The Court held that district court could not deny the reduction based on waiver, when the issue was not raised by the government. Rather, in that scenario, the government has waived the waiver.
Here's some good language on waiver for us appellate people.
“But as a general rule, our adversary system is designed around the premise that the parties know what is best for them, and are responsible for advancing the facts and arguments entitling them to relief.”
“The rule that points not argued will not be considered is more than just a prudential rule of convenience; its observance, at least in the vast majority of cases, distinguishes our adversary system of justice from the inquisitorial one.”