

                UNITED STATES COURT OF APPEALS
                    FOR THE FIRST CIRCUIT
                                         

No. 95-2092

           EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,

                     Plaintiff, Appellee,

                              v.

            COMMONWEALTH OF MASSACHUSETTS, ET AL.,

                   Defendants, Appellants.

                                         

         APPEAL FROM THE UNITED STATES DISTRICT COURT

              FOR THE DISTRICT OF MASSACHUSETTS

           [Hon. Rya W. Zobel, U.S. District Judge]                                                              

                                         

                            Before

                    Selya, Cyr and Boudin,

                       Circuit Judges.                                                 

                                         

Pierce  O'Cray,  Assistant  Attorney General,  Government  Bureau,                          
with  whom Scott  Harshbarger,  Attorney General,  was  on briefs  for                                     
appellants.
Samuel  A.  Marcosson,  with  whom  C.  Gregory  Stewart,  General                                                                    
Counsel, Gwendolyn Young Reams, Associate General Counsel, and Vincent                                                                              
J. Blackwood, Assistant General Counsel, were on brief for appellee.                    

                                         

                        March 11, 1996
                                         

     Per Curiam.   Chapter  32 of  the Massachusetts  General                           

Laws  establishes  the  Commonwealth's  statutory  retirement

benefit plan  for its  state  and local  employees.   Section

3(2)(f) of that chapter provides that "[n]o person who enters

or who re-enters  the service of any governmental  unit as an

employee after attaining  age sixty-five, and after  the date

when  a  system  becomes operative  therein,  shall  become a

member except  as otherwise  provided for  in this  section."

This provision generally  prevents state and local  employees

hired  after age 65 from participating in any public employee

retirement system in  Massachusetts.  Francis C.  Coolidge, a

part-time employee of  the Town of  Tewksbury who was  denied

membership in the Middlesex  County Retirement System,  filed

charges  challenging   section  3(2)(f)   before  the   Equal

Employment Opportunity Commission ("EEOC").

     In due course the EEOC itself sued  the Commonwealth and

the Middlesex County Retirement System in the district court,

claiming  that section 3(2)(f)  violates and is  preempted by

the  Age Discrimination in Employment Act ("ADEA"), 29 U.S.C.

   623(a)(1) et. seq.  Both sides moved for summary judgment;                                 

the district  court granted  the EEOC's  motion, ruling  that

section 3(2)(f)  ran afoul  of 29  U.S.C.    623(a)(1), which

makes it illegal for an employer to "discriminate against any

individual   with   respect  to   his   compensation,  terms,

conditions,  or privileges  of  employment, because  of  such

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individual's age."       The   Commonwealth    now   appeals.

Although the state statute plainly discriminates on the basis

of age  regarding  benefits of  employment, the  Commonwealth

argues  that  the  Massachusetts statute  is  shielded  by 29

U.S.C.     623(f)(2)(B)(i),  which  permits  an  employer  to

differentiate on the basis of  age "where for each benefit or

benefit  package, the actual  amount of payment  made or cost

incurred on  behalf of an older  worker is no less  than that

made or incurred on behalf of a younger worker as permissible

under  section 1625.10, title 29, Code of Federal Regulations

(as in effect June 22,  1989)."  The Commonwealth claims that

this provision effectively codifies a subsection of the cited

regulation, 29  C.F.R.   1625.10(f)(1)(iii)(A)  (1989), which

allowed  an employer  to  exclude from  a retirement  plan an

employee who begins work after normal retirement age.  

     As a matter of ordinary grammar, the statutory exception

relied  on by  the  Commonwealth  does  not  protect  section

3(2)(f) because  the Commonwealth concededly  does not  incur

costs on behalf  of workers excluded from the  pension system

at least  equal to  the costs incurred  on behalf  of younger

workers.  The plain language of section 623(f)(2)(B)(i) makes

clear that it  incorporates only those elements  of the cited

regulation  that  conform to  this  equal  cost/equal benefit

principle.   The Commonwealth's  argument that  the statutory

provision   incorporates  the   regulation  wholesale,   even

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portions of it--like 29 C.F.R.   16256.10(f)(1)(iii)(a)--that

are plainly inconsistent  with the  equal cost/equal  benefit

principle,  simply  cannot  be  squared  with  the  statutory

language.

     If legislative history is consulted, it too supports the

EEOC  and  not the  Commonwealth.    As  the  district  court

observed,  Congress enacted  the current  version of  section

623(f) in  response to the Supreme Court's decision in Public                                                                         

Employees  Retirement Sys.  v. Betts,  492  U.S. 158  (1989),                                                

which  determined  that the  ADEA  did  not  apply to  fringe

benefits.  Congress then amended the statute to reinstate the

equal  cost/equal benefit  rule and to  ensure that  the ADEA

applied to  age-based discrimination  in benefit  plans.   S.

Rep. No. 263,  101st Cong., 2d Sess. 18  (1990), reprinted in                                                                         

1990  U.S.C.C.A.N. 1509,  1523.    This  Senate  report  said

explicitly that Congress  intended to incorporate only  those

portions  of  the  regulation  consistent  with  the  amended

statute.  Id.                         

     The Commonwealth argues that because the ADEA here would

preempt a  state statute, we  must apply a  "clear statement"

rule of interpretation,  e.g., Gregory v. Ashcroft,  501 U.S.                                                              

452  (1991), and  resolve in  favor of  the Commonwealth  any

doubts  about  whether Congress  intended  to  incorporate 29

C.F.R.   1625.10(f)(1)(iii)(a).  The EEOC  plausibly responds

that  the clear  statement  rule  applies  only  in  deciding

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whether  the  state  is  governed  by the  ADEA  and  not  to

questions  concerning  the  substantive  reach of  the  ADEA,

questions  whose answer affects  public and private employers

alike.   Although  this precise  question may  not have  been

decided,  we have  been  very  hesitant  in  closely  related

contexts  to extend the clear  statement rule beyond its core

application.   See Gately v. Commonwealth of Massachusetts, 2                                                                      

F.3d 1221, 1230 (1st Cir.  1993); see EEOC v. Commonwealth of                                                                         

Massachusetts, 987 F.2d 64, 68-70 (1st Cir. 1993).                         

     In all events, the meaning of the provision in this case

is clear enough once the  technical jargon is unraveled.  The              

statute   adopts  an   equal  cost/equal  benefit   test  for

differentiations "as permissible" under the cited regulation,

and  no one claims that the  Commonwealth's flat bar conforms

to any  equal  cost/equal  benefit test.    Thus,  whether  a                  

particular  equal cost/equal  benefit  differential would  be

"permissible" under  the regulation does not even arise.  The

subject  matter  is complex  but complexity  is not  the same

thing as ambiguity.      Affirmed.                                             

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