United States v. Orleans, 425 U.S. 807 (1976)
U.S. Supreme CourtUnited States v. Orleans, 425 U.S. 807 (1976)
United States v. Orleans
Argued March 22, 1976
Decided June 1, 1976
425 U.S. 807
Under the Economic Opportunity Act of 1964 (EOA) the Federal Government, acting through an agency (at the relevant time herein the Office of Economic Opportunity (OEO)), furnishes financial assistance for community action programs undertaken by community action agencies. Such an agency is defined as a "State or political subdivision of a State . . . or a public or private nonprofit agency or organization which has been designated by a State or such a political subdivision" to plan and administer a community action program, consisting of "services and activities having a measurable and potentially major impact on causes of poverty in the community. . . ." The Warren-Trumbull Council is a community action agency operating as a nonprofit corporation under Ohio law, and was funded entirely by the OEO, but also received 20% of its support locally from "in-kind" services in compliance with EOA funding requirements. One of the Council's activities was a Neighborhood Opportunity Center, which sponsored recreational outings for children. While returning from one of the Center's outings in a private car for which the Council had made arrangements, a minor child was injured in a collision. The child and his father (respondents) brought suit in the District Court against the United States under the Federal Tort Claims Act (FTCA) alleging negligence on the part of agents of the United States in organizing and supervising the outing. The Government moved for summary judgment on the ground that the Council and Center were not "instrumentalities or agencies of the United States" within the purview of the FTCA. The District Court granted the motion, holding that the Council was a contractor with the OEO, not a corporation acting as a federal instrumentality, and that the Council's employees were not federal employees. The Court of Appeals reversed.
Held: The Council and the Center are not federal agencies or instrumentalities and their employees are not federal employees within the meaning of the FTCA. Pp. 425 U. S. 813-819.
(a) The FTCA, which is a limited waiver of sovereign immunity
applying to injuries caused by the negligent act of any Government employee while acting within the scope of his employment, but excluding from its coverage "any contractor with the United States," was never intended to reach employees or agents of all federally funded programs. The critical element in distinguishing an agency from a contractor is the Government's power "to control the detailed physical performance of the contractor," Logue v. United States, 412 U. S. 521, 412 U. S. 528. The question here is not whether the community action agency receives federal money and must comply with federal standards and regulations, but whether its daily operations are supervised by the Federal Government. Cf. Logue, supra; Maryland v. United States, 381 U. S. 41. Pp. 425 U. S. 813-815.
(b) Compliance with Government conditions and regulations to meet contract or grant goals does not convert a contractor to an agent of the Government. Pp. 425 U. S. 815-816.
(e) The EOA emphasizes that a community action agency (which like myriads of other activities is federally funded) is a local enterprise, not a federal enterprise whose "detailed physical performance" is subject to Government control. P. 425 U. S. 816.
(d) The legislative history relating to the community action programs manifests the congressional intent not to create new federal agencies, but to strengthen community capabilities of eliminating poverty at the local level. P. 425 U. S. 817.
(e) Local officials administer the programs. Though OEO regulations and guidelines must be observed, the OEO, none of whose employees may serve on a community action board, has no power to supervise the community action agency or its neighborhood program. Pp. 425 U. S. 817-819.
509 F.2d 197, reversed. BURGER, C.J., delivered the opinion for a unanimous Court.