Dantran, Inc. v. United States Dept

• Court: Court of Appeals for the First Circuit
• Decided: March 29, 1999
• Docket: 98-1830
• Status: Published

Opinion

USCA1 Opinion

                 United States Court of Appeals

                     For the First Circuit


No. 98-1830



                      DANTRAN, INC., ET AL.,



                     Plaintiffs, Appellants,



                                v.



                    U. S. DEPARTMENT OF LABOR,



                       Defendant, Appellee.


APPEAL FROM THE UNITED STATES DISTRICT COURT



                    FOR THE DISTRICT OF MAINE



             [Hon. Gene Carter, U.S. District Judge]


Before



                      Selya, Circuit Judge,

                                

                 Cudahy,* Senior Circuit Judge,

                                

                   and Stahl, Circuit Judge.


Richard P. Romeo, with whom Seth D. Harrow and Smith, Elliott,

Smith & Garmey, P.A. were on brief, for appellants.

     Mary J. Rieser, Attorney, United States Department of Labor,

with whom Judith E. Kramer, Deputy Solicitor, Steven J. Mandel,

Associate Solicitor, and Paul L. Frieden, Counsel for Appellate

Litigation, were on brief, for appellee.


March 29, 1999


_______________

*Of the Seventh Circuit, sitting by designation.  SELYA, Circuit Judge.  The Secretary of Labor (the

Secretary) accused Dantran, Inc., and its principal, Robert C.

Holmes (collectively, the plaintiffs), of having violated certain

provisions of the McNamara-O'Hara Service Contract Act of 1965, 41

U.S.C.  351-358 (the Act), and the regulations thereunder.  She

wished to debar the plaintiffs, that is, to place them on a list of

contractors with whom no government entity may transact business,

for a period of three years.  The district court, echoing a

determination of the Labor Department's Administrative Review Board

(the ARB), authorized debarment.  We reverse.

I.  BACKGROUND

  For over a decade, the United States Postal Service

routinely awarded contracts to Dantran for hauling mail between

various sites in Maine, Vermont, New Hampshire, and Massachusetts. 

During this period, Dantran operated profitably; in its heyday, the

company employed approximately 40 persons and generated annual

revenues in the $2,000,000 range.  The tectonic plates shifted in

mid-1991, when the Secretary, acting on a compliance officer's

conclusion that the company's practices violated certain

regulations dealing with, among other things, employee fringe

benefit payments, "froze" funds owed to Dantran by the Postal

Service.

  If the Secretary's earlier investigation of Dantran

provided any baseline for comparison, the results of the 1991 probe

must have come as something of a shock.  In 1989, the Secretary had

sent a compliance officer to inquire into Dantran's payroll

practices.  On that occasion, the investigator, George Rioux,

uncovered no irregularities.  Rioux's final report specifically

noted that there were no problems with Dantran's fringe benefit

payment practices.

  When the Wage and Hour Division returned in 1991,

Dantran's practices had not changed at all from 1989.  The

Secretary's outlook apparently had:  shortly after the new

compliance officer, Scott Wilkinson, began his review, he informed

the plaintiffs that two of Dantran's routine practices   paying

employees on a monthly basis and capping fringe benefits at 40

hours per week regardless of the number of contracts, or hours per

contract, an employee actually worked   violated the Act.

  In response to Wilkinson's admonitions, the plaintiffs

promptly devised a plan to inaugurate semi-monthly wage payments

and commenced negotiations to identify the amounts due in respect

to the cross-crediting of fringe benefits.  Wilkinson nonetheless

recommended that the Secretary freeze some $20,000 owed to Dantran

by the Postal Service to satisfy  his estimate of what Dantran owed

its employees by virtue of cross-crediting.  The Secretary obliged. 

The timing could not have been worse.  Cf. Benjamin Franklin, Poor

Richard's Almanac (1758) (explaining how for want of a nail, the

kingdom was lost).  Without the withheld funds, Dantran could not

cover insurance premiums on its fleet of trucks and, unable to keep

the uninsured trucks in service, suspended operations.  This, in

turn precipitated a further withholding of funds, to the tune of

some $60,000, without which Dantran could not meet its July 1991

payroll.

  Dantran and the Secretary eventually settled all wage-

related matters.  The settlement totaled roughly $67,000, ($40,000

of which consisted of the wages Dantran had been unable to pay in

July 1991).  Despite the fact that the settlement made Dantran's

work force whole, Wilkinson's final report pressed for debarment

"because of the size of the violations and the fact that the firm

was investigated once before."  The Secretary acquiesced and, in

her complaint, attempted to justify so extreme a sanction on the

basis of cross-crediting and an alleged failure adequately to

maintain records.  The case was tried before an Administrative Law

Judge (ALJ).  During the hearing, the Secretary raised two new

issues:  the frequency of payment of wages and Dantran's failure to

pay its employees in July 1991 (when the Secretary froze its

revenue stream).

  In the end, the ALJ concluded that Holmes's testimony was

credible and that neither he nor Dantran should be debarred.  In

his view, the case boiled down to cross-crediting and frequency of

wage payments.  He determined that Dantran's practices in these

respects did not transgress the regulations.  As an alternative

holding, the ALJ further concluded  that Dantran had continued the

challenged practices in reasonable reliance on the results of the

Secretary's earlier investigation and that the case therefore

displayed unusual circumstances sufficient to warrant relief from

debarment.  See 41 U.S.C.  354(a).  These circumstances included,

in addition to the fact that the plaintiffs had been misled by the

Secretary's earlier investigation and by statements of various

Postal Service employees, three additional facts:  (1) Dantran had

not acted culpably, willfully, or deliberately to violate the law;

(2) it had an excellent history of compliance with the wage and

hour laws; and (3) the plaintiffs had fully cooperated with the

Secretary's inquiry.

     The Secretary appealed the ALJ's ruling to the ARB, which

reversed.  It found that the cross-crediting and frequency of

payment practices violated the regulations and that Dantran had

been culpable in disregarding the law because, during the 1989

indagation, Rioux had given Holmes a copy of the regulations (which

should have alerted Dantran to the illegality of its actions).  The

ARB deemed this finding of culpable disregard dispositive on the

question of debarment.

     The plaintiffs sought judicial review of the ensuing

debarment order.  In a brief, unpublished memorandum, the  district

court rejected their plea.  This appeal followed.  Because the ARB

predicated its debarment order on two of Dantran's practices  

cross-crediting and making monthly wage payments   we discuss each

practice.

II.  CROSS-CREDITING

     With certain exceptions not relevant here, the Act

provides that every service contract entered into by the United

States "shall contain" provisions specifying the fringe benefits

which those employees of the contractor who perform the work will

receive.  See 41 U.S.C.  351(a)(2).  The Act lists the types of

fringe benefits that must be included in such a package, including

items such as health insurance, life insurance, and retirement

benefits.  See id.  Instead of prescribing a single method for the

delivery of these benefits, the Act permits employers to choose the

manner in which they wish to satisfy their statutory obligation. 

Exercising this latitude, many employers opt to discharge parts of

it by making payments in cash to the affected employee (or to a

union trust fund on his behalf) in a sum equivalent to the value of

certain benefits owed.

     The Act leaves room for the operation of the collective

bargaining process in valuing fringe benefits.  See id.  Often,

however, service contractors abide by general per-hour valuations

determined by the Secretary, based on the Secretary's assessment of

prevailing fringe benefit arrangements applicable to similarly

situated employees in a particular locality.  See id.; see also 29

C.F.R.  4.51.  Thus, for example, if truck drivers in rural

Vermont typically earn fringe benefits worth $2.80 per hour, the

Secretary might well ask a service contractor to pay that amount to

its truck drivers who operate principally in rural Vermont.  The

particular wage/benefit terms applicable to a specific service

contract between an employer and a government agency typically are

written into that contract, and so it was with the contracts

entered into between Dantran and the Postal Service.

     The dispute in this case concerns not the values assigned

to fringe benefit payments (i.e., the per-hour rates), but the

total number of hours per week for which a service contractor must

make payments to its employees.  Relying on the regulations   the

statute is silent on the matter   the Secretary argues, and the ARB

agreed, that when employees work on multiple contracts for a single

employer, they are entitled to fringe benefits corresponding to

every hour they work on each particular contract in a given week,

up to a maximum of 40 hours worth of fringe benefits per contract. 

In other words, under the Secretary's reading of the regulations,

fringe benefit determinations turn not on the total number of hours

worked per week, but on the number of different contracts to which

an employee is assigned.

     To illustrate, assume that a service contractor has three

separate mail-hauling contracts with the Postal Service, and that

in a given week worker A spends 25 hours on contract X, 20 hours on

contract Y, and 10 hours on contract Z.  According to the

Secretary, worker A must receive an incremental payment equal to 55

hours worth of fringe benefits, notwithstanding that worker B, who

likewise toiled for 55 hours that week but spent it all in carrying

out contract X, will only receive a payment equal to 40 hours worth

of fringe benefits.  In contrast, Dantran's interpretation is not

contract-specific.  On its understanding, both A and B would

receive incremental payments in lieu of fringe benefits equal to

the rate times 40 hours.  It follows, then, that if the Secretary's

reading of the regulation is correct, Dantran's use of cross-

crediting constituted a violation.  Giving due weight to the

language and structure of the regulations, we find the Secretary's

gloss insupportable.

     The regulations' general provision on fringe benefits

states, in pertinent part, that "every employee performing on a

covered contract must be furnished the fringe benefits required" by

the particular contract "for all hours spent working on that

contract up to a maximum of 40 hours per week and 2,080 (i.e., 52

weeks of 40 hours each) per year, as these are the typical number

of nonovertime hours of work in a week, and in a year,

respectively."  29 C.F.R.  4.172.  Although at first glance one

might read the 40-hour cap on benefits to refer to "that contract,"

which would imply that the 40-hour maximum applies independently to

each contract on which an employee toils, the whole of the proviso

belies this reading.  The sentence we have quoted explains that the

reason why the regulations have capped fringe benefits at "a

maximum of 40 hours per week" is that this figure represents "the

typical number of nonovertime hours of work in a week."  This is a

clear indication that the Secretary intended to make the number of

nonovertime hours worked in a week her criterion for determining

the amount of fringe benefit payments due.  Because the Secretary's

reading of this provision mandates fringe benefit payments for

overtime hours in addition to nonovertime hours, it contravenes the

explicit text of her own regulation and is therefore untenable. 

See Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994)

(noting that an agency's interpretation of a regulation is not

given controlling weight when it is inconsistent with, or

contradicts, the plain language of the regulation).

     The Secretary attempts to parry this thrust by citing the

next sentence in section 4.172, which reads:  "Since the Act's

fringe benefit requirements are applicable on a contract-by-

contract basis, employees performing on more than one contract

subject to the Act must be furnished the full amount of fringe

benefits to which they are entitled under each contract and

applicable wage determination."  The Secretary's position involves

some circularity:  she strives to export the "contract-by-contract

basis" language from the later sentence into the earlier in order

to establish that the 40-hour maximum refers to each and every

contract, and then attempts to import that understanding back into

the later sentence to argue that the phrase "to which they are

entitled" must refer to 40 hours per week per contract.

     We decline this invitation to distort the plain meaning

of the earlier sentence by linguistic legerdemain.  To adopt the

Secretary's construction would eviscerate the regulation's

expression of its rationale for establishing a 40-hour maximum,

namely, that such a figure represents the typical nonovertime work

week.  Moreover, such a course also would entail abandonment of the

accepted rule that all words and phrases in a statute or regulation

should be given effect.  See Walters v. Metropolitan Educ.

Enterps., Inc., 117 S. Ct. 660, 664 (1997); McIntosh v. Antonino,

71 F.3d 29, 35 (1st Cir. 1995); United States v. Ven-Fuel, Inc.,

758 F.2d 741, 751-52 (1st Cir. 1985).

     We hasten to add that recognizing an absolute 40-hour

weekly maximum is perfectly consistent with the language of the

second sentence.  The "contract-by-contract" language in that

sentence most probably is meant to clarify that employers must give

credit to employees for work done on each contract, perhaps to

avoid situations in which an employer might seek to shortchange

employees by assigning them to work less than 40 hours on each of

several contracts, and then limiting the corresponding fringe

benefit payment to work done on a single contract.  On this

reading, the next passage (mentioning the "full amount of fringe

benefits to which [employees] are entitled under each contract")

simply refers to a number less than or equal to the 40-hour

maximum.

     Other, related sections of the regulations also call the

Secretary's proposed interpretation of section 4.172 into question. 

Consider the regulation that addresses vacation pay.  This section

purports to synthesize the intent of section 4.172.  It states: 

"As set forth in  4.172, unless specified otherwise in an

applicable fringe benefit determination, service employees must be

furnished the required amount of fringe benefits for all hours paid

for up to a maximum of 40 hours per week and 2,080 hours per year." 

29 C.F.R.  4.173(e)(2) (emphasis supplied).  In our estimation,

this language confirms that 40 hours per week operates as an

aggregate cap on an employee's entitlement to fringe benefit

payments, regardless of the number of contracts involved.

     Perhaps the most telling sign of the agency's intent

appears in an example that the regulations supply to illuminate

their effect.  The example follows almost immediately after section

4.175(a)(1), see supra note 2, and states that if an employee works

32 hours in one week and receives 8 hours of holiday pay, then he

is "entitled to the maximum of 40 hours of health and welfare

and/or pension payments in that workweek."  29 C.F.R. 

4.175(a)(1)(ii).  The insertion of the definite article ("the")

preceding the phrase "maximum of 40 hours" itself strongly suggests

that the regulations intend to set an overall ceiling of 40 hours

per week on fringe benefit payments.  Even more telling is the

example's next sentence, which explains:  "If the employee works

more than 32 hours and also received 8 hours of holiday pay, the

employee is still only entitled to the maximum of 40 hours of

health and welfare and/or pension payments."  Id.  This statement

is completely at odds with the Secretary's rendition of the

regulations.  If fringe benefit payments are only subject to per-

contract ceilings, as the Secretary insists, then the hypothetical

worker described in the example would be entitled not only to 8

hours worth of benefits attributable to his holiday pay, but also

to at least 40 hours of benefits for his work   and more if he

labored on multiple contracts.

     We are not unmindful of our wonted obligation to  defer

to the Secretary's construction of her legislative rules.  SeeMartin v. OSHRC, 499 U.S. 144, 150-51 (1991); P. Gioioso & Sons v.

OSHRC, 115 F.3d 100, 107 (1st Cir. 1997).  Here, however, when the

regulations are read as a whole, the conclusion, already dictated

by plain language, becomes inexorable:  employees who work for a

single service contractor are only entitled to fringe benefit

payments up to a maximum of 40 hours per week, regardless of the

number of contracts on which they labor.  This obvious

inconsistency between what the regulations say and what the

Secretary says they say eliminates any need for judicial deference. 

See, e.g., Thomas Jefferson Univ., 512 U.S. at 512.

     In all events, courts should be reluctant to rubber-stamp

an agency's interpretation of its regulations when that

interpretation has no plausible link to the goals of the regulatory

scheme and would lead to absurd results.  See P. Gioioso & Sons,

115 F.3d at 107.  In this instance, the Secretary's interpretation

creates anomalous situations in which employees doing the same kind

of work for the same hours will receive different levels of fringe

benefit payments merely because the employer happens to assign them

to work within the parameters of one, two, or more different

contracts.  At oral argument, we asked the Secretary's counsel

directly if the Secretary could provide us with any policy

rationale that would justify so quixotic an outcome.  Counsel was

unable to identify any way in which the Secretary's position

plausibly advances (or even jibes with) the purposes of the wage

and hour regulations.

     Federal courts long have recognized that this statutory

and regulatory scheme comprises "remedial labor legislation." 

Midwest Maint. & Constr. Co. v. Vela, 621 F.2d 1046, 1050 (10th

Cir. 1980).  If labor concerns are the focal point of this scheme

  and we firmly believe that they are   we can perceive no direct

relation, at any level of generality, between the Secretary's

interpretation of the rules and the purposes that Congress intended

to serve.  If anything, the Secretary's proffered construction runs

at cross-purposes with the Act, for it creates disparities in the

treatment of employees who do the same work for the same employer

for the same amounts of time.  See supra note 3.  Consequently, we

are unable to sustain the Secretary's position.

III.  MONTHLY WAGE PAYMENTS

     We detect no flaw in the Secretary's construction of the

frequency of payment requirement.  Although the Act itself does not

prescribe the length of requisite pay periods, the debarment

sanction is not limited to statutory violations simpliciter.  The

Act is written in general terms, and Congress has conferred upon

the Secretary broad power to implement its provisions by, among

other things, fashioning legislative rules.  See 41 U.S.C. 

353(a).  Once duly promulgated, such rules become part of the warp

and woof of the Act's enforcement scheme, see id., and, if

reasonably faithful to the statutory language and intent,

constitute binding law.

     So it is here:  the Secretary promulgated a regulation,

29 C.F.R.  4.165(b), which states bluntly that "[a] pay period

longer than semimonthly is not recognized as appropriate for

service employees and wage payments at greater intervals will not

be considered as constituting proper payments in compliance with

the Act."  In wording the regulation, the Secretary made it crystal

clear that monthly pay periods will not do.  The regulation is

valid and the plaintiffs are bound by its terms.

     The plaintiffs have a fallback position.  Brandishing the

clean bill of health that they received in the report of the 1989

wage-and-hour investigation, they contend that they reasonably

relied on that report's conclusions, and, therefore, that the

government should be estopped from pursing an action based on

practices (like the monthly payment of wages) that drew no

criticism at that time.  They stress that Rioux (the first

compliance officer) knew of their monthly payment ritual and argue

that his silence on the matter suggested to them that they were in

compliance.  Had he questioned the practice then, they quickly

would have taken corrective action (as they did when the second

compliance officer, Wilkinson, raised the issue in 1991).  To

reinforce this point, the plaintiffs also note that the Postal

Service paid them on a monthly basis, was on notice that Dantran

paid its employees on the same schedule (indeed, Dantran regularly

submitted copies of its payroll records to the Postal Service), and

tacitly approved the regime.

     Estoppel against the government is a concept more

frequently discussed than applied.  While the Supreme Court has

never definitively ruled out the possibility of an estoppel against

the government, it consistently has emphasized the difficulties

that such a concept entails.  See, e.g., OPM v. Richmond, 496 U.S.

414, 419-20, 423 (1990) (plurality op.); Heckler v. Community

Health Servs., 467 U.S. 51, 60-61 (1984).  If estoppel against the

government possesses any viability (a matter on which we take no

view), the phenomenon occurs only in the most extreme

circumstances.  This case does not qualify.

     The plaintiffs argue that estoppel is available here

because they invoke it as a shield rather than a sword.  This

distinction apparently has its roots in OPM, wherein the Court

restricted its holding to cases involving demands made upon the

public fisc.  496 U.S. at 426-28.  But such commendable chariness

does not signify that the Court has ever approved   or hinted at

approving   a sword/shield distinction.  Because blanket adherence

to the distinction would conflict with fundamental tenets that

underlie estoppel jurisprudence, we reject it.

     Using estoppel as a shield implies nothing less than

frustrating the government's authority to enforce valid laws.  We

cannot in good conscience accept a broad rule that prevents the

sovereign from enforcing valid laws for no better reason than that

a government official has performed his enforcement duties

negligently.  It does not overstate the case to say that such a

rule would risk embroiling the judiciary in the Executive Branch's

duty faithfully to execute the law and thereby would raise

separation of powers concerns.  See United States v. Marine Shale

Processors, 81 F.3d 1329, 1348 (5th Cir. 1996).

     The most obvious manner in which a sword/shield dichotomy

would raise separation of powers concerns is by placing the

sovereign in a position where, in order to recognize estoppel

relief, it would itself have to violate the law.  Such a result is

untenable and, not surprisingly, numerous cases have held that

estoppel must fail under such circumstances.  See OPM, 496 U.S. at

430; Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 385-86

(1947); Utah Power & Light Co. v. United States, 243 U.S. 389, 408-

09 (1917); see also FDIC v. Hulsey, 22 F.3d 1472, 1489 (10th Cir.

1994) (positing that estoppel, if available at all, would only

succeed if it would "not frustrate the purpose of the statutes

expressing the will of Congress").  This type of holding extends to

legal requirements fixed by duly promulgated regulations.  SeeSchweiker v. Hansen, 450 U.S. 785, 790 (1981) (per curiam); Federal

Crop Ins., 332 U.S. at 384-85.

     In the instant case, the Act's enforcement scheme

requires the Secretary to initiate debarment proceedings when she

determines that a government contractor has violated the Act or the

regulations.  Were we to adopt the plaintiffs' suggested

sword/shield distinction, we would frustrate the operation of this

enforcement mechanism without so much as even inquiring into the

equities of the particular case.  We are not prepared to embark on

so poorly conceived an itinerary.

     Our concerns would be no different if the Act's

enforcement scheme lay entirely within the Secretary's discretion. 

There, too, estoppel   even "shield-type" estoppel   would

insinuate the Judicial Branch into the Executive Branch's exclusive

preserve and would carry a serious potential of undermining the

Executive Branch's policies and priority setting in enforcing the

laws   a result that is no more palatable than frustrating the

congressional will.  See Marine Shale Processors, 81 F.3d at 1348-

49; Hulsey, 22 F.3d at 1489.

     Beyond the attempted sword/shield distinction, the

plaintiffs' estoppel claim is insubstantial.  It is firmly settled

that a party seeking to raise estoppel against the sovereign must,

at the very least, demonstrate that government agents have been

guilty of affirmative misconduct.  See Drozd v. INS, 155 F.3d 81,

90 (2d Cir. 1998); Linkous v. United States, 142 F.3d 271, 277-78

(5th Cir. 1998); Frillz, Inc. v. Lader, 104 F.3d 515, 518 (1st

Cir.), cert. denied, 118 S. Ct. 59 (1997); see also OPM, 496 U.S.

at 421-22; see generally Kenneth Culp Davis & Richard J. Pierce,

Jr., 2 Administrative Law Treatise  13.1, at 232 (3d ed. 1994). 

In this case, no estoppel lies because the record reflects no

affirmative governmental misconduct.

     It is common ground that affirmative misconduct requires

something more than simple negligence, see United States v. Hemmen,

51 F.3d 883, 892 (9th Cir. 1995); Kennedy v. United States, 965

F.2d 413, 421 (7th Cir. 1992); Azizi v. Thornburgh, 908 F.2d 1130,

1136 (2d Cir. 1990), and the plaintiffs' proof does not cross that

threshold.  The plaintiffs base their estoppel initiative on

Rioux's conduct and, to a lesser extent, that of various Postal

Service plenipotentiaries.  But, though Rioux's final report

disclaims any violations of the Act, no one argues that he made

that statement with an intent to mislead the plaintiffs about their

responsibilities.  So, too, the comments attributed to various

officials of the Postal Service.  In a nutshell, there is not the

slightest whiff of affirmative misconduct.

     In a related vein, if a statute or regulation clearly

limns a party's legal obligations, the party cannot justifiably

rely for estoppel purposes on a government agent's representation

that the law provides to the contrary.  See Federal Crop Ins., 332

U.S. at 383-84; Marine Shale Processors, 81 F.3d at 1349-50

(collecting cases).  This is so because the government speaks most

authoritatively through its official policymaking machinery, not

through individuals,  even if the individuals occupy responsible

agency positions.  See Federal Crop Ins., 332 U.S. at 384; Irvingv. United States, 162 F.3d 154, 166 (1st Cir. 1998) (en banc). 

Here, even if the plaintiffs relied on Rioux's report and/or the

statements of postal officials to conclude that their regimen did

not violate the Secretary's frequency of payment requirement, the

clear language of the applicable regulation would render such

reliance unreasonable.

IV.  RELIEF FROM DEBARMENT

     We grapple next with an issue of some complexity.  Both

the statute and the regulations provide that the existence of

"unusual circumstances" may forestall the imposition of a debarment

sanction.  See 41 U.S.C.  354(a); 29 C.F.R.  4.188(a).  Although

the Act does not elaborate, the Secretary has established that the

existence of "unusual circumstances" in a given case depends on the

absence of aggravating factors and the presence of mitigating

factors.  See 29 C.F.R.  4.188(b)(3)(i)-(ii).  The plaintiffs

assert that their case fits within these confines.

     A first, potentially conclusive, step in the pavane

involves aggravation.  Under the regulations, if aggravating

factors inhere, a government contractor cannot be saved from

debarment.  See id.  4.188(b)(3)(ii).  The regulations describe in

some detail what constitutes aggravation.  They speak in terms of

"deliberate" or "willful" conduct, "culpable neglect," and

"culpable disregard," id.  4.188(b)(3)(i), and thus evince a

design to ensure blacklisting of those who have defied the law with

a degree of impunity or premeditation.  What the regulations mean

by the term "culpable" is not spelled out, except to stipulate that

"falsification of records" (an evil not present in this case)

qualifies as "culpable failure to comply with recordkeeping

requirements."  Id.  If this latter example is intended to serve as

a guide, culpability must require more than simple negligence or a

mere failure to ascertain whether one's practices coincide with the

law's demands.

     The ARB concluded that the plaintiffs' conduct satisfied

the standard of culpability.  This conclusion relied, in part, on

the plaintiffs' practice of cross-crediting fringe benefits and, in

part, on the plaintiffs' violation of the frequency of payment

regulation.  The first ground does not hold water given our

determination that the Act allows cross-crediting.  See supra Part

II.  Thus, the ARB's finding of aggravation must stand or fall on

the second ground.

     The ARB found the violation relating to monthly wage

payments culpable due to the clarity of the prohibitory regulation. 

But this assumes that the enforcement scheme mandates debarment

whenever an employer violates an unambiguous regulation.  This

assumption is unfounded.

     The regulations speak of "culpable neglect to ascertain"

or "culpable disregard" of whether one is in violation of the Act

as being criteria for finding factors in aggravation.  To hold that

this language renders culpable every violation of an unambiguous

regulation would, for all practical purposes, turn the debarment

provision into a strict liability regime.  The very invocation of

a culpability standard, however, is a sure sign that strict

liability is not what the Secretary intended.  This view is

explicitly confirmed by the Secretary's incorporation into the

regulations of a portion of the Act's legislative history which

states that "[t]he authority [to relieve from blacklisting] was

intended to be used in situations where the violation was a minor

one, or an inadvertent one, or one in which disbarment . . . would

have been wholly disproportionate to the offense."  29 C.F.R. 

4.188(b)(2) (alterations in the original).  The ARB's strict

liability regime drains section 4.188(b)(2) of meaning:  after all,

a violation of an unambiguous regulation can be minor, inadvertent,

wholly disproportionate to a proposed debarment, or all of the

above.  Thus, simply stating that an employer violated an

unambiguous regulation, without more, cannot justify debarment.

     The ARB's reliance on a different portion of the same

regulation does not affect our conclusion.  Section 4.188(b)(1)

states, in pertinent part, that unusual circumstances do not

include instances "such as negligent or willful disregard of the

contract requirements and of the Act and regulations, including a

contractor's plea of ignorance of the Act's requirements where the

obligation to comply with the Act is plain from the contract." 

Drawing on this language and on the fact that the plaintiffs were

in possession of a copy of the regulations, the ARB reasoned that

debarment was warranted.  We are not convinced.

     Fairly read, this language contemplates an automatic

finding of culpability only when the law's requirements are obvious

on the face of the contract.  Under such circumstances, a

contractor's disregard of legal requirements legitimately can be

considered willful or grossly negligent, and thus manifest the

species of culpability delineated by the regulations.  Here,

however, none of Dantran's contracts with the Postal Service

provided notice of the Secretary's interpretation of her frequency

of payment rule.  The reverse is closer to the truth, for the

contracts themselves provided for monthly payments to Dantran and

thus appeared to confirm Dantran's historic payroll practices.  In

this case, then, it is not enough to point to possession of the

regulations, and rest.  There must be affirmative evidence of

culpable conduct.

     This brings us to the second reason upon which the ARB

premised its determination that Dantran's monthly payment protocol

warranted debarment.  In the last analysis, this is less a reason

than a self-fulfilling prophecy.  The ARB describes this reason as

"ample evidence" of culpable conduct, and cites two purported facts

to prove ampleness:  first, the plaintiffs' longstanding practice

of monthly wage payments; and second, their attitude toward the

first compliance officer when he allegedly raised questions anent

this practice.  These two "facts" telescope into one, for the

significance of the first "fact" depends entirely on the validity

of the assumption that underlies the second.  If no questions were

raised about monthly payments during the first investigation, then

the plaintiffs scarcely can be criticized for continuing the

established praxis.

     The assumption underlying the second "fact" rests solely

upon the following testimony from Rioux's direct examination:

     Q.   . . . What about the payments on

          a monthly basis?  How were they

          paying people?  If you know.



     A.   I think they were paying on a

          monthly basis back then.  And I

          think we discussed that.  I'm

          not sure exactly when, but . . .



     Q.   Okay, but you did discuss it

          with him.  what were the nature

            what did you tell him

          regarding the payment on a

          monthly basis?



     A.   Then this is going by memory,

          but it's a final conference,

          initial conference, in between. 

          We did talk about it.  I said

          the regulations call for payment

          on a semi-monthly, bi-weekly

          basis.  And he said, "the post

          office pays me on a monthly

          basis  When they pay me on a bi-

          weekly basis, I'll pay them on a

          bi-weekly basis."



According to the ARB, this exchange demonstrates that Dantran's

subsequent monthly payment of employees knowingly violated the law. 

We conclude that the ARB, in superimposing its interpretation of

this testimony upon the decisional calculus, failed to accord due

deference to the ALJ's findings of fact.

     An odd standard of review obtains here.  In cases arising

under the Act, courts do not employ the "substantial evidence" test

that most frequently accompanies judicial review of final

administrative orders.  See, e.g., 7 U.S.C.  706(2)(E)

(Administrative Procedure Act); see also Universal Camera Corp. v.

NLRB, 340 U.S. 474, 490-91 (1951).  Instead, the Service Contract

Act, 41 U.S.C.  353(a), incorporates the hearing provisions of the

Walsh-Healey Act, 41 U.S.C.  38-39, and thereby adopts a standard

of review under which findings of fact made by the Secretary's

authorized representative upon notice and hearing are conclusive if

supported by a preponderance of the evidence.  See Vigilantes, Inc.v. Administrator of Wage & Hour Div., 968 F.2d 1412, 1418 (1st Cir.

1992) (explicating standard of judicial review for cases under the

Act).

     This standard presents certain interpretive difficulties. 

Asking an appellate tribunal to review a factfinder's conclusions

for a "preponderance of the evidence" gives a familiar phrase a new

twist.  In its normal iteration, the preponderance of the evidence

standard, like "clear and convincing" and "beyond a reasonable

doubt," establishes a quantum of proof to be measured by the

factfinder, not a standard for error-detection.  When used to

describe appellate review, however, the phrase is at best an

awkward locution, for it connotes nothing about the degree of

probability of error required before a reviewing court may set

aside a factual determination.  If an appellate tribunal were to

apply the preponderance of the evidence standard literally, it

would mire itself in a factfinding exercise inconsistent with the

accepted appellate role.  We believe that Congress, in selecting

the preponderance of the evidence phraseology, must have

contemplated some other course.

     The Secretary posits that, under the Act, the 

preponderance standard should be treated as synonymous with the

substantial evidence standard.  We think not.  Congress appears

deliberately to have refrained from employing the conventional

substantial evidence rule.  Courts ordinarily should presume that

Congress legislates with knowledge of the legal standards

prevailing in administrative law.  See, e.g., Commissioner v.

Keystone Consol. Indus., Inc., 508 U.S. 152, 159 (1993). 

Consequently, we are unprepared to say that Congress's election to

use a seemingly different rule in this instance should be thwarted. 

See Haas v. IRS, 48 F.3d 1153, 1156-57 (11th Cir. 1995); cf. BFP v.

Resolution Trust Corp., 511 U.S. 531, 537 (1994) ("It is generally

presumed that Congress acts intentionally and purposely when it

includes particular language in one section of a statute but omits

it in another, and that presumption is even stronger when the

omission entails the replacement of standard legal terminology with

a neologism.") (citation and internal quotation marks omitted).

     Rejecting the Secretary's position establishes what the

phrase ("preponderance of the evidence") does not mean, but leaves

unanswered the question of what it does mean.  We are aided in this

inquiry by the fact that the Act's standard of appellate review,

though curious, is not unique:  Congress used comparable language

to describe judicial review of factfinding in arbitration

proceedings under the Multiemployer Pension Plan Amendments Act of

1980 (MPPAA), Pub. L. 96-364, 94 Stat. 1208.  In relevant part,

that statute's judicial review provision, 29 U.S.C.  1401(c),

states that "there shall be a presumption, rebuttable only by a

clear preponderance of the evidence, that the findings of fact made

by the arbitrator were correct."  In construing this provision, the

Seventh Circuit concluded that preponderance of the evidence, when

articulated as a standard of review, operates much the same as the

"clearly erroneous" standard.  See Jos. Schlitz Brewing Co. v.

Milwaukee Brewery Workers' Pension Plan, 3 F.3d 994, 998-99 (7th

Cir. 1993); Chicago Truck Drivers Pension Fund v. Louis Zahn Drug

Co., 890 F.2d 1405, 1411 (7th Cir. 1989).  The Eleventh Circuit

reached an identical conclusion in respect to the precise provision

at issue here.  See Amcor, Inc. v. Brock, 780 F.2d 897, 899 (11th

Cir. 1986).  Among its other virtues, such an approach imports a

certain symmetry, as courts regularly review factfinding done

pursuant to a preponderance of the evidence standard for clear

error.  See, e.g., Foster-Miller, Inc. v. Babcock & Wilcox Canada,

46 F.3d 138, 147 (1st Cir. 1995); Fed. R. Civ. P. 52(a).  We

therefore hold  that the Service Contract Act's preponderance of

the evidence standard requires that we review factual findings for

clear error.

     This leaves a further question as to whether deference is

due to the ALJ or the ARB.  The Secretary advocates the latter

position.  In many settings, that viewpoint would have force.  As

a default rule, the Administrative Procedure Act establishes that

an agency enjoys plenary powers of review over a hearing officer's

factual and legal conclusions.  See 7 U.S.C.  557(b); see also 2

Davis & Pierce, supra  11.2, at 178-79.  Nevertheless, agencies

may elect to deviate from this default rule.  See Vercillo v. CFTC,

147 F.3d 548, 553 (7th Cir. 1998); Chen v. GAO, 821 F.2d 732, 737

& n.6 (D.C. Cir. 1987); Mullen v. Bowen, 800 F.2d 535, 541 & n.8

(6th Cir. 1986).  Here, the statute and the regulations, read

together, effectuate such a departure.

     The Service Contract Act provides, in relevant part, that

the Secretary or her authorized representative "shall make findings

of fact after notice and hearing, which findings shall be

conclusive upon all agencies of the United States, and if supported

by the preponderance of the evidence, shall be conclusive in any

court of the United States."  41 U.S.C.  39.  We think it is

significant that the final clause refers back to the findings of

fact that are made "after notice and hearing."  Under the current

administrative structure, those findings of fact are made by the

hearing officer (i.e., the ALJ), not the ARB.

     The regulations further confirm our intuition.  They

refer to the ARB as an "appellate body," 29 C.F.R.  8.1(d), and

empower it to "modify or set aside" an ALJ's findings of fact "only

when it determines that those findings are not supported by a

preponderance of the evidence," id.  8.9(b).  Given that the

phrase "preponderance of the evidence" is here couched as a

standard of appellate review, we believe that the regulations

contemplate deference to the hearing officer qua factfinder and

require the ARB (like a reviewing court) to accept an ALJ's

factfinding absent clear error.

     Further evidence of the Secretary's intent to limit the

ARB's function to appellate review is found in her refusal to

confer the authority to receive evidence upon the ARB.  See id. 

8.1(d).  If additional evidence is needed, the ARB must remand to

the hearing officer.  See id.  Courts have held that the authority

to receive additional evidence customarily signals the power to

reweigh the evidence.   See, e.g., Carlisle Area Sch. v. Scott P.,

62 F.3d 520, 528 (3d Cir. 1995).  We believe that the converse also

is true:  the absence of such authority signals that a reviewing

body's power is limited to error-correction.

     Such a structure of agency review, in which deference is

due to the hearing officer's findings of fact rather than to the

factual determinations of the agency's reviewing body, is unusual,

but not unprecedented.  It mirrors, for example the Secretary's

administration of black lung benefits under the Federal Coal Mine

Health and Safety Act, Pub. L. No. 91-173, Title IV, 83 Stat. 792

(Dec. 30, 1969) (codified, as amended, at 30 U.S.C.  901-945). 

The applicable regulations create a framework in which the agency's

reviewing body, the Benefits Review Board (BRB), is enjoined to

employ a substantial evidence standard of review   and, thus,

functions under precisely the same constraints as does a reviewing

court.  See Consolidation Coal Co. v. McMahon, 77 F.3d 898, 901

(6th Cir. 1996); Taylor v. Alabama By-Products Corp., 862 F.2d

1529, 1532-33 (11th Cir. 1989).  Consequently, as long as the ALJ's

findings of fact satisfy the stipulated standard, they are

conclusive upon both the BRB and the courts.

     Based on these insights, we conclude that the ARB is an

appellate tribunal which reviews an ALJ's findings of fact only for

clear error.  Accord Amcor, 780 F.2d at 899; see also American

Waste Removal Co. v. Donovan, 748 F.2d 1406, 1408-09 (10th Cir.

1984) ("The findings of fact made by an ALJ in proceedings pursuant

to the Service Contract Act are conclusive in any court of the

United States if supported by a preponderance of the evidence."). 

It is against this backdrop that we assess the ARB's debarment

decision in this matter.

     On the crucial point   whether Rioux had raised the

monthly payment question with Dantran during the first

investigation   the ARB condemned the ALJ for "erroneously

ignor[ing]" Rioux's testimony.  But the ALJ's memorandum opinion

makes it crystal clear that he did not "ignore" the snippet of

testimony that the ARB plucked from the record.  The ALJ explicitly

considered the evidence and declined to give it weight, instead

crediting Holmes's testimony that Rioux made no such point.  Having

reviewed the entire record, we are persuaded that this finding was

not clearly erroneous   especially since the ALJ, not the ARB, had

the opportunity to observe the witnesses' demeanor at first hand.

     To be sure, Rioux testified, albeit somewhat tentatively,

that he had once mentioned to Holmes that the monthly payment

practice violated the regulations.  His final report, however, did

not contain a word to that effect.  On the contrary, it stated

that, based on employee interviews and perscrutation of payroll

records, the plaintiffs' payroll practices were "in compliance with

all the provisions of the [Act]."  Even were the ALJ obliged to

credit Rioux's testimony that he warned the plaintiffs about making

monthly wage payments   a dubious supposition, considering a

hearing officer's latitude in making credibility calls, see, e.g.,

Aguilar-Solis v. INS, ___ F.3d ___, ___ (1st Cir. 1999) [No. 98-

1481, slip op. at 11]   such a statement could only have been made

informally and, as Rioux himself testified, not in the closing

conference.  Given that the compliance officer's final report

exonerated the plaintiffs up and down the line, the ALJ's finding

that Dantran had a reasonable, good-faith belief throughout the

ensuing period that its wage-payment practices conformed with the

Act's requirements was not clearly erroneous.

     In this case, moreover, the ARB's stance is further

weakened because, although it rejected the ALJ's finding of fact,

it never explained why that finding was mistaken.  The ARB pointed

to no extrinsic evidence to support its conclusion anent the

plaintiff's lack of good faith   and the major piece of relevant

extrinsic evidence (Rioux's final report) supports the ALJ's

credibility determination.  On appellate review, courts are

entitled to expect, at a minimum, that an agency which rejects an

ALJ's factfinding will provide a rational exposition of how other

facts or circumstances justify such a course of action.  SeeInternational Bhd. of Teamsters v. NLRB, 587 F.2d 1176, 1181 (D.C.

Cir. 1978); Local No. 441, IBEW v. NLRB, 510 F.2d 1274, 1276 (D.C.

Cir. 1975).  There is no hint of such an analysis in the ARB's

opinion.

     We have said enough on this score.  The short of it is

that, gauged by the proper standard of review, the ARB had no

legally sufficient reason for upsetting the ALJ's findings of fact

(particularly those that relied on credibility assessments).

     At the risk of redundancy, we pause to repastinate ground

previously plowed.  The ARB ordered debarment because of the

presence of aggravating factors.  It rested this order on two

practices that it deemed culpable:  (i) cross-crediting of fringe

benefits, and (ii) payment of wages on a monthly, rather than semi-

monthly, basis.  As we have seen, however, the ARB premised the

first of these conclusions on an incorrect view of the law (its

belief that cross-crediting violated the regulations), and it

premised the second on an erroneous rejection of the ALJ's

factfinding.  Thus, the ARB's sole remaining rationale for

debarment collapses because its foundation is porous.

     We agree with our dissenting brother that, when a

reviewing court discovers a serious infirmity in agency

decisionmaking, the ordinary course is to remand.  See, e.g.,

Pension Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633, 654 (1990);

Baystate Altern. Staffing, Inc. v. Herman, 163 F.3d 668, 679 (1st

Cir. 1998).  But such a course is not essential if remand will

amount to no more than an empty exercise.  See Fergiste v. INS, 138

F.3d 14, 20-21 (1st Cir. 1998); Empire Co. v. OSHRC, 136 F.3d 873,

877 (1st Cir. 1998); Cotton Petroleum Corp. v. United States Dep't

of Interior, 870 F.2d 1515, 1528-29 (10th Cir. 1989).  Two

circumstances bring this principle into play.  First, the ALJ found

that no aggravating factors were extant, and the record reveals no

plausible basis for a contrary finding.  Second, mitigating factors

abound.

     In respect to mitigation, the regulations suggest that

factors such as compliance history, cooperation during the

investigation, and prompt repayment of sums owed bear heavily on

whether relief from debarment should be granted.  See 29 C.F.R. 

4.188(b)(3)(ii).  Beyond these factors, the agency must consider

items such as the results of previous investigations, the extent to

which the disputed issues involved uncertain legal questions, the

impact of debarment on innocent employees, and the seriousness of

the violations.  See id.  Here, remand would serve no useful

purpose from a factfinding perspective, for the ALJ already has

made specific findings of historical fact that resolve virtually

all of the enumerated factors in the plaintiffs' favor.  Because

these findings easily survive clear-error review, the statute and

the regulations make them conclusive upon the ARB.  Consequently,

there is no point in remanding on this account.  See, e.g., Freeman

United Coal Min. Co. v. Anderson, 973 F.2d 514, 518 (7th Cir. 1992)

(declining, in black lung benefits case, to remand when the ALJ had

made relevant findings of fact and the court had an obligation to

apply the same standard of review as the agency).

     The only remaining question is whether we should remand

so that the ARB can review the mitigating factors to determine the

supportability of the ALJ's balancing (i.e., his application of

legal standards to the facts as found).  Were evidence of

aggravation present, or were mitigation evidence lacking, or were

the relevant proof meager, we would not hesitate to remand for the

ARB's reconsideration.  Here, however, there is no reasonable doubt

about the balancing equation's overall equilibrium.  Although the

Act grants the Secretary latitude in considering whether to

recommend relief from debarment, she has cabined that discretion by

enumerating the specific factors (and the balancing methodology)

upon which she will rely to determine the existence of unusual

circumstances.  In this case, the findings as to mitigation are so

potent that solving the balancing equation in any manner contrary

to that which the ALJ reached would constitute an abuse of

discretion.  Furthermore, while we do not regard the Secretary's

list of enumerated factors as exhaustive, neither the ARB's opinion

nor the Secretary's brief so much as hints at any other datum in

the record that might alter the outcome of the mitigation equation.

     In the last analysis, the Secretary's only plausible

argument for remand emphasizes that the plaintiffs' transgressions

did not involve legal issues of "doubtful certainty."  To the

extent that this argument refers to cross-crediting, it is simply

wrong.  See supra Part II.  To the extent that it refers to the

frequency of payment issue, the argument has some bite, but for two

reasons we do not believe, as a matter of law, that the Secretary's

"legal certainty" refrain can prevail.

     For one thing, the fact that the Secretary's own

representative failed to advise the plaintiffs during the 1989

investigation that their wage-payment practices were impermissible

undermines her position.  As we have said, Rioux's final report

left the plaintiffs with the justifiable impression that the

monthly payment of wages met the Secretary's criteria.  This

impression was bolstered both before and after that investigation

by the conduct of various Postal Service officials, who contracted

to pay Dantran monthly, accepted the plaintiffs' submission of

payroll schedules that clearly showed monthly payments without

evincing the slightest concern, and assured the plaintiffs

(tacitly, at least) that they were handling employee payments in an

appropriate manner.  While these facts do not warrant estoppel

against the government, see supra Part III, they nevertheless form

a significant part of the equitable overlay that the Act and the

regulations take into account in determining whether relief from a

very harsh penalty is warranted.

     For another thing, the legal certainty associated with

the payment frequency provision, without more, cannot overcome a

record that reeks of mitigation.  This solitary item cannot trump

the numerous indicia of mitigation contained in the record (most of

which satisfy precisely the specific mitigating criteria limned by

the regulations).  Thus, given the absence of aggravating

circumstances, the prevalence of mitigating factors, and the

relatively insubstantial nature of the violation,  debarment would

be a punishment totally out of proportion to the offense (and,

therefore, contrary to the regulations).  See 29 C.F.R. 

4.188(b)(2).

     We summarize succinctly.  The customary rule, as our

dissenting brother says, favors remand when a court sets aside an

agency determination.  But the rule also allows some flexibility. 

Courts should not indulge in wasteful wheel-spinning.  Thus, in the

rare case in which the facts admit of only one plausible legal

conclusion, an inquiring court serves the ends of justice by a

frank acknowledgment that remand promises to be an exercise in

futility.  See  Gatson v. Bowen, 838 F.2d 442, 450 (10th Cir. 1988)

(declining to remand after concluding that agency had misapplied

the law where, regardless of any further findings, the record would

support only one legal conclusion); Brock v. L.R. Willson & Sons,

Inc., 773 F.2d 1377, 1389 n.12 (D.C. Cir. 1985) (concluding that

the court of appeals could rule on a question involving application

of law to fact, without remanding to the agency, as long as only

one conclusion would be supportable); Donovan ex. rel. Anderson v.

Stafford Constr. Co., 732 F.2d 954, 961 (D.C. Cir. 1984) (same);

see also Donovan v. Capital City Excavating Co., 712 F.2d 1008,

1010 (6th Cir. 1983); Usery v. Marquette Cement Mfg. Co., 568 F.2d

902, 910-11 (2d Cir. 1977).  Because this is such a case   after

all, debarment proceedings under the Act are all-or-nothing

propositions, see Federal Food Serv., Inc. v. Donovan, 658 F.2d

830, 834 (D.C. Cir. 1981); no intermediate penalties are available,

so if debarment is not in order, no practical necessity exists for

resurrecting the administrative proceeding   remand is not

obligatory.

V.  CONCLUSION

     We need go no further.  Although the plaintiffs did

violate the Act in one particular, they have made a compelling case

for relief from debarment.  In view of that conclusion, and because

remand is not an appealing option, we rescind the debarment order,

reverse the decision of the district court, and return the case to

that court for the entry of an appropriate judgment.



Reversed.


Separate Opinion follows  CUDAHY, Senior Circuit Judge, concurring in part and dissenting in

part.

     With some reluctance, I undertake a critique of Judge

Selya's monumental analysis of this tangled case.  But in several

respects I think a different approach may be required.

     Before reaching the more troubling question, I generally

approve of the direction taken by the majority's dissection of the

fringe benefit provisions.  However, I do not come away from this

examination entirely convinced that the Department's reading of its

regulations is wrong and Dantran's is right.  As far as it goes,

the majority's analysis is persuasive.  That analysis does not,

however, fully account for the use of terms like "contract-by-

contract," "employees performing on more than one contract," "on

each contract" and the like.  The regulations, particularly the

latter pertinent sentence of 29 C.F.R.  4.172, emphasize a need

to calculate fringe benefits as separately attributable to specific

contracts.  It is not a complete answer to suggest, as does the

majority, that this language is designed merely to mandate

accounting for all of the hours worked on the various contracts in

order to make up the allowed forty hours.  If this were all that

was involved, why would the regulations specify that the

calculation be made "contract-by-contract?"  The emphasis is too

insistent, it seems to me, merely to convey the meaning suggested

by the majority.

     I believe that the language that I have quoted above does

tend to support the Department's position.  However, reading this

language together with the other language which the majority

opinion correctly analyzes as supporting Dantran's view, the only

fair conclusion is that these regulations are self-contradictory

and too vague and ambiguous to be enforced.  One reason for this is

that the Department has not seen fit to explain to us the rationale

for its reading of the rule.  One would think that, for example,

fifty hours worked under several contracts should be rewarded with

the same fringe benefits as fifty hours worked under a single

contract, as Dantran has interpreted the regulations.  It may be,

giving maximum ambit to one's imagination, that somehow two

contracts provide more funds to cover fringe benefits than does a

single contract.  We can hardly be expected to speculate that this

is the case, however.  The best we can do is leave the subject

scratching our heads and concluding that the regulations are

indecipherable.  If that is the case, they are unenforceable.  They

cannot furnish any basis for an order of debarment. 

     On the other matter in dispute -- the frequency of wage

payments -- I part company in a significant way with the majority. 

The record here does not reflect any good reason why an employer,

exercising normal prudence, is entitled to assume, without

checking, that monthly payment of wages is an available option or

that the applicable regulations would endorse this practice.  This

is not an esoteric matter, like the methodology of furnishing

fringe benefits.  Instead, it is easily understood and likely to be

of immediate concern to employees.  It is something about which a

prudent employer would take reasonable steps to acquaint himself --

even to the point of actually looking at the regulations.

     In that connection, did Dantran make any effort between

1986 (when it apparently began monthly payments) and 1991 to ensure

compliance with the frequency of payment provisions?  It appears

not.  Holmes testified that he spoke with his Post Office contacts

about the propriety of cross-crediting fringe benefits, but he

never mentioned asking how often he was required to pay his

employees.  His wife, who kept Dantran's books and ran its payroll,

was similarly remiss.  The majority does not even note this major

omission but apparently adopts Dantran's thesis that if the

contract specifies monthly payments to Dantran by the government,

Dantran is entitled to infer that Dantran's employees need be paid

only monthly.  See ante at 23.  This seems specious to me. 

Although Dantran apparently did not keep large cash reserves, it

ought to have better access to working capital than its employees. 

Dantran is in a better position to adjust for temporary mismatches

of revenue and expense than are its employees to wait a full month

for their pay.  Contractors and merchants the world around receive

progress payments, remittances on invoices and other payments from

customers on a variety of schedules, but I am not aware that these

schedules  determine how often they are expected or required to pay

their own employees.  This inference, for which Dantran argues

persistently, is simply a non-sequitur.  And I know no reason why

government contractors would have some special dispensation to pay

their employees less frequently than businessmen in the economy at

large.

     I am therefore not nearly as indulgent of Dantran's

frequency of pay practices as is the majority.  On the other hand,

I am certainly not convinced that debarment is appropriate.  I

believe the matter of frequency of wage payments should be remanded

to the Board for separate consideration, the fringe benefit matter

having dropped out of the case.

     Remand would clearly not be an empty exercise. 

Notwithstanding the majority's apparent effort to consign the Board

to irrelevance, the Board does -- and should -- retain some

discretion to determine whether debarment is warranted.  The plain

language of 41 U.S.C.  39 -- "findings of fact . . . shall be

conclusive upon all agencies of the United States, and if supported

by the preponderance of the evidence, shall be conclusive in any

court of the United States" -- suggests that reviewing bodies may

exercise what amounts to de novo review of the record.  If the

finder of fact and the reviewing authority  are bound by the same

standard in establishing the facts (preponderance of the evidence),

the logic of the situation is that review is essentially de novo. 

First Circuit case law apparently supports such a literal reading.

See Vigilantes, Inc. v. Administrator of Wage & Hour Div., 968 F.2d

1412, 1418 (1st Cir. 1992) ("We review the Secretary's findings to

determine whether a preponderance of the evidence supports his

conclusion that [the appellants] should be barred from bidding on

government contracts.").  The Eleventh Circuit case cited by the

majority, Amcor, Inc. v. Brock, 780 F.2d 897, 899 (11th Cir. 1986),

at best only stirs up already murky waters by mentioning "clear

error" and "preponderance of the evidence" in consecutive

sentences.  

     In addition, the majority's reliance on  interpretations

of the MPPAA  is misplaced, since that statute frames the standard

of review more conventionally:  "there shall be a presumption,

rebuttable only by a clear preponderance of the evidence, that the

findings of fact made by the arbitrator were correct,"  29 U.S.C.

 1401(c) (emphasis added).  This language simply establishes a

presumption in favor of the factfinder (something like the clear

error standard).  This is quite different than the language of 41

U.S.C.  39 (governing this case) which establishes no such

presumption but instead instructs the reviewing body to accept

findings only if they are supported by a preponderance of the

evidence.

     Moreover, even though the Secretary's own regulations

appear to vest the Board with essentially appellate powers,

appellate bodies need defer, if they are to defer at all, only to

findings of historical fact; how the law applies to the facts is

certainly within the de novo reviewing powers of the appellate

body.  The majority offers no reasons why we would defer to the

ALJ's application of the law to the facts rather than accept the

same application by the Board.

     I therefore disagree with the majority about the degree

of deference in factual matters the Board owes to the ALJ.  But

these differences are not crucial in resolving the question of

debarment, since relief from debarment does not issue automatically

from determinations of fact.  Instead, as prescribed by the

regulations, the absence of aggravating circumstances, the presence

of mitigating elements and a sensitive balancing of related factors

(potentially either aggravating or mitigating) determines whether

a case presents truly unusual circumstances.  An adjudicator must

address, for example, a contractor's efforts to ensure compliance

and a contractor's culpability, if any, in failing to make the

necessary efforts.  None of these determinations simply requires

findings of fact; each requires a judgment about how the facts

relate to the legal standards set out in the regulations. 

Ultimately, there must be a discretionary judgment about the

relative weight to be accorded each factor.

     Again, with respect to Dantran's efforts at compliance,

the majority is persuaded that inspector Rioux's "clean bill of

health" provides some sort of "equitable overlay," see ante at 36-

37, excusing Dantran's failure to inquire about or read the

applicable regulations.  I do not find this convincing.  At the

same time, the majority goes to considerable lengths to reject

Dantran's estoppel argument.  It follows from this emphatic denial

of estoppel that any reliance by Dantran on Rioux's report to

justify its own breach of regulations is unreasonable.  In that

context, it is not clear why fairness requires us to credit

Dantran's mistaken beliefs.

     In my view, equitable considerations of whatever sort are

better left in the first instance to the Board, precisely because

the regulations mandate a factor-specific balancing with

accompanying judgments about the relative weights of the factors. 

The present case illustrates the potential for competing inferences

and varying weights to be attached to findings of historical fact. 

Thus, even if the Secretary must review the ALJ's fact-finding with

deference, she must still make an independent determination whether

the facts add up to circumstances unusual enough for Dantran to

avoid debarment.  I would permit the Secretary or her delegate, the

Board, to undertake this balancing anew, consistent with this

opinion, of course.  To that extent, I respectfully dissent.