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Proposed Rule2022-28376

Partnerships With Faith-Based and Neighborhood Organizations

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Published

January 13, 2023

Issuing agencies

Education DepartmentHomeland Security DepartmentAgriculture DepartmentAgency for International DevelopmentHousing and Urban Development DepartmentJustice DepartmentLabor DepartmentVeterans Affairs DepartmentHealth and Human Services Department

Abstract

The agencies listed above (the "Agencies") propose to amend their regulations to clarify protections for beneficiaries and potential beneficiaries receiving federally funded social services and the rights and obligations of organizations providing such services. In accordance with the Executive order of February 14, 2021 (Establishment of the White House Office of Faith-Based and Neighborhood Partnerships), this clarification should promote maximum participation by beneficiaries and providers in the Agencies' covered programs and activities and ensure consistency in the implementation of those programs and activities.

Full Text

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<title>Federal Register, Volume 88 Issue 9 (Friday, January 13, 2023)</title>
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[Federal Register Volume 88, Number 9 (Friday, January 13, 2023)]
[Proposed Rules]
[Pages 2395-2427]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-28376]

[[Page 2393]]

Vol. 88

Friday,

No. 9

January 13, 2023

Part II

Department of Education

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2 CFR Part 3474

34 CFR Parts 75 And 76

Department of Homeland Security

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6 CFR Part 19

Department of Agriculture

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7 CFR Part 16

Agency for International Development

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22 CFR Part 205

Department of Housing and Urban Development

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24 CFR Part 5

Department of Justice

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28 CFR Part 38

[[Page 2394]]

Department of Labor

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29 CFR Part 2

Department of Veterans Affairs

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38 CFR Parts 50, 61 and 62

Department of Health and Human Services

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45 CFR Part 87

Partnerships With Faith-Based and Neighborhood Organizations; Proposed
Rule

Federal Register / Vol. 88, No. 9 / Friday, January 13, 2023 /
Proposed Rules

[[Page 2395]]

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DEPARTMENT OF EDUCATION

2 CFR Part 3474

34 CFR Parts 75 and 76

RIN 1840-AD467

DEPARTMENT OF HOMELAND SECURITY

6 CFR Part 19

RIN 1601-AB02

DEPARTMENT OF AGRICULTURE

7 CFR Part 16

RIN 0510-AA008

AGENCY FOR INTERNATIONAL DEVELOPMENT

22 CFR Part 205

RIN 0412-AB10

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 5

RIN 2501-AD91

DEPARTMENT OF JUSTICE

28 CFR Part 38

[A.G. Order No. 5563-2022]
RIN 1105-AB64

DEPARTMENT OF LABOR

29 CFR Part 2

RIN 1290-AA45

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Parts 50, 61 and 62

RIN 2900-AR23

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 87

RIN 0991-AC13

Partnerships With Faith-Based and Neighborhood Organizations

AGENCY: Department of Education, Department of Homeland Security,
Department of Agriculture, Agency for International Development,
Department of Housing and Urban Development, Department of Justice,
Department of Labor, Department of Veterans Affairs, and Department of
Health and Human Services.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The agencies listed above (the ``Agencies'') propose to amend
their regulations to clarify protections for beneficiaries and
potential beneficiaries receiving federally funded social services and
the rights and obligations of organizations providing such services. In
accordance with the Executive order of February 14, 2021 (Establishment
of the White House Office of Faith-Based and Neighborhood
Partnerships), this clarification should promote maximum participation
by beneficiaries and providers in the Agencies' covered programs and
activities and ensure consistency in the implementation of those
programs and activities.

DATES: Electronic comments must be submitted, and written comments must
be postmarked, no later than 11:59 p.m. Eastern Time on March 14, 2023.

ADDRESSES: Comments may be submitted as indicated below:
[ssquf] Federal eRulemaking Portal: Go to <a href="http://www.regulations.gov">www.regulations.gov</a> to
submit your comments electronically. Information on using
<a href="http://Regulations.gov">Regulations.gov</a>, including instructions for accessing agency documents,
submitting comments, and viewing the docket, is available on the site
under ``FAQ.''
[ssquf] Postal Mail or Commercial Delivery: If you do not have
internet access or electronic submission is not possible, you may mail
written comments to the Regulations Division, Office of General
Counsel, U.S. Department of Housing and Urban Development, 451 7th
Street SW, Room 10276, Washington, DC 20410-0500.
[ssquf] Comments submitted by email or fax will not be accepted.
Privacy Note: The Agencies' policy is to make all comments received
from members of the public available for public viewing in their
entirety on the Federal eRulemaking Portal at <a href="http://www.regulations.gov">www.regulations.gov</a>.
Therefore, commenters should be careful to include in their comments
only information that they wish to make publicly available.

FOR FURTHER INFORMATION CONTACT: For information regarding each
Agency's proposed regulations, the contact information for that Agency
follows. If you use a telecommunications device for the deaf (``TDD'')
or a text telephone (``TTY''), call the Telecommunications Relay
Service at 7-1-1.
Department of Education: Maggie Siddiqi, Director, Center for
Faith-Based and Neighborhood Partnerships, 202-453-7443,
<a href="/cdn-cgi/l/email-protection#abeeefdbcad9dfc5ced9d8ebcecf85ccc4dd">[email&#160;protected]</a>.
Department of Homeland Security: Peter Mina, Senior Official
Performing the Duties of the Officer for Civil Rights and Civil
Liberties, Office for Civil Rights and Civil Liberties, 202-401-1474
(phone), 202-401-0470 (TTY).
Department of Agriculture: Lisa Ramirez, Director of the Office of
Partnerships and Public Engagement, <a href="/cdn-cgi/l/email-protection#e6aa8f9587c8b4878b8f94839ca693958287c8818990">[email&#160;protected]</a>.
Agency for International Development: Adam Phillips, Director,
Center for Faith-Based and Neighborhood Partnerships, 202-615-9528,
<a href="/cdn-cgi/l/email-protection#0b6a7b63626767627b784b7e786a626f256c647d">[email&#160;protected]</a>.
Department of Housing and Urban Development: Dr. Derrick Harkins,
Director of the Office of Faith-Based and Neighborhood Partnerships,
Office of the Secretary, 451 7th Street SW, Washington, DC 20410,
Phone: 202-708-2404.
Department of Justice: Michael L. Alston, Director, Office for
Civil Rights, Office of Justice Programs, 202-307-0690,
<a href="/cdn-cgi/l/email-protection#3051435b7f7362705f5a401e4543545f5a1e575f46">[email&#160;protected]</a>.
Department of Labor: Elena S. Goldstein, Deputy Solicitor of Labor,
Office of the Solicitor of Labor, 202-878-9471,
<a href="/cdn-cgi/l/email-protection#b6d1d9dad2c5c2d3dfd898d3dad3d8d7f6d2d9da98d1d9c0">[email&#160;protected]</a>.
Department of Veterans Affairs: Conrad Washington, Director, Center
for Faith-Based and Neighborhood Partnerships, Office of Public and
Intergovernmental Affairs, 202-461-7865.
Department of Health and Human Services: Que English, Director,
Center for Faith-Based and Neighborhood Partnerships, 202-260-6501,
<a href="/cdn-cgi/l/email-protection#89f9e8fbfde7ecfbfae1e0f9fac9e1e1faa7eee6ff">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

I. Background

On December 12, 2002, President George W. Bush signed Executive
Order 13279, 67 FR 77141 (Dec. 16, 2002) (Equal Protection of the Laws
for Faith-Based and Community Organizations). Executive Order 13279 set
forth the principles and policymaking criteria to guide Federal
agencies in formulating and implementing policies for the delivery of
social services with implications for faith-based organizations and
other community organizations, to ensure equal protection of the laws
for faith-based and community organizations, and to expand
opportunities for, and strengthen the capacity of, faith-based and
other community organizations to meet social needs in America's
communities. In addition, Executive Order 13279 directed specified
agency heads to review and evaluate existing policies that had
implications for faith-based and community organizations relating to
their eligibility for Federal financial assistance for social service
programs and, where appropriate, to

[[Page 2396]]

implement new policies that were consistent with and necessary to
further the fundamental principles and policymaking criteria
articulated in the Executive order.
Several Agencies proceeded to promulgate regulations to implement
Executive Order 13279:
[ssquf] In 2004, the Department of Veterans Affairs (``VA'')
promulgated regulations at 38 CFR part 61 consistent with Executive
Order 13279. See VA Homeless Providers Grant and Per Diem Program;
Religious Organizations, 69 FR 31883 (June 8, 2004).
[ssquf] The Department of Education (``ED'') similarly promulgated
regulations at 34 CFR parts 74, 75, 76, and 80. See Participation in
Education Department Programs by Religious Organizations; Providing for
Equal Treatment of All Education Program Participants, 69 FR 31708
(June 4, 2004).
[ssquf] In 2003 and 2004, the Department of Housing and Urban
Development (``HUD'') promulgated three final rules to implement
Executive Order 13279. See Participation in HUD's Native American
Programs by Religious Organizations; Providing for Equal Treatment of
All Program Participants, 69 FR 62164 (Oct. 22, 2004); Equal
Participation of Faith-Based Organizations, 69 FR 41712 (July 9, 2004);
Participation in HUD Programs by Faith-Based Organizations; Providing
for Equal Treatment of all HUD Program Participants, 68 FR 56396 (Sept.
30, 2003).
[ssquf] In 2004, the Department of Justice (``DOJ''), Department of
Agriculture (``USDA''), Department of Labor (``DOL''), Department of
Health and Human Services (``HHS''), and Agency for International
Development (``USAID'') issued regulations through notice-and-comment
rulemaking implementing Executive Order 13279. See Participation in
Justice Department Programs by Religious Organizations; Providing for
Equal Treatment of All Justice Department Program Participants, 69 FR
2832 (Jan. 21, 2004); Equal Opportunity for Religious Organizations, 69
FR 41375 (July 9, 2004); Equal Treatment in Department of Labor
Programs for Faith-Based and Community Organizations; Protection of
Religious Liberty of Department of Labor Social Service Providers and
Beneficiaries, 69 FR 41882 (July 12, 2004); Participation in Department
of Health and Human Services Programs by Religious Organizations;
Providing for Equal Treatment of All Department of Health and Human
Services Program Participants, 69 FR 42586 (July 16, 2004);
Participation by Religious Organizations in USAID Programs, 69 FR 61716
(Oct. 20, 2004).
[ssquf] The Department of Homeland Security (``DHS'') issued a
notice of proposed rulemaking (``NPRM'' or ``proposed rule'') in 2008,
see Nondiscrimination in Matters Pertaining to Faith-Based
Organizations, 73 FR 2187 (Jan. 14, 2008); however, DHS did not issue a
final rule related to the participation of faith-based organizations in
its programs prior to 2016.
Shortly after taking office, President Barack Obama signed
Executive Order 13498, 74 FR 6533 (Feb. 9, 2009) (Amendments to
Executive Order 13199 and Establishment of the President's Advisory
Council for Faith-Based and Neighborhood Partnerships). Executive Order
13498 changed the name of the White House Office of Faith-Based and
Community Initiatives to the White House Office of Faith-Based and
Neighborhood Partnerships, and it created the President's Advisory
Council on Faith-Based and Neighborhood Partnerships, which
subsequently submitted recommendations regarding the work of that White
House office.
On November 17, 2010, President Obama signed Executive Order 13559,
75 FR 71319 (Nov. 22, 2010) (Fundamental Principles and Policymaking
Criteria for Partnerships With Faith-Based and Other Neighborhood
Organizations). Based on recommendations made by the Advisory Council,
Executive Order 13559 made various changes to Executive Order 13279,
which included:
[ssquf] Requiring agencies that administer or award Federal
financial assistance for social service programs to implement
additional protections for the beneficiaries and prospective
beneficiaries of those programs, including (i) providing referrals to
alternative providers when beneficiaries objected to the religious
character of the organizations providing services, and (ii) providing
written notice to beneficiaries of that referral requirement and other
protections before they enrolled in or received services from the
program;
[ssquf] Stating that decisions about awards of Federal financial
assistance must be free from political interference or even the
appearance of such interference, and must be made on the basis of
merit, not on the basis of religious affiliation, or lack of
affiliation, of recipient organizations;
[ssquf] Stating that the Federal Government has an obligation to
monitor and enforce all standards regarding the relationship between
religion and government in ways that avoid excessive entanglement
between religious bodies and governmental entities;
[ssquf] Providing further clarifications concerning certain
requirements, including under Executive Order 13279, that organizations
engaging in explicitly religious activity must (i) perform such
activities and offer such services outside of programs that are
supported with direct Federal financial assistance, (ii) separate these
activities in time or location from programs supported with direct
Federal financial assistance, and (iii) ensure that participation in
any such activities must be voluntary for the beneficiaries of the
social service program supported with Federal financial assistance;
[ssquf] Emphasizing again that religious providers should be
eligible to compete for social service funding from the Government and
to participate fully in social service programs supported with Federal
financial assistance, and that such organizations may do so while
maintaining their religious identities;
[ssquf] Requiring agencies that provide Federal financial
assistance for social service programs to post online regulations,
guidance documents, and policies that have implications for faith-based
and other neighborhood organizations, and to post online a list of
entities receiving such assistance; and
[ssquf] Clarifying that the principles set forth apply to subawards
as well as prime awards.
An interagency working group was tasked with developing model
regulatory changes to implement Executive Order 13279, as amended by
Executive Order 13559, including provisions that clarified the
prohibited uses of direct financial assistance, allowed religious
social service providers to maintain their religious identities, and
distinguished between direct and indirect assistance.
These efforts eventually resulted in DHS's promulgating regulations
and the other Agencies' promulgating amendments to their regulations.
In April 2016, following notice and comment, the Agencies published a
joint final rule to ensure consistency with Executive Order 13279, as
amended by Executive Order 13559. See Federal Agency Final Regulations
Implementing Executive Order 13559: Fundamental Principles and
Policymaking Criteria for Partnerships With Faith-Based and Other
Neighborhood Organizations, 81 FR 19355 (Apr. 4, 2016). These revised
regulations--referred to hereinafter as the ``2016 Rule''--incorporated
the principles from Executive Order 13559 detailed above.

[[Page 2397]]

On May 3, 2018, President Donald J. Trump signed Executive Order
13831, 83 FR 20715 (May 8, 2018) (Establishment of a White House Faith
and Opportunity Initiative), amending Executive Order 13279, as amended
by Executive Order 13559, and other related Executive Orders. Among
other things, Executive Order 13831 changed the name of the White House
Office of Faith-Based and Neighborhood Partnerships, established in
Executive Order 13498, to the White House Faith and Opportunity
Initiative; changed the way that the initiative was to operate;
directed departments and agencies with Centers for Faith-Based and
Community Initiatives to change the names of those centers to Centers
for Faith and Opportunity Initiatives; and ordered that departments and
agencies without a Center for Faith and Opportunity Initiatives
designate a Liaison for Faith and Opportunity Initiatives. Executive
Order 13831 also eliminated the requirements to refer beneficiaries to
alternative providers upon request and to notify beneficiaries of the
protections in Executive Order 13559 described above.
Consistent with Executive Order 13831, in December 2020 the
Agencies promulgated a final rule following notice and comment that
amended the 2016 Rule. See Equal Participation of Faith-Based
Organizations in the Federal Agencies' Programs and Activities, 85 FR
82037 (Dec. 17, 2020). This joint final rule--referred to hereinafter
as the ``2020 Rule''--made changes to the 2016 Rule, including the
following:
[ssquf] Eliminating a requirement that faith-based providers
receiving direct Federal financial assistance provide notice to
beneficiaries and prospective beneficiaries of certain protections,
including protection from discrimination on the basis of religion;
[ssquf] Eliminating requirements that, if a beneficiary objected to
the religious character of a faith-based provider, the provider would
undertake reasonable efforts to identify and refer the beneficiary to
an alternative provider, and that providers inform beneficiaries of
this alternative provider requirement in the notice to them;
[ssquf] Eliminating a requirement that beneficiaries of indirect
Federal financial assistance (such as vouchers, certificates, or other
Government-funded means that the beneficiaries might be able to use to
obtain services at providers of their choosing) must have at least one
adequate secular option for the use of the indirect assistance;
[ssquf] Adding a provision allowing providers receiving indirect
Federal aid to require beneficiaries to attend ``all activities that
are fundamental to the program'';
[ssquf] Adding a definition of the term ``religious exercise'';
[ssquf] Adding a requirement that notices or announcements of award
opportunities and notices of awards or contracts include language
regarding certain protections for faith-based organizations'
independence from Government and providers' obligations not to use
direct financial assistance for any explicitly religious activities and
not to discriminate against prospective or current program
beneficiaries on the basis of religion;
[ssquf] Adding a provision stating that, if an awarding agency
program required an applicant to show nonprofit status and the
applicant holds a sincerely held religious belief that it cannot apply
for a determination as an entity that it is tax-exempt under section
501(c)(3) of the Internal Revenue Code, the applicant could submit
evidence sufficient to establish that it otherwise qualified as a
nonprofit organization;
[ssquf] Adding a provision stating that neither the awarding agency
nor any State or local government or other pass-through entity
receiving funds under any Federal awarding agency program or service
shall construe provisions ``in such a way as to advantage or
disadvantage faith-based organizations affiliated with historic or
well-established religions or sects in comparison with other religions
or sects''; and
[ssquf] Adding language to preexisting requirements regarding the
Government's obligation to accommodate religion and regarding the
religious exemption from the Federal prohibition on employment
discrimination on the basis of religion.

II. Overview of the Proposed Rule

On February 14, 2021, President Joseph R. Biden, Jr., signed
Executive Order 14015. 86 FR 10007 (Feb. 18, 2021) (Establishment of
the White House Office of Faith-Based and Neighborhood Partnerships).
Executive Order 14015 sought to ``organiz[e] more effective efforts to
serve people in need across the country and around the world, in
partnership with civil society, including faith-based and secular
organizations.'' Id. at 10007. The Executive order further emphasized
the importance of strengthening the ability of such organizations to
deliver services in partnership with Federal, State, and local
governments and with other private organizations, while adhering to all
governing law. Id.
Executive Order 14015 revoked Executive Order 13831, see id. at
10008, which had formed the basis for the 2020 Rule. With the
revocation of Executive Order 13831, the Agencies are proposing to
amend the 2020 Rule so as to ensure full access to and comprehensive
delivery of federally funded social services, in keeping with governing
law and with the policies articulated in Executive Order 14015. The
Agencies also seek to advance the policies set out in Executive Order
13985, 86 FR 7009 (Jan. 25, 2021) (Advancing Racial Equity and Support
for Underserved Communities Through the Federal Government), and
Executive Order 14058, 86 FR 71357 (Dec. 16, 2021) (Transforming
Federal Customer Experience and Service Delivery To Rebuild Trust in
Government).
The Agencies achieve their missions in part through the
administration of Federal financial assistance. Funds are distributed
through a wide range of social service programs, including the
following:
[ssquf] Workforce Innovation and Opportunity Act (``WIOA'') Adult
and Dislocated Worker Programs: DOL's Employment and Training
Administration provides job search assistance and training to adult and
dislocated workers through State formula grants authorized under WIOA.
This funding area includes individualized training accounts through
which program participants can choose from a statewide list of
providers to access training.
[ssquf] Homeless Veterans Reintegration Program: This grant
program, administered by DOL's Veterans' Employment and Training
Service, provides services that assist in reintegrating homeless
veterans into meaningful employment within the labor force and supports
development of delivery systems that address the complex problems
facing homeless veterans.
[ssquf] Healthy Marriage and Responsible Fatherhood Programs: HHS's
Office of Family Assistance competitively awards Healthy Marriage and
Responsible Fatherhood grants to States, local governments, tribal
entities, and community-based organizations (both for profit and not-
for-profit, including faith-based) that help participants build and
sustain healthy relationships and marriages, and strengthen positive
father-child interaction.
[ssquf] Nita M. Lowey 21st Century Community Learning Centers: This
program, administered by ED's Office of Elementary and Secondary
Education,

[[Page 2398]]

supports the creation of community learning centers that provide
academic enrichment opportunities during non-school hours for children,
particularly students who attend high-poverty and low-performing
schools. The program helps students meet State and local student
standards in core academic subjects, such as reading and math; offers
students a broad array of enrichment activities that can complement
their regular academic programs; and offers literacy and other
educational services to the families of participating children.
[ssquf] Gaining Early Awareness and Readiness for Undergraduate
Programs (``GEAR UP''): Under this program, ED's Office of
Postsecondary Education awards discretionary grants to (1) States and
(2) partnerships of local educational agencies and institutions of
higher education, which may also include community organizations or
entities as additional partners, to provide services at high-poverty
middle and high schools to increase the number of low-income students
who are prepared to enter and succeed in postsecondary education.
[ssquf] Citizenship and Integration Grant Program: Administered by
DHS's U.S. Citizenship and Immigration Services (``USCIS''), the
Citizenship and Integration Grant Program has helped more than 290,000
lawful permanent residents (``LPRs'') prepare for U.S. citizenship. The
program assists non-profit organizations in providing citizenship
instruction and application assistance to LPRs.
[ssquf] VA Homeless Providers Grant and Per Diem Program: VA's
Homeless Programs Office administers this program, which awards funds
to community organizations providing services to veterans experiencing
homelessness to ensure the availability of supportive housing and
services, with the goal of helping homeless veterans achieve
residential stability.
[ssquf] Supportive Services for Veteran Families: This program,
administered by VA's Homeless Programs Office, awards grants to
selected private non-profit organizations and consumer cooperatives to
assist very low-income veteran families residing in or transitioning to
permanent housing. Grantees provide a range of supportive services to
eligible veteran families that are designed to promote housing
stability.
Under these and other social services programs, Federal funds are
not distributed directly to individuals but, rather, are distributed to
recipients--for example, State and local governments, school districts,
nonprofit organizations, institutions of higher education, and other
entities--that use the Federal funds to provide services to the
programs' intended beneficiaries. This proposed rule generally refers
to these recipients as ``providers'' or ``grantees,'' and to those whom
they serve, either directly or through sub-recipients, as
``beneficiaries.'' In administering these programs, the providers must
comply both with applicable Federal law and with the terms and
conditions under which they receive Federal funding from the Agencies.
For example, applicants for Federal funds through the Office of Justice
Programs at DOJ must certify that in administering any Federal award
they will comply with all relevant Federal civil rights and
nondiscrimination laws.
Consistent with Executive Order 14015, the Agencies propose to
amend the 2020 Rule for several reasons. First, it is central to the
Agencies' missions that federally funded services and programs, such as
those listed above, reach the widest possible eligible population,
including historically marginalized communities. Second, the Agencies
seek to address and correct inconsistencies and confusion raised by the
2020 Rule. To meet these objectives, the Agencies propose to amend the
2020 Rule as described in this preamble and as set forth in each
agency's proposed revisions to its relevant regulatory texts.

A. Beneficiary Protections

Executive Order 14015 recognizes that ``[i]t is important that the
Federal Government strengthen the ability of'' faith-based and other
community organizations ``to deliver services effectively in
partnership with Federal, State, and local governments and with other
private organizations, while preserving our fundamental constitutional
commitments guaranteeing the equal protection of the laws and the free
exercise of religion and forbidding the establishment of religion.'' 86
FR 10007. The Agencies are committed to ensuring that all beneficiaries
and potential beneficiaries have access to federally funded services
and programs without unnecessary barriers and free from discrimination.
To that end, and consistent with prior iterations of these rules, both
the 2016 Rule and the 2020 Rule contained provisions prohibiting
providers from discriminating against a program beneficiary or
prospective beneficiary ``on the basis of religion, a religious belief,
a refusal to hold a religious belief, or a refusal to attend or
participate in a religious practice.'' Those prohibitions against
religious discrimination apply in direct and indirect aid programs
alike,\1\ and they reflect one of the fundamental principles set forth
in section 2(d) of Executive Order 13279, as amended by section 1(b) of
Executive Order 13559. 75 FR 71320. The Agencies are retaining those
regulatory provisions. The 2020 Rule added a requirement for all
Agencies except USAID that notices or announcements of award
opportunities and notices of awards or contracts include language
regarding providers' obligations not to discriminate against
prospective or current program beneficiaries on the basis of
religion.\2\ The Agencies are also retaining that requirement.
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\1\ See, e.g., 34 CFR 75.52(e), 76.52(e) (ED); 2 CFR 3474.15(f)
(ED); 6 CFR 19.5 (DHS); 7 CFR 16.4(a) (USDA); 22 CFR 205.1(e)
(USAID); 24 CFR 5.109(g) (HUD); 28 CFR 38.5(c) (DOJ); 29 CFR 2.33(a)
(DOL); 38 CFR 50.2(d) (VA); 45 CFR 87.3(d) (HHS). While certain VA
program-specific regulations limit the applicability of the
nondiscrimination requirement to the provision of ``direct program
assistance,'' 38 CFR 61.64(e), 62.62(e), that just reflects that
direct assistance is the only type of assistance that those programs
administer.
\2\ USAID adopted a slightly different requirement, providing
that its notices or announcements of funding opportunities indicate
that faith-based organizations are eligible on the same basis as any
other organization subject to the protections and requirements of
Federal law. 85 FR 82135 (revising 22 CFR 205.1(a)(4)). USAID
proposes to retain that requirement.
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The 2016 Rule required that, in programs supported by direct
Federal financial assistance, beneficiaries and potential beneficiaries
also be made aware of these prohibitions on discrimination, but the
2020 Rule removed this notice requirement.\3\ Because the purpose of
making providers aware of nondiscrimination requirements is to ensure
that beneficiaries can access services free from discrimination, the
Agencies believe that beneficiaries should also be made aware of rights
and protections that are due to them. All Agencies except USAID
therefore propose to reinstate the requirement that organizations
providing social services

[[Page 2399]]

under Agencies' direct Federal financial assistance programs give
written notice to beneficiaries and prospective beneficiaries of
certain nondiscrimination protections, and to apply this requirement to
all such providers, whether they are faith-based or secular. The
Agencies may, as appropriate, require providers to include this notice
as part of a broader and more general notice of nondiscrimination on
additional grounds.
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\3\ Due to the unique characteristics of USAID-funded programs
implemented abroad in foreign countries, USAID declined to adopt
written notification or referral requirements in the 2016 Rule and,
accordingly, did not have to amend its regulations in 2020 to remove
or otherwise alter such requirements. Because the notification and
referral requirements proposed by the rest of the Agencies here
continue to remain unworkable and impractical in the international
context, USAID does not propose to amend its regulatory text to
adopt the beneficiary notification requirement. In addition, USAID
did not amend its regulations in 2020 to state that providers at
which beneficiaries choose to expend indirect aid may require
attendance at all activities that are fundamental to the program, as
discussed below. There is therefore no need for USAID to remove such
language from its regulations, as the other Agencies are proposing
to do. For these reasons, USAID does not join in this section (Part
II.A) of the preamble.
---------------------------------------------------------------------------

The 2016 Rule also required the notification to beneficiaries to
inform them that, if they were to object to the religious nature of a
given provider, the provider would be required to make reasonable
efforts to refer them to an alternative provider. The 2020 Rule
eliminated that requirement. The Agencies believe, however, that
providing assistance to beneficiaries seeking alternative providers
would help advance the overarching goal of facilitating access to
federally funded programs and services. Without such assistance, it may
be challenging for beneficiaries or prospective beneficiaries
unfamiliar with Federal grant programs to identify other federally
funded providers.
To inform the path forward, the Agencies have reviewed the
implementation of the referral requirement under the 2016 Rule and
determined that its utility and feasibility varied significantly by
agency and by program. For one thing, although a provider might be in
the best position to identify other similar service providers within a
certain proximity, the provider might not be aware which other
providers receive Federal funds. Further, for certain programs--for
example, programs that fund one service provider per region, or
programs that allow for many different types of services using Federal
funds--the program design itself might preclude a meaningful referral
option. Therefore, with the exception of USAID, the Agencies are
proposing a modified version of the 2016 Rule's referral procedure that
would encourage Agencies, when appropriate and feasible, or State
agencies and other entities that might be administering a federally
funded social service program, to provide notice to beneficiaries or
prospective beneficiaries about how to obtain information about other
available federally funded service providers.
Finally, with the exception of USAID, the Agencies are proposing to
remove language added by the 2020 Rule stating that providers at which
beneficiaries choose to expend indirect aid ``may require attendance at
all activities that are fundamental to the program.'' E.g., 85 FR 82139
(revising 28 CFR 38.5(c)) (DOJ). This additional language, which was
not added by USAID in the 2020 Rule, created a confusing tension with
the first sentence of the same provision and with the language of the
Executive order on which it is based, which provides that organizations
that receive Federal financial assistance under social service programs
``should not be allowed to discriminate against current or prospective
program beneficiaries on the basis of . . . a refusal to attend or
participate in a religious practice.'' E.O. 13279, section 2(d), as
amended by E.O. 13559, section 1(b), 75 FR 71320.

B. Indirect Federal Financial Assistance

With the exception of USAID, the Agencies are proposing two changes
to the definition of ``indirect Federal financial assistance,'' both
designed to clarify the operation of the rule.\4\ When the Agencies
first promulgated the regulation here--indicating that faith-based
organizations were eligible to participate in grant or contract
programs administered by the Agencies on the same basis as any other
outside organization--they attached certain conditions to the
acceptance of ``direct financial assistance.'' E.g., 69 FR 2832, 2838-
41 (Jan. 21, 2004) (DOJ). These conditions included the requirements
not to use the direct assistance for ``inherently religious
activities'' and to separate, by time or location, any such activities
carried out by the program provider at its own expense. E.g., id. at
2838-40 (adding 28 CFR 38.1(b)(1), 38.2(b)(1)) (DOJ). DOJ's 2004 rule
did not specifically define the terms ``direct'' or ``indirect,'' and
most of its express references to either type of assistance concerned
the conditions attached to direct assistance, which by negative
implication did not attach to indirect assistance.
---------------------------------------------------------------------------

\4\ USAID does not fund programs involving indirect Federal
financial assistance as that term is used within this proposed rule
and has never defined indirect Federal financial assistance in its
rule. USAID is not proposing to amend its regulatory text to add a
definition of indirect Federal financial assistance at this time.
Accordingly, USAID does not join in this section (Part II.B) of the
preamble.
---------------------------------------------------------------------------

The 2004 rules for several Agencies did, however, include separate
provisions stating that the restrictions on inherently religious
activities did not apply when a religious organization received
Department funds ``as a result of a genuine and independent private
choice of a beneficiary.'' E.g., id. at 2839-41 (adding 28 CFR 38.1(i),
38.2(i)) (DOJ). This language echoed the Supreme Court's declaration in
Zelman v. Simmons-Harris that when program beneficiaries direct the use
of government aid to religious schools ``wholly as a result of [the
beneficiaries'] own genuine and independent private choice, the program
is not readily subject to challenge under the Establishment Clause,''
even when the religious schools in question include religious
instruction in the funded program. 536 U.S. 639, 652 (2002). DOJ's 2004
rule further clarified that a beneficiary is considered to exercise
this ``genuine and independent private choice'' when, for example, the
beneficiary ``redeems a voucher, coupon, or certificate, allowing the
beneficiary to direct where funds are to be paid, or a similar funding
mechanism provided to that beneficiary and designed to give that
beneficiary a choice among providers.'' E.g., 69 FR 2839, 2841 (adding
28 CFR 38.1(i), 38.2(i)) (DOJ).
In 2016, the Agencies amended their regulations to define the terms
``direct'' and ``indirect'' Federal financial assistance. E.g., 81 FR
19419 (revising 28 CFR 38.3(a), (b)) (DOJ). The common formulation was
that `` `[d]irect Federal financial assistance' or `Federal financial
assistance provided directly' refers to situations where the Government
or an intermediary . . . selects the provider and either purchases
services from that provider (e.g., via a contract) or awards funds to
that provider to carry out a service (e.g., via a grant or cooperative
agreement).'' E.g., id. (revising 28 CFR 38.3(a)(1)) (DOJ). In
contrast, the Agencies explained, ``[i]ndirect Federal financial
assistance'' or ``Federal financial assistance provided indirectly''
referred to situations where the choice of the service provider was
placed in the hands of the beneficiary, and the cost of that service
was paid through a voucher, certificate, or other similar means of
Government-funded payment. See, e.g., id. (revising 28 CFR 38.3(b))
(DOJ). Federal financial assistance provided to an organization is
considered ``indirect,'' the 2016 Rule said, when (1) the Government
``program through which the beneficiary receives the voucher,
certificate, or other similar means of government-funded payment is
neutral toward religion''; (2) the organization ``receives the
assistance as a result of a decision of the beneficiary, not a decision
of the Government''; and (3) the ``beneficiary has at least one
adequate secular option for the use of the voucher, certificate, or
other similar means of government-funded payment.'' See, e.g., id. The
joint preamble to the 2016 Rule explained that this definition

[[Page 2400]]

was designed to ``align[ ] with the constitutional principles''
articulated in Zelman and noted that ``the voucher scheme at issue in
Zelman, which was described by the Court as a program of `true private
choice,' was neutral toward religion and offered beneficiaries adequate
secular options.'' Id. at 19361-62. The 2016 Rule continued to attach
the same conditions to ``direct'' aid: e.g., no Federal funds for what
were now called ``explicitly religious activities''; and keeping those
activities, when funded by the program provider, separate in time or
location. E.g., id. at 19419 (revising 28 CFR 38.2(a), 38.5(a)) (DOJ).
In 2020, the Agencies revised the definition of ``indirect Federal
financial assistance,'' collapsing the second and third parts of the
three-part test in the 2016 Rule into a second part requiring that
``[t]he service provider receive[ ] the assistance as a result of an
independent choice of the beneficiary, not a choice of the
Government.'' E.g., 85 FR 82138 (revising 28 CFR 38.3(b)) (DOJ). The
Agencies explained that this revision was designed to ``align more
closely with'' Zelman ``by removing the requirement that beneficiaries
have at least one secular option.'' Id. at 82040 (citation omitted).
They identified two primary concerns motivating the change. First, they
did not read Zelman to ``say that secular options must be available in
a given geographic area in order for an indirect-aid program to satisfy
the Establishment Clause,'' pointing to the Supreme Court's
observations that the distribution of religious and nonreligious
schools in Ohio `` `did not arise as a result of the [school-choice]
program' '' and that allowing the geographic distribution of providers
to determine the constitutionality of an indirect-aid program could ``
`lead to the absurd result that a neutral school-choice program might
be permissible in some parts of Ohio . . . but not in' others.'' Id. at
82073 (quoting Zelman, 536 U.S. at 656-57). Second, they expressed
concern that the alternative-provider requirement created ``some level
of distinction between secular and religious providers based solely on
religious character,'' id. at 82074, which might bring the rule into
conflict with the Supreme Court's interpretation of the Free Exercise
Clause in cases subsequent to the 2016 Rule, primarily Trinity Lutheran
Church of Columbia, Inc. v. Comer, 137 S. Ct. 2012 (2017), and Espinoza
v. Mont. Dep't of Revenue, 140 S. Ct. 2246 (2020). ``When a secular
provider option was not present,'' the preamble explained, ``this
requirement precluded `otherwise eligible recipients'-- the
beneficiaries and the providers--from accessing a public benefit
`solely because of' the provider's `religious character.' '' 85 FR
82074.
The Agencies remain mindful of the concerns expressed in the 2020
Rule preamble but are concerned that the changes to the regulatory
language in 2020 have engendered confusion. For one thing, the
potential availability to beneficiaries of a practical option to use
indirect aid for services that do not involve explicitly religious
activities is a significant factor in determining whether beneficiaries
choose to expend indirect aid with religious providers ``wholly as a
result of their own genuine and independent private choice''--the
Establishment Clause standard the Supreme Court articulated in Zelman.
536 U.S. at 652. ``The Establishment Clause question,'' the Court wrote
in the context of the school voucher program at issue there, ``must be
answered by evaluating all options Ohio provides Cleveland
schoolchildren, only one of which is to obtain a program scholarship
and then choose a religious school.'' Id. at 655-56. The Court
repeatedly drew attention to the presence of secular schools as an
option for parents and children in upholding Ohio's voucher program,\5\
as did Justice O'Connor in her concurring opinion.\6\ And lower courts
applying Zelman have accordingly viewed the availability of adequate
secular alternatives as a significant factor in determining whether a
program affords ``true private choice,'' in which case the government
is not responsible for the religious uses of the aid.\7\ The Agencies
do not read Zelman or subsequent cases to suggest that the availability
of adequate secular alternatives is immaterial to the question of
whether the Establishment Clause imposes any limits on the provision of
services in programs funded through indirect aid.
---------------------------------------------------------------------------

\5\ See, e.g., Zelman, 536 U.S. at 653 (``The program permits
the participation of all schools within the district, religious or
nonreligious.''); id. at 655 (``Cleveland schoolchildren enjoy a
range of educational choices: They may remain in public school as
before, remain in public school with publicly funded tutoring aid,
obtain a scholarship and choose a religious school, obtain a
scholarship and choose a nonreligious private school, enroll in a
community school, or enroll in a magnet school.''); id. at 657
(``[B]y all accounts the program has captured a remarkable cross-
section of private schools, religious and nonreligious.''); id. at
659 (noting ``(1) the more than 1,900 Cleveland children enrolled in
alternative community schools, (2) the more than 13,000 children
enrolled in alternative magnet schools, and (3) the more than 1,400
children enrolled in traditional public schools with tutorial
assistance''); id. at 662 (concluding that the Ohio program
permitted families ``to exercise genuine choice among options public
and private, secular and religious'').
\6\ See, e.g., id. at 663 (``I think it is worth elaborating on
the Court's conclusion that this inquiry should consider all
reasonable educational alternatives to religious schools that are
available to parents.''); id. at 670-71 (``The District Court record
demonstrates that nonreligious schools were able to compete
effectively with Catholic and other religious schools in the
Cleveland voucher program.'').
\7\ See, e.g., Ams. United for Separation of Church & State v.
Prison Fellowship Ministries, Inc., 509 F.3d 406, 425 (8th Cir.
2007) (``In this case, there was no genuine and independent private
choice. The inmate could direct the aid only to InnerChange. The
legislative appropriation could not be directed to a secular
program, or to general prison programs.''); Am. Jewish Cong. v.
Corp. for Nat'l & Cmty. Serv., 399 F.3d 351, 358 (D.C. Cir. 2005)
(``When enough non-religious options exist, those participants who
choose to teach in religious schools do so only as a result of their
own genuine and private choice.''); Rainey v. Samuels, 130 F. App'x
808, 811 (7th Cir. 2005) (``Nor does Rainey contend that religious
entities are the only providers of `parental training' under
contract with the state, so that he lacks an opportunity for
choice.''); Eulitt v. Me. Dep't of Educ., 386 F.3d 344, 348 (1st
Cir. 2004) (``The Zelman Court announced that indirect public aid to
sectarian education is constitutionally permissible when the
financial assistance program has a valid secular purpose, provides
benefits to a broad spectrum of individuals who can exercise genuine
private choice among religious and secular options, and is neutral
toward religion.''); Freedom from Religion Found., Inc. v. McCallum,
324 F.3d 880, 881-82 (7th Cir. 2003) (``Parole officers who
recommend Faith Works are required to offer the offender a secular
halfway house as an alternative.''); see also Winn v. Ariz.
Christian Sch. Tuition Org., 562 F.3d 1002, 1017 (9th Cir. 2009)
(true private choice lacking because ``[t]he vast majority of the
scholarship money under the program--over 85 percent as of the time
of plaintiffs' complaint--is available only for use at religious
schools''), rev'd on other grounds, 563 U.S. 125 (2011).
---------------------------------------------------------------------------

The 2020 Rule preamble also raised a possible misunderstanding
about the implications of a finding that some beneficiaries lack
genuine and independent private choice in an indirect aid program. That
preamble assumed that in such a situation, the religious organizations
in question would be precluded from participating in the program,
potentially raising Free Exercise Clause concerns under Trinity
Lutheran and Espinoza. If, however, an Agency determines that ``genuine
and independent private choice'' is absent for particular
beneficiaries, including because providers that offer secular programs
are as a practical matter unavailable, Zelman would not require the
Agency to terminate the indirect aid program or disallow beneficiaries
from redeeming their vouchers or certificates at religious providers.
The Agency would instead need to take other appropriate steps to remedy
the problem, such as expanding the universe of reasonably available
providers to include secular options or requiring existing providers to
observe the same conditions that the rule

[[Page 2401]]

attaches to direct aid.\8\ These remedies would ensure that
beneficiaries are not effectively required to participate in religious
activities in order to receive the benefits of the federally funded
program and that the Government is not responsible for the use of the
aid to support explicitly religious activities.
---------------------------------------------------------------------------

\8\ The Supreme Court's recent decision in Carson v. Makin, 142
S. Ct. 1987 (June 21, 2022), does not call into question these
longstanding conditions on the use of direct aid. Carson suggested
that ``use-based discrimination'' was no ``less offensive to the
Free Exercise Clause'' than discrimination on the basis of an aid
recipient's religious character, id. at 2001, but it did so in the
context of a ``neutral benefit program in which public funds
flow[ed] to religious organizations through the independent choices
of private benefit recipients,'' id. at 1997--i.e., an indirect aid
program. See Me. Stat. tit. 20-A, sec. 5204(4) (providing that the
State of Maine would ``pay the tuition . . . at the public school or
the approved private school of the parent's choice at which the
student is accepted'' (emphasis added)). Nothing in Carson,
moreover, affects the longstanding doctrine that the Establishment
Clause generally prohibits the use of aid received directly from the
government for ``specifically'' or ``inherently'' religious
activities, see, e.g., Bowen v. Kendrick, 487 U.S. 589, 621-22
(1988); Mitchell v. Helms, 530 U.S. 793, 840-41 (2000) (O'Connor,
J., concurring in the judgment); nor did the Court in Carson suggest
that statutory and regulatory restrictions on such religious uses of
direct aid violate the Free Exercise Clause.
The Court in Carson also determined that Maine's requirement
that any school receiving tuition payments from the State be ``a
nonsectarian school,'' Me. Stat. tit. 20-A, sec. 2951(2), was a form
of impermissible discrimination because certain schools were
``disqualified from this generally available benefit `solely because
of their religious character,''' 142 S. Ct. at 1997 (quoting Trinity
Lutheran, 137 S. Ct. at 2021). Here, in contrast, were the Agencies
to determine that conditions of ``genuine and independent private
choice'' were lacking for particular beneficiaries, the Agencies
would not disqualify the religious providers from receiving vouchers
or certificates as a result of beneficiaries' genuine and
independent private choices. At most, the Agencies would merely
require the religious providers to observe the same rules as all
other providers for the use of direct aid.
---------------------------------------------------------------------------

In this proposed rule, the Agencies are continuing to define
``indirect Federal financial assistance,'' but that definition would
now reflect not only the form of aid--the fact that the choice of
service provider is placed in the hands of beneficiary, and the cost of
that service is paid through a voucher, certificate, or other similar
means of Government-funded payment--but also the constitutional
prerequisites Zelman identified as necessary to avoid Establishment
Clause concerns. Accordingly, and for the reasons stated above, the
Agencies are proposing two changes to the second part of the
definition. First, the Agencies are proposing to revise the language to
track that of Zelman more closely and thus make even clearer that the
regulations incorporate the understanding of ``indirect'' aid in that
decision. For Federal financial assistance to qualify as ``indirect''
under Zelman, a service provider must receive the assistance ``wholly
as a result of'' a ``genuine and independent private choice'' of the
beneficiary, not a choice of the Government. 536 U.S. at 652. The
proposed rule thus would add the words ``wholly,'' ``genuinely,'' and
``private'' to the definition of ``indirect Federal financial
assistance,'' to emphasize the private and voluntary nature of any
decision to allocate indirect aid to a service provider that uses the
aid for explicitly religious activities.
Second, the Agencies are proposing to add a sentence to the second
part of the definition of ``indirect Federal financial assistance,''
stating that the availability of adequate secular alternatives is a
significant factor in determining whether a program affords true
private choice. This sentence is designed to eliminate any confusion
about the continuing relevance of alternative secular providers in
determining whether a particular aid program is indirect. Again, if an
Agency is responsible for selecting service providers in an indirect
aid program, and if an Agency determines, based upon available
information, that certain beneficiaries are as a practical matter
unable to exercise genuinely independent and private choice and might
as a result effectively have no alternative but to expend the aid at a
service provider that includes explicitly religious activities in its
program, the Agency will not disqualify that provider. Rather, it will
take steps outlined above, which may include finding ways to give
beneficiaries the choice of other providers that do not include
explicitly religious activities or requirements in their programs or
requiring that all providers reasonably available to the beneficiaries
observe the conditions that apply to direct aid. The Agencies would
make such a determination on a case-specific basis, considering all the
circumstances of which the Agency is reasonably aware.
With this understanding of the remedial approach to circumstances
in which a beneficiary lacks ``genuinely independent and private
choice,'' the proposed clarifications to the definition of indirect
Federal financial assistance avoid any conflict with the
nondiscrimination principle in Trinity Lutheran and Espinoza, which the
2020 Rule cited as a motivating concern for its changes to the
definition. Under those cases, ``disqualifying otherwise eligible
recipients from a public benefit `solely because of their religious
character' imposes `a penalty on the free exercise of religion that
triggers the most exacting scrutiny.' '' Espinoza, 140 S. Ct. at 2255
(quoting Trinity Lutheran, 137 S. Ct. at 2021). Under this proposed
rule, in contrast, a determination that ``genuine and independent
private choice'' is lacking in a particular geographic area will not
result in disqualifying religious providers or in any other kind of
religious discrimination.

C. Eligibility of Faith-Based Organizations

Consistent with the First Amendment and other Federal protections
for religious liberty, it has long been Federal policy that faith-based
organizations are eligible to participate in Agencies' grant-making
programs on the same basis as any other organizations, that the
Agencies will not discriminate against faith-based organizations in the
selection of service providers, and that faith-based and other
organizations may request accommodations from program requirements and
may be afforded such accommodations in accordance with Federal law. The
2020 Rule did not substantively alter these policies but instead sought
to clarify them. In so doing, though, the 2020 Rule introduced
confusion regarding the protections the law affords to faith-based
organizations and others.
The 2020 Rule indicated that the Agencies would not discriminate in
their selection of service providers on the basis of religious
exercise, but effectively defined that term twice. The 2020 Rule did so
first with reference to the statutory definition of the term
``religious exercise'' contained in the Religious Land Use and
Institutionalized Persons Act, 42 U.S.C. 2000cc et seq. E.g., 85 FR
82138 (revising 28 CFR 38.3(g)) (DOJ). It did so second with reference
to three specific bases of possible discrimination: (1) because of
conduct that would not be considered grounds to disfavor a secular
organization; (2) because of conduct that must or could be granted an
appropriate accommodation in a manner consistent with the Religious
Freedom Restoration Act (``RFRA''), 42 U.S.C. 2000bb et seq., or the
Religion Clauses of the First Amendment to the Constitution; or (3)
because of the actual or suspected religious motivation of the
organization's religious exercise. E.g., 85 FR 82138 (revising 28 CFR
38.4(a)) (DOJ). This second definition introduced confusion by tying
the Agencies' longstanding nondiscrimination policies in selecting
service providers to accommodation determinations that Agencies
generally do not make until after an organization

[[Page 2402]]

has been selected. Injecting the language about accommodations into the
nondiscrimination provision was designed to assure prospective
providers that an Agency would not refuse to consider their
applications merely because it was possible they would seek an
accommodation from program requirements, but it created the
misimpression that the Agencies would be bound to make such
accommodations even when the accommodation would be permissive rather
than required by Federal law.
The proposed rule seeks to clarify the nature of the protections
for faith-based organizations by decoupling its religious
nondiscrimination protections from the question of accommodations.
First, the proposed rule would state more directly that the Agencies
will not, in their selection of service providers, discriminate on the
basis of an organization's religious character, motives, or
affiliation, or lack thereof, or on the basis of conduct that would not
be considered grounds to disfavor a similarly situated secular
organization such as one that has the same capacity to effectively
provide services. For example, the 2020 Rule bars discrimination on the
basis of an organization's ``religious motivation,'' but only
indirectly, through its definition of discrimination on the basis of
religious exercise. E.g., 85 FR 82138 (revising 28 CFR 38.4(a)(3))
(DOJ). The proposed rule maintains the same prohibition but states it
more plainly, barring the Agencies from discriminating on the basis of
religious motives. The proposed language would thus maintain the
Agencies' longstanding policies in this area and would further
guarantee that the Agencies will not discriminate against providers on
grounds that would violate the First Amendment.
With regard to possible accommodations from program requirements,
the proposed rule would make clear that the Agencies will continue to
consider requests for accommodations, on a case-by-case basis, in
accordance with the Constitution and Federal statutes. To ensure that
faith-based and other organizations are not dissuaded from
participating in the Agencies' programs at the selection phase, the
proposed rule would state that the Agencies will not disqualify any
organization from participating in a program simply because that
organization has indicated it may request an accommodation. Only if the
organization makes clear at the time of application that it will not
participate in the program if the accommodation is not granted, and the
Agency determines that it will not grant the accommodation, would the
Agency be permitted to deny the application on that basis. In such a
case, the Agency would not be ``disqualifying otherwise eligible
recipients from a public benefit `solely because of their religious
character,' '' Espinoza, 140 S. Ct. at 2255 (quoting Trinity Lutheran,
137 S. Ct. at 2021), but instead because the potential recipient had
already represented that it could not abide by certain terms or
conditions of the program. That organization would be treated the same
as any other organization that decided for nonreligious reasons that it
could not or would not comply with the terms and conditions of the
program. If the accommodation is required by law, the Agency would not
deny an application for that reason but would proceed to assess whether
the organization entitled to the accommodation is qualified to receive
the funds and participate in the social service program.

D. Title VII

Before 2020, most of the Agencies' regulations generally provided
that a religious organization's limited exemption from the Federal
prohibition on employment discrimination on the basis of religion, set
forth in section 702(a) of the Civil Rights Act of 1964 (``Title
VII''), 42 U.S.C. 2000e-1(a), is not forfeited just because the
organization receives direct or indirect financial assistance from an
awarding agency. In the 2020 Rule, VA joined the other Agencies by
adding explicit language stating that the section 702 exemption
continues to apply when a religious organization receives Federal
financial assistance. Also in the 2020 Rule, ED, HHS, DOL, USAID, and
VA added text indicating that the Title VII religious exemption allows
hiring of persons on the basis of their ``acceptance of or adherence to
religious tenets of the organization.'' E.g., 85 FR 82128 (revising 34
CFR 75.52(g)) (ED); 85 FR 82141 (revising 29 CFR 2.37) (DOL).
Title VII states in relevant part that it shall not apply to ``a
religious corporation, association, educational institution, or society
with respect to the employment of individuals of a particular religion
to perform work connected with the carrying on by such corporation,
association, educational institution, or society of its activities.''
42 U.S.C. 2000e-1(a). The applicability of Title VII's religious
exemption is governed by the text of that statute, any other applicable
laws (e.g., nondiscrimination laws and program statutes that prohibit
discrimination on the basis of religion when hiring), and the caselaw
interpreting these authorities.
The Title VII religious exemption generally allows qualifying
religious organizations to hire only people of a particular religion in
the absence of any inconsistent statutes, but as numerous courts have
held, the Title VII religious exemption does not permit such
organizations to discriminate against workers on the basis of another
protected classification, even when an employer takes such action for
sincere reasons related to its religious tenets (such as those that
might amount to discrimination on the basis of employees' sex).\9\ The
2020 Rule added text that could mistakenly suggest that Title VII
permits religious organizations that qualify for the Title VII
religious exemption to insist upon tenets-based employment conditions
that would otherwise violate Title VII or the particular underlying
funding statute in question. Those Agencies that added the text on
religious tenets in the 2020 Rule therefore propose to remove that
language because it is unnecessary and potentially misleading.
---------------------------------------------------------------------------

\9\ See, e.g., Kennedy v. St. Joseph's Ministries, Inc., 657
F.3d 189, 192 (4th Cir. 2011) (The Title VII religious exemption
``does not exempt religious organizations from Title VII's
provisions barring discrimination on the basis of race, gender, or
national origin.''); Cline v. Catholic Diocese of Toledo, 206 F.3d
651, 658 (6th Cir. 2000) (The Title VII religious exemption does not
exempt religious organizations ``with respect to all discrimination.
Title VII still applies to a religious institution charged with sex
discrimination.'' (quotation marks and alterations omitted));
DeMarco v. Holy Cross High Sch., 4 F.3d 166, 173 (2d Cir. 1993)
(Religious organizations that qualify for the Title VII religious
exemption ``are subject to Title VII provisions relating to
discrimination based on race, gender and national origin.''); see
also Memorandum for William P. Marshall, Deputy Counsel to the
President, from Randolph D. Moss, Assistant Attorney General, Office
of Legal Counsel, Re: Application of the Coreligionists Exemption in
Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e-1(a), to
Religious Organizations That Would Directly Receive Substance Abuse
and Mental Health Services Administration Funds Pursuant to Section
704 of H.R. 4923, the ``Community Renewal and New Markets Act of
2000'' (Oct. 12, 2000); Proposal to Rescind Implementing Legal
Requirements Regarding the Equal Opportunity Clause's Religious
Exemption, 86 FR 62115, 62116, 62119-20 (Nov. 9, 2021) (DOL).
---------------------------------------------------------------------------

Title VII itself, the case law interpreting the statute, and the
terms of program-specific statutes provide the controlling standards
for when and to what extent Title VII's religious exemption should
apply. Constitutional doctrines might also be implicated in some cases.
For example, antidiscrimination laws, including Title VII, are subject
to constitutional limitations as applied to certain decisions by some
religious organizations concerning their

[[Page 2403]]

``ministerial'' employees.\10\ And the Agencies must be careful not to
unduly interrogate the plausibility of the religious justification in
assessing whether a religious tenets claim is a pretext for some other,
impermissible form of employment discrimination.\11\ In addition, as
the Supreme Court recently recognized, ``how these doctrines protecting
religious liberty interact with Title VII are questions for future
cases.'' Bostock v. Clayton Cnty., 140 S. Ct. 1731, 1754 (2020).\12\
---------------------------------------------------------------------------

\10\ See, e.g., Our Lady of Guadalupe Sch. v. Morrissey-Berru,
140 S. Ct. 2049 (2020); Hosanna-Tabor Evangelical Lutheran Church &
Sch. v. EEOC, 565 U.S. 171 (2012).
\11\ See, e.g., Curay-Cramer v. Ursuline Acad. of Wilmington,
Del., Inc., 450 F.3d 130, 141 (3d Cir. 2006); Little v. Wuerl, 929
F.2d 944, 948 (3d Cir. 1991).
\12\ In Bostock, the Court explained that ``worries about how
Title VII may intersect with religious liberties are nothing new;
they even predate the statute's passage.'' 140 S. Ct. at 1754
(describing how, as a result of Congress's ``deliberations in
adopting the law, Congress included an express statutory exception
for religious organizations'' (citing 42 U.S.C. 2000e-1(a))).
Turning to its own precedents, the Court stated that it has
``recognized that the First Amendment can bar the application of
employment discrimination laws `to claims concerning the employment
relationship between a religious institution and its ministers.'''
Id. (quoting Hosanna-Tabor, 565 U.S. at 188). Finally, the Court
acknowledged that ``Congress has gone a step further yet in'' RFRA,
describing it as ``a kind of super statute'' that ``displac[es] the
normal operation of other federal laws'' and stating that ``it might
supersede Title VII's commands in appropriate cases.'' Id.
---------------------------------------------------------------------------

E. Request for Comments on Regulatory Definitions of ``Federal
Financial Assistance'' or ``Financial Assistance''

Several provisions of Executive Order 13279, including those at
issue in this rulemaking, turn on the conveyance or receipt of
``Federal financial assistance.'' Section 1(a) of the Executive Order
defines ``Federal financial assistance'' for purposes of the Order to
mean ``assistance that non-Federal entities receive or administer in
the form of grants, contracts, loans, loan guarantees, property,
cooperative agreements, food commodities, direct appropriations, or
other assistance, but does not include a tax credit, deduction, or
exemption.'' 67 FR 77141.
HUD's regulations contain a definition of ``Federal financial
assistance'' that largely follows the definition in the Executive
Order. See 24 CFR 5.109(b). DOJ's and USAID's regulations have never
defined ``Federal financial assistance.''
Of the other six Agencies, prior to the 2020 Rule the regulations
for USDA, ED, HHS, and VA also contained no definition of ``Federal
financial assistance''; the DOL regulation largely tracked the
definition from Executive Order 13279; and the DHS regulation contained
a definition that was based on the definition in the Executive Order
but that also specifically referred to, for instance, subgrants and
emergency management assistance. In the 2020 Rule, these six Agencies
adopted provisions specifying that certain forms of assistance are not
included as ``Federal financial assistance''--provisions that might be
read to be materially different from the definition in Executive Order
13279.\13\ For example, four of the Agencies' regulations exclude
``guaranty contracts'' from the definition (without any explanation of
why, or what such contracts consist of); four Agencies included
language in their regulations stating that the ``use'' of any
assistance by any individual who is the ``ultimate beneficiary'' under
certain specified programs is not ``Federal financial assistance''; and
one Agency's regulation excludes ``the use by a private participant of
assistance obtained through direct benefit programs (such as
Supplemental Nutrition Assistance Program, social security,
pensions).''
---------------------------------------------------------------------------

\13\ See 6 CFR 19.2 (DHS) (defining ``Financial assistance'' to
reflect the Executive Order 13279 definition but adding that
``Financial assistance does not include a tax credit, deduction,
exemption, guaranty contract, or the use of any assistance by any
individual who is the ultimate beneficiary under any such
program.''); 7 CFR 16.2 (USDA) (``Federal financial assistance does
not include a guarantee or insurance, regulated programs, licenses,
procurement contracts at market value, or programs that provide
direct benefits'' (emphasis omitted)); 29 CFR 2.31(a) (DOL)
(defining ``Federal financial assistance'' to reflect the Executive
Order 13279 definition but adding that the term ``does not include a
tax credit, deduction, or exemption, nor the use by a private
participant of assistance obtained through direct benefit programs
(such as Supplemental Nutrition Assistance Program, social security,
pensions)''); 34 CFR 75.52(c)(3)(iii), 76.52(c)(3)(iii) (ED)
(``Federal financial assistance does not include a tax credit,
deduction, exemption, guaranty contract, or the use of any
assistance by any individual who is the ultimate beneficiary under
any such program.'' (emphasis omitted)); 38 CFR 50.1(c) (VA)
(``Federal financial assistance does not include a tax credit,
deduction, exemption, guaranty contracts, or the use of any
assistance by any individual who is the ultimate beneficiary under
any such program.''); 45 CFR 87.1(d) (HHS) (``Federal financial
assistance does not include a tax credit, deduction, exemption,
guaranty contract, or the use of any assistance by any individual
who is the ultimate beneficiary under any such program.'').
---------------------------------------------------------------------------

The effect, if any, of these changes in the 2020 regulations is
unclear. Some of the Agencies stated in their notices of proposed
rulemaking that they were proposing these changes ``in accordance''
with Executive Order 13279, 85 FR 2889, 2892 (Jan. 17, 2020) (DHS); 85
FR 3190, 3203, 3204 (Jan. 17, 2020) (ED), or ``to align the
[regulatory] text more closely with Executive Order 13279,'' 85 FR
2929, 2933 (Jan. 17, 2020) (DOL), but the amendments themselves did not
do so. HHS offered an explanation, stating (among other things) that
``[w]hen a beneficiary acquires a good or service with the financial
assistance they have received from the government, the vendor of that
good or service is not receiving federal financial assistance.'' 85 FR
2974, 2979 (Jan. 17, 2020). This understanding about whether such
``indirect aid'' is a form of Federal financial assistance is simply
incorrect, and is belied by other provisions of the HHS regulation
itself. See 45 CFR 87.1(a), (c) (defining direct and indirect Federal
financial assistance).
Executive Order 13279 defines ``Federal financial assistance'' for
purposes of its directives, and therefore the Agencies may not refuse
to apply the requirements of Executive Order 13279 to any forms of
assistance that the Order defines as ``Federal financial assistance''--
including assistance that an agency provides to an ``ultimate
beneficiary'' and that therefore only ``indirectly'' subsidizes the
expenses of a service provider. Cf. Grove City Coll. v. Bell, 465 U.S.
555, 563-70 (1984) (holding that an institution receives ``federal
financial assistance'' for purposes of the antidiscrimination
requirements of Section 901(a) of Title IX of the Education Amendments
of 1972, 20 U.S.C. 1681(a), when it enrolls a student who pays tuition
with a Federal grant that must be used for educational purposes). With
the exception of USAID, which (as noted above) does not fund programs
involving indirect Federal financial assistance as that term is used
here, all of the Agency regulations expressly provide that they govern
indirect aid,\14\ which could only be the case if such aid qualifies as
``Federal financial assistance,'' as it does under the Executive Order.
---------------------------------------------------------------------------

\14\ See, e.g., 34 CFR 75.52(c)(3)(ii), 76.52(c)(3)(ii) (ED); 2
CFR 3474.15(c)(2) (ED); 6 CFR 19.2 (DHS); 7 CFR 16.2 (USDA); 24 CFR
5.109(b) (HUD); 28 CFR 38.3(b) (DOJ); 29 CFR 2.31(a)(2) (DOL); 38
CFR 50.1(b) (VA); 45 CFR 87.1(c) (HHS).
---------------------------------------------------------------------------

The six Agencies that made changes in 2020 to their regulatory
definitions of ``Federal financial assistance'' are concerned that the
changes could cause some confusion and possible misunderstandings among
Agency administrators, recipients, and beneficiaries. Accordingly, the
Agencies seek comment on whether an Agency that adopts a definition of
``Federal financial assistance'' in its regulation should use any
definition other than that in Executive Order 13279; on any positive or
negative effects resulting from the changes made by certain

[[Page 2404]]

Agencies in the 2020 Rule, particularly with respect to recipients and
beneficiaries; and on whether those Agencies should retain, amend, or
repeal those provisions.

F. Procedural Requirements, Technical Amendments and Miscellaneous
Updates

The Agencies propose to make technical amendments to the 2020 Rule
to enhance clarity and reduce confusion. For example, the 2016 Rule
described four ways that an applicant for Federal funds could
demonstrate nonprofit status. E.g., 81 FR 19420 (revising 28 CFR
38.5(g)(1)-(4)) (DOJ). The 2020 Rule provided a fifth methodology,
stating that ``an entity that holds a sincerely held religious belief
that it cannot apply for a determination as an entity that is tax-
exempt under section 501(c)(3) of the Internal Revenue Code'' may
instead provide ``evidence sufficient to establish that the entity
would otherwise qualify as a nonprofit organization.'' E.g., 85 FR
82139 (adding 28 CFR 38.5(g)(5)) (DOJ). Upon review and consideration,
the Agencies have determined that this provision was confusing and
unnecessary. Therefore, where applicable, the Agencies propose to
strike the fifth methodology. DHS has proposed a slightly different
standard, under which the organization may provide evidence that ``the
DHS awarding agency determines to be sufficient'' to establish that the
entity would otherwise qualify as a nonprofit organization. DHS
believes that it is capable of making this determination and that the
resources expended would be minimal, but DHS and the other Agencies
welcome comment on these proposed amendments and the potential
divergence.
Finally, where appropriate, Agencies have also proposed non-
substantive updates to their regulations, including reorganization of
certain provisions and clarifications to the text, to ensure accuracy
and consistency of implementation.

III. General Regulatory Certifications

A. Regulatory Planning and Review (Executive Order 12866); Improving
Regulation and Regulatory Review (Executive Order 13563)

This proposed rule has been drafted in accordance with Executive
Order 13563 of January 18, 2011, 76 FR 3821 (Jan. 20, 2021) (Improving
Regulation and Regulatory Review), and Executive Order 12866 of
September 30, 1993, 58 FR 51735 (Oct. 4, 1993) (Regulatory Planning and
Review).
Section 1 of Executive Order 12866 directs agencies, to the extent
permitted by law, to propose or adopt a regulation only upon a reasoned
determination that its benefits justify its costs; tailor the
regulation to impose the least burden on society, consistent with
obtaining the regulatory objectives; and, in choosing among alternative
regulatory approaches, select those approaches that maximize net
benefits. 58 FR 51735-36. Under section 6 of that Executive Order, the
Office of Information and Regulatory Affairs (``OIRA'') must determine
whether this regulatory action is ``significant'' and, therefore,
subject to the requirements of the Executive Order and subject to
review by OMB. Id. at 51740-41. Section 3(f) of Executive Order 12866
defines a ``significant regulatory action'' as an action likely to
result in a regulation that may:
(1) Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or communities
(also referred to as an ``economically significant'' regulation);
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impacts of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles stated in
Executive Order 12866.
Id. at 51738. OIRA has determined that this proposed rule is an
economically significant regulatory action subject to review by OMB
under section 3(f) of Executive Order 12866. Accordingly, OMB has
reviewed this proposed rule.
The Agencies have also reviewed this proposed rule under Executive
Order 13563, which supplements and reaffirms the principles,
structures, and definitions governing regulatory review established in
Executive Order 12866. To the extent permitted by law, section 1(b) of
Executive Order 13563 requires that an agency:
(1) Propose or adopt regulations only upon a reasoned determination
that their benefits justify their costs (recognizing that some benefits
and costs are difficult to quantify);
(2) Tailor its regulations to impose the least burden on society,
consistent with obtaining regulatory objectives, and taking into
account--among other things and to the extent practicable--the costs of
cumulative regulations;
(3) In choosing among alternative regulatory approaches, select
those approaches that maximize net benefits (including potential
economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity);
(4) To the extent feasible, specify performance objectives, rather
than the behavior or manner of compliance that regulated entities must
adopt; and
(5) Identify and assess available alternatives to direct
regulation, including providing economic incentives--such as user fees
or marketable permits--to encourage the desired behavior, or providing
information that enables the public to make choices.
76 FR 3821. Section 1(c) of Executive Order 13563 also requires an
agency ``to use the best available techniques to quantify anticipated
present and future benefits and costs as accurately as possible.'' Id.
OIRA has emphasized that these techniques may include ``identifying
changing future compliance costs that might result from technological
innovation or anticipated behavioral changes.'' Memorandum for the
Heads of Executive Departments and Agencies, and of Independent
Regulatory Agencies, from Cass R. Sunstein, Administrator, Office of
Information and Regulatory Affairs, Re: Executive Order 13563,
``Improving Regulation and Regulatory Review'' at 1 (Feb. 2, 2011),
<a href="https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/memoranda/2011/m11-10.pdf">https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/memoranda/2011/m11-10.pdf</a>.
The Agencies are issuing this proposed rule upon a reasoned
determination that its benefits justify its costs. In choosing among
alternative regulatory approaches, the Agencies selected those
approaches that maximize net benefits. Based on the analysis that
follows, the Agencies believe that this proposed rule is consistent
with the principles in Executive Order 13563. The Agencies also have
determined that this regulatory action does not unduly interfere with
State, local, or tribal governments in the exercise of their
governmental functions.
In accordance with Executive Orders 12866 and 13563, the Agencies
have assessed the potential costs, cost savings, and benefits, both
quantitative and qualitative, of this regulatory action.
1. Costs
The potential costs of this proposed regulatory action are those
resulting from implementing the beneficiary

[[Page 2405]]

notification requirements and regulatory familiarization. DOL
previously estimated the cost of imposing a similar beneficiary
notification requirement, reporting an upper-bound estimate of $200 per
organization per year (in 2013 dollars). 81 FR 19395. This cost
estimate was based on the expectation it would take up to $100 in
annual material costs and no more than two annual burden hours for a
Training and Development Specialist to print, duplicate, and distribute
notices to beneficiaries. Id.
For the present NPRM, the Agencies adjusted the estimate to $240
(in 2021) and also replicated this methodology to generate a central
estimate of the cost per organization per year. For the replication,
the Agencies adjusted the annual materials cost to $116.32 (in 2021
dollars) using the consumer price index.\15\ The Agencies calculated
the cost of labor by multiplying the estimated time burden by the
hourly compensation of a Training and Development Specialist (SOC Code
13-1151). According to the Bureau of Labor Statistics (``BLS''), the
mean hourly wage rate for a Training and Development Specialist in May
2021 was $32.51.\16\ For this analysis, the Agencies used a fringe
benefits rate of 46 percent,\17\ resulting in a fully loaded hourly
compensation rate for Training and Development Specialists of $47.46 [=
$32.51 + ($32.51 x 0.46)]. The Agencies estimated that a Training and
Development Specialist will spend on average 2 hours ($94.93) printing,
duplicating, and distributing notices to beneficiaries. The Agencies
combined these estimates to generate a primary cost per organization of
the beneficiary notification requirement of $211.25 [= $116.32 +
$94.93]. As shown in Table 1, the Agencies estimated the total annual
cost resulting from the proposed notification requirement by
multiplying the number of covered providers of social service programs
receiving Federal financial assistance by the annual compliance cost of
the proposed notification requirement (a potential central estimate of
$211.25). Only providers receiving direct Federal financial assistance
are subject to the notification requirement in this proposed rule.
However, we could not differentiate direct recipients from indirect
recipients in calculating the annual cost of the notification
requirement, and the cost was overstated as such. On the other hand,
for some Agencies, the number of providers of social service programs
does not include sub-recipients due to data limitations. This resulted
in an underestimation of the annual cost of the notification
requirement. Overall, the annual cost of the proposed notification
requirement is likely to be underestimated in this analysis, but not
enough to change the determination of the Agencies that the benefits
justify the costs.
---------------------------------------------------------------------------

\15\ To calculate this figure, the Agencies used the data on
annual averages of the consumer price index (``CPI'') available at
BLS, CPI Inflation Calculator, <a href="https://www.bls.gov/data/inflation_calculator.htm">https://www.bls.gov/data/inflation_calculator.htm</a>. The average CPI for 2013 was $232.957; for
2021, the average CPI was $270.970. Using this ratio, the materials
cost of $100 in 2013 dollars became $116.37 in 2021 dollars [= $100
x (270.970/232.957)].
\16\ BLS, Occupational Employment and Wage Statistics, May 2021,
<a href="https://www.bls.gov/oes/current/oes131151.htm">https://www.bls.gov/oes/current/oes131151.htm</a>.
\17\ BLS, Employer Costs for Employee Compensation, <a href="https://www.bls.gov/ncs/data.htm">https://www.bls.gov/ncs/data.htm</a>. Wages and salaries averaged $26.22 per
hour worked in 2020, while benefit costs averaged $11.99, which is a
benefits rate of 46 percent. BLS, Employer Costs for Employee
Compensation Archived News Releases, <a href="https://www.bls.gov/bls/news-release/ecec.htm#2020">https://www.bls.gov/bls/news-release/ecec.htm#2020</a>.
\18\ Most Agencies provided their numbers of recipients of
financial assistance, and the averages over three years (FY2019 to
FY2021), where available, are presented in Table 1.
\19\ See the discussion preceding Table 1 for the derivation of
a $211.25 estimate. The Agencies request comment on both
quantitative approaches, including their presentation as central
estimates or bounds.
\20\ Number of recipients of DOL financial assistance under
various programs authorized by title I of the Workforce Innovation
and Opportunity Act in FY2019, FY2020, or FY2021.
\21\ Average number of prime recipients of HHS financial
assistance in affected programs in FY2019, FY2020, and FY2021.
\22\ Average number of recipients of DHS financial assistance
from USCIS's Citizenship and Integration Grant Program and the
Federal Emergency Management Agency's Disaster Case Management,
Crisis Counseling and Training Program and Emergency Food and
Shelter Program in FY2019, FY2020, and FY2021.
\23\ Average number of recipients of USDA financial assistance
from National Institute of Food and Agriculture Program, Community
Facilities Program, Single Family Housing Preservation Grant
Program, Multifamily Housing Programs, nutrition assistance programs
in FY2019, FY2020, and FY2021. All other USDA programs, including
via State partners, States and territories of the United States, and
tribal organizations, are estimates for the current fiscal year.
\24\ Average number of recipients of DOJ financial assistance
from the Office on Violence Against Women and Office of Justice
Programs in FY2019, FY2020, and FY2021.
\25\ Average number of recipients of HUD financial assistance
from Community Development Block Grant Program, HOME Investment
Partnerships, Public Housing Agency, Office of Native American
Programs, Office of Special Needs, Multifamily Assisted Property
Owners program, Office of Rural Housing and Economic Development,
and Comprehensive Housing Counseling Grant Program in FY2019,
FY2020, and FY2021.
\26\ Average number of prime recipients of USAID financial
assistance in FY2019, FY2020, and FY2021.
\27\ USAID is not proposing to adopt the notification
requirement, so this proposed rule will not result in any cost to
recipients of financial assistance from USAID.
\28\ Average number of recipients of VA financial assistance
from Supportive Services for Veteran Families and Grant and Per Diem
Programs in FY2019, FY2020, and FY2021. In addition, VA estimates
that the Staff Sergeant Parker Gordon Fox Suicide Prevention Grant
Program will fund 90 grantees in each of FY2022 and FY2023.
\29\ Average number of recipients of ED financial assistance
from discretionary grant programs and formula grant programs in
FY2019, FY2020, and FY2021.

Table 1--Annual Cost of Proposed Notification Requirement by Agency
----------------------------------------------------------------------------------------------------------------
Number of providers
of social service
Agencies programs receiving Cost per entity Annual cost
federal financial \19\
assistance \18\
(A) (B) (C = A x B)
----------------------------------------------------------------------------------------------------------------
DOL................................................... \20\ 39,981 $211.25 $8,445,986
HHS................................................... \21\ 10,287 211.25 2,173,129
DHS................................................... \22\ 10,648 211.25 2,249,390
USDA.................................................. \23\ 240,810 211.25 50,871,113
DOJ................................................... \24\ 18,152 211.25 3,834,610
HUD................................................... \25\ 45,321 211.25 9,574,061
USAID................................................. \26\ 1,251 211.25 \27\ 0
VA.................................................... \28\ 1,027 211.25 216,954
ED.................................................... \29\ 10,941 211.25 2,311,286
---------------------------------------------------------

[[Page 2406]]

Total............................................. ..................... ................. 79,676,529
----------------------------------------------------------------------------------------------------------------

The process of regulatory familiarization or reviewing the
regulation to determine how it applies (if finalized as proposed) will
impose a one-time direct cost on all covered providers of social
service programs in the first year. The Agencies calculated this cost
by multiplying the estimated time to review the rule by the hourly
compensation of a Community and Social Service Specialist (SOC Code 21-
1099). According to the BLS, the mean hourly wage rate for Community
and Social Service Specialist in May 2021 was $24.28.\30\ For this
analysis, the Agencies used a fringe benefits rate of 46 percent,\31\
resulting in a fully loaded hourly compensation rate for Community and
Social Service Specialists of $35.45 [= $24.28 + ($24.28 x 0.46)]. The
Agencies estimated that a Community and Social Service Specialist will
spend on average 30 minutes reviewing the rule ($17.72). Table 2 shows
the one-time regulatory familiarization cost by Agency in the first
year.
---------------------------------------------------------------------------

\30\ BLS, Occupational Employment and Wage Statistics, May 2021,
<a href="https://www.bls.gov/oes/current/oes211099.htm">https://www.bls.gov/oes/current/oes211099.htm</a>.
\31\ BLS, Employer Costs for Employee Compensation, <a href="https://www.bls.gov/ncs/data.htm">https://www.bls.gov/ncs/data.htm</a>. Wages and salaries averaged $26.22 per
hour worked in 2020, while benefit costs averaged $11.99, which is a
benefits rate of 46 percent.

Table 2--One-Time Regulatory Familiarization Cost by Agency
----------------------------------------------------------------------------------------------------------------
Number of providers
Agencies of social service Cost per entity Cost in the
programs first year
(A) (B) (C = A x B)
----------------------------------------------------------------------------------------------------------------
DOL................................................... 39,981 $17.72 $708,463
HHS................................................... 10,287 17.72 182,286
DHS................................................... 10,648 17.72 188,683
USDA.................................................. 240,810 17.72 4,267,153
DOJ................................................... 18,152 17.72 321,653
HUD................................................... 45,321 17.72 803,088
USAID................................................. 1,251 17.72 22,168
VA.................................................... 1,027 17.72 18,198
ED.................................................... 10,941 17.72 193,875
---------------------------------------------------------
Total............................................. ..................... ................. 6,705,567
----------------------------------------------------------------------------------------------------------------

Table 3 shows the total annualized cost at a 7 percent and a 3
percent discounting for the proposed notification requirement and the
one-time regulatory familiarization cost. For example, the annualized
cost for DOL-regulated entities is $8,546,856 at a 7 percent
discounting. The total annualized cost for all nine Agencies is
$80,631,251 at a 7 percent discounting. This total cost estimate is
likely to be understated because some sub-recipients are not included
in the analysis, but not enough to change the determination of the
Agencies that the benefits of the notification requirement justify its
costs.

Table 3--Total Cost of Notification Requirements and Regulatory Familiarization by Agency
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual cost of Total annualized Total annualized
Agencies notification One-time regulatory cost at 7 percent cost at 3 percent
requirements familiarization cost discounting discounting
--------------------------------------------------------------------------------------------------------------------------------------------------------
DOL................................................................ $8,445,986 $708,463 $8,546,856 $8,529,040
HHS................................................................ 2,173,129 182,286 2,199,082 2,194,498
DHS................................................................ 2,249,390 188,683 2,276,254 2,271,509
USDA............................................................... 50,871,113 4,267,153 51,478,659 51,371,353
DOJ................................................................ 3,834,610 321,653 3,880,406 3,872,318
HUD................................................................ 9,574,061 803,088 9,688,403 9,668,208
USAID.............................................................. 0 22,168 3,156 2,599
VA................................................................. 216,954 18,198 219,545 219,087
ED................................................................. 2,311,286 193,875 2,338,890 2,334,014
------------------------------------------------------------------------------------
Total.......................................................... ................ ....................... 80,631,251 80,462,627
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 2407]]

2. Cost Savings
The proposed notice requirement could provide some cost savings to
beneficiaries who may be able to receive free information about
alternative providers in their area and therefore may no longer need to
investigate alternative providers on their own. The Agencies invite
comments on any information that could be used to quantify this
potential cost savings. While the Agencies cannot quantify this cost
savings with a reasonable degree of confidence, the Agencies expect
this cost savings to be insignificant because the number of
beneficiaries who incur costs to identify alternative providers is
likely very small.
3. Benefits
Section 1(c) of Executive Order 13563 recognizes that some benefits
and costs are difficult to quantify and provides that, where
appropriate and permitted by law, agencies may consider and discuss
qualitative values that are difficult or impossible to quantify,
including equity, human dignity, and distributive impacts. 76 FR 3821.
The Agencies recognize a non-quantified benefit to social service
providers in the form of increased clarity, consistency, and fairness
that will result from imposing uniform notice requirements on faith-
based and secular organizations alike, in accordance with the
longstanding Federal policy that faith-based organizations are eligible
to participate in grant-making programs on the same basis as other
organizations. The proposed rule may also benefit providers, in that it
would provide a modified referral option that could ultimately connect
them with beneficiaries who are in need of their services.
Additionally, in situations in which beneficiaries lack ``true private
choice,'' the proposed rule would benefit faith-based organizations by
enabling them to continue operating indirect aid programs, consistent
with Executive Order 14015's recognition that faith-based organizations
are essential to the delivery of services in our neighborhoods.
The proposed rule would also benefit beneficiaries in several
important ways. Specifically, the proposed notice requirement would
improve beneficiaries' access to federally funded services by informing
them of their rights and thus removing certain barriers arising from
discrimination. Additionally, the proposed referral option would make
it easier for beneficiaries who object to receiving services from one
provider to learn about alternative providers. And, where such
alternatives are unavailable as a practical matter, the proposed rule
would ensure that beneficiaries are not effectively required to
participate in religious activities in order to receive the benefits of
federally funded programs. Finally, the proposed rule would benefit all
beneficiaries, including those who would freely choose faith-based
providers, by expanding the universe of providers reasonably available
to them.

B. Regulatory Flexibility Analysis

The Regulatory Flexibility Act of 1980 (``RFA''), 5 U.S.C. 601 et
seq., as amended by the Small Business Regulatory Enforcement Fairness
Act of 1996, Public Law 104-121, tit. II, 110 Stat. 847, 857, requires
Federal agencies engaged in rulemaking to consider the impact of their
proposals on small entities, consider alternatives to minimize that
impact, and solicit public comment on their analyses. The RFA requires
the assessment of the impact of a regulation on a wide range of small
entities, including small businesses, not-for-profit organizations, and
small governmental jurisdictions. Agencies must perform a review to
determine whether a proposed rule would have a significant economic
impact on a substantial number of small entities. 5 U.S.C. 603, 604.
The Agencies believe that the estimated cost of $228.97 per
provider in the first year \32\ is far less than 1 percent of the
annual revenue of even the smallest providers of social service
programs. Therefore, the Agencies certify that this proposed rule will
not have a significant economic impact on a substantial number of small
entities.
---------------------------------------------------------------------------

\32\ [= $211.25 (notification requirement) + $17.72 (rule
familiarization cost)].
---------------------------------------------------------------------------

C. Civil Justice Reform (Executive Order 12988)

Executive Order 12988 provides that agencies shall draft
regulations that meet applicable standards to avoid drafting errors and
ambiguity, minimize litigation, provide clear legal standards for
affecting conduct, and promote simplification and burden reduction. 61
FR 4729 (Feb. 7, 1996) (Civil Justice Reform). This proposed rule meets
the applicable standards set forth in sections 3(a) and 3(b)(2) of
Executive Order 12988, 61 FR 4731-32.

D. Consultation and Coordination With Indian Tribal Governments
(Executive Order 13175)

The Agencies have reviewed this proposed rule in accordance with
Executive Order 13175 and determined that it will not affect the
statutory prerogatives and authority of the Indian tribes, which is a
policy goal underlying Executive Order 13175. 65 FR 67249 (Nov. 9,
2000) (Consultation and Coordination With Indian Tribal Governments).
Tribal sovereignty and self-governance will not be affected by this
proposed rule. Accordingly, this rule does not implicate the
consultation requirements of Executive Order 13175.
HUD's policy is to consult with Indian tribes early in the process
on matters that have tribal implications. On April 11, 2022, HUD sent
letters to all tribal leaders participating in HUD programs, informing
them of the nature of this forthcoming rulemaking. HUD received no
comments in response to those letters. Tribal leaders are welcome to
provide public comments on this proposed rule.

E. Federalism (Executive Order 13132)

Section 6 of Executive Order 13132 requires Federal agencies to
consult with State entities when a regulation or policy will have a
substantial direct effect on the States, the relationship between the
National Government and the States, or the distribution of power and
responsibilities among the various levels of government within the
meaning of the Executive Order. 64 FR 43255, 43257-58 (Aug. 10, 1999)
(Federalism). Section 3(b) of the Executive Order further provides that
Federal agencies may implement a regulation limiting the policymaking
discretion of the States only if constitutional or statutory authority
permits the regulation and the regulation is appropriate in light of
the presence of a problem of national significance. Id. at 43256. The
proposed rule does not have a substantial direct effect on the States
or the relationship between the National Government and the States, or
the distribution of power and responsibilities among the various levels
of government, within the meaning of Executive Order 13132.
Furthermore, the constitutional and statutory authority supports the
proposed rule, and it is appropriate in light of the presence of a
problem of national significance.

F. Paperwork Reduction Act

This proposed rule does not contain any new or revised
``collection[s] of information'' as defined by the Paperwork Reduction
Act of 1995 (``PRA''), 44 U.S.C. 3501 et seq. The Agencies have
determined in consultation with OIRA that the requirement to provide
written notice to beneficiaries of certain nondiscrimination
protections is not a

[[Page 2408]]

collection of information subject to the PRA because the Federal
Government has provided or will provide the information that a provider
must use. See 5 CFR 1320.3(c)(2).

G. Unfunded Mandates Reform Act

Section 202(a) of the Unfunded Mandates Reform Act of 1995
(``UMRA''), 2 U.S.C. 1532(a), requires that a Federal agency determine
whether a regulation proposes a Federal mandate that may result in the
expenditure by State, local, or tribal governments, in the aggregate,
or by the private sector, of $100 million or more in a single year
(adjusted annually for inflation). The inflation-adjusted value of $100
million in 1995 was approximately $178 million in 2021 based on the
Consumer Price Index for All Urban Consumers.\33\ If a Federal mandate
would result in expenditures in excess of the threshold, UMRA requires
the agency to prepare a written statement containing, among other
things, a qualitative and quantitative assessment of the anticipated
costs and benefits of the Federal mandate. Id. The Agencies have
reviewed this proposed rule in accordance with UMRA and determined that
the total cost to implement the proposed rule in any one year will not
meet or exceed the threshold. The proposed rule does not include any
Federal mandate that may result in increased expenditure by State,
local, and tribal governments in the aggregate of more than the
threshold, or increased expenditures by the private sector of more than
the threshold.\34\ Accordingly, UMRA does not require any further
action.
---------------------------------------------------------------------------

\33\ The Agencies again derived this figure from the data on
annual averages of the consumer price index (``CPI'') available at
BLS, CPI Inflation Calculator, <a href="https://www.bls.gov/data/inflation_calculator.htm">https://www.bls.gov/data/inflation_calculator.htm</a>. The average CPI for 1995 was $152.40; for
2021, $270.970. Using this ratio, $100 million in 1995 dollars
became $178 million in 2021 dollars [= $100,000,000 x (270.970/
152.40)].
\34\ See also 2 U.S.C. 1503 (excluding from UMRA's ambit any
provision in a proposed or final regulation that, among other
things, enforces constitutional rights of individuals; establishes
or enforces any statutory rights that prohibit discrimination on the
basis of race, color, religion, sex, national origin, age, handicap,
or disability; or provides for emergency assistance or relief at the
request of any State, local, or tribal government or any official of
a State, local, or tribal government).
---------------------------------------------------------------------------

H. Intergovernmental Review (Executive Order 12372)

These programs are not subject to Executive Order 12372, 47 FR
30959 (July 16, 1982) (Intergovernmental Review of Federal Programs),
as amended, or ED regulations in 34 CFR part 79.

I. Assessment of Educational Impact

In accordance with section 411 of the General Education Provisions
Act, 20 U.S.C. 1221e-4, the Secretary of Education particularly
requests comments on whether the proposed regulations would require
transmission of information that any other agency or authority of the
United States gathers or makes available.

List of Subjects

2 CFR Part 3474

Accounting, Administrative practice and procedure, Adult education,
Aged, Agriculture, American Samoa, Bilingual education, Blind, Business
and industry, Civil rights, Colleges and universities, Communications,
Community development, Community facilities, Copyright, Credit,
Cultural exchange programs, Educational facilities, Educational
research, Education, Education of disadvantaged, Education of
individuals with disabilities, Educational study programs, Electric
power, Electric power rates, Electric utilities, Elementary and
secondary education, Energy conservation, Equal educational
opportunity, Federally affected areas, Government contracts, Grant
programs, Grants administration, Guam, Home improvement, Homeless,
Hospitals, Housing, Human research subjects, Indians, Indians--
education, Infants and children, Insurance, Intergovernmental
relations, International organizations, Inventions and patents, Loan
programs, Manpower training programs, Migrant labor, Mortgage
insurance, Nonprofit organizations, Northern Mariana Islands, Pacific
Islands Trust Territories, Privacy, Renewable energy, Reporting and
recordkeeping requirements, Rural areas, Scholarships and fellowships,
School construction, Schools, Science and technology, Securities, Small
businesses, State and local governments, Student aid, Teachers,
Telecommunications, Telephone, Urban areas, Veterans, Virgin Islands,
Vocational education, Vocational rehabilitation, Waste treatment and
disposal, Water pollution control, Water resources, Water supply,
Watersheds, Women.

6 CFR Part 19

Civil rights, Government contracts, Grant programs, Nonprofit
organizations, Reporting and recordkeeping requirements.

7 CFR Part 16

Administrative practice and procedure, Grant programs.

22 CFR Part 205

Foreign aid, Grant programs, Nonprofit organizations.

24 CFR Part 5

Administrative practice and procedure, Aged, Claims, Crime,
Government contracts, Grant programs--housing and community
development, Individuals with disabilities, Intergovernmental
relations, Loan programs--housing and community development, Low and
moderate income housing, Mortgage insurance, Penalties, Pets, Public
housing, Rent subsidies, Reporting and recordkeeping requirements,
Social security, Unemployment compensation, Wages.

28 CFR Part 38

Administrative practice and procedure, Grant programs, Reporting
and recordkeeping requirements.

29 CFR Part 2

Administrative practice and procedure, Grant programs, Religious
discrimination, Reporting and recordkeeping requirements.

34 CFR Part 75

Accounting, Copyright, Education, Grant programs--education,
Indemnity payments, Inventions and patents, Private schools, Reporting
and recordkeeping requirements, Youth organizations.

34 CFR Part 76

Accounting, Administrative practice and procedure, American Samoa,
Education, Grant programs--education, Guam, Northern Mariana Islands,
Pacific Islands Trust Territory, Prisons, Private schools, Reporting
and recordkeeping requirements, Virgin Islands, Youth organizations.

38 CFR Part 50

Administrative practice and procedure, Alcohol abuse, Alcoholism,
Day care, Dental health, Drug abuse, Government contracts, Grant
programs--health, Grant programs--veterans, Health care, Health
facilities, Health professions, Health records, Homeless, Mental health
programs, Per-diem program, Reporting and recordkeeping requirements,
Travel and transportation expenses, Veterans.

38 CFR Part 61

[[Page 2409]]

Health professions, Health records, Homeless, Mental health programs,
Per-diem program, Reporting and recordkeeping requirements, Travel and
transportation expenses, Veterans.

38 CFR Part 62

Administrative practice and procedure, Day care, Disability
benefits, Government contracts, Grant programs--health, Grant
programs--housing and community development, Grant programs--Veterans,
Health care, Homeless, Housing, Indians--lands, Individuals with
disabilities, Low and moderate income housing, Manpower training
programs, Medicaid, Medicare, Public assistance programs, Public
housing, Relocation assistance, Rent subsidies, Reporting and
recordkeeping requirements, Rural areas, Social security, Supplemental
Security Income (SSI), Travel and transportation expenses, Unemployment
compensation.

45 CFR Part 87

Administrative practice and procedure, Grant programs--social
programs, Nonprofit organizations, Public assistance programs.

45 CFR Part 1050

Grant programs--social programs.

DEPARTMENT OF EDUCATION

For the reasons discussed in the preamble, the Secretary of
Education proposes to amend 2 CFR part 3474 and 34 CFR parts 75 and 76
as follows:

Title 2--Grants and Agreements

PART 3474--UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES,
AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS

0
1. The authority citation for part 3474 is revised to read as follows:

Authority: 20 U.S.C. 1221e-3, 3474; 42 U.S.C. 2000bb et seq.;
E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 258; E.O. 13559, 75
FR 71319, 3 CFR, 2010 Comp., p. 273; and 2 CFR part 200, unless
otherwise noted.

0
2. Section 3474.15 is amended by:
0
a. Revising paragraph (b).
0
b. Removing note 1 to paragraph (e)(1).
0
c. In paragraph (f), removing ``and may require attendance at all
activities that are fundamental to the program'' from the last
sentence.
0
d. In paragraph (g), removing the second sentence.
The revision reads as follows:

Sec. 3474.15 Contracting with faith-based organizations and
nondiscrimination.

* * * * *
(b)(1) A faith-based organization is eligible to contract with
grantees and subgrantees, including States, on the same basis as any
other private organization.
(2)(i) In selecting providers of goods and services, grantees and
subgrantees, including States--
(A) May not discriminate for or against a private organization on
the basis of the organization's religious character, motives, or
affiliation, or lack thereof, or on the basis of conduct that would not
be considered grounds to disfavor a similarly situated secular
organization; and
(B) Must ensure that the award of contracts is free from political
interference, or even the appearance of such interference, and is done
on the basis of merit, not on the basis of religion or religious
belief, or lack thereof.
(ii) Notices or announcements of award opportunities and notices of
award or contracts must include language substantially similar to that
in appendices A and B, respectively, to 34 CFR part 75.
(3) No grant document, agreement, covenant, memorandum of
understanding, policy, or regulation that is used by a grantee or
subgrantee in administering Federal financial services from the
Department may require faith-based organizations to provide assurances
or notices if they are not required of non-faith-based organizations.
Any restrictions on the use of grant funds must apply equally to faith-
based and non-faith-based organizations. All organizations that
participate in Department programs or services, including organizations
with religious character, motives, or affiliation, or lack thereof,
must carry out eligible activities in accordance with all program
requirements, including those prohibiting the use of direct financial
assistance to engage in explicitly religious activities, subject to any
accommodations that are granted to organizations on a case-by-case
basis in accordance with the Constitution and laws of the United
States, including Federal civil rights laws.
(4) No grant document, agreement, covenant, memorandum of
understanding, policy, or regulation that is used by a grantee or
subgrantee may disqualify faith-based organizations from participating
in Department-funded programs or services on the basis of the
organization's religious character, motives, or affiliation, or lack
thereof, or on the basis of conduct that would not be considered
grounds to disqualify a similarly situated secular organization.
(5) Nothing in this section may be construed to preclude the
Department from making an accommodation with respect to one or more
program requirements on a case-by-case basis in accordance with the
Constitution and laws of the United States, including Federal civil
rights laws.
(6) Neither a State nor the Department may disqualify an
organization from participating in any Department program for which it
is otherwise eligible on the basis of the organization's indication
that it may request an accommodation with respect to one or more
program requirements, unless the organization has made clear that the
accommodation is necessary to its participation and the Department has
determined that it would deny the accommodation.
* * * * *

Title 34--Education

PART 75--DIRECT GRANT PROGRAMS

0
3. The authority citation for part 75 is revised to read as follows:

Authority: 20 U.S.C. 1221e-3 and 3474; E.O. 13279, 67 FR 77141,
3 CFR, 2002 Comp., p. 258; and E.O. 13559, 75 FR 71319, 3 CFR, 2010
Comp., p. 273; unless otherwise noted.

Sec. 75.51 [Amended]

0
4. Section 75.51 is amended by:
0
a. In paragraph (b)(3), adding ``or'' at the end of the sentence.
0
b. In paragraph (b)(4), removing ``; or'' at the end of the sentence
and adding, in its place, a period.
0
c. Removing paragraph (b)(5).
0
5. Section 75.52 is amended by:
0
a. Revising paragraphs (a) and (c)(3)(ii)(B).
0
b. Removing paragraph (c)(3)(vi) and note 1 to paragraph (d)(1).
0
c. In paragraph (d)(2)(iv), removing the words ``and employees.''
0
d. In paragraph (e), removing the words ``and may require attendance at
all activities that are fundamental to the program'' from the last
sentence.
0
e. In paragraph (g), removing the second sentence.
The revisions read as follows:

Sec. 75.52 Eligibility of faith-based organizations for a grant and
nondiscrimination against those organizations.

(a)(1) A faith-based organization is eligible to apply for and to
receive a grant under a program of the Department on the same basis as
any other private organization.

[[Page 2410]]

(2)(i) In the selection of grantees, the Department--
(A) May not discriminate for or against a private organization on
the basis of the organization's religious character, motives, or
affiliation, or lack thereof, or on the basis of conduct that would not
be considered grounds to disfavor a similarly situated secular
organization; and
(B) Must ensure that all decisions about grant awards are free from
political interference, or even the appearance of such interference,
and are made on the basis of merit, not on the basis of religion or
religious belief, or the lack thereof.
(ii) Notices or announcements of award opportunities and notices of
award or contracts must include language substantially similar to that
in appendices A and B, respectively, to this part.
(3) No grant document, agreement, covenant, memorandum of
understanding, policy, or regulation that is used by the Department may
require faith-based organizations to provide assurances or notices if
they are not required of non-faith-based organizations. Any
restrictions on the use of grant funds must apply equally to faith-
based and non-faith-based organizations. All organizations that receive
grants under a Department program, including organizations with
religious character, motives, or affiliation, must carry out eligible
activities in accordance with all program requirements, including those
prohibiting the use of direct financial assistance to engage in
explicitly religious activities, subject to any accommodations that are
granted to organizations on a case-by-case basis in accordance with the
Constitution and laws of the United States, including Federal civil
rights laws.
(4) No grant document, agreement, covenant, memorandum of
understanding, policy, or regulation that is used by the Department may
disqualify faith-based organizations from applying for or receiving
grants under a Department program on the basis of the organization's
religious character, motives, or affiliation, or lack thereof, or on
the basis of conduct that would not be considered grounds to disqualify
a similarly situated secular organization.
(5) Nothing in this section may be construed to preclude the
Department from making an accommodation, including for religious
exercise, with respect to one or more program requirements on a case-
by-case basis in accordance with the Constitution and laws of the
United States, including Federal civil rights laws.
(6) The Department may not disqualify an organization from
participating in any Department program for which it is eligible on the
basis of the organization's indication that it may request an
accommodation with respect to one or more program requirements, unless
the organization has made clear that the accommodation is necessary to
its participation and the Department has determined that it would deny
the accommodation.
* * * * *
(c) * * *
(3) * * *
(ii) * * *
(B) The organization receives the assistance wholly as the result
of the genuinely independent and private choice of the beneficiary. The
availability of an adequate secular alternative is a significant factor
in determining whether a program affords a genuinely independent and
private choice.
* * * * *
0
6. Add Sec. 75.712 to read as follows:

Sec. 75.712 Beneficiary protections: Written notice.

(a) An organization providing social services to beneficiaries
under a Department program supported by direct Federal financial
assistance must give written notice to a beneficiary or prospective
beneficiary of certain protections. Such notice must be given in the
manner and form prescribed by the Department. This notice must state
that--
(1) The organization may not discriminate against a beneficiary or
prospective beneficiary on the basis of religion, a religious belief, a
refusal to hold a religious belief, or a refusal to attend or
participate in a religious practice;
(2) The organization may not require a beneficiary or prospective
beneficiary to attend or participate in any explicitly religious
activities that are offered by the organization, and any participation
by a beneficiary in such activities must be purely voluntary;
(3) The organization must separate in time or location any
privately funded explicitly religious activities from activities
supported by direct Federal financial assistance; and
(4) A beneficiary or prospective beneficiary may report an
organization's violation of these protections, including any denials of
services or benefits by an organization, by contacting or filing a
written complaint with the Department.
(b) The written notice described in paragraph (a) of this section
must be given to a prospective beneficiary prior to the time they
enroll in the program or receive services from the program. When the
nature of the service provided or exigent circumstances make it
impracticable to provide such written notice in advance of the actual
service, an organization must provide the notice at the earliest
available opportunity.
(c) When applicable, as determined by the Department, the notice
described in paragraph (a) of this section must also inform each
beneficiary or prospective beneficiary of the option to seek
information as to whether there are any other federally funded
organizations in their area that provide the services available under
the applicable program.
0
7. Appendix A to part 75 is amended by revising paragraph (a) and (b)
to read as follows:

Appendix A to Part 75--Notice or Announcement of Award Opportunities

(a) Faith-based organizations may apply for this award on the
same basis as any other private organization (this part and 42
U.S.C. 2000bb et seq.). The Department will not, in the selection of
grantees, discriminate for or against an organization on the basis
of the organization's religious character, motives, or affiliation,
or lack thereof, or on the basis of conduct that would not be
considered grounds to disfavor a similarly situated secular
organization.
(b) A faith-based organization that participates in this program
will retain its independence from the Government and may continue to
carry out its mission consistent with religious freedom and
conscience protections in Federal law.
* * * * *
0
8. Appendix B to part 75 is amended by revising paragraph (a) to read
as follows:

Appendix B to Part 75--Notice of Award or Contract

PART 76--STATE-ADMINISTERED PROGRAMS

0
9. The authority citation for part 76 is revised to read as follows:

Authority: 20 U.S.C. 1221e-3 and 3474; E.O. 13279, 67 FR 77141,
3 CFR, 2002 Comp., p. 258; and E.O. 13559, 75 FR 71319, 3 CFR, 2010
Comp., p. 273; unless otherwise noted.

0
10. Section 76.52 is amended by:
0
a. Revising paragraphs (a) and (c)(3)(ii)(B).
0
b. Removing paragraph (c)(3)(vi) and note 1 to paragraph (d)(1).

[[Page 2411]]

0
c. In paragraph (d)(2)(iv), removing the words ``and employees.''
0
d. In paragraph (e), removing the words ``and may require attendance at
all activities that are fundamental to the program'' from the last
sentence.
0
e. In paragraph (g), removing the second sentence.
The revisions read as follows:

Sec. 76.52 Eligibility of faith-based organizations for a subgrant
and nondiscrimination against those organizations.

(a)(1) A faith-based organization is eligible to apply for and to
receive a subgrant under a program of the Department on the same basis
as any other private organization.
(2)(i) In the selection of subgrantees and contractors, States--
(A) May not discriminate for or against a private organization on
the basis of the organization's religious character, motives, or
affiliation, or lack thereof, or on the basis of conduct that would not
be considered grounds to disfavor a similarly situated secular
organization; and
(B) Must ensure that all decisions about subgrants are free from
political interference, or even the appearance of such interference,
and are made on the basis of merit, not on the basis of religion or
religious belief, or a lack thereof.
(ii) Notices or announcements of award opportunities and notices of
award or contracts must include language substantially similar to that
in appendices A and B, respectively, to 34 CFR part 75.
(3) No grant document, agreement, covenant, memorandum of
understanding, policy, or regulation that is used by States in
administering a Department program may require faith-based
organizations to provide assurances or notices if they are not required
of non-faith-based organizations. Any restrictions on the use of
subgrant funds must apply equally to faith-based and non-faith-based
organizations. All organizations that receive a subgrant from a State
under a State-Administered Formula Grant program of the Department,
including organizations with religious character, motives, or
affiliation, must carry out eligible activities in accordance with all
program requirements, including those prohibiting the use of direct
financial assistance to engage in explicitly religious activities,
subject to any accommodations that are granted to organizations on a
case-by-case basis in accordance with the Constitution and laws of the
United States, including Federal civil rights laws.
(4) No grant document, agreement, covenant, memorandum of
understanding, policy, or regulation that is used by States may
disqualify faith-based organizations from applying for or receiving
subgrants under a State-Administered Formula Grant program of the
Department on the basis of the organization's religious character,
motives, or affiliation, or lack thereof, or on the basis of conduct
that would not be considered grounds to disqualify a similarly situated
secular organization.
(5) Nothing in this section may be construed to preclude the
Department from making an accommodation with respect to one or more
program requirements on a case-by-case basis in accordance with the
Constitution and laws of the United States, including Federal civil
rights laws.
(6) Neither a State nor the Department may disqualify an
organization from participating in any Department program for which it
is eligible on the basis of the organization's indication that it may
request an accommodation with respect to one or more program
requirements, unless the organization has made clear that the
accommodation is necessary to its participation and the Department has
determined that it would deny the accommodation.
* * * * *
(c) * * *
(3) * * *
(ii) * * *
(B) The organization receives the assistance wholly as the result
of the genuinely independent and private choice of the beneficiary. The
availability of an adequate secular alternative is a significant factor
in determining whether a program affords a genuinely independent and
private choice.
* * * * *
0
11. Add Sec. 75.712 to read as follows:

Sec. 76.712 Beneficiary protections: Written notice.

DEPARTMENT OF HOMELAND SECURITY

For the reasons set forth in the preamble, DHS proposes to amend 6
CFR part 19 as follows:

Title 6--Domestic Security

PART 19--NONDISCRIMINATION IN MATTERS PERTAINING TO FAITH-BASED
ORGANIZATIONS

0
12. The authority citation for part 19 is revised to read as follows:

Authority: 5 U.S.C. 301; 6 U.S.C. 101 et seq.; 8 U.S.C. 1101 et
seq.; 42 U.S.C. 5164, 5183, 5189d; 42 U.S.C. 2000bb et seq; 42
U.S.C. 11331 et seq.; E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p.
258; E.O. 13403, 71 FR 28543, 3 CFR, 2006 Comp., p. 228; E.O. 13498,
74 FR 6533, 3 CFR, 2009 Comp., p. 219; and E.O. 13559, 75 FR 71319,
3 CFR, 2010 Comp., p. 273.

0
13. Section 19.1 is revised to read as follows:

Sec. 19.1 Purpose.

It is the policy of the Department of Homeland Security (DHS) to
ensure the equal treatment of faith-based and other organizations in
social service programs

[[Page 2412]]

administered or supported by DHS or its component agencies, enabling
those organizations to participate in providing important social
services to beneficiaries. The equal treatment policies and
requirements contained in this part are generally applicable to faith-
based and other organizations participating or seeking to participate
in any such programs. More specific policies and requirements regarding
the participation of faith-based and other organizations in individual
programs may be provided in the statutes, regulations, or guidance
governing those programs, such as regulations in title 44 of the Code
of Federal Regulations. DHS or its components may issue policy guidance
and reference materials at a future time with respect to the
applicability of this policy and this part to particular programs.
0
14. Section 19.2 is amended by:
0
a. In the definition of ``Indirect Federal financial assistance or
Federal financial assistance provided indirectly'', revising paragraph
(2).
0
b. Revising the definition of ``Intermediary''.
The revisions read as follows:

Sec. 19.2 Definitions.

* * * * *
Indirect Federal financial assistance or Federal financial
assistance provided indirectly * * *
(2) The organization receives the assistance wholly as a result of
a genuinely independent and private choice of the beneficiary. The
availability of adequate secular alternatives is a significant factor
in determining whether a program affords true private choice.
Intermediary means an entity, including a non-governmental
organization, acting under a contract, grant, or other agreement with
the Federal Government or with a State or local government, that
accepts Federal financial assistance and distributes that assistance to
other organizations that, in turn, provide government-funded social
services. If an intermediary, acting under a contract, grant, or other
agreement with the Federal Government or with a State or local
government that is administering a program supported by Federal
financial assistance, is given the authority under the contract, grant,
or agreement to select non-governmental organizations to provide
services supported by the Federal Government, the intermediary must
ensure compliance with the provisions of this part by the recipient of
a contract, grant or agreement. If the intermediary is a non-
governmental organization, it retains all other rights of a non-
governmental organization under the program's statutory and regulatory
provisions.
* * * * *
0
15. Revise Sec. 19.3 to read as follows:

Sec. 19.3 Equal ability for faith-based organizations to seek and
receive financial assistance through DHS social service programs.

(a) Faith-based organizations are eligible, on the same basis as
any other organization and considering any religious accommodations
appropriate under the Constitution or other provisions of Federal law,
to seek and receive direct financial assistance from DHS for social
service programs or to participate in social service programs
administered or financed by DHS.
(b) Neither DHS, nor a State or local government, nor any other
entity that administers any social service program supported by direct
financial assistance from DHS, shall discriminate for or against an
organization on the basis of the organization's religious motivation,
character or affiliation (or lack thereof), or on the basis of conduct
that would not be considered grounds to disfavor a similarly situated
secular organization.
(c) Nothing in this part shall be construed to preclude the
Department from making an accommodation, including for religious
exercise, with respect to one or more program requirements on a case-
by-case basis in accordance with the Constitution and laws of the
United States.
(d) The Department shall not disqualify an organization from
participating in any Department program for which it is otherwise
eligible on the basis of the organization's indication that it may
request an accommodation with respect to one or more program
requirements, unless the organization has made clear that the
accommodation is necessary to its participation and the Department has
determined that it would deny the accommodation.
(e) Decisions about awards of Federal financial assistance must be
free from political interference or even the appearance of such
interference and must be made on the basis of merit, not on the basis
of religion or religious belief or lack thereof, or on the basis of
religious or political affiliation.
(f) All organizations that participate in DHS social service
programs, including faith-based organizations, must carry out eligible
activities in accordance with all program requirements, including those
prohibiting the use of direct financial assistance from DHS to engage
in explicitly religious activities, subject to any accommodations that
are granted to organizations on a case-by-case basis in accordance with
the Constitution and laws of the United States.
(g) No grant document, agreement, covenant, memorandum of
understanding, policy, or regulation that is used by DHS or an
intermediary in administering financial assistance from DHS shall
disqualify a faith-based organization from participating in DHS's
social service programs:
(1) Because such organizations are motivated or influenced by
religious faith to provide social services;
(2) Because of their religious character, affiliation, or lack
thereof; or
(3) On the basis of conduct that would not be considered grounds to
disqualify a similarly situated secular organization.
(h) No grant document, agreement, covenant, memorandum of
understanding, policy, or regulation used by DHS or an intermediary in
administering financial assistance from DHS shall require faith-based
organizations to provide assurances or notices where they are not
required of non-faith-based organizations. Any restrictions on the use
of grant funds shall apply equally to faith-based and non-faith-based
organizations.
0
16. Section 19.4 is amended by revising paragraphs (c) and (d) and
adding paragraph (f) to read as follows:

Sec. 19.4 Explicitly religious activities.

* * * * *
(c) All organizations that participate in DHS social service
programs, including faith-based organizations, must carry out eligible
activities in accordance with all program requirements, and in
accordance with all other applicable requirements governing the conduct
of DHS-funded activities, including those prohibiting the use of direct
financial assistance from DHS to engage in explicitly religious
activities, subject to any accommodations that are granted to
organizations on a case-by-case basis in accordance with the
Constitution and laws of the United States. No grant document,
agreement, covenant, memorandum of understanding, policy, or regulation
that is used by DHS or a State or local government in administering
financial assistance from DHS shall disqualify a faith-based
organization from participating in DHS's social service programs
because such organizations are motivated or influenced by religious
faith to provide social services, because of their religious character,
or affiliation, lack thereof, or on the basis of conduct that would not
be considered grounds to disqualify a similarly situated secular
organization.

[[Page 2413]]

(d) The use of indirect Federal financial assistance is not subject
to the restriction in paragraphs (a), (b), and (c) of this section.
* * * * *
(f) To the extent that any provision of this part is declared
invalid by a court of competent jurisdiction, the Department intends
for all other provisions that are capable of operating in the absence
of the specific provision that has been invalidated to remain in
effect.
0
17. Revise Sec. 19.5 read as follows:

Sec. 19.5 Nondiscrimination requirements.

An organization that receives financial assistance from DHS for a
social service program shall not, in providing services or in outreach
activities related to such services, favor or discriminate against a
beneficiary of said program or activity on the basis of religion or
religious belief, a refusal to hold a religious belief, or a refusal to
attend or participate in a religious practice. Organizations that favor
or discriminate against a beneficiary will be subject to applicable
sanctions and penalties, as established by the requirements of the
particular DHS social service program or activity. However, an
organization that participates in a program funded by indirect
financial assistance need not modify its program activities to
accommodate a beneficiary who chooses to expend the indirect aid on the
organization's program.
0
18. Section 19.6 is amended by revising paragraph (e) to read as
follows:

Sec. 19.6 How to prove nonprofit status.

* * * * *
(e) Evidence that the DHS awarding agency determines to be
sufficient to establish that the entity would otherwise qualify as a
nonprofit organization.
0
19. Section 19.9 is amended by revising paragraph (b) to read as
follows:

Sec. 19.9 Exemption from Title VII employment discrimination
requirements.

* * * * *
(b) Where a DHS program contains independent statutory or
regulatory provisions that impose nondiscrimination requirements on all
grantees, those provisions are not waived or mitigated by this part. In
this case, grantees should consult with the appropriate DHS program
office to determine the scope of any applicable requirements.
0
20. Add Sec. 19.12 to read as follows:

Sec. 19.12 Notifications to beneficiaries and applicants.

(a) Organizations providing social services to beneficiaries under
a program supported by direct Federal financial assistance from the
Department must give written notice to beneficiaries and prospective
beneficiaries of certain protections. Such notice must be given in a
manner and form prescribed by the Department of Homeland Security's
Office for Civil Rights and Civil Liberties, including by incorporating
the notice into materials that are otherwise provided to beneficiaries.
This notice must include the following information:
(1) The organization may not discriminate against beneficiaries or
prospective beneficiaries on the basis of religion, a religious belief,
a refusal to hold a religious belief, or a refusal to attend or
participate in a religious practice;
(2) The organization may not require beneficiaries or prospective
beneficiaries to attend or participate in any explicitly religious
activities that are offered by the organization, and any participation
by beneficiaries in such activities must be purely voluntary;
(3) The organization must separate in time or location any
privately funded explicitly religious activities from activities
supported by direct Federal financial assistance; and
(4) Beneficiaries or prospective beneficiaries may report an
organization's violation of these protections, including any denials of
services or benefits by an organization, by contacting or filing a
written complaint with the Office for Civil Rights and Civil Liberties
or the intermediary that awarded funds to the organization.
(b) The written notice described in paragraph (a) of this section
must be given to prospective beneficiaries prior to the time the
prospective beneficiary enrolls in the program or receives services
from the program. When the nature of the service provided or exigent
circumstances make it impracticable to provide such written notice in
advance of the actual service, organizations must advise beneficiaries
of their protections at the earliest available opportunity.
(c) When applicable, as determined by the Department, the notice
described in paragraph (a) of this section may also inform each
beneficiary or prospective beneficiary of the option to seek
information as to whether there are any other federally funded
organizations that provide these kinds of services in their area.
(d) Notices or announcements of award opportunities and notices of
award or contracts shall include language substantially similar to that
in appendices A and B, respectively, to this part.
0
21. Revise appendix A to part 19 to read as follows:

Appendix A to Part 19--Notice or Announcement of Award Opportunity

(a) Faith-based organizations may apply for this award on the
same basis as any other organization, as set forth at and subject to
the protections and requirements of this part and 42 U.S.C. 2000bb
et seq. DHS will not, in the selection of recipients, discriminate
for or against an organization because such organizations are
motivated or influenced by religious faith to provide social
services, because of their religious character, affiliation, or lack
thereof, or on the basis of conduct that would not be considered
grounds to disfavor a similarly situated secular organization.
(b) A faith-based organization that participates in this program
will retain its independence from the Government and may continue to
carry out its mission consistent with religious freedom and
conscience protections in Federal law.
(c) A faith-based organization may not use direct Federal
financial assistance from DHS to support or engage in any explicitly
religious activities except where consistent with the Establishment
Clause and any other applicable requirements. An organization
receiving Federal financial assistance also may not, in providing
services funded by DHS, discriminate against a program beneficiary
or prospective program beneficiary on the basis of religion, a
religious belief, a refusal to hold a religious belief, or a refusal
to attend or participate in a religious practice.

0
22. Revise appendix B to part 19 to read as follows:

Appendix B to Part 19--Notice of Award or Contract

(a) A faith-based organization that participates in this program
retains its independence from the Government and may continue to
carry out its mission consistent with religious freedom and
conscience protections in Federal law.
(b) A faith-based organization may not use direct Federal
financial assistance from DHS to support or engage in any explicitly
religious activities except where consistent with the Establishment
Clause and any other applicable requirements. An organization
receiving Federal financial assistance also may not, in providing
services funded by DHS, discriminate against a program beneficiary
or prospective program beneficiary on the basis of religion, a
religious belief, a refusal to hold a religious belief, or a refusal
to attend or participate in a religious practice.

DEPARTMENT OF AGRICULTURE

For the reasons set forth in the preamble, USDA proposes to amend 7
CFR part 16 as follows:

[[Page 2414]]

Title 7--Agriculture

PART 16--EQUAL OPPORTUNITY FOR RELIGIOUS ORGANIZATIONS

0
23. The authority citation for part 16 is revised to read as follows:

Authority: 5 U.S.C. 301; 42 U.S.C. 2000bb et seq.; E.O. 13279,
67 FR 77141, 3 CFR, 2002 Comp., p. 258; E.O. 13280, 67 FR 77145, 3
CFR, 2002 Comp., p. 262; E.O. 13559, 75 FR 71319, 3 CFR, 2010 Comp.,
p. 273; E.O. 13831, 83 FR 20715, 3 CFR, 2018 Comp., p. 806; E.O.
14015, 86 FR 10007, 3 CFR, 2021 Comp., p. 517.

0
24. Revise Sec. 16.1 to read as follows:

Sec. 16.1 Purpose and applicability.

(a) The purpose of this part is to set forth Department of
Agriculture (USDA) policy regarding equal opportunity for faith-based
or religious organizations to participate in USDA assistance programs
for which other private organizations are eligible.
(b) Except as otherwise specifically provided in this part, the
policy outlined in this part applies to all recipients and
subrecipients of USDA assistance to which 2 CFR part 400 applies, and
to recipients and subrecipients of Commodity Credit Corporation
assistance that is administered by agencies of USDA.
0
25. Section 16.2 is amended by revising the definitions of
``Discriminate against an organization on the basis of the
organization's religious exercise'' and ``Indirect Federal financial
assistance or Federal financial assistance provided indirectly'' to
read as follows:

Sec. 16.2 Definitions.

* * * * *
Discriminate against an organization on the basis of the
organization's religious exercise means to disfavor an organization,
including by failing to select an organization, disqualifying an
organization, or imposing any condition or selection criterion that
otherwise disfavors or penalizes an organization in the selection
process or has such an effect, because of the organization's religious
character, motives, or affiliation, or lack thereof; or because of
conduct that would not be considered grounds to disfavor a secular
organization.
* * * * *
Indirect Federal financial assistance or Federal financial
assistance provided indirectly refers to situations where the service
provider receives the assistance wholly as a result of a genuinely
independent and private choice of the beneficiary, not a choice of the
Government, and the cost of that service is paid through a voucher,
certificate, or other similar means of Government-funded payment in
accordance with the First Amendment of the U.S. Constitution. The
availability of an adequate secular alternative is a significant factor
in determining whether a program affords a genuinely independent and
private choice.
* * * * *
0
26. Section 16.3 is amended by revising paragraphs (a), (c), (d), and
(f), and adding paragraph (h) to read as follows:

Sec. 16.3 Faith-Based Organizations and Federal Financial Assistance.

(a) A faith-based or religious organization is eligible, on the
same basis as any other organization, to access and participate in any
USDA assistance programs for which it is otherwise eligible. Neither
the USDA awarding agency nor any State or local government or other
intermediary receiving funds under any USDA awarding agency program or
service shall, in the selection of service providers, discriminate for
or against an organization on the basis of the organization's religious
character, motives, or affiliation, or lack thereof, or on the basis of
conduct that would not be considered grounds to disfavor a similarly
situated secular organization. Decisions about awards of USDA direct
assistance or USDA indirect assistance must also be free from political
interference or even the appearance of such interference and must be
made on the basis of merit, not on the basis of religion, the religious
belief or affiliation of a recipient organization, or lack thereof.
Notices or announcements of award opportunities and notices of award or
contracts shall include language substantially similar to that in
appendices A and B to this part.
* * * * *
(c) A faith-based or religious organization's exemption from the
Federal prohibition on employment discrimination on the basis of
religion, set forth in section 702(a) of the Civil Rights Act of 1964,
42 U.S.C. 2000e-1, is not forfeited when an organization participates
in a USDA assistance program.
(d) No grant document, agreement, covenant, memorandum of
understanding, policy, or regulation that is used by a USDA awarding
agency or a State or local government in administering Federal
financial assistance from the USDA awarding agency shall require faith-
based or religious organizations to provide assurances or notices where
they are not required of non-religious organizations.
(1) Any restrictions on the use of grant funds shall apply equally
to faith-based or religious organizations and non-religious
organizations.
(2) All organizations that participate in USDA awarding agency
programs or services, including organizations with religious character
or affiliations, must carry out eligible activities in accordance with
all program requirements and other applicable requirements governing
the conduct of USDA awarding agency-funded activities, including those
prohibiting the use of direct financial assistance to engage in
explicitly religious activities, subject to any accommodations that are
granted to organizations on a case-by-case basis in accordance with the
Constitution and laws of the United States.
(3) No grant or agreement, document, loan agreement, covenant,
memorandum of understanding, policy or regulation that is used by the
USDA awarding agency or a State or local government in administering
financial assistance from the USDA awarding agency shall disqualify
faith-based or religious organizations from participating in the USDA
awarding agency's programs or services because of the organizations'
religious character or affiliation, or lack thereof; or on the basis of
conduct that would not be considered grounds to disqualify a similarly
situated secular organization.
* * * * *
(f) USDA direct financial assistance may be used for the
acquisition, construction, or rehabilitation of structures to the
extent authorized by the applicable program statutes and regulations.
USDA direct assistance may not be used for the acquisition,
construction, or rehabilitation of structures to the extent that those
structures are used by the USDA funding recipients for explicitly
religious activities. Where a structure is used for both eligible and
ineligible purposes, USDA direct financial assistance may not exceed
the cost of those portions of the acquisition, construction, or
rehabilitation that are attributable to eligible activities in
accordance with the cost accounting requirements applicable to USDA
funds. Sanctuaries, chapels, or other rooms that an organization
receiving direct assistance from USDA uses as its principal place of
worship, however, are ineligible for USDA-funded improvements.
Disposition of real property after the term of the grant or any change
in use of the property during the term of the grant is subject to
government-wide regulations governing

[[Page 2415]]

real property disposition (see 2 CFR part 400).
(1) Any use of USDA direct financial assistance for equipment,
supplies, labor, indirect costs, and the like shall be prorated between
the USDA program or activity and any ineligible purposes by the faith-
based or religious organization in accordance with applicable laws,
regulations, and guidance.
(2) Nothing in this section shall be construed to prevent the
residents of housing who are receiving USDA direct assistance funds
from engaging in religious exercise within such housing.
* * * * *
(h) Nothing in this part shall be construed to preclude a USDA
awarding agency or any State or local government or other intermediary
from accommodating religion or making an accommodation for religious
exercise, with respect to one or more program requirements on a case-
by-case basis in accordance with Federal law and the U.S. Constitution.
A USDA awarding agency, State or local government or intermediary shall
not disqualify an organization from participating in any USDA
assistance program for which it is eligible on the basis of the
organization's indication that it may request an accommodation with
respect to one or more program requirements, unless the organization
has made clear that the accommodation is necessary to its participation
and the USDA awarding agency, State or local government or intermediary
has determined that it would deny the accommodation.
0
27. Section 16.4 is amended by revising paragraphs (a) and (c) and
adding paragraph (d) to read as follows:

Sec. 16.4 Responsibilities of participating organizations.

(a) Any organization that receives direct or indirect Federal
financial assistance shall not, with respect to services, or, in the
case of direct Federal financial assistance, outreach activities funded
by such financial assistance, discriminate against a current or
prospective program beneficiary on the basis of religion, religious
belief, a refusal to hold a religious belief, or a refusal to attend or
participate in a religious practice. However, an organization that
participates in a program funded by indirect financial assistance need
not modify its program activities to accommodate a beneficiary who
chooses to expend the indirect aid on the organization's program.
* * * * *
(c)(1) All organizations that receive USDA direct assistance under
any domestic USDA program must give written notice in a manner
prescribed by USDA to all beneficiaries and prospective beneficiaries
of certain protections in a manner and form prescribed by USDA. This
notice must state that:
(i) The organization may not discriminate against beneficiaries or
prospective beneficiaries on the basis of religion or religious belief,
a refusal to hold a religious belief, or a refusal to attend or
participate in a religious practice;
(ii) The organization may not require beneficiaries or prospective
beneficiaries to attend or participate in any explicitly religious
activities that are offered by the organization, and any participation
by beneficiaries or prospective beneficiaries in such activities must
be purely voluntary;
(iii) The organization must separate in time or location any
privately funded explicitly religious activities from activities
supported by direct Federal financial assistance; and
(iv) Beneficiaries or prospective beneficiaries may report
violations of these protections (including denials of services or
benefits) by an organization to USDA (or, the intermediary, if
applicable).
(2) When appropriate and feasible, as determined by the USDA
awarding agency, this written notice may also include a notice to
beneficiaries and prospective beneficiaries about how to obtain
information about other federally funded service providers in their
area that provide the services available under the applicable program.
(3) This written notice must be given to beneficiaries prior to the
time they enroll in the program or receive services from such programs.
When the nature of the service provided or exigent circumstances make
it impracticable to provide such written notice in advance of the
actual service, service providers must advise beneficiaries of their
protections at the earliest available opportunity.
(d) Nothing in paragraphs (a) through (c) of this section shall be
construed to prevent faith-based or religious organizations that
receive USDA assistance under the Richard B. Russell National School
Lunch Act, 42 U.S.C. 1751 et seq., the Child Nutrition Act of 1966, 42
U.S.C. 1771 et seq., or USDA international school feeding programs from
considering religion in their admissions practices or from imposing
religious attendance or curricular requirements at their schools.
0
28. Add Sec. 16.6 to read as follows:

Sec. 16.6 Compliance.

USDA agencies will monitor compliance with this part in the course
of regular oversight of USDA programs.
0
29. Revise appendix A to part 16 to read as follows:

Appendix A to Part 16--Notice or Announcement of Award Opportunities

(a) Faith-based or religious organizations may apply for this
award on the same basis as any other organization, as set forth at
and, subject to the protections and requirements of this part and 42
U.S.C. 2000bb et seq., USDA will not, in the selection of
recipients, discriminate against an organization on the basis of the
organization's religious character, motives, or affiliation, or lack
thereof, or on the basis of conduct that would not be considered
grounds to disfavor a similarly situated secular organization.
(b) A faith-based or religious organization that participates in
this program will retain its independence from the Government and
may continue to carry out its mission consistent with religious
freedom and conscience protections in the U.S. Constitution and
Federal law, including 42 U.S.C. 2000bb et seq., 42 U.S.C. 238n, 42
U.S.C. 18113, 42 U.S.C. 2000e-1(a) and 2000e-2(e), 42 U.S.C.
12113(d), and the Weldon Amendment, among others. Religious
accommodations may also be sought under many of these religious
freedom and conscience protection laws.
(c) A faith-based or religious organization may not use direct
financial assistance from USDA to support or engage in any
explicitly religious activities except where consistent with the
Establishment Clause and any other applicable requirements. An
organization also may not, in providing services funded by USDA,
discriminate against a program beneficiary or prospective program
beneficiary on the basis of religion, a religious belief, a refusal
to hold a religious belief, or a refusal to attend or participate in
a religious practice.

0
30. Revise appendix B to part 16 to read as follows:

Appendix B to Part 16--Notice of Award or Contract

(a) A faith-based or religious organization that participates in
this program retains its independence from the Government and may
continue to carry out its mission consistent with religious freedom
and conscience protections in the U.S. Constitution and Federal law,
including 42 U.S.C. 2000bb et seq., 42 U.S.C. 238n, 42 U.S.C. 18113,
42 U.S.C. 2000e-1(a) and 2000e-2(e), 42 U.S.C. 12113(d), and the
Weldon Amendment, among others. Religious accommodations may also be
sought under many of these religious freedom and conscience
protection laws.
(b) A faith-based or religious organization may not use direct
financial assistance from USDA to support or engage in any
explicitly religious activities except when consistent with the
Establishment Clause and any other applicable requirements. An
organization receiving Federal financial assistance also

[[Page 2416]]

may not, in providing services funded by USDA, discriminate against
a program beneficiary or prospective program beneficiary on the
basis of religion, a religious belief, a refusal to hold a religious
belief, or a refusal to attend or participate in a religious
practice.

AGENCY FOR INTERNATIONAL DEVELOPMENT

Accordingly, for the reasons set forth in the preamble, USAID
proposes to amend 22 CFR part 205 as follows:

Title 22--Foreign Relations

PART 205--PARTICIPATION BY RELIGIOUS ORGANIZATIONS IN USAID
PROGRAMS

0
31. The authority citation for part 205 continues to read as follows:

Authority: 22 U.S.C. 2381(a).

0
32. Revise Sec. 205.1 to read as follows:

Sec. 205.1 Grants and cooperative agreements.

(a) As used in this section, the term ``award'' has the definition
in 2 CFR 700.1. As used in this section, the following terms have the
definitions in 2 CFR 200.1: ``subaward,'' ``pass-through entity,''
``recipient,'' and ``subrecipient'' as modified by 2 CFR 700.3 to apply
to both nonprofit and for-profit entities.
(b) Faith-based organizations are eligible on the same basis as any
other organization to receive any U.S. Agency for International
Development (USAID) award for which they are otherwise eligible. In the
selection of recipients by USAID and subrecipients by pass-through
entities, neither USAID nor pass-through entities shall discriminate
for, or against, an organization on the basis of the organization's
religious character, motives, or affiliation, or lack thereof, or on
the basis of conduct that would not be considered grounds to disfavor a
similarly situated secular organization. Notices or announcements of
award opportunities shall include language to indicate that faith-based
organizations are eligible on the same basis as any other organization
and subject to the protections and requirements of Federal law.
(c) Organizations that receive direct Federal financial assistance
from USAID under any USAID award or subaward may not engage in
explicitly religious activities (including activities that involve
overt religious content such as worship, religious instruction, or
proselytization), as part of the programs or services directly funded
with direct Federal financial assistance from USAID. If an organization
conducts such activities, the activities must be offered separately, in
time or location, from the programs or services funded with direct
Federal financial assistance from USAID, and participation must be
voluntary for beneficiaries of the programs or services funded with
such assistance. Nothing in this part restricts USAID's authority under
applicable federal law to fund activities, such as the provision of
chaplaincy services, that can be directly funded by the Government
consistent with the Establishment Clause.
(d) A faith-based organization that applies for, or participates
in, USAID-funded awards or subawards will retain its autonomy,
religious character, and independence, and may continue to carry out
its mission consistent with religious freedom protections in Federal
law, including the definition, development, practice, and expression of
its religious beliefs, provided that it does not use direct Federal
financial assistance from USAID to support or engage in any explicitly
religious activities (including activities that involve overt religious
content such as worship, religious instruction, or proselytization), or
in any other manner prohibited by law. Among other things, a faith-
based organization that receives Federal financial assistance from
USAID may use space in its facilities, without concealing, altering, or
removing religious art, icons, scriptures, or other religious symbols.
In addition, a faith-based organization that receives Federal financial
assistance from USAID retains its authority over its internal
governance, and it may retain religious terms in its organization's
name, select its board members on a religious basis, and include
religious references in its organization's mission statements and other
governing documents.
(e) USAID must implement its awards in accordance with the
Establishment Clause. Nothing in this part shall be construed as
authorizing the use of USAID funds for activities that are not
permitted by Establishment Clause jurisprudence or otherwise by law.
USAID will consult with the U.S. Department of Justice if, in
implementing a specific program involving overseas acquisition,
rehabilitation, or construction of structures used for explicitly
religious activities, there is any question about whether such funding
is consistent with the Establishment Clause. USAID will describe any
program implemented after such consultation on its Web site.
(f) An organization that receives a USAID-funded award or subaward
shall not, in providing services, discriminate against a program
beneficiary or potential program beneficiary on the basis of religion
or religious belief, refusal to hold a religious belief, or a refusal
to attend or participate in a religious practice.
(g) No grant document, contract, agreement, covenant, memorandum of
understanding, policy, or regulation used by USAID shall require faith-
based organizations to provide assurances or notices where the Agency
does not require them of secular organizations. Any restrictions on the
use of award or subaward funds shall apply equally to faith-based and
secular organizations. All organizations that receive USAID awards and
subawards, including faith-based organizations, must carry out eligible
activities in accordance with all award requirements and other
applicable requirements that govern the conduct of USAID-funded
activities, including those that prohibit the use of direct Federal
financial assistance from USAID to engage in explicitly religious
activities. No grant document, contract, agreement, covenant,
memorandum of understanding, policy, or regulation used by USAID shall
disqualify faith-based organizations from receiving USAID awards
because such organizations are motivated or influenced by religious
faith to provide social services or other assistance, or because of
their religious character or affiliation.
(h) A religious organization does not forfeit its exemption from
the Federal prohibition on employment discrimination on the basis of
religion, set forth in section 702(a) of the Civil Rights Act of 1964,
42 U.S.C. 2000e-1, when the organization receives Federal financial
assistance from USAID.
(i) If a USAID award requires an organization to be a ``nonprofit
organization'' in order to be eligible for funding, the individual
solicitation will specifically indicate the requirement for nonprofit
status in the eligibility section of the solicitation. Potential
applicants should consult with the appropriate USAID program office to
determine the scope of any applicable requirements. In USAID awards in
which an applicant must show that it is a nonprofit organization, other
than programs which are limited to registered Private and Voluntary
Organizations, the applicant may do so by any of the following means:
(1) Proof that the Internal Revenue Service currently recognizes
the applicant as an organization to which contributions are tax
deductible under section 501(c)(3) of the Internal Revenue Code;
(2) A statement from a state taxing body or the state secretary of
state certifying that:

[[Page 2417]]

(i) The organization is a nonprofit organization operating within
the State; and
(ii) No part of its net earnings may lawfully benefit any private
shareholder or individual;
(3) A certified copy of the applicant's certificate of
incorporation or similar document that clearly establishes the
nonprofit status of the applicant; or
(4) Any item described in paragraphs (i)(1) through (3) of this
section if that item applies to a state or national parent
organization, together with a statement by the State or parent
organization that the applicant is a local nonprofit affiliate.
(j) Decisions about awards of USAID Federal financial assistance
must be free from political interference or even the appearance of such
interference and must be made on the basis of merit, not on the basis
of the religious affiliation of a recipient organization, or lack
thereof.
(k) Nothing in this part shall be construed as authorizing the use
of USAID funds for the acquisition, construction, or rehabilitation of
religious structures inside the United States.
(l) The Secretary of State may waive the requirements of this
section in whole or in part, on a case-by-case basis, where the
Secretary determines that such waiver is necessary to further the
national security or foreign policy interests of the United States.
(m) Nothing in this section shall be construed in such a way as to
advantage, or disadvantage, faith-based organizations affiliated with
historic or well-established religions or sects in comparison with
other religions or sects.

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

For the reasons set forth in the preamble, HUD proposes to amend 24
CFR part 5 as follows:

PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

0
33. The authority citation for part 5 is revised to read as follows:

Authority: 12 U.S.C. 1701x; 42 U.S.C. 1437a, 1437c, 1437f,
1437n, 3535(d); 42 U.S.C. 2000bb et seq.; 42 U.S.C. 14043e et seq.;
Sec. 327, Pub. L. 109-115, 119 Stat. 2396; E.O. 13279, 67 FR 77141,
3 CFR, 2002 Comp., p. 258; E.O. 13559, 75 FR 71319, 3 CFR, 2010
Comp., p. 273; E.O. 14015, 86 FR 10007, 3 CFR, 2021 Comp., p. 517.

0
34. Section 5.109 is amended by:
0
a. In paragraph (a), removing the words ``Executive Order 13831,
entitled ``Establishment of a White House Faith and Opportunity
Initiative'' '' and adding, in their place, the words ``Executive Order
14015, entitled ``Establishment of the White House Office of Faith-
Based and Neighborhood Partnerships'' ''.
0
b. In paragraph (b), revising the definition of ``Indirect Federal
financial assistance''.
0
c. Removing the introductory text of paragraph (c).
0
d. Revising paragraphs (c)(1) through (3).
0
e. In paragraph (c)(4) removing the word ``availability'' and adding,
in its place, the word ``opportunity''.
0
f. Revising paragraphs (d)(1), (g) and (h).
0
g. In paragraph (l)(3) adding an ``or'' at the end of the sentence.
0
h. In paragraph (l)(4) removing ``; or'' and adding, in its place, a
period.
0
i. Removing paragraph (l)(5).
The revisions read as follows:

Sec. 5.109 Equal participation of faith-based organizations in HUD
programs and activities.

* * * * *
(b) * * *
Indirect Federal financial assistance means Federal financial
assistance provided when the choice of the provider is placed in the
hands of the beneficiary, and the cost of that service is paid through
a voucher, certificate, or other similar means of Government-funded
payment. Federal financial assistance provided to an organization is
considered indirect when the Government program through which the
beneficiary receives the voucher, certificate, or other similar means
of Government-funded payment is neutral toward religion meaning that it
is available to providers without regard to the religious or non-
religious nature of the institution and there are no program incentives
that deliberately skew for or against religious or secular providers;
and the organization receives the assistance wholly as a result of a
genuinely independent and private choice of the beneficiary, not a
choice of the Government. The availability of an adequate secular
alternative is a significant factor in determining whether a program
affords true private choice.
* * * * *
(c) Equal participation of faith-based organizations in HUD
programs and activities. (1) Faith-based organizations are eligible, on
the same basis as any other organizations, to participate in any HUD
program or activity for which they are otherwise eligible, considering
any permissible accommodations on a case-by-case basis in accordance
with the Constitution and laws of the United States. Neither the
Federal Government, nor a State, tribal or local government, nor any
other entity that administers any HUD program or activity, shall
discriminate for or against an organization on the basis of the
organization's religious character, motives, affiliation, or lack
thereof, or on the basis of conduct that would not be considered
grounds to disfavor a similarly situated secular organization.
(2) Nothing in this section shall be construed to preclude HUD from
making an accommodation, including for religious exercise, with respect
to one or more program requirements on a case-by-case basis in
accordance with the Constitution and laws of the United States.
(3) HUD shall not disqualify an organization from participating in
any HUD program for which it is eligible on the basis of the
organization's indication that it may request an accommodation with
respect to one or more program requirements, unless the organization
has made clear that the accommodation is necessary to its participation
and, in accordance with the Constitution and laws of the United States,
HUD has determined that it would deny the accommodation.
* * * * *
(d) * * *
(1) A faith-based organization that applies for, or participates
in, a HUD program or activity supported with Federal financial
assistance retains its autonomy, right of expression, religious
character, authority over its governance, and independence, and may
continue to carry out its mission, including the definition,
development, practice, and expression of its religious beliefs;
provided that, it does not use direct Federal financial assistance,
whether received through a prime award or sub-award, to support or
engage in any explicitly religious activities, including activities
that involve overt religious content such as worship, religious
instruction, or proselytization.
* * * * *
(g) Nondiscrimination and beneficiary protection notice
requirements--(1) Nondiscrimination. Any organization that receives
Federal financial assistance under a HUD program or activity shall not,
in providing services with such assistance or carrying out activities
with such assistance, discriminate against a beneficiary or prospective
beneficiary on the basis of religion, religious belief, a refusal to
hold a religious belief, or a refusal to attend or participate in a
religious practice. However, an organization that

[[Page 2418]]

participates in a program funded by indirect Federal financial
assistance need not modify its program or activities to accommodate a
beneficiary who chooses to expend the indirect aid on the
organization's program.
(2) Beneficiary protection notice. An organization providing
services under a program supported by direct Federal financial
assistance from HUD must give written notice to a beneficiary and
prospective beneficiary of certain protections in a manner and form
prescribed by HUD, including by incorporating the notice into materials
that are otherwise provided to beneficiaries. This notice must include
the following:
(i) Nondiscrimination requirements of paragraph (g)(1) of this
section;
(ii) Prohibitions with respect to explicitly religious activities
as set forth in paragraph (e) of this section; and
(iii) A beneficiary or prospective beneficiary may report an
organization's violation of these protections, including any denials of
services or benefits by an organization, by contacting or filing a
written complaint with the Office of Faith-Based and Neighborhood
Partnerships or the intermediary that awarded funds to the
organization.
(3) Notice timing. The written notice described in paragraph (g)(2)
of this section must be given to a prospective beneficiary prior to the
time the prospective beneficiary enrolls in the program or receives
services from the program. When the nature of the service provided or
exigent circumstances make it impracticable to provide such written
notice in advance of the actual service, an organization must advise
beneficiaries of their protections at the earliest available
opportunity.
(4) Alternative option information. When applicable, as determined
by HUD, the notice described in paragraph (g)(2) of this section may
also inform each beneficiary or prospective beneficiary of the option
to seek information as to whether there are any other federally funded
organizations in their area that provide the services available under
the applicable program.
(h) No additional assurances from faith-based organizations. A
faith-based organization is not rendered ineligible by its religious
nature to access and participate in HUD programs. Absent regulatory or
statutory authority, no notice of funding availability, grant
agreement, cooperative agreement, covenant, memorandum of
understanding, policy, or regulation that is used by HUD or a recipient
or intermediary in administering Federal financial assistance from HUD
shall require otherwise eligible faith-based organizations to provide
assurances or notices where they are not required of similarly situated
secular organizations. All organizations that participate in HUD
programs or activities, including organizations with religious
character or affiliations, must carry out eligible activities in
accordance with all program requirements, including those prohibiting
the use of direct financial assistance to engage in explicitly
religious activities, subject to any accommodations that are granted to
organizations on a case-by-case basis in accordance with the
Constitution and laws of the United States. No notice of funding
availability, grant agreement, cooperative agreement, covenant,
memorandum of understanding, policy, or regulation that is used by HUD
or a recipient or intermediary in administering financial assistance
from HUD shall disqualify otherwise eligible faith-based organizations
from participating in HUD's programs or activities because such
organization is motivated or influenced by religious faith to provide
such programs and activities, or because of its religious character or
affiliation, or lack thereof; or on the basis of conduct that would not
be considered grounds to disqualify a similarly situated secular
organization.
* * * * *
0
35. Appendix A to subpart A of part 5 is amended by revising paragraphs
(a) and (b) to read as follows:

Appendix A to Subpart A of Part 5--Notice of Funding Opportunity

(a) Faith-based organizations may apply for this award on the
same basis as any other organization, as set forth at Sec. 5.109,
and subject to the protections and requirements of 42 U.S.C. 2000bb
et seq., HUD will not, in the selection of recipients, discriminate
for or against an organization on the basis of the organization's
religious character, motives, affiliation, or lack thereof, or on
the basis of conduct that would not be considered grounds to
disfavor a similarly situated secular organization.
(b) A faith-based organization that participates in this program
will retain its independence and may continue to carry out its
mission consistent with religious freedom and conscience protections
in Federal law.
* * * * *

DEPARTMENT OF JUSTICE

For the reasons set forth in the preamble, the Attorney General
proposes to amend 28 CFR part 38 as follows.

Title 28--Judicial Administration

PART 38--PARTNERSHIPS WITH FAITH-BASED AND OTHER NEIGHBORHOOD
ORGANIZATIONS

0
36. The authority citation for part 38 continues to read as follows:

Authority: 28 U.S.C. 509; 5 U.S.C. 301; E.O. 13279, 67 FR 77141,
3 CFR, 2002 Comp., p. 258; 18 U.S.C. 4001, 4042, 5040; 21 U.S.C.
871; 25 U.S.C. 3681; Pub. L. 107-273, 116 Stat. 1758; Pub. L. 109-
162, 119 Stat. 2960; 34 U.S.C. 10152, 10154, 10172, 10221, 10382,
10388, 10444, 10446, 10448, 10473, 10614, 10631, 11111, 11182,
20110, 20125; E.O. 13559, 75 FR 71319, 3 CFR, 2010 Comp., p. 273;
E.O. 13831, 83 FR 20715, 3 CFR, 2018 Comp., p. 806; 42 U.S.C. 2000bb
et seq.

0
37. Revise Sec. 38.1 to read as follows:

Sec. 38.1 Purpose.

The purpose of this part is to implement Executive Order 13279,
Executive Order 13559, and Executive Order 14015.
0
38. Section 38.3 is amended by revising paragraphs (a), (b)(2), and (d)
to read as follows:

Sec. 38.3 Definitions.

(a) ``Direct Federal financial assistance'' or ``Federal financial
assistance provided directly'' refers to situations in which the
Government or an intermediary (under this part) selects the provider
and either purchases services from that provider (e.g., via a contract)
or awards funds to that provider to carry out a service (e.g., via a
grant or cooperative agreement). This includes recipients of sub-grants
that receive Federal financial assistance through State administering
agencies or State-administered programs. In general, Federal financial
assistance shall be treated as direct, unless it meets the definition
of ``indirect Federal financial assistance'' or ``Federal financial
assistance provided indirectly.''
(b) * * *
(2) The service provider receives the assistance wholly as a result
of a genuinely independent and private choice of the beneficiary, not a
choice of the Government. The availability of an adequate secular
alternative is a significant factor in determining whether a program
affords a genuinely independent and private choice.
* * * * *
(d) ``Department program'' refers to a discretionary, formula, or
block grant program administered by or from the Department.
* * * * *
0
39. Revise Sec. 38.4 to read as follows:

[[Page 2419]]

Sec. 38.4 Policy.

(a) Faith-based organizations are eligible, on the same basis as
any other organizations, to participate in any Department program for
which they are otherwise eligible. Neither the Department nor any State
or local government receiving funds under any Department program shall,
in the selection of service providers, discriminate for or against an
organization on the basis of the organization's religious character,
motives, or affiliation, or lack thereof, or on the basis of conduct
that would not be considered grounds to disfavor a similarly situated
secular organization.
(b) Nothing in this part shall be construed to preclude the
Department from making an accommodation, including for religious
exercise, with respect to one or more program requirements on a case-
by-case basis in accordance with the Constitution and laws of the
United States.
(c) The Department shall not disqualify an organization from
participating in any Department program for which it is eligible on the
basis of the organization's indication that it may request an
accommodation with respect to one or more program requirements, unless
the organization has made clear that the accommodation is necessary to
its participation and the Department has determined that it would deny
the accommodation.
(d) Decisions about awards of Federal financial assistance must be
free from political interference or even the appearance of such
interference and must be made on the basis of merit, not on the basis
of religion, religious belief, or lack thereof.
0
40. Section 38.5 is amended by:
0
a. Revising paragraphs (c) through (f).
0
b. Adding the word ``or'' at the end of paragraph (g)(3).
0
c. Removing ``; or'' and adding a period in its place at the end of
paragraph (g)(4).
0
d. Removing paragraph (g)(5).
The revisions read as follows:

Sec. 38.5 Responsibilities.

* * * * *
(c) Any organization that participates in programs funded by
Federal financial assistance from the Department shall not, in
providing services, discriminate against a program beneficiary or
prospective program beneficiary on the basis of religion, a religious
belief, a refusal to hold a religious belief, or a refusal to attend or
participate in a religious practice. However, an organization that
receives indirect Federal financial assistance need not modify its
program activities to accommodate a beneficiary who chooses to expend
the indirect aid on the organization's program.
(d) No grant document, agreement, covenant, memorandum of
understanding, policy, or regulation that the Department or a State or
local government uses in administering Federal financial assistance
from the Department shall require faith-based or religious
organizations to provide assurances or notices where they are not
required of non-faith-based organizations. Any restrictions on the use
of grant funds shall apply equally to faith-based and non-faith-based
organizations. All organizations, including religious ones, that
participate in Department programs must carry out all eligible
activities in accordance with all program requirements, including those
prohibiting the use of direct Federal financial assistance from the
Department to engage in explicitly religious activities, subject to any
accommodations that are granted to organizations on a case-by-case
basis in accordance with the Constitution and laws of the United
States. No grant, document, agreement, covenant, memorandum of
understanding, policy, or regulation that is used by the Department or
a State or local government in administering Federal financial
assistance from the Department shall disqualify faith-based or
religious organizations from participating in the Department's programs
because such organizations are motivated or influenced by religious
faith to provide social services; because of their religious character
or affiliation, or lack thereof; or on the basis of conduct that would
not be considered grounds to disqualify a similarly situated secular
organization.
(e) A faith-based organization's exemption from the Federal
prohibition on employment discrimination on the basis of religion, set
forth in section 702(a) of the Civil Rights Act of 1964, 42 U.S.C.
2000e-1(a), is not forfeited when the organization receives direct or
indirect Federal financial assistance from the Department. Some
Department programs, however, contain independent statutory provisions
requiring that all grantees agree not to discriminate in employment on
the basis of religion. In this case, grantees should consult with the
appropriate Department program office to determine the scope of any
applicable requirements.
(f) If an intermediary, acting under a contract, grant, or other
agreement with the Federal Government or with a State or local
government that is administering a program supported by Federal
financial assistance, is given the authority under the contract, grant,
or agreement to select organizations to provide services funded by the
Federal Government, the intermediary must ensure the compliance of the
recipient of a contract, grant, or agreement with the provisions of
Executive Order 13279, as amended by Executive Order 13559, and any
implementing rules or guidance. If the intermediary is a
nongovernmental organization, it retains all other rights of a
nongovernmental organization under the program's statutory and
regulatory provisions.
* * * * *

Sec. 38.5 [Amended]

0
41. Revise Sec. 38.6 to read as follows:

Sec. 38.6 Procedures.

(a) If a State or local government voluntarily contributes its own
funds to supplement activities carried out under the applicable
programs, the State or local government has the option to separate out
the Federal funds or commingle them. If the funds are commingled, the
provisions of this section shall apply to all of the commingled funds
in the same manner, and to the same extent, as the provisions apply to
the Federal funds.
(b) An organization providing social services under a program of
the Department supported by direct Federal financial assistance must
give written notice to a beneficiary and prospective beneficiary of
certain protections in a manner and form prescribed by the Office for
Civil Rights, including by incorporating the notice into materials that
are otherwise provided to beneficiaries. This notice must include the
following information:
(1) The organization may not discriminate against a beneficiary or
prospective beneficiary on the basis of religion, a religious belief, a
refusal to hold a religious belief, or a refusal to attend or
participate in a religious practice;
(2) The organization may not require a beneficiary or prospective
beneficiary to attend or participate in any explicitly religious
activities that are offered by the organization, and any participation
by a beneficiary in such activities must be purely voluntary;
(3) The organization must separate in time or location any
privately funded explicitly religious activities from activities
supported by direct Federal financial assistance; and
(4) A beneficiary or prospective beneficiary may report an
organization's violation of these protections, including any denials of
services or benefits by an organization, by contacting or filing a

[[Page 2420]]

written complaint with the Office for Civil Rights or the intermediary
that awarded funds to the organization.
(c) The written notice described in paragraph (b) of this section
must be given to a prospective beneficiary prior to the time the
prospective beneficiary enrolls in the program or receives services
from the program. When the nature of the service provided or exigent
circumstances make it impracticable to provide such written notice in
advance of the actual service, an organization must advise
beneficiaries of their protections at the earliest available
opportunity.
(d) When applicable, as determined by the Department, the notice
described in paragraph (b) of this section may also inform each
beneficiary or prospective beneficiary of the option to seek
information as to whether there are any other federally funded
organizations in their area that provide the services available under
the applicable program.
(e) Notices or announcements of award opportunities and notices of
award or contracts shall include language substantially similar to that
in appendices A and B, respectively, to this part.
0
42 Revise appendix A to part 38 to read as follows:

Appendix A to Part 38--Notice or Announcement of Award Opportunities

(a) Faith-based organizations may apply for this award on the
same basis as any other organization, as set forth at, and subject
to the protections and requirements of, this part and 42 U.S.C.
2000bb et seq. The Department of Justice will not, in the selection
of recipients, discriminate for or against an organization on the
basis of the organization's religious character, motives, or
affiliation, or lack thereof, or on the basis of conduct that would
not be considered grounds to favor or disfavor a similarly situated
secular organization.
(b) A faith-based organization that participates in this program
will retain its independence from the Government and may continue to
carry out its mission consistent with religious freedom and
conscience protections in Federal law.
(c) A faith-based organization may not use direct Federal
financial assistance from the Department of Justice to support or
engage in any explicitly religious activities except when consistent
with the Establishment Clause and any other applicable requirements.
An organization receiving Federal financial assistance also may not,
in providing services funded by the Department of Justice,
discriminate against a program beneficiary or prospective program
beneficiary on the basis of religion, a religious belief, a refusal
to hold a religious belief, or a refusal to attend or participate in
a religious practice.

0
43. Revise appendix B to part 38 to read as follows:

Appendix B to Part 38--Notice of Award or Contract

(a) A faith-based organization that participates in this program
retains its independence from the Government and may continue to
carry out its mission consistent with religious freedom and
conscience protections in Federal law.
(b) A faith-based organization may not use direct Federal
financial assistance from the Department of Justice to support or
engage in any explicitly religious activities except when consistent
with the Establishment Clause of the First Amendment and any other
applicable requirements. An organization receiving Federal financial
assistance also may not, in providing services funded by the
Department of Justice, discriminate against a program beneficiary or
prospective program beneficiary on the basis of religion, a
religious belief, a refusal to hold a religious belief, or a refusal
to attend or participate in a religious practice.

DEPARTMENT OF LABOR

For the reasons set forth in the preamble, DOL proposes to amend 29
CFR part 2 as follows:

Title 29--Labor

PART 2--GENERAL REGULATIONS

0
44. The authority citation for part 2 is revised to read as follows:

Authority: 5 U.S.C. 301; E.O. 13198, 3 CFR, 2001 Comp., p. 750;
E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 258; E.O. 13559, 75
FR 71319, 3 CFR, 2010 Comp., p. 273; E.O. 14015, 86 FR 10007, 3 CFR,
2021 Comp., p. 517.

Subpart D--Equal Treatment in Department of Labor Programs for
Faith-Based and Community Organizations; Protection of Religious
Liberty of Department of Labor Social Service Providers and
Beneficiaries

0
45. Section 2.31 is amended by revising paragraph (a)(2)(ii) and the
second sentence of paragraph (d) to read as follows:

Sec. 2.31 Definitions.

* * * * *
(a) * * *
(2) * * *
(ii) The organization receives the assistance wholly as a result of
a genuinely independent and private choice of the beneficiary, not a
choice of the Government. The availability of adequate secular
alternatives is a significant factor in determining whether a program
affords true private choice.
* * * * *
(d) * * * Such programs include, but are not limited to, the one-
stop delivery system, Job Corps, and other programs supported through
the Workforce Innovation and Opportunity Act.
* * * * *
0
46. Revise Sec. 2.32 to read as follows:

Sec. 2.32 Equal participation of faith-based organizations.

(a) Faith-based organizations are eligible, on the same basis as
any other organizations, to seek DOL support or participate in DOL
programs for which they are otherwise eligible. DOL and DOL social
service intermediary providers, as well as State and local governments
administering DOL support, must not discriminate for or against an
organization on the basis of the organization's religious character,
motives, or affiliation, or lack thereof, or on the basis of conduct
that would not be considered grounds to disfavor a similarly situated
secular organization, although this requirement does not preclude DOL,
DOL social service providers, or State or local governments
administering DOL support f

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