Walter K. Gilmore, Plaintiff-appellant, v. Salt Lake Community Action Program, a Utah Corporation; Halj. Schultz, Executive Director; Robert E. Philbrick,president, Board of Trustees; Richard Fields, Personneladministrator; Fred Geter, Chairman, Personnel Committee;ann O'connell, Terry Williams, John E. Delaney, Ted L.wilson, Jennings Phillips, Glen Greener, Pete Kutulas,william Dunn, Ralph Mcclure, Jess Agraz, Don Mierva, Lucyotero, Glen M. Larsen, Bernice Benns, Lambertus Jensen,solomon Chacon, Leon Reese, Palmer Depaulis, Richard Ligh,victor Delgado, Norbest Martinez, Mavis Lindsay, M.c.eberhardt, Clement Jay, Eva Maez, Jerri Brown, Waynehorrocks, Hermoine Jex, Constituting the Board of Trusteesof the Salt Lake Area Community Action Program, Theirofficers, Employees, Successors and Assigns, Defendants-appellees, 710 F.2d 632 (10th Cir. 1983)

Walter K. Gilmore served as Fiscal Director of the Salt Lake Community Action Program ("SLCAP") from 1974 to 1977. In 1977, the Executive Director of SLCAP reorganized the Fiscal Department, assumed the position of Fiscal Director, and terminated Mr. Gilmore's employment as a "reduction in force." Mr. Gilmore appealed the termination to the SLCAP Personnel Committee, which sustained the Executive Director's decision. He then filed this suit under section 1983¹  against SLCAP, its officers, and its trustees. He alleged that the termination was state action that deprived him of a property interest without due process in violation of the fourteenth amendment. He also included a Bivens claim,²  alleging that the termination was federal action that deprived him of a property interest without due process in violation of the fifth amendment. The district court concluded that neither state nor federal action was present and entered judgment for the defendants. Mr. Gilmore challenges this determination on appeal. He claims that governmental action is present because SLCAP is a "community action agency."³ 

* The concept of the community action agency originated in Title II of the Economic Opportunity Act of 1964 (the "EOA"), 42 U.S.C. §§ 2781-2837 (1976) (repealed 1981). Through the EOA's provisions, Congress sought to encourage the creation of community operated agencies that would coordinate federal, state, and private resources to combat poverty at a local level.⁴  Congress defined the basic structure and functions of these agencies and established requisites for federal funding. See EOA Secs. 210-221, 42 U.S.C. §§ 2790-2808. However, Congress left broad discretion to the local communities in the operation of the agencies. See H.R.Rep. No. 1458, 88th Cong., 2d Sess., reprinted in 1964 U.S.Code Cong. & Ad.News 2900, 2909.

Congress established a number of requirements of particular relevance to this appeal. It provided that " [a] community action agency shall be a State or political subdivision of a State ... or a combination of such political subdivisions, or a public or private nonprofit agency or organization which has been designated by a State ...." EOA Sec. 210(a), 42 U.S.C. § 2790(a). It also specified that " [n]o political subdivision of a State shall be included in the community action program of a community action agency designated under section 2790(a) of this title if the elected or duly appointed governing officials of such political subdivision do not wish to be so included." EOA Sec. 210(e), 42 U.S.C. § 2790(e).

Congress set forth specific requirements for the governing board of the community action agencies, providing,

Each board to which this subsection applies shall consist of not more than fifty-one members and shall be so constituted that (1) one-third of the members of the board are elected public officials, 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, membership on the board of appointive public officials may be counted in meeting such one-third requirement ....

EOA Sec. 211(b), 42 U.S.C. § 2791(b).⁵  Regarding the authority of the board, Congress provided,

The powers of every community action agency governing board shall include the power to appoint persons to senior staff positions, to determine major personnel, fiscal, and program policies, to approve overall program plans and priorities, and to assure compliance with conditions of and approve proposals for financial assistance under this subchapter.

EOA Sec. 211(e), 42 U.S.C. § 2791(e).

SLCAP is a community action agency created pursuant to the EOA. Its avowed purpose is to "prevent and alleviate poverty and its causes." Articles of Incorporation, Record, vol. 2, at 208, 209. It is eligible for and has received federal funding under the EOA.⁶ 

SLCAP is organized as a private nonprofit corporation under the laws of Utah,⁷  as permitted by section 210 of the EOA. See 42 U.S.C. § 2790(a). During the period of interest in this suit, its Board of Trustees consisted of thirty members, of whom eleven were apparently public officials,⁸  thus meeting the requirements of section 211(b) of the EOA. See 42 U.S.C. § 2791(b).

The SLCAP Board of Trustees promulgated personnel policies for SLCAP and delegated power over personnel decisions to the Executive Director, as authorized by section 211 of the EOA. See 42 U.S.C. § 2791. Mr. Gilmore claims that both the policies promulgated by the Board and the specific decision by the Executive Director to terminate his employment constitute governmental action because of the extensive government involvement in creating, regulating, funding, and operating SLCAP.

II

The Constitution promotes individual liberty by forbidding the government, and the government alone, from engaging in certain activities.⁹  See Lugar v. Edmondson Oil Co., 457 U.S. 922, 936, 102 S. Ct. 2744, 2754, 73 L. Ed. 2d 482 (1982); Flagg Brothers, Inc. v. Brooks, 436 U.S. 149, 156, 98 S. Ct. 1729, 1733, 56 L. Ed. 2d 185 (1978). Although the pertinent provisions appear uncomplicated, the concept of government action, and the consequent reach of the constitutional proscriptions, has consistently eluded certain definition. See Reitman v. Mulkey, 387 U.S. 369, 378, 87 S. Ct. 1627, 1632, 18 L. Ed. 2d 830 (1967). Experience has shown that governmental power can be exercised in the absence of an official presence. See Evans v. Newton, 382 U.S. 296, 86 S. Ct. 486, 15 L. Ed. 2d 373 (1966). Conversely, not all acts by government employees can be justly characterized as governmental action. See Polk County v. Dodson, 454 U.S. 312, 102 S. Ct. 445, 70 L. Ed. 2d 509 (1982).¹⁰ 

The Supreme Court has approached the concept of governmental action flexibly. It has pragmatically examined ostensibly private activities to determine if they constitute governmental action. In this regard, the Court has inquired whether a private party is performing a "public function," see Terry v. Adams, 345 U.S. 461, 73 S. Ct. 809, 97 L. Ed. 1152 (1953); Marsh v. Alabama, 326 U.S. 501, 66 S. Ct. 276, 90 L. Ed. 265 (1946), or acting under "state compulsion," see Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S. Ct. 1598, 26 L. Ed. 2d 142 (1970), whether there is a "nexus," see Jackson v. Metropolitan Edison Co., 419 U.S. 345, 95 S. Ct. 449, 42 L. Ed. 2d 477 (1974); Burton v. Wilmington Parking Authority, 365 U.S. 715, 81 S. Ct. 856, 6 L. Ed. 2d 45 (1961), or "joint action" between the private party and the government, Lugar v. Edmondson Oil Co., 457 U.S. 935, 102 S. Ct. 2744, 73 L. Ed. 2d 482 (1982); Flagg Brothers v. Brooks, 436 U.S. 149, 98 S. Ct. 1729, 56 L. Ed. 2d 185 (1978).

These cases, taken together, impart at least two important principles. First, they recognize that power entrusted to the government by the people can ultimately be exercised through nominally private entities, be it through the government's delegation, compulsion, concerted action, or acquiescence. Second, they provide that when these nominally private parties exercise governmental power, they shall not exercise it insulated from constitutional constraints.

The problem remains in distinguishing the exercise of governmental power from benign or tangential governmental involvement. This problem is resolved by "sifting facts and weighing circumstances" in each case. Burton v. Wilmington Parking Authority, 365 U.S. 715, 722, 81 S. Ct. 856, 860, 6 L. Ed. 2d 45 (1961).

* The appellant asserts that federal action is present in this case because of the extensive federal funding and regulation of SLCAP. The Court of Appeals for the Ninth Circuit accepted this argument in Mathis v. Opportunities Industrialization Centers, Inc., 545 F.2d 97 (9th Cir. 1976). See also Ginn v. Mathews, 533 F.2d 477 (9th Cir. 1976). However, this result seems questionable in light of subsequent Supreme Court precedent.

Last term, the Supreme Court twice concluded that governmental funding and regulation of an ostensibly private organization, in the absence of other factors, is insufficient to establish governmental action. In Rendell-Baker v. Kohn, 457 U.S. 830, 102 S. Ct. 2764, 73 L. Ed. 2d 418 (1982), the Court held that state funding and associated regulation of a private school for troubled youths did not render the school's personnel decisions state action, absent evidence of state influence or control over those decisions. 457 U.S. at 838 n. 6, 102 S. Ct. at 2770 & n. 6. Compare Milonas v. Williams, 691 F.2d 931 (10th Cir. 1982), cert. denied, 457 U.S. 991, 103 S. Ct. 1524, 75 L. Ed. 2d 947 (1983). In Blum v. Yaretsky, 457 U.S. 991, 102 S. Ct. 2777, 73 L. Ed. 2d 534 (1982), the Court held that state funding and associated regulation of nursing homes was insufficient to establish state action in the nursing homes' patient care decisions, absent a showing of government involvement in those decisions. 457 U.S. at 1008 & n. 19, 102 S. Ct. at 2788-89 & n. 19. In both of these cases, the facts and circumstances suggested that though the private entities were funded and regulated by the government, they did not exercise government power so as to be subject to constitutional constraints.

Federal involvement in community action agencies is analogous to state involvement in the private school in Rendell-Baker and the nursing homes in Blum. Indeed, in describing community action agencies and the provisions of the EOA in a different context, the Supreme Court stated,

Nothing could be plainer than the congressional intent that the local entities here in question have complete control over operations of their own programs with the Federal Government supplying financial aid, advice, and oversight only to assure that federal funds not be diverted to unauthorized purposes.

United States v. Orleans, 425 U.S. 807, 96 S. Ct. 1971, 48 L. Ed. 2d 390 (1976) (footnote omitted) (considering the application of the Federal Tort Claims Act to community action agencies). In the instant case, the appellant has shown no federal involvement in SLCAP beyond the provision of financial aid, advice, and associated regulation. There are no substantial allegations that the federal government exercised any meaningful influence or control over SLCAP's challenged personnel decisions. The facts of this case clearly fall within the ambit of Rendell-Baker and Blum. Accordingly, we find no federal action. Accord Griffith v. Bell-Whitley Community Action Agency, 614 F.2d 1102, 1108 (6th Cir. 1980); Hines v. Cenla Community Action Committee, Inc., 474 F.2d 1052, 1057-58 (5th Cir. 1973); Joseph v. Ulster County Community Action Committee, Inc., 475 F. Supp. 944, 948 (S.D.N.Y. 1979); Kelley v. Action For Boston Community Development, Inc., 419 F. Supp. 511, 525-27 (D. Mass. 1976).¹¹ B

The appellant also claims that his termination was state action subject to the fourteenth amendment.

In Ginn v. Mathews, 533 F.2d 477 (9th Cir. 1976), the Ninth Circuit concluded that the community action agency was engaged in state action, citing "abundant evidence" in the record. 533 F.2d at 481. To some extent, Ginn relied on state funding and regulation in finding state action. 533 F.2d at 480-81 & n. 4. As we explained in examining the federal action issue, funding and regulation provide insufficient grounds for finding governmental action. To the extent that Ginn relied on these factors, its result is questionable. But as the appellant notes, other factors in this case suggest grounds for finding state action. In particular, the appellant points to the extensive involvement of public officials in the creation and operation of the community action agency.

The Supreme Court's decision in Lugar v. Edmondson Oil Co., 457 U.S. 922, 102 S. Ct. 2744, 73 L. Ed. 2d 482 (1982), provides the appropriate analytical framework for assessing the relevance of involvement by public officials in nominally private activities. In Lugar, the Court considered whether a party who relied on the participation of state officials in a prejudgment attachment of a debtor's property could be held accountable for the deprivation of a federal right. In finding state action, the Court stated the following two-part test:

First, the deprivation must be caused by the exercise of some right or privilege created by the state or by a rule of conduct imposed by the state or by a person for whom the state is responsible .... Second, the party charged with the deprivation must be a person who may fairly be said to be a state actor.

457 U.S. at 937, 102 S. Ct. at 2754. We believe that this test is directly applicable in determining whether SLCAP engaged in state action in the present case.

Examining the second prong of the test first, we inquire whether SLCAP may fairly be considered a state actor. Lugar states that a person may be a state actor "because he is a state official, because he has acted together with or has obtained significant aid from state officials, or because his conduct is otherwise chargeable to the state." 457 U.S. at 937, 102 S. Ct. at 2754. The facts in this case indicate substantial participation and aid by state officials in the creation of SLCAP. Federal law gave the State of Utah the option of establishing community action agencies. EOA Sec. 210, 42 U.S.C. § 2790. In exercising this option, Utah could have designated either a political subdivision or a public or private nonprofit organization to serve as a community action agency. Id. It chose to designate SLCAP, a private nonprofit corporation. Even after this designation, political subdivisions of Utah retained the option to be excluded from any program administered by SLCAP. EOA Sec. 210(e), 42 U.S.C. § 2790(e). Beyond its participation in the creation of the SLCAP, the state is integrally involved in SLCAP's actual operation. One third of the members of the governing board of SLCAP are local public officials, as required by federal law. EOA Sec. 211(b), 42 U.S.C. § 2791(b). These public officials serve on the board, not in an honorary or figurehead capacity, but rather to offer "services and assistance" as public officials, see EOA Sec. 201(a) (5), 42 U.S.C. § 2781(a) (5), in combating poverty, a public concern. Given the state's extensive involvement in the decision to designate a community action agency and to organize it as a private nonprofit corporation, given the veto power of local officials over community action programs, and given the requirement that one third of the board be composed of public officials who serve the board as representatives of government, we conclude that SLCAP can be fairly considered a state actor.¹² 

Our conclusion that SLCAP is a state actor does not resolve the issue of whether it engaged in state action in the termination of Mr. Gilmore's employment. Lugar instructs that, in addition, we must determine whether the deprivation of federal rights that Mr. Gilmore alleges resulted from the exercise of a right, privilege, or rule of conduct having its source in state authority.

Mr. Gilmore claims that he was deprived of his property interest in employment without due process. He claims that SLCAP personnel policies provided inadequate notice and hearing, and that in any event his termination did not comply with the policies SLCAP set forth. Our examination of the facts surrounding these claims reveals no basis for attributing the alleged deprivation to the exercise of rights, privileges, or decisions originating in the state. While we acknowledge that SLCAP is a state actor, we also recognize that not all actions by state actors are state action.¹³  See Lugar, 457 U.S. at 927 n. 6, 102 S. Ct. at 2748-49 n. 6. Lugar requires that at a minimum there must be a showing that the deprivation was in some sense attributable to a governmental decision. 457 U.S. at 938 & n. 20, 102 S. Ct. at 2755 & n. 20. See, e.g., Coleman v. Turpen, 697 F.2d 1341, 1345 (10th Cir. 1982). In this case, the appellant has failed to show that the alleged deprivations resulted from a governmental rule, policy, or decision.

It is true that the personnel policies were formulated by a board of trustees partially composed of public officials; indeed, we considered the composition of the board highly relevant in our determination that SLCAP is a state actor. However, this characteristic of the board, standing alone, does not compel an inference that the personnel practices formulated by the board are the product of a state policy or decision. Although the public officials serve on the board as representatives of local government and as advocates of governmental objectives, there are no allegations that they represent or advocate a governmental position on personnel policy. Likewise, there is no indication that the Executive Director's decision to terminate Mr. Gilmore's employment in any way reflected a governmental policy or decision. Accordingly, we conclude that the appellant has failed to meet one of the two prongs of the Lugar test, and we hold that there is no state action in this case.¹⁴ 

III

In conclusion, we hold that SLCAP's termination of Mr. Gilmore's employment was not federal action. Federal funding and regulation of SLCAP are insufficient to establish federal action. We also hold that the termination was not state action. While we conclude that SLCAP is a state actor, we find that this personnel decision did not result from any rule, policy, or decision attributable to the state. Accordingly, the judgment of the district court is AFFIRMED.