author:
Justice Brennan
      Chief Justice Burger,

text:
    NATIONAL LABOR RELATIONS BOARD v. FINANCIAL INSTITUTION EMPLOYEES OF AMERICA, LOCAL 1182, CHARTERED BY UNITED FOOD & COMMERCIAL WORKERS INTERNATIONAL UNION, AFL-CIO, et al.
    No. 84-1493.
    Argued December 4, 1985
    Decided February 26, 1986

      BRENNAN, J., delivered the opinion of the Court, in which White, MARSHALL, Blackmun, Powell, Rehnquist, Stevens, and O’ConnoR, JJ., joined. BURGER, C. J., filed an opinion concurring in the judgment, post, p. 210.

      Norton J. Come argued the cause for petitioner in No. 84-1493. With him on the briefs were Solicitor General Fried, Linda Sher, and Patrick J. Szymanski.

      Mark A. Hutcheson argued the cause for petitioner in No. 84-1509. With him on the briefs was Stephen M. Rummage.

      Laurence Gold argued the cause for respondents in both cases. With him on the brief were George Murphy, Marsha S. Berzon, Michael Rubin, and David Silberman.

       Together with No. 84-1509, Seattle-First National Bank v. Financial Institution Employees of America, Local 1182, Chartered by United Food

        & Commercial Workers International Union, AFL-CIO, et al., also on certiorari to the same court.

       Briefs of amici curiae urging reversal were filed for the Chamber of Commerce of the United States by Edward B. Miller and Stephen A. Bokat; for the National Right to Work Legal Defense Foundation by Raymond J. LaJeunesse, Jr.; and for the Legal Foundation of America by Jean Fleming Powers and David Crump.

   Justice Brennan

delivered the opinion of the Court.

The question for decision in these cases is whether a rule of the National Labor Relations Board that requires that nonunion employees be permitted to vote in a certified union’s decision whether to affiliate with another union is consistent with the National Labor Relations Act.

i — I

In 1970, the Board certified the Firstbank Independent Employees Association (Firstbank) as the collective-bargaining representative of a bargaining unit consisting of the employees of petitioner Seattle-First National Bank (SeaFirst). Firstbank and SeaFirst subsequently negotiated successive collective-bargaining agreements, the most recent of which expired in 1977. In 1978, Firstbank voted to affiliate with the Retail Clerks International Union, AFL-CIO. Under Firstbank’s constitution, only union members in good standing could vote in the election. The union members voted in favor of affiliation by a margin of 1,206-774. Upon affiliation, Firstbank changed its name to the Financial Institution Employees of America, Local 1182 (FIEA), chartered by the Retail Clerks International Union, AFL-CIO. FIEA then petitioned the Board to amend its certification to reflect this change. SeaFirst challenged the petition, arguing that affiliation with the Retail Clerks had substantially changed the union, that nonunion employees should have been allowed to vote on whether to affiliate, and that the union had not followed its own constitution in establishing voter eligibility standards. The Board rejected these arguments and amended Firstbank’s certification to name FIEA as the employees’ bargaining representative. Seattle-First National Bank, 241 N. L. R. B. 751 (1979).

SeaFirst refused to recognize the amended certification or to bargain with FIEA. The Board sustained FIEA’s charges and held that SeaFirst had committed an unfair labor practice in violation of §§ 8(a)(1) and 8(a)(5) of the Act, 29 U. S. C. §§ 158(a)(1) and 158(a)(5), and ordered it to bargain. Seattle-First National Bank, 245 N. L. R. B. 700 (1979). SeaFirst petitioned the Court of Appeals for the Ninth Circuit for review of the Board’s order, and the Board cross-applied for enforcement. Before the Court of Appeals rendered its decision, the Board moved for remand of the case to it, and the court granted the motion. Seattle-First National Bank v. NLRB, Nos. 79-7515, 80-7004 (June 27, 1980); see n. 4, infra.

On remand, the Board notified the parties of its decision on its own motion to reconsider its earlier decision. On reconsideration, the Board held that, because nonunion employees were not allowed to vote in the affiliation election, the election did not meet minimal “due process” standards, and therefore that the affiliation was invalid. Accordingly, the Board dismissed FIEA’s unfair labor practice charge and vacated the amended certification. Seattle-First National Bank, 265 N. L. R. B. 426 (1982).

FIEA petitioned the Court of Appeals for the Ninth Circuit for review of the Board’s decision. The Court of Appeals, in a 2-1 decision, granted the petition and remanded the case. 752 F. 2d 356 (1984). The court held that the Board’s requirement that nonunion employees be allowed to vote on affiliation questions was irrational and inconsistent with the Act for three reasons. First, the Board’s rule intruded upon the union’s internal affairs —here a totally unjustified intrusion because the Board had not determined that affiliation had substantially changed the union or eroded its majority support — and violated the “longstanding federal labor policy of avoiding unnecessary interference in internal union affairs.” Id., at 362. Second, the Board’s rule was “inconsistent with the strong national policy of maintaining stability in the bargaining representative.” Id., at 364. Pursuant to that policy, Congress and the Board had restricted the opportunities for employers and employees to challenge a certified union’s status as bargaining representative, and the Board’s new rule did not further but breached the policy, since it effectively decertified the union without a Board determination that affiliation had undermined the union’s majority support. Finally, the Board’s rule was irrational, because the interests of nonunion employees were adequately protected under existing procedures, and because the Board’s reasoning did not support the rule.

The holding of the Court of Appeals conflicts with contrary holdings of the Courts of Appeals for the Fifth and Seventh Circuits upholding the Board’s rule. Local Union No. 4-14 v. NLRB, 721 F. 2d 150, 152-153 (CA5 1983); United Retail Workers Union, Local 881 v. NLRB, 774 F. 2d 752 (CA7 1985). We granted both petitions in this case to to resolve the conflict. 471 U. S. 1098 (1985). We affirm.

HH l-H

Section 7 of the Act guarantees employees the right “to bargain collectively through representatives of their own choosing,” 29 U. S. C. §157, and the Board is empowered to determine representation on petition of employees or the employer. 29 U. S. C. §§ 159(c)(l)(A)(i), 159(c)(1)(B). In either case, the Board investigates the petition and holds a hearing if it has reasonable cause to believe that a “question of representation” exists, 29 U. S. C. § 159(c), and directs a representation election by secret ballot to settle the question. Ibid. The Board certifies the winning union as the bargaining representative of all of the employees in the bargaining unit. The employer commits an unfair labor practice by refusing to bargain with the employees’ certified bargaining representative. 29 U. S. C. § 158(a)(5).

The Act recognizes that employee support for a certified bargaining representative may be eroded by changed circumstances. In such cases, employees may petition the Board for another election, alleging that the certified representative no longer enjoys majority support. 29 U. S. C. § 159(c)(1) (A)(ii); 29 CFR §§ 101.17,102.60(a) (1985). Similarly, an employer who questions whether a majority of employees continue to support a certified union may petition for another election. 29 U. S. C. § 159(c)(1)(B); 29 CFR §§101.17, 102.60(a) (1985); see 1 C. Morris, The Developing Labor Law 349 (2d ed. 1983). The employer, however, must “demonstrate by objective considerations that it has some reasonable grounds for believing that the union has lost its majority status.” United States Gypsum Co., 157 N. L. R. B. 652, 656 (1966); 29 CFR § 101.17 (1985); see 1 Morris, supra. Again, if the Board determines, after investigation and hearing, that a question of representation exists, it directs an election by secret ballot and certifies the result. 29 U. S. C. § 159(c).

One such change in circumstances is, as here, where an independent union decides to affiliate with a national or international organization. In many such cases, the union may also change its name to reflect its new affiliation, and will petition the Board to amend its certification to reflect this name change. 29 CFR §§101.17, 102.60(b) (1985). The Board’s practice has been to grant such petitions if the Board found that the affiliation satisfied two conditions. First, that union members have had an adequate opportunity to vote on affiliation. North Electric Co., 165 N. L. R. B. 942, 943 (1967). The Board ordinarily required that the affiliation election be conducted with adequate “due process” safeguards, including notice of the election to all members, an adequate opportunity for members to discuss the election, and reasonable precautions to maintain ballot secrecy. E. g., Newspapers Inc., 210 N. L. R. B. 8, 9 (1974), enf’d, 515 F. 2d 334 (CA5 1975). Second, that there was substantial “continuity” between the pre- and post-affiliation union. The focus of this inquiry was whether the affiliation had substantially changed the union; the Board considered such factors as whether the union retained local autonomy and local officers, and continued to follow established procedures. See Note, supra n. 5, at 445, and nn. 74-82. If the organizational changes accompanying affiliation were substantial enough to create a different entity, the affiliation raised a “question concerning representation” which could only be resolved through the Board’s election procedure. 1 Morris, supra, at 690; 29 CFR §§ 101.17, 102.60(b) (1985). However, as long as continuity of representation and due process were satisfied, affiliation was considered an internal matter that did not affect the union’s status as the employees’ bargaining representative, and the employer was obligated to continue bargaining with the reorganized union. 1 Morris, supra, at 690-691; Universal Tool & Stamping Co., 182 N. L. R. B. 254, 259 (1970).

The Board’s new rule dramatically changes this scheme. The Board now takes the position that all employees in the bargaining unit — not merely union members — must have the opportunity to participate in the affiliation decision. See Amoco Production Co., 262 N. L. R. B. 1240, 1241 (1982). Unless they are allowed to do so, the Board will not amend the union’s certification or require the employer to bargain with the reorganized union. The Board applies this rule even though the organizational changes resulting from the affiliation are not substantial enough to raise a question of representation. See Brief for NLRB 16-17. The Board does not contend that the Act requires that all employees of the bargaining unit, union and nonunion, must be allowed to participate in the affiliation election or that the Act expressly authorizes the Board to impose such requirements. Rather, the Board and the employer defend the Board’s new rule on two grounds. First, they assert that the Board’s rule is a reasonable means of protecting the bargaining unit employees’ right to select a bargaining representative under § 7 of the Act. Second, they argue that the rule minimizes industrial strife. We address each argument in turn.

I — I 1 — 1 HH

A

Petitioners argue that the Board should be afforded “a wide degree of discretion in establishing the procedure and safeguards necessary to insure the fair and free choice of bargaining representatives by employees,” NLRB v. A. J. Tower Co., 329 U. S. 324, 330 (1946); see also 29 U. S. C. § 156; NLRB v. Wyman-Gordon Co., 394 U. S. 759, 767 (1969); NLRB v. Waterman S.S. Corp. 309 U. S. 206, 226 (1940), and contend that a requirement that all employees be allowed to vote on affiliation is a reasonable means of insuring that a majority of employees consent to representation by the postaffiliation union, and ultimately of protecting the right of all employees to select a bargaining representative. Our cases have previously recognized the Board’s broad authority to construe provisions of the Act, and have deferred to Board decisions that are not irrational or inconsistent with the Act. Ford Motor Co. v. NLRB, 441 U. S. 488, 495, 497 (1979); Beth Israel Hospital v. NLRB, 437 U. S. 483, 501 (1978); NLRB v. Iron Workers, 434 U. S. 335, 350 (1978). However, the question here is whether the Board’s new rule exceeds the Board’s statutory authority. Cf. NLRB v. Longshoremen, 473 U. S. 61 (1985); NLRB v. Bildisco & Bildisco, 465 U. S. 513 (1984). Deference to the Board “cannot be allowed to slip into a judicial inertia which results in the unauthorized assumption ... of major policy decisions properly made by Congress.” American Ship Building Co. v. NLRB, 380 U. S. 300, 318 (1965); see also NLRB v. Insurance Agents, 361 U. S. 477, 499 (1960). We hold that the Board’s new rule exceeds its authority under the Act.

Under the Act, the certified union must be recognized as the exclusive bargaining representative of all employees in the bargaining unit, and the Board cannot discontinue that recognition without determining that the affiliation raises a question of representation and, if so, conducting an election to decide whether the certified union still is the choice of a majority of the unit. 29 U. S. C. § 159(c). Of course, as is the case with any organizational and structural change, a new affiliation may substantially change a certified union’s relationship with the employees it represents. These changed circumstances may in turn raise a “question of representation,” if it is unclear whether a majority of employees continue to support the reorganized union. Thus, in these situations, the affiliation implicates the employees’ right to select a bargaining representative, and to protect the employees’ interests, the situation may require that the Board exercise its authority to conduct a representation election. 29 U. S. C. § 159(c)(1). However, the Board’s decision must take into account that “[t]he industrial stability sought by the Act would unnecessarily be disrupted if every union organizational adjustment were to result in displacement of the employer-bargaining representative relationship.” Canton Sign Co., 174 N. L. R. B. 906, 909 (1969), enf. denied on other grounds, 457 F. 2d 832 (CA6 1972). In many cases, a majority of employees will continue to support the union despite any changes precipitated by affiliation. In such situations, affiliation does not necessarily implicate the “selection” of a new bargaining representative. The reorganized union may legitimately claim to succeed as the employees’ duly selected bargaining representative, and in that case retains a legitimate interest in continuing to bargain collectively with the employer. The Act balances these competing concerns by authorizing the Board to conduct a representation election only where affiliation raises a question of representation. 29 U. S. C. § 159(c). Conversely, where affiliation does not raise a question of representation, the statute gives the Board no authority to act. The Board’s new rule upsets the accommodation drawn by the statute by effectively decertify-ing the reorganized union even where affiliation does not raise a question of representation.

Turning to the record in these cases, the Board revoked FIEA’s certification and relieved SeaFirst of its obligation to bargain despite the fact, as the Board acknowledges, that it was not sufficient to raise a question of representation that nonunion employees were not allowed to vote in the affiliation election. Brief for NLRB 16-17. Absent a question of representation, FIEA continued to function, as it was entitled to do, as the bargaining representative of the unit, and SeaFirst was obligated to continue bargaining with it. By-refusing either to amend FIEA’s certification or to order SeaFirst to bargain, the Board effectively circumvented the decertification procedures provided for by statute. Moreover, the Board exceeded its statutory authority by requiring that nonunion employees be allowed to vote in the union’s affiliation election. This violated the policy Congress incorporated into the Act against outside interference in union decisionmaking. See Steelworkers v. Sadlowski, 457 U. S. 102, 117 (1982); NLRB v. Boeing Co., 412 U. S. 67, 71 (1973); Scofield v. NLRB, 394 U. S. 423, 428 (1969); NLRB v. Allis-Chalmers Mfg. Co., 388 U. S. 175, 195 (1967). Petitioners maintain that this policy must give way to the right of the employees to select a bargaining representative. Cf. Pattern Makers v. NLRB, 473 U. S. 95 (1985) (union rule barring resignations during a strike contrary to statutory policy of voluntary unionism); NLRB v. Marine Workers, 391 U. S. 418 (1968) (union rule requiring exhaustion of internal grievance procedures does not preclude Board review). But the Act establishes a specific election procedure to decide whether the employees desire a change in a certified union’s representative status. While the Board is charged with responsibility to administer this procedure, the Act gives the Board no authority to require unions to follow other procedures in adopting organizational changes.

B

Petitioners contend that this statutory scheme does not adequately protect the interests of nonunion employees, and that this justifies the Board’s new rule. They argue that an affiliation may affect a union’s representation of the bargaining unit even if it does not raise a question of representation, but that argument overlooks the fact that a union makes many decisions that “affect” its representation of nonmember employees. It may decide to call a strike, ratify a collective-bargaining agreement, or select union officers and bargaining representatives. Under the Act, dissatisfied employees may petition the Board to hold a representation election, but the Board has no authority to conduct an election unless the effects complained of raise a question of representation. In any event, dissatisfaction with representation is not a reason for requiring the union to allow nonunion employees to vote on union matters like affiliation. Rather, the Act allows union members to control the shape and direction of their organization, and “[n]on-union employees have no voice in the affairs of the union.” Allis-Chalmers, 388 U. S., at 191. We repeat, dissatisfaction with the decisions union members make may be tested by a Board-conducted representation election only if it is unclear whether the reorganized union retains majority support.

Petitioners concede that a union’s organizational and structural changes would not ordinarily justify the Board’s meddling in a union’s internal affairs, but argue that affiliation is different from other changes because affiliation necessarily changes the union’s identity, and because initiation of the change is by the certified union seeking the Board’s approval for the affiliation by amendment of its certification or an order on the employer to bargain after affiliation. Neither distinction is persuasive.

First, petitioners argue that affiliation differs from other organizational changes because it results in employees being represented by a different organization. See Hamilton Tool Co., 190 N. L. R. B. 571, 576 (1971) (Miller, concurring). But many organizational or structural changes may operate to alter a union’s “identity.” This would be the case where the union amends its constitution or bylaws, restructures its financial obligations and resources, or alters its jurisdiction. The fact that an affiliation is often accompanied by a formal name change does not serve to distinguish it from other organizational developments. As the Board has recognized, “an affiliation does not create a new organization, nor does it result in the dissolution of an already existing organization.” Amoco Production Co., 239 N. L. R. B. 1195 (1979). Rather, the union will determine “whether any administrative or organizational changes are necessary in the affiliating organization.” Ibid. If these changes are sufficiently dramatic to alter the union’s identity, affiliation may raise a question of representation, and the Board may then conduct a representation election. Otherwise, the statute gives the Board no authority to interfere in the union’s affairs.

Petitioners next contend that affiliation involves the union’s asking the Board to amend its certification or to order the employer to bargain. Petitioners assert that the Board therefore has a strong interest in insuring that its own election procedures have not been circumvented before placing its imprimatur on the union’s affiliation election. This argument mischaracterizes the nature of the relevant procedures. In amending the union’s certification or ordering the employer to bargain, the Board does not “sanction” the union’s affiliation. Rather, it signifies only that the reorganized union continues as an ongoing entity that the employer should continue to recognize. By analogy, the fact that the Board may order the employer to bargain with a union that has amended its constitution does not mean that the Board has “sanctioned” the constitutional amendment. In any event, the Board’s interest in insuring the integrity of its procedures does not empower it to adopt measures exceeding its statutory authority. If the Board finds that affiliation raises a question of representation “undermining . . . the Board’s own election and certification procedures,” Amoco Production Co., 262 N. L. R. B., at 1241, it can refuse to consider the union’s unfair labor practice charge, and is authorized to conduct a representation election. However, it may not condone an employer’s refusal to bargain in the absence of a question of representation, and has no authority to prescribe internal procedures for the union to follow in order to invoke the Act’s protections.

> HH

The basic purpose of the National Labor Relations Act is to preserve industrial peace. 29 U. S. C. § 151. The Act includes several provisions designed to encourage stable bargaining relationships, e. g., § 8(b)(7)(A), 29 U. S. C. § 158 (b)(7)(A) (prohibiting recognitional picketing by employees represented by recognized union); § 8(b)(7)(B), 29 U. S. C. § 158(b)(7)(B) (prohibiting recognitional picketing for one year after election); § 9(c)(3), 29 U. S. C. § 159(c)(3) (prohibiting second representation election within one year), and the Board has devised rules to achieve the same ends. See n. 3, supra. Petitioners argue that the Board’s new rule furthers this policy by introducing a measure of certainty into the bargaining relationship that protects both the employer and the union. By having all employees vote for affiliation, so the argument goes, the employer avoids the possibility of having to bargain -with a union that may not represent a majority of the employees. Petitioners submit that the union also benefits from having all employees vote, since it avoids the disruption that would occur if the Board eventually determines that it must hold a new election because the affiliation raises a question of representation. If the employees vote for affiliation, the union can continue to bargain with confidence, since the employer is less likely to challenge the affiliation, and the Board is less likely to find a question of representation. If the employees vote against affiliation, the incumbent union can forgo affiliation and continue to represent the bargaining unit.

Absent any statutory framework, the Board’s rule might well be a rational means of preserving industrial stability. However, as the Ninth Circuit noted, Congress has already determined “as a matter of national labor policy that bargaining stability and the principle of majority rule may limit the timing of employee challenges to their certified bargaining representative’s majority status.” 752 F. 2d, at 366. The Act assumes that stable bargaining relationships are best maintained by allowing an affiliated union to continue representing a bargaining unit unless the Board finds that the affiliation raises a question of representation. The Board’s rule contravenes this assumption, since an employer may invoke a perceived procedural defect to cease bargaining even though the union succeeds the organization the employees chose, the employees have made no effort to decertify the union, and the employer presents no evidence to challenge the union’s majority status. Any uncertainty on the employer’s part does not reheve him of his obligation to bargain collectively. “If an employer has doubts about his duty to continue bargaining, it is his responsibility to petition the Board for relief .... To allow employers to rely on employees’ rights in refusing to bargain with the formally designated union is not conducive to [industrial peace].” Brooks v. NLRB, 348 U. S. 96, 103 (1954). The Board’s rule effectively gives the employer the power to veto an independent union’s decision to affiliate, thereby allowing the employer to directly interfere with union decisionmaking Congress intended to insulate from outside interference.

We hold that the Board exceeded its authority under the Act in requiring that nonunion employees be allowed to vote for affiliation before it would order the employer to bargain with the affiliated union. The judgment of the Court of Appeals is affirmed. The cases are remanded for further proceedings consistent with this opinion.

It is so ordered.

Chief Justice Burger,

concurring in the judgment.

I write separately to note that the Court’s action today striking down a Board action is one of those rare departures from this Court’s long history of special deference to the Board’s decisions concerning the selection of an exclusive bargaining unit representative by employees. See, e. g., NLRB v. A. J. Tower Co., 329 U. S. 324, 330 (1946); see also NLRB v. Action Automotive, Inc., 469 U. S. 490 (1985).

       After the Board amended FIEA’s certification, the Retail Clerks International Union merged with the Amalgamated Meat Cutters and Butcher Workmen of North America to become the United Food and Commercial Workers International Union, AFL-CIO. The Board granted FIEA’s motion to amend the name of the charging party in this ease to reflect this change. Seattle-First National Bank, 245 N. L. R. B. 700, 700, n. 1 (1979).

       Under § 8(a) of the Act, as set forth in 29 U. S. C. § 158(a), “[i]t shall be an unfair labor practice for an employer—
      “(1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 157 of this title;

      “(5) to refuse to bargain collectively with the representatives of his employees, subject to the provisions of section 159(a) of this title.”

       The court cited three examples of Board rules designed to maintain stable bargaining relationships. 752 F. 2d, at 365. First, in cases in which the employer is charged with refusing to bargain with a certified union, the union enjoys a presumption of majority status. For the first year after certification, this presumption is irrebuttable. See Brooks v. NLRB, 348 U. S. 96, 103 (1954). Second, the Board will consider “decerti-fying” a union only if at least 30% of the employees present a petition, or in “extreme eases.” See 29 CFR § 101.18 (1985); R. Gorman, Basic Text on Labor Law 49-50 (1976). Third, under its contract-bar rule, the Board ordinarily refuses to conduct decertification elections for a certain period of time while the collective-bargaining agreement remains in effect. See 1 C. Morris, The Developing Labor Law 361-376 (2d ed. 1983).

       The procedural history of the Fifth Circuit’s decision is closely intertwined with this case. In that case, the employer refused to bargain with an affiliated union because only union members had been allowed to vote on affiliation. The Board ordered the employer to bargain. Amoco Production Co., 220 N. L. R. B. 861 (1975), aff’d, 239 N. L. R. B. 1195 (1979). The Board relied on its Amoco decision when it originally amended FIEA’s certification in this case. Amoco was then appealed to the Court of Appeals for the Fifth Circuit, which remanded the case for the Board to determine whether affiliation had substantially changed the union. Amoco Production Co. v. NLRB, 613 F. 2d 107, 112 (1980). In light of the strong similarity between the two cases, the Board asked the Ninth Circuit to remand this ease as well. On remand from the Fifth Circuit, the Board did not address whether affiliation had substantially changed the union. Rather, the Board reversed itself and concluded that the affiliation was invalid because only union members had been allowed to vote. Amoco Production Co., 262 N. L. R. B. 1240 (1982). The Board in turn relied on this decision in dismissing FIEA’s unfair labor practice charge and revoking its amended certification.

       A local union may seek to affiliate with a larger organization for a variety of reasons. The larger organization may provide bargaining expertise or financial support, or may compensate for a lack of leadership within the local union. Amoco Production Co., 239 N. L. R. B., at 1195; Hale, Union Affiliations: Examination of Governing NLRA Standards, 1983 Det. C. L. Rev. 709. Affiliation “is but one of many ways in which labor organizations alter their structures and alignments in response to changing economic and political conditions.” Note, Union Affiliations and Collective Bargaining, 128 U. Pa. L. Rev. 430, 431 (1979). The Board has recognized that a union “must remain largely unfettered in its organizational quest for financial stability and aid in the negotiating process.” The Williamson Co., 244 N. L. R. B. 953, 955 (1979).

       The union suggests that it may even be inappropriate for the Board to impose due process safeguards with respect to union members. Brief for FIEA 28-29. While we note that the NLRA does not require unions to follow specified procedures in deciding matters such as affiliations, we need not assess the propriety of the Board’s past procedures.

       The parties disagree over whether affiliation substantially changed the union in this case. See Brief for NLRB 4, and n. 2; Brief for FIEA 4. However, the Board did not make a continuity determination but simply dismissed FIEA’s unfair labor practice charge and vacated its amended certification. The Court of Appeals therefore declined to address the continuity issue. 752 F. 2d, 356, 359, n. 4 (1984). We also decline to address it.

       In some cases, the affiliated union will not petition the Board to amend its certification, but will instead wait to see whether the employer will continue to bargain. If the employer refuses to bargain, the union may then file an unfair labor practice charge with the Board. In the past, the Board required the employer to bargain if the affiliation satisfied its two-pronged due process and continuity test. In other words, the Board used the same standards to examine affiliations whether the issue arose as a defense to an unfair labor practice charge or in a petition to amend a certification. Independent Drug Store Owners of Santa Clara County, 211 N. L. R. B. 701, n. 2 (1974), enf’d, 528 F. 2d 1225 (CA9 1975); Hale, supra n. 5, at 710, and n. 8; Note, supra n. 5, at 432.

       The Board’s assertion that it actually adopted its “new” rule in its decision in Jasper Seating Co., 231 N. L. R. B. 1025 (1977), may be questioned. Jasper was a 3-2 decision in which only two members took the position that nonunion employees should be allowed to vote in affiliation elections. While suggesting that he could adopt this position under other circumstances, member Penello concurred in the decision “based upon the application of [different] principles.” Id., at 1026. He found that the affiliation had raised a question of representation which could only be resolved through a Board-conducted representation election. Id., at 1027.

       The Board has recognized that “affiliation does not directly involve the employment relation. The status of wages, working conditions, benefits, and grievance procedures is unaffected by the affiliation vote; the collective-bargaining agreement between the union and the employer remains effective until the stated expiration date.” Amoco Production Co., 239 N. L. R. B., at 1195. Affiliation “has no probative value concerning the employees’ choice of the [union] as their collective bargaining representative.” American Range Lines, Inc., 13 N. L. R. B. 139, 154 (1939); see also Brief for NLRB 16, n. 10 (“The Board has in general found that affiliations do not destroy continuity of representation”).

       Congress has expressly declined to prescribe procedures for union decisionmaking in matters such as affiliation. When the NLRA was amended by the Labor Management Relations Act of 1947, the House passed a proposal that would have regulated union procedures for electing officers, assessing dues, disciplining members, and deciding to strike. H. R. 3020, §8(c), 80th Cong., 1st Sess. (1947), 1 NLRB, Legislative History of the Labor Management Relations Act, 1947, pp. 179-183 (Legis. Hist.). These provisions were deleted from the final legislation. See 93 Cong. Rec. 6443 (1947), 2 Legis. Hist. 1540 (“The Senate conferees. . . felt that it was unwise to authorize [the NLRB] to undertake such elaborate policing of the internal affairs of unions”). In 1959, Congress adopted the Labor-Management Reporting and Disclosure Act, which regulated union procedures for assessing dues, disciplining employees, and electing officers. 29 U. S. C. §§ 411-415, 481. Senators Knowland and McClellan both advanced proposals to regulate other sorts of union decisions. See 104 Cong. Rec. 11184 (1958) (constitutional amendments and recall of officers); id., at 11461 (waiver of right to strike); S. 1137, § 102(5), 86th Cong., 1st Sess. (1959), 1 Legislative History of the Labor-Management Reporting and Disclosure Act 272-273 (1959) (creation of affiliated organizations or funds), § 103(4), id., at 277 (mergers and transfers between local unions). None of these proposals was incorporated into the statute. See Steelworkers v. Sadlowski, 457 U. S. 102, 117 (1982) (“Congress was guided by the general principle that unions should be left free to ‘operate their own affairs, as far as possible.’ It believed that only essential standards should be imposed by legislation” (citation omitted)).

       In its amicus brief, the Chamber of Commerce notes that the statute does not explicitly provide for petitions to amend a union’s certification, and argues that the Board therefore has broad authority to refuse to grant such requests. However, because the union’s request to amend its certification is a mere formality, it cannot give the Board additional authority to police the affiliation. A union could simply decide not to change its name upon affiliation, and would not have to ask the Board to amend its certification. The employer might then challenge the affiliation as a defense to an unfair labor practice charge. Unless the Board finds that the affiliation raised a question of representation, the affiliated union would continue as the employees’ bargaining representative, and the employer would be required to bargain with the reorganized union. Thus, the amended certification procedure cannot broaden the Board’s authority to interfere in the union’s affairs.

       We do not suggest, however, that other Board representation procedures, such as its continuity determination, exceed its statutory authority.
      Respondents argue that the Board’s rule is irrational because it assumes that affiliation involves the selection of a new bargaining representative absent any indication that the affiliation has significantly changed the union. Because we conclude that the Board has exceeded its authority under the statute, we need not address this issue.


source: Caselaw Access Project

author: Justice White Justice O’Connor,

license: Public Domain

text:
    CONNOLLY et al., TRUSTEES OF THE OPERATING ENGINEERS PENSION TRUST v. PENSION BENEFIT GUARANTY CORPORATION et al.
    No. 84-1555.
    Argued December 2, 1985
    Decided February 26, 1986

      White, J., delivered the opinion for a unanimous Court. O’Connor, J., filed a concurring opinion, in which Powell, J., joined, post, p. 228.

      Wayne Jett argued the cause and filed briefs for appellants in No. 84-1555. Richard M. Freeman argued the cause for appellant in No. 84-1567. With him on the brief was Michael L. Jensen.

      Baruch A. Fellner argued the cause for appellees. With him on the brief were Edward R. Mackiewicz, Mitchell L. Strickler, J. Stephen Cafiisch, Peter H. Gould, David F. Power, Nathan Lewin, and Seth P. Waxman.

      Together with No. 84-1567, Woodward Sand Co., Inc. v. Pension Benefit Guaranty Corporation et al., also on appeal from the same court.

       Briefs of amici curiae urging reversal were filed for the American Trucking Associations, Inc., by Carl L. Taylor, Glenn Summers, Daniel R. Barney, and Kenneth E. Siegel; and for the National Association of Manufacturers by Chester W. Nosal, John R. Keys, Jr., Columbus R. Gangemi, Jan S. Amundson, and Gary D. Lipkin.

      Briefs of amici curiae urging affirmance were filed for the National Coordinating Committee for Multiemployer Plans by Gerald M. Feder; and for Trustees of the United Mine Workers of America 1950 and 1974 Pension Plans by William F. Hanrahan and Israel Goldowitz.

        William H. Towle filed a brief for the American Warehousemen’s Association as amicus curiae.

   Justice White

delivered the opinion of the Court.

In Pension Benefit Guaranty Corporation v. R. A. Gray & Co., 467 U. S. 717 (1984), the Court held that retroactive application of the withdrawal liability provisions of the Multi-employer Pension Plan Amendments Act of 1980 did not violate the Due Process Clause of the Fifth Amendment. In these cases, we address the question whether the withdrawal liability provisions of the Act are valid under the Clause of the Fifth Amendment that forbids the taking of private property for public use without just compensation.

I

A

The background and legislative history of both the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829, 29 U. S. C. § 1001 et seq., and the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA or Act), 94 Stat. 1208, 29 U. S. C. §§ 1381-1461, are set forth in detail in Gray, supra, at 720-725. We therefore only summarize the relevant portions of that description for purposes of our discussion here.

Congress enacted ERISA in 1974 to provide comprehensive regulation for private pension plans. In addition to prescribing standards for the funding, management, and benefit provisions of these plans, ERISA also established a system of pension benefit insurance. This “comprehensive and reticulated statute” was designed “to ensure that employees and their beneficiaries would not be deprived of anticipated retirement benefits by the termination of pension plans before sufficient funds have been accumulated in the plans.. . . Congress wanted to guarantee that ‘if a worker has been promised a defined pension benefit upon retirement — and if he has fulfilled whatever conditions are required to obtain a vested benefit — he will actually receive it.’” 467 U. S., at 720, quoting Nachman Corp. v. Pension Benefit Guaranty Corporation, 446 U. S. 359, 361-362, 374-375 (1980) (citations omitted).

To achieve this goal of protecting “anticipated retirement benefits,” Congress created the Pension Benefit Guaranty Corporation (PBGC), a wholly owned Government corporation, to administer an insurance program for participants in both single-employer and multiemployer pension plans. 29 U. S. C. § 1302 (1976 ed.). For single-employer plans that were in default, ERISA immediately obligated the PBGC to pay benefits. § 1381. With respect to multiemployer plans, ERISA delayed mandatory payment of guaranteed benefits until January 1, 1978. Until that date, Congress gave the PBGC discretionary authority to pay benefits upon the termination of multiemployer pension plans. §§ 1381(c)(2)-(4). As with single-employer plans, all contributors to covered multiemployer plans were assessed insurance premiums payable to the PBGC. If the PBGC exercised its discretion to pay benefits upon a plan’s termination, all employers that had contributed to the plan during the five years preceding its termination were liable to the PBGC in amounts proportional to their shares of the plan’s contributions during that period, subject to the limitation that any individual employer’s liability could not exceed 30% of the employer’s net worth. § 1362(b)(2).

During the period between the enactment of ERISA and 1978, when mandatory multiemployer guarantees were due to go into effect, the PBGC extended coverage to numerous plans. “Congress became concerned that a significant number of plans were experiencing extreme financial hardship,” Gray, supra, at 721, and that implementation of mandatory guarantees for multiemployer plans might induce several large plans to terminate, thus subjecting the insurance system to liability beyond its means. As a result, Congress delayed the effective date for the mandatory guarantees for 18 months, Pub. L. 95-214, 91 Stat. 1501, and directed the PBGC to prepare a report analyzing the problems of multi-employer plans and recommending possible solutions. See S. Rep. No. 95-570, pp. 1-4 (1977); H. R. Rep. No. 95-706, p. 1 (1977).

The PBGC’s Report found, inter alia, that “ERISA did not adequately protect plans from the adverse consequences that resulted when individual employers terminate their participation in, or withdraw from, multiemployer plans.” Gray, supra, at 722. The “basic problem,” the Report found, was the threat to the solvency and stability of multiemployer plans caused by employer withdrawals, which existing law actually encouraged. Pension Benefit Guaranty Corporation, Multiemployer Study Required by P. L. 95-214, pp. 96-97 (1978) (PBGC Report). As the PBGC’s Executive Director explained:

“A key problem of ongoing multiemployer plans, especially in declining industries, is the problem of employer withdrawal. Employer withdrawals reduce a plan’s contribution base. This pushes the contribution rate for remaining employers to higher and higher levels in order to fund past service liabilities, including liabilities generated by employers no longer participating in the plan, so-called inherited liabilities. The rising costs may encourage — or force — further withdrawals, thereby increasing the inherited liabilities to be funded by an ever decreasing contribution base. This vicious downward spiral may continue until it is no longer reasonable or possible for the pension plan to continue.” Pension Plan Termination Insurance Issues: Hearings before the Subcommittee on Oversight of the House Committee on Ways and Means, 95th Cong., 2nd Sess., 22 (1978) (statement of Matthew M. Lind) (hereinafter 1978 Hearings).

“To alleviate the problem of employer withdrawals, the PBGC suggested new rules under which a withdrawing employer would be required to pay whatever share of the plan’s unfunded liabilities was attributable to that employer’s participation.” Gray, 467 U. S., at 723, citing PBGC Report, at 97-114 (footnote omitted). Again, the PBGC Executive Director explained:

“To deal with this problem, our report considers an approach under which an employer withdrawing from a multiemployer plan would be required to complete funding its fair share of the plan’s unfunded liabilities. In other words, the plan would have a claim against the employer for the inherited liabilities which would otherwise fall upon the remaining employers as a result of the withdrawal. . . .
“We think that such withdrawal liability would, first of all, discourage voluntary withdrawals and curtail the current incentives to flee the plan. Where such withdrawals nonetheless occur, we think that withdrawal liability would cushion the financial impact on the plan.” 1978 Hearings, at 23 (statement of Matthew M. Lind).

After 17 months of discussion, Congress agreed with the analysis put forward in the PBGC Report, and drafted legislation which implemented the Report’s recommendations. “As enacted, the Act requires that an employer withdrawing from a multiemployer pension plan pay a fixed and certain debt to the pension plan. This withdrawal liability is the employer’s proportionate share of the plan’s ‘unfunded vested benefits,’ calculated as the difference between the present value of the vested benefits and the current value of the plan’s assets.” Gray, supra, at 725, quoting 29 U. S. C. §§ 1381, 1391.

B

Appellant Trustees administer the Operating Engineers Pension Plan according to a written Agreement Establishing the Operating Engineers Pension Trust, executed in 1960, pursuant to § 302(c)(5) of the Labor Management Relations Act, 1947, 29 U. S. C. § 186(c)(5). App. 29. The Trust receives contributions from several thousand employers under written collective-bargaining agreements covering employees in the construction industry throughout southern California and southern Nevada. Under these collective-bargaining agreements, the employers agree to contribute a certain amount to the Pension Plan, with the actual amount contributed by each employer determined by multiplying their employees’ hours of service by a rate specified in the current agreement. See id., at 33-35.

By the express terms of the Trust Agreement, id., at 30-31, and the Plan, id., at 31-32, the employer’s sole obligation to the Pension Trust is to pay the contributions required by the collective-bargaining agreement. The Trust Agreement clearly states that the employer’s obligation for pension benefits to the employee is ended when the employer pays the appropriate contribution to the Pension Trust. This is true even though the contributions agreed upon are insufficient to pay the benefits under the Plan.

In 1975, the Trustees filed suit, seeking declaratory and in-junctive relief, claiming that the Pension Plan is a “defined contribution plan” as defined by ERISA, and thus not subject to the jurisdiction of the PBGC. Alternatively, the Trustees argued that if the Plan was subject to the provisions of ERISA requiring premium payments and imposing contingent termination liability, the statute was unconstitutional, as it deprived the Trustees, the employers, and the plan participants of property without due process and without proper compensation.

The District Court granted summary judgment to the Trustees, finding that the Plan was a “defined contribution plan,” and enjoining the PBGC from treating it in any other manner. Connolly v. Pension Benefit Guaranty Corporation, 419 F. Supp. 737 (CD Cal. 1976). The Ninth Circuit reversed and remanded for consideration of the constitutional issues. Connolly v. Pension Benefit Guaranty Corporation, 581 F. 2d 729 (1978), cert. denied, 440 U. S. 935 (1979). On remand, the District Court denied the Trustees’ motion to convene a three-judge court on the ground that the Trustees’ constitutional challenges were insubstantial. App. 55-56. The Trustees sought a petition of mandamus on the issue, but their petition was denied by both the Ninth Circuit and this Court. Connolly v. Williams, No. 79-7580 (Jan. 14, 1980); Connolly v. United States District Court, 445 U. S. 959 (1980).

On the merits, the District Court granted summary judgment to the PBGC, but the Ninth Circuit reversed. 673 F. 2d 1110 (1982). The court could not agree with the District Court that the constitutional claims raised by the Trustees were so “insubstantial” that a three-judge panel could be summarily denied. Id., at 1114. The Ninth Circuit remanded the case with directions to convene a three-judge court.

During the course of the litigation to convene the three-judge court, Congress enacted the MPPAA. The District Court permitted the Trustees to file an amended complaint to include a challenge to the constitutionality of the new Act. The court also permitted appellant Woodward Sand Co., an employer that had been assessed withdrawal liability by the Trustees, to intervene in the action. App. 82.

After oral argument, the three-judge panel granted summary judgment in favor of the PBGC. The court rejected appellants’ argument that the Act violated the Taking Clause of the Fifth Amendment, holding that “the contractual right which insulates employers from further liability to the pension plans in which they participate is not ‘property’ within the meaning of the takings clause.” 631 F. Supp. 640, 645 (1984). Because the court resolved this issue “on the basis that no ‘property’ is affected by the MPPAA,” it did not discuss whether a “taking” had occurred, or whether the taking would have been for a “public purpose.” Ibid.

Both the Trustees and Woodward Sand Co. invoked the appellate jurisdiction of this Court under 28 U. S. C. § 1253. We noted probable jurisdiction, 472 U. S. 1006 (1985), and now affirm.

II

Appellants challenge the District Court’s conclusion that the Act does not effect a taking of “property” within the meaning of the Taking Clause of the Fifth Amendment. Rather than specifically asserting that the contractual limitation of liability is property, however, appellants argue that the imposition of noncontractual withdrawal liability violates the Taking Clause by requiring employers to transfer their assets for the private use of pension trusts and, in any event, by requiring an uncompensated transfer.

We agree that an employer subject to withdrawal liability is permanently deprived of those assets necessary to satisfy its statutory obligation, not to the Government, but to a pension trust. If liability is assessed under the Act, it constitutes a real debt that the employer must satisfy, and it is not an obligation which can be considered insubstantial. In the present litigation, for example, appellant Woodward Sand Co.’s withdrawal liability, after the Trustees’ assessment was reduced by an arbitrator, was approximately $200,000, or nearly 25% of the firm’s net worth. Juris. Statement in No. 84-1567, p. 7, n. 7.

But appellants’ submission — that such a statutory liability to a private party always constitutes an uncompensated taking prohibited by the Fifth Amendment — if accepted, would prove too much. In the course of regulating commercial and other human affairs, Congress routinely creates burdens for some that directly benefit others. For example, Congress may set minimum wages, control prices, or create causes of action that did not previously exist. Given the propriety of the governmental power to regulate, it cannot be said that the Taking Clause is violated whenever legislation requires one person to use his or her assets for the benefit of another. In Usery v. Turner Elkhorn Mining Co., 428 U. S. 1 (1976), we sustained a statute requiring coal mine operators to compensate former employees disabled by pneumoconiosis, even though the operators had never contracted for such liability, and the employees involved had long since terminated their connection with the industry. We said: “[0]ur cases are clear that legislation readjusting rights and burdens is not unlawful solely because it upsets otherwise settled expectations. . . . This is true even though the effect of the legislation is to impose a new duty or liability based on past acts.” Id., at 15-16 (citations omitted).

Relying on Turner Elkhorn, we also rejected a due process attack on the imposition, under the statute now before us, of withdrawal liability on employers who withdrew before the effective date of the 1978 amendments. We held that Congress had acted within its powers and for sound reasons. Pension Benefit Guaranty Corporation v. R. A. Gray & Co., 467 U. S. 717 (1984). Although both Gray and Turner Elkhom were due process cases, it would be surprising indeed to discover now that in both cases Congress unconstitutionally had taken the assets of the employers there involved.

Appellants’ claim of an illegal taking gains nothing from the fact that the employer in the present litigation was protected by the terms of its contract from any liability beyond the specified contributions to which it had agreed. See nn. 2, 3, supra. “Contracts, however express, cannot fetter the constitutional authority of Congress. Contracts may create rights of property, but when contracts deal with a subject matter which lies within the control of Congress, they have a congenital infirmity. Parties cannot remove their transactions from the reach of dominant constitutional power by making contracts about them.” Norman v. Baltimore & Ohio R. Co., 294 U. S. 240, 307-308 (1935).

If the regulatory statute is otherwise within the powers of Congress, therefore, its application may not be defeated by private contractual provisions. For the same reason, the fact that legislation disregards or destroys existing contractual rights does not always transform the regulation into an illegal taking. Bowles v. Willingham, 321 U. S. 503, 517 (1944); Omnia Commercial Co. v. United States, 261 U. S. 502, 508-510 (1923). This is not to say that contractual rights are never property rights or that the Government may always take them for its own benefit without compensation. But here, the United States has taken nothing for its own use, and only has nullified a contractual provision limiting liability by imposing an additional obligation that is otherwise within the power of Congress to impose. That the statutory withdrawal liability will operate in this manner and will redound to the benefit of pension trusts does not justify a holding that the provision violates the Taking Clause and is invalid on its face.

This conclusion is not inconsistent with our prior Taking Clause cases. See, e. g., Ruckelshaus v. Monsanto Co., 467 U. S. 986 (1984); Loretto v. Teleprompter Manhattan CATV Corp., 458 U. S. 419 (1982); Hodel v. Virginia Surface Mining & Reclamation Assn., 452 U. S. 264 (1981); Kaiser Aetna v. United States, 444 U. S. 164 (1979); Penn Central Transportation Co. v. New York City, 438 U. S. 104 (1978). In all of these cases, we have eschewed the development of any set formula for identifying a “taking” forbidden by the Fifth Amendment, and have relied instead on ad hoc, factual inquiries into the circumstances of each particular case. Monsanto Co., supra, at 1005; Kaiser Aetna, supra, at 175. To aid in this determination, however, we have identified three factors which have “particular significance”: (1) “the economic impact of the regulation on the claimant”; (2) “the extent to which the regulation has interfered with distinct investment-backed expectations”; and (3) “the character of the governmental action.” Penn Central Transportation Co., supra, at 124. Accord, Monsanto Co., supra, at 1005; PruneYard Shopping Center v. Robins, 447 U. S. 74, 82-83 (1980). Examining the MPPAA in fight of these factors reinforces our belief that the imposition of withdrawal liability does not constitute a compensable taking under the Fifth Amendment.

First, with respect to the nature of the governmental action, we already have noted that, under the Act, the Government does not physically invade or permanently appropriate any of the employer’s assets for its own use. Instead, the Act safeguards the participants in multiemployer pension plans by requiring a withdrawing employer to fund its share of the plan obligations incurred during its association with the plan. This interference with the property rights of an employer arises from a public program that adjusts the benefits and burdens of economic fife to promote the common good and, under our cases, does not constitute a taking requiring Government compensation. Penn Central Transportation Co., supra, at 124; Usery v. Turner Elkhorn Mining Co., supra, at 15, 16. See Andrus v. Allard, 444 U. S. 51, 65 (1979); Pennsylvania Coal Co. v. Mahon, 260 U. S. 393, 413 (1922).

Next, as to the severity of the economic impact of the MPPAA, there is no doubt that the Act completely deprives an employer of whatever amount of money it is obligated to pay to fulfill its statutory liability. The assessment of withdrawal liability is not made in a vacuum, however, but directly depends on the relationship between the employer and the plan to which it had made contributions. Moreover, there are a significant number of provisions in the Act that moderate and mitigate the economic impact of an individual employer’s liability. There is nothing to show that the withdrawal liability actually imposed on an employer will always be out of proportion to its experience with the plan, and the mere fact that the employer must pay money to comply with the Act is but a necessary consequence of the MPPAA’s regulatory scheme.

The final inquiry suggested for determining whether the Act constitutes a “taking” under the Fifth Amendment is whether the MPPAA has interfered with reasonable investment-backed expectations. Appellants argue that the only monetary obligations incurred by each employer involved in the Operating Engineers Pension Plan arose from the specific terms of the Plan and Trust Agreement between the employers and the union, and that the imposition of withdrawal liability upsets those reasonable expectations. Pension plans, however, were the objects of legislative concern long before the passage of ERISA in 1974, and surely as of that time, it was clear that if the PBGC exercised its discretion to pay benefits upon the termination of a multi-employer pension plan, employers who had contributed to the plan during the preceeding five years were liable for their proportionate share of the plan’s contributions during that period. 29 U. S. C. § 1364. It was also plain enough that the purpose of imposing withdrawal liability was to ensure that employees would receive the benefits promised them. When it became evident that ERISA fell short of achieving this end, Congress adopted the 1980 amendments. Prudent employers then had more than sufficient notice not only that pension plans were currently regulated, but also that withdrawal itself might trigger additional financial obligations. See Gray, 467 U. S., at 732. “Those who do business in the regulated field cannot object if the legislative scheme is buttressed by subsequent amendments to achieve the legislative end.” FHA v. The Darlington, Inc., 358 U. S. 84, 91 (1958). See also Usery v. Turner Elkhorn Mining Co., 428 U. S., at 15-16 and cases cited therein.

The purpose of forbidding uncompensated takings of private property for public use is “to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” Armstrong v. United States, 364 U. S. 40, 49 (1960). We are far from persuaded that fairness and justice require the public, rather than the withdrawing employers and other parties to pension plan agreements, to shoulder the responsibility for rescuing plans that are in financial trouble. The employers in the present litigation voluntarily negotiated and maintained a pension plan which was determined to be within the strictures of ERISA. We do not know, as a fact, whether this plan was underfunded, but Congress determined that unregulated withdrawals from multiemployer plans could endanger their financial vitality and deprive workers of the vested rights they were entitled to anticipate would be theirs upon retirement. For this reason, Congress imposed withdrawal liability as one part of an overall statutory scheme to safeguard the solvency of private pension plans. We see no constitutionally compelled reason to require the Treasury to assume the financial burden of attaining this goal.

The judgment of the three-judge court is

Affirmed.

Justice O’Connor,

with whom Justice Powell joins, concurring.

Today the Court upholds the withdrawal liability provisions of the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA) against a facial challenge to their validity based on the Taking Clause of the Fifth Amendment. I join the Court’s opinion and agree with its reasoning and its result, but I write separately to emphasize some of the issues the Court does not decide today. Specifically, the Court does not decide today, and has left open in previous cases, whether the imposition of withdrawal liability under the MPPAA and of plan termination liability under the Employee Retirement Income Security Act of 1974 (ERISA) may in some circumstances be so arbitrary and irrational as to violate the Due Process Clause of the Fifth Amendment. See Pension Benefit Guaranty Corporation v. R. A. Gray & Co., 467 U. S. 717, 728, n. 7 (1984); Nachman Corp. v. Pension Benefit Guaranty Corporation, 446 U. S. 359, 367-368 (1980). The Court also has no occasion to decide whether the MPPAA may violate the Taking Clause as applied in particular cases, or whether the pension plan in this case is a defined benefit plan rather than a defined contribution plan within the meaning of ERISA.

As the Court indicates, the mere fact that “legislation requires one person to use his or her assets for the benefit of another,” ante, at 223, will not establish either a violation of the Taking Clause or the Due Process Clause. With regard to the latter provision, it is settled that in the field of economic legislation “the burden is on one complaining of a due process violation to establish that the legislature has acted in an arbitrary and irrational way.” Usery v. Turner Elkhorn Mining Co., 428 U. S. 1, 15 (1976). Nonetheless, the Court has never intimated that Congress possesses unlimited power to “readjus[t] rights and burdens . . . [and] upse[t] otherwise settled expectations.” Turner Elkhorn, supra, at 16. Our recent cases leave open the possibility that the imposition of retroactive liability on employers for the benefit of employees may be arbitrary and irrational in the absence of any connection between the employer’s conduct and some detriment to the employee. See Turner Elkhorn, supra, at 19, 24-26; Pension Benefit Guaranty Corporation v. R. A. Gray & Co., supra, at 733 (discussing Railroad Retirement Board v. Alton R. Co., 295 U. S. 330 (1935)).

Insofar as the application of the provisions of the MPPAA and of ERISA to pension benefits that accrue in the future is concerned, there can be httle doubt of Congress’ power to override contractual provisions limiting employer liability for unfunded benefits promised to employees under the plan. But both statutes impose liability under certain circumstances on contributing employers for unfunded benefits that accrued in the past under a pension plan whether or not the employers had agreed to ensure that benefits would be fully funded. In my view, imposition of this type of retroactive liability on employers, to be constitutional, must rest on some basis in the employer’s conduct that would make it rational to treat the employees’ expectations of benefits under the plan as the employer’s responsibility.

In enacting ERISA, Congress distinguished between two types of employee retirement benefit plans: “defined benefit plan[s]” and “defined contribution plan[s],” also known as “individual account plan[s].” See 29 U. S. C. §§ 1002(34), (35). An employer is subject to plan termination liability under ERISA only if the employee benefit plan to which the employer has contributed is covered by ERISA’s plan termination insurance program, which applies to defined benefit plans but not to defined contribution plans. 29 U. S. C. § 1321(b)(1). See Nachman Corp. v. Pension Benefit Guaranty Corporation, supra, at 363, n. 5. Congress exempted defined contribution plans from ERISA’s termination insurance program because a defined contribution plan does not specify benefits to be paid, but instead establishes an individual account for each participant to which employer contributions are made. 29 U. S. C. § 1002(34). “[U]nder such plans, by definition, there can never be an insufficiency of funds in the plan to cover promised benefits.” Nachman Corp., supra, at 364, n. 5.

By contrast, whenever a plan defines the benefits payable thereunder, the possibility exists that at a given time plan assets will fall short of the present value of vested plan benefits. Congress therefore subjected defined benefit plans to ERISA’s plan termination insurance program, and did so by broadly defining a defined benefit plan as “a pension plan other than an individual account plan.” 29 U. S. C. § 1002(35). We have no occasion today to decide whether this definition sweeps in all plans in which the benefits to be received by employees are fixed by the terms of the plan, even if the plan also provides that the employer’s contributions shall be fixed and shall not be adjusted to whatever level would be required to provide those benefits. Indeed, this litigation began in part as a challenge by the Trustees of the Operating Engineers Pension Plan to a determination by the Pension Benefit Guaranty Corporation (hereinafter PBGC) that the Pension Plan is a defined benefit plan. See ante, at 219. That challenge was resolved against the Trustees and is not presented here.

ERISA’s broad definition of defined benefit plan may well mean that Congress imposed contingent liability on contributing employers without regard to the extent of a particular employer’s actual responsibility for the existence of a plan’s promise of fixed benefits to employees and without regard to the extent to which any such promise was conditioned — and understood by employees to be conditioned — by plan provisions limiting the employer’s obligations to make contributions to the plan. If so, the application of ERISA may in some circumstances raise constitutional doubts under the Taking Clause or the Due Process Clause.

The same doubts arise with respect to the imposition of withdrawal liability under the MPPAA, which is properly seen as a prophylactic extension of the liability initially imposed by ERISA. Withdrawal liability is intended to ensure that “ ‘an employer withdrawing from a multiemployer plan w[ill] . . . complete funding its fair share of the plan’s unfunded liabilities,”’ R. A. Gray & Co., 467 U. S., at 723, n. 3 (quoting Pension Plan Termination Insurance Issues: Hearings before the Subcommittee on Oversight of the House Committee on Ways and Means, 95th Cong., 2d Sess., 23 (1978) (statement of Matthew M. Lind, Executive Director of PBGC), and thus presupposes that employers can be made hable for those unfunded liabilities in the first instance. Although the MPPAA substitutes liability to the plan for liability to PBGC, the withdrawal liability it imposes on employers who contribute to multiemployer plans reflects the same apparent determination to treat all definite benefits as promises for which the employer can be held liable that underlies termination liability under ERISA. PBGC coverage of a multiemployer plan continues to turn on whether it is a defined benefit plan, and the MPPAA defines the withdrawing employer’s liability to the plan in terms of “unfunded vested benefits,” 29 U. S. C. § 1391, thereby making withdrawal liability turn on the presence of fixed benefits. The MPPAA’s termination liability provisions are complex, but their overall effect is also to hold employers liable for underfunding of vested fixed benefits. See 29 U. S. C. § 1341a. Thus, it is evident that the MPPAA expands on Congress’ decision in ERISA to exempt only defined contribution plans, narrowly defined, from PBGC coverage and employer liability. Whether the employer’s liability is to PBGC or to the plan, the thrust of both statutes is to enforce the plan’s promise of fixed benefits against the employer with respect to benefits already accrued.

The degree to which an employer can be said to be responsible for the promise of benefits made by a plan varies dramatically across the spectrum of plans. Where a single employer has unilaterally adopted and maintained a pension plan for its employees, the employer’s responsibility for the presence of a promise to pay defined benefits is direct and substantial. The employer can nominate all the plan’s trustees and enjoys wide discretion in designing the plan and determining the level of benefits. Where such a plan holds out to employees a promise of definite benefits, and where employees have rendered the years of service required for benefits to accrue and vest, it seems entirely rational to hold the employer liable for any shortfall in the plan’s assets, even if the plan’s provisions purport to limit the employer’s liability in the event of underfunding upon plan termination.

Where a pension plan is established through collective bargaining between one or more employers and a union, matters may be different. Such plans, commonly known as “Taft-Hartley” plans, were authorized by § 302(c)(5) of the Labor Management Relations Act, 1947 (LMRA), 61 Stat. 157, codified, as amended, at 29 U. S. C. § 186(c)(5). Taft-Hartley plans are the product of joint negotiation between employers and a union representing employees and are administered by trustees nominated in equal numbers by employers and the union. Ibid. Unlike typical defined benefit plans, which call for variable employer contributions and provide for fixed benefits, most Taft-Hartley plans “possess the characteristics of both fixed contributions and fixed benefits.” J. Melone, Collectively Bargained Multi-Employer Pension Plans 20 (1963) (hereinafter Melone). As PBGC has explained:

“Employers participating in multiemployer plans are generally required to contribute at a fixed rate, specified in the collective bargaining agreement. . . . Traditionally, the multiemployer plan or the bargaining agreement have limited the employer’s contractual obligation to contribute at the fixed rate, whether or not the contributions were sufficient to provide the benefits established by the joint board or the collectively bargained agreement.” Pension Benefit Guaranty Corporation, Multiemployer Study Required by P. L. 95-214, p. 22 (1978) (hereinafter Multiemployer Study).

See also Melone 50; Goetz, Developing Federal Labor Law of Welfare and Pension Plans, 55 Cornell L. Rev. 911, 931 (1970).

Under these hybrid Taft-Hartley plans it is* the plans’ trustees, not the employers and the union, who are “usually responsible for determining the types of benefits to be provided . . . and the level of benefits, although in some cases these are set in the collective bargaining agreement. ” Multi-employer Study 22 (footnote omitted). See also GAO/ HRD-85-58, Comptroller General’s Report to the Congress, Effects of the Multiemployer Pension Plan Amendments Act on Plan Participants’ Benefits, 37, App. I, Table 3 (June 14, 1985) (95% of 139 multiemployer plans surveyed provided that trustees set benefits) (hereinafter Report to the Congress). This delegation of responsibility to the trustees may well stem from an understanding on the part of employers and unions that under the fixed-contribution approach the plan rather than the employers would bear the risks of adverse experience and the benefits of favorable experience in the first instance. See Pension Plans Under Collective Bargaining: A Reference Guide for Trade Unions 64 (American Federation of Labor 1953). If the actuary’s earnings assumptions proved too conservative, the plan would have excess assets that could be used to support an increase in benefits by the trustees, and if asset growth was lower than anticipated, benefits could be reduced. It now appears that Taft-Hartley plan employers will be liable for such experience losses in many cases, even where withdrawal occurs as a result of events over which an employer has no control, and even though experience gains can still ordinarily be used to increase benefits.

It is also noteworthy that, as this Court held in NLRB v. Amax Coal Co., 453 U. S. 322, 331-332 (1981), “the duty of the management-appointed trustee of an employee benefit fund under § 302(c)(5) is directly antithetical to that of an agent of the appointing party.” ERISA conclusively established that “an employee benefit fund trustee is a fiduciary whose duty to the trust beneficiaries must overcome any loyalty to the interest of the party that appointed him.” Id., at 334. In light of these fiduciary duties, it seems remarkable to impute responsibility to employers for the level of benefits promised by the plan and set by the joint board of trustees, notwithstanding the express limits on employer liability contained in the plan and agreed to in collective bargaining.

Yet that would appear to be what Congress may have done to the extent a Taft-Hartley plan such as the pension plan in this case is treated as a pure defined benefit plan in which the employer promised to make contributions to the extent necessary to fund the fixed benefits provided in the plan. As Representative Erlenborn put it in the hearings on the MPPAA:

“[W]e have taken something that neither looked like a duck, or walked like a duck, or quacked like a duck, and we passed a law [ERISA] and said, ‘It is a duck.’ If it is that easy, I suppose we can repeal the law of gravity and solve our energy problem. It is treating the multi-employer plans where you negotiate a contribution as having put a legal obligation on the employer to reach a level of benefits that has caused the problem.” Hearings on The Multiemployer Pension Plan Amendments Act of 1979 before the Task Force on Welfare and Pension Plans of the Subcommittee on Labor-Management Relations of the House Committee on Education and Labor, 96th Cong., 391 (1980) (emphasis added).

The foregoing observations suggest to me that whatever promises a collectively bargained plan makes with respect to benefits may not always be rationally traceable to the employer’s conduct and that it may sometimes be quite fictitious to speak of such plans as “promising” benefits at a specified level, since to do so ignores express and bargained-for conditions on those promises. Where the plan’s fixed-contribution aspects were agreed to by employees through their exclusive bargaining representatives, and where employers had no control over the level of benefits promised, employer responsibility for the benefits specified by the plan is very much attenuated, and employee expectations that those benefits will in all events be paid, in the face of plan language to the contrary, are not easily traceable to the employer’s conduct.

The possible arbitrariness of imposing termination and withdrawal liability on some employers contributing to fixed-cost Taft-Hartley plans may be heightened in particular cases. For example, an employer who agrees to participate in a multiemployer plan long after the plan’s benefit structure has been determined may have had no say whatever in establishing critical features of the plan that determine the level of benefits and the value of those benefits. Similarly, if a plan had regularly undergone increases and reductions in accrued benefits prior to ERISA, any contention that employers caused employees to rely on a promise of fixed benefits might carry even less weight.

Beyond that, the withdrawal provisions of the MPPAA are structured in a manner that may lead to extremely harsh results. For example, it appears that even if the trustees raised benefits for both retired and current employees during the period immediately prior to an employer’s withdrawal, the withdrawing employer can be held liable for the resulting underfunding. Such benefit increases are not uncommon. See Report to the Congress 43, App. I, Table 17 (68% of multiemployer plans surveyed increased benefits for working participants during 33 months prior to enactment of the MPPAA); Table 18 (46% of these plans increased retirees’ benefits during the same period). In addition, the presumptive method for calculating employer withdrawal liability is based on the employer’s proportionate share of the contributions made to the plan during the years in which the employer participated. 29 U. S. C. § 1391(b). As a result, because fixed-contribution plans typically do not set each employer’s contributions on the basis of the value of the benefits accrued by that employer’s employees, it seems entirely possible that an employer may be hable to the plan for substantial sums even though that employer’s contributions plus its allocable share of plan earnings exceed the present value of all benefits accrued by its employees.

To be sure, the Court does not address these questions today. Since this case involves only a facial challenge under the Taking Clause to the MPPAA’s withdrawal liability provisions, the Court properly refuses to look into the possibility that harsh results such as those I have noted may affect its analysis, let alone a due process inquiry, when the MPPAA is applied in particular cases. I write only to emphasize some of the issues the Court does not decide today, and to express the view that termination liability under ERISA, and withdrawal liability under the MPPAA, impose substantial retroactive burdens on employers in a manner that may drastically disrupt longstanding expectations, and do so on the basis of a questionable rationale that remains open to review in appropriate cases.

       The inadequacy of existing law was demonstrated by the Report’s finding that roughly 10% of all multiemployer plans, covering 1.3 million participants, were experiencing financial difficulties. PBGC Report, at 1. Funding of all plan benefits under these plans, if they terminated, would cost the insurance system approximately $4.8 billion and necessitate an increase in premiums to unacceptable levels. Id., at 2, 16, 139. See also Hearings on the Multiemployer Pension Plan Amendments Act of 1979 before the Task Force on Welfare and Pension Plans of the Subcommittee on Labor-Management Relations of the House Committee on Education and Labor, 96th Cong., 1st Sess. 1156, 1170, 1291 (1980). See also Brief for National Coordinating Committee for Multiemployer Plans as Amicus Curiae 12-14; Brief of Trustees for United Mine Workers of America 1950 and 1974 Pension Plans as Amici Curiae 7.

       Article II, § 7, of the Trust Agreement provides as follows:
      “Neither the Employers nor any Signatory Association, or officer, agent, employee or committee member of the Employers or any Signatory Association, shall be liable to make Contributions to the Fund or with respect to the Pension Plan, except to the extent that he or it may be an Individual Employer required to make Contributions to the Fund with respect to his or its own individual or joint venture operations, or to the extent he or it may incur liability as a Trustee as hereinafter provided. Except as provided in Article III hereof, the liability of any Individual Employer to the Fund, or with respect to the Pension Plan, shall be limited to the payments required by the Collective Bargaining Agreements with respect to his or its individual or joint venture operations, and in no event shall he or it be liable or responsible for any portion of the Contributions due from other Individual Employers or with respect to the operations of such Individual Employers. The Individual Employers shall not be required to make any further payments or Contributions to the cost of operations of the Fund or of the Pension Plan, except as may be hereinafter provided in the Collective Bargaining Agreements.” App. 30-31.

       Article VII, § 4, of the Plan provides as follows:
      “This Pension Plan has been adopted on the basis of an actuarial calculation which has established, to the extent possible, that the contributions will, if continued, be sufficient to maintain the Plan on a permanent basis. However, it is recognized that the benefits provided by this Pension Plan can be paid only to the extent that the Plan has available adequate resources for those payments. No Individual Employer has any liability, directly or indirectly to provide the benefits established by this Plan beyond the obligation of the Individual Employer to make contributions as stipulated in any Collective Bargaining Agreement. In the event that at any time the Pension Fund does not have sufficient assets to permit continued payments under this Pension Plan, nothing contained in this Pension Plan and the Trust Agreement shall be construed as obliging any Individual Employer to make benefit payments or contributions (other than the eon-tributions for which the Individual Employer may be obliged by any Collective Bargaining Agreement) in order to provide for the benefits established by the Pension Plan. Likewise, there shall be no liability upon the Board of Trustees, individually or collectively, or upon the Employers, Signatory Association, Individual Employer, or Union to provide the benefits established by this Plan if the Pension Fund does not have the assets to make such benefit payments.” Id., at 31-32.

       Title 29 U. S. C. §1002(34) describes a “defined contribution plan” as “a pension plan which provides for an individual account for each participant and for benefits based solely upon the amount contributed to the participant’s account, and any income, expenses, gains and losses, and any forfeitures of accounts of other participants which may be allocated to such participant’s account.” The Plan Termination Insurance provisions of ERISA do not apply to such plans. § 1321(b)(1).

       Penfield & Smith, Inc., Roy L. Klema Engineers, Inc., and Municipal Engineers, Inc., also intervened in the proceedings before the District Court. These employers are not parties to this appeal, however, as the Trustees have determined that they have incurred no liability under the Act. Brief for Appellant in No. 84-1567, p. ii.

       The three-judge court also rejected appellants’ arguments that the MPPAA violated due process, the Contract Clause, and several other constitutional provisions. See App. to Juris. Statement in No. 84-1555, pp. 8-14.

        The panel’s decision upholding the constitutionality of the MPPAA is consistent with the result reached by every other court to have considered the issue. Keith Fulton & Sons, Inc. v. New England Teamsters and Trucking Industry Pension Fund, 762 F. 2d 1124 (CA1 1984), modified on other grounds, 762 F. 2d 1137 (1985); Board of Trustees of Western Conference of Teamsters Pension Trust Fund v. Thompson Building Materials, Inc., 749 F. 2d 1396 (CA9 1984), cert. denied, 471 U. S. 1054 (1985); Terson Co. v. Bakery Drivers and Salesmen Local 194, 739 F. 2d 118 (CA3 1984); Washington Star Co. v. International Typographical Union Negotiated Pension Plan, 235 U. S. App. D. C. 1, 729 F. 2d 1502 (1984); Textile Workers Pension Fund v. Standard Dye & Finishing Co., 725 F. 2d 843 (CA2), cert. denied sub nom. Sibley, Lindsay & Curr Co. v. Bakery Workers, 467 U. S. 1259 (1984); Peick v. Pension Benefit Guaranty Corporation, 724 F. 2d 1247 (CA7 1983), cert. denied, 467 U. S. 1259 (1984); Republic Industries, Inc. v. Teamsters Joint Council No. 83 of Virginia Pension Fund, 718 F. 2d 628 (CA4 1983), cert. denied, 467 U. S. 1259 (1984); Dorn’s Transportation, Inc. v. I. A. M. National Pension Fund Benefit Plan, 578 F. Supp. 1222 (DC 1984), aff’d, 243 U. S. App. D. C. 348, 753 F. 2d 166 (1985); Speckmann v. Paddock Chrysler Plymouth, Inc., 565 F. Supp. 469 (ED Mo. 1983). In Keith Fulton, Thompson Building Materials, Terson, Peick, Republic Industries, Dorn, and Speckmann, the Taking Clause claim was directly at issue.

       Appellant Trustees make two additional arguments as well. First, they argue that if the imposition of withdrawal liability is invalid under the Taking Clause, then the related provisions of the MPPAA requiring multi-employer plans to pay premiums to the PBGC are also invalid, as they are inseverable from the overall statutory scheme. Second, the Trustees contend that the statutory provisions requiring multiemployer plans to pay premiums to the PBGC and authorizing the PBGC to use the funds “in its discretion” to pay benefits to participants of a terminated multiemployer plan violate the principle of separation of powers by delegating legislative authority to the PBGC.
      Because we find that the withdrawal liability provisions of the Act are valid under the Taking Clause, we need not address the Trustees’ first assertion. As to the Trustees’ separation-of-powers contention, we find little merit in this argument. Title 29 U. S. C. § 1381(c)(2)(B) (1976 ed.) stated that the PBGC was to pay benefits if it determined that “the payment ... of benefits guaranteed under [ERISA] with respect to that plan [would] not jeopardize the payments the [PBGC] anticipate^] it may be required to make in connection with [the mandatory guarantee program].” Congress delegated discretionary, rather than mandatory, coverage for multiemployer plans prior to 1980 because it needed “time for thorough consideration of the complex issues posed by the termination of multi-employer pension plans.” Pension Benefit Guaranty Corporation v. R. A. Gray & Co., 467 U. S. 717, 721, n. 1 (1984). In these circumstances, the delegation of discretionary authority was a reasonable means of achieving congressional aims, and we are not persuaded that Congress failed to provide a clear “intelligible principle” to guide the PBGC in the exercise of this authority under the Act. See J. W. Hampton, Jr., & Co. v. United States, 276 U. S. 394, 409 (1928).

       Several sections of the Act moderate the impact of a withdrawing employer’s liability by exempting certain transactions from being characterized as “withdrawals.” See, e. g., 29 U. S. C. §§ 1383(b), (c) (applying special definitions for determining whether there has been a complete or partial withdrawal from a pension plan in the building and construction industry and in the entertainment industry); § 1384 (cessation or reduction of contribution obligations as a result of an employer’s sale of its assets does not result in a withdrawal, provided certain other conditions are met); § 1398(1) (change of corporate structure where successor continues to contribute to plan is not a withdrawal); § 1398(2) (withdrawal does not occur where employer suspends contributions to plan during labor dispute involving its employees).
      Other sections reduce the size of the financial liability in various instances. See, e. g., 29 U. S. C. § 1389(a) (creating a de minimis rule which eliminates withdrawal liability entirely for an employer whose obligation would be equal to or less than the smaller of (1) *U of 1% of the plan’s unfunded vested obligations; or (2) $50,000); § 1405(a)(1) (limiting withdrawal liability for employer who liquidates his business); § 1390(a)(2) (establishing a “free look” provision, whereby new employers may withdraw without liability if they had an obligation to contribute for no more than six consecutive plan years, or, if shorter, the number of years required for vesting under the plan).