OCTOBER TERM, 1992
UNITED STATES ET AL. v. TEXAS ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
No. 91-1729. Argued March 1, 1993-Decided April 5, 1993
States participating in the Food Stamp Program receive from the United States Department of Agriculture coupons that they distribute to qualified individuals and households. If they distribute the coupons through the mail, they must reimburse the Federal Government for part of the replacement cost for any coupons that are lost or stolen. Texas, which contractually bound itself to comply with all federal regulations governing the program, incurred substantial mail issuance losses and was informed that prejudgment interest would begin to accrue on its debt unless payment was made within 30 days. Mter being denied administrative relief, Texas filed suit against the United States, arguing, inter alia, that the Debt Collection Act of 1982 (Act) abrogated the United States' common-law right to collect prejudgment interest on debts owed to it by the States. The District Court granted summary judgment in favor of the United States, but the Court of Appeals reversed.
Held: The Act left in place the States' federal common-law obligation to pay prejudgment interest on debts owed to the Federal Government. Pp.533-539.
(a) It is a longstanding rule that a party owing debts to the Federal Government must pay prejudgment interest where the underlying claim is a contractual obligation to pay money. Also longstanding is the principle that statutes invading the common law are to be read with a presumption favoring retention of existing law except when a statutory purpose to the contrary is evident. This presumption is not limited to state common law or federal maritime law. Pp. 533-534.
(b) The Act is silent as to the States' obligations to pay prejudgment interest. That the Act applies only to debts owed by a "person" establishes only Congress' intent to exempt the States from the obligation to pay interest in accordance with the Act's mandatory provisions, not an intent to relieve them of their common-law obligation. Given the differences between the Act-which requires federal agencies to collect prejudgment interest at a preestablished rate-and the common lawwhich gives federal courts flexibility in determining whether to impose interest and the appropriate rate-it is logical to conclude that the Act was intended to reach only private debtors and to leave the States alone. The Act's purpose-to enhance the Government's debt collection abil-cralaw
ity-reinforces this reading of its plain language. Texas' proposed reading, however, would give delinquent States less incentive to pay their debts. Neither the fact that the Food Stamp Act has a mechanism to collect debts nor the fact that Congress did not see the States as the root of the debt collection problem when it passed the Debt Collection Act indicates that Congress meant to relieve the States of their common-law obligation. Texas incorrectly argues that the reimbursement requirement is not subject to prejudgment interest because it is a penalty rather than a contractual obligation. Rodgers v. United States, 332 U. S. 371, 374-376, distinguished. pp. 534-539.
951 F.2d 645, reversed.
REHNQUIST, C.J., delivered the opinion of the Court, in which WHITE, BLACKMUN, O'CONNOR, SCALIA, KENNEDY, SOUTER, and THOMAS, JJ., joined. STEVENS, J., filed a dissenting opinion, post, p. 539.
Thomas G. Hungar argued the cause for petitioners.
With him on the briefs were Solicitor General Starr, Acting Solicitor General Bryson, Assistant Attorney General Gerson, Deputy Solicitor General Roberts, William Kanter, and Bruce G. Forrest.
James C. Todd argued the cause for respondents. With him on the brief were Dan Morales, Attorney General of Texas, Will Pryor, First Assistant Attorney General, Mary F. Keller, Deputy Attorney General, Edwin N. Horne and Christopher Johnsen, Assistant Attorneys General, and Jorge Vega.
CHIEF JUSTICE REHNQUIST delivered the opinion of the Court.
In this case we decide the question left open in West Virginia v. United States, 479 U. S. 305, 312-313, n. 5 (1987): whether Congress intended the Debt Collection Act of 1982 to abrogate the United States' federal common-law right to collect prejudgment interest on debts owed to it by the States. We hold that it did not.
Texas incurred the instant debts as a result of participation in the Food Stamp Program, 78 Stat. 703, as amended,cralaw