                    United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 04-2253
                                   ___________

Anthony R. Elwood,                       *
                                         *
             Plaintiff - Appellant,      *
                                         * Appeal from the United States
      v.                                 * District Court for the Eastern
                                         * District of Arkansas.
Cole Jeter, Warden, FCI Forrest City; *
United States Bureau of Prisons,         *
                                         *
             Defendants - Appellees.     *
                                    ___________

                          Submitted: September 13, 2004
                              Filed: October 18, 2004
                                  ___________

Before RILEY, LAY, and MELLOY, Circuit Judges.
                            ___________

MELLOY, Circuit Judge.

       Anthony Elwood (“Elwood”) appeals the district court’s denial of his Petition
for a Writ of Habeas Corpus, alleging that the Bureau of Prisons’s (“BOP”) policy of
limiting prisoner placement in Community Corrections Centers (“CCC”) to the lesser
of six months or ten percent of the prisoner’s sentence is illegal. We reverse.

                             Procedural Background
      On May 28, 2002, Elwood pled guilty to one count of wire fraud in the United
States District Court for the Western District of Missouri. On February 20, 2003, the
district court sentenced him to forty-eight months in prison, followed by three years
of supervised release. Upon entering prison, Elwood learned that he would not be
eligible for transfer to a CCC until November 28, 2005, which would be, with the
application of good time credits, four months from the end of his sentence. Elwood
filed grievances asserting that he should be transferred to a CCC at an earlier date.1
Elwood’s grievances were denied. On December 31, 2003, Elwood filed a Petition
for a Writ of Habeas Corpus, pursuant to 28 U.S.C. § 2241. The district court denied
his petition on May 5, 2004.


                  The History of the BOP’s Placement Policies
      At the time Elwood pled guilty, the BOP had a policy of allowing prisoners to
serve their last six months of incarceration in a CCC regardless of what percent of the
sentence this six months comprised. However, on December 13, 2002, in response to
an inquiry by the BOP, the Office of Legal Counsel of the U.S. Department of Justice
issued a Memorandum (the “Memorandum”) that found the BOP’s CCC placement
policy illegal because it was inconsistent with the BOP’s statutory grant of authority.


      The BOP is granted authority to designate the place of an inmate’s
imprisonment in 18 U.S.C. § 3621(b):

      (b) Place of imprisonment.—The Bureau of Prisons shall designate the
      place of the prisoner’s imprisonment. The Bureau may designate any


      1
      The parties agree that Elwood failed to exhaust his administrative remedies,
however, the government waived the exhaustion requirement because it concedes
Elwood’s continued use of the grievance procedure to contest the validity of the
BOP’s new policy would be futile.

                                         -2-
      available penal or correctional facility that meets minimum standards of
      health and habitability established by the Bureau . . . that the Bureau
      determines to be appropriate and suitable . . . . The Bureau may at any
      time . . . direct the transfer of a prisoner from one penal or correctional
      facility to another.

However, this grant of authority must be read in conjunction with 18 U.S.C.
§ 3624(c):

      (c) Pre-release custody.—The Bureau of Prisons shall, to the extent
      practicable, assure that a prisoner serving a term of imprisonment spends
      a reasonable part, not to exceed six months, of the last 10 per centum of
      the term to be served under conditions that will afford the prisoner a
      reasonable opportunity to adjust to and prepare for the prisoner’s re-
      entry into the community. The authority provided by this subsection
      may be used to place a prisoner in home confinement. The United
      States Probation System shall, to the extent practicable, offer assistance
      to a prisoner during such pre-release custody.

       The Memorandum concluded that the BOP’s policy of placing prisoners in
CCCs for six months at the end of their terms was inconsistent with § 3621(b) and
§ 3624(c). The Memorandum acknowledged that § 3621(b) gave the BOP the
authority to choose an inmate’s place of imprisonment generally. However, the
Memorandum found that “[c]ommunity confinement does not constitute
imprisonment.”                 Memorandum at 1, available at
http://www.usdoj.gov/olc/allopinionstxt.htm. Therefore, § 3621(b), which gives the
BOP the power to decide a prisoners “place of imprisonment” in “any available penal
or correctional facility” did not apply to placement in CCCs. Id. According to the
Memorandum, the authority to transfer a prisoner to a CCC came solely from
§ 3624(c). This section limited the stay in “conditions that will afford the prisoner
a reasonable opportunity to adjust to and prepare for the prisoner’s re-entry into the
community” to “a reasonable part, not to exceed six months, of the last 10 per centum


                                         -3-
of the term.” 18 U.S.C. § 3624(c); see Memorandum at 1, 6. The Memorandum
concluded the BOP had no authority to transfer a prisoner to a CCC, except for the
lesser of the last ten percent of the sentence and the last six months of the sentence.

       The United States Attorney General’s Office Adopted the Office of Legal
Counsel’s position on December 16, 2002. On December 20, 2002, the BOP adopted
the opinions of the Office of Legal Counsel and the Attorney General and instituted
a policy that inmates could be released to CCCs only for the last ten percent of their
terms, to be capped at six months.

      Under the new BOP policy, Elwood is eligible for placement in a CCC
beginning November 28, 2005, during only the last four months of his sentence, while
under the old BOP policy, he would be eligible for placement in a CCC for a full six
months of his sentence. Elwood argues that the new policy is illegal, and that he is
entitled to additional time in a CCC near the conclusion of his confinement.


                                      Discussion
A.    Standard of Review
      When reviewing an agency’s interpretation of a statute, we must first consider
“whether Congress has directly spoken to the precise question at issue. If the intent
of Congress is clear, that is the end of the matter; for the court, as well as the agency,
must give effect to the unambiguously expressed intent of Congress.” Chevron,
U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43
(1984). If “Congress has not directly addressed the precise question at issue . . . the
question for the court is whether the agency’s answer is based on a permissible
construction of the statute.” Id. at 843. We find that, here, Congress addressed the
issue, so we need not look to the agency’s interpretation of the statute.

                                           -4-
B.    Analysis
      Elwood brings three challenges to the BOP’s new placement policy. First,
Elwood claims that the policy is based on an erroneous interpretation of two statutory
provisions, 18 U.S.C. §§ 3621(b) and 3624(c). Second, Elwood argues that the policy
violates the Administrative Procedures Act (“APA”), 5 U.S.C. § 553, because it was
not published and made available for public comment. Third, Elwood contends that
the policy violates the Ex Post Facto Clause. Because we grant relief on Elwood’s
statutory argument, we need consider neither his APA nor Ex Post Facto claims.


      Elwood argues that, based on 18 U.S.C. §§ 3621(b) and 3624(c), the BOP may
transfer an inmate to a CCC at any time and must transfer an inmate for a reasonable
part of the last ten percent of his or her sentence, though this obligation does not
extend beyond six months. His reading of the statutes is based on the following
claims. First, § 3621(b) gives the BOP the authority to transfer an inmate to any
penal or correctional facility at any time. Second, a CCC is a penal or correctional
facility and a place of imprisonment. Third, § 3624(c) reads:


      The Bureau of Prisons shall, to the extent practicable, assure that a
      prisoner serving a term of imprisonment spends a reasonable part, not
      to exceed six months, of the last 10 per centum of the term to be served
      under conditions that will afford the prisoner a reasonable opportunity
      to adjust to and prepare for the prisoner’s re-entry into the community.


18 U.S.C. § 3624(c) (emphasis added). Elwood contends this “shall” bestows a duty
on the BOP to transfer inmates, not merely a power to do so. Therefore, Elwood
argues, the BOP has the discretion to transfer him to a CCC at any time during his

                                         -5-
sentence, and the BOP must transfer him to a CCC or similar conditions for the last
ten percent of his term, unless it is not practicable to do so.


       Until recently, no appeals court had spoken on the issue of the legality of the
BOP’s current placement policy. However, the First Circuit in a recent decision,
Goldings v. Winn, No. 03-2633, 2004 WL 2005625 (1st Cir. Sept. 3, 2004), agreed
with Elwood’s interpretation of the statutes and invalidated the policy. In addition,
the judgments of several district courts support Elwood’s interpretation. See, e.g.,
Schoenfeld v. Menifee, No. 04Civ.3551NRB, 2004 WL 1516797 (S.D.N.Y. July 7,
2004); Zucker v. Menifee, No. 03 Civ. 10077(RJH), 2004 WL 102779 (S.D.N.Y. Jan.
21, 2004); Fagiolo v. Smith, 326 F. Supp. 2d 589 (M.D. Penn. Mar. 12, 2004); Cato
v. Menifee, No. 03 Civ. 5795(DC), 2003 WL 22725524 (S.D.N.Y. Nov. 20, 2003);
Grimaldi v. Menifee, No. 04CIV1340DABGWG, 2004 WL 912099 (S.D.N.Y. Apr.
29, 2004).

       The government, on the other hand, contends that the current BOP policy
reflects the correct interpretation of 18 U.S.C. §§ 3621(b) and 3624(c). The
government agrees with Elwood that § 3621(b) gives the BOP authority to “at any
time . . . direct the transfer of a prisoner from one penal or correctional facility to
another.” See 18 U.S.C. § 3621(b). It also agrees that a CCC is a penal or
correctional facility and a place of imprisonment.2 However, the government reads


      2
        The government conceded, both in its brief and in oral argument, that a CCC
is a place of imprisonment. This approach is a departure from the Office of Legal
Counsel’s position, as well as the position of many courts that have upheld the policy.
See, e.g., Adler v. Menifee, 293 F. Supp. 2d 363 (S.D.N.Y. 2003); Galizia v. The
Federal Bureau of Prisons, No. 04 Civ. 5777(RCC), 2004 WL 1900350 (S.D.N.Y.
Aug. 25, 2004); Roth v. Menifee, No. 04 Civ. 3552(TPG), 2004 WL 1886010
(S.D.N.Y. Aug. 23, 2004); Skelskey v. Deboo, No. Civ.A. 3:04CV986CFD., 2004
WL 1897023 (D. Conn. Aug. 16, 2004); Cohn v. The Federal Bureau of Prisons, 302
F. Supp. 2d 267 (S.D.N.Y. 2004); Loeffler v. Menifee, 326 F. Supp. 2d 454 (S.D.N.Y.

                                          -6-
§ 3624(c) to be a limit on the general authority granted in § 3621(b), and not an
affirmative duty to place inmates in CCCs for the conclusion of their time of
incarceration. See Varity Corp. v. Howe, 516 U.S. 489, 511 (1996) (holding that
when construing statutes, the “specific governs the general” (internal citations
omitted)) . Therefore, the government concludes, the BOP may transfer an inmate to
a CCC only during the last ten percent of the inmate’s term, and not to exceed six
months.

       We agree with the interpretation of the statutes put forward by Elwood and the
First Circuit. Section 3624(c) clearly states that the BOP “shall” “assure” that each
prisoner spends a reasonable part of the last ten percent of his or her term “under
conditions that afford the prisoner a reasonable opportunity to adjust to and prepare
for the prisoner's re-entry into the community” to the extent that this is practicable.
As the First Circuit stated:

      This language imposes an affirmative obligation on the BOP to take
      steps to facilitate a smooth re-entry for prisoners into the outside world.
      It is true that this obligation is qualified. Section 3624(c) does not
      mandate placement in a CCC prior to release, and it requires the BOP to
      assure that a prisoner spends the last part of his sentence under
      pre-release conditions only if practicable. However, a qualified
      obligation differs from a grant of discretion. Under § 3624(c), the BOP
      must ensure placement under pre-release conditions except where no
      such placement is practicable.


Goldings, 2004 WL 2005625 at *5. We agree with the First Circuit that the word
“shall” bestows a duty on the BOP. To adopt the government’s view that the section



2004).

                                         -7-
merely limits the more general grant of authority in 18 U.S.C. § 3621(b) would be to
ignore the obligatory nature of the word “shall.”


       We emphasize, like the First Circuit, that 18 U.S.C. § 3624(c) does not require
placement in a CCC. It only obligates the BOP to facilitate the prisoner’s transition
from the prison system. Under § 3621(b), the BOP may place a prisoner in a CCC for
six months, or more. Under § 3624(c) the BOP must formulate a plan of pre-release
conditions. This plan may include CCC placement, home confinement, drug or
alcohol treatment, or any other plan that meets the obligation of a plan that addresses
the prisoner’s re-entry into the community. Likewise, the obligation is qualified by
the phrase “to the extent practicable.” Security concerns or space limitations in a
CCC near the prisoner’s home are among the factors that may make it impractical to
transfer a prisoner to a CCC for all or even part of the transition period.

                                      Conclusion
       We hold, on the facts of this case, in which both parties agree that CCCs are
places of imprisonment for the purposes of 18 U.S.C. § 3621(b), that § 3621(b) gives
the BOP the discretion to transfer prisoners to CCCs at any time during their
incarceration. Further, the BOP is required to place prisoners in “conditions that will
afford [them] a reasonable opportunity to adjust to and prepare for the prisoner’s re-
entry into the community” during a reasonable part of the last ten percent of the
prisoner’s term, to the extent practicable. This duty shall not extend beyond the last
six months of the prisoner’s sentence.

      We reverse the judgment of the district court and remand for proceedings
consistent with this opinion.




                                         -8-
RILEY, Circuit Judge, dissenting.

      I respectfully dissent.

      According to section 3621(b), the Bureau of Prisons (BOP) is required to
“designate the place of the prisoner’s imprisonment. The [BOP] may designate any
available penal or correctional facility that meets minimum standards of health and
habitability established by the [BOP],” and may transfer an inmate “at any time.” 18
U.S.C. § 3621(b). Under section 3624(c), the BOP’s placement of an inmate in a
Community Corrections Center (CCC) (or other establishment meant to facilitate the
inmate’s reentry into society) before the completion of the inmate’s term of
imprisonment is limited to “a reasonable part, not to exceed six months, of the last 10
per centum of the term to be served.” 18 U.S.C. § 3624(c).

       Any inconsistency between sections 3621(b) and 3624(c) can be reconciled by
applying two canons of statutory construction. The first canon mandates specific
statutory provisions govern over more general provisions. Varity Corp. v. Howe, 516
U.S. 489, 511 (1996). The Supreme Court interprets the canon, “the specific governs
the general,” as providing “a warning against applying a general provision when
doing so would undermine limitations created by a more specific provision.” Id.
Section 3621(b) delegates broad authority to the BOP to “designate the place of the
prisoner’s imprisonment.” 18 U.S.C. § 3621(b). Section 3624(c), on the other hand,
is narrower, specifically capping at six months the amount of time an inmate may be
placed in a CCC (or other transitional facility) at the end of his term of imprisonment.
18 U.S.C. § 3624(c).

       The second canon applicable here is courts must be “reluctan[t] to treat
statutory terms as surplusage.” Babbitt v. Sweet Home Chapter, Cmtys. for Great
Ore., 515 U.S. 687, 698 (1995). “It is our duty ‘to give effect, if possible, to every
clause and word of a statute,’ rather than to emasculate an entire section.” United

                                          -9-
States v. Menasche, 348 U.S. 528, 538-539 (1955) (quoting Montclair v. Ramsdell,
107 U.S. 147, 152 (1883)). By reading the two sections together to permit the BOP
to begin to transition inmates at any time during their imprisonment, the majority
eviscerates both the specific limitations set forth in section 3624(c) and Congress’s
express intention to limit the amount of time permitted for CCC placement at the
conclusion of an inmate’s term.

      A plain reading of the two statutes in conjunction with each other permits
compliance with the two cited canons. The specific ten percent/six-month limitations
contained in section 3624(c) expressly restrict the BOP’s broad grant of general
authority and discretion conferred under section 3621(b). See, e.g., Galizia v. Fed.
Bureau of Prisons, No. 04 Civ. 5777(RCC), 2004 WL 1900350, at *3 (S.D.N.Y. Aug.
25, 2004); Skelsky v. Deboo, No. Civ.A. 3:04CV986CFD, 2004 WL 1897023, at *3
(D. Conn. Aug. 16, 2004); Loeffler v. Menifee, 326 F. Supp. 2d 454, 461-62
(S.D.N.Y. 2004); Cohn v. Fed. Bureau of Prisons, 302 F. Supp. 2d 267, 273
(S.D.N.Y. 2004); Adler v. Menifee, 293 F. Supp. 2d 363, 368-69 (S.D.N.Y. 2003);
accord Crapanzano v. Menifee, No. 04 Civ. 1052(SAS), 2004 WL 736860, at *2 n.5
(S.D.N.Y. Apr. 5, 2004) (agreeing section 3624(c) expressly restricts broad grant of
authority in section 3621(b), but concluding change in BOP policy violates the
Administrative Procedures Act and Ex Post Facto Clause).

        Under section 3621(b), therefore, the BOP generally may place an inmate in
any penal or correctional facility at any time, subject, however, to the specific time
limitations set forth in section 3624(c). Without rendering meaningless any terms in
either statute, this interpretation utilizes the language contained in both statutes, and
specifically gives life to section 3624(c)’s limitations on placements in transitional
facilities at the end of an inmate’s term. Such an interpretation further complies with
the canon, “the specific governs the general.” Conversely, the majority opinion’s
interpretation ignores the limitations “not to exceed six months” and “of the last 10



                                          -10-
per centum,” rendering the terms mere “surplusage” in violation of both canons of
statutory construction.

       I agree with the majority’s conclusion that section 3624(c) places an
affirmative duty on the BOP to facilitate the transition of inmates out of the prison
system at the conclusion of their sentence. Section 3624(c), the more specific statute,
evinces a dual Congressional intent–an intent to place a limit on section 3621(b)’s
broad grant of authority, and an intent to mandate efforts are made to ease an inmate’s
transition back into society, which transition is “not to exceed six months.” My
disagreement is with the majority’s decision to disregard the specific limitations set
forth in section 3624(c), notwithstanding Congress’s use of the phrase “a reasonable
part” in modifying the limitations. The majority concludes section 3621(b) permits
the BOP to transfer an inmate to a CCC for more than six months. Section 3624(c),
while mandating the BOP allow an inmate the opportunity to transition into the
community at the conclusion of his imprisonment, also states such placement must
be for “a reasonable part” of the last ten percent of the term of imprisonment, but such
placement is “not to exceed six months.” Congress gave the BOP some discretion in
interpreting what “a reasonable part” of that time will be. However, as made clear in
section 3624(c), that discretion ends at a maximum of six months.

      Practical application of the majority’s decision would permit inmates being
assigned to CCCs for years or for the entire term of imprisonment. May the BOP
decide a federal inmate serving a twenty-year or even fifty-year sentence will be
placed in a CCC for ten years or for the entire imprisonment term? According to the
majority, such a decision would rationally implement sections 3621(b) and 3624(c),
notwithstanding section 3624(c)’s express six-month limitation.




                                         -11-
       The majority’s interpretation eviscerates section 3624(c) in a judicial effort to
expand the possible CCC time. I prefer to follow the language of Congress in its
entirety. Therefore, I dissent.
                        ______________________________




                                         -12-
