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JACOBS, J., dissenting: The majority opinion is premised on
the notion that section 148(f) is unambiguous, thus preventing us
from looking beyond the words of the statute. In my opinion, the
majority's mechanical interpretation of section 148(f), when
applied to the unusual facts of this case,1 leads to a result that
does not comport with the rationale behind the promulgation of the
arbitrage provisions. See Birdwell v. Skeen, 983 F.2d 1332, 1337
(5th Cir. 1993); Wilshire Westwood Associates v. Atlantic
Richfield Corp., 881 F.2d 801, 804 (9th Cir. 1989). Accordingly,
I believe that we should resort to the legislative history for aid
in applying section 148(f) to the facts of this case. By doing so,
I conclude, as petitioners do, that Congress did not intend to make
the issuers of tax-exempt bonds (here, the Housing Authority of
Riverside County, California) the insurers for wrongful actions of
those who misuse the bond proceeds to earn arbitrage profits for
themselves. Accordingly, I would hold that the Bonds issued by the
Housing Authority are not arbitrage bonds. I would further hold
that the Bonds are nontaxable industrial development bonds.2
1 Statutory text should not be read in an atmosphere of
sterility, but rather in the context of the specific facts and
circumstances of each case. See 2A Singer, Sutherland Statutory
Construction, sec. 45.12, at 61 (5th ed. 1992). "The use of
literalism suggests that a judge puts on blinders, so to speak,
obscuring from view everything but the text of the statute whose
effect on the matter at issue is in question." Id. sec. 46.02,
at 92.
2 Admittedly, the Bonds were industrial development bonds
under sec. 103(b)(2). However, the Bonds come within the
exception provided by sec. 103(b)(4)(A). That section provides
that the interest on the obligations is not taxable as long as
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