TEXAS STATE COM'N FOR THE BLIND v. U.S.

NIES, Circuit Judge.

The United States appeals from the judgment of the U.S. Claims Court2 holding the United States liable under the income-sharing provisions of the Randolph-Sheppard Vending Stand Act, 20 U.S.C. §§ 107-107f (1982), to the Texas State Commission for the Blind and the State of Texas (collectively hereafter, TSCB) for income derived from vending machines operated by the military exchanges of the Department of Defense. We reverse.

I.

This appeal involves a question of statutory interpretation of the Randolph-Sheppard Act (the Act). More precisely, the issue is whether a regulation of the Department of Defense (DOD) reasonably interprets the scope of the statutory exemption provided for military exchanges from the requirements of the Act that income from vending machines on federal property be shared with blind vendors and/or state blind agencies.

In 1936, Congress passed the Randolph-Sheppard Act, Ch. 638, 74 Stat. 1559 (1936) (current version at 20 U.S.C. §§ 107-107f (1982)), to provide blind persons with remunerative employment and economic opportunities by permitting them to operate vending stands in federal buildings. The program was only moderately successful. Part of the problem was general apathy to the program among the agencies. In addition, civilian employee welfare and recreation groups were being permitted by agencies to place vending machines in federal buildings to finance the activities of such groups. The competition from these machines diverted income from blind vendors and made the establishment of new vending stands economically unattractive.

The practice of allowing employee groups, such as unions, to utilize federal property free of charge and to retain the funds without any accountability was of questionable legality. In 1952, the Comptroller General issued an opinion advising the Attorney General that funds derived from vending machines at the Federal Bureau of Investigation were received "for the use of the United States" within the meaning of that phrase in 31 U.S.C. § 484 and were required to be deposited into the Treasury as miscellaneous receipts. Comp.Gen.Dec. B-111,086, 32 Comp.Gen. 124 (1952). In view of that opinion, the Comptroller General, in a related opinion that year, ruled that the practice of allowing postal employee groups to install vending machines on federal property and retain the profits was of "doubtful" legality. However, the Comptroller General concluded that his office would "interpose no objection to the continued use of proceeds by employee groups" pending action on clarifying legislation which the Controller General had recommended to Congress.3

In 1954, Congress amended the Randolph-Sheppard Act to make it more effective. Amendments to the Randolph-Sheppard Vending Stand Act, Pub.L. No. 83-565, § 4, 68 Stat. 663 (1954). These amendments mandated that blind vendors be given a "preference," so far as feasible, in establishing new stands on federal property and authorized the heads of agencies to assign vending machine income to blind vendors with whom vending machines directly competed in order to assure such "preference." However, it appears that the assignment of income power was virtually ignored. In 1962, Senator Randolph, in proposing further amendments to improve the opportunities for the blind, specifically recognized that vending machines of civilian employee groups were the source of the problem and urged that such groups could and should find "other means of financing [their] projects." Operation of Vending Stands for the Blind in Federal Buildings: Hearing on S. 394 Before the Special Subcomm. of the Senate Comm. on Government Operations, 87th Cong., 2d Sess. 10 (1962).

In 1974, over strong opposition by civilian employee groups, particularly the Postal Workers Union, significant changes were made in the Act because of continued congressional dissatisfaction with the limited expansion of the blind vendor program. Randolph-Sheppard Act Amendments, Pub.L. No. 93-516, Title II, 88 Stat. 1622 (1974). These amendments were in large part, again, the result of the efforts of Senator Randolph and included provisions by which blind vendors were given "priority" (not merely a preference) in operating new facilities so as to increase their numbers; the items allowed to be sold were expanded; and income from vending machines — with some exemptions — was required to be shared either with blind vendors directly or with state agencies for the blind. The sharing percentages are 100% for machines in direct competition with blind vendors; 50% where there is no direct competition unless at least half of the hours worked on the premises where the machines are located are outside normal working hours; and 30% in the latter case. 20 U.S.C. § 107d-3(b)(1) (1982).

The exemption provided in the 1974 amendments, which concerns us here, is found in 20 U.S.C. § 107d-3(d) (1982) and provides:

A DOD regulation, 32 C.F.R. § 260.3(i)(3)(i) (1985), interprets this exemption to exclude:

A number of state agencies, TSCB being one, nevertheless, sought to share in the income of military exchanges. In May, 1979, TSCB filed a complaint with HEW which resulted in the convening of an arbitration panel, as provided in the statute (20 U.S.C. § 107d-1(a) (1982)), to adjudge the validity of its asserted right to a share of vending machine income of the military exchanges. TSCB argued that the statutory exemption covered only those vending machines of the military exchanges physically located within the four walls of military exchange stores.

In a split decision, the arbitration panel of three held that the position of TSCB was the correct interpretation of the statute. Texas (Texas State Commission for the Blind) v. Department of Defense, No. RS 79-4 (Sept. 2, 1981). The majority of the arbitrators stated that the statutory language did not "appear to be ambiguous." Slip op. at 11. "Within retail sales outlets," per the two arbitrators, would normally be understood to mean "inside the four walls of an exchange system store." They then recognized that "within" could also mean "a part of" but concluded that this would render the phrase "retail sales outlets" meaningless. Slip op. at 11-12. On the other hand, the unequivocal legislative history against reaching income of the military exchanges raised questions in their minds as to the "clarity" of the language. Slip op. at 12. Ultimately, the two arbitrators resolved the question of the scope of the military exemption by reliance "on the general intent and approach of the legislation itself. These facts argue for a narrow reading of any limitation on opportunities for the blind." Slip op. at 15. To be exempt, they concluded, vending machines had to be "within the four walls of an exchange system store" but "expressly [did] not decide the issue of whether vending machines directly outside retail sales outlets are to be deemed inside or outside these stores." Slip op. at 18 and n. 27. The majority found final support for its position in regulations of the Department of Health, Education and Welfare (HEW), the principal agency under the Act charged with its administration. The majority did not rely on specific language in the HEW regulations (the regulations simply repeat the statute), but on HEW's refusal to amend its regulations to include the broad exemption language requested by DOD. Slip op. at 16-17.

The dissenting arbitrator, in reaching his conclusion that DOD's position was correct, relied on the essentially different nature of the military exchanges from civilian employee welfare and recreation groups. Through the profits generated by military exchanges, essential governmental support services were provided for military service personnel and their families. He noted that extracts from Congressional Hearings and Reports of record dated 1949, 1953, 1970, 1972, 1974, 1978 and 1979 on non-Randolph-Sheppard legislation established that this arrangement had been recognized and approved by Congress as mutually beneficial to service personnel and to the public fisc. In his view, the legislative history unequivocally indicated that the military exchange systems were intended to be exempt and that that purpose could be given effect without a strained reading of the words of the statute.

In the minority arbitrator's view, the statutory language had no "plain meaning." Indeed, TSCB had conceded that the statutory words "retail sales outlet" and "within" were susceptible to more than one interpretation, and the majority opinion had expressly left open the question whether vending machines directly outside exchange stores should be deemed "within" such stores under the statute. The "plain language" of the statute seen by the majority, in his words, "turned out not to be so plain."

Following the decision of the arbitration panel, on September 2, 1981, TSCB sought to obtain enforcement of the arbitration decision by the Department of Education (DOE), which had succeeded to HEW's authority under the Randolph-Sheppard Act. Act of October 17, 1979, Pub.L. No. 96-88, Title VI, 93 Stat. 696. In the interim, the State of Oklahoma had initiated litigation in federal district court against DOD on a comparable claim to military exchange income.4 Because of the conflict between the interpretations of the statute by two government departments (DOE and DOD), DOE referred the matter to the Department of Justice for resolution, as required by Executive Order No. 12,146, 3 C.F.R. § 409.411 (1980). On February 1, 1982, the Department of Justice advised that it resolved the conflict in favor of DOD. Therefore, the Department of Justice undertook to defend the Oklahoma suit on the basis of DOD's interpretation.

The decisions in the Oklahoma litigation are reported at Oklahoma v. Weinberger, 582 F.Supp. 293 (W.D.Okla.1982), aff'd, 741 F.2d 290 (10th Cir.1983). In sum, those courts held that the statutory language was not without some ambiguity as evidenced by the changes in HEW's position during the drafting of its own regulations.5 In their view, the proposed narrow interpretation was contrary to the intent of Congress, since limiting the exemption to vending machines physically within exchange stores would effectively deprive the exchanges of any exemption. On the other hand, the DOD regulation, endorsed by the Department of Justice, was consistent with the statutory language, the purpose of the exemption, and congressional intent in the overall purpose of the Act. Thus, both the Oklahoma district court and the 10th Circuit held DOD's regulation valid.

The suit by TSCB, seeking enforcement of the arbitration award in its favor, was filed in the United States Claims Court in March, 1983. The Claims Court rendered its decision, upholding the award, after the 10th Circuit decision, thereby creating a clear conflict in interpretation.

The Claims Court's decision turned particularly on the meaning of the statutory term "within." The common usage of the term, per the court, "contemplates spatial boundaries." 6 Cl.Ct. at 738. The court discounted the significance of the legislative history relied on by the 10th Circuit since the Claims Court considered the history to be "at odds" with the concept of "within physical boundaries." 6 Cl.Ct. at 740. A particular colloquy on the House floor between Messrs. Brademas and Sikes (which specifically supports DOD's interpretation) was discounted because it occurred after the Senate passed the bill and could not have been considered by that body.6 Id. at 741. The Claims Court viewed other portions of the legislative history as supporting TSCB's position because of the use of the words "retail outlet" therein which, in its understanding, meant a store.7 Id. at 740. The court also noted the Conference Report characterizing the exemption as excluding "certain locations." Id. citing S.Rep. No. 1270, 93rd Cong., 2d Sess. 35 (1974); H.R.Rep. No. 1457, 93rd Cong., 2d Sess. 35 (1974). Further, the legislative history's reference to the Marine Corps base in Albany, Georgia, as a "model" because of the number of blind vendors was seen to overcome DOD's argument that the income-sharing provisions were directed to the civilian groups only. 6 Cl.Ct. at 741.

Finally, since the majority of vending machines on DOD-controlled property are operated by the exchange system, the congressional purpose of the act would be frustrated, per the Claims Court, if these were exempt. To avoid "nullifying" the statute, the court ruled in favor of TSCB. Id. at 741-42.

The court certified the question of statutory interpretation to this court which accepted jurisdiction.8

II.

Upon consideration of the statutory language, the legislative history, the purpose of the exemption, and the status of the military exchanges as non-appropriated fund instrumentalities performing essential governmental services, we conclude that the Claims Court erred in voiding the DOD regulation.

The task before us of interpreting the statutory language of the military exchanges exemption is succinctly summarized in United States v. Turkette, 452 U.S. 576, 580, 101 S.Ct. 2524, 2527, 69 L.Ed.2d 246 (1981):

In this case, the statement of the difficulty in identifying "plain" or "unambiguous language" is particularly apropos. Whether or not words of a statute are clear is itself not always clear. Even if the "common" understanding of "within retail sales outlets" were physically within the walls of a store, as the Claims Court held, that does not make the subject phrase "plain" or "unambiguous." The determination of what usage of particular words is common must be rejected as an "errorless test."

Moreover, even where a statute is clear on a purely linguistic level, interpretation may be necessary if that interpretation does not do justice to the realities of the situation. As stated by the Supreme Court in Church of the Holy Trinity v. United States, 143 U.S. 457, 459, 12 S.Ct. 511, 512, 36 L.Ed. 226 (1892), it is a "familiar rule that a thing may be within the letter of the statute, but not within its spirit nor within the intention of its makers." See also United States v. Riverside Bayview Homes, Inc., ___ U.S. ___, 106 S.Ct. 455, 461, 88 L.Ed.2d 419 (1985) (argument that it is "unreasonable to classify `lands,' wet or otherwise, as `waters'" is "simplistic.")

Finally, the question in this case is not what interpretation this court would give to the statute were it the executive branch. The issue to be decided by this court is whether the statute is capable of more than one interpretation and whether the agency's interpretation is reasonable.

With these premises in mind, we turn to the statutory analysis.

III.

The arbitration award represents an amount estimated to be in excess of $10 million which must be paid from DOD current funds for essential government services for the military and their families. The brief review of legislative history noted above indicates that the funds Congress anticipated would be used for the state agencies for the blind were funds which could be diverted at no cost to the government and no diminution in essential government services. In keeping with that expectation, Congress over a period of 11 years has failed to appropriate any moneys to make up for the loss of exchange funds which the Claims Court held Congress intended to be transferred to the blind.

No rational reason can be advanced to conclude that Congress intended military personnel and their families to support the blind by giving up essential services. Indeed, the whole rationale behind the Claims Court's finding that it had jurisdiction over the claim here shows the special nature of the funds generated by the military exchange systems and differentiates such funds from those of private groups organized by civilian employees, such as employees' unions, which were clearly intended to be diverted to the blind.9 As indicated, the funds of the latter-type of organizations were being used without any governmental control for whatever group activities their membership wished, such as flowers for the sick, birthday and wedding gifts, band uniforms, scholarships, furnishings for recreation rooms, and general social activities.10 No funding by Congress can be provided for such activities. In contrast, the only services financed by the funds of the military exchanges are child care centers, libraries, youth activities, gymnasiums, arts and crafts facilities and similar essential support services, which are furnished around the world for military personnel and families. Such services are of a nature for which appropriated funds are also used, indeed, have been provided by yearly Congressional appropriation. The amount of exchange-generated funds is taken into account in determining the amount of the appropriation. Precisely because of this interrelationship, the Claims Court found it had jurisdiction over this claim under the precedent of United States v. General Electric Corp., 727 F.2d 1567, 1570 (Fed.Cir.1984) and cases cited therein. Texas State Commission for the Blind v. U.S., 6 Cl.Ct. at 737-38.

The Claims Court avoided what it called the "difficult question" which would be raised were additional appropriated funds necessary as a result of its judgment (28 U.S.C. § 2517, 31 U.S.C. § 1304) by characterizing the judgment which will result as "in the nature of a refund." 6 Cl.Ct. at 737. Under this theory, the judgment is then payable by DOD from the account which was credited with the revenues collected by the exchanges, or from other appropriated funds used by DOD to fund its morale, welfare and recreational programs.

The concept that the judgment is a "refund" is not only a tortured theory, but also ignores the realities of the judgment. The judgment of the Claims Court would require an immediate cut in essential government services to satisfy the retroactive liability, as well as additional appropriations indefinitely into the future to provide essential government services which otherwise must be reduced. It is unlikely that such a major change in financing for, or in the amount of, military support services would have been undertaken by Congress without serious controversy. There was none. Moreover, if the bill were intended to have such an effect, it would have been taken up by appropriate finance and military affairs committees. It was not. Skirting these problems, the Senate Subcommittee on the Handicapped, which reported the bill, inserted a last-minute amendment exempting the military exchanges, and the Senate Report states unequivocally that the exchanges were wholly exempt. See S.Rep. No. 937, 93d Cong., 2nd Sess. 24 (1974). The House floor debate agreed with the Senate's understanding of the scope of the exemption. See 120 Cong.Rec. 35,712 (1974).

The 1973 statement submitted on behalf of organizations for the blind, in support of enactment of the 1974 amendments, was limited to the funds of civilian employee groups:

Randolph-Sheppard Act for the Blind Amendments of 1973: Hearings on S.2581 Before the Subcomm. on the Handicapped of the Senate Comm. on Labor and Public Welfare, 93d Cong., 1st Sess. 139 (1973) (statement of representatives of various organizations for the blind).

The funds of such employee groups were attractive targets for diversion. No similar motive existed for reaching the earnings of military exchanges. Diversion of that income to state agencies for the blind would make no economic sense. It would simply be robbing Peter to pay Paul, and then appropriating money for Peter to make up for the transfer.

The government does not argue here that the Randolph-Sheppard Act does not apply to military bases. There is no question that Congress sought more opportunities for blind vendors on all DOD properties, and other provisions of the 1974 amendments effectively reach DOD.11 These include expansion of blind opportunities from vending "stands" to vending "facilities," e.g., cafeterias, including rooms with vending machines only; expansion of items to be sold; the granting of a mandatory "priority" in allocating sites rather than merely a "preference" to blind vendors; a requirement for sites for blind vendors in all new or renovated Federal buildings; and, of course, income sharing, which reaches the numerous non-military exchange groups within DOD. At this time, DOD is second only to GSA in implementing the program for the blind both in numbers of sites and in the amount of income turned over to the states for their programs.12

As initially drafted, that is, before the exemption, the bill amending the Act was so broad that it could be read to cover every vending machine on federal property. The circumstances surrounding insertion of the subsection providing exemptions were not conducive to precision in drafting.13 The subsection simply appeared in a markup of the entire bill put before the January 29, 1974, executive meeting of the Senate Committee on Labor and Public Welfare, Subcommittee on the Handicapped.14 There was no opportunity for input from other committees or from DOD. The minutes of the meeting, which are in the record, disclose that the sole topic of discussion was the continuing controversy with the Postal workers and other unions over diverting funds from their vending machines and what compromise (such as grandfathering) could be worked out to mollify them.

On June 5, 1974, at another executive session, Senator Williams asked the sponsor of the bill, Senator Randolph, to explain it. Senator Randolph said the bill would enable more blind persons to become active so that they would not have to rely on relief or charity. "The moneys that should go to the blind are going to Federal employee unions." He hoped that "an accommodation would be reached with the unions."15 Senator Dominick asked again "To whom does the income from vending machines now go?" Mr. Robert Humphreys (of the staff) replied, "To the Employee Union Welfare Committees." Since Senator Randolph was the sponsor of the amendments, his explanation and that of the staff cannot be viewed as casual, off-the-cuff comments. The subcommittee was conscientiously restricting itself to reaching only funds of civilian organizations which were being withheld from the Treasury. The compromise worked out with the unions was that the blind would share in the vending machine income earned by private employee groups in exchange for Congress' sanctioning the retention of the balance by such private groups. There was no similar compromise necessary with respect to exchange funds inasmuch as the retention of exchange funds had for years been approved and the exchanges were recognized as official government instrumentalities.16

On June 17, 1974, the Senate Committee on Labor and Public Welfare issued Senate Report 93-937, which is the principal Congressional report on the 1974 amendments. The Senate Report interprets the exemption to apply to all exchange operated machines:

S.Rep. No. 937, supra, at 24.

A House version of the bill had been passed as part of H.R. 14225 on May 21, 1974; the Senate version on September 10, 1974. In presenting the conference version to the House for final passage, Mr. Brademas, floor manager of the bill and Chairman of the House Select Education Subcommittee, gave the following explanation of the military exchange exemption:

Mr. Sikes, Chairman of the House Armed Services Committee, sought explicit confirmation of the extent of that exemption and the following exchange occurred between them:17

120 Cong.Rec. 35,712 (Oct. 16, 1974).

Immediately following that exchange, the House passed the bill. It could not be clearer that Congress did not intend to cut back on funds for the military or to make additional appropriations as a result of 1974 Randolph-Sheppard amendments. The exemption for the exchanges was intended by both the Senate and the House to be complete. The Claims Court opined that the colloquy's:

6 Cl.Ct. at 741 (citations omitted). The Claims Court's analysis discounts the Senate's own legislative history. The House was adopting the Senate's understanding not vice versa. In any event, because of a presidential veto, Congress passed the bill again.18 Mr. Brademas's explanation, confirmed by the colloquy, thus, is a major factor in determining the intent of both houses, as Mr. Brademas was not simply "another member" but the floor manager and chairman of the sponsoring committee whose remarks are entitled to particular weight. See Lindahl v. Office of Personnel Management, 470 U.S. 768, 105 S.Ct. 1620, 84 L.Ed.2d 674 (1985).19

All legislative history expressly addressing the possible diversion of income from the exchanges indicates that income was to be exempt. The records contain not even a suggestion of cutting funds for essential military services or making up the loss with additional appropriations. The exchanges simply were not to be affected, as the blind organizations themselves represented. The portions of the congressional report, relied on by the Claims Court (and accepted by the dissent) as support for its view, do not, in fact, indicate a contrary purpose. Rather, the portions were deemed supportive to its theory that "within retail sales outlets" must be given a spatial connotation, as a matter of linguistics. Further, Congressional approval of the "model" Marine Corps base was made with reference to providing additional sites for blind vendors, not with reference to income-sharing. The Marine Corps base was not then sharing income generated by exchanges and never has.

HEW's Interpretation of the Exemption

HEW had responsibility for coordinating the administration of the Act among the government agencies and was to draft regulations in consultation with them. There was substantial dispute between HEW and DOD as to the extent of the exemption provided for the military. None of the dispute, however, initially concerned the exemption of military exchanges. HEW agreed these organizations were exempt. Principally the dispute was over an exemption for enlisted and officers' messes (not part of the exchanges). DOD pressed for such an exemption on the basis of the legislative history despite the absence of any language in the statute directed to the messes.

HEW vacillated on allowing this exemption. The negotiations between HEW and DOD and the series of proposed HEW draft regulations, as well as correspondence discussed below, confirm that the HEW position that military exchange income was to be diverted to the blind was a change from its original interpretation.

That the scope of the military exemption was not "plain" to HEW from the statutory language is evidenced by the various drafts of regulations which HEW considered over a period of two years. One of the first HEW drafts, dated March 20, 1975, read:

This version continued through several drafts. An HEW memorandum dated June 2, 1975, clarified HEW's position with respect to DOD civilian employee funds:

The proposed regulation was not, however, published and the next version in July, 1975, while continuing the exemption for the exchanges, eliminated the exemption for officer and enlisted messes and civilian groups. This version read:

DOD pressed for revision to exclude all vending machines in military base communities. The first suggestion by HEW that the exchange income was not exempt appears to have been made in October, 1975. DOD was continuing at that time to argue that messes and civilian DOD groups on military bases should be excluded. On December 23, 1975, HEW published proposed regulations simply repeating the statutory language with no interpretation of what the language meant. 40 Fed.Reg. 59,408, 59,414 (1975). DOD and HEW continued their negotiations.

On April 26, 1976, Congressman Sikes wrote Secretary Matthews of HEW, confirming that the intent of Congress was to exempt the military exchanges, stating: "Although the law was designed to expand opportunities for blind persons, it was not intended to cripple certain Armed Forces morale and welfare activities."

At an April 28, 1976, meeting with DOD, HEW personnel proposed defining "vending machine" in the regulations to exclude any "machines from which the revenue accrues to the Federal Government for credit to the Federal Government." HEW verified that the intent of this change was to exempt DOD non-appropriated fund instrumentalities.20

DOD then wrote HEW as follows:

On May 11, 1976, Secretary Matthews answered Congressman Sikes' letter, reassuring him that HEW appreciated his clarification of congressional intent with respect to officers and enlisted messes and that HEW was working closely with DOD. No mention was made of HEW's intention to deny exemption to income from exchange vending machines.

In June, 1976, Congressman Brademas wrote Congressman Sikes:

However, no regulations "conforming" to the intent of Congress were issued and HEW ceased consultation with DOD.

On March 23, 1977, HEW published final regulations which were exhaustive in other details but, with respect to the military exemption, did little more than repeat the statutory language. 42 Fed.Reg. 15,802-17 (1977), now 34 C.F.R. § 395.32 (1985).21 Interestingly, the preamble to the regulations, in explaining why officers and enlisted messes were not considered exempt, states that the act "limits exemptions from the income sharing requirements to systems authorized under Title 10 of the United States Code...." (Emphasis added.) 42 Fed.Reg. at 15,807. To exclude messes would, HEW stated, require statutory clarification despite their "linkage to Title 10." Id. On the other hand, HEW did exempt (without an explicit statutory basis) stamp vending machine, copy machines, pay telephones, coin-operated game machines, juke boxes and certain NASA and National Park Service concessions, 34 C.F.R. § 395.30 (1985), citing such reasons as "vending that is uniquely supportive of the Postal Service mission," too "significant" a change, probable "Congressional intent," and "not traditionally found in blind operated vending facilities." 42 Fed.Reg. at 15,806.

On July 7, 1977, DOD published its own proposed regulations which stated flatly that income sharing did "not apply to: Income from vending machines operated by or for the military exchanges or ships' stores systems." 42 Fed.Reg. 34,895 (1977). The identical provision was included in DOD's final regulations. 43 Fed.Reg. 25,337, 25,341 (June 12, 1978), now 32 C.F.R. § 260.3(i)(3)(i) (1985).

The agencies were then at logger-heads. DOD attempted to get clarifying amendments before Congress. As acknowledged in the majority decision of the arbitrators:

In 1979, HEW proposed to DOD that the Department of Justice resolve the conflict between the agencies, stating:

However, it was not until the Oklahoma litigation that the matter was referred to the Department of Justice for resolution of the conflicting HEW/DOD interpretations. Justice upheld DOD. HEW acknowledges that it is bound by Justice's ruling and no longer advances its former unpublished interpretation.22

Under these circumstances, there is no basis for deference to the interpretation by HEW. Internally, HEW has vacillated. Its published regulations have never set forth an interpretation of the statutory language. Its late-adopted private interpretation was never published or given effect. It is bound by Justice's interpretation. And, finally, in the face of Justice's interpretation, which conflicted with HEW's, HEW has found it unnecessary to revise its regulations. This is understandable since HEW's regulations have never done more than repeat the statute.

The Statutory Purpose

The Claims Court looked to the overall purpose of the legislation and concluded that an exemption for the exchanges would leave "little or no opportunity" for blind vendors on DOD installations since the majority of vending machines were operated by the exchanges. That finding is clearly erroneous in view of DOD's large contributions to state agencies for the blind.

In any event, the statutory purpose to be considered here is not simply the purpose of the legislation, but the purpose of the exemption. That exemption was designed to keep the financial support of essential services by the exchanges intact so that Congress need not appropriate additional funds. Congress expected the exchange income to continue to supplement essential programs approved by Congress. Senator Randolph, the blind groups, Mr. Brademas, Mr. Sikes, and both chambers of Congress all agreed on this purpose.

IV.

The Statutory Language

Given the congressional purpose of the exemption, the question becomes whether the language can reasonably be interpreted, as in DOD's regulation, to effectuate that purpose. We conclude that the statutory language has sufficient ambiguity to make DOD's interpretation reasonable.23

The first phrase which must be looked at is "income from vending machines." "Vending machine income" requires interpretation, as reflected by the definitions of these terms in HEW regulations setting out exclusions for vending machines of various types and at certain of the National Park Service and NASA facilities. 34 C.F.R. § 395.30 (1985). No statutory provision authorizes these exemptions. HEW simply deemed it necessary and within its power to exclude certain categories of vending machine income which came within the literal words of the statute but were not, in HEW's view, within its intended scope.

"Within retail sales outlets" is not without some ambiguity. "Within" can mean "a part of" a system as well as "inside" a structure. "Retail sales outlets" need not mean "stores." The military exchanges operate movie theatres and other recreation facilities, which easily fall within the term "retail sales outlets" and are not "stores." Indeed, an area with only vending machines has become a typical "retail sales outlet."

TSCB argues that the phrase "within retail sales outlets" is surplusage if DOD's interpretation is accepted.24 By the same token, the words "under the control" are surplusage under the contrary interpretation. No real significance can be attached to either argument.

TSCB also argues that Congress narrowly drafted the exchange exemptions in comparison with the Veterans Canteen Service exemption. However, the Canteen Service does not have retail outlets which generate a surplus to be used for other services. It simply provides articles and services in veterans hospitals and any surplus income is required by statute to be turned in to the Treasury. 38 U.S.C. § 4201. Thus, this difference in exemption language can be explained. In any event, both the Senate and the House said that both were intended to be wholly exempt.

This parsing of sentences is a meaningless exercise here. Undoubtedly, in some instances where statutory language has been finely tuned to cover or to exclude, it is important to consider each word and its relationship to others with great care. This statutory provision was not drawn with great care or precision. For example, the reference to the exchanges systems being authorized by Title 10 is erroneous. See supra note 16.

We do not have an instance here where the words of an exemption were selected after debate over its scope. Indeed, in light of the legislative history, had no exemption been specifically granted, an interpretation by regulation to exclude the military exchanges from the definition of "vending machine income" — which HEW has concluded is proper for other agencies — would appear appropriate. The language selected to insure that the military exchanges were unquestionably exempt "represents an instance of inartful drafting rather than the intentional drawing of a subtle distinction." Exxon Corp. v. Hunt, 475 U.S. ___, 106 S.Ct. 1103, 1113, 89 L.Ed.2d 364 (1986).

V.

"An agency's construction of a statute it is charged with enforcing is entitled to deference if it is reasonable and not in conflict with the expressed intent of Congress." United States v. Riverside Bayview Homes, Inc., 106 S.Ct. at 461. After considering the ambiguities in the statutory language, the legislative history supporting DOD's position, the purpose of the exemption, and the status of the military exchanges as non-appropriated fund instrumentalities performing essential government services, we are convinced that DOD's regulation is reasonable and is not in conflict with the intent of Congress as expressed in the statute. For the foregoing reasons, we agree with the 10th Circuit that DOD's regulation is not void. The judgment of the Claims Court is reversed.25

REVERSED.

DAVIS, Circuit Judge, with whom MARKEY, Chief Judge, and FRIEDMAN, Circuit Judge, join, concurring in the result.

This case presents, in acute form, the recurrent problem of the tension between statutory language and legislative history. I write separately because, for me, the plurality opinion overstresses the alleged "ambiguity" of the statute, while the dissenters underplay the role of the legislative history. My general position is that pertinent legislative history is never wholly irrelevant in the construction of a statute but that the interrelationship of that history with the statutory text follows a continuous spectrum measuring the strength of the language, on the one hand, and the strength of the history, on the other. The more compelling and definitive the words are, the less controlling the legislative history; conversely, the less compelling and definite the language, the more controlling the history to the extent of its strength.1 In this particular instance, my judgment is that Congress' words can permissibly accommodate a certain degree of breadth which is required by the very strong legislative history.

I start with the statutory words. If there were no pertinent legislative history (or if it were amorphous or weak) I would certainly adopt the appellees' reading. To me, the normal meaning of section 107d-3(d) (exempting "income from vending machines within the retail sales outlets under the control of exchange or ships' stores systems authorized by title 10") (emphasis added) covers only vending machines within post exchange stores (or perhaps immediately outside and adjacent to those facilities). However, that wording is not as precise or as definite as if the statute reached only vending machines "inside" exchange stores or ships' stores; rather, the words Congress actually used — "within the retail sales outlets under the control of [military] exchange ... systems" (emphasis added) — can have a wider reach and potentially be read, without necessarily turning white into black, as including all vending machines operated by the military exchange systems. As I have said, I would not take that course unless the legislative history compelled (or very strongly supported) that broader interpretation.

I agree with the plurality's view of the statute because, as I see it, the germane legislative history is very strong and points directly to the wider construction. The colloquy, on the floor of the House of Representatives, between Congressman Brademas and Congressman Sikes2 inescapably states that all vending machines operated by the military exchanges are exempt from the income sharing provision. This colloquy was not simply a floor exchange between two individual, ordinary members of the House. Congressman Brademas was Chairman of the House Select Education Subcommittee and floor manager of the very bill containing the disputed language; Congressman Sikes was Chairman of the House Armed Services Committee, obviously interested in the military exchange systems. Each spoke in that official capacity, and I think their joint views represented the position of their two committees. As the plurality opinion points out, the bill was passed by both Houses of Congress after the Sikes-Brademas colloquy. To me there is very little doubt that the colloquy had a primary role in the enacting of this amendment to the Randolph-Sheppard Act — equivalent in essence to a formal statement in a committee report. In fact Congressman Brademas referred (in June 1976 at the time the Department of Health, Education and Welfare was drafting its regulations) to the Sikes-Brademas exchange as representing "the intent of Congress" (see plurality opinion, supra, p. 413). There is nothing in the remainder of the legislative history which contradicts or conflicts with the Sikes-Brademas colloquy; on the contrary, the relevant part of the Senate Report (S.Rep. No. 937, 93rd Cong., 2d Sess. 24 (1974)) seems in its generality to exempt all vending machines operated by military exchange systems. The sum of it, for me, is that the significant legislators concerned with the precise question before us deliberately and knowingly chose the military version of the meaning of the disputed phase.

I add, however, that I disassociate myself from the emphasis in the plurality opinion on the position of the Department of Justice as relevant to this interpretive issue. As the main dissent points out, the statute expressly gives to the Department of Health, Education and Welfare (now Health and Human Services (HHS)) the power to promulgate regulations necessary to assure compliance with the provision before us (20 U.S.C. § 107d-3(g)) — not to the Department of Justice or to the Department of Defense. The fact is, though, that the current HHS regulations are of no help because they do not deal at all with the dispute we are asked to resolve; an internal or unpublished HHS position (not promulgated in a regulation) does not have the status of a proper regulation, and need not be considered. In a word, there is now no regulation of which account should be taken in construing the statute.

SMITH, Circuit Judge, with whom NEWMAN, Circuit Judge, joins, dissenting.

I respectfully dissent.

The purpose of the Randolph-Sheppard Act is to create employment opportunities for the blind by requiring a priority for blind vending stands on all federal property. The priority is achieved and protected by requiring that income from vending machines operated by competitors must be shared with the blind vendors.

At issue in this appeal is the meaning of the exemption from income sharing for "vending machines within retail sales outlets under the control of exchange or ships' stores systems."1 Also at issue are two conflicting approaches to statutory construction.

A substantial portion of the majority analysis is based on the silence of Congress with respect to military exchange appropriations. The majority also relies on a colloquy which took place on the House floor when a quorum was not present. On this tenuous basis, the majority established "congressional purpose" in the face of the admittedly clear language of the statute.

Plain Meaning of Statute

I can see nothing ambiguous or superfluous in the statutory exemption for "income from vending machines within retail sales outlets under the control of exchange or ships' stores systems." HEW, GAO, the arbitration panel, and the Claims Court reached the only possible conclusion when they decided that vending machines which are not within such retail sales outlets are not exempt from income sharing.

The majority, at the urging of DOD, has rewritten the statute by deleting the words "within retail sales outlets" from Congress' own language. The statutory exemption, as rewritten by the majority, now reads: "income from vending machines under the control of exchange or ships' stores systems." Only after rewriting the statute is it possible to conclude that the exemption covers all vending machines operated by the military exchanges, without regard to the machines' location.

The word "ambiguity" has been defined as "uncertainty of meaning" or "admitting of two or more meanings."2 As for "uncertainty of meaning," it is not difficult to understand "within retail sales outlets" as having the certain meaning "inside the four walls of an exchange system store" (commonly known as "the PX").3 As for "admitting of two or more meanings," the majority never reveals what other meaning "within retail sales outlets" has.4

Contrary to the majority's assertion, the Tenth Circuit did not hold or even imply that the statute was at all ambiguous. The Tenth Circuit stated in Oklahoma v. Weinberger:5

Similarly, the district court in Oklahoma found that "[r]ejection of the `plain meaning' of the exemption" was necessary because:6

Rather, the rationale of the Tenth Circuit and the Western District of Oklahoma was that:7

I agree with the Tenth Circuit that the statute is unambiguous. But notwithstanding my great respect for the Tenth Circuit, I cannot agree that the literal meaning of the words would lead to "absurd results" or "thwart the obvious purpose of the statute."8

A. Clear, Customary Meaning.

Section 107d-3(d) states:9

This section creates distinct exemptions: one for the exchange systems and another for the veterans canteen service.

The exemption provided for the exchange systems, unlike the one provided for the canteen system, contains two phrases of modification. Not only must the machines be "under the control of" the exchange system, the machines must also be "within [its] retail sales outlets." As the Claims Court correctly determined, the plain and customary meaning of the word "within" clearly connotes spatial boundaries.10 The common usage of the word "within" is "to indicate enclosure or containment."11 Thus, as the majority concedes, the customary meaning of "within retail sales outlets" is "physically within the walls of a store."

DOD argues that "within" implies more than just "contained in" and that the exemption protects all machines operated by the military exchanges.12 DOD contends that "within" can mean something other than spatial proximity — for example when used to mean "within the law."13

In the context of section 107d-3(d), DOD's interpretation would require this court to hold that "within" really means "within and without." DOD's interpretation completely reads out of the statute the phrase "within retail sales outlets." Basic principles of statutory construction require that effect should be given to every word of the statute so that no part will be rendered meaningless.14 The two distinct phrases of modification in the statute clearly suggest that vending machines must be more than "under the control of" the military exchanges. The machines must also be "within [a] retail sales outlet."

No definition for "within" urged by DOD makes sense when read in the context of section 107d-3(d). If Congress had simply meant "under the control of" the military exchanges, it would not have included the phrase "within retail sales outlets" in the statute at all. DOD considers the word "within" in isolation and discusses the almost metaphorical meanings that it can take on in other contexts. As this court has recently explained, statutory words "cannot be considered in a vacuum. We sit to interpret a statute, not a word."15

The majority also accepts DOD's argument that the phrase "retail sales outlet" can describe "a cluster of vending machines or even a single vending machine" and that the statute, thereby, exempts all machines. The first error in this strained interpretation is that it is contrary to the accepted meaning of the word "outlet." The term outlet has a common, everyday meaning of "a market for a commodity" or "a retail store."16 It is well settled that unless Congress has clearly indicated a contrary meaning, a word's customary, everyday meaning is favored.17

A second problem with DOD's construction of the phrase "retail sales outlet" is that, in context, it makes the statute meaningless. By equating a vending machine with a "retail sales outlet," DOD construes the statute to exempt "income from vending machines within vending machines." Such a bootstrapped definition would read all meaning out of the exemption. The Claims Court reached the correct interpretation by accounting for all of the words in the statute, without nullifying any of its terms.

B. Veterans Canteen Service Exemption.

DOD's construction of the statute is as follows:

Thus, DOD is really arguing to be treated like the veterans canteen service. Section 107d-3(d) specifically exempts "vending machines operated by the Veterans Canteen Service" (emphasis supplied). The wording of the exemption for the canteen service proves two things. First, Congress knew how to draft the exact exemption that DOD wants, because it did so in the very next clause. Second, this exemption proves that Congress only wanted to provide this broad exemption (encompassing all machines, regardless of location) to the veterans canteen service.18

Legislative History

Where the words of a statute are clear, there is no need to review the legislative history.19 A corollary is that the legislative history cannot be used to create ambiguity where there is none in the statute.20

The majority has placed great reliance on excerpts from the legislative history; however, other portions of the same reports give a clear indication that Congress fully addressed a much broader problem than that spotlighted by the majority. In addressing that part of the majority opinion, the words of our predecessor court, the Court of Customs and Patent Appeals, give us guidance:21

A. Purpose of the Act.

The majority unacceptably narrows the purpose of the act by focusing only on "civilian employee groups." Thus, the majority ignores Congress' language reaching "all Federal property," including DOD and military bases in particular.

Notwithstanding the appeal of arguments made on behalf of the military, the Randolph-Sheppard Act is primarily legislation in support of the blind. The primary purpose of Congress was to create a 2-pronged approach to establish a priority for blind vendors. First, Congress ordered that one or more blind vending stands must be placed on all federal property.22 Congress recognized, however, that since 1936 the act had already required a "preference" for blind vending stands on all federal property. The act had been unsuccessful because of competition from vending machines:23

The act had been amended in 1954 to require the assignment of vending machine income to blind vendors, where vending machines were in direct competition with the blind:

The existing law in 1974 already required a preference for blind vendors on military bases. Yet there were only 46 blind vending stands on 490 military bases.24 Congress was forced to take decisive action to achieve its stated goal of one or more blind vendors on every military base.

Thus, Congress created the second prong, called "income sharing" to "achieve and protect" the priority for blind vendors.25 Income sharing was enacted to prevent competitors from driving blind vendors out of business. A competitor who placed vending machines at the same location as the blind vendor was required to assign 100 percent of the vending machine net income to the blind vendor.26

Similarly, the competitor could not continue to block the placement of a blind vending stand. Even if the competitor succeeded at keeping the blind vendor off the federal property altogether, the competitor was still required to share 50 percent of the vending machine net income with state blind associations.27

Congress designed income sharing to "remedy the evil" of vending machine competition facing blind vendors.28 The two prongs of Congress' approach go hand-in-hand. The admitted priority for blind vendors on military bases simply cannot be "achieve[d] and protect[ed]"29 without the income-sharing provisions of the act.

There can be no doubt that Congress specifically targeted the "evil" of DOD abuses of the Randolph-Sheppard Act when it enacted the 1974 amendments:30

The majority concedes that one or more blind vending stands must be placed on every military base, but the majority takes the teeth out of the statute by recognizing only the first prong (priority for blind vendors on every base) and not the second prong (income sharing "to achieve and protect such priority").31

B. Sound and Meaningful Distinction.

DOD argues that the interpretation arrived at by the Claims Court leads to an "absurd result" because it

Although this contention is stated emphatically, DOD offers no argument or reasons to back it up.

The distinction between machines within retail stores and those in other locations appears to be consistent with Congress' goals and of the compromise struck between the exchange system and the blind. Congress exempted from the income-sharing provisions the revenue from machines located within the exchanges, thereby allowing the exchanges to sell within the store, by machine, whatever they could sell ordinarily. Thus, a blind vendor could not claim that, because an exchange store was selling cigarettes or drinks from a machine rather than by a human, he was entitled to share the income. On the other hand, the exemption does not allow the exchanges to nullify the priority for blind vendors by placing competing vending machines over the entire base.

It is DOD's interpretation that leads to a result plainly at variance with the purpose of the statute, because the interpretation would grant DOD the power to completely circumvent the act. DOD regulations expressly deny the priority for blind vendors with respect to vending machines operated by the exchange system.32 Thus, if DOD's interpretation prevails, it could keep all blind vendors off military bases by ruling that a blind vendor would be competing with a machine operated by the exchange system. This self-appointed power was pointed out to Congress by GAO and it formed a basis for the narrow compromise exemption.33

C. Congress' Silence on PX Appropriations.

One of the consequences of the Randolph-Sheppard Act is that military exchanges are subject to income sharing from vending machines outside the PX stores. The cost of compliance with the act would be less than 4 percent of the exchanges' total annual income.34 The act is completely silent about additional appropriations for the military exchanges to make up for the income sharing. This is not surprising, since this particular act was intended to help the blind; its primary purpose was not to help soldiers and sailors.

The majority, however, attaches great significance to Congress' silence. Under the majority's view, it is not sufficient for Congress to require the military exchanges to share income with the blind. Congress also must demonstrate that it has considered whether additional appropriations will be necessary for the military exchanges.35

The Supreme Court has warned of the danger in the majority's approach: "[t]he search for significance in the silence of Congress is too often the pursuit of a mirage."36 In still another case, the Supreme Court stated:37

The Supreme Court "has never insisted that a legislative body articulate its reasons for enacting a statute."38 Thus, it is not a function of the courts to "presume that `Congress was unaware of what it accomplished....'"39

Congress was not obliged to discuss military PX appropriations in this statute related to the blind vending program. The majority errs in pursuing "the theory of the dog that did not bark."

The majority's reliance on PX appropriations in other legislation totally unconnected to the Randolph-Sheppard Act is too remote to be relevant in discerning legislative intent in the present act.40

D. Colloquy on the House Floor.

Historically, the courts have been extremely reluctant to consider statements made by legislators during floor debate. In the landmark case of Aldridge v. Williams,41 the Supreme Court held:

Explanatory statements made by the committeeman in charge of the bill when presenting it for passage have been used as an "aid to the interpretation of a statute where its language is doubtful or obscure."42 "But while they may be looked at to explain doubtful expressions, not even formal reports — much less the language of a member of a Committee — can be resorted to for the purpose of construing a statute contrary to its plain terms."43

The Supreme Court again explained the limits on the use of statements by the committeeman in charge of the bill:44

It is impossible to discover the "intention of Congress" from remarks made by individual legislators on the congressional floor.45 The safest guide to congressional intent is found in the words employed by Congress in the statute.46

Judge Skelly Wright has stated:47

As our predecessor, the Court of Claims, has cautioned:48

The "judicial eye" must see that there are pitfalls in resorting to floor debate which "contradicts the plain language of a statute in guise of interpreting it." Indeed, a member of Congress has warned us that legislators may enter into a "friendly colloquy" in the hope that the courts will accept their language instead of the plain language of the statute:49

Turning now to the colloquy relied upon by the majority, it can be seen that under the "guise of interpret[ation]" Congressman Sikes "contradicts the plain language of the statute" and makes "manifestly incorrect statements about it or what it does."50 Sikes quotes the statutory language limiting the exemption to "vending machines `within the retail sales outlets,'" and then in the next sentence "presume[s] * * * that this provision exempts from the revenue-sharing plan all those vending machines which are operated by the military post exchanges * * * and so forth."51 (Emphasis supplied.) He continued by stating that the income-sharing provisions "shall not apply to the military services" (emphasis supplied), a statement so clearly erroneous that even DOD acknowledges that the exemption is not so broad as Sikes claimed. Sikes also indicated his concern for the funding of the "worthwhile endeavors" of the military exchange program, stating his belief that additional appropriations for that year would be impossible.

The majority opinion would give legislative effect to the overbroad statements of one member of Congress by means of the terse answer "yes" given by another member. The classic response to this is that a shorter and more accurate answer by the second gentleman would have been "no."

Perhaps the greatest danger in rewriting the statute on the basis of this colloquy, not addressed in the majority opinion, is that there was not a quorum present when the colloquy took place.52 Thus, the "two men [were] able to legislate more effectively than all of Congress."53

With apologies to Gilbert and Sullivan,54 it may be observed that:

I have no doubt that Congressman Sikes was sincere in his concern for the welfare of the military exchanges; indeed, I would expect such concern from the Chairman of the House Armed Services Committee. Nor do I question the authority of Congress to enact a statute such as Sikes would have preferred.

There is no doubt that if Sikes had been successful in amending the bill to delete the words "within retail sales outlets," and if Congress had passed such a bill, this court would give effect to the resulting statute. The only hitch is that the bill was not amended to delete the language to which Sikes objected.

DOD comes to this court asking us to give effect to the language of Congressman Sikes (before less than a quorum of 1 house) rather than the language of the statute enacted by Congress. This we cannot do under the precedent of the Supreme Court and our predecessor courts. "Even assuming, for the time being," that it would make more "economic sense" to exempt all vending machines instead of only those machines "within retail sales outlets":55

"Since Congress thought there was a reason"56 to grant an exemption for vending machines "within retail sales outlets," but not for vending machines in other locations, "we cannot say otherwise."57

The Court of Claims further stated in Ricker:58

It is not within the power of this court to rewrite the Randolph-Sheppard Amendments of 1974 under the rationale of "no economic sense."

I would give effect to the words employed by Congress. The exemption from income sharing applies to "vending machines within retail sales outlets under the control of exchange or ships' stores systems." All other vending machines under the control of the exchange systems are subject to income sharing, as provided by the Randolph-Sheppard Act.59

E. Subsequent Letters from Congressmen.

The majority errs in relying on letters, written by individual congressmen subsequent to the bill's enactment, as evidence of "the intent of Congress."60 As the Court of Claims has stated:61

Furthermore, if subsequent interpretations were relevant, the 1979 Oversight Hearings indicate that Congress enacted exactly the words it intended in the 1974 statutory exemption. Senator Randolph, the author of the act, was highly critical of DOD's noncompliance with both the act and the HEW regulation concerning vending machine income sharing.62

Just as the colloquy was ineffective to amend the language of the bill, the subsequent letters were ineffective to amend the language of the statute.

In sum, the legislative history of the act reveals its sweeping purpose to combat the "widespread, major abuses" of the blind vendor program and to double the number of blind vendors on all federal property. DOD alone was characterized as "singularly insensitive" and "hostile or indifferent" to the program. DOD was criticized not only for its abuses of blind vending stands but specifically for the military exchanges' use of vending machines to compete with blind vendors.63 The amendments were adopted to protect the blind from the military exchanges and not vice versa.

HEW Interpretation

Congress expressly stated its desire and reason for regulatory supremacy in HEW:64

Congress acted on the committee's recommendations by granting both broad and specific powers to HEW alone. Thus, HEW shall prescribe regulations to assure the priority for blind vendors (including income sharing "to achieve and protect such priority").65 HEW shall prescribe regulations establishing one or more vending facilities on all federal property.66 "A determination made by the Secretary [of HEW] pursuant to this provision shall be binding on any department, agency, or instrumentality of the United States affected by such determination."67

HEW shall "make annual surveys of concession vending opportunities for blind persons * * * particularly with respect to * * the Department of Defense."68 HEW shall convene arbitration panels to decide disputes under the Randolph-Sheppard Act.69

Finally, and most significantly:70

Given the statute and the express statements of Congress, the majority's conclusion that HEW is "only on a par with DOD" in promulgating regulations under the act is surprising, to say the least.

For two reasons, the majority misplaces its reliance on Executive Order No. 12,146,71 which only states that if two executive agencies disagree on the interpretation of a statute, they may submit the dispute to the Attorney General "prior to proceeding in any court" (emphasis supplied). First, the Department of Justice is not allowed to issue a ruling on a matter already in litigation.72

Thus, in Oklahoma v. Weinberger,73 the Department of Justice was not functioning in the neutral position that the Tenth Circuit assumed. As the letter upon which DOD bases its argument clearly states, the issue reached the Department of Justice only after suit was filed in Oklahoma. The Department of Justice was already functioning as the Government's lawyer in response to pending litigation against the United States. The Department of Justice was merely advising its client not to take any action that would compromise the litigation in progress. The Department of Justice thus issued no formal opinion, nor could it have under federal law, because the matter was under litigation.

The majority errs in stating that Justice's interpretation in litigation is binding. The United States is always a party in the Claims Court, where it is represented by the Department of Justice. Under the majority's analysis, the Department of Justice could issue a binding ruling in every case, and there would be no need for a Claims Court.

Second, it is inaccurate for the majority to suggest that conflicting regulations of two agencies are entitled to equal weight, without regard to the statutory authority of the agencies. Here, the respective authority of HEW and DOD can be determined only in reference to the act, which overwhelmingly rejects the majority's assertion that the agencies are "only on a par."

The majority criticizes the HEW regulation because it merely "repeat[s] the statutory language." In my view, a better basis for disregarding a regulation of the authorized agency would be if the agency did not follow the statute.74 Furthermore, the fact that HEW did not find it necessary to depart from the statutory language, stating that only an amendment by Congress could effect such a change, is a powerful indication that the statute was clear and unambiguous.

The majority states that "there is no basis for deference to the interpretation by HEW" because HEW has "vacillated internally." A close reading of the majority opinion, however, discloses the fact that HEW published its final regulation on March 23, 1977, and HEW has never changed or withdrawn this regulation.

Advocates for DOD wrote letters attempting to prevail upon HEW to change its regulation. It is this flurry of correspondence which the majority describes as evidence of "internal vacillation." If the correspondence proves anything, it is that HEW carefully considered the views of DOD as well as the language of the statute before it promulgated its regulations. This initial correspondence was never promulgated or published, but even if it had been, it would not be sufficient to undermine HEW's credibility. The United States Supreme Court has recently explained:75

When it became clear to DOD that HEW would not change its regulations, DOD acted upon HEW's advice and attempted to introduce legislation to amend the Randolph-Sheppard Act to delete the words "within retail sales outlets." DOD's legislative proposal was not acted on, however, and the statutory exemption remained unchanged.

Undaunted, DOD proceeded to publish its own final regulations exempting all vending machines "operated by or for the military exchanges."76 DOD acknowledged comments disagreeing with its version of the exemption, but it refused to change the DOD regulation.77

The majority "conclude[d] that the interpretation of DOD, as the agency compelled to apply the statutory exemption, is the only authoritative administrative construction."78 Clearly, the majority has erred.

Conclusion

The majority has rewritten a clear statute despite its plain meaning, the legislative history supporting that plain meaning, and the interpretation of the authorized agency. Thus, DOD has accomplished through the courts what it was unable to accomplish in the legislature or in the executive branch.

I would affirm the judgment of the United States Claims Court.

NEWMAN, Circuit Judge, with whom SMITH, Circuit Judge joins, dissenting.

I generally agree with Judge Smith's opinion in dissent, and offer the following additional remarks.

Both sides of this issue pose questions that are inappropriate for judicial answer, yet answer we must. The literal words of the statute, on which Judge Smith's opinion turns, are challenged by the fact that DOD has apparently never implemented those words; this in turn is balanced by the contrary reading of the statute by HEW (the agency charged with administering the statute). The 10th Circuit has held one way, and the Texas arbitrators (split 2-1) and the Claims Court held the other way. The legislative history can support both interpretations, as the preceding opinions demonstrate at length.

No fundamental law of nations or peoples is at stake; rather, at stake is the choice of Congress on how to aid both the blind and military recreation. This is a decision of national policy, and it cries for the voice of Congress, not a court's conclusion that Congress did not intend the legislation that it enacted.

Until that voice is heard, I conclude that the balance is on the side of the position supported by Judge Smith. This result does not require explaining away the plain words of the statute, as is eloquently done by the majority of the court. I find it anomalous to conclude that the House and Senate* believed that the simple clause "within retail sales outlets" really means "anywhere on the base". Although the government has cited precedent for judicial rewrite of acts of Congress, none of this authority goes as far as the dramatic rewrite advanced by the court.