author: Chief Justice Rehnquist Justice Stevens,

text:
    UNITED STATES v. IDAHO ex rel. DIRECTOR, IDAHO DEPARTMENT OF WATER RESOURCES
    No. 92-190.
    Argued March 29, 1993 —
    Decided May 3, 1993

      Jeffrey P. Minear argued the cause for the United States. With him on the briefs were Solicitor General Starr, Acting Solicitor General Bryson, Acting Assistant Attorney General O’Meara, Edwin S. Kneedler, Peter C. Monson, Robert L. Klarquist, and William B. Lazarus.

      Clive J. Strong, Deputy Attorney General of Idaho, argued the cause for respondent. With him on the brief were Larry EchoHawk, Attorney General, and David J. Barber, Peter R. Anderson, and Steven W. Strack, Deputy Attorneys General.

        Robert T. Anderson, Melody L. McCoy, Walter R. Echo-Hawk, Patrice Kunesh, Carl Ullman, Henry J. Sockbeson, and Dale T. White filed a brief for the Nez Perce Tribe et al. as amici curiae urging reversal.

        Theodore R. Kulongoski, Attorney General of Oregon, Virginia L. Linder, Solicitor General, and Jerome S. Lidz, Stephen E. A. Sanders, and Rives Kistler, Assistant Attorneys General, filed a brief for the State of Alaska et al. as amici curiae urging affirmance.

   Chief Justice Rehnquist

delivered the opinion of the Court.

The McCarran Amendment allows a State to join the United States as a defendant in a comprehensive water right adjudication. 66 Stat. 560, 43 U. S. C. § 666(a). This ease arises from Idaho’s joinder of the United States in a suit for the adjudication of water rights in the Snake River. Under Idaho Code §42-1414 (1990), all water right claimants, including the United States, must pay “filing fees” when they submit their notices of claims. Idaho collects these fees to “finane[e] the costs of adjudicating water rights,” §42-1414; the United States estimates that in its case the fees could exceed $10 million. We hold that the McCarran Amendment does not waive the United States’ sovereign immunity from fees of this kind.

Discovered by the Lewis and Clark expedition, the Snake River — the “Mississippi of Idaho” — is 1,038 miles long and the principal tributary to the Columbia River. It rises in the mountains of the Continental Divide in northwest Wyoming and enters eastern Idaho through the Palisades Reservoir. Near Heise, Idaho, the river leaves the mountains and meanders westerly across southern Idaho’s Snake River plain for the entire breadth of the State — some 400 miles. On the western edge of Idaho, near Weiser, the Snake enters Oregon for a while and then turns northward, forming the Oregon-Idaho boundary for 216 miles. In this stretch, the river traverses Hells Canyon, the Nation’s deepest river gorge. From the northeastern corner of Oregon, the river marks the Washington-Idaho boundary until Lewiston, Idaho, where it bends westward into Washington and finally flows into the Columbia just south of Pasco, Washington. From elevations of 10,000 feet, the Snake descends to 3,000 feet and, together with its many tributaries, provides the only water for most of Idaho. See generally T. Palmer, The Snake River (1991).

This litigation followed the enactment by the Idaho Legislature in 1985 and 1986 of legislation providing for the Snake River Basin Adjudication. That legislation stated that “the director of the department of water resources shall petition the [state] district court to commence an adjudication within the terms of the McCarran [Ajmendment.” Idaho Code §42-1406A(l) (1990). The 1985 and 1986 legislation also altered Idaho’s methods for “financing the costs of adjudicating water rights”; it provided that the Director of the Idaho Department of Water Resources shall not accept a “notice of claim” from any water claimant unless such notice “is submitted with a filing fee based upon the fee schedule.” §42-1414. “Failure to pay the variable water use fee in accordance with the timetable provided shall be cause for the department to reject and return the notice of claim to the claimant.” Ibid. Idaho uses these funds “to pay the costs of the department attributable to general water rights adjudications” and “to pay for judicial expenses directly relating to the Snake river adjudication.” §§42-1777(1) and (2).

The Director of the Idaho Department of Water Resources filed a petition in the District Court of the Fifth Judicial District naming the United States and all other water users as defendants. The District Court entered an order commencing the adjudication, which was affirmed by the Supreme Court of Idaho. In re Snake River Basin Water System, 115 Idaho 1, 764 P. 2d 78 (1988), cert. denied sub nom. Boise-Kuna Irrigation Dist. v. United, States, 490 U. S. 1005 (1989). When the United States attempted to submit its notices of claims unaccompanied by filing fees, the director refused to accept them. The United States then filed a petition for a writ of mandamus with the state court to compel the director to accept its notices without fees, asserting that the McCarran Amendment does not waive federal sovereign immunity from payment of filing fees. The District Court granted Idaho summary judgment on the immunity issue: “The ordinary, contemporary and common meaning of the language of McCarran is that Congress waived all rights to assert any facet of sovereign immunity in a general adjudication of all water rights . . . which is being conducted in accordance with state law.” App. to Pet. for Cert. 86a (emphasis in original).

The Supreme Court of Idaho affirmed by a divided vote. 122 Idaho 116, 832 P. 2d 289 (1992). It concluded that the McCarran Amendment “expresses] a ‘clear intent' of congress to subject the United States to all of the state court processes of an ‘adjudication’ of its water rights with the sole exception of costs.” Id., at 121, 832 P. 2d, at 294. The court also “deeline[d] to read the term judgment for costs as including the term filing fees.” Id., at 122, 832 P. 2d, at 295. Whereas “costs” are charges that a prevailing party may recover from its opponent as part of the judgment, “fees are compensation paid to an officer, such as the court, for services rendered to individuals in the course of litigation.” Ibid. Two justices wrote separate dissents, asserting that the McCarran Amendment does not waive sovereign immunity from filing fees. We granted certiorari, 506 U. S. 939 (1992), and now reverse.

The McCarran Amendment provides in relevant part:

“Consent is given to join the United States as a defendant in any suit (1) for the adjudication of rights to the use of water of a river system or other source, or (2) for the administration of such rights, where it appears that the United States is the owner of or is in the process of acquiring water rights by appropriation under State law, by purchase, by exchange, or otherwise, and the United States is a necessary party to such suit. The United States, when a party to any such suit, shall (1) be deemed to have waived any right to plead that the State laws are inapplicable or that the United States is not amenable thereto by reason of its sovereignty, and (2) shall be subject to the judgments, orders, and decrees of the court having jurisdiction, and may obtain review thereof, in the same manner and to the same extent as a private individual under like circumstances: Provided, That no judgment for costs shall be entered against the United States in any such suit.” 43 U.S. C. § 666(a).

According to Idaho, the amendment requires the United States to comply with all state laws applicable to general water right adjudications. Idaho argues that the first sentence of the amendment, the joinder provision, allows joinder of the United States as a defendant in suits for the adjudication of water rights. It then construes the amendment’s second sentence, the pleading provision, to waive the United States’ immunity from all state laws pursuant to which those adjudications are conducted. Idaho relies heavily on the language of the second sentence stating that the United States shall be “deemed to have waived any right to plead that the State laws are inapplicable.” Because the “filing fees” at issue here are assessed in connection with a comprehensive adjudication of water rights, Idaho contends that they fall within the MeCarran Amendment’s waiver of sovereign immunity.

The United States, on the other hand, contends that the critical language of the second sentence renders it amenable only to state substantive law of water rights, and not to any of the state adjective law governing procedure, fees, and the like. The Government supports its position by arguing that the phrase “the State laws” in the second sentence must be referring to the same “State law” mentioned in the first sentence, and that since the phrase in the first sentence is clearly directed to substantive state water law, the phrase in the second sentence must be so directed as well.

There is no doubt that waivers of federal sovereign immunity must be “unequivocally expressed” in the statutory text. See Irwin v. Department of Veterans Affairs, 498 U. S. 89, 95 (1990); Department of Energy v. Ohio, 503 U. S. 607, 615 (1992); United States v. Nordic Village, Inc., 503 U. S. 30, 33-34 (1992). “Any such waiver must be strictly construed in favor of the United States,” Ardestani v. INS, 502 U. S. 129, 137 (1991), and not enlarged beyond what the language of the statute requires, Ruckelshaus v. Sierra Club, 463 U. S. 680, 685-686 (1983). But just as “ ‘we should not take it upon ourselves to extend the waiver beyond that which Congress intended[,] . . . [njeither, however, should we assume the authority to narrow the waiver that Congress intended.’ ” Smith v. United States, 507 U. S. 197, 206 (1993) (quoting United States v. Kubrick, 444 U. S. 111, 117-118 (1979)).

We are unable to accept either party’s contention. The argument of the United States is weak, simply as a matter of grammar, because the critical term in the second sentence is “the State laws,” while the corresponding language in the first sentence is “State law.” And such a construction would render the amendment’s consent to suit largely nugatory, allowing the Government to argue for some special federal rule defeating established state-law rules governing pleading, discovery, and the admissibility of evidence at trial. We do not believe that Congress intended to create such a legal no-man’s land in enacting the MeCarran Amendment. We rejected a similarly technical argument of the Government in construing the MeCarran Amendment in United States v. District Court, County of Eagle, 401 U. S. 520, 525 (1971), saying “[w]e think that argument is extremely technical; and we decline to confine [the MeCarran Amendment] so narrowly.”

We also reject Idaho’s contention. In several of our cases exemplifying the rule of strict construction of a waiver of sovereign immunity, we rejected efforts to assess monetary liability against the United States for what are normal incidents of litigation between private parties. See, e. g., United States v. Chemical Foundation, Inc., 272 U. S. 1, 20-21 (1926) (assessment of costs); Library of Congress v. Shaw, 478 U. S. 310, 323 (1986) (recovery of interest on judgment); Ohio, supra, at 619-620 (liability for punitive fines). And the McCarran Amendment’s “cost proviso,” of course, expressly forbids the assessment of costs against the United States: “[N]o judgment for costs shall be entered against the United States.”

The Supreme Court of Idaho pointed out in its opinion that “fees” and “costs” mean two different things in the context of lawsuits, 122 Idaho, at 122, 832 P. 2d, at 295, and we agree with this observation. “Fees” are generally those amounts paid to a public official, such as the clerk of the court, by a party for particular charges typically delineated by statute; in contrast, “costs” are those items of expense incurred in litigation that a prevailing party is allowed by rule to tax against the losing party. See 10 C. Wright, A. Miller, & M. Kane, Federal Practice and Procedure §2666, pp. 173-174 (1983). Before Idaho altered its system for recovering its expenses in conducting comprehensive water right adjudications in 1985 and 1986, Idaho courts, at the time of entry of final judgment, used to proportionately tax the “costs” of the adjudication against all parties to the suit, and not simply against the losing parties. Idaho Code §42-1401 (1948). When Idaho revised this system, many of the items formerly taxed as “costs” to the parties at the conclusion of the adjudication were denominated as “fees,” and required to be paid into court at the outset. This suggests that although the general distinction between fees and costs may be accurate, in the context of this proceeding the line is blurred, indeed.

While we therefore accept the proposition that the critical language of the second sentence of the McCarran Amendment submits the United States generally to state adjective law, as well as to state substantive law of water rights, we do not believe it subjects the United States to the payment of the sort of fees that Idaho sought to exact here. The cases mentioned above dealing with waivers of sovereign immunity as to monetary exactions from the United States in litigation show that we have been particularly alert to require a specific waiver of sovereign inununity before the United States may be held liable for them. We hold that the language of the second sentence making “the State laws” applicable to the United States in comprehensive water right adjudications is not sufficiently specific to meet this requirement.

The judgment of the Supreme Court of Idaho is therefore reversed, and the case is remanded for further proceedings not inconsistent with this opinion.-

It is so ordered.

Justice Stevens,

concurring in the judgment.

As the Court points out, ante, at 8, before 1985 “fees” comparable to those at issue in this litigation were taxed as “costs” in Idaho. Because I am persuaded that these exactions are precisely what Congress had in mind when it excepted judgments for “costs” from its broad waiver of sovereign immunity from participation in water rights adjudications, I concur in the Court’s judgment.


source: Caselaw Access Project

author: Justice White

license: Public Domain

text:
    CISNEROS, SECRETARY OF HOUSING AND URBAN DEVELOPMENT, et al. v. ALPINE RIDGE GROUP et al.
    No. 92-551.
    Argued March 30, 1993 —
    Decided May 3, 1993

      Michael R. Dreeben argued the cause for petitioners. With him on the briefs were Solicitor General Starr, Acting Solicitor General Wallace, Assistant Attorney General Gerson, Deputy Solicitor General Roberts, Douglas Letter, Howard M. Schmeltzer, and Barton Shapiro.

      Warren J. Daheim argued the cause for respondents. With him on the brief for respondent Alpine Ridge Group was Donald W. Hanford. Milton Eisenberg and Leonard A. Zax filed a brief for respondents Acacia Villa et al.

        Robert M. Weinberg and Laurence Gold filed a brief for the American Federation of Labor and Congress of Industrial Organizations as amicus curiae urging reversal.
      Briefs of amici curiae urging affirmance were filed for Charter Federal Savings Bank by Thomas M. Buchanan; for the National Association of Home Builders et al. by Ronda L. Daniels; for Southwind Acres Associates et al. by Larry Derryberry; and for Statesman Savings Holding Corp. et al. by Charles J. Cooper, Robert J. Cynkar, and Michael A Carvin.

   Justice White

delivered the opinion of the Court.

The question presented in this case is whether § 801 of the Department of Housing and Urban Development Reform Act of 1989, 103 Stat. 2057, violates the Due Process Clause of the Fifth Amendment by abrogating respondents’ contract rights to certain rental subsidies.

I

A

In 1974, Congress amended the United States Housing Act of 1937 (Housing Act) to create what is known as the Section 8 housing program. Through the Section 8 program, Congress hoped to “ai[d] low-income families in obtaining a decent place to live,” 42 U. S. C. § 1437f(a) (1988 ed., Supp. III), by subsidizing private landlords who would rent to low-income tenants. Under the program, tenants make rental payments based on their income and ability to pay; the Department of Housing and Urban Development (HUD) then makes “assistance payments” to the private landlords in an amount calculated to make up the difference between the tenant’s contribution and a “contract rent” agreed upon by the landlord and HUD. As required by the statute, this contract rent is, in turn, to be based upon “the fair market rental” value of the dwelling, allowing for some modest increase over market rates to account for the additional expense of participating in the Section 8 program. See §1437f(c)(l).

The statute, as originally enacted, further provided that monthly rents for Section 8 housing would be adjusted at least annually as follows:

“(A) The assistance contract shall provide for adjustment annually or more frequently in the maximum monthly rents for units covered by the contract to reflect changes in the fair market rentals established in the housing area for similar types and sizes of dwelling units or, if the Secretary determines, on the basis of a reasonable formula.
“(C) Adjustments in the maximum rents as herein-before provided shall not result in material differences between the rents charged for assisted and comparable unassisted units, as determined by the Secretary.” 42 U. S. C. §§ 1437f(c)(2)(A) and (C) (1982 ed.).

The respondents in this ease are private developers who entered into long-term contracts with HUD — known as Housing Assistance Payments (HAP) Contracts or “assistance contracts” — to lease newly constructed apartment units to Section 8 tenants. Their contracts established initial contract rents for each unit and provided, consistent with the statutory authorization, that these rents would be adjusted regularly, on the basis of a reasonable formula, to keep pace with changes in rental values in the private housing market. Section 1.9b of their contracts provides:

“b. Automatic Annual Adjustments
“(1) Automatic Annual Adjustment Factors will be determined by the Government at least annually; interim revisions may be made as market conditions warrant. Such Factors and the basis for their determination will be published in the Federal Register. . . .
“(2) On each anniversary date of the Contract, the Contract Rents shall be adjusted by applying the applicable Automatic Annual Adjustment Factor most recently published by the Government. Contract Rents may be adjusted upward or downward, as may be appropriate; however, in no case shall the adjusted Contract Rents be less than the Contract Rents on the effective date of the Contract.” App. to Brief for Petitioners 8a.

The Automatic Annual Adjustment Factors to which the contracts refer are developed by HUD based upon market trends recorded by the Consumer Price Index and the Bureau of the Census American Housing Surveys.

Section 1.9d of the contracts, in part tracking the language of § 8(c)(2)(C) of the Housing Act, 42 U. S. C. § 1437f(c)(2)(C) (1988 ed., Supp. III), provides:

“d. Overall Limitation. Notwithstanding any other provisions of this Contract, adjustments as provided in this Section shall not result in material differences between the rents charged for assisted and comparable unassisted units, as determined by the Government; provided that this limitation shall not be construed to prohibit differences in rents between assisted and comparable unassisted units to the extent that such differences may have existed with respect to the initial Contract Rents.” App. to Brief for Petitioners 8a-9a.

B

In the early 1980’s, HUD began to suspect that the assistance payments it was making to some landlords under the Section 8 program were well above prevailing market rates for comparable housing. Accordingly, the agency began to conduct independent “comparability studies” in certain real estate markets where it believed that contract rents, adjusted upward by the automatic adjustment factors, were materially out of line with market rents. Under these studies, HUD personnel would select between three and five other apartment buildings they considered comparable to the Section 8 building and compare their rents. The private market rents would then serve as an independent cap limiting the rent payments HUD would make under the Section 8 contracts.

After several landlords brought suit, the Court of Appeals for the Ninth Circuit ruled in 1988 that the standard assistance contracts described above prohibited the use of comparability studies as an independent cap on rents. In Rainier View Associates v. United States, 848 F. 2d 988, the Court of Appeals reasoned that HUD, having contracted to increase rents automatically each year based upon a reasonable formula (the second of the two alternative approaches permitted by § 8(c)(2)(A) of the Housing Act, see supra, at 12-13), could not thereafter limit those increases by means of a market survey (the first of the two statutory alternatives). “Having made its choice,” the court wrote, “HUD cannot now change its mind.” 848 F. 2d, at 991.

After this Court denied certiorari to review the Rainier View decision, 490 U. S. 1066 (1989), HUD made clear its intention not to adhere to that decision’s interpretation of its contracts outside the Ninth Circuit. Faced with the prospect of inconsistent application of Government contracts depending solely upon geography, Congress attempted to resolve the matter through amendments to the Housing Act in late 1989. Section 801 of the Department of Housing and Urban Development Reform Act (Reform Act), 103 Stat. 2057, amended § 8(c)(2)(C) of the Housing Act to provide explicitly that HUD may limit automatic rent adjustments in the future through the use of independent comparability-studies. In an apparent compromise, however, the same section also sought to restore to Section 8 project owners a portion of the automatic rent adjustments they had been denied through the use of comparability studies prior to the enactment of the 1989 amendments. The amendments thus offered Section 8 project owners a partial retroactive remedy for lost rent attributable to comparability studies while at the same time affirming HUD’s authorization to employ such studies to cap future rent adjustments.

c

In this litigation, respondents have alleged that §801 of the Reform Act violates the Due Process Clause of the Fifth Amendment by stripping them of their vested rights under the assistance contracts to annual rent increases based on the automatic adjustment factors alone. In separate lawsuits, the United States District Courts for the Western District of Washington and the Central District of California each granted summary judgment for respondents. The Court of Appeals for the Ninth Circuit, in a consolidated appeal, affirmed both judgments. Alpine Ridge Group v. Kemp, 955 F. 2d 1382 (1992). Refusing to reconsider its earlier holding in Rainier View, supra, the court first reaffirmed that the assistance contracts prohibited HUD from capping rents based on independent comparability studies. See 955 F. 2d, at 1384-1385. The court then held that Congress’ attempt to authorize such caps through the Reform Act unconstitutionally deprived respondents of their “vested property interest in formula-based rent adjustments pursuant to their section 8 contracts.” Id., at 1387.

We granted certiorari, 506 U. S. 984 (1992), and now reverse.

II

We begin our analysis of respondents’ due process claim with the assistance contracts. Because we find that those contracts do not prohibit the use of comparability studies to impose an independent cap on the formula-based rent adjustments, our analysis ends there as well.

In our view, respondents’ claimed entitlement to formula-based rent adjustments without regard to independent comparisons to private-market rents is precluded by the plain language of the assistance contracts. To be sure, § 1.9b(2) of those contracts provides that the contract rents “shall be adjusted [annually] by applying the applicable Automatic Annual Adjustment Factor most recently published by the Government.” Section 1.9d of the contracts, however, imposes what is labeled an “[ojverall [ljimitation” on the formula-based adjustments provided by § 1.9b. It provides that u[n]otwithstanding any other provisions of this Contract, adjustments as provided in this Section shall not result in material differences between the rents charged for assisted and comparable unassisted units, as determined by the Government” (emphasis added). As we have noted previously in construing statutes, the use of such a “notwithstanding” clause clearly signals the drafter’s intention that the provisions of the “notwithstanding” section override conflicting provisions of any other section. See Shomberg v. United States, 348 U. S. 540, 547-548 (1955). Likewise, the Courts of Appeals generally have “interpreted similar ‘notwithstanding’ language... to supersede all other laws, stating that ‘“[a] clearer statement is difficult to imagine.”’” Liberty Maritime Corp. v. United States, 289 U. S. App. D. C. 1, 4, 928 F. 2d 413, 416 (1991) (quoting Crowley Caribbean Transport, Inc. v. United States, 275 U. S. App. D. C. 182, 184, 865 F. 2d 1281, 1283 (1989) (in turn quoting Illinois National Guard v. FLRA, 272 U. S. App. D. C. 187, 194, 854 F. 2d 1396, 1403 (1988))); see also Bank of New England Old Colony, N. A. v. Clark, 986 F. 2d 600, 604 (CA1 1993); Dean v. Veterans Admin. Regional Office, 943 F. 2d 667, 670 (CA6 1991), vacated and remanded on other grounds, 503 U. S. 902 (1992); In re FCX, Inc., 853 F. 2d 1149, 1154 (CA4 1988), cert. denied sub nom. Universal Cooperatives, Inc. v. FCX, Inc., 489 U. S. 1011 (1989); Multi-State Communications, Inc. v. FCC, 234 U. S. App. D. C. 285, 291, 728 F. 2d 1519, 1525, cert. denied, 469 U. S. 1017 (1984); New Jersey Air National Guard v. FLRA, 677 F. 2d 276, 283 (CA3), cert. denied sub nom. Government Employees v. New Jersey Air National Guard, 459 U. S. 988 (1982). Thus, we think it clear beyond peradventure that § 1.9d provides that contract rents “shall not” be adjusted so as to exceed materially the rents charged for “comparable unassisted units” on the private rental market — even if other provisions of the contracts might seem to require such a result. This limitation is plainly consistent with the Housing Act itself, which provides that “[ajdjustments in the maximum rents,” whether based on market surveys or on a reasonable formula, “shall not result in material differences” between Section 8 rents and the rents for comparable housing on the private market. 42 U. S. C. § 1437f(e)(2)(C) (1988 ed., Supp. III).

In its Rainier View decision, the Court of Appeals read § 1.9d’s “overall limitation” as empowering HUD only to make prospective changes in the automatic adjustment factors where it discovered that those factors were producing materially inflated rents; under the court’s view, § 1.9d would not permit “abandonment of the formula method whenever application of the formula would result in a disparity between section 8 and other rents.” 848 F. 2d, at 991. But this reading of the contract — under which Section 8 project owners could demand payment of materially inflated rents until the Secretary could publish revised automatic adjustment factors aimed at curing the overpayment — is almost precisely backwards. It would entitle project owners to collect the formula-based adjustments promised by § 1.9b notwithstanding that those adjustments were resulting in the sort of material differences in rents prohibited by § 1.9d.

Reading § 1.9d’s “overall limitation” as allowing rent caps based on comparability studies does not, as the Rainier View court supposed, “render the formula method authorized by the statute and elected in the contract a nullity.” Ibid. The rent adjustments indicated by the automatic adjustment factors remain the presumptive adjustment called for under the contract. It is only in those presumably exceptional eases where the Secretary has reason to suspect that the adjustment factors are resulting in materially inflated rents that a comparability study would ensue. Because the automatic adjustment factors are themselves geared to reflect trends in the local or regional housing market, theoretically it should not be often that the comparability studies would suggest material differences between Section 8 and private-market rents.

Respondents assert that “the automatic adjustment provision was a central provision of the HAP Contracts and that the owners would not have signed contracts that expressly contained the [comparability] provision HUD asks the Court to imply.” Brief for Respondents Acacia Village et al. 22. They urge us to eschew any interpretation of the contracts that would allow the displacement of the “automatic” adjustments for which they bargained by a “project-by-project comparability process” that “would leave [project owners] at the mercy of minor HUD officials.” Brief for Respondent Alpine Ridge Group 30-31. At bottom, many of respondents’ arguments in support of the decision below seem to circle back to their vigorous contention that HUD’s comparability studies have been poorly conceived and executed, resulting in faulty and misleading comparisons. But the integrity with which the agency has carried out its comparability studies is an entirely separate matter from its contractual authority to employ such studies at all. Even if it could be demonstrated that HUD’s studies have been unreliable, this would in no way suggest that the contract forbids HUD to cap rents based on accurate and fair comparability studies. If respondents have been denied formula-based rent increases based on shoddy comparisons, their remedy is to challenge the particular study, not to deny HUD’s authority to make comparisons.

In sum, we think that the contract language is plain that no project owner may claim entitlement to formula-based rent adjustments that materially exceed market rents for comparable units. We also think it clear that § 1.9d — which by its own terms clearly envisions some comparison “between the rents charged for assisted and comparable unassisted units” — affords the Secretary sufficient discretion to design and implement comparability studies as a reasonable means of effectuating its mandate. In this regard, we observe that § 1.9d expressly assigns to “the Government” the determination of whether there exist material differences between the rents charged for assisted and comparable unassisted units. Because we find that respondents have no contract right to unobstructed formula-based rent adjustments, we have no occasion to consider whether §801 of the Reform Act unconstitutionally abrogated such a right.

Ill

For these reasons, the judgment of the Court of Appeals for the Ninth Circuit is

Reversed.

       Section 8(c)(2)(C) of the Housing Act, as amended by §801 of the Reform Act, now provides: “(C) Adjustments in the maximum rents under subparagraphs (A) and (B) shall not result in material differences between the rents charged for assisted units and unassisted units of similar quality, type, and age in the same market area, as determined by the Secretary. In implementing the limitation established under the preceding sentence, the Secretary shall establish regulations for conducting comparability studies for projects where the Secretary has reason to believe that the application of the formula adjustments under subparagraph (A) would result in such material differences. The Secretary shall conduct such studies upon the request of any owner of any project, or as the Secretary determines to be appropriate by establishing, to the extent practicable, a modified annual adjustment factor for such market area, as the Secretary shall designate, that is geographically smaller than the applicable housing area used for the establishment of the annual adjustment factor under subparagraph (A). The Secretary shall establish such modified annual adjustment factor on the basis of the results of a study conducted by the Secretary of the rents charged, and any change in such rents over the previous year, for assisted units and unassisted units of similar quality, type, and age in the smaller market area. Where the Secretary determines that such modified annual adjustment factor cannot be established or that such factor when applied to a particular project would result in material differences between the rents charged for assisted units and unassisted units of similar quality, type, and age in the same market area, the Secretary may apply an alternative methodology for conducting comparability studies in order to establish rents that are not materially different from rents charged for comparable unassisted units. If the Secretary or appropriate State agency does not complete and submit to the project owner a comparability study not later than 60 days before the anniversazy date of the assistance contact under this section, the automatic annual adjustment factor shall be applied. The Secretary may not reduce the contact rents in effect on or after April 15, 1987, for newly constructed, substantially rehabilitated, or moderately rehabilitated projects assisted under this section (including projects assisted under this section as in effect prior to November 30,1983), uzzless the project has been refizianeed in a maimer that reduces the periodic payments of the owner. Any maximum monthly rent that has been reduced by the Secretary after April 14, 1987, and prior to November 7, 1988, shall be restored to the maximum monthly rent in effect on April 15,1987. For any project which has had its maximum monthly rents reduced after April 14, 1987, the Secretary shall make assistance payments (from amounts reserved for the original contract) to the owner of such project in an amount equal to the difference between the maximum monthly rents in effect on April 15,1987, and the reduced maximum monthly rents, multiplied by the number of months that the reduced maximum monthly rents were in effect.” 42 U. S. C. § 1437f(c)(2)(C) (1988 ed., Supp. III). HUD has now published proposed regulations governing the future use of comparability studies, as required by this provision. See 57 Fed. Reg. 49120 (1992).

       The Rainier View court also suggested that HUD’s own regulations had interpreted the assistance contracts as barring adjustments to contract rents independent of the published factors. The court quoted 24 CFR §888.204 (1987), which states that the agency “'will consider establishing separate or revised Automatic Annual Adjustment Factors for [a] particular area'” if project owners can demonstrate that application of the formula would result in Section 8 rents substantially below market rents for comparable units. See 848 F. 2d, at 991. Although this regulation is certainly consistent with respondents’ view of the contracts, we do not believe that it is inconsistent with our understanding of the contracts’ plain language: The regulation acknowledges revision of the adjustment factors as a means of remedying material differences in rents but it does not foreclose corrective adjustments independent of the factors.

       Petitioners acknowledge that “[a] comparability study must... satisfy requirements of administrative reasonableness and ‘is reviewable under administrative law principles.’” Reply Brief for Petitioners 16, n. 23 (quoting Sheridan Square Partnership v. United, States, 761 F. Supp. 738, 745, n. 3 (Colo. 1991)).


author: Justice Stevens

text:
    MOREAU et al. v. KLEVENHAGEN, SHERIFF, HARRIS COUNTY, TEXAS, et al.
    No. 92-1.
    Argued March 1, 1993 —
    Decided May 3, 1993

      Michael T Leihig argued the cause for petitioners. With him on the briefs were Lawrence Gold and Walter Kamiat.

      Harold M. Streicher argued the cause for respondents. With him on the brief were Murray E. Malakoff and Mike Driscoll.

      Briefs of amici curiae urging affirmance were filed for the State of Missouri by William L. Webster, Attorney General, Bruce Farmer, Assistant Attorney General, Jack L. Campbell, and William E. Quirk; for the National Association of Counties et al. by Richard Ruda and Charles J. Cooper; and for the Texas Municipal League et al. by Susan M. Horton.

   Justice Stevens

delivered the opinion of the Court.

The Fair Labor Standards Act (FLSA or Act) generally requires employers to pay their employees for overtime work at a rate of IV2 times the employees’ regular wages. In 1985, Congress amended the FLSA to provide a limited exception to this rule for state and local governmental agencies. Under the Fair Labor Standards Amendments of 1985 (1985 Amendments), public employers may compensate employees who work overtime with extra time off instead of overtime pay in certain circumstances. The question in this case is whether a public employer in a State that prohibits public sector collective bargaining may take advantage of that exception when its employees have designated a union representative.

Because the text of the 1985 Amendments provides the framework for our entire analysis, we quote the most relevant portion at the outset. Subsection 7(o)(2)(A) states:

“(2) A public agency may provide compensatory time [in lieu of overtime pay] only—
“(A) pursuant to—
“(i) applicable provisions of a collective bargaining agreement, memorandum of understanding, or any other agreement between the public agency and representatives of such employees; or
“(ii) in the case of employees not covered by sub-clause (i), an agreement or understanding arrived at between the employer and employee before the performance of the work----”

Petitioners are a group of employees who sought, unsuccessfully, to negotiate a collective FLSA compensatory time agreement by way of a designated representative. The narrow question dispositive here is whether petitioners are “employees not covered by subclause (i)” within the meaning of subclause (ii), so that their employer may provide compensatory time pursuant to individual agreements under the second subclause.

X

Congress enacted the FLSA in 1938 to establish nationwide minimum wage and maximum hours standards. Section 7 of the Act encourages compliance with maximum hours standards by providing that employees generally must be paid on a time-and-one-half basis for all hours worked in excess of 40 per week.

Amendments to the Act in 1966 and 1974 extended its coverage to most public employers, and gave rise to a series of eases questioning the power of Congress to regulate the compensation of state and local employees. Following our decision in Garcia v. San Antonio Metropolitan Transit Authority, 469 U. S. 528 (1985), upholding that power, the Department of Labor (DOL) announced that it would hold public employers to the standards of the Act effective April 15, 1985.

In response to the Garcia decision and the DOL announcement, both Houses of Congress held hearings and considered legislation designed to ameliorate the burdens associated with necessary changes in public employment practices. The projected “financial costs of coming into compliance with the FLSA — particularly the overtime provisions” — were specifically identified as a matter of grave concern to many States and localities. S. Rep. No. 99-159, p. 8 (1985). The statutory provision at issue in this ease is the product of those deliberations.

In its Report recommending enactment of the 1985 Amendments, the Senate Committee on Labor and Human Resources explained that the new subsection 7(o) would allow public employers to compensate for overtime hours with compensatory time off, or “comp time,” in lieu of overtime pay, so long as certain conditions were met: The provision of comp time must be at the premium rate of not less than IV2 hours per hour of overtime work, and must be pursuant to an agreement reached prior to performance of the work. Id., at 10-11. With respect to the nature of the necessary agreement, the issue raised in this case, the Committee stated: “Where employees have a recognized representative, the agreement or understanding must be between that representative and the employer, either through collective bargaining or through a memorandum of understanding or other type of agreement.” Id., at 10.

The House Committee on Education and Labor was in substantial agreement with the Senate Committee as to the conditions under which comp time could be made available. See H. R. Rep. No. 99-331, p. 20 (1985). On the question of subsection 7(o)’s agreement requirement, the House Committee expressed an understanding similar to the Senate Committee’s: “Where employees have selected a representative, which need not be a formal or recognized collective bargaining agent as long as it is a representative designated by the employees, the agreement or understanding must be between the representative and the employer ....” Ibid.

Where the Senate and House Committee Reports differ is in their description of the “representative” who, once designated, would require that compensatory time be provided only pursuant to an agreement between that representative and the employer. While the Senate Report refers to a “recognized” representative, the House Report states that the representative “need not be a formal or recognized collective bargaining agent.” Swpm this page. The Conference Report does not comment on this difference, see H. R. Conf. Rep. No. 99-357 (1985), and the 1985 Amendments as finally enacted do not adopt the precise language of either Committee Report.

The issue is addressed, however, by the Secretary of Labor, in implementing regulations promulgated pursuant to express legislative direction under the 1985 Amendments. The relevant DOL regulation seems to be patterned after the House Report, providing that “the representative need not be a formal or recognized bargaining agent.” At the same time, in response to concerns expressed by the State of Missouri about the impact of the regulation in States where employee representatives have no authority to enter into enforceable agreements, the Secretary explained:

“The Department believes that the proposed rule accurately reflects the statutory requirement that a CBA [collective bargaining agreement], memorandum of understanding or other agreement be reached between the public agency and the representative of the employees where the employees have designated a representative. Where the employees do not have a representative, the agreement must be between the employer and the individual employees. The Department recognizes that there is a wide variety of State law that may be pertinent in this area. It is the Department’s intention that the question of whether employees have a representative for purposes of FLSA section 7(o) shall be determined in accordance with State or local law and practices.” 52 Fed. Reg. 2014-2015 (1987) (emphasis added).

II

Petitioner Moreau is the president of the Harris County Deputy Sheriffs Union, representing approximately 400 deputy sheriffs in this action against the county and its sheriff, respondent Klevenhagen. For several years, the union has represented Harris County deputy sheriffs in various matters, such as processing grievances and handling workers' compensation claims, but it is prohibited by Texas law from entering into a collective-bargaining agreement with the county. Accordingly, the terms and conditions of petitioners’ employment are included in individual form agreements signed by each employee. These agreements incorporate by reference the county^ regulations providing that deputies shall receive IV2 hours of compensatory time for each hour of overtime work.

Petitioners filed this action in 1986, alleging, inter alia, that the county violated the Act by paying for overtime work with comp time, rather than overtime pay, absent an agreement with their representative authorizing the substitution. Petitioners contended that they were “covered” by subclause (i) of subsection 7(o)(2)(A) by virtue of their union representation, and that the county therefore was precluded from providing comp time pursuant to individual agreements (or pre-existing practice) under subclause (ii).

The District Court disagreed and entered summary judgment for the county. The court assumed that designation of a union representative normally would establish that employees are “covered” by subelause (i), and hence render sub-clause (ii) inapplicable, but went on to hold that subelause (i) cannot apply in States, like Texas, that prohibit collective bargaining in the public sector. Merritt v. Klevenkagen, Civ. Action No. 88-1298 (SD Tex., Sept. 5, 1990), p. 5, reprinted in App. to Pet. for Cert. 19a-20a. Reaching the same result by an alternative route, the court also reasoned that petitioners were not “covered” by subclause (i) because their union was not “ ‘recognized’ ” by the county, a requirement it grounded in the legislative history of the 1985 Amendments. Id., at 6, reprinted in App. to Pet. for Cert. 21a.

The Court of Appeals affirmed, but relied on slightly different reasoning. It seemed to agree with an Eleventh Circuit case, Dillard v. Harris, 885 F. 2d 1549 (1989), cert. denied, 498 U. S. 878 (1990), that the words “not covered” in subclause (ii) refer to the absence of an agreement rather than the absence of a representative. 956 F. 2d 516, 519-520 (CA5 1992). Under that theory, the fact that Texas law prohibits agreements between petitioners’ union and the employer means that petitioners can never be “covered” by sub-clause (i), making subelause (ii) available as an alternative vehicle for provision of comp time.

Because there is conflict among the Circuits over the scope of subelause (i)’s coverage, we granted certiorari. 506 U. S. 813 (1992).

Ill

Respondents find the language of the statute perfectly clear. In their view, subelause (ii) plainly authorizes individual agreements whenever public employees have not successfully negotiated a collective-bargaining agreement under subclause (i). Petitioners, on the other hand, contend that ambiguity in the statute itself justifies resort to its legislative history and the DOL regulations, and that these secondary sources unequivocally preclude individual comp time agreements with employees who have designated a representative. We begin our analysis with the relevant statutory text.

At least one proposition is not in dispute. Subclause (ii) authorizes individual comp time agreements only “in the case of employees not covered by subclause (i).” Our task, therefore, is to identify the class of “employees” covered by sub-clause (i). This task is complicated by the fact that sub-clause (i) does not purport to define a category of employees, as the reference in subelause (ii) suggests it would. Instead, it describes only a category of agreements — those that (a) are bargained with an employee representative, and (b) authorize the use of comp time.

Respondents read this shift in subject from “employees” in subelause (ii) to “agreement” in subclause (i) as susceptible of just one meaning: Employees are covered by subelause (i) only if they are bound by applicable provisions of a collective-bargaining agreement. Under this narrow construction, subclause (i) would not cover employees who designate a representative if that representative is unable to reach agreement with the employer, for whatever reason; such employees would remain “uncovered” and available for individual comp time agreements under subclause (ii).

We find this reading unsatisfactory. First, while the language of subclauses (i) and (ii) will bear the interpretation advanced by respondents, we cannot say that it will bear no other. Purely as a matter of grammar, subclause (ii)’s reference to “employees” remains unmodified by subclause (i)’s focus on “agreement,” and “employees . . . covered” might as easily comprehend employees with representatives as employees with agreements. See International Assn. of Fire Fighters, Local 2203 v. West Adams County Fire Dist., 877 F. 2d 814, 816-817, and n. 1 (CA10 1989).

Second, respondents’ reading is difficult to reconcile with the general structure of subsection 7(o). Assuming designation of an employee representative, respondents’ theory leaves it to the employer to choose whether it will proceed under subclause (i), and negotiate the terms of a collective comp time agreement with the representative, or instead proceed under subclause (ii), and deal directly with its employees on an individual basis. If the employer is free to choose the latter course (as most employers likely would), then it need only decline to negotiate with the employee representative to render subclause (i) inapplicable and authorize individual comp time agreements under subelause (ii). This permissive interpretation of subsection 7(o), however, is at odds with the limiting phrase of subelause (ii) at issue here. See supra, at 31. Had Congress intended such an open-ended authorization of the use of comp time, it surely would have said so more simply, forgoing the elaborate sub-clause structure that purports to restrict use of individual agreements to a limited class of employees. Respondents’ broad interpretation of the subsection 7(o) exception is also in some tension with the well-established rule that “exemptions from the [FLSA] are to be narrowly construed.” See, e. g., Mitchell v. Kentucky Finance Co., 359 U. S. 290, 295-296 (1959).

At the same time, however, we find equally implausible a reading of the statutory text that would deem employees “covered” by subclause (i) whenever they select a representative, whether or not the representative has the ability to enter into the kind of agreement described in that sub-clause. If there is no possibility of reaching an agreement under subclause (i), then that subclause cannot logically be read as applicable. In other words, “employees ... covered by subclause (i)” must, at a minimum, be employees who conceivably could receive comp time pursuant to the agreement contemplated by that subclause.

The most plausible reading of the phrase “employees ... covered by subclause (i)” is, in our view, neither of the extreme alternatives described above. Rather, the phrase is most sensibly read as referring to employees who have designated a representative with the authority to negotiate and agree with their employer on “applicable provisions of a collective bargaining agreement” authorizing the use of comp time. This reading accords significance to both the focus on the word “agreement” in subclause (i) and the focus on “employees” in subclause (ii). It is also true to the hierarchy embodied in subsection 7(o), which favors subclause (i) agreements over individual agreements by limiting use of the latter to cases in which the former are unavailable.

This intermediate reading of the statutory text is consistent also with the DOL regulations, interpreted most reasonably. It is true that 29 CFR § 553.23(b), read in isolation, would support petitioners’ view that selection of a representative by employees — even a representative without lawful authority to bargain with the employer — is sufficient to bring the employees within the scope of subelause (i) and preclude use of subclause (ii) individual agreements. See supra, at 27, and n. 9. So interpreted, however, the regulation would prohibit entirely the use of comp time in a substantial portion of the public sector. It would also be inconsistent with the Secretary’s statement that “the question ... whether employees have a representative for purposes of FLSA section 7(o) shall be determined in accordance with State or local law and practices.” See supra, at 28. This clarification by the Secretary convinces us that when the regulations' identify selection of a representative as the condition necessary for coverage under subelause (i), they refer only to those representatives with lawful authority to negotiate agreements.

Thus, under both the statute and the DOL regulations, employees are “covered” by subclause (i) when they designate a representative who lawfully may bargain collectively on their behalf — under the statute, because such authority is necessary to reach the kind of “agreement” described in subelause (i), and under the regulation, because such authority is a condition of “representative” status for subclause (i) purposes. Because we construe the statute and regulation in harmony, we need not comment further on petitioners’ argument that the Secretary’s interpretation of the 1985 Amendments is entitled to special deference.

Petitioners in this case did not have a representative authorized by law to enter into an agreement with their employer providing for use of comp time under subclause (i). Accordingly, they were “not covered by subclause (i),” and subclause (ii) authorized the individual agreements challenged in this litigation.

The judgment of the Court of Appeals is affirmed.

So ordered.

         52 Stat. 1063, as amended, 29 U. S. C. § 207(a).

       The relevant portion of the 1985 Amendments, 99 Stat. 790, is codified at 29 U. S. C. §207(o). It provides:
      “§207. Maximum hours.
      “(1) Employees of a public agency which is a State, a political subdivision of a State, or an interstate governmental agency may receive, in accordance with this subsection and in lieu of overtime compensation, compensatory time off at a rate not less than one and one-half hours for each hour of employment for which overtime compensation is required by this section.
      “(2) A public agency may provide compensatory time under paragraph (1) only—
      “(A) pursuant to—
      “(i) applicable provisions of a collective bargaining agreement, memorandum of understanding, or any other agreement between the public agency and representatives of such employees; or
      “(ii) in the case of employees not covered by subclause (i), an agreement or understanding arrived at between the employer and employee before the performance of the work; and
      “(B) if the employee has not accrued compensatory time in excess of the limit applicable to the employee prescribed by paragraph (3).
      “In the case of employees described in clause (A)(ii) hired prior to April 15, 1986, the regular practice in effect on April 15, 1986, with respect to compensatory time off for such employees in lieu of the receipt of overtime compensation, shall constitute an agreement or understanding under such clause (A)(ii). Except as provided in the previous sentence, the provision of compensatory time off to such employees for hours worked after April 14,1986, shall be in accordance with this subsection.”

       29 U. S. C. § 207(a).

         Fair Labor Standards Amendments of 1966, §§ 102(a) and (b), 80 Stat. 830, 29 U. S. C. §§ 203(d) and (r).

       Fair Labor Standards Amendments of 1974, §§ 6(a)(1) and (6), 88 Stat. 58, 60, 29 U. S. C. §§ 203(d) and (x).

         Maryland v. Wirtz, 392 U. S. 183 (1968); Fry v. United States, 421 U. S. 542 (1975); National League of Cities v. Usery, 426 U. S. 833 (1976); Garcia v. San Antonio Metropolitan Transit Authority, 469 U. S. 528 (1985).

       See S. Rep. No. 99-159, p. 7 (1985). The Department of Labor also announced that it would delay enforcement activities until October 15, 1985; that date was later extended to November 1, 1985. Ibid.

       99 Stat. 790, §6, 29 U. S. C. §203.

       “(b) Agreement or understanding between the public agency and a representative of the employees. (1) Where employees have a representative, the agreement or understanding concerning the use of compensatory time must be between the representative and the public agency either through a collective bargaining agreement or through a memorandum of understanding or other type of oral or written agreement. In the absence of a collective bargaining agreement applicable to the employees, the representative need not be a formal or recognized bargaining agent as long as the representative is designated by the employees. Any agreement must be consistent with the provisions of section 7(o) of the Act.” 29 CFR § 553.23(b) (1992).

       As the Court of Appeals stated: “Tex. Rev. Crv. Stat. Ann. art. 5154c prohibits any political subdivision from entering into a collective bargaining agreement with a labor organization unless the political subdivision has adopted the Fire and Police Employee Relations Act. Harris County has not adopted that Act; thus, under article 5154c the County has no authority to bargain with the Union.” 956 F. 2d 516, 519 (CA5 1992). The court went on to clarify that “Texas law prohibits any bilateral agreement between a city and a bargaining agent, whether the agreement is labeled a collective bargaining agreement or something else. Under Texas law, the County could not enter into any agreement with the Union.” Id., at 520 (emphasis in original).
      The District Court interpreted Texas law the same way. Merritt v. Klevenkagen, Civ. Action No. 88-1298 (SD Tex., Sept. 5, 1990), pp. 3-4, reprinted in App. to Pet. for Cert. 18a. Our decision is premised on the normal assumption that the Court of Appeals and the District Court have correctly construed the relevant rules of Texas law. See Bishop v. Wood, 426 U. S. 341, 346, and n. 10 (1976) (citing cases).

       Merritt, Civ. Action No. 88-1298, p. 2, reprinted in App. to Pet. for Cert. 17a.

       The District Court granted summary judgment for the county on two additional claims: that the county failed to include longevity pay in its overtime pay calculations, and that the county excluded nonmandated firearms qualification time from the calculation of number of hours worked. The Court of Appeals affirmed with respect to the former and remanded for further proceedings with respect to the latter claim. 956 F. 2d, at 520-523. Neither claim is before us today.

       Respondents in this ease sought to provide comp time pursuant to both a “regular practice in effect on April 15, 1986,” for deputies hired before that date, and individual agreements, for deputies hired later. Merritt, Civ. Action No. 88-1298, p. 2, reprinted in App. to Pet. for Cert. 17a. Like subelause (ii) individual agreements, “regular practice” is available as an option only for employees “not covered by subelause (i).” 29 U. S. C. § 207(o)(2); n. 2, supra. Accordingly, our analysis is the same with respect to both forms of agreement, and we refer to them here collectively as individual agreements.

         See, e. g., International Assn. of Fire Fighters, Local 2203 v. West Adams County Fire Dist., 877 F. 2d 814 (CA10 1989) (employees covered by subclause (i) upon designation of representative); Abbott v. Virginia Beach, 879 F. 2d 132 (CA4 1989) (employees covered by subclause (i) upon designation of recognized representative), cert. denied, 493 U. S. 1051 (1990); Dillard v. Harris, 885 F. 2d 1549 (CA11 1989) (employees covered by subelause (i) upon entry of agreement regarding compensatory time), cert. denied, 498 U. S. 878 (1990); Nevada Highway Patrol Assn. v. Nevada, 899 F. 2d 1549 (CA9 1990) (employees covered by subclause (i) upon designation of representative unless state law prohibits public sector collective bargaining).
      For discussion of the division in the Courts of Appeals, see generally Note, The Public Sector Compensatory Time Exception to the Fair Labor Standards Act: Trying to Compensate for Congress's Lack of Clarity, 75 Minn. L. Rev. 1807 (1991).

       Indeed, even an employer who is party to a collective-bargaining agreement with its employees may be permitted to take advantage of subelause (ii) under respondents’ construction. Because subclause (i) describes only those agreements that authorize the use of comp time, see supra, at 31-32, a collective-bargaining agreement silent on the subject, or even one prohibiting use of comp time altogether, would not constitute a subclause (i) agreement. Accordingly, employees bound by such an agreement would not be “covered by subelause (i)” under respondents’ theory, and their employer would be free to provide comp time instead of overtime pay pursuant to individual employee agreements.

       So read, we do not understand subsection 7(o) to impose any new burden upon a public employer to bargain collectively with its employees. Subsection 7(o) is, after ail, an exception to the general FLSA rule mandating overtime pay for overtime work, and employers may take advantage of the benefits it offers “only” pursuant to certain conditions set forth by Congress. 29 U. S. C. § 207(b)(2); see n. 2, supra. Once its employees designate a representative authorized to engage in collective bargaining, an employer is entitled to take advantage of those benefits if it reaches a comp time agreement with the representative. It is also free, of course, to forgo collective bargaining altogether; if it so chooses, it remains in precisely the same position as any other employer subject to the overtime pay provisions of the FLSA.

       Accordingly, public employers need not fear that they will find themselves dealing with a different representative for each employee, should each of their employees choose to seleet his or her own representative. See Brief for the National Association of Counties et al. as Amici Curiae 17. Unless such individual designations were “in accordance with State or local law and practices,” the designees would not be “representatives” for purposes of subclause (i).


author: Justice Kennedy

text:
    STINSON v. UNITED STATES
    No. 91-8685.
    Argued March 24, 1993 —
    Decided May 3, 1993

      William Mallory Kent argued the cause and filed a brief for petitioner.

      Paul J. Larkin, Jr., argued the cause for the United States. With him on the brief were Acting Solicitor General Bryson, Acting Assistant Attorney General Keeney, and John F. DePue.

        Robert Augustus Harper filed a brief for the Florida Association of Criminal Defense Lawyers as amicus curiae.

   Justice Kennedy

delivered the opinion of the Court.

In this case we review a decision of the Court of Appeals for the Eleventh Circuit holding that the commentary to the Sentencing Guidelines is not binding on the federal courts. We decide that commentary in the Guidelines Manual that interprets or explains a guideline is authoritative unless it violates the Constitution or a federal statute, or is inconsistent with, or a plainly erroneous reading of, that guideline.

Petitioner Terry Lynn Stinson entered a plea of guilty to a five-count indictment resulting from his robbery of a Florida bank. The presentence report recommended that petitioner be sentenced as a career offender under the Sentencing Guidelines. See United States Sentencing Commission, Guidelines Manual §4B1.1 (Nov. 1989). Section 4B1.1 provided that a defendant is a career offender if:

“(1) the defendant was at least eighteen years old at the time of the instant offense, (2) the instant offense of conviction is a felony that is either a crime of violence or a controlled substance offense, and (3) the defendant has at least two prior felony convictions of either a crime of violence or a controlled substance offense.”

All concede that petitioner was at least 18 years old when the events leading to the indictment occurred and that he then had at least two prior felony convictions for crimes of violence, thereby satisfying the first and third elements in the definition of career offender. It is the second element in this definition, the requirement that the predicate offense be a crime of violence, that gave rise to the ultimate problem in this case. At the time of his sentencing, the Guidelines defined “crime of violence” as, among other things, “any offense under federal or state law punishable by imprisonment for a term exceeding one year that... involves conduct that presents a serious potential risk of physical injury to another.” §4B1.2(1). The United States District Court for the Middle District of Florida found that petitioner’s conviction for the offense of possession of a firearm by a convicted felon, 18 U. S. C. § 922(g), was a crime of violence, satisfying the second element of the career offender definition. Although the indictment contained other counts, the District Court relied only upon the felon-in-possession offense in applying the career offender provision of the Guidelines. In accord with its conclusions, the District Court sentenced petitioner as a career offender.

On appeal, petitioner maintained his position that the offense relied upon by the District Court was not a crime of violence under USSG §§4B1.1 and 4B1.2(1). The Court of Appeals affirmed, holding that possession of a firearm by a felon was, as a categorical matter, a crime of violence. 943 F. 2d 1268, 1271-1273 (CA11 1991). After its decision, however, Amendment 433 to the Guidelines Manual, which added a sentence to the commentary to §4B1.2, became effective. The new sentence stated that “[t]he term ‘crime of violence’ does not include the offense of unlawful possession of a firearm by a felon.” USSG App. C, p. 253 (Nov. 1992). See §4B1.2, comment., n. 2. Petitioner sought rehearing, arguing that Amendment 433 should be given retroactive effect, but the Court of Appeals adhered to its earlier interpretation of “crime of violence” and denied the petition for rehearing in an opinion. 957 F. 2d 813 (CA11 1992) (per curiam).

Rather than considering whether the amendment should be given retroactive application, the Court of Appeals held that commentary to the Guidelines, though “persuasive,” is of only “limited authority” and not “binding” on the federal courts. Id., at 815. It rested this conclusion on the fact that Congress does not review amendments to the commentary under 28 U. S. C. § 994(p). The Court of Appeals “decline[d] to be bound by the change in section 4B1.2’s commentary until Congress amends section 4B1.2,s language to exclude specifically the possession of a firearm by a felon as a ‘crime of violence.”’ 957 F. 2d, at 815. The various Courts of Appeals have taken conflicting positions on the authoritative weight to be accorded to the commentary to the Sentencing Guidelines, so we granted certiorari. 506 U. S. 972 (1992).

The Sentencing Reform Act of 1984 (Sentencing Reform Act), as amended, 18 U. S. C. §3551 et seq. (1988 ed. and Supp. Ill), 28 U.S.C. §§991-998 (1988 ed. and Supp. Ill), created the Sentencing Commission, 28 U. S. C. § 991(a), and charged it with the task of “establish[ingj sentencing policies and practices for the Federal criminal justice system,” § 991(b)(1). See Mistretta v. United States, 488 U. S. 361, 367-370 (1989). The Commission executed this function by promulgating the Guidelines Manual. The Manual contains text of three varieties. First is a guideline provision itself. The Sentencing Reform Act establishes that the Guidelines are “for use of a sentencing court in determining the sentence to be imposed in a criminal ease.” 28 U. S. C. § 994(a)(1). The Guidelines provide direction as to the appropriate type of punishment — probation, fine, or term of imprisonment — and the extent of the punishment imposed. §§ 994(a)(1)(A) and (B). Amendments to the Guidelines must be submitted to Congress for a 6-month period of review, during which Congress can modify or disapprove them. § 994(p). The second variety of text in the Manual is a policy statement: The Sentencing Reform Act authorizes the promulgation of “general policy statements regarding application of the guidelines” or other aspects of sentencing that would further the purposes of the Act. § 994(a)(2). The third variant of text is commentary, at issue in this case. In the Guidelines Manual, both guidelines and policy statements are accompanied by extensive commentary. Although the Sentencing Reform Act does not in express terms authorize the issuance of commentary, the Act does refer to it. See 18 U. S. C. § 3553(b) (in determining whether to depart from a guidelines range, “the court shall consider only the sentencing guidelines, policy statements, and official commentary of the Sentencing Commission”). The Sentencing Commission has provided in a Guideline that commentary may serve these functions: commentary may “interpret [a] guideline or explain how it is to be applied,” “suggest circumstances which ... may warrant departure from the guidelines,” or “provide background information, including factors considered in promulgating the guideline or reasons underlying promulgation of the guideline.” USSG § 1B1.7.

As we have observed, “the Guidelines bind judges and courts in the exercise of their uncontested responsibility to pass sentence in criminal cases.” Mistretta v. United States, supra, at 391. See also Burns v. United States, 501 U. S. 129, 133 (1991). The most obvious operation of this principle is with respect to the Guidelines themselves. The Sentencing Reform Act provides that, unless the sentencing court finds an aggravating or mitigating factor of a kind, or to a degree, not given adequate consideration by the Commission, a circumstance not applicable in this ease, “[t]he court shall impose a sentence of the kind, and within the range,” established by the applicable guidelines. 18 U. S. C. §§ 3553(a)(4), (b). The principle that the Guidelines Manual is binding on federal courts applies as well to policy statements. In Williams v. United States, 503 U. S. 193, 201 (1992), we said that “[w]here ... a policy statement prohibits a district court from taking a specified action, the statement is an authoritative guide to the meaning of the applicable Guideline.” There, the District Court had departed upward from the Guidelines’ sentencing range based on prior arrests that did not result in criminal convictions. A policy statement, however, prohibited a court from basing a départure on a prior arrest record alone. USSG §4A1.3, p. s. We held that failure to follow the policy statement resulted in a sentence “imposed as a result of an incorrect application of the sentencing guidelines” under 18 U. S. C. § 3742(f)(1) that should be set aside on appeal unless the error was harmless. 503 U. S., at 201, 203.

In the case before us, the Court of Appeals determined that these principles do not apply to commentary. 957 F. 2d, at 814-815. Its conclusion that the commentary now being considered is not binding on the courts was error. The commentary added by Amendment 433 was interpretive and explanatory of the Guideline defining “crime of violence.” Commentary which functions to “interpret [a] guideline or explain how it is to be applied,” USSG § 1B1.7, controls, and if failure to follow, or a misreading of, such commentary results in a sentence “seleet[ed]. . . from the wrong guideline range,” Williams v. United States, supra, at 203, that sentence would constitute “an incorrect application of the sentencing guidelines” under 18 U. S. C. § 3742(f)(1). A Guideline itself makes this proposition clear. See USSG § 1B1.7 (“Failure to follow such commentary could constitute an incorrect application of the guidelines, subjecting the sentence to possible reversal on appeal”). Our holding in Williams dealing with policy statements applies with equal force to the commentary before us here. Cf. USSG § 1B1.7 (commentary regarding departures from the Guidelines should be “treated as the legal equivalent of a policy statement”); § 1B1.7, comment. (“Portions of [the Guidelines Manual] not labeled as guidelines or commentary ... aré to be construed as commentary and thus have the force of policy statements”).

It does not follow that commentary is binding in all instances. If, for example, commentary and the guideline it interprets are inconsistent in that following one will result in violating the dictates of the other, the Sentencing Reform Act itself commands compliance with the guideline. See 18 U. S. C. §§ 3553(a)(4), (b). Some courts have refused to follow commentary in situations falling short of such flat inconsistency. Thus, we articulate the standard that governs the decision whether particular interpretive or explanatory commentary is binding.

Different analogies have been suggested as helpful characterizations of the legal force of commentary. Some we reject. We do not think it helpful to treat commentary as a contemporaneous statement of intent by the drafters or issuers of the guideline, having a status similar to that of, for example, legislative committee reports or the advisory committee notes to the various federal rules of procedure and evidence. Quite apart from the usual difficulties of attributing meaning to a statutory or regulatory command by reference to what other documents say about its proposers’ initial intent, here, as is often true, the commentary was issued well after the guideline it interprets had been promulgated. The guidelines of the Sentencing Commission, moreover, cannot become effective until after the 6-month review period for congressional modification or disapproval. It seems inconsistent with this process for the Commission to announce some statement of initial intent well after the review process has expired. To be sure, much commentary has been issued at the same time as the guideline it interprets. But neither the Guidelines Manual nor the Sentencing Reform Act indicates that the weight accorded to, or the function of, commentary differs depending on whether it represents a contemporaneous or ex post interpretation.

We also find inapposite an analogy to an agency’s construction of a federal statute that it administers. Under Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984), if a statute is unambiguous the statute governs; if, however, Congress’ silence or ambiguity has “left a gap for the agency to fill,” courts must defer to the agency’s interpretation so long as it is “a permissible construction of the statute.” Id., at 842-843. Commentary, however, has a function different from an agency’s legislative rule. Commentary, unlike a legislative rule, is not the product of delegated authority for rulemaking, which of course must yield to the clear meaning of a statute. Id., at 843, n. 9. Rather, commentary explains the guidelines and provides concrete guidance as to how even unambiguous guidelines are to be applied in practice.

Although the analogy is not precise because Congress has a role in promulgating the guidelines, we think the Government is correct in suggesting that the commentary be treated as an agency’s interpretation of its own legislative rule. Brief for United States 13-16. The Sentencing Commission promulgates the guidelines by virtue of an express congressional delegation of authority for rulemaking, see Mistretta v. United States, 488 U. S., at 371-379, and through the informal rulemaking procedures in 5 U. S. C. §553, see 28 U. S. C. § 994(x). Thus, the guidelines are the equivalent of legislative rules adopted by federal agencies. The functional purpose of commentary (of the kind at issue here) is to assist in the interpretation and application of those rules, which are within the Commission’s particular area of concern and expertise and which the Commission itself has the first responsibility to formulate and announce. In these respects this type of commentary is akin to an agency’s interpretation of its own legislative rules. As we have often stated, provided an agency’s interpretation of its own regulations does not violate the Constitution or a federal statute, it must be given “controlling weight unless it is plainly erroneous or inconsistent with the regulation.” Bowles v. Seminole Rock & Sand Co., 325 U. S. 410, 414 (1945). See, e. g., Robertson v. Methow Valley Citizens Council, 490 U. S. 332, 359 (1989); Lyng v. Payne, 476 U. S. 926, 939 (1986); United States v. Larionoff, 431 U. S. 864, 872-873 (1977); Udall v. Tollman, 380 U. S. 1, 16-17 (1965). See also 2 K. Davis, Administrative Law Treatise § 7:22, pp. 105-107 (2d ed. 1979).

According this measure of controlling authority to the commentary is consistent with the role the Sentencing Reform Act contemplates for the Sentencing Commission. The Commission, after all, drafts the guidelines as well as the commentary interpreting them, so we can presume that the interpretations of the guidelines contained in the commentary represent the most accurate indications of how the Commission deems that the guidelines should be applied to be consistent with the Guidelines Manual as a whole as well as the authorizing statute. The Commission has the statutory obligation “periodically [to] review and revise” the guidelines in light of its consultation with authorities on and representatives of the federal criminal justice system. See 28 U. S. C. § 994(b). The Commission also must “revie[w] the presentence report, the guideline worksheets, the tribunal’s sentencing statement, and any written plea agreement,” Mistretta v. United States, supra, at 369-370, with respect to every federal criminal sentence. See 28 U. S. C. § 994(w). In assigning these functions to the Commission, “Congress necessarily contemplated that the Commission would periodically review the work of the courts, and would make whatever clarifying revisions to the Guidelines conflicting judicial decisions might suggest.” Braxton v. United States, 500 U. S. 344, 348 (1991). Although amendments to guidelines provisions are one method of incorporating revisions, another method open to the Commission is amendment of the commentary, if the guideline which the commentary interprets will bear the construction. Amended commentary is binding on the federal courts even though it is not reviewed by Congress, and prior judicial constructions of a particular guideline cannot prevent the Commission from adopting a conflicting interpretation that satisfies the standard we set forth today.

It is perhaps ironic that the Sentencing Commission’s own commentary fails to recognize the full significance of interpretive and explanatory commentary. The commentary to the Guideline on commentary provides:

“[I]n seeking to understand the meaning of the guidelines courts likely will look to the commentary for guidance as an indication of the intent of those who wrote them. In such instances, the courts will treat the commentary mueh like legislative history or other legal material that helps determine the intent of a drafter.” USSG § 1B1.7, comment.

We note that this discussion is phrased in predictive terms. To the extent that this commentary has prescriptive content, we think its exposition of the role of interpretive and explanatory commentary is inconsistent with the uses to which the Commission in practice has put such commentary and the

command in.§lB1.7 that failure to follow interpretive and explanatory commentary could result in reversible error.

We now apply these principles to Amendment 433. We recognize that the exclusion of the felon-in-possession offense from the definition of “crime of violence” may not be compelled by the guideline text. Nonetheless, Amendment 433 does not run afoul of the Constitution or a federal statute, and it is not “plainly erroneous or inconsistent” with §4B1.2, Bowles v. Seminole Rock & Sand Co., supra, at 414. As a result, the commentary is a binding interpretation of the phrase “crime of violence.” Federal courts may not use the felon-in-possession offense as the predicate crime of violence for purposes of imposing the career offender provision of USSG §4B1.1 as to those defendants to whom Amendment 433 applies.

The Government agrees that the Court of Appeals erred in concluding that commentary is not binding on the federal courts and in ruling that Amendment 433 is not of controlling weight. See Brief for United States 11-19. It suggests, however, that we should affirm the judgment on an alternative ground. It argues that petitioner’s sentence conformed with the Guidelines Manual in effect when he was sentenced, id., at 22-29, and that the sentence may not be reversed on appeal based upon a postsentence amendment to the provisions in the Manual, id., at 19-22. The Government claims that petitioner’s only recourse is to file a motion in District Court for resentencing, pursuant to 18 U. S. C. § 3582(e)(2). Brief for United States 33-35. It notes that after the Court of Appeals denied rehearing in this case, the Sentencing Commission amended USSG § 1B1.10(d), p. s., to indicate that Amendment 433 may be given retroactive effect under § 3582(c)(2). See Amendment 469, USSG App. C, p. 296 (Nov. 1992).

We decline to address this argument. In refusing to upset petitioner’s sentence, the Court of Appeals did not consider the nonretroactivity theory here advanced by the Government; its refusal to vacate the sentence was based only on its view that commentary did not bind it. This issue, moreover, is not “fairly included” in the question we formulated in the grant of certiorari, see 506 U. S. 972 (1992). Cf. this Court’s Rule 14.1(a). We leave the contentions of the parties on this aspect of the case to be addressed by the Court of Appeals on remand.

The judgment of the United States Court of Appeals for the Eleventh Circuit is vacated, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

       Amendment 433 was contrary to a substantial body of Circuit precedent holding that the felon-in-possession offense constituted a crime of violence in at least some circumstances. See, e.g., United States v. Williams, 892 F. 2d 296, 304 (CA3 1989), cert. denied, 496 U. S. 939 (1990); United States v. Goodman, 914 F. 2d 696, 698-699 (CA5 1990); United States v. Alvarez, 914 F. 2d 915, 917-919 (CA7 1990), cert. denied, 500 U. S. 934 (1991); United States v. Cornelius, 931 F. 2d 490, 492-493 (CA8 1991); United States v. O’Neal, 937 F. 2d 1369, 1374-1375 (CA9 1990); United States v. Walker, 930 F. 2d 789, 793-795 (CA10 1991); 943 F. 2d 1268, 1271-1273 (CA11 1991) (case below).

       With the decision below compare, e. g., United States v. Weston, 960 F. 2d 212, 219 (CA1 1992) (when the language of a guideline is not “fully self-illuminating,” courts should look to commentary for guidance; while commentary “do[es] not possess the force of law,” it is an “important interpretive ai[d], entitled to considerable respect”); United States v. Joshua, 976 F. 2d 844, 855 (CA3 1992) (commentary is analogous to an administrative agency’s interpretation of an ambiguous statute; courts should defer to commentary if it is a “reasonable reading” of the guideline); United States v. Wimbish, 980 F 2d 312, 314-315 (CA5 1992) (commentary has the force of policy statements; while courts “must consider” commentary, “they are not bound by [it] as they are by the guidelines”), cert. pending, No. 92-7993; United States v. White, 888 F 2d 490, 497 (CA7 1989) (commentary constitutes a “contemporaneous explanatio[n] of the Guidelines by their authors, entitled to substantial weight”); United States v. Smeathers, 884 F. 2d 363, 364 (CA8 1989) (commentary “reflects the intent” of the Sentencing Commission); United States v. Anderson, 942 F. 2d 606, 611-613 (CA9 1991) (en banc) (commentary is analogous to advisory committee notes that accompany the federal rules of procedure and evidence; commentary should be applied unless it cannot be construed as consistent with the Guidelines); United States v. Saucedo, 950 F. 2d 1508, 1515 (CA10 1991) (refuses to follow amendment to commentary that is inconsistent with Circuit precedent; “our interpretation of a guideline has the force of law until such time as the Sentencing Commission or Congress changes the actual text of the guideline”).