Opinion

JUSTICE O'CONNOR, with whom JUSTICE BRENNAN, JUSTICE MARSHALL, and JUSTICE STEVENS join, dissenting.

The Court's decision is based on two distinct lines of argument. First, the Court concludes that the language of § 506(b) of the Bankruptcy Code, 11 U.S.C. § 506(b), is clear and unambiguous. Second, the Court takes a very narrow view of Midlantic National Bank v. New Jersey Dept. of Environmental Protection, 474 U. S. 494 (1986), and its progeny. I disagree with both aspects of the Court's opinion, and with the conclusion to which they lead.

The relevant portion of § 506(b) provides that

there shall be allowed to the holder of [an oversecured] claim, interest on such claim, and any reasonable fees, costs, or charges provided for under the agreement under which such claim arose.

The Court concludes that the only natural reading of § 506(b) is that recovery of post-petition interest is "unqualified." Ante at 241. As Justice Frankfurter remarked some time ago, however, "[t]he notion that, because the words of a statute are plain, its meaning is also plain, is merely pernicious oversimplification." United States v. Monia, 317 U. S. 424, 317 U. S. 431 (1943) (dissenting opinion).

Although "the use of the comma is exceedingly arbitrary and indefinite," United States v. Palmer, 3 Wheat. 610, 16 U. S. 638 (1818) (separate opinion of Johnson, J.), the Court is able to read § 506(b) the way that it does only because of the comma following the phrase "interest on such claim." Without this "capricious" bit of punctuation, In re Newbury Cafe, Inc., 841 F.2d 20, 22 (CA1 1988), cert. pending, No. 87-1784, the relevant portion of § 506(b) would read as follows:

there shall be allowed to the holder of [an oversecured] claim, interest on such claim and any reasonable fees, costs, or charges provided for under the agreement under which such claim arose.

The phrase "interest on such claim" would be qualified by the phrase "provided for under the agreement under which such claim arose," and nonconsensual liens would not accrue post-petition interest. See Porto Rico Railway, Light & Power Co. v. Mor, 253 U. S. 345, 253 U. S. 348 (1920) ("When several words are followed by a clause which is applicable as much to the first and other words as to the last, the natural construction of the language demands that the clause be read as applicable to all"). This conclusion is not altered by the fact that the words "and any" follow the phrase "interest on such claim." Those words simply indicate that interest accrues only on the amount of the claim, and not on "fees, costs, or charges" that happen to be incurred by the creditor.

The Court's reliance on the comma is misplaced. "[P]unctuation is not decisive of the construction of a statute." Costanzo v. Tillinghast, 287 U. S. 341, 287 U. S. 344 (1932). See also Barrett v. Van Pelt, 268 U. S. 85, 268 U. S. 91 (1925) (" Punctuation is a minor, and not a controlling, element in interpretation, and courts will disregard the punctuation of a statute, or re-punctuate it, if need be, to give effect to what otherwise appears to be its purpose and true meaning"'); Ewing v. Burnet, 11 Pet. 41, 36 U. S. 53 -54 (1837) ("Punctuation is a most fallible standard by which to interpret a writing; it may be resorted to when all other means fail, but the court will first take the instrument by its four corners, in order to ascertain its true meaning; if that is apparent on judicially inspecting the whole, the punctuation will not be suffered to change it"). Under this rule of construction, the Court has not hesitated in the past to change or ignore the punctuation in legislation in order to effectuate congressional intent. See, e.g., Simpson v. United States, 435 U. S. 6, 435 U. S. 11 -12, n. 6 (1978) (ignoring punctuation and conjunction so that qualifying phrase would modify antecedent followed by comma and the word "or"); Stephens v. Cherokee Nation, 174 U. S. 445, 174 U. S. 479 -480 (1899) (ignoring punctuation so that qualifying phrase would restrict antecedent set off by commas and followed by the word "and").

Although punctuation is not controlling, it can provide useful confirmation of conclusions drawn from the words of a statute. United States v. Naftalin, 441 U. S. 768, 441 U. S. 774, n. 5 (1979). The Court attempts to buttress its interpretation of § 506(b) by suggesting that any other reading would be inconsistent with the remaining portions of § 506, which "make no distinction between consensual and nonconsensual liens." Ante at 489 U. S. 242, n. 5. But § 506(b), regardless of how it is read, does distinguish between types of liens. The phrase "provided for under the agreement under which such claim arose" certainly refers to consensual liens, and must qualify some preceding language. Even under the Court's interpretation, "reasonable fees, costs, or charges" can only be awarded if provided for in a consensual lien. Thus, limiting post-petition interest to consensual liens simply reinforces a distinction that already exists in § 506(b). For the same reason, I find unavailing the Court's assertion, ante at 489 U. S. 242, n. 5, that Congress would have used the phrase "security interest" if it wanted to limit post-petition interest to consensual liens.

Even if I believed that the language of § 506(b) were clearer than it is, I would disagree with the Court's conclusion, for Midlantic counsels against inferring congressional intent to change pre-Code bankruptcy law. At issue in Midlantic was § 554(a) of the Code, 11 U.S.C. § 554(a), which provided that,

[a]fter notice and a hearing, the trustee may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value to the estate.

Despite this unequivocal language, the Court held that § 554(a) does not authorize a trustee to abandon hazardous property in contravention of a state statute or regulation reasonably designed to protect the public health or safety. Relying on only three pre-Code cases (one did not deal with state laws and in another the relevant language was arguably dicta), the Court concluded that, under pre-Code bankruptcy law, there were restrictions on a trustee's power to abandon property. 474 U.S. at 474 U. S. 500 -501. The Court stated that the

normal rule of statutory construction is that, if Congress intends for legislation to change the interpretation of a judicially created concept, it makes that intent specific,

and noted that it had "followed this rule with particular care in construing the scope of bankruptcy codifications." Id. at 474 U. S. 501 (citations omitted). Given the pre-Code law and Congress' goal of protecting the environment, the Court was

unwilling to assume that by enactment of § 554(a), Congress implicitly overturned longstanding restrictions on the common law abandonment power.

Id. at 474 U. S. 506.

The Court characterizes Midlantic as involving

a situation where bankruptcy law, under the proposed interpretation, was in clear conflict with state or federal laws of great importance.

Ante at 489 U. S. 245. Though I agree with that characterization, I think there is more to Midlantic than conflict with state or federal laws. Contrary to the Court's intimation, Midlantic did not "concer[n] statutory language which... was open to interpretation." Ante at 489 U. S. 245. The language of § 554(a) is "absolute in its terms," 474 U.S. at 474 U. S. 509 (REHNQUIST, J., dissenting), and the Court in Midlantic did not attempt to argue otherwise. Nonetheless, the Court concluded that such clear language was insufficient to demonstrate specific congressional intent to change pre-Code law. The rule of Midlantic is that bankruptcy statutes will not be deemed to have changed pre-Code law unless there is some indication that Congress thought that it was effecting such a change. See Kelly v. Robinson, 479 U. S. 36, 479 U. S. 50 -51 (1986) ("Nowhere in the House and Senate Reports is there any indication that this language should be read so intrusively.... If Congress had intended, by § 523(a)(7) [of the Code] or by any other provision, to discharge state criminal sentences, we can be certain that there would have been hearings, testimony, and debate concerning consequences so wasteful, so inimical to purposes previously deemed important, and so likely to arouse public outrage'") (quoting TVA v. Hill, 437 U. S. 153, 437 U. S. 209 (1978) (Powell, J., dissenting)).

The first step under Midlantic is to ascertain whether there was an established pre-Code bankruptcy practice. See 474 U.S. at 500-501. That question is easily answered here. Prior to the 1978 enactment of the Code, this Court, as well as every Court of Appeals to address the question, had refused to allow post-petition interest on nonconsensual liens such as the tax lien involved in this case. See City of New York v. Saper, 336 U. S. 328, 336 U. S. 329 -341 (1949); In re Kerber Packing Co., 276 F.2d 245, 246-248 (CA7 1960); United States v. Mighell, 273 F.2d 682, 684 (CA10 1959); United States v. Bass, 271 F.2d 129, 130-132 (CA9 1959); United States v. Harrington, 269 F.2d 719, 723 (CA4 1959). See also In re Boston and Maine Corp., 719 F.2d 493, 495-498 (CA1 1983) (post-Code case not allowing post-petition interest on municipal tax lien), cert. denied sub nom. City of Cambridge v. Meserve, 466 U.S. 938 (1984). In order to deflect this line of cases, the Court refers to the practice "of denying post-petition interest to the holders of nonconsensual liens, while allowing it to holders of consensual liens," as "an exception to an exception." Ante at 489 U. S. 246. Regardless of how it is labeled, cf. Henneford v. Silas Mason Co., 300 U. S. 577, 300 U. S. 586 (1937) ("Catch words and labels... are subject to the dangers that lurk in metaphors and symbols, and must be watched with circumspection, lest they put us off our guard"), the practice was more widespread and more well established than the practice in Midlantic, and was certainly one that Congress "[would have been] aware of when enacting the Code." Ante at 489 U. S. 246.

The denial of post-petition interest on nonconsensual liens was based on the distinction between types of liens, as well as equitable considerations. Unlike consensual liens, to which the parties voluntarily agree, nonconsensual liens depend for their existence only on legislative fiat. Thus, the justification for the allowance of post-petition interest on consensual liens -

that, when the creditor extended credit, he relied upon the particular security given as collateral to secure both the principal of the debt and interest until payment and, if the collateral is sufficient to pay him, the contract between the parties ought not be abrogated by bankruptcy,

United States v. Harrington, 269 F.2d at 724 -has no application to nonconsensual liens. The allowance of interest on nonconsensual liens is akin to a penalty on the debtor for the nonpayment of taxes or other monetary obligations imposed by law. Permitting post-petition interest on nonconsensual liens drains the pool of assets to the detriment of lower priority creditors who are not responsible for the debtor's inability to pay, and who cannot avoid the imposition of post-petition interest. See In re Boston and Maine Corp., 719 F.2d at 497. Indeed, the Court acknowledges that "the payment of post-petition interest is arguably somewhat in tension with the desirability of paying all creditors as uniformly as practicable." Ante at 489 U. S. 245 -246.

The second step under Midlantic is to look for some indicia that Congress knew it was changing pre-Code law. See 474 U.S. at 474 U. S. 502 -505. As the Court said only last Term,

it is most improbable that [a change in the existing bankruptcy rules] would have been made without even any mention in the legislative history.

United Savings Association of Texas v. Timbers of Inwood Forest Associates, 484 U. S. 365, 484 U. S. 380 (1988). The legislative history of § 506(b) is "wholly inconclusive," Best Repair Co. v. United States, 789 F.2d 1080, 1082 (CA4 1986), and there is no statement in that history acknowledging that § 506(b) was to work a major change in pre-Code law. Because there is no evidence whatsoever that § 506(b) was meant to allow post-petition interest on nonconsensual liens, it should not be assumed that Congress "silently abrogated" the pre-Code law. Kelly v. Robinson, 479 U.S. at 479 U. S. 47.

For the reasons set forth above, I respectfully dissent.