CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT.
Blackmun, J., delivered the opinion for a unanimous Court. Powell, J., filed a concurring opinion, in which O'connor, J., joined, post, p. 29.
JUSTICE BLACKMUN delivered the opinion of the Court.
Under § 13(c) of the Urban Mass Transportation Act of 1964 (Act or UMTA), 78 Stat. 307, as amended, 49 U. S. C. § 1609(c),*fn1 a state or local government must make arrangements to preserve transit workers' existing collective-bargaining rights before that government may receive federal financial assistance for the acquisition of a privately owned transit company. This case presents the issue whether § 13(c) by itself permits a union to sue in federal court for alleged violations of an arrangement of this kind or of the collective-bargaining agreement between the union and the local government transit authority.
When the Act was under consideration in the Congress, that body was aware of the increasingly precarious financial condition of a number of private transportation companies across the country, and it feared that communities might be left without adequate mass transportation. See S. Rep. No. 82, 88th Cong., 1st Sess., 4-5, 19-20 (1963). The Act was designed in part to provide federal aid for local governments in acquiring failing private transit companies so that communities could continue to receive the benefits of mass transportation despite the collapse of the private operations. See §§ 2 (b) and 3, as amended, 49 U. S. C. § 1601(b) and 1602.
At the same time, however, Congress was aware that public ownership might threaten existing collective-bargaining rights of unionized transit workers employed by private companies. If, for example, state law forbade collective bargaining by state and local government employees, the workers might lose their collective-bargaining rights when a private company was acquired by a local government. See Urban Mass Transportation -- 1963, Hearings on S. 6 and S. 917 before a Subcommittee of the Senate Committee on Banking and Currency, 88th Cong., 1st Sess., 318-323 (1963) (Senate Hearings) (statement of Andrew J. Biemiller, Director, Department of Legislation, AFL-CIO). To prevent federal funds from being used to destroy the collective-bargaining rights of organized workers, Congress included § 13(c) in the Act. See H. R. Rep. No. 204, 88th Cong., 1st Sess., 15-16 (1963).
Section 13(c) requires, as a condition of federal assistance under the Act, that the Secretary of Labor certify that "fair and equitable arrangements" have been made "to protect the interests of employees affected by [the] assistance." The statute lists several protective steps that must be taken before a local government may receive federal aid; among these
are the preservation of benefits under existing collective-bargaining agreements and the continuation of collective-bargaining rights. The protective arrangements must be specified in the contract granting federal aid.*fn2
In 1966, petitioner city of Jackson, Tenn., applied for federal aid to convert a failing private bus company into a public entity, petitioner Jackson Transit Authority. See App. 12a-16a. In order to satisfy § 13(c), the Authority so created entered into a "§ 13(c) agreement" with respondent Local Division 1285, Amalgamated Transit Union, AFL-CIO-CLC, the union that represented the private company's employees. See 29 CFR pt. 215 (1981). Among other things, the § 13(c) agreement guaranteed the preservation of the transit workers' collective-bargaining rights. App. 16a-20a. The Secretary of Labor certified that the agreement was "fair and equitable." Its substance was made a part of the grant contract between the city and the United States, and the city received approximately $279,000 in federal aid.
Thereafter, until 1975, the Authority's unionized workers were covered by a series of collective-bargaining agreements. Six months after a new 3-year collective-bargaining agreement was signed in 1975, see id., at 31a, however, the Authority notified the union that it no longer considered itself bound by that contract. See id., at 45a.*fn3
Ultimately, the union filed suit in the United States District Court for the Western District of Tennessee. It sought damages and injunctive relief, alleging that petitioners had breached the § 13(c) agreement and the collective-bargaining contract. App. 8a, 10a-11a.*fn4 The District Court concluded that it lacked subject-matter jurisdiction to hear the suit because the complaint rested on contract rights that should be enforced only in a state court. 447 F.Supp. 88 (1977).
The United States Court of Appeals for the Sixth Circuit reversed. 650 F.2d 1379 (1981). Relying on Bell v. Hood, 327 U.S. 678 (1946), that court first determined that it had subject-matter jurisdiction under 28 U. S. C. § 1331, because ...