      “Except as authorized in Renegotiation Board Regulations 1480.4 (a) (attached), opinions and orders of the Renegotiation Board are not published or made available to the public (see RBR [32 C. F. R. §] 1480.8)
      As our prior discussion of 32 CFR § 1480.8, n. 15, supra, makes clear, the “opinions” to which the Board referred were Statements and Summaries. Thus, the reference to concurring and dissenting opinions in the House Report, with respect to the Renegotiation Board, was not to Division Reports but was to nonexistent concurrences to and dissents from Statements and Summaries which were already being made public.


author: Per Curiam.

text:
    COSTARELLI v. MASSACHUSETTS
    No. 73-6739.
    Argued March 17, 1975
    Decided April 28, 1975

      Robert W. Hagopian, by appointment of the Court, 419 U. S. 1066, argued the cause and filed a brief for appellant.

      David A. Mills, Assistant Attorney General of Massachusetts, argued the cause for appellee. With him on the brief were Francis X. Bellotti, Attorney General, and John J. Irwin, Jr., Assistant Attorney General.

         Mdivine Nathanson filed a brief for the Massachusetts Defenders Committee as amicus curiae urging reversal.

   Per Curiam.

Under Massachusetts procedure, a “two-tier” system is utilized for trial of a variety of criminal charges. The initial trial under this system is in a county district court or the Municipal Court of the City of Boston. No jury is available in these courts, but persons who are convicted in them may obtain a de novo trial, with a jury, in the appropriate superior court by lodging an “appeal” with that court. At the de novo trial, all issues of law and fact must be determined anew and are not affected by the initial disposition. In effect, the taking of the appeal vacates the district court or Municipal Court judgment, leaving the defendant in the position of defendants in other States which require the prosecution to present its proof before a jury.

In January 1974, appellant Costarelli was charged with knowing unauthorized use of a motor vehicle, an offense under Mass. Gen. Laws, c. 90, § 24 (2) (a) (Supp. 1975). The offense carries a maximum sentence of a $500 fine and two years’ imprisonment, and is subject to the two-tier system described above. Prior to trial in the Municipal Court, Costarelli moved for a jury trial. The motion was denied and the trial before the court resulted in a judgment of guilty. A one-year prison sentence was imposed. Costarelli thereupon lodged an appeal in the Superior Court for Suffolk County.

Without awaiting proceedings in Superior Court, Costarelli appealed to this Court, seeking to establish that the Sixth and Fourteenth Amendments require that a jury be available in his first trial, whether it be in the Municipal Court or the Superior Court. He also raised speedy trial and double jeopardy contentions as bars to his retrial before a jury. On October 21, 1974, we postponed further consideration of the question of jurisdiction to the hearing on the merits. 419 U. S. 893. We now dismiss for want of jurisdiction. Title 28 U. S. C. § 1257 limits our review to the judgment of the highest state court in which a decision could be had, and we conclude that this is not such a judgment.

That a decision of a higher state court might have been had in this case is established by a recent decision of the Supreme Judicial Court of Massachusetts, Whitmarsh v. Commonwealth, -Mass. -, 316 N. E. 2d 610 (1974), in which another criminal defendant sought relief from Massachusetts’ two-tier trial system. After conviction without a jury in the first tier, Whitmarsh took his appeal to the Superior Court, but thereupon sought immediate review of his constitutional contentions in the Supreme Judicial Court. As one potential basis of that court’s jurisdiction, he asserted its power of “general superintendence of all courts of inferior jurisdiction to correct and prevent errors and abuses therein if no other remedy is expressly provided." Mass. Gen. Laws, c. 211, §3 (1958) (emphasis added). The Supreme Judicial Court rejected this basis of jurisdiction on the ground that another remedy was in fact expressly provided. It stated:

“The constitutional issue the plaintiff now asks us to decide is the same issue which he raised in the District Court, and in the Superior Court by his motion to dismiss. If his motion were denied, and if he were thereafter tried in the Superior Court and found guilty, the plaintiff would have available to him an opportunity for appellate review of the ruling on his motion as matter of right by saving and perfecting exceptions thereto.” -Mass., at-, 316 N. E. 2d, at 613 (footnote omitted).

It is thus clear that Costarelli can raise his constitutional issues in Superior Court by a motion to dismiss, and can obtain state appellate review of an adverse decision through appeal to the state high court. That the issue might be mooted by his acquittal in Superior Court is, of course, without consequence, since an important purpose of the requirement that we review only final judgments of highest available state courts is to prevent our interference with state proceedings when the underlying dispute may be otherwise resolved. Cf. Republic Gas Co. v. Oklahoma, 334 U. S. 62, 67 (1948); Gorman v. Washington University, 316 U. S. 98, 100-101 (1942).

Costarelli argues that resort to the remedy outlined in Whitmarsh should be unnecessary, because it cannot produce the relief to which he believes he is entitled. He is of the opinion that if the Superior Court denied his motion to dismiss, he would have no alternative but to proceed to trial before a jury. Once this occurred the error would, he fears, have been cured, or at least mooted.

But we think this contention confuses an argument of substantive constitutional law with an argument relating to the application of 28 U. S. C. § 1257. Whit-marsh undoubtedly contemplates that in the event the Superior Court were to deny Costarelli’s motion, he would then have to proceed to trial. But just as surely it contemplates that in the event that judgment were adverse to him, he could appeal to the Supreme Judicial Court and raise before it precisely the constitutional question which had been raised by the motion to dismiss in the Superior Court. Whether the fact that he was afforded a jury trial in the Superior Court proceeding “cured” or “mooted” his federal, constitutional claim is a matter of federal constitutional law, for determination initially in state courts and ultimately by this Court. That the state courts might conclude that the second-tier trial terminated his claim does not mean that Costarelli may draft his own rules of procedure in order to raise the claim only before those Massachusetts courts which he deems appropriate. Massachusetts affords him a method by which he may raise his constitutional claim in the Superior Court, and a method by which he may, if necessary, appropriately preserve that claim for assertion in the Supreme Judicial Court. The Supreme Judicial Court of Massachusetts, therefore, is “the highest court of a State in which a decision could be had” on his claim. Since no decision has been had in that court, we lack jurisdiction of this case.

Appellant relies on language from Largent v. Texas, 318 U. S. 418 (1943), to support a contrary result. In that case we reviewed a judgment of the County Court of Lamar County, Tex. We did so because under Texas law the state-court system provided no appeal from that judgment of conviction. We noted that state habeas corpus was available to test the constitutionality on its face of the ordinance under which Mrs. Largent had been convicted, but that it was not available to test its constitutionality as applied in her particular case.

We then stated:

“Since there is, by Texas law or practice, no method which has been called to our attention for reviewing the conviction of appellant, on the record made in the county court, we are of the opinion the appeal is properly here under § [1257 (2)] of the Judicial Code.” Id., at 421 (emphasis added).

Appellant argues that because the proceeding in Massachusetts Superior Court would not be a review on the record made in Municipal Court, the de novo proceeding in Superior Court is a collateral proceeding which need not, under Largent, be utilized to satisfy the highest-court requirement.

Appellant's reliance is misplaced. In Largent, we went on to say:

“The proceeding in the county court was a distinct suit. It disposed of the charge. The possibility that the appellant might obtain release by a subsequent and distinct proceeding, and one not in the nature of a review of the pending charge, in the same or a different court of the State does not affect the finality of the existing judgment or the fact that this judgment was obtained in the highest state court available to the appellant. Cf. Bandini Co. v. Superior Court, 284 U. S. 8, 14; Bryant v. Zimmerman, 278 U. S. 63, 70.” 318 U. S., at 421-422.

The present case is plainly distinguishable. Here the Municipal Court proceeding did not finally dispose of the charge, and the proceeding in Superior Court is not a distinct suit or proceeding. It is instead based on precisely the same complaint as was the Municipal Court trial. In Largent, the available review on habeas corpus was not based on the record in county court for the reason that habeas review was sharply limited in scope. Similarly, in Bandini Co., cited in Largent, the “distinct suit” was a proceeding for a writ of prohibition in which the only litigable issue was lower court jurisdiction.

Here, on the contrary, the review is not circumscribed so as to be narrower than normal appellate-type review on the record made in an inferior court, but is instead so broad as to permit de novo relitigation of all aspects of the offense charged, whether they be factual or legal. It is because of the breadth of appellate review, not its narrowness, as in Largent, that the record is not the basis of review in Superior Court. Greater identity of proceedings in two different courts would be difficult to imagine, and it would be strange indeed to class the Superior Court trial as a form of “collateral” review of the Municipal Court judgment in the same sense as habeas corpus is traditionally thought of as a “collateral attack” on a judgment of conviction.

The appeal is dismissed for want of jurisdiction.

So ordered.

Mb. Justice Douglas took no part in the consideration or decision of this case.

       See Mass. Gen. Laws, c. 218, § 27A, and c. 278, § 18 (Supp. 1975); c. 278, § 18A (1972).
      Unlike the situation in Colten v. Kentucky, 407 U. S. 104 (1972), the initial trial cannot be avoided by a plea of guilty without also waiving the right to a jury trial in superior court.

       Appellant argues that in several respects the district court or Municipal Court judgment remains in effect despite the lodging of an appeal. In particular, he points to the facts that if a defendant defaults in superior court, the first-tier judgment becomes the legal basis for imposing sentence, and that appeal does not eliminate such collateral consequences as revocation of parole or of a driver’s permit. These matters do not affect the result we announce today, and merit no further discussion.

       There is some question as to whether review should have been sought by way of a petition for certiorari rather than appeal. Under 28 U. S. C. § 1257 (2), we have appellate jurisdiction when the constitutional validity of a state statute is drawn in question and the decision is in favor of its validity. In the present case it is not clear that the denial of a jury in the first-tier trial resulted from the operation of a statute rather than of custom and practice. We need not resolve the issue, because it cannot affect our disposition — if not properly denominated an appeal, we would treat the papers as a petition for certiorari, 28 U. S. C. §2103, and the highest-state-court requirement of § 1257 applies to petitions for certiorari as well as to appeals.


author: Mr. Justice Brennan

text:
    GURLEY, dba GURLEY OIL CO. v. RHODEN, CHAIRMAN, TAX COMMISSION OF MISSISSIPPI
    No. 73-1734.
    Argued March 18, 1975
    Decided May 12, 1975

      BrennaN, J., delivered the opinion of the Court, in which all other Members joined except Douglas, J., who took no part in the consideration or decision of the case.

      Charles R. Davis argued the cause for petitioner. With him on the briefs was Walter A. Armstrong, Jr.

      Hunter M. Gholson argued the cause for respondent. With him on the brief was William G. Bur gin, Jr.

   Mr. Justice Brennan

delivered the opinion of the Court.

Mississippi imposes a 5% sales tax upon the “gross proceeds of the retail sales” of tangible personal property, including gasoline. Miss. Code Ann. §27-65-17 (Supp. 1974), Petitioner operates as a sole proprietorship from West Memphis, Ark. He owns and operates five gasoline service stations in Mississippi and also sells gasoline at four other stations in Mississippi on a consignment basis. He purchases his gasoline tax free from sources in Tennessee and Arkansas. He transports the gasoline to his Mississippi stations in his own trucks. He holds a Mississippi distributor’s permit and is also federally licensed because he is a “producer” within the meaning of the Internal Revenue Code as one who sells gasoline bought tax free from other “producers.” He adds to his pump prices the amount of a Mississippi gasoline excise tax, now nine cents per gallon, Miss. Code Ann. § 27-55-11 (Supp. 1974), and a federal gasoline excise tax of four cents per gallon, 26 U. S. C. § 4081 (a). The State computes his gross proceeds of retail sales “without any deduction for . . . taxes of any kind . . . .” Miss. Code Ann. § 27-65-3 (h) (Supp. 1974). Petitioner contends that the denial of a deduction of the amount of the excise taxes added to his pump prices in the computation of his “gross proceeds of the retail sales” of gasoline, and the resultant application of the 5% sales tax to so much of his pump prices as reflects the amount of the taxes, are unconstitutional. He therefore paid the sales taxes to that extent under protest, and sued for a refund in Mississippi Chancery Court, Hinds County. Respondent cross-claimed for unpaid sales taxes accruing after the filing of the suit. After trial, the Chancery Court dismissed petitioner’s suit and entered judgment for respondent on the cross-claim. The Supreme Court of Mississippi affirmed. 288 So. 2d 868. We granted certiorari, 419 U. S. 1018 (1974). We affirm.

I

Petitioner’s principal argument is that he acts as a mere collector of the taxes for the two governments because the legal incidence of both excise taxes is upon the purchaser-consumer. Upon that premise, he argues: “Consequently, to impose the Mississippi sales tax upon amounts so received by [petitioner] would be to tax him upon gross receipts which are not his gross receipts, but rather the gross receipts of [the two governments]. This would not only violate the fundamental conception of right and justice, but it would be taking [petitioner’s] property without due process of the Fourteenth Amendment . . . .” Brief for Petitioner 37. He cites in support the statement in Hoeper v. Tax Comm’n, 284 U. S. 206, 215 (1931), that “any attempt by a state to measure the tax on one person’s property or income by reference to the property or income of another is contrary to due process of law as guaranteed by the Fourteenth Amendment.”

Also, petitioner advances an alternative argument limited to the denial of the deduction of the amount of the federal excise tax. He contends that the denial results to that extent in “a state tax on . . . monies held in trust by [petitioner] as agent for the United States [and] is, in essence, a tax upon the United States . . . [that] ... is clearly unconstitutional” as violating the constitutional immunity of the United States and its property from taxation by the States. M‘Culloch v. Maryland, 4 Wheat. 316 (1819). Brief for Petitioner 48.

Petitioner’s arguments can prevail, as he apparently concedes, only if the legal incidence of the excise taxes is not upon petitioner, but upon the purchaser-consumer. Our task therefore is to determine upon whom the legal incidence of each tax rests.

II

The economic burden of taxes incident to the sale of merchandise is traditionally passed on to the purchasers of the merchandise. Therefore, the decision as to where the legal incidence of either tax falls is not determined by the fact that petitioner, by increasing his pump prices in the amounts of the taxes, shifted the economic burden of the taxes from himself to the purchaser-consumer. The Court has laid to rest doubts on that score raised by such decisions as Panhandle Oil Co. v. Mississippi ex rel. Knox, 277 U. S. 218 (1928); Indian Motorcycle Co. v. United States, 283 U. S. 570 (1931); and Kern-Limerick, Inc. v. Scurlock, 347 U. S. 110 (1954), at least under taxing schemes, as here, where neither statute required petitioner to pass the tax on to the purchaser-consumer. See Alabama v. King & Boozer, 314 U. S. 1 (1941); Lash’s Products Co. v. United States, 278 U. S. 175 (1929); Wheeler Lumber Co. v. United States, 281 U. S. 572 (1930); First Agricultural Nat. Bank v. Tax Comm’n, 392 U. S. 339 (1968); American Oil Co. v. Neill, 380 U. S. 451 (1965).

A majority of courts that have considered the question have held, in agreement with the Mississippi Supreme Court in this case, that the legal incidence of the federal excise tax is upon the statutory “producer” such as petitioner and not upon his purchaser-consumer. Martin Oil Service, Inc. v. Department of Revenue, 49 Ill. 2d 260, 273 N. E. 2d 823 (1971); People v. Werner, 364 Ill. 594, 5 N. E. 2d 238 (1936); Sun Oil Co. v. Gross Income Tax Division, 238 Ind. Ill, 149 N. E. 2d 115 (1958); State v. Thoni Oil Magic Benzol Gas Stations, Inc., 121 Ga. App. 454, 174 S. E. 2d 224, aff’d, 226 Ga. 883, 178 S. E. 2d 173 (1970). Contra, see Tax Review Board v. Esso Standard Division, 424 Pa. 355, 227 A. 2d 657 (1967); cf. Standard Oil Co. v. State, 283 Mich. 85, 276 N. W. 908 (1937); Standard Oil Co. v. State Tax Comm’r, 71 N. D. 146, 299 N. W. 447 (1941). Our independent examination of the federal statute and its legislative history persuades us also that the legal incidence of the federal tax falls upon the statutory “producer” such as petitioner.

The wording of the federal statute plainly places the incidence of the tax upon the “producer,” that is, by definition, upon federally licensed distributors of gasoline such as petitioner. Section 4082 (a) provides that “[a]ny person to whom gasoline is sold tax-free . . . shall be considered the producer of such gasoline,” and § 4081 (a) expressly imposes the tax “on gasoline sold by the producer ....’’ (Emphasis added.) The congressional purpose to lay the tax on the “producer” and only upon the “producer” could not be more plainly revealed. Persuasive also that such wTas Congress’ purpose is the fact that, if the producer does not pay the tax, the Government cannot collect it from his vendees; the statute has no provision making the vendee liable for its payment. First Agricultural Nat. Bank v. Tax Comm’n, supra, at 347.

It is true that the purchaser-consumer who buys gasoline for use on his farm, 26 U. S. C. § 6420 (a), or for other nonhighway purposes, § 6421 (a), or for a local transit system, § 6421 (b), can recover payment of all or part of the amount of the tax passed on by the “producer.” But this is not proof that Congress laid the tax upon the purchaser-consumer. Rather, since the proceeds of this tax go not into the general treasury, but into a special fund used to defray the cost of the federal highway system, S. Rep. No. 367, 87th Cong., 1st Sess. (1961), the refunds authorized simply reflect a congressional determination that, because the economic burden of such taxes is traditionally passed on to the purchaser-consumer in the form of increased pump prices, farmers and other off-highway users should be relieved of the economic burden of the cost of the highway program, and that the cost should be borne entirely by motorists who use gasoline to drive on the highways. Martin Oil Service, Inc. v. Department of Revenue, supra, at 265, 273 N. E. 2d, at 827.

Petitioner cites references by President Johnson to the tax as a “user tax” as proving that it is not and never was intended that the tax be imposed upon the “producer,” but rather upon the purchaser-consumer. President Johnson’s message to Congress of May 17, 1965, on the subject of reform of the excise tax structure stated that such “reform . . . will. . . leave . . . excises on alcoholic beverages, tobacco, gasoline, tires, trucks, air transportation (and a few other user-charge and special excises) . . . H. R. Doc. No. 173, 89th Cong., 1st Sess., 3 (1965). (Emphasis added.) Petitioner relies also on the report of the House Committee on Ways and Means accompanying H. R. 8371, H. R. Rep. No. 433, 89th Cong., 1st Sess., 12-13 (1965). It states: “Taxes such as those on gasoline . . . are user taxes. ... A tax on. gasoline taxes users of the highways in rough proportion to their use of the service.” (Emphasis added.) These references obviously were not made in the context of consideration of the legal incidence of the gasoline, tax but merely as recognition that the reality is that users bear the economic burden of the tax. These references were rejected in Martin Oil Service, Inc., supra, by the Illinois Supreme Court as irrelevant to the question whether the tax must be considered as one whose incidence rests on the purchaser-consumer. We agree with, and adopt, that court’s analysis:

“We consider the references to the tax as a ‘user tax’ were not intended to be descriptive of the legal incidence of the gasoline tax. It is not disputed that the ultimate economic burden of the tax rests upon the purchaser-consumer. A practical nontechnical description of the tax as a ‘user tax’ is explainable, consistently with the legal incidence of the tax being on the producer. The economic burden of the tax has no relevance to the issue before us.” 49 Ill. 2d, at 264, 273 N. E. 2d, at 826.

We therefore hold that the Mississippi Supreme Court, which relied upon Martin Oil Service, Inc., see 288 So. 2d, at 873, properly concluded that the federal excise tax is imposed solely on statutory “producers” such as petitioner and not on the purchaser.

Ill

The Mississippi Supreme Court held that the legal incidence of the Mississippi excise tax also falls upon petitioner. It is true of course that this Court is the final judicial arbiter of the question where the legal incidence of the federal excise tax falls. But a State’s highest court is the final judicial arbiter of the meaning of state statutes, Alabama v. King & Boozer, 314 U. S., at, 9-10, and therefore our review of the holding of a state court respecting the legal incidence of a state excise tax is guided by the following: “When a state court has made its own definitive determination as to the operating incidence, our task is simplified. We give this finding great weight in determining the natural effect of a statute, and if it is consistent with the statute’s reasonable interpretation it will be deemed conclusive.” American Oil Co. v. Neill, 380 U. S., at 455-456.

This is manifestly a case in which the holding of the Mississippi Supreme Court that the legal incidence of the state excise tax falls upon petitioner should be “deemed conclusive.” Mississippi Code Ann. § 27-55-11 (Supp. 1974), provides that the tax “attaches on the distributor or other person for each gallon of gasoline brought into the state . . .” in the case of distribution of gasoline by distributors, such as petitioner, who bring gasoline into Mississippi “by means other than through a common carrier.” The Mississippi Supreme Court relied primarily upon this provision in reaching its conclusion, and we cannot say that its conclusion is not “consistent with the statute’s reasonable interpretation.”

Our determination is buttressed by the holding of a three-judge District Court in United States v. Sharp, 302 F. Supp. 668 (SD Miss. 1969). The United States sought a declaratory judgment that the Mississippi tax was invalid with respect to gasoline purchased by the Federal Government, its agencies, and personnel when used on Mississippi highways on Government business. The three-judge court held that the legal incidence of the state tax was upon the distributor-vendor and not upon the purchaser United States, and dismissed the action. The court stated:

“We do not quarrel with the contention that a statute’s practical operation and effect determines where the legal incidence of the tax falls. We simply agree that the tax burden in the Mississippi statute falls plainly and squarely on the distributor to whom the state looks for the payment of the tax, albeit the amount of the tax may ultimately be borne by the vendee, in this case the federal government.” Id., at 671.

Petitioner argues, however, that the decision of the Mississippi Supreme Court is foreclosed by this Court’s decision in Panhandle Oil Co. v. Knox, 277 U. S. 218 (1928). The argument is without merit. In that case Mississippi sued Panhandle Oil Co. to recover gasoline excise taxes imposed by Chapter 116 of the 1922 Laws of Mississippi, as amended, a predecessor to the present Miss. Code Ann. § 27-55-11. The taxes claimed were on account of sales madé by Panhandle to the United States for the use of its Coast Guard Fleet in service in the Gulf of Mexico, and of its Veterans’ Hospital at Gulfport, Miss.' The Court, over the dissents of Justices Holmes, Brandéis, Stone, and McReynolds, held that the tax as applied was invalid as a tax upon the means used by the United States for governmental purposes. The dissenters’ view was that it was not a tax upon means used by the United States, but that Panhandle merely shifted the economic burden of the tax to its vendees by adding it to the price of the gasoline.

The Court’s Panhandle opinion did not focus upon whether the Mississippi statute laid the legal incidence of the tax upon the distributor. Rather, the rationale was that the tax was bad because, if laid upon distributors, the distributors were able to shift its burden to the purchaser. The Court has since expressly abandoned that view, and has accepted the analysis of the dissent. In Alabama v. King & Boozer, 314 U. S., at 9, the Court held: “So far as a different view has prevailed, see Panhandle Oil Co. v. Knox ... , we think it no longer tenable.”

IV

Finally, petitioner argues that even if the legal incidence of the two taxes is on him rather than on the consumer, the provision of § 27-65-17 denying the deduction of the taxes in the computation of his “gross proceeds of . . . retail sales” is invalid for two reasons.

First, he argues: “Since [petitioner] sells only to the ultimate consumer, the excise tax attaches simultaneously with the sale and with the sales tax; therefore, there can be no sales tax upon the excise tax.” Brief for Petitioner 47. In other words, his argument is that the liability for the excise taxes, state and federal, and the liability for the sales tax arise simultaneously, and in that circumstance, one should not be included in computing the other. We read the opinion of the Mississippi Supreme Court to reject this argument and to hold that the taxes fall on the “producer at a time prior to the point of retail sale or other consumer transaction . . . .” 288 So. 2d, at 870. That interpretation of the Mississippi statutes is, of course, binding on us as respects the state excise tax; indeed, the interpretation is not merely “reasonable,” but seems obvious in light of the express provision of § 27-55-11 that in cases of distributors, like petitioner, bringing gasoline into Mississippi in their own trucks the tax “attaches... at the time when and at the point where such gasoline is brought into the state.” Further, we agree with the Mississippi court that the federal tax also attaches prior to the point of the retail sale. However, even if the liability for the excise taxes did arise simultaneously with the sales tax, we cannot see any legal distinction, constitutional or otherwise, arising from that circumstance. The Illinois Supreme Court also addressed this contention when made in Martin Oil Service, Inc., supra, as to the federal excise tax, and rejected it for the following reasons, with which we agree.

“The legal incidence of the Federal gasoline tax is on the producer, who is under no legal duty to pass the burden of the tax on to the consumer. If he does pass on the burden of the tax it is simply done by charging the consumer a higher price. This higher price is the result of the added cost, because of the burden of the Federal tax, to the producer in selling his gasoline. It is no different from other costs he incurs in bringing his product to market, including the costs of raw material, its processing and its delivery. All these costs are includable in his ‘gross receipts’ or the ‘consideration’ he receives for his gasoline. No reason has been given... why the cost of the gasoline tax should be regarded differently from the other costs of the producer-retailer and we perceive none.” 49 Ill. 2d, at 268, 273 N. E. 2d, at 828.

Second, petitioner argues that “since other independent oil dealers in those states which do not include the federal excise tax as a part of the sales tax base would not be forced to pay such tax [e. g., Pennsylvania, see Tax Review Board v. Esso Standard, supra], then the arbitrary imposition of such tax upon [petitioner] and those other independent oil dealers in his class (who have to pay a sales tax on federal excise tax) would deprive [petitioner] of the Fourteenth Amendment’s guarantee to equal protection of the laws.” Brief for Petitioner 21. The contention is patently frivolous. The prohibition of the Equal Protection Clause is against denial by the State, here Mississippi, as between taxpayers subject to its laws. Petitioner makes no claim of unconstitutional discrimination by Mississippi in the application of its sales tax Act to taxpayers subject to that tax.

Affirmed.

Mr. Justice Douglas took no part in the consideration or decision of this case.

       Section 27-65-17 provides in pertinent part:
      “Upon every person engaging or continuing within this state in the business of selling any tangible personal property whatsoever, there is hereby levied, assessed and shall be collected a tax equal to five percent (5%) of the gross proceeds of the retail sales of the business, except as otherwise provided herein. . . .”

       26 ü. S. C. §4082 (a), n. 3, infra.

       Mississippi Code Ann. §27-55-11 provides:
      “Any person in business as a distributor of gasoline . . . shall pay for the privilege of engaging in such business ... an excise tax equal to [specified] cents per gallon on all gasoline . . . sold ... in this state for sale [or] use on the highways ....
      “With respect to distributors . . . who bring . . . into this state gasoline by means other than through a common carrier, the tax accrues and the tax liability attaches on the distributor ... at the time when and at the point where such gasoline is brought into the state.”
      Title 26 TJ. S. C. §4081 (a) provides:
      “In general. There is hereby imposed on gasoline sold by the producer or importer thereof, or by any producer of gasoline, a tax of 4 cents a gallon.”
      Title 26 U. S. C. §4082 (a) provides in pertinent part: “Producer. . . . Any person to whom gasoline is sold tax-free under this subpart shall be considered the producer of such gasoline.”

       Section 27-65-3 (h) provides in pertinent part:
      “ ‘Gross proceeds of sales’ means the value proceeding or accruing from the full sale price of tangible personal property . .. without any deduction for . . . taxes of any kind except those expressly exempt....”

       Petitioner sought refunds of $62,782.57, and respondent cross-claimed for $29,131.19.

       Act of June 8, 1966, e. 645, Miss. Gen. Laws 1343, 1347, in effect during some of the tax years involved, but since repealed, provided only that the excise tax “may be passed on to the ultimate consumer . . . .” (Emphasis added.) In contrast, the Massachusetts sales tax law before us in First Agricultural Nat. Bank. v. Tax Comm’n, 392 U. S. 339 (1968), expressly provided that the tax “ ‘shall be paid by the purchaser/ ” and that the vendor “ ‘shall add to the sales price and shall collect from the purchaser the full amount of the tax imposed.’ ” Id., at 347.