finding that he was not a federal public official under 18 U.S.C. § 201(a).
This opinion sets forth the court's findings of fact
and conclusions of law.
Sometime prior to 1977, the City of Chicago became a prime
sponsor of a CETA-PSE (Public Service Employment) plan which was
approved by the Secretary of Labor. The statute provides for
federal grants to prime sponsors who submit CETA plans which are
approved by the Secretary of Labor. The approved CETA plan is the
plan of the prime sponsor; it is not the Secretary of Labor's
plan which is merely administered by the prime sponsor.
The eligibility requirements for persons who could participate
in any CETA-PSE plan are set forth in the statute and regulations
of the Secretary. 29 U.S.C. § 825(i). However, under CETA, the
City as prime sponsor had full responsibility for the eligibility
of those enrolled in the program. That responsibility could be
delegated by the City to a third party provided that the
Secretary of Labor approved the arrangement.*fn4
The City apparently did delegate the responsibility for
eligibility, at least with respect to Public Service Employment
jobs, to the IBES. This delegation must have been approved by the
Secretary of Labor at the time the City's CETA program plans were
approved under 29 U.S.C. § 814. Under Section 814, "The Secretary
shall, prior to approval of any plan, insure that the prime
sponsor has demonstrated a recognizable and proven method of
verifying eligibility of all participants." Section 813(a)(15) of
Title 29 specifically contemplates that the prime sponsor, in its
plan, could coordinate with local State employment security
agencies and delineate the specific responsibilities of each.
During 1977 the United States Department of Labor ("DOL")
conducted an investigation of the City's CETA-PSE program and
apparently found irregularities. In August, 1977, the City and
DOL entered into an agreement to establish a "procedure for
referring and selecting PSE participants for the City's CETA
program that will assure that CETA jobs are filled in accordance
with applicable federal statutes and regulations." (Government
The agreement indicated that IBES was already in place as the
agency delegated by the City to determine eligibility, but the
agreement provided specific rules binding on the City regarding
the determination of eligibility. The agreement also provided for
DOL monitoring to assure adherence to the agreement and all
requirements of CETA.
This agreement probably was voluntarily entered into by the
City in order to avoid possible termination of federal funding.
It is clear under the federal statute that the Secretary, upon
making certain findings, may revoke a prime sponsor's plan and
terminate financial assistance or withhold financial assistance.
29 U.S.C. § 816. However, the remedies provided in Section 816
are the only remedies available to the Secretary during the term
of the prime sponsor's plan.*fn5 It is important to note that
Section 816(b) specifically provides that nothing in that section
"shall be deemed to reduce the responsibility and full liability
of the prime sponsors. . . .
Nothing in the agreement changed the relative positions of the
parties: The City, the prime sponsor of its CETA-PSE plan,
had full responsibility for determining eligibility of those
enrolled in the program, and that responsibility had properly
been delegated to IBES. IBES was continuing to determine
eligibility as the City's delegee.*fn6 The Secretary of Labor had
only the power to remake the plan and terminate federal
assistance or withhold funds, but no statutory or contractual
authority to control the City in its administration of the City's
plan, while the plan was in effect. While the agreement between
the City and DOL provided for federal monitoring of the actions
of the City in determining eligibility, it did not give DOL or
the Secretary any greater authority over the City or the City's
CETA plan than that granted under the statute.
The defendant was a state employee working for IBES. He could
be hired, fired and supervised only by IBES personnel. His salary
was paid by the State. Although the State was reimbursed for that
salary under the Wagner-Peyser Act, the defendant could look only
to the State for his salary and not to the federal government.
Mr. Hoskins' sole job was to determine eligibility of applicants
for the City's CETA-PSE program and to refer eligible applicants
to PSE jobs.
The question under 18 U.S.C. § 201(a) is whether in performing
his job as a state employee Mr. Hoskins was acting "for or on
behalf of" the Secretary of Labor.*fn7 The Secretary of Labor's
function under CETA was limited to approving a prime sponsor's
plan, granting funds to the prime sponsor to implement its CETA
plan and, upon making certain findings, terminating the plan and
withholding funds. The determination of eligibility of persons
enrolled in the CETA plan was specifically the responsibility of
the prime sponsor. 29 U.S.C. § 825(i). None of the remedial
powers of the Secretary specified in 29 U.S.C. § 816 in any way
limited the responsibility of the prime sponsor. The City
delegated its responsibility to IBES and IBES performed under an
agreement with the City. Although eligibility standards are
federal standards set forth in the statute, the determination of
eligibility, which is what Mr. Hoskins was doing, was not a
federal function or responsibility.
The CETA plan was the City's plan — not the Secretary's plan.
The Secretary could not re-write the plan (after it had been
approved, while it was in effect) and he had no statutory
authority to force the City to administer the plan in any special
way. The Secretary had a big stick, namely the power to terminate
funding, and DOL certainly used that stick to get the City to
agree to certain procedural changes and safeguards in determining
eligibility during the term of the City's plan, but the agreement
did not alter the basic relationship between DOL, the City and
Mr. Hoskins was employed by and working for IBES, which in turn
was, by delegation, fulfilling the City's obligations to
determine eligibility. There was no federal function involved.
Therefore, Mr. Hoskins could not have been working for or on
behalf of the Secretary of DOL. At most he was acting for or on
behalf of the City in fulfilling the responsibilities of the City
(as delegated to IBES) to determine eligibility. Compare U.S. v.
Del Toro, 513 F.2d 656 (2d Cir.), cert. den. 423 U.S. 826, 96
S.Ct. 41, 46 L.Ed.2d 42
(1975), and U.S. v. Loschiavo, 531 F.2d 659 (2d Cir. 1976).*fn8
The government argues that the City in fact was an entity
acting for or on behalf of DOL, that IBES was something like a
subagent of DOL, and that Mr. Hoskins, an IBES, employee, was,
therefore, working for or on behalf of DOL. This argument is
based on 29 U.S.C. § 812, which provides that the Secretary of
Labor can act as if he were a prime sponsor in any area for which
no prime sponsor has been designed or where the Secretary of
Labor has terminated a local CETA program.*fn9
The government's argument is plainly erroneous. The Secretary's
power to act as a prime sponsor when there is no local prime
sponsor does not make every actual prime sponsor someone acting
for or on behalf of DOL. The City simply was not acting for or on
behalf of the Secretary, but for itself as the prime sponsor of
its own CETA plan.*fn10 Even the Secretary's remedial powers do not
limit the responsibilities of the prime sponsor for its CETA
plan. 29 U.S.C. § 816(b). Moreover, the City, as the prime
sponsor, had specific responsibility for eligibility of persons
enrolled in the CETA plan, which it could and did delegate to
IBES. 29 U.S.C. § 825(i). Thus, in performing his job at IBES,
Mr. Hoskins was acting for and on behalf of the City, not DOL.
We also note that the congressional purpose of the CETA
legislation was to be achieved "by establishing a flexible,
coordinated, and decentralized system of Federal, State and local
programs." 29 U.S.C. § 801. This congressional statement of
purpose refutes the government's position.*fn11
Accordingly, the court concludes that the defendant is not a
federal public official within the meaning of 18 U.S.C. § 201(a),
and, as previously held, he is acquitted on Counts 1, 3 and 5.