José A. Cabranes, Circuit Judge:

This case presents two questions. The first is whether the framework for evaluating proposed bargaining units set forth in Specialty Healthcare & Rehabilitation Center of Mobile, 357 N.L.R.B. 934 (2011), is unlawful. Under this framework, the National Labor Relations Board (the "Board") uses a two-step analysis to determine whether a union's proposed bargaining unit consists of employees who share a "community of interests" and does not arbitrarily exclude other employees. Several sister circuits recently approved this standard, but we have yet to opine on this question.1 The second question is whether the Board properly applied the Specialty Healthcare framework in its order at issue in this case.

We hold the Specialty Healthcare framework to be valid, as our sister circuits have, and to be consistent with this Court's precedent. We conclude, however, that the Board did not properly apply the Specialty Healthcare framework in its decision and order against Constellation Brands, U.S. Operations, Inc., d/b/a Woodbridge Winery ("Constellation"). In approving the petitioned-for collective bargaining unit, the Board did not analyze at step one of the Specialty Healthcare framework whether the excluded employees had meaningfully distinct interests from members of the petitioned-for unit in the context of collective bargaining that outweigh similarities with unit members.

Accordingly, we GRANT the petition for review, DENY the Board's cross-petition for enforcement, and REMAND the cause to the Board for further proceedings consistent with the record of this matter and this opinion.

BACKGROUND

Constellation owns and operates Woodbridge Winery in California, which employs about 100 managers and 200 production and maintenance employees. Its employees are divided into various departments. This case concerns the cellar operations department, which is organized into two subgroups: "outsider cellar" with 46 employees and "barrel" with 18 employees. The parties dispute whether the "outside cellar" employees form a group that is sufficiently distinct from the "barrel" employees (as well as from Constellation's other employees) that they may be treated separately for collective bargaining purposes under Section 9 of the National Labor Relations Act ("NLRA").2

The certification of a bargaining unit falls largely to the Board's Regional Directors ("RDs"), who are appointed by the General Counsel and approved by the Board, and to hearing officers in the regional offices, who report to the RDs.3 Parties seeking to determine whether a particular labor organization has majority support in a workplace submit a petition for an election to the Board's regional office.4 Where the parties do not agree on an appropriate bargaining unit, a hearing officer will conduct a representation hearing to "determine the unit appropriate for the purposes of collective bargaining, to investigate and provide for hearings, and determine whether a question of representation exists, and to direct an election or take a secret ballot ... and certify the results thereof."5 Based on the hearing officer's report, the RD will decide on the petition and, if warranted, direct an election and prescribe its procedures. Although parties have the right to appeal the RD's decision to a three-member panel of the Board, the Board's review is discretionary and granted only in limited circumstance.6 Following the Board's review, elections are held and the RD may certify the results.

On September 2, 2014, the Teamsters Local Union 601 (the "Union") filed a petition seeking to represent Constellation's outside cellar employees as a bargaining unit. Constellation objected, arguing that an appropriate unit should encompass all production and maintenance employees or, at a minimum, all cellar operations employees. Following a hearing, the RD decided in favor of the Union and directed that an election be held. In determining that the Union's proposed bargaining unit of outside cellar employees was appropriate, the RD applied the Specialty Healthcare standard. On February 26, 2015, a three-member panel of the Board (Chairman Pearce, Member Hirozawa, and Member McFerran) denied Constellation's request to review the RD's decision, stating that Constellation had "raise[d] no substantial issues warranting review." Special App. 4.

In the Board-ordered election, the outside cellar employees voted 31-13 to unionize and the RD certified the Union as the collective-bargaining representative of those employees. Following the usual procedure for contesting the validity of a union election, Constellation refused to bargain with the Union, which then filed an unfair-labor-practice charge.7 On July 29, 2015, a three-member Board panel granted the General Counsel's motion for summary judgment and concluded that Constellation had violated the NLRA by refusing to bargain.8 Constellation subsequently petitioned for review of that decision, and the Board filed a cross-petition for enforcement.

JURISDICTION

While both parties agree that we have jurisdiction, we nonetheless consider the issue independently.9 The Board had jurisdiction over the original petition under 29 U.S.C. § 160(a)-(c), which empowers the Board to prevent unfair labor practices.10 Since Constellation is a New York corporation and transacts business within this Circuit, we have jurisdiction over the petition for review and the cross-petition for enforcement under 29 U.S.C. § 160(f).11

DISCUSSION

A. The Legality of the Specialty Healthcare Framework

The threshold question presented is whether we, along with six of our sister circuits,12 should also adopt the Specialty Healthcare framework. "[W]e review the Board's legal conclusions to ensure that they have a reasonable basis in law."13

When considering a petition for a proposed bargaining unit, an RD has discretion to approve any appropriate unit, not just "the single most appropriate unit."14 To guide its discretion, the RD has traditionally asked whether the members of the proposed unit share a "community of interests distinct from their interests as employees of the whole institution."15 In Specialty Healthcare, the Board clarified this traditional approach by introducing a new, two-step analysis. "[I]n step one, the Board [i.e., the RD] performs a community-of-interest analysis to determine whether the proposed unit is appropriate; if the unit is found appropriate, in step two [the party opposing certification] must demonstrate that the excluded employees it wishes to include share an `overwhelming community of interest' with the included employees."16

While the RD's discretion in determining the appropriateness of a bargaining unit is broad, it is not unlimited. Section 9(c) of the NLRA explicitly states that "[i]n determining whether a unit is appropriate... the extent to which the employees have organized shall not be controlling."17 The Board has long disfavored fractured units that may arbitrarily exclude certain groups of employees or could invite "gerrymandering" of interests among employees.18 Today, it is well established under Board precedent that "the Board does not approve fractured units, i.e., combinations of employees that are too narrow in scope or that have no rational basis."19

Certain interested groups argue that the Specialty Healthcare test essentially creates a presumption in favor of "micro" unions, causing the undue proliferation of bargaining units that make it difficult for employers to settle labor disputes and that arbitrarily exclude certain employees.20 In addition to the increased costs to employers of administering multiple contracts and benefit plans or reconciling conflicting demands from separate units, "micro" unions may also, the interested groups argue, diminish the rights of employees.21 These groups argue that the proliferation of units can allow one bargaining unit to disrupt the operations of an enterprise with unique demands not shared by other employees. "Micro" unions can also make it more difficult for employees to access new opportunities across units and may diminish the overall power of labor by creating units so small that they lack influence.22 Outside groups also echo Constellation's objections that the Specialty Healthcare framework is a departure from decades of Board cases23 and inconsistent with the NLRA.24

In the present case, Constellation asserts two objections to the Specialty Healthcare test. First, it argues that this test impermissibly gives controlling weight to the extent to which employees have already been organized, thereby departing from past precedent of the Board and contravening the statutory language of the NLRA. Under the prior framework, Constellation argues, the RD had to determine whether the petitioned-for unit had interests "sufficiently distinct from" those of excluded employees as part of the "community of interest" analysis.25 Under Specialty Healthcare, in contrast, that determination of "sufficiently distinct interests" is postponed until step two, at which point the employer must show that excluded employees shared an "overwhelming community of interest" with the presumptively appropriate petitioned-for group.26 This heightened showing, Constellation argues, makes it nearly impossible for an employer to resist unions' efforts to gerrymander bargaining units.

This concern is misplaced. Step one of Specialty Healthcare expressly requires the RD to evaluate several factors relevant to "whether the interests of the group sought were sufficiently distinct from those of other employees to warrant the establishment of a separate unit."27 For instance, the Board must consider "[w]hether the employees are organized into a separate department; have distinct skills and training; have distinct job functions and perform distinct work ...; are functionally integrated with the Employer's other employees; ... have distinct terms and conditions of employment; and are separately supervised."28 Accordingly, it seems to us that Specialty Healthcare does not significantly redefine the showing required of a party seeking Board approval in establishing a bargaining unit. Nor does it contravene Section 9(c) of the NLRA by giving union organizers an inappropriate degree of control.

Constellation's second argument against adoption of the rule of Specialty Healthcare is that the Board failed to provide a reasoned explanation for the new standard.29 This argument is also unpersuasive. Step one of Specialty Healthcare adopts verbatim the "community of interest" test on which the Board has long relied.30 Step two is a novel formulation called the "overwhelming community of interest" test, but its substance is consistent with earlier Board precedents that imposed a heightened burden on a party who urges the Board to add employees to a unit that has otherwise been deemed appropriate. Moreover, the phrase "overwhelming community of interest" was taken from a decision of the United States Court of Appeals for the District of Columbia Circuit, which itself purported to summarize relevant Board precedents.31 One might question the desirability of the Board's approach. Yet it seems implausible to claim that a Board decision, announced in a 14-page opinion (exclusive of the dissent) that borrows heavily from Board and appellate precedent, is invalid because it failed to explain itself.

In sum, Constellation has failed to meet its burden of showing that the Specialty Healthcare framework is inconsistent with the NLRA or meaningfully departs from the Board's past precedents.

B. Did the Board Correctly Apply Specialty Healthcare?

We now turn to the application of the Specialty Healthcare framework in this case. In reviewing the Board's decision of unit appropriateness, we are mindful that our task is not to substitute our judgment for that of the Board.32 The Board is empowered to determine whether a unit is appropriate for the purposes of collective bargaining33 and "select from those possible arrangements in reaching its unit determination."34 Although the Board's determination that a bargaining unit is appropriate "will stand unless arbitrary and unreasonable,"35 we conclude that the RD misapplied the Specialty Healthcare framework at step one.

1. Step One: "Community of Interest"

Constellation argues that the Specialty Healthcare standard improperly rubber stamps a union's organizing efforts by presumptively approving the petitioned-for unit and creating too high a burden for the objecting party.36 We rejected that argument above precisely because Specialty Healthcare indeed requires the Board to consider, at step one, whether members of the proposed unit have an interest that is "separate and distinct" from all other employees.37 But merely reciting or repeating the standard cannot substitute for the analysis that Specialty Healthcare demands.

The RD (whose decision the Board declined to review) did not make the step-one determination required by Specialty Healthcare. Although he appropriately recited the community of interest standard, and declared that "employees in the petitioned-for unit share distinct characteristics," Special App. 34, the RD did not explain why those employees had interests "sufficiently distinct from those of other employees to warrant the establishment of a separate unit."38 Rather, the RD based his step-one determination on his finding "that the employees in that unit are a readily identifiable group, such that there is a rational basis for grouping them together in a bargaining unit."39 Special App. 32. Reciting the legal framework does not substitute for analysis of differences between unit-members and other employees, as required by Specialty Healthcare. Indeed, as one of our sister circuits has stated, the very purpose of step one is "to guard against arbitrary exclusions" that have no purchase in the context of collective bargaining.40

To be sure, the RD made a number of factual findings that tend to show that outside cellar employees had interests distinct from other employees. But he never explained the weight or relevance of those findings. For instance, the RD did not explain why some factual findings, which seemed to indicate the presence of distinct interests, e.g., "physically separate locations" or "separate front-line [and] immediate supervisors," should have outweighed other findings of similarities, e.g., similar "job functions and duties," evidence of "interchange" and "work[ing] together," and "identical skills and training requirements." Special App. 44 n.20. To the extent that the RD did provide such explanations, it did so only at step two, i.e., only to rebut a heightened showing that the excluded employees share an "overwhelming community of interest" with the presumptively appropriate petitioned-for unit. This misapplication of Specialty Healthcare requires us to deny the Board's petition for enforcement.41

Our sister circuits have accepted the Specialty Healthcare framework based on the understanding that it requires the Board to ensure, at step one, that employees are not inappropriately "excluded [from a bargaining unit] on the basis of meager differences."42 To properly apply this framework, the Board must analyze at step one the facts presented to: (a) identify shared interests among members of the petitioned-for unit, and (b) explain why excluded employees have meaningfully distinct interests in the context of collective bargaining that outweigh similarities with unit members.43 Merely recording similarities or differences between employees does not substitute for an explanation of how and why these collective-bargaining interests are relevant and support the conclusion. Explaining why the excluded employees have distinct interests in the context of collective bargaining is necessary to avoid arbitrary lines of demarcation and to avoid making step one of the Specialty Healthcare framework a mere rubber stamp.

While the RD has discretion to approve of "an appropriate unit, not the most appropriate unit,"44 he may exercise that discretion only after finding, upon analysis, that a petitioner has met its "prima facie" burden under the Specialty Healthcare framework. The RD failed to do so here. Nor did the Board exercise its power of review to ensure that the new framework was being appropriately applied. Without this critical first step of the Specialty Healthcare framework, the burden would be exclusively on the employer to prove the absence of distinctions. Such a burden is inconsistent with the NLRA and the Board's past precedent.

2. Step Two: "Overwhelming Community of Interests"

Constellation argues that it should also prevail at step two of the Specialty Healthcare framework, known as the "overwhelming community of interests" test, which requires that Constellation show "that there is no legitimate basis upon which to exclude" barrel employees from that unit.45 We need not reach this question. Since the Board failed to perform the requisite analysis at step one, its decision and order dated July 29, 2015 against Constellation cannot stand.

CONCLUSION

To summarize, we hold as follows:

Accordingly, we GRANT the petition for review, DENY the Board's cross-petition for enforcement, and REMAND the cause to the Board for further proceedings consistent with the record of this matter and this opinion.