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    NOTICE: This opinion is subject to formal revision before publication in
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    requested to notify the Reporter of Decisions, Supreme Court of the
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                       SUPREME COURT OF THE UNITED STATES

                                    --------
                                   No. 91-1729
                                    --------

                      UNITED STATES, ET AL., PETITIONERS v.                                                        ___
                                  TEXAS ET AL.

                       ON WRIT OF CERTIORARI TO THE UNITED
                      STATES COURT OF APPEALS FOR THE FIFTH
                                     CIRCUIT

                                 [April 5, 1993]

  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 (Act) 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, 7 U. S. C. S2011 et seq.  Under that                                                          _______
program, the Food and Nutrition Service (FNS) of the United States Department of
Agriculture provides food stamp coupons to participating States, and the States
then distribute the coupons to qualified individuals and households.  SS2013(a),
2014.  Regulations implementing the Food Stamp Program permit participating
States to distribute the coupons either over-the-counter or through the mail.  7
CFR S274.3(a) (1986); 7 CFR S274.3 (a)(3) (1992).  While mail issuance generally
is cheaper and more convenient, States that choose to use that distribution
method must reimburse the Federal Government for a portion of the replacement
cost for any lost or stolen coupons.  7 U. S. C. S2016(f).  Specifically, a
State must reimburse                                91-1729 - OPINION

2                            UNITED STATES v. TEXAS                                          ____

the Government for all such losses above a "tolerance level" set by
regulation. (Ftnote. 1)            (Ftnote. 1)
  Texas, through its Department of Human Services, contractually bound itself to
comply with all federal regulations governing the program.  See 7 CFR
SS272.2(a)(2), 272.2(b)(1) (1986). (Ftnote. 2)  Texas incurred substantial mail                                   (Ftnote. 2)
issuance losses, in part because United States Postal employees stole food
stamps that had been mailed by the Texas Department of Human Services to
qualified households.  Because those losses exceeded the applicable tolerance
level, Texas was bound to reimburse the Federal Government for the excess
losses.  The FNS notified Texas




















                    ____________________

   1)   The regulatory tolerance level in place for the mail issuance losses in   1)
this case was .5% of each reporting area's total mail issuances for each
calendar quarter.  7 CFR S274.3(c)(4)(i) (1986).
   2)  Title 7 CFR S272.2(a)(2) (1992) provides in pertinent part:     2)
 "The basic components of the State Plan of Operation are the Federal/ State
Agreement, the Budget Projection Statement, and the Program Activity
Statement. . . . The Federal/State Agreement is the legal agreement between the
State and the Department of Agriculture.  This Agreement is the means by which
the State elects to operate the Food Stamp Program and to administer the program
in accordance with the Food Stamp Act of 1977, as amended, regulations issued
pursuant to the Act and the FNS-approved State Plan of Operations."
 Subsection (b)(1) sets out the exact wording of the pre-printed Federal/ State
Agreement.  The provisions relevant to this dispute are as follows:
 "The State of ___ and the Food and Nutrition Service (FNS), U. S. Department
of Agriculture (USDA), hereby agree to act in accordance with the provisions of
the Food Stamp Act of 1977, as amended, implementing regulations and the FNS-
approved State Plan of Operation.  The State and FNS (USDA) further agree to
fully comply with any changes in Federal law and regulations.  This agreement
may be modified with the mutual written consent of both parties.
       .     .      .      .      .
 "The State agrees to: 1. Administer the program in accordance with the
provisions contained in the Food Stamp Act of 1977, as amended, and in the
manner prescribed by regulations issued pursuant to the Act; and to implement
the FNS-approved State Plan of Operation."  7 CFR S272.2(b)(1) (1992).                                91-1729 - OPINION

                             UNITED STATES v. TEXAS                            3                                          ____

of its debt in the amount of $412,385, and informed it that prejudgment interest
would begin to accrue on the balance unless payment was made within 30 days.
  Texas sought administrative relief in the form of a waiver of liability.
After the Food Stamp Appeals Board denied the requested relief, Texas sued the
United States in the United States District Court for the Western District of
Texas.  In addition to challenging the Appeals Board's refusal to grant a waiver
of liability, Texas argued that the Debt Collection Act precluded the imposition
of prejudgment interest on any amount it owed the Federal Government.  The
District Court granted summary judgment in favor of the United States on both
issues.  With respect to the prejudgment interest issue, the District Court
adopted the approach taken by the Court of Appeals for the Tenth Circuit in
Gallegos v. Lyng, 891 F. 2d 788 (1989), which held that the Government's common________    ____
law right to prejudgment interest on debts owed to it by the States survived
enactment of the Debt Collection Act.  See Civ. Action Nos. A-87-CA-774, A-
88-CA-820 (WD Tex., Nov. 13, 1990).
  The Court of Appeals for the Fifth Circuit affirmed the District Court's
decision concerning waiver, but reversed its decision concerning prejudgment
interest.  951 F. 2d 645 (1992).  Relying on the language of the Debt Collection
Act, the Court held that the "Act is not silent concerning whether or not state
obligations should be subject to prejudgment interest.  The Act specifically
excludes states from the payment of interest."  Id., at 651.  Because Congress                                                ___
did not impose interest through the specific provisions of the Food Stamp Act
"during the time period relevant in this case, the Courts are not free to
`supplement' Congress' enactment."  Ibid. (quoting Mobil Oil Corp. v.                                    _____          _______________
Higginbotham, 436 U. S. 618, 625 (1978)).  The Court rejected the argument that____________
abrogation is inconsistent with the Act's purpose of enhancing the Government's
ability to collect its debts.  In the Court's                                91-1729 - OPINION

4                            UNITED STATES v. TEXAS                                          ____

view, the Federal Government could enforce its claims for unpaid mail issuance
losses through the offset procedures built into the Food Stamp Act.  Because of
a split among the Courts of Appeals on this question, we granted certiorari, 506
U. S. ___ (1992), and now reverse. (Ftnote. 3)                                   (Ftnote. 3)
  It is a "longstanding rule that parties owing debts to the Federal Government
must pay prejudgment interest where the underlying claim is a contractual
obligation to pay money."  West Virginia v. United States, 479 U. S., at 310                           _____________    _____________
(citing Royal Indemnity Co. v. United States, 313 U. S. 289, 295-297 (1941)).         ___________________    _____________
In Board of Comm'rs of Jackson County v. United States, 308 U. S. 343 (1939), we   ___________________________________   _____________
held that this common law right extends to debts owed by state and local
governments, but cautioned that a federal court considering the question in an
individual case should weigh the federal and state interests involved.  We
reaffirmed Board of Comm'rs in West Virginia, supra, and upheld the assessment           ________________    _____________  _____
of prejudgment interest on a debt owed by West Virginia to the United States.
  Just as longstanding is the principle that "[s]tatutes which invade the common
law . . . are to be read with a presumption favoring the retention of long-
established and familiar principles, except when a statutory purpose to the
contrary is evident."  Isbrandtsen Co. v. Johnson, 343 U. S. 779, 783 (1952);                       _______________    _______
Astoria Federal Savings & Loan Assn. v. Solimino, 501 U. S. ___, ___ (1991)____________________________________    ________
(slip op., at 3).  In such cases, Congress does not write upon a clean slate.
Astoria, supra, at ___ (slip op., at 2-3).  In order_______  _____

























                    ____________________

   3)  The Tenth Circuit holds that the Debt Collection Act of 1982 did not   3)
abrogate the Federal Government's common law right to collect prejudgment
interest against the States.  Gallegos v. Lyng, 891 F. 2d 788 (1989).  The                              ________    ____
Second, Third and Eighth Circuits all hold to the contrary.  See Perales v.                                                                 _______
United States, 751 F. 2d 95 (CA2 1984) (per curiam); Pennsylvania Dept. of_____________                          _____________ _____________________
Public Welfare v. United States, 781 F. 2d 334 (CA3 1986); Arkansas by Scott v.______________    _____________                            _________________
Block, 825 F. 2d 1254 (CA8 1987)._____                                91-1729 - OPINION

                             UNITED STATES v. TEXAS                            5                                          ____

to abrogate a common law principle, the statute must "speak directly" to the
question addressed by the common law.  Mobil Oil Corp. v. Higginbotham, supra,                                       _______________    ____________  ______
at 625; Milwaukee v. Illinois, 451 U. S. 304, 315 (1981).        _________    ________
  Texas argues that this presumption favoring retention of existing law is
appropriate only with respect to state common law or federal maritime law.
Although a different standard applies when analyzing the effect of federal
legislation on state law, Milwaukee, supra, at 316-317, there is no support in                          _________  _____
our cases for the proposition that the presumption has no application to federal
common law, or for a distinction between general federal common law and federal
maritime law in this regard.  We agree with Texas that Congress need not
"affirmatively proscribe" the common law doctrine at issue.  Brief for
Respondents 3-4; see Milwaukee, supra, at 315.  But as we stated in Astoria,                     _________  _____                               _______
supra, "courts may take it as a given that Congress has legislated with an_____
expectation that the [common law] principle will apply except `when a statutory
purpose to the contrary is evident.'"  501 U. S., at ___ (slip op., at 3)
(quoting Isbrandtsen, supra, at 783).          ___________  _____
  The Debt Collection Act does not speak directly to the Federal Government's
right to collect prejudgment interest on debts owed to it by the States.  The
Act states that "[t]he head of an executive or legislative agency shall charge a
minimum annual rate of interest on an outstanding debt on a United States
Government claim owed by a person. . . ."  31 U. S. C. S3717(a)(1) (emphasis                           ______
added).  Section 3701, in turn, provides that the term "`person' does not
include an agency of the United States Government, of a State government, or of
a unit of general local government."  S3701(c).  Texas argues that this exemp-
tion clearly establishes Congress' intent to relieve the States of their common
law obligation to pay prejudgment interest.  We disagree.
  The only obligation from which S3701 exempts the States is the obligation to
pay prejudgment interest in                                91-1729 - OPINION

6                            UNITED STATES v. TEXAS                                          ____

accordance with the mandatory provisions of the Act.  These impose a stringent
minimum interest requirement upon private persons owing money to the Federal
Government.  The statute is silent as to the obligation of the States to pay
prejudgment interest on such debts.  We agree with the Solicitor General that
"Congress's mere refusal to legislate with respect to the prejudgment-interest
obligations of state and local governments falls far short of an expression of
legislative intent to supplant the existing common law in that area."  Brief for
Petitioners 16. (Ftnote. 4)                (Ftnote. 4)
  Our conclusion that the States remain subject to common law prejudgment
interest liability is supported by the fact that the Debt Collection Act is more
onerous than the common law.  Section 3717(a) requires federal agencies to                                              ________
collect prejudgment interest against persons and specifies






















                    ____________________

   4)  Both Texas and the Court of Appeals rely on Congress' authority to   4)
impose interest obligations on the States through specific statutes, such as the
Medicaid Act, 42 U. S. C. S1396b(d)(5), and the Social Security Act, 42 U. S. C.
S418(j) (1982 ed.), to support the proposition that the Debt Collection Act
extinguished the Federal Government's common law right to collect prejudgment
interest.  Both statutes, however, codified and made mandatory the common law
right to collect prejudgment interest at a specified interest rate.  Like the
Debt Collection Act, these statutes changed the common law.  Congress' obvious
desire to enhance the common law in specific, well-defined situations does not
signal its desire to extinguish the common law in other situations.
 Texas also relies on the recent amendment to 7 U. S. C. S2022 adding a
provision requiring prejudgment interest on specific obligations arising under
the Food Stamp Act of 1977.  Pub. L. 100-435, S602, 102 Stat. 1674 (1988).  But
"subsequent legislative history is a `hazardous basis for inferring the intent
of an earlier' Congress."  Pension Benefit Guaranty Corp. v. LTV Corp., 496                           ______________________________    _________
U. S. 633, 650 (1990) (quoting United States v. Price, 361 U. S. 304, 313                               _____________    _____
(1960)).  Texas' argument also fails because, like the Medicaid Act and the
Social Security Act provisions, the Food Stamp Act of 1977 did not merely codify
the common law without change.  Rather, it contains a mandatory provision
requiring prejudgment interest at a specified rate.                                91-1729 - OPINION

                             UNITED STATES v. TEXAS                            7                                          ____

the interest rate. (Ftnote. 5)  The duty to pay prejudgment interest under the                   (Ftnote. 5)
common law, however, is by no means automatic.  Before imposing prejudgment
interest, the courts must weigh the competing federal and state interests.  West                                                                            ____
Virginia, 479 U. S., at 309-311; Board of Comm'rs, 308 U. S., at 350.  And________                         ________________
instead of imposing a pre-established rate of interest, the district courts
retain discretion to choose the appropriate rate in a given case.  Unlike the
common law, S3717 also imposes processing fees and penalty charges, 31 U. S. C.
SS3717(e)(1), (e)(2).  Given these differences, it is logical to conclude that
the Act was intended to reach only one subset of potential debtors - persons -
and to leave the other subset alone.  It is reasonable to apply more stringent
requirements to debts owed by private persons and to keep the more flexible
common law in place for debts owed by state and local governments.
  The evident purpose of the Debt Collection Act rein- forces our reading of the
plain language.  The Act was designed "[t]o increase the efficiency of
Government-wide efforts to collect debts owed the United States and to provide
additional procedures for the collection of debts owed the United States."  96
Stat. 1749; S. Rep. No. 97-378, p. 2 (1982) (the Act responded to "increasing
concern . . . expressed in Congress and elsewhere over the increasing backlog of
unpaid debts owed the federal government").  This suggests that Congress passed
the Act in order to strengthen the Government's hand in collecting its debts.
Yet under the reading proposed by Texas and the Court of Appeals, the Act would
have the anomalous effect of placing delinquent States in a position where




























                    ____________________

   5)  The interest rate required under S3717 is "the average investment rate   5)
for the Treasury tax and loan accounts for the 12-month period ending on
September 30 of each year, rounded to the nearest whole percentage point."  31
U. S. C. S3717(a)(1).                                91-1729 - OPINION

8                            UNITED STATES v. TEXAS                                          ____

they had less incentive to pay their debts to the Federal Government than they
had prior to its passage.
  The Court of Appeals reasoned that the States would not have an incentive to
delay payment of their debts because the Food Stamp Act makes state agencies
liable for actual losses caused by coupon shortages or unauthorized issuances,
and permits the Federal Government to recover these debts through an
administrative off-set procedure.  951 F. 2d, at 650.  But the Debt Collection
Act applies to all federal agencies, not just the FNS.  Thus, the existence of a               ___
mechanism in the Food Stamp Act allowing the FNS to collect its debts does
nothing to encourage prompt payment of debts government-wide.  That the FNS may
have already possessed adequate sanctions to compel payment is not a reason to
conclude that the generic language in the Debt Collection Act was meant to
abrogate the existing common law obligation of the States generally.
  Texas concedes that Congress intended to enhance the Government's debt
collection efforts by passing the Act.  It argues, however, that Congress was
concerned primarily with debts owed by private persons.  Accordingly, runs the
argument, Congress meant to relieve the States of their duty to pay interest
because the States were not the root of the debt collection problem.
  Part of this argument persuades; Congress in the Act tightened the screws, so
to speak, on the prejudgment interest obligations of private debtors to the
Government, and not on the States.  It may be inferred from this fact that the
former were the root of the Government's debt collection problems which inspired
the Act.  But it does not at all follow that because Congress did not tighten
the screws on the States, it therefore intended that the screws be entirely
removed.  The more logical conclusion is that it left the screws in place,
untightened.
  As a last-ditch argument, Texas contends that its liability for losses in the
mail is not a contractual debt for                                91-1729 - OPINION

                             UNITED STATES v. TEXAS                            9                                          ____

which it owes prejudgment interest, but rather a penalty unilaterally imposed by
Congress.  See Rodgers v. United States, 332 U. S. 371, 374-376 (1947)               _______    _____________
(penalties are not normally subject to prejudgment interest).  This argument
fails because the obligation of Texas to reimburse the Government for a portion
of the stamps lost in the mail is quite different from that involved in Rodgers.                                                                         _______
There the penalties in question were unilaterally imposed by the Agricultural
Adjustment Act on farmers who exceeded their production quotas; there was no
suggestion that the farmers ever consented to such penalties.  Here, on the
other hand, Texas signed a Federal/State Agreement, the express terms of which
bound the State to act in accordance with the implementing regulations.  7 CFR
S272.2(a)(2) (1986); see also n. 2, supra.  Thus, 7 CFR S274.3(c)(4) (1986),                                    _____
which imposed liability for mail issuance losses above a specified tolerance
level, was incorporated into Texas' Federal/State Agreement.  The requirement
that the States reimburse the Federal Government for a certain portion of mail
issuance losses is not a penalty, but a contractual obligation which the State
assumed. (Ftnote. 6)         (Ftnote. 6)
  For these reasons, we hold that the Debt Collection Act left in place the
federal common law governing the
























                    ____________________

   6)  Both Texas and the Court of Appeals rely upon our decision in Pennhurst   6)                                                                _________
State School and Hospital v. Halderman, 451 U. S. 1 (1981), for the proposition_________________________    _________
that the Federal Government may not collect prejudgment interest because neither
the Debt Collection Act nor the Food Stamp Act expressly require prejudgment
interest.  This reliance is misplaced.  In Pennhurst, we held that in order to                                           _________
impose conditions on the receipt of federal funds, Congress must speak
unambiguously.  Id., at 17.  This makes sense because the States cannot                ___
voluntarily and knowingly agree to a condition that is not clearly expressed.
Ibid.  Because the duty to pay prejudgment interest on debts owed to the United_____
States existed long before either the Food Stamp Program or the Debt Collection
Act was created, the rule in Pennhurst does not apply.  See Bell v. New Jersey,                             _________                      ____    __________
461 U. S. 773, 790, n. 17 (1983).                                91-1729 - OPINION

10                           UNITED STATES v. TEXAS                                          ____

obligation of the States to pay prejudgment interest on debts owed to the
Federal Government.
  The judgment of the Court of Appeals to the contrary is accordingly
                                                                       Reversed.                                                                       ________