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500 or less are payable from agency funds. Are payable from the permanent judgment appropriation. Asking for any information we can provide concerning whether the office of the Market Administrator of the Federal Milk Order Program is covered by the Federal Tort Claims Act. To what extent the office would be liable for the payment of claims out of the office's funds if it is covered. You state as follows concerning the Market Administrator's office: "Federal milk orders are established by the Secretary of Agriculture pursuant to the authority of the Agricultural Marketing Agreement Act of 1937. Each individual order is administered locally by a market administrator appointed by the Secretary of Agriculture.

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B-229660 April 28, 1989

Digest Based upon a broad construction of the coverage of the Federal Tort Claims Act (FTCA), the Market Administrator's Office of the Department of Agriculture's Federal Milk Order Program appears to be covered by the FTCA. Therefore, administrative settlements of $2,500 or less are payable from agency funds. Administrative settlements greater than $2,500 plus judgments and settlements of lawsuits under the FTCA, are payable from the permanent judgment appropriation, 31 U.S.C. Sec. 1304.

Mr. Mark Joseph Rubic Agricultural Marketing Service Chicago Regional Marketing Area 800 Roosevelt Road-Glen Hill North Building A, Suite 200 Glen Ellyn, Illinois 60137

Dear Mr. Rubic:

This responds to your letter of October 20, 1987, asking for any information we can provide concerning whether the office of the Market Administrator of the Federal Milk Order Program is covered by the Federal Tort Claims Act, 28 U.S.C. Secs. 2671 et seq., and to what extent the office would be liable for the payment of claims out of the office's funds if it is covered.

You state as follows concerning the Market Administrator's office:

"Federal milk orders are established by the Secretary of Agriculture pursuant to the authority of the Agricultural Marketing Agreement Act of 1937, as amended, (7 U.S.C. 601-674). Each individual order is administered locally by a market administrator appointed by the Secretary of Agriculture. Supervisory administration of the whole Federal order program is carried out by the Dairy Division, Agricultural Marketing Service, U.S. Department of Agriculture. The individual market administrator offices receive no appropriations. Instead, the funds used to administer each local order are derived from an administrative assessment levied on the handlers we regulate."

As you indicate, the statutory provisions concerning the Federal Milk Order Program appear in 7 U.S.C. Sec. 601 et seq. The Market Administrators' offices are federal instrumentalities serving a federal purpose pursuant to authority granted the Secretary of Agriculture by 7 U.S.C. Secs. 608b and 608c. Under this authority the Secretary promulgates milk orders, which include the agency for the administration of the orders--market administrators. 7 U.S.C. Sec. 610(b)(2)(i) and 7 C.F.R. Sec. 1000.3. The Market Administrators and their offices are financed with assessments levied on the milk handlers that are being regulated and not with funds directly appropriated by Congress. The Market Administrators are appointed by the Secretary of Agriculture, who also fixes their compensation, and they employ and fix the compensation of persons in their offices. 7 C.F.R. Sec. 1003(a) and (c).

The Federal Tort Claims Act covers torts committed by employees of the government within the scope of their employment, including officers or employees of "any federal agency" and "persons acting on behalf of a federal agency in an official capacity," and any federal agency includes the "executive departments." 28 U.S.C. Sec. 2671. It has been our view that the application of the Federal Tort Claims Act to a "federal agency," in light of the act's legislative history, should be broadly construed as covering all agencies not specifically excluded by the act. 35 Comp.Gen. 511 (l956). See also 67 Comp.Gen. 142 (1987). In addition the organization and functions of the office of the Market Administrator seem to be somewhat similar to that of a lower level committee of the Agricultural Stabilization and Conservation Service, also a Department of Agriculture instrumentality, which is well described in Delgado v. Akins, 236 F. Supp. 202 (D. Ariz. 1964). That case holds that an employee of the lower level committee is an employee of the government for Federal Tort Claims Act purposes, although his salary is not paid by Treasury check and at least part of the funds from which salaries are paid come from charges levied on farmers. Accord, Wollman v. Gross, 637 F.2d 544 (8th Cir. 1980), cert. denied, 454 U.S. 893 (1981).

Although we are not aware of a case holding specifically that employees of a Market Administrator's office are government employees for the purposes of the act, in view of the broad construction given the coverage of the act and the precedents discussed above, they would appear to be so. We suggest, however, that you also consult with the Department of Justice in view of that Department's role in approving certain administrative settlements and representing the United States in litigation under the act.

Assuming the office of the Market Administrator is a federal agency, an agency of the Department of Agriculture, if it administratively settles a claim under the Federal Tort Claims Act for $2,500 or less, that claim is to be paid out of "appropriations available to that agency. n 28 U.S.C. Sec. 2672. We have held that under this authority the head of an agency is permitted to select for payment of such claims any appropriation of that agency currently available for obligation and the use of which for such purpose is not specifically proscribed or limited. Also, the word agency is not limited to a particular bureau but embraces the whole department or independent establishment. 38 Comp.Gen. 338, 340 (1958). However, any larger administrative settlement, or any compromise, settlement, or judgment on a federal tort claim filed in a U.S. district court would be paid out of the permanent indefinite appropriation found in 31 U.S.C. Sec. 1304, unless some other appropriation or fund under the control of the agency is legally available to satisfy the judgment or award. 67 Comp. Gen. 142, 145, supra. See also the discussion in 67 Comp.Gen. 142, supra, concerning the limitations on the types of tort claims payable from the Judgment Fund. If your office is concerned about other kinds of claims, or if you desire a decision of the Comptroller General on a specific case, you should submit the matter through the Secretary of Agriculture's Office with a full explanation of the matter.

We trust this information is helpful and regret the delay in responding. Copies of our decisions are enclosed for your convenience .

Sincerely yours

Robert L. Higgins Associate General Counsel

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