Woodbury County Community Action Agency

National Labor Relations Board - Board Decisions

Aug 24, 1990

299 N.L.R.B. 554 (N.L.R.B. 1990)

554 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Woodbury County Community Action Agency and
Lodge 1426, International Association of Ma-
chinists and Aerospace Workers, AFL-CIO.
Case 18-RC-13528
August 24, 1990
DECISION ON REVIEW AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS
CRACRAFT AND DEVANEY
On November 5, 1986, the Regional Director for
Region 18 issued a Supplemental Decision in the
above-entitled proceeding in which he asserted ju-
risdiction over the Employer. In accordance with
Section 102.67 of the Board's Rules and Regula-
tions, the Employer filed a timely request for
review of the Regional Director's Supplemental
Decision. By telegraphic order dated March 27,
1987, the Board granted the Employer's request for
review.
The Board considered the entire record, includ-
ing the Employer's brief on review, and makes the
following findings.
The Employer is incorporated in the State of
Iowa as a private nonprofit "community action
agency" serving Woodbury County, Iowa. Its arti-
cles of incorporation grant it unlimited power to
engage in "all lawful business" that an Iowa non-
profit corporation may perform. Accordingly, the
Employer receives Federal, state, and local funds
through various grants and contracts to administer
educational, nutritional, employment, neighborhood
service, and housing and energy conservation pro-
grams.1
Federal law 2 requires that the Employer have a
board of directors, and that:
(A) one-third of the members of the board
are elected public officials, currently holding
office, or their representatives, except that if
the number of elected officials reasonably
available and willing to serve is less than one-
third of the membership of the board, member-
ship on the board of appointive public officials
may be counted in meeting such one-third re-
quirement; (B) at least one-third of the members
are persons chosen in accordance with democratic
selection procedures adequate to assure that they
are representative of the poor in the area served;
and (C) the remainder of the members are offi-
cials or members of business, industry, labor,
religious, welfare, education, or other major
1 The Employer's most recent annual report reveals that 98.6 percent
of its revenue is derived from governmental sources. Private cash contn-
butions and in-kind donations of materials account for the remainder.
The Community Services Block Grant Act, 42 U.S.C. § 9901,
§ 9904(c)(3) (Aug 13, 1981)
groups and interests in the community [empha-
sis added].
The State of Iowa has incorporated this tripartite
structure into its code, 3 providing, inter alia, that:
b. One-third [of the members of the board of
directors] shall be persons who according to
the federal guidelines have income at or below
poverty level and are elected by such persons,
or are representatives elected by such persons
[emphasis added].
Section 2(2) of the Act provides that the term
"employer" shall not include "any State or political
subdivision thereof. . . ." To date, the Board has
limited the "political subdivision" exemption to en-
tities "that are either (1) created directly by the
state, so as to constitute departments or administra-
tive arms of the government, or (2) administered
by individuals who are responsible to public offi-
cials or to the general electorate." NLRB v. Natu-
ral Gas Utility District of Hawkins County (Hawkins
County), 402 U.S. 600, 604-605 (1971).4
Applying the above-described analysis to deter-
mine whether the Employer here is a political sub-
division under Section 2(2) of the Act, we note ini-
tially that it is undisputed that the Employer, as a
private nonprofit agency, was not created directly
by any Government entity nor was any special leg-
islative act or public official required to create it.
Rather, the Employer was incorporated by five
private individuals under State of Iowa law. Thus,
it is clear that the first alternative of the Hawkins
County test was not satisfied.
Turning to the second alternative of the Hawkins
County test, as noted above, one-third of the board
members are "elected public officials" having
"direct personal accountability" to public officials
or to the general public and they satisfy the second
prong of the Hawkins County test insofar as they
are responsible by law3 to public officials or to the
'Iowa Code § 7A 22 [Sec. 601K 83 m Senate file 2175, p. 270]; Iowa
Admin. Code ch. 22, § 22.4(3) (1986)
4 See also Economic Security Corp., 299 NLRB No. 68 (Aug. 24, 1990).
3 Accountability "by choice rather than law" is an insufficient basis on
which to predicate political subdivision status See Jefferson County Com-
munity Center it NLRB, 732 F.2d 122 (10th Cir. 1984), and discussion in
Economic Security, 299 NLRB No 68, slip op. at 5-7.
We are not persuaded by our dissenting colleague's personal view that
the two-part test for political subdivisions set forth in Hawkins County is
only a threshold step in determining whether an entity is exempt as a po-
litical subdivision from the Board's junsdichon. Contrary to our dissent-
ing colleague, we believe that almost 20 years of precedent compels us to
find that the two-prong Hawkins County test is indeed the test for politi-
cal subdivisions, and is not simply the starting point for determining enti-
tlement to the exemption. Our view is confirmed by the many cases in
which the Board has concluded that an entity is a political subdivision
under Hawkins County, without regard to the other factors our dissenting
colleague considers determinative. See, e.g , Detroit Institute of Arts, 271
NLRB 285 (1984) (art museum society, administered by director responsi-
Continued
299 NLRB No. 65
WOODBURY COUNTY COMMUNITY ACTION AGENCY

555
general electorate See, e g, Cape Girardeau Care
Center, 278 NLRB 1018, 1019-1020 (1986) Howev-
er, in order to satisfy the second alternative of the
Hawkins County test there must be a majority(' con-
trol of the board of directors by individuals who
are responsible by law to public officials or the
general electorate It is undisputed that one-third of
the board is composed of elected public officials
who are responsible to the general electorate and
one-third are community leaders who are not re-
sponsible to the general electorate or to public offi-
cials The issue therefore is whether the one-third
of the board required to be "elected" by persons
whose incomes are "at or below poverty level" are
"responsible to the general electorate "7 We find
that they are responsible to the general electorate8
and, accordingly, reverse the Regional Director
and dismiss the petition
In Economic Security Corp, supra, the Board held
that the Federal and state laws, by using "demo-
ble to municipal public officials, is political subdivision), Community
Health & Home Care, 251 NLRB 509 (1980) (provider of comprehensive
public health nursing and homemaker services, governed by board of di-
rectors accountable to and appointed by towns' public officials, is politi-
cal subdivision), Northern Community Mental Health Center, 241 NLRB
323 (1979) (mental health service provider, governed by 14-member
board of directors of which 12 are county appointed, is political subdivi-
sion), Association of Hospitals of Santa Clara County, 228 NLRB 1014
(1977) (hospital formed under state law is political subdivision), Children's
Village Inc , 197 NLRB 1218 (1972) (school district, admnustered by
board of education whose members are responsible to State's board of re-
gents, is political subdivision)
Recently, the Sixth Circuit in Moir v Greater Cleveland Regional Tran-
sit Authority, 895 F 2d 266 (1990), found a regional transit authority, cre-
ated by the State and administered by a board of trustees whose members
are responsible to elected officials, to be a political subdivision under
both prongs of the Hawkins County test The court made this finding de-
spite the lack of evidence concerning the transit authority's power of
eminent domain or tax exempt status The court observed "Whus, our
analysis stops short of an application of the additional factors that the Su-
preme Court articulated in Hawkins County, 402 U S at 608-609" Id at
272 fn 11
Although we recognize that evidence concerning power of eminent
domain, power to levy taxes, public meetings, etc, provides additional
support for finding an entity to be a political subdivision, precedent con-
strains us to conclude that the two-prong test in Hawkins County is the
test for determining whether an entity is a political subdivision
Finally, our dissenting colleague points out that the Board in Commu-
nity Action Program, 251 NLRB 86 (1980), and Saratoga County Economic
Council, 249 NLRB 453 (1980), asserted junsdiction over community
action agencies despite their being administered by boards of directors
having the same tripartite composition as the Employer here Our col-
league apparently believes this precedent supports his dissent In neither
case, however, did the Board even consider, as we do here, whether the
employers were political subdivisions exempt from Board jurisdiction
Rather, the Board in both cases strictly confmed its analysis to whether
the employers met the test for control over labor relations set forth in
National Transportation Service, 240 NLRB 565 (1979) Moreover, to the
extent that facts relevant to political subdivision status were even dis-
cussed in Community Action Program and Saratoga County, that discussion
is consistent with our analysis in Economic Security, supra
a See Economic Security Corp, supra at fn 10
7 There is no evidence that the one-third elected by persons whose In-
comes are at or below the poverty level are responsible by law to public
officials
8 The Hawkins County phrase "general electorate" has been broadly
defined to encompass such limited groups of electors as those in Wood-
bury, Iowa See Economic Security Corp, supra at fn 12 and cases cited
therein
cratic selection procedures," envisioned an election
of the individuals representative of the poor The
holding was further reinforced by the employer's
elaborate election procedure
Here, the State of Iowa has mandated that
"democratic selection procedures" be interpreted
as requiring an election of the one-third of the
board of directors representing the poor 9 When
combined with the one-third "elected public offi-
cial" board members, it is clear that majority con-
trol of the Employer's board of directors is vested
in individuals responsible 1 ° by law to public offi-
cials or the general electorate
Accordingly, we find the entity here ,to be an
exempt political subdivision of the State of Iowa,
and we dismiss the petition
ORDER
The petition is dismissed
CHAIRMAN STEPHENS, dissenting
The Board granted the request for review in this
case to consider the difficult and important ques-
tion of whether the Woodbury County Community
Action Agency (the Employer)—a private non-
profit community service corporation established
for the purpose of administering at a local level an
array of federally subsidized poverty programs—
comes within the Act's Section 2(2) exemption for
a "political subdivision" of a State My colleagues
hold that the Employer is such an exempt entity
under the authority of NLRB v Natural Gas Utility
District of Hawkins County (Hawkins County), 402
U S 600 (1971), and they therefore order dismissal
of the representation petition To the contrary, I
believe that the Employer is subject to the Board's
jurisdiction, and that' the majority has stretched the
concept of political subdivision to the breaking
point
I differ with my colleagues on this issue for three
principal reasons First, I would read Hawkins
County as approving a test that often will require
more than my colleagues demand in order to show
that an employer comes within the exemption
° Like Economic Security Corp, the Employer here has developed an
elaborate election procedure Thus, art IV, sec 1 of the Employer's re-
vised bylaws incorporated the Iowa Code's requirement of an election
for "low-income" board members, and states that not less than one-third
of the board "shall be elected to the Board by the residents of the areas
of Woodbury County as designated by the Board" The revised bylaws
also contain requirements on publication, nomination, and other election
procedures
'° Responsibility to public officials or the general electorate does not
require that the directors be subject to removal from office by public of-
ficials or the general electorate in addition to being placed in office by
public officials or the general electorate See Economic Security, supra,
slip op at 12-14
556 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Second, I would construe the test's reference to
"individuals responsible to the general
electorate" differently from my colleagues in light
of Board and court precedent at the time the Haw-
kins County Court generally approved what it de-
scribed as the Board's political subdivision test
Moreover, I do not find that the law subsequent to
Hawkins County unequivocally establishes that the
structure of the Employer's board renders it a po-
litical subdivision under the "responsible to
the general electorate" test
Finally, I would take account of the fact that the
features of the Employer's board on which my col-
leagues rely to find a state political subdivision
have their source in Federal legislation—and it is,
moreover, Federal legislation that classifies non-
profit corporations such as the Employer as entities
distinct from state political subdivisions The 74th
Congress that enacted the Section 2(2) exemption
in 1935 could hardly have envisioned the kind of
hybrid local organizations that grew up decades
later in response to Federal antipoverty legislation,
and I see nothing in the meager indications of its
intent to suggest that it would regard the Board's
assertion of jurisdiction over the Employer as the
kind of impermissible intrusion into state sovereign-
ty that Section 2(2) was enacted to prevent
I THE HAWKINS COUNTY TEST
In Hawkins County, supra, the Supreme Court
considered the Board's construction and applica-
tion of the Section 2(2) exemption to a utility dis-
trict organized under state law for the distribution
of natural gas to customers in a particular geo-
graphical area Noting the absence of a statutory
definition of "political subdivision" or much in the
way of legislative history,' the Court did not hold
that any particular gloss on the Section 2(2) lan-
guage was mandated by Congress Rather, it ac-
cepted as reasonable what it took to be the Board's
1 As the Court noted, all that the legislative history indicated was that
Congress Included the exemption in order "to except from Board cogni-
zance the labor relations of federal, state, and municipal governments,
since governmental employees did not usually enjoy the right to strike"
402 U S at 604 As the Sixth Circuit later observed, the rationale for the
exemption must have "Its ultimate basis in Tenth Amendment consider-
ations of state sovereignty and the Eleventh Amendment grant of judicial
immunity to the states" Cresthne Memorial Hospital Assn v NLRB, 668
F 2d 243, 246 fn 1 (1982) Accord Crilly v Southeastern Pennsylvania
Transportation Authority, 529 F 2d 1355, 1360 (3d Or 1976)
One interesting fact, not widely noted, is that Senator Wagner's origi-
nal bill, introduced in 1934 as S 2926, would have excluded from cover-
age "any State, municipal corporation, or other governmental Instrumen-
tality" S 2926, Sec 3(2), 73d Cong , 2d Sets (1934), reprinted in I Legis-
lative History of the National Labor Relations Act, 1935 at 2 (1985) Re-
introduced in 1935 as S 1958 (and eventually enacted as the Wagner
Act), this portion of the bill was modified to read "any State or political
subdivision thereof" S 1958, Sec 2(2), 74th Cong , 1st Sets (1935), re-
pnnted in I Leg Hist 1296 This change was not accompanied by any
explanation See, e g, Memorandum comparing S 2926 and S 1958, at 2,
reprinted at I Leg Hist 1320
own exemption criteria and then held that the
Board's assertion of jurisdiction over the utility dis-
tnct could not be sustained under that test 2
In describing what has come to be known as the
Hawkins County test, the Court quoted from the
Board's brief in the case, stating that "the Board
'has limited the exemption for political subdi-
visions to entities that are either (1) created direct-
ly by the state, so as to constitute departments or
administrative arms of the government, or (2) ad-
ministered by individuals who are responsible to
public officials or to the general electorate " 402
U S at 604-605 3 Taken literally, the "either
or" phrasmg would seem to suggest a disjunctive
test, under which satisfaction of just one or the
other of the prongs of the test will entitle an em-
ployer to the exemption But such an interpretation
overlooks the first part of the quoted statement
"the Board has limited the exemption
(emphasis added) Reading the Board's own sen-
tence as a whole, I view it as merely explaining
that any entity not coming within one of the two
parts of the formulation will not qualify for the ex-
emption There is no necessary implication that
qualifying under just the second prong—being re-
sponsible to state officials and the general elector-
ate—will always be sufficient to prove entitlement
to the exemption 4 Such a view is fully warranted,
2 It would appear, therefore, that the Board can, if It wishes, alter its
test, so long as the new test reflects "a defensible construction of the stat-
ute" NLRB v Iron Workers Local 103, 434 US 335, 350, 351 (1978) See,
e g, John Deklewa & Sons, 282 NLRB 1375 (1987), enfd sub nom Iron
Workers Local 3 v NLRB, 843 F 2d 770 (3d Cir 1988) Thus I respect-
fully disagree with my colleagues' belief that 20 years of precedent "com-
pels" them to avoid taking a fresh look at Hawkins County
3 In fact, the phrase, "administered by individuals who are responsible
to the general electorate" was the brief writer's paraphrase, not
actual language taken from any previous Board case In the briefs cited
cases involving persons who obtained their positions through elections
rather than by appointment, the Board had spoken of "publicly elected
officials" (Randolph Electric Membership Corp, 145 NLRB 158, 161
(1963)), or commissioners "elected by the qualified voters of the dis-
trict" (Oxnard Harbor District, 34 NLRB 1285, 1289 (1941), and quoted in
Lewiston Orchards Irrigation District, 186 NLRB 827, 828 (1970)) The
other cases cited by the brief were the source of other parts of the formu-
lation Mobile Steamship Assn , 8 NLRB 1297, 1305 (1938) ("created by
the State of Alabama as an agency through which the State" could oper-
ate harbors and seaports), New Jersey Turnpike Authority, 33 LRRM 1528
(1954) (authority's members appointed by the governor), New Bedford
Steamship Authority, 127 NLRB 1322 (1960) (same) In FayettewIle-Lincoln
County Electric System, 183 NLRB 101 (1970), the members of the gov-
erning board were not state appointees but rather were appointed by the
mayor subject to the approval of local alderman The Board found, on
the basis of all the factors, that this entity was "created directly by the
State with no corporate identity apart from the City of Fayetteville" Id
at 102
4 I am speaking here only of the second prong, because I think It un-
likely that we would ever require additional evidence in the case of enti-
ties created by a state as one of its own "departments" or "administrative
arms" Thus, for example, I in no way quarrel with the reasoning of Assn
of Hospitals of Santa Clara County, 228 NLRB 1014 (1977), that a hospital
was exempt under Sec 2(2) because It was a municipal hospital directly
created by the State as a tax-supported political subdivision, or with that
of Children's Village, Inc , 197 NLRB 1218, 1220 (1972), in which the
Continued
WOODBURY COUNTY COMMUNITY ACTION AGENCY

557
I submit, by a careful reading of the entire opinion
of the Court 5 First, the Court's only unequivocal
endorsement of a controllmg principle of law with
respect to Section 2(2) referred to the following
statement quoted from NLRB v Randolph Electric
Membership Corp, 343 F 2d 60, 63 (4th Cir 1965)
[I]t is clear that state law is not controlling
and that it is to the actual operations and char-
acteristics of [the employing entity] that we
must look in demdmg whether there is suffi-
cient support for the Board's conclusion that
they are not 'political subdivisions' within the
meaning of the National Labor Relations Act"
402 U S at 604 (emphasis added) Taking this more
comprehensive perspective enabled the Supreme
Court expressly to avoid having to "decide wheth-
er 'the actual operations and characteristics' of an
entity must necessarily feature one or the other of the
Board's limitations to qualify an entity for the ex-
emption " 402 U S at 605 (emphasis added)
In fact, the remainder of the opinion manifests the
Court's understanding that the two-part test is only
the starting point for determining entitlement to the'
exemption
After setting out the two-part formulation, the
Court declared
[The] respondent is administered by a Board of
Commissioners appointed by an elected county
Board found that the Sec 2(2) exemption encompassed a school board
that supervised the local public schools under the general direction of the
state commissioner of education, since both prongs of the Hawkins
County test were met The court of appeals' opinion in Moir v Greater
Cleveland Regional Transit Authority, 895 F 2d 266 (6th Or 1990), on
which my colleagues rely, is also a case m which both prongs of the test
were held to be satisfied
5 That the element of public accountability should not be a singular de-
terminant, divorced from the nature of putative political subdivision (and
the powers it exercises) also finds some support, albeit nonbinding (see fn
14 mfra), in other contexts For example, even Justice Stewart, who dis-
sented in Hawkins County, linked the two elements in analyzing the
nature of a municipal corporation, whose political subdivision status gen-
erally is undisputed
"Municipal corporations are instrumentalities of the State for the con-
venient administration of government within their " They have
only such powers as are delegated them by the State of which they are a
subdivision, and when they act they exercise the State's sovereign power
City governments are not unaccountable to the public but are subject to
direct popular control through their own electorates and through the
state legislature
Lafayette v Louisiana Power & Light Co, 435 US 389, 428, 429-430
(1978) (dissenting on Issue of whether municipal corporations and politi-
cal subdivisions are entitled to share a State's immunity from the Federal
antitrust laws) The notion that a political subdivision exercises some at-
tnbutes of sovereignty delegated from the State was likewise expressed in
National League of Cities v Usmy, 426 U S 833, 855 fn 20 (1976) ("politi-
cal subdivision" under the Fair Labor Standards Act implies a local gov-
ernmental unit that denves its authonty and power from a State), over-
ruled on other grounds, Garcia v San Antonio Metro Transit Authority,
469 U S 528 (1985), and in Commissioner of Internal Revenue v Sham-
berg's Estate, 144 F 2d 998 (2d Cir 1944) (exempt "political subdivision"
under the Internal Revenue Code is keyed to the extent to which the
entity exercises sovereign attnbutes, including police powers and the
powers of taxation and eminent domain)
judge, and subject to removal proceedings at
the instance of the Governor, the county pros-
ecutor, or private citizens Therefore, in the
light of other "actual operations and characteris-
tics" under that administration, the Board's
holding that respondent "exists as an essential-
ly private venture, with insufficient identity
with or relationship to the State of Tennes-
see," 167 NLRB at 691, has no "warrant in the
record" and "no reasonable basis in law"
402 U S at 605 (emphasis added) The Court then
proceeded to list "operations and characteristics,"
in addition to the bases for the commissioners' ap-
pomtment and removal, that justified finding the
district was exempt These included a grant by the
state legislature of "all the powers necessary
for the accomplishment of the [utility district's]
purpose capable of being delegated by the leg-
islature", grant of "the power of eminent domain
which the District may exercise even against other
governmental entities", a requirement that the dis-
trict's records be open for public inspection, a re-
quirement that hearings be granted on rate protests,
with published "written findings as to the reason-
ableness of rates", and a grant of subpoena power
to the commissioners for their investigations Id at
606-608 6
With one exception, 7 court cases decided after
Hawkins County reflect an understanding that the
Court-approved test required something more than
a mere fmdmg that one of the parts of the two-part
formulation is satisfied Thus, in NLRB v Natchez
Trace Electrical Power, 476 F 2d 1042 (5th Cir
1973), enfg 193 NLRB 1098 (1971), the court of
appeals, usmg "Hawkins County as our guide,"
upheld the Board's finding that a nonprofit electric
power cooperative orgamzed under the Mississippi
Electric Power Association Act was not an exempt
entity under Section 2(2) Id at 1044 In reaching
this conclusion, the Fifth Circuit agreed with the
Board that the Supreme Court had considered a
"variety of factors," and the court noted the ab-
sence of many of those factors in the case before it
Id, 193 NLRB at 1098-1099 Thus, for example,
although the employer had eminent domain
Board cases decided prior to the Supreme Court's opinion in Hawkins
County also considered more factors than simply the way in which mem-
bers of the employer's governing board were selected See cases cited at
fn 3, supra
In NLRB v Lewiston Orchards Irrigation District, 469 F 2d 698 (9th
Or 1972), the court of appeals, in light of the Supreme Court's decision
in Hawkins County, overturned the Board's finding that the employer was
not a Sec 2(2) exempt entity notwithstanding the absence of many of the
factors relied on by the Supreme Court But the court's opinion consists
only of the statement of its conclusion that the respondent employer was
entitled to the exemption under the Hawkins County test There is no in-
dication of the court's rationale
558 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
powers, it could not, unlike the utility district in
Hawkins County, exercise them against other public
entities, its revenues could be taxed, and there was
no requirement that it maintain open records or
issue written findings in response to rate protests
476 F 2d at 1045-1046 It is true that, in some
Board cases decided subsequent to the Supreme
Court's opinion in Hawkins County, the Board has
found entitlement to the exemption under the
second prong, apparently without relying on facts
other than those going to the composition of the
employer's director or board of directors, but in
those cases the entities have been controlled by ap-
pointees of political officials rather than by persons
elected by some subgroup in the community 8 By
contrast, in the two post-Hawkins County Board
cases on which the panel in Economic Security
Corp, 299 NLRB No 68 (Aug 24, 1990), and my
colleagues in this case rely to find entitlement to
the exemption on the basis of proof that the board
members in question are "responsible to the general
electorate," the Board noted, inter aim, that the
employers had powers of eminent domain, were
exempt from state taxes but had their own powers
to assess taxes, and were required by law to have
open meetings and records 9
In sum, the Employer in this case cannot be
found exempt under Section 2(2) simply on the
ground that it comes within the second prong of
what I would call the Hawkins County threshold
test Further, I would not find that the additional
factors cited by the Employer—its exemption from
certain state taxes and its recognition as a tax-
exempt organization by the Internal Revenue Serv-
ice, the fact that its annual audit (performed by a
private certified accountant hired by its board) is
submitted to certain state agencies, the large pro-
portion of its revenue coming from Government
sources, and the existence of certain Government
regulations placing some restraints on expenditures
of those funds—are sufficient under Board prece-
dent to tip the balance in favor of the exemption 10
8 Thus, in Detroit Institute of Arts, 271 NLRB 285 (1984), the exemp-
tion was granted to an employer with a director who served at the pleas-
ure of the mayor and could be removed by him and whose salary was
partly paid by the city, in Community Health & Home Care, 251 NLRB
509 (1980), the employer, which oversaw certain public health nursing
and homemaker services for a 10-town area, was directed by a board
consisting mainly of the appointees of the selectmen of the different
towns, and in Northern Community Mental Health Center, 241 NLRB 323
(1979), the employer was governed by a board that consisted principally
of the appointees of the boards of county supervisors (and in many cases
those county boards simply appointed one of the supervisors to be the
county's representative)
Salt River Project, 231 NLRB 11 (1977), Electrical District Number
Two, 224 NLRB 904 (1976)
10 Most of the funds and some of the regulations to which the Employ-
er refers are Federal As explained in sec III, below, I do not accept the
view that Federal requirements can convert a nonprofit community cor-
poration into a state politcial subdivision simply because those require-
II SIGNIFICANCE OF "RESPONSIBLE TO THE
GENERAL ELECTORATE"
Even were I to agree, contrary to the views
stated in section I above, that an employer comes
within the Section 2(2) exemption simply by meet-
ing the second prong of the Hawkins County test, I
would not find that the employer here meets that
part of the test My colleagues conclude that a ma-
jority of the members of the board of directors
were "responsible [either] to public officials or the
general electorate," on the twofold theory that
one-third of the board consists of public officials
and another third were "responsible to the general
electorate" because they were elected by low-
income residents from board-designated areas of
Woodbury County, Iowa In my view, neither
Board nor court precedent unequivocally supports
the latter premise of their argument
First, it should be noted that the Supreme Court
has given no guidance on this, since the board in
Hawkins County consisted of individuals who were
found to be "responsible to public officials," i e,
they were appointed by an elected county judge
and "subject to removal proceedings at the in-
stance of the Governor, the county prosecutor, or
private citizens" Id at 605 Although the Court
noted that the governing Tennessee statute allowed
vacancies on such boards to be "filled by popular
election" in large counties, it had no occasion to
elaborate on the kinds of electorates encompassed
by this part of the test Similarly, although the
Board, both before and after Hawkins County, has
decided cases that either expressly or implicitly
presented this issue, there is no distinct pattern that
would permit us to cite any particular case or cases
as dispositive of the question whether the repre-
sentatives of the designated low-income voters in-
volved here are "responsible to the general elector-
ate"
The Board's decisions in Randolph Electric Mem-
bership Corp, 145 NLRB 158 (1963), enfd 343 F 2d
60 (4th Cir 1965), and Lewiston Orchards Irrigation
District, 186 NLRB 827 (1970), enf denied 469
ments are incorporated Into state law Further, although no one alleges
that the Employer is a Federal entity, I note that such Federal involve-
ment is certainly insufficient to render the Employer a Federal agency or
instrumentality for purposes of the Federal Tort Claims Act United
States v Orleans, 425 U S 807 (1976) (Involving community action
agency funded under the Economic Opportunity Act of 1964, 78 Stat
516, as amended, 81 Stat 690, which was the predecessor of the Commu-
nity Services Block Grant Act of 1981, 42 U S C 9901 et seq ) The Su-
preme Court in Orleans cited Hines v Cenla Community Action Communi-
ty, 474 F 2d 1052, 1058 (5th Cir 1973), which held that a community
service agency was a private employer, not a state or Federal one Cf
Hauth v Southeastern Tidewater Opportunity Project, 420 F Supp 171, 174
(E D Va 1976) (nonprofit community action agency not a municipal
corporation entitled to sovereign immunity defense in negligence action,
under state law)
WOODBURY COUNTY COMMUNITY ACTION AGENCY 559
F 2d 698 (9th Or 1972), indicate that, at the time
the Court decided Hawkins County, the Board
would not necessarily find the "general electorate"
part of the Section 2(2) test satisfied simply by a
showing that individuals who administered the em-
ployer in question were elected by some defined in-
sular class of voters Thus, neither the cooperative
members who elected the directors in Randolph
Electric nor the landowners of the irrigation district
who elected the directors in Lewiston were found
to qualify As the Board explained in Lewiston,
unlike the "qualified voters of the district" in
Oxnard Harbor District, 34 NLRB 1285 (1941),
who were voters in "a state-created district," the
irrigation distnct voters were "a special class of
voters, landowners," for whose benefit the district
existed 186 NLRB at 828 The Fourth Circuit ac-
cepted this analysis in Randolph Electric, 343 F 2d
at 64, and the Ninth Circuit evidently rejected it in
Lewiston 1 ' In NLRB v Natchez Trace Electrical
Power, supra, the Fifth Circuit stated its agreement
with the Board's position in the following terms
The [Mississippi statute] makes no provision
for [the employer's directors'] removal from
office for misfeasance or nonfeasance, and, in
spite of respondent's assertion to the contrary,
it is by no means settled that they are "public
officers" subject to removal for misconduct
under §4053 of the Mississippi Code [Footnote
omitted ] Thus unlike the Hawkins County
District, Natchez Trace is not administered by
individuals who are responsible to public offi-
cials or to the general electorate, instead its di-
rectors are elected by its members and appar-
ently are accountable only to them The gener-
al public exercises no control over them
476 F 2d at 1045 (footnote omitted)
It is true that later, in Salt River Project, 231
NLRB 11 (1977), and Electrical District Number
Two, 224 NLRB 904 (1976), in which the Board
found the employers to be Section 2(2) political
subdivisions, the Board appeared to overrule its de-
cisions in Lewiston and Natchez Trace on this issue,
but the state of the law after this was not entirely
clear Two Board Members in Electrical District
Number Two (i e, less than a majority of the full
Board) cited the Ninth Circuit's decision denying
enforcement of the Board's order in Lewiston 224
NLRB at 906 fn 7 The third panel member said
he was not relying on that decision The Board
also alluded to the fact that the electrical district
directors were subject to removal by the voters of
the district Id at 906 Yet in Salt River Project, the
" See fn 7, supra
Board noted that there was no evidence there of
provisions for removal, but nonetheless found Elec-
trical District Number Two controlling 231 NLRB
at 14
Finally, when the Board was later confronted in
two cases with community action agencies adminis-
tered by a board of directors having the same tri-
partite composition as the Employer in the present
case, it held, without discussing either Salt River
Project or Electrical District Number Two, that the
employer in each case was not exempt Community
Action Program of Oklahoma City, 251 NLRB 86
(1980), Saratoga County Economic Council, 249
NLRB 453 (1980) 12
In short, I would find that Board precedent
leaves us considerable latitude in deciding the
"general electorate" issue in this case, and in decid-
mg that question I would consider whether, given
the source and purposes of the mandate for low-
mcome representatives, their inclusion on the board
of directors implicates any of the state sovereignty
considerations underlying the Section 2(2) exemp-
tion
III THE CONNECTION BETWEEN STATE LAW
AND THE REQUIREMENT FOR ELECTED
REPRESENTATIVES OF THE POOR
As noted at the outset, although the legislative
history of Section 2(2) is quite skimpy, it is general-
ly recognized that the exemption for political sub-
divisions of a State "has its ultimate basis in
Tenth Amendment considerations of state sover-
eignty and the Eleventh Amendment grant of judi-
cial immunity to the states" Cresthne Memorial
Hospital Assn v NLRB, 668 F 2d 243, 246 fn 1
(6th Cir 1982) Hence, it is reasonable, in determin-
ing whether an employer's directors "are responsi-
ble to the general electorate" so as to bring the em-
12 It is possible that the employers in the community action cases made
slightly different arguments than the employers in the two earlier cases,
and that the Board was therefore focused not on whether the Hawkins
County two-part test was met but on whether a conceded governmental
agency controlled the employees' wages and working conditions so sub-
stantially as to make It impossible for the employer to engage in meaning-
ful bargaining Community Action Program, supra, 251 NLRB at 87, Sara-
toga County, supra, 249 NLRB at 455 But a statement in Community
Action Program, at the end of a footnote describing the board of directors'
tripartite structure, suggests that the Board was at least aware of the po-
tential "responsible to a general electorate" argument The Board ob-
served
The Employer's executive director testified that this composition of
the board of directors is required by Federal statute and the Employ-
er's bylaws Because neither the Economic Opportunity Act of 1964
nor the regulations pursuant to that act requires participation by a
delegate of a community action agency, we must assume on the basis
of the record before us that this structure is Imposed by the Employ-
er's bylaws
As explained below, It seems clear to me that the tripartite structure
has always been mandated by the Federal statutes that provided the fund-
ing for these agencies, so I find this statement an Inadequate basis for
evading the "general electorate" issue
560 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
ployer within the Section 2(2) exemption, to con-
sider whether the demarcation of the electorate in
question is truly a creature of state law.
In this case the electorate consists of individuals
(1) whose incomes are at or below poverty levels
set by Federal Government guidelines and (2) who
reside in areas of Woodbury County that are desig-
nated by the Employer's own board. It is true that
the State of Iowa has incorporated into its own law
the requirement that one-third of the members of
the board of a private nonprofit community action
agency be "persons who according to the federal
guidelines have income at or below poverty level
and are elected by such persons or are representa-
tives elected by such persons."" It seems clear,
however, that this codification merely reflects the
State's compliance with Federal restrictions on the
use of funds provided to the States under the Com-
munity Services Block Grant Act, 42 U.S.C.
§ 9901 et seq., which was in effect when the peti-
tion in this case was filed.14
Under that statute, each participating state is re-
quired to use at least 90 percent of the funds it re-
ceives for certain designated purposes by making
grants for those purposes either to "political subdi-
visions of the State" or to nonprofit private com-
munity organizations that meet the tripartite struc-
ture requirements that my colleagues cite as their
basis for finding the Employer in this case to be a
political subdivision of a State. 42 U.S.C.
§ 9904(c)(2)(A)(ii), and (c)(2)(A)(3). Each State is
also required to "provide assurances" that any
community action agency receiving such grant
funds meets the requirements, inter alia, that one-
third of its board members be elected public offi-
cials and one-third be "persons chosen in accord-
ance with democratic selection procedures ade-
quate to assure that they are representative of
the poor in the area served." 42 U.S.C.
§ 9904(c)(2)(A)(3). I cannot accept the proposition
that Iowa's incorporation of this Federal require-
ment into state law erects a state sovereignty bar-
rier against a Federal agency's assertion of jurisdic-
tion over an otherwise private corporation. Neither
"Iowa Code § 7A.22 [Sec. 601K.83 in Senate file 2175, p. 2701; Iowa
Admin. Code ch 22, § 22.4(3) (1986)
" The requirement that one-third of a community action agency's
board be elected from among the poor population served by the - pro-
grams was carried over from earlier Federal antipoverty legislation. The
original statute was the Economic Opportunity Act of 1964, 78 Stat. 516
(1964), but the requirement that the board have a tripartite structure with
one-third consisting of democratically selected representatives of the poor
was first added 3 years later, in Pub. L. 90-222, Title I, Sec 104, 81 Stat.
693 (1967). Congress wished by this means to ensure that the programs
truly reflected the needs of the population served and encouraged their
participation. Economic Opportunity Commission of Nassau County v.
Weinberger, 524 F.2d 393, 403 (2d Cir. 1975). For a history of the ante-
cedents of the Block Grant legislation, see Accion Social de Puerto Rico v.
Viera Perez, 831 F.2d 365, 366 (1st Cir. 1987).
can I conceive of an electorate defined entirely by
guidelines provided by the Federal Government
(the income test for voters) and the local communi-
ty organization itself (county areas to be designated
by the Employer's board) as being equivalent to
the state-district-based electorates in the cases in
which the Board has asserted jurisdiction over non-
profit corporations.
Finally, although we properly hesitate at defin-
ing a term in one statute by reference to Congress'
use of that term in another, 15 I see at least some
significance in the fact, noted above, that in the
Block Grant Act (as well as in antecedent legisla-
tion), Congress distinguished between political sub-
divisions of States, on the one hand, and private
nonprofit corporations operating as community
action agencies, on the other. The Congress of
1935, which enacted the Wagner Act, could hardly
have had any specific intent concerning the status
of organizations like the Employer, whose impetus
was the 1964 antipoverty legislation and its legisla-
tive progeny; so we have no sound basis for know-
ing whether the Wagner Act Congress would
deem the Employer to be a state political subdivi-
sion. But we do know that each Congress that en-
acted a Federal legislative foundation for communi-
ty action agencies like the Employer did not regard
them as political subdivisions of a State. Just as the
Supreme Court in Hawkins County took note of the
treatment accorded the Hawkins County utility dis-
trict under other Federal laws (i.e., the Federal tax
code and the Social Security Act)," so I think that
we can take at least some account of the fact that
the Federal law governing this Employer's forma-
tion and structure defmes it as something other
than a political subdivision of a State.
IV. CONCLUSION
The Supreme Court in Hawkins County did not
impose any particular definition of "political subdi-
vision" on the Board, and neither that opinion nor
subsequent Board law requires a holding that the
exemption encompasses a nonprofit corporation
formed to spend Federal funds in community im-
provement activities simply because elected repre-
sentatives of the poor, when combined with state
and local public officials, make up a majority of the
corporation's board." We would violate neither
15 See Philadelphia National Bank V. U.S., 666 F.2d 834, 839 (3d Cir.
1981) (court did not regard as dispositive of the university's claim for an
exemption under Federal tax laws the fact that the Board had exercised
its discretion not to assert jurisdiction over the same university on
grounds that the school had unique relationship with State).
16 402 U.S. at 608-609
' 7 While my colleagues' finding here may represent a logical, albeit
mechanical, extension of the Hawkins County test, it may well open the
Continued
WOODBURY COUNTY COMMUNITY ACTION AGENCY 561
Board to the criticism that Justice Scalia voiced in his concurring opinion
in NLRB v Electrical Workers IBEW Local 340 (Royal Electric), 481 US
573, 598 (1987), which Involved the Board's expansive interpretation of
Sec 8(b)(1)(B)
Applied to an erroneous part of departure, the logical reasoning that
is ordinarily the mechanism of judicial adherence to the rule of law
perversely carries the Court further and further from the meaning of
the statute Some distance down that path, however, there comes a
point at which a later incremental step, again rational in Itself, leads
the letter of Section 2(2), nor the underlying policy
of protecting state sovereignty from Federal intru-
sion, by asserting jurisdiction over the Employer I
believe that we should assert jurisdiction and, ac-
cordingly, I would not dismiss the petition
to a result so far removed from the statute that obedience to text
must overcome fidelity to logic