MARGARET M. HECKLER, SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL., APPELLANTS v. PUBLIC AGENCIES OPPOSED TO SOCIAL SECURITY ENTRAPMENT, ET AL. UNITED STATES OF AMERICA, ET AL., APPELLANTS v. STATE OF CALIFORNIA APPENDIX No. 85-521 In the Supreme Court of the United States October Term, 1985 On Appeal from the United States District Court for the Eastern District of California Jurisdictional Statement PARTIES TO THE PROCEEDING In addition to the parties named in the caption, plaintiffs in the district court were the Yorba Linda Library District, the North Bakersfield Recreation and Park District, the Delano Mosquito Abatement District, Katherine T. Citizen, William Rasmussen, and Margie Hunt. Defendants in the district court included, in addition to the parties named in the caption, John Svahn. Named as "real parties in interest" were George Deukmejian, Michael Franchetti, the Board of Administration of the Public Employees Retirement System of the State of California, Robert F. Carlson, Bill D. Ellis, Jake Petrofino, Prescott R. Reed, Wilson C. Riles, Jr., Mel Reuben, Jack G. Willard, Brenda Y. Shockley, and Susan Tohbe. TABLE OF CONTENTS Question Presented Parties to the Proceeding Opinion below Jurisdiction Constitutional and statutory provisions involved Statement The question is insubstantial Conclusion Appendix A Appendix B Appendix C OPINION BELOW The opinion of the district court (App., infra, 1a-35a) is reported at 613 F. Supp. 558. JURISDICTION The judgment of the district court (App., infra, 36a) was entered on May 31, 1985. A notice of appeal (App., infra 37a-38a) was filed on June 27, 1985. On August 19, 1985, Justice Rehnquist extended the time for docketing the appeal through September 25, 1985. The jurisdiction of this Court is invoked under 28 U.S.C. 1252. CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED 42 U.S.C. 418(a)(1) provides in relevant part: The Secretary of Health and Human Services shall, at the request of any State, enter into an agreement with such State for the purpose of extending the insurance system established by this subchapter to services performed by individuals as employees of such State or any political subdivision thereof. 42 U.S.C. (Supp. I) 418(g) provides: No agreement under this section may be terminated, either in its entirety or with respect to any coverage group, on or after April 20, 1983. 42 U.S.C. 1304 provides: The right to alter, amend, or repeal any provision of this chapter is hereby reserved to Congress. The Fifth Amendment to the Constitution provides in relevant part: (N)or shall private property be taken for public use, without just compensation. QUESTION PRESENTED Whether Section 103(a) of the Social Security Amendments Act of 1983, 42 U.S.C. (Supp. I) 418(g), effected a "taking" of property within the meaning of the Fifth Amendment by preventing states from withdrawing from the Social Security System. STATEMENT 1. The Social Security Act, 42 U.S.C. (& Supp. I) 301 et seq., exempts state and local government employees from mandatory participation in the Social Security System (the System). 42 U.S.C. 410(a)(7). In 1950, however, Congress amended the Act to permit the states to enroll their employees, and those of their political subdivisions, in the System. Social Security Act Amendments of 1950, ch. 809, Section 106, 64 Stat. 514, codified at 42 U.S.C. (& Supp. I) 418. Specifically, Section 418 authorizes the Secretary of Health and Human Services (the Secretary), "at the request of any State, (to) enter into an agreement with such State for the purpose of extending the (Social Security) insurance system * * * to services performed by individuals as employees of such State or any political subdivision thereof." 42 U.S.C. 418(a)(1). Pursuant to these so-called "Section 418 agreements" -- which must "contain such provisions, not inconsistent with the provisions of this section, as the State may request" (42 U.S.C. 418(a)(1)) -- participating states may enroll all, or only limited "coverage groups," of their employees. 42 U.S.C. 418(c). See 42 U.S.C. 418(b)(5). Participating states are responsible for collecting and periodically paying to the Secretary of the Treasury "amounts equivalent to the sum of taxes" that would be due if their employees (or those of their political subdivisions) otherwise were covered by the Act (42 U.S.C. (Supp. I) 418(e)(1)(A)), and the other requirements imposed upon the states generally are the same as those placed on private employers by the Act. See 42 U.S.C. 418(i). The Secretary of Health and Human Services may impose penalties for late payment. 42 U.S.C. 418(j). The statute also makes provision for the assessment of amounts due (42 U.S.C. 418(q)), for the administrative determination of challenges to assessments and claims for refunds (42 U.S.C. 418(s)), and for judicial review of such determinations (42 U.S.C. 418(t)). Following enactment of Section 418, all 50 states executed agreements with the Secretary to obtain Social Security coverage for their own employees or for those of their political subdivisions. /1/ And the percentage of state and local employees enrolled in the System through Section 418 agreements increased dramatically, from 11% in 1951 to 70% in 1970. Subcomm. on Social Security of the House Comm. on Ways and Means, 97th Cong., 2d Sess., WMCP: 97-34, Termination of Social Security Coverage for Employees of State and Local Government and Nonprofit Groups 25 (Comm. Print 1982) (hereinafter cited as H.R. Comm. Print 97-34). The percentage of such employees covered by Section 418 agreements has remained roughly constant since then (see H.R. Comm. Print 97-34, at 25); as of 1983, some 9.4 million of the approximately 13.2 million state and local government employees were participants in the Social Security System. H.R. Rep. 98-25, 98th Cong., 1st Sess. Pt. 1a, at 17 (1983). 2. As originally enacted, Section 418 provided that a participating state could elect to terminate its Section 418 agreement, in whole or in part, upon two years' notice to the Secretary. 42 U.S.C. 418(g). /2/ During the statute's first two decades of operation, virtually no states or subdivisions chose to withdraw from the System. H.R. Rep. 98-25, supra, at 18; H.R. Comm. Print 97-34, at 26. /3/ From 1977 on, however, the number of withdrawals increased significantly. Between 1977 and 1981, 96,000 state and local government employees were withdrawn from the System; by 1983, termination notices were pending for 634 state and local entities representing an additional 227,000 employees. H.R. Rep. 98-25, supra, at 18. In that year, Congress determined that the continued and accelerating withdrawal of employees by states and localities was threatening the integrity of the Social Security System. It noted that withdrawals at the current rate would cost the Social Security trust funds $500 million to $1 billion annually. H.R. Comm. Print 97-34, at 13-14. And it concluded that permitting states and localities to terminate Social Security participation for their employees was inequitable both for the workers who lost coverage and for the employees who continued to pay into the system. H.R. Rep. 98-25, supra, at 18-19. As part of the Social Security Amendments Act of 1983, Pub. L. No. 98-21, Section 103(a), 97 Stat. 71, Congress accordingly amended Section 418(g) to provide that "(n)o agreement under this section may be terminated, either in its entirety or with respect to any coverage group, on or after April 20, 1983." /4/ This amendment prevents a state from withdrawing its employees (or those of its political subdivisions) from the Social Security System even if a two-year termination notice had been filed prior to 1983 and was pending at the time that Section 418 was modified. /5/ 3. At the time of the 1983 amendment to Section 418(g), appellee State of California -- which has had a Section 418 agreement with the Secretary since 1951 (App., infra, 4a) /6/ -- had filed termination notices on behalf of approximately 70 of its political subdivisions with some 34,000 employees. /7/ Those employees were to have been withdrawn from the System at the end of the year. The 1983 amendment, however, prevented the notices from taking effect. In response to this development, these suits were brought in the United States District Court for the Eastern District of California to challenge the validity of amended Section 418(g). The first action was filed by one set of appellees -- several public agencies of the State of California, their employees, local taxpayers, and a group called "Public Agencies Opposed to Social Security Entrapment" (POSSE) -- who contended, in part, that the amendment deprived them of their contract rights without according them due process or just compensation. App., infra, 9a-10a. The second suit was filed by the State of California, which claimed that Section 418(g) infringed the State's contract and violated the Tenth Amendment by impairing the State's ability to structure its relationships with its employees. App., infra, 10a-11a. Both sets of appellees sought injunctive relief. The district court ruled for appellees. /8/ In the court's view, Section 418 agreements are contracts and thus "property" within the meaning of the Fifth Amendment's Takings Clause. App., infra, 20a, 30a-31a. Similarly, the court found that the ability to terminate an agreement on two years' notice, which appeared in the original version of Section 418(g) and was echoed in California's Section 418 agreement (see App., infra, 4a-5a), "is a contractual right running in favor of the public agencies." Id. at 21a. While the court assumed that Congress would have the authority to divest the State of its right to withdraw "if the right existed solely by virtue of the statute," here the ability to withdraw from the Social Security System "draws its independent existence from the plain terms of the contract." The court therefore held that "Congress is simply not free to deprive the State of its contractual right without just compensation." App., infra, 31a-32a (footnotes omitted). Although the district court thus found that the 1983 amendment to Section 418(g) effected a taking of property, it concluded that it was not free to order payment of just compensation or to refer the case to the Claims Court for the award of that relief. The court reasoned that the purpose of the 1983 amendment was to "ensure an adequate financial basis for (the Social Security) system by requiring the states and their public agencies to contribute to the system," so that "requir(ing) the United States to pay just compensation by making the contribution for the public agencies is simply and clearly contrary to the will of Congress." App., infra, 34a. The court therefore declared the amendment void, and ordered the Secretary to "accept the notifications of withdrawal properly tendered to her." Id. at 35a. THE QUESTION IS SUBSTANTIAL The district court has invalidated a central portion of a legislative package that was designed to "assure the solvency of the Social Security Trust Funds" while correcting a significant "inequit(y)" in the Social Security System. H.R. Rep. 98-25, supra, at 1, 18. The importance of its decision is manifest. It will have an immediate effect on the 227,000 state and local government employees whose employers attempted to withdraw from the System as of 1984; if their coverage is terminated, a great many of these employees will be left with inadequate pension and insurance guarantees, while others -- whose rights in the System already have vested -- will obtain windfall payments. Similarly, the decision may affect the pension rights of more than 9 million other state and local government employees, whose participation in Social Security (under the district court's ruling) may be terminated upon two years' notice at the election of their employers. And the financial impact on the System of the district court's decision is immense: if withdrawals are permitted to continue at their current pace, the Social Security trust funds will lose between $500 million and $1 billion annually (H.R. Comm. Print 97-34, at 13-14), with an aggregate loss of well over $3 billion for the 1983-1989 period. S. Rep. 98-23, 98th Cong., 1st Sess. 154 (1983). Because the decision below misreads Section 418 and misapplies the law of "takings," plenary review by this Court plainly is warranted. /9/ 1. The district court grounded its holding on the assumption that Section 418 agreements represent run-of-the-mill contractual relationships between the state and federal governments, with each side holding vested property rights. That assumption, however, fundamentally misunderstands the nature of Section 418 and of the agreements consummated under its authority. Section 418 agreements do not involve arms-length negotiation with each side attempting to obtain the "benefit of the bargain"; instead, Congress created the agreement mechanism simply as a convenient method of making the benefits of enrollment in the Social Security System available to state and local government employees. See S. Rep. 1669, 81st Cong., 2d Sess. (1950). Section 418 thus constitutes a social welfare program essentially universal in its application, rather than "a contractual arrangement." National Railroad Passenger Corp. v. Atchison, T. & S.F. Ry., No. 83-1492 (Mar. 18 1985), slip op. 14. And when Congress establishes such a legislative program, "the presumption is that '(it) is not intended to create private contractual or vested rights but merely declares a policy to be pursued until the legislature shall ordain otherwise.'" Ibid. (quoting Dodge v. Board of Education 302 U.S. 74, 79 (1937)). See Rector of Christ Church v. County of Philadelphia, 65 U.S. (24 How.) 300, 302 (1861). "(L)est there by any doubt in this case about Congress' will" (National Railroad Passenger Corp., slip op.16), statute from the outset expressly has reserved to Congress "(t)he right to alter, amend, or repeal any provision of (the Act)." 42 U.S.C. 1304. For over a century, the Court has "recognized the effect of these few simple words" (National Railroad Passenger Corp., slip op. 16 n.22): "through the language of reservation 'Congress not only retains, but has given special notice of its intention to retain, full and complete power to make such alterations and amendments * * * as come within the just scope of legislative power.'" Ibid. (quoting the Sinking-Fund Cases, 99 U.S. 700, 720 (1879)). Legislation containing such a provision hardly can give rise to static property interests. It is true, of course, that the Section 418 program makes use of written agreements, a consideration that the district court evidently found determinative (see App., infra 31a-32a). But there is no talismanic significance to the existence of a separate writing signed by a representative of the federal government. Congress provided that the states could join the Social Security System by means of individual agreements in an attempt to "premit() (them) to play a continued role" (FERC v. Mississippi, 456 U.S. 742, 765 n.29 (1982)) in the pension field; states may enroll certain coverage groups so as to preserve their existing pension systems, and may include in their agreements any provisions that are not inconsistent with the Act. See H.R. Comm. Print 97-34, at 20; S. Rep. 1669, supra. Congress reasoned that this approach would "extend coverage as quickly and with as little difficulty as possible to those employees who needed it most." H.R. Rep. 98-25, supra, at 19. It would turn this aim on its head, however -- and ultimately would disserve state interests -- to conclude that attempts to accommodate the states in federal regulatory programs give rise to contractual relationship that make changes in those programs impermissible. In any event, Section 418 agreements have none of the indicia of typical contracts. Their purpose is not a parochial one related to the self-interest of the parties; instead the agreements make available to individual workers the benefits of participation in a generally applicable social welfare program. The implementation of the agreements is subject to regulations promulgated by the Secretary. 42 U.S.C. 418(i). And the Act makes provision for administrative and judicial review of challenges to assessments and payments (42 U.S.C. 418(s) and (t)) in a manner that parellels those applicable to most federal programs. Section 418 agreements thus do not create obligations of the sort that have ever been found to be binding on the federal government. Compare, e.g., Perry v. United States, 294 U.S. 330 (1935); Lynch v. United States, 292 U.S. 571 (1934). 2. Even if Section 418 agreements are in some sense thought to be contracts, "Congress simply cannot be presumed to have nonchalantly shed (the) vitally important governmental power" to make basic modifications in the Social Security System through legislative change. National Railroad Passenger Corp., slip op. 17. The district court assumed that Congress has the power to modify Section 418 itself to eliminate the statutory termination provision, but held that the existence of written agreements freezes the relationship between the United States and state participants in the System (App., infra, 31a-32a). The court failed to recognize, however, that "sovereign power even when unexercised, is an enduring presence that governs all contracts subject to the sovereign's jurisdiction." Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 148 (1982). See New York Rapid Transit Corp. v. City of New York, 303 U.S. 573, 590-593 (1938). Thus, "(c)ontractual arrangements remain subject to subsequent legislation by the presiding soverign * * * unless (the sovereign's ability to enact such legislation) has been specifically surrendered in terms which admit of no other reasonable interpretation.'" Jicarilla Apache Tribe, 455 U.S. at 147-148 (quoting City of St. Louis v. United Rys., 210 U.S. 266,280 (1908)). That Congress did not bargain away its authority to modify essential elements of the Social Security System is plain. As noted above, the Act contains an express reservation of congressional authority to modify any of the Act's provisions. And this Court repeatedly has noted that the survival of the System requires flexibility and boldness in adjustment to ever-changing conditions * * *. It was doubtless out of an awareness of the need for such flexibility that Congress included in the original Act, and has since retained, a clause expressly reserving to it '(t)he right to alter, amend, or repeal any provision' of the Act. That provision makes explicit what is implicit in the institutional needs of the program. Flemming v. Nestor, 363 U.S. 603, 610-611 (1960) (citations omitted). Cf. United States Railroad Retirement Board v. Fritz, 449 U.S. 166, 174 (1980); Hisquierdo v. Hisquierdo, 439 U.S. 572, 575 (1979); Richardson v. Belcher, 404 U.S. 78, 80-81 (1971). It is hardly likely, then, that Congress would have "abandoned its sovereign power" (Jicarilla Apache Tribe, 455 U.S. at 146) to adjust, through legislation, the Social Security obligations of state and local employers. /10/ On close examination, in fact, it is evident that Section 418 agreements cannot impose an independent check on Congress's exercise of its sovereign authority. Neither Section 418 nor any individual agreements, for example, contain a provision permitting the United States to terminate the Social Security coverage of state and local government employees. See note 4, supra. Yet if Congress were to eliminate the System altogether, it is difficult to imagine that the federal government would be obligated by the existing agreements to continue paying Social Security benefits to those (and only to those) employees. To the contrary, this Court has remarked in similar circumstances that "a revenue bond might be secured by the State's promise to continue operating the facility in question; yet such a promise surely would not likely be construed to bind the State never to close the facility for health or safety reasons." United States Trust Co. v. New Jersey, 431 U.S. 1, 25 (1977). If Congress has not surrendered its ability to modify the System itself (as distinct from individual Section 418 agreements), the artificiality of the district court's approach becomes clear. Congress could have ignored the outstanding agreements and simply enacted new legislation bringing into the Social Security System those state and local government employees who already are covered. /11/ And if Congress retained the authority to take such action, it seems absurd to suggest that it surrendered the power to modify the existing Section 418 agreements to achieve the same result. Indeed, the legislative history indicates that Congress believed that it was, effectively, acting to expand the Social Security System when it amended Section 418(g). It made no reference to the modification of contractual rights; instead, it declared flatly that it was "prohibit(ing) State and local governments from terminating Social Security) coverage for their employees." H.R. Rep. 98-25, supra, at 19; S. Rep. 98-23, supra, at 5. That Congress found it most efficacious to take this step by making existing agreements nonterminable, rather than by, in terms, making participation in the System mandatory, cannot have independent constitutional significance. 3. a. The district court did more than misread Section 418; even granting the court's assumption that Section 418 agreements are contracts of a conventional sort, it erred by disregarding this Court's decisions on the validity of laws that affect pre-existing contractual obligations. /12/ As the Court explained last Term, when a contract is impaired by federal legislation, "the judicial scrutiny (is) quite minimal" (National Railroad Passenger Corp., slip op. 21): to make out a constitutional violation, the complaining party must demonstrate "'that the legislature has acted in an arbitrary and irrational way.'" Pension Benefit Guarantee Corp. v. R.A. Gray & Co., No. 83-245 (June 18, 1984), slip op. 10 (quoting Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15 (1976)). See National Railroad Passenger Corp., slip op. 21, 25; Norman v. Baltimore & O.R.R., 294 U.S. 240, 307-308 (1935). /13/ The challenged legislation at issue here is unquestionably rational: it helped secure the solvency of the Social Security System, while both protecting the interests of state and local government employees and preserving public confidence in the System as a whole. As Congress explained, the "voluntary coverage provision can be seen as an anomaly in the context of a basically mandatory system." H.R. Rep. 98-25, supra, at 19. And many employees covered by Section 418 agreements -- in particular, those whose coverage had not vested at the time of termination, who change jobs frequently, or who have low incomes -- faced the prospect of significant injury when their employers "file(d) for withdrawal in significant numbers * * * for reasons that appear to have more to do with reducing operating costs than providing basic, adequate protection for all employees." Ibid. See H.R. Comm. Print 97-34, at 12-13, 15, 16. Conversely, Congress found considerable resentment on the part of covered employees towards that group of state and local government workers who had been in the System long enough to remain eligible for full benefits even after they were withdrawn by their employers. H.R. Rep. 98-25, supra, at 19. In these circumstances, the legislative action was, as the Court has remarked in the Contracts Clause context, plainly "appropriate to the public purpose justifying its adoption." United States Trust Co., 431 U.S. at 22. b. This conclusion is enough to establish that the 1983 modification of Section 418(g) does not implicate the Fifth Amendment. It should be added, however, that the district court also disregarded a second distinct strand of "takings" law that establishes the constitutionality of the challenged legislation. As this Court repeatedly has noted, "government regulation -- by definition -- involves the adjustment of rights for the public good." Andrus v. Allard, 444 U.S. 51, 65 (1979). Thus, at least "where an owner possesses a full 'bundle' of property rights, the destruction of one 'strand' of the bundle is not a taking, because the aggregate must be viewed in its entirety." Id. at 65-66. See Penn Central Transportation Co. v. New York City, 438 U.S. 104, 124, 130, 136-138 (1978). /14/ Here, state employers retain the principal benefit that led them to enter into Section 418 agreements -- participation in the Social Security System. Nothing in the 1983 amendment changed the nature of the ongoing relationship between employers and the federal government. And while termination no longer is possible, it is far from clear that the ability to withdraw from the System was, at any point, a significant part of the attraction of the Section 418 program. To the contrary, the termination provision "receive(d) little attention in the legislative histories of (Social Security Act) amendnents since 1939, presumably because it was assumed that once covered, few groups would seek to terminate coverage." H.R. Comm. Print 97-34, at 3. Indeed, in the program's first 13 years only four local government entities, representing a total of 48 employees, withdrew from the System (id. at 26); only one state (Alaska) ever has withdrawn its own employees from the System (see id. at 1); and the states have made no attempt to withdraw the vast bulk of covered local government employees. In these circumstances, it is difficult to see how the amendment to Section 418(g) violated "the dictates of "'justice and fairness."'" Allard, 444 U.S. at 65 (citations omitted). CONCLUSION Probable jurisdiction should be noted. Respectfully submitted. CHARLES FRIED Acting Solicitor General RICHARD K. WILLARD Acting Assistant Attorney General KENNETH S. GELLER Deputy Solicitor General CHARLES A. ROTHFELD Assistant to the Solicitor General WILLIAM KANTER DOUGLAS LETTER Attorneys SEPTEMBER 1985 /1/ Only five states -- Alaska, Maine, Massachusetts, Nevada, and Ohio -- currently do not have their own employees enrolled in the Social Security System. See H.R. Rep. 98-25, 98th Cong., 1st Sess. Pt. 1, at 17 (1983). /2/ States alone were given the authority to file notices of withdrawal, although they could do so on behalf of local governments. /3/ Indeed, from 1950 through 1966, 23 public entities representing a total of only 319 employees withdrew from the System. H.R. Comm. Print 97-34, at 26. /4/ Prior to this amendment, the Secretary was authorized to terminate a Section 418 agreement upon finding that the state involved was unable to comply with the agreement or with the Act. 42 U.S.C. 418(g)(2). The statute also provided that an agreement, once terminated, could not be renewed. 42 U.S.C. 418(g)(3). Both of these provisions were eliminated by the 1983 amendment. /5/ Prior to 1983, employees of certain types of nonprofit organizations were excluded from the Social Security System unless the employing organization filed a certificate waiving its exemption from the System. 42 U.S.C. 410(a)(8)(B). Pursuant to such waivers, approximately 80% to 90% of the 5.3 million employees of nonprofit organizations participated in the System. H.R. Rep. 98-25, supra, at 15. Like state governments, however, nonprofit institutions were permitted to withdraw from the System upon two years' notice, and in 1983 termination notices were pending for 977 such organizations with 322,600 employees. In 1983, Congress accordingly made coverage for such employees mandatory by including them within the Act's basic definition of "employee." See Pub. L. No. 98-21, Section 102(a)(1), 97 Stat. 70. /6/ California in turn enacted legislation permitting it to enter into agreements with public agencies that wished to participate in the System; these entities were to contribute their share of contributions to the State, and were to be permitted to ask the State to withdraw them from the System upon two years' notice to the State. See App., infra, 5a. /7/ The State did not seek to withdraw its own 100,000 employees from the System. /8/ The court first ruled that it had jurisdiction, finding that all of the appellees had standing and that the Anti-Injunction Act, 26 U.S.C. 7421(a), was inapplicable. App. infra. 11a-24a, 26a-28a. /9/ Appellees asserted that the district court had jurisdiction under 28 U.S.C. 1331, 1346, 1361, 2201 and 2202; the court assumed jurisdiction over the claims of all appellees without identifying the jurisdictional basis. In our view, however, jurisdiction to challenge implementation of the Act must be provided by the Act itself. See 42 U.S.C. 405(h); Heckler v. Ringer, No. 82-1772 (May 14, 1984), slip op. 11-12; Weinberger v. Salfi, 422 U.S. 749, 762 (1975) Cf. Brown v. GSA, 425 U.S. 820 (1976). Here, that jurisdiction is provided as to California by 42 U.S.C. 418(t), which permits state participants in the System to challenge the Secretary's determinations about amounts owed. California claimed that it had a right to withdraw certain employees from the System, and thus to cease making contributions on their behalf; the Secretary denied that claim. The Secretary has treated this exchange as a final decision on a challenge to an assessment, and has determined not to insist on further recourse to administrative remedies because no facts are in dispute and "the relief that is sought is beyond (her) power to confer." Mathews v. Eldridge, 424 U.S. 319, 330 (1976). See Salfi, 422 U.S. at 766-767. While the district court thus had authority to decide the case, we note that none of the POSSE plaintiffs was properly before the court. The individuals could challenge a dispute about application of the Act only under 42 U.S.C. 405(g); because none of them filed a complaint or a request for the correction of records (see 42 U.S.C. 405(c)) with the Secretary, the court lacked jurisdiction to consider their challenge. See e.g., Eldridge, 424 U.S. at 329. And Section 418(t) provides a remedy only for states (which are the only Section 418 employers to deal with the Secretary), not for political subdivisions. See noted, supra. /10/ Even if the situation here is viewed in conventional contractual terms, agreements between the Secretary and the states must be read consistently with controlling provisions of law. United States v. Erika, Inc., 456 U.S. 201, 211 n.14 (1982). Those provisions, of course, include 42 U.S.C. 1304. Cf. Home Building & Loan Ass'n v. Blaisdell, 290 U.S. 398, 435 (1934) ("(n)ot only (is) existing law() read into contracts in order to fix obligations as between the parties, but the reservation of essential attributes of sovereign power is also read into (the) contract() as a postulate of the legal order"); United States Trust Co. v. New Jersey, 431 U.S. 1, 19-20 n.17 (1977)). /11/ Making continued participation in the System mandatory only for workers who already are covered plainly is rational. Expanding coverage to workers outside the system would mean displacing existing pension systems. H.R. Comm. Print 97-34, at 18. And the rights of employees currently making Social Security payments may have vested; permitting them to withdraw may entitle them to benefits even though they no longer would be paying a portion of their wages into the System. H.R. Rep. 98-25, supra, at 19. See generally FHA v. Darlington, Inc., 358 U.S. 84, 91 (1958) (citation omitted) ("'(f)ederal regulation of future action based upon rights previously acquired by the person regulated is not prohibited by the Constitution'"); Califano v. Webster, 430 U.S. 313, 321 (1977); United States v. Maryland Savings-Share Insurance Corp., 400 U.S. 4, 6 (1970). /12/ At the outset, it is far from clear that a "takings" analysis is appropriate in this case at all. The Constitution's guarantee of just compensation is "'designed 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.'" Penn Central Transportation Co. v. New York City, 438 U.S. 104, 123 (1978) (citation omitted). Here, however, Congress has acted to ensure that the vast bulk of the workforce (and the Nation's employers) obtain the same benefits and are subjected to the same obligations. /13/ In National Railroad Passenger Corp., the Court reserved the question whether "an allegation of a governmental breach of its own contract warrants application of a more rigorous standard." Slip op. 20. However the Court answers this question in other contexts, a more rigorous test plainly would be inappropriate in this case. The Court occasionally has suggested that the government should be held to a higher standard to maintain the credit of public debtors (see Perry v. United States, 294 U.S. 330, 346-347 (1935); Lynch v. United States, 292 U.S. 571, 580 (1934)) or when the government's actions are simple attempts to reduce its financial obligations. See United States Trust Co. v. New Jersey, 431 U.S. 1, 25 n.23, 26 & n.25 (1977). See generally National Railroad Passenger Corp., slip op. 20 n.24; Lynch, 292 U.S. at 580. Here, in contrast, the government is not attempting to terminate its obligations; to the contrary, it is attempting to include a large portion of the workforce in the national insurance system. /14/ While contract rights are a form of property that may be taken for a public purpose (see, e.g., United States Trust Co., 431 U.S. at 19) the Court generally has inquired only into the rationality of federal legislation impairing the value of contracts (see pages 16-17, supra), instead of applying the somewhat more elaborate test spelled out in Allard and Penn Central. It apparently has done so both to forestall the danger that parties will attempt to "remove their transactions from the reach of dominant constitutional power by making contracts about them" (Norman, 294 U.S. at 307-308 (1935)), and because legislation affecting more tangible property interests is more likely to "interfere() with distinct investment-backed expectations." Penn Central, 438 U.S. at 124.