Proposed Rule2023-14600
Health and Human Services Grants Regulation
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 13, 2023
Issuing agencies
Health and Human Services Department
Abstract
This is a notice of proposed rulemaking (NPRM) to repromulgate and revise certain regulatory provisions of the HHS, Uniform Administrative Rule Requirements, Cost Principles, and Audit Requirements for HHS Awards, previously set forth in a final rule published in the Federal Register.
Full Text
<html>
<head>
<title>Federal Register, Volume 88 Issue 133 (Thursday, July 13, 2023)</title>
</head>
<body><pre>
[Federal Register Volume 88, Number 133 (Thursday, July 13, 2023)]
[Proposed Rules]
[Pages 44750-44760]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-14600]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of the Secretary
45 CFR Parts 75
RIN 0945-AA19
Health and Human Services Grants Regulation
AGENCY: Office for Civil Rights (OCR), Office of the Assistant
Secretary for Financial Resources (ASFR), Department of Health and
Human Services (HHS).
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: This is a notice of proposed rulemaking (NPRM) to
repromulgate and revise certain regulatory provisions of the HHS,
Uniform Administrative Rule Requirements, Cost Principles, and Audit
Requirements for HHS Awards, previously set forth in a final rule
published in the Federal Register.
DATES: Comments: Submit comments on or before September 11, 2023.
ADDRESSES: You may submit comments, identified by the Regulation
Identifier Number (RIN) 0945-AA19, by any of the following methods.
Please do not submit duplicate comments.
Federal Rulemaking Portal: You may submit electronic comments at
<a href="https://regulations.gov">https://regulations.gov</a> by searching for the Docket ID number HHS-OCR-
2023-0011. Follow the instructions for submitting electronic comments.
If you are submitting comments electronically, the Department strongly
encourages you to submit any comments or attachments in Microsoft Word
format. If you must submit a comment in Adobe Portable Document Format
(PDF), the Department strongly encourages you to convert the PDF to
``print-to-PDF'' format, or to use some other commonly used searchable
text format. Please do not submit the PDF in scanned format. Using a
print-to-PDF allows the Department to electronically search and copy
certain portions of your submissions to assist in the rulemaking
process.
Regular, Express, or Overnight Mail: You may mail written comments
to the following address only: U.S. Department of Health and Human
Services, Office for Civil Rights, Attention: HHS Grants Rulemaking
(RIN-0945-AA19), Washington, DC 20201.
All comments received by the methods and due date specified above
may be posted without change to content to <a href="https://www.regulations.gov">https://www.regulations.gov</a>,
which may include personal information provided about the
[[Page 44751]]
commenter, and such posting may occur after the closing of the comment
period. However, the Department may redact certain non-substantive
content from comments before posting, including threats, hate speech,
profanity, graphic images, or individually identifiable information
about a third-party individual other than the commenter. In addition,
comments or material designated as confidential or not to be disclosed
to the public will not be accepted. Comments may be redacted or
rejected as described above without notice to the commenter, and the
Department will not consider in rulemaking any redacted or rejected
content that would not be made available to the public as part of the
administrative record.
Because of the large number of public comments normally received on
Federal Register documents, OCR is not able to provide individual
acknowledgements of receipt.
Please allow sufficient time for mailed comments to be received
timely in the event of delivery or security delays.
Please note that comments submitted by fax or email and those
submitted after the comment period will not be accepted.
Docket: For complete access to background documents or posted
comments, go to <a href="https://www.regulations.gov">https://www.regulations.gov</a> and search for Docket ID
number HHS-OCR-2023-0011.
FOR FURTHER INFORMATION CONTACT: Office for Civil Rights, Daniel Shieh,
Associate Deputy Director, HHS Office for Civil Rights, (202) 240-3110
or (800) 537-7697 (TDD), or via email at <a href="/cdn-cgi/l/email-protection#620a0a110d01100510030c1611220a0a114c050d14"><span class="__cf_email__" data-cfemail="fc94948f939f8e9b8e9d92888fbc94948fd29b938a">[email protected]</span></a> for
matters related to the HHS Grants Rulemaking.
SUPPLEMENTARY INFORMATION: This is an NPRM proposing to repromulgate
provisions of the Uniform Administrative Requirements, 45 CFR part 75,
set forth in the rule published in the Federal Register at 81 FR 89393
(December 12, 2016). (2016 Rule). The 2016 Rule is currently subject to
a Notice of Nonenforcement, 84 FR 63809 (November 19, 2019), which
states that the Department will rely upon its enforcement discretion to
not enforce the regulatory provisions adopted or amended by the 2016
Rule. On the same day that the Department issued the Notice of
Nonenforcement, it also issued an NPRM proposing revisions to the 2016
Rule. After a 30-day comment period, during which the Department
received over 100,000 comments, a final rule was published in January
2021. 86 FR 2257 (January 12, 2021) (2021 Rule). The 2021 Rule was
challenged in the U.S. District Court for the District of Columbia,
Facing Foster Care et al. v. HHS, 21-cv-00308 (D.D.C. filed Feb. 2,
2021). The 2021 Rule was to be effective on February 11, 2021, but the
effective date was extended via several postponements by the court in
Facing Foster Care under 5 U.S.C. 705. On June 29, 2022, the court
granted the Department's motion for remand with vacatur, and ``ordered
that those portions of the U.S. Department of Health and Human Services
(`HHS') regulation entitled Health and Human Services Grants
Regulation, 86 FR 2257 (Jan. 12, 2021), that amend 45 CFR 75.101(f),
75.300(c), and 75.300(d), are hereby VACATED and REMANDED to HHS.'' \1\
Through this NPRM, the Department now proposes to repromulgate with
certain exceptions and revisions those provisions of the 2021 Rule that
were vacated and remanded to the Department.
---------------------------------------------------------------------------
\1\ See Order, Facing Foster Care et al. v. HHS, No. 21-cv-00308
(D.D.C. June 29, 2022), ECF No. 44.
---------------------------------------------------------------------------
Table of Contents
I. Background
A. Background and Rulemaking
B. Additional Background
C. Summary of the Proposed Rule
1. Applicability (45 CFR 75.101)
2. Statutory and National Policy Requirements (45 CFR 75.300)
3. Notification of Views Regarding Application of Federal
Religious Freedom Laws
II. Reasons for the Proposed Rulemaking
A. The 2016 Rule and the Scope of 5 U.S.C. 301
B. Effect on the Notice of Nonenforcement
III. Executive Order 12866 and Related Executive Orders on
Regulatory Review
A. Executive Order 12866 Determination
B. Regulatory Flexibility Analysis--Initial Small Entity
Analysis
C. Executive Order 13132: Federalism
D. Executive Order 12250 on Leadership and Coordination of
Nondiscrimination Laws
E. Paperwork Reduction Act
IV. Request for Comment
I. Background
A. Background and Rulemaking
On December 26, 2013, the Office of Management and Budget (OMB)
issued the Uniform Administrative Requirements, Cost Principles, and
Audit Requirements for Federal Awards (UAR or uniform regulations) that
``set standard requirements for financial management of Federal awards
across the entire federal government.'' 78 FR 78590 (Dec. 26, 2013). On
December 19, 2014, OMB and other Federal award-making agencies,
including the Department, issued an interim final rule to implement the
UAR. 79 FR 75867 (Dec. 19, 2014). OMB's purpose in promulgating the
uniform regulations was to (1) streamline guidance in making Federal
awards to ease administrative burden and (2) strengthen financial
oversight over Federal funds to reduce risks of fraud, waste, and
abuse.\2\
---------------------------------------------------------------------------
\2\ 78 FR 78590 (Dec. 26, 2013); 85 FR 3766 (Jan. 22, 2020).
---------------------------------------------------------------------------
On July 13, 2016, the Department issued an NPRM proposing changes
to its adoption of the 2014 UAR Interim Final Rule.\3\ The 2016 Rule
was promulgated pursuant to OMB's uniform regulations that ``set
standard requirements for financial management of Federal awards across
the entire federal government,'' 2 CFR part 200; 5 U.S.C. 301; and the
Chief Financial Officers Act of 1990, Public Law 101-576, now at 31
U.S.C. 503.\4\ The NPRM, entitled the ``Health and Human Services
Grants Rule,'' proposed changes to:
---------------------------------------------------------------------------
\3\ 81 FR 45270 (July 13, 2016).
\4\ 78 FR 78590 (Dec. 26, 2013).
---------------------------------------------------------------------------
<bullet> Section 75.102, concerning requirements related to the
Indian Self-Determination and Education Assistance Act (ISDEAA);
<bullet> Section 75.300, concerning certain public policy
requirements and Supreme Court cases, and Sec. 75.101, concerning the
applicability of those provisions to the Temporary Assistance for Needy
Families Program (Title IV-A of the Social Security Act, 42 U.S.C. 601-
19);
<bullet> Section 75.305, concerning the applicability to states of
certain payment provisions;
<bullet> Section 75.365, concerning certain restrictions on public
access to records;
<bullet> Section 75.414, concerning indirect cost rates for certain
grants; and
<bullet> Section 75.477, concerning shared responsibility payments
and payments for failure to offer health coverage to employees.
On December 12, 2016, the Department finalized all of these
provisions with the exception of proposed Sec. 75.102. See 81 FR
89393.\5\ The 2016 Rule went into effect on January 11, 2017.
---------------------------------------------------------------------------
\5\ The 2016 Rule also made a technical change not set forth in
the proposed rule, amending Sec. 75.110(a) by removing ``75.355''
and adding, in its place, ``75.335.''
---------------------------------------------------------------------------
On February 27, 2018, the State of South Carolina sent a letter to
the Department's Administration for Children and Families (ACF) on
behalf of the state's faith-based organizations, seeking a waiver from
the 2016 Rule's religious nondiscrimination requirements. On January
23, 2019, ACF sent South Carolina a letter approving
[[Page 44752]]
the state's waiver request from the religious nondiscrimination
requirement of 45 CFR 75.300(c).
On November 19, 2019, the Department issued a Notice of
Nonenforcement, 84 FR 63809, which stated that the Department would
rely upon its enforcement discretion to not enforce the regulatory
provisions adopted or amended by the 2016 Rule. The Department stated
that such nonenforcement was due to issues regarding the 2016 Rule's
compliance with the requirements of the Regulatory Flexibility Act, 5
U.S.C. 601-12 (RFA). The 2019 Notice of Nonenforcement stated that the
Department was concerned over whether the 2016 Rule provided a
sufficient rationale and certification that the rule would not have a
significant economic impact on a substantial number of small entities,
or a sufficient final regulatory flexibility analysis at the time of
publication. The 2019 Notice of Nonenforcement was challenged in the
U.S. District Court for the Southern District of New York in Family
Equality v. Azar, 20-cv-02403 (S.D.N.Y. filed Mar. 19, 2020); the suit
was dismissed on March 30, 2022, for lack of subject-matter
jurisdiction.\6\ The case is on appeal in the Second Circuit, while the
2019 Notice of Nonenforcement remains in effect.\7\
---------------------------------------------------------------------------
\6\ See Order, Family Equality v. Azar, No. 20-cv-02403
(S.D.N.Y. Mar. 30, 2022), ECF No. 62.
\7\ Family Equality v. Becerra, No. 22-1174 (2d Cir. filed May
27, 2022).
---------------------------------------------------------------------------
On March 5, 2020, in response to a lawsuit filed by the State of
Texas against the Department challenging the 2016 Rule, Texas v. Azar,
3:19-cv-00365 (S.D. Tex. Oct. 31, 2019), OCR sent a letter informing
Texas of OCR's conclusion that the Religious Freedom Restoration Act of
1993 (RFRA), 42 U.S.C. 2000bb et seq., prohibited the Department from
applying 45 CFR 75.300(c) and (d) against Texas with respect to the
Archdiocese of Galveston-Houston, a religious foster-care service
provider, and ``other similarly situated entities.''
On November 3, 2020, in response to a separate lawsuit filed
against the Department, Buck v. Gordon, 1:19-cv-00286 (W.D. Mich. Apr.
15, 2019), OCR sent the Michigan Department of Health and Human
Services a letter informing them of OCR's conclusion that RFRA likewise
prohibited the Department from applying 45 CFR 75.300(c) against
Michigan with respect to the St. Vincent Catholic Charities, a
religious foster-care service provider, and ``other similarly situated
entities.''
On the same day the Department issued the 2019 Notice of
Nonenforcement, it published an NPRM proposing to ``repromulgate some
of the provisions of the [2016] Final Rule, not to repromulgate others,
and to replace or modify certain provisions that were included in the
Final Rule with other provisions.'' 84 FR 63831 (Nov. 19, 2019). After
a 30-day comment period and receipt of over 100,000 comments, on
January 12, 2021, the Department repromulgated portions of and issued
amendments to the 2016 Rule, 86 FR 2257 (2021 Rule). Specifically, from
the 2016 Rule, the 2021 Rule repromulgated provisions of 45 CFR part 75
and made amendments to 45 CFR 75.300(c) and (d). Section 75.300(c)
previously prohibited discrimination in the administration of programs
supported by HHS awards ``based on non-merit factors such as age,
disability, sex, race, color, national origin, religion, gender
identity, or sexual orientation.'' The 2021 Rule amended Sec.
75.300(c) to prohibit discrimination in these programs ``to the extent
doing so is prohibited by federal statute.''
Section 75.300(d) had previously stated that ``all recipients must
treat as valid the marriages of same-sex couples'' consistent with the
Supreme Court decisions in United States v. Windsor and Obergefell v.
Hodges. The 2021 Rule amended Sec. 75.300(d) to state that ``HHS will
follow all applicable Supreme Court decisions.''
Shortly after the 2021 Rule's issuance, portions of the amendments
to Sec. 75.300 and a conforming amendment at Sec. 75.101(f) were
challenged in the U.S. District Court for the District of Columbia.
Facing Foster Care v. HHS, 21-cv-00308 (D.D.C. Feb. 2, 2021). On June
17, 2022, the Department filed a motion for remand with vacatur the
challenged portions of the 2021 Rule. The Department noted that because
HHS had ``reviewed only a small fraction of the non-duplicative
comments, did not employ a sampling methodology likely to produce an
adequate sample of the comment received, and did not explain its use of
sampling in the final rule, Defendants have concluded, in the
circumstances of this case, that the 2021 Rule was promulgated in
violation of the [Administrative Procedure Act].'' \8\ On June 29,
2022, the court ordered that the challenged portions of 45 CFR
75.101(f), 75.300(c), and 75.300(d) be vacated and remanded to HHS.\9\
---------------------------------------------------------------------------
\8\ Facing Foster Care et al. v. HHS, No. 21-cv-00308 (D.D.C.
June 17, 2022), ECF No. 41.
\9\ See id., Order (June 29, 2022), ECF No. 44. Because they
were not subject to the order of vacatur, certain provisions
previously adopted in the 2021 Rule remain in effect. These
provisions are: 45 CFR 75.305, 75.365, 75.414, and 75.417.
---------------------------------------------------------------------------
On November 18, 2021, HHS issued letters to South Carolina,
Michigan, and Texas with respect to previously granted waivers under
RFRA for participation in the Title IV-E program (the HHS-administered
adoption and foster care program). The letters noted that because HHS
had issued the 2019 Notification of Nonenforcement, which stated that
HHS would not enforce the non-discrimination requirements under the
2016 Rule, the RFRA waivers were unnecessary, and thus, rescinded. The
letters further explained that the previously granted waivers had
misapplied the applicable RFRA standards and were therefore withdrawn.
B. Additional Background
On June 15, 2020, the U.S. Supreme Court held that Title VII of the
Civil Rights Act of 1964, 42 U.S.C. 2000e-2(a)(1) (Title VII),
prohibits discrimination on the basis of sex, which includes
discrimination based on sexual orientation and gender identity. Bostock
v. Clayton County, 140 S. Ct. 1731 (2020). Bostock concluded that the
plain meaning of ``because of . . . sex'' in Title VII necessarily
included discrimination because of sexual orientation and gender
identity. Id. at 1753-54. After Bostock, circuit courts concluded that
the plain language of the Title IX of the Education Amendments of 1972,
20 U.S.C. 1681(a), prohibition on sex discrimination must be read
similarly. See Grimm v. Gloucester Cty. Sch. Bd., 972 F.3d 586 (4th
Cir. 2020), cert. denied, 141 S. Ct. 2878 (2021); see also Doe v.
Snyder, 28 F.4th 103, 114 (9th Cir. 2022) (applying Bostock's reasoning
to the prohibitions on sex discrimination in Title IX and Section 1557
of the Affordable Care Act, 42 U.S.C. 18116). But cf. Adams v. School
Bd. of St. Johns Co., 57 F.4th 791, 811-15 (11th Cir. 2022) (en banc)
(recognizing that Bostock instructs that the exclusion of a transgender
student from the bathroom consistent with his gender identity was
exclusion on the basis of ``sex,'' but that such exclusion was
permitted by Title IX's ``express statutory and regulatory carve-outs''
for living and bathroom facilities).
On January 20, 2021, President Biden issued Executive Order (E.O.)
13988, 86 FR 7023, 7023-24, which directed Federal agencies to review
all agency actions, including regulations, ``as necessary to fully
implement statutes that prohibit sex discrimination,'' and determine if
they were inconsistent with Bostock reasoning.\10\
---------------------------------------------------------------------------
\10\ In Neese v. Becerra, No. 2:21-cv-00163 (N.D. Tex., Nov. 10,
2022), the U.S. District Court for the Northern District of Texas
declared unlawful a May 10, 2021 notification titled, ``Notification
of Interpretation and Enforcement of Section 1557 of the Affordable
Care Act and Title IX of the Education Amendments of 1972,'' which
applied Bostock to Title IX and Section 1557. On January 20, 2023,
the Department appealed that decision to the Fifth Circuit Court of
Appeals. That appeal is pending.
---------------------------------------------------------------------------
[[Page 44753]]
C. Summary of the Proposed Rule
Because the 2021 Rule's amendments to 45 CFR 75.101(f), 75.300(c),
and 75.300(d) were vacated and remanded to HHS, the Department proposes
to repromulgate some provisions from the 2016 Rule as well as other
provisions with changes. Specifically, the Department is proposing not
to reinstate former Sec. 75.101(f), as found in both the 2016 and 2021
Rules; is proposing revisions to Sec. 75.300(c) and (d) from the 2016
Rule; and is proposing to add new Sec. 75.300(e) and (f), not found in
either the 2016 or the 2021 Rules.
1. Applicability (Sec. 75.101)
Proposed section 75.101 provides for the applicability of the 2014
UAR Rule. The 2016 Rule included a provision at Sec. 75.101(f)
providing that Sec. 75.300(c) (prohibiting discrimination on a range
of bases in the administration of programs supported by HHS awards)
would ``not apply to the Temporary Assistance for Needy Families
Program (title IV-A of the Social Security Act, 42 U.S.C. 601-619).''
This was repromulgated in the 2021 Rule and is subject to the order of
vacatur.
The Department does not propose to add paragraph (f) in Sec.
75.101, which was included in the 2016 Rule to ensure that the specific
statutory requirements of the Temporary Assistance for Needy Families
Program (Title IV-A of the Social Security Act, 42 U.S.C. 601-619)
(TANF) governed applicable grants. This language is not necessary under
the proposed language of 45 CFR 75.300, because the latter is already
limited to applicable statutory nondiscrimination requirements and the
TANF statute, 42 U.S.C. 608(d), already identifies the
nondiscrimination provisions that apply to TANF.
2. Statutory and National Policy Requirements (Sec. 75.300)
Section 75.300 provides the statutory and policy requirements for
the 2014 UAR Rule. The Department proposes to keep paragraphs (a) and
(b) of Sec. 75.300 unchanged from the 2016 Rule, which provides: ``(a)
The Federal awarding agency must manage and administer the Federal
award in a manner so as to ensure that Federal funding is expended and
associated programs are implemented in full accordance with U.S.
statutory and public policy requirements: Including, but not limited
to, those protecting public welfare, the environment, and prohibiting
discrimination. The Federal awarding agency must communicate to the
non-Federal entity all relevant public policy requirements, including
those in general appropriations provisions, and incorporate them either
directly or by reference in the terms and conditions of the Federal
award. (b) The non-Federal entity is responsible for complying with all
requirements of the Federal award. For all Federal awards, this
includes the provisions of FFATA, which includes requirements on
executive compensation, and also requirements implementing the Act for
the non-Federal entity at 2 CFR part 25 and 2 CFR part 170. See also
statutory requirements for whistleblower protections at 10 U.S.C. 2324
and 2409, and 41 U.S.C. 4304, 4310, and 4712.''
This NPRM proposes to repromulgate Sec. 75.300(c) from the 2021
Rule to provide: ``It is a public policy requirement of HHS that no
person otherwise eligible will be excluded from participation in,
denied the benefits of, or subjected to discrimination in the
administration of HHS programs and services, to the extent doing so is
prohibited by federal statute.'' This revises the 2016 Rule, which
provided at 45 CFR 75.300(c), in relevant part, ``It is a public policy
requirement of HHS that no person otherwise eligible will be excluded
from participation in, denied the benefits of, or subjected to
discrimination in the administration of HHS programs and services based
on non-merit factors such as age, disability, sex, race, color,
national origin, religion, gender identity, or sexual orientation.''
The Department also proposes to repromulgate Sec. 75.300(d) from the
2021 Rule to provide, ``HHS will follow all applicable Supreme Court
decisions in administering its award programs.'' This revises the 2016
Rule, which provided at 45 CFR 75.300(d), ``In accordance with the
Supreme Court decisions in United States v. Windsor and in Obergefell
v. Hodges, all recipients must treat as valid the marriages of same-sex
couples. This does not apply to registered domestic partnerships, civil
unions or similar formal relationships recognized under state law as
something other than a marriage.'' As discussed more fully below in
Part II, Section A, the Department's proposals reflect its
reconsideration in light of arguments concerning the Housekeeping
Statute, 5 U.S.C. 301, raised in litigation challenging a different HHS
rule, and HHS's desire to provide stability and clarity in its
programs.
Finally, the Department proposes to add a Sec. 75.300(e), which
clarifies the Department interpretation of the prohibition of
discrimination on the basis of sex to include (1) discrimination on the
basis of sexual orientation and (2) discrimination on the basis of
gender identity, consistent with the Supreme Court's decision in
Bostock v. Clayton County, 140 S. Ct. 1731 (2020)), and other Federal
court precedent applying Bostock's reasoning that sex discrimination
includes discrimination based on sexual orientation and gender
identity.\11\ Proposed Sec. 75.300(e) applies to 13 HHS authorities
that prohibit discrimination on the basis of sex in health and human
services programs.
---------------------------------------------------------------------------
\11\ Bostock's reasoning applies with equal force to claims
alleging discrimination on the basis of sex characteristics,
including intersex traits, because discrimination based on
anatomical or physiological sex characteristics (such as genitals,
gonads, chromosomes, hormone function, and brain development/
anatomy) is inherently sex-based. Discrimination on the basis of
intersex traits, therefore, is prohibited sex discrimination because
the individual is being discriminated against based on their sex
characteristics. If their sex characteristics were different--i.e.,
traditionally ``male'' or ``female''--the intersex person would be
treated differently. Moreover, like gender identity and sexual
orientation, intersex traits are ``inextricably bound up with'' sex,
and ``cannot be stated without referencing sex.'' Bostock, 140 S.
Ct. at 1742; see also Grimm, 972 F.3d at 608 (quoting Whitaker v.
Kenosha Unified Sch. Dist. No. 1 Bd. of Educ., 858 F.3d 1034, 1051
(7th Cir. 2017)).
In addition to Bostock, the Department continues to interpret
sex discrimination to prohibit discrimination on the basis of sex
stereotypes, which can include stereotypes regarding sex
characteristics and intersex traits, consistent with longstanding
Supreme Court precedent. See Los Angeles, Dep't of Water & Power v.
Manhart, 435 U.S. 702 (1978); Price Waterhouse v. Hopkins, 490 U.S.
228 (1989)).
---------------------------------------------------------------------------
The Department seeks comment on whether the Department administers
other statutes prohibiting sex discrimination that are not set forth in
proposed Sec. 75.300(e) or whether the Department should include
language or guidance in Sec. 75.300(e) to cover current or future laws
that prohibit sex discrimination that are not set forth above.
Bostock held that a plain reading of Title VII's prohibition on
discrimination ``because of . . . sex'' encompassed discrimination
based on sexual orientation or transgender status. According to the
Court, a straightforward application of the terms ``discriminate,''
``because of,'' and ``sex'' means that ``it is impossible to
discriminate against a person'' for being gay or transgender ``without
[[Page 44754]]
discriminating against that individual based on sex.'' \12\
---------------------------------------------------------------------------
\12\ 140 S. Ct. at 1742.
---------------------------------------------------------------------------
The 13 statutes listed in proposed Sec. 75.300(e) each contain
prohibitions on sex discrimination. None of the 13 statutes contain any
indicia--such as statute-specific definitions, or any other criteria--
to suggest that these prohibitions on sex discrimination should be
construed differently than Title VII's sex discrimination prohibition.
Nor is the Department aware of reported case law requiring such a
construction. Accordingly, this rule proposes to interpret the
prohibition on sex discrimination by applying Bostock's reasoning that
sex discrimination includes discrimination on the basis of sexual
orientation and gender identity with respect to programs, activities,
projects, assistance, and services that receive Federal financial
assistance under these statutes which the Department administers \13\
and over which OCR maintains civil rights enforcement authority.\14\
---------------------------------------------------------------------------
\13\ Authorized by the Omnibus Budget Reconciliation Act of 1981
(OBRA), Public Law 97-35.
\14\ See 47 FR 4348-02 (January 29, 1982) (delegating to the OCR
Director ``civil rights enforcement authority contained in the
Health and Human Services Block Grants prescribed by the Omnibus
Budget Reconciliation Act of 1981.'').
---------------------------------------------------------------------------
As described further below, the 13 listed statutes contain minor
variations in the language used to prohibit sex discrimination,
sometimes within the same statute, but the Department does not believe
any of the variations can be reasonably understood to distinguish the
various statutes from Bostock's reasoning.
Nine of the statutes listed in proposed Sec. 75.300(e) prohibit
discrimination ``on the basis of'' sex, using language identical to the
sex discrimination prohibition in Title IX.\15\ For example, the Public
Health Service Act, prohibits the Secretary from providing certain
funding to nursing schools unless the school ``furnishes assurances . .
. that it will not discriminate on the basis of sex.'' \16\ Seven of
the statutes identified in proposed 75.300(e) prohibit discrimination
``on the ground of . . . sex.'' \17\ For example, the Preventive Health
and Health Services Block Grant provides that ``no person shall on the
ground of sex . . . be excluded from participation in, or be denied the
benefits of, or be subjected to discrimination under, any program or
activity funded in whole or in part with funds made available under
this part.'' \18\ One statute states that a grant or contract must
provide that the recipient of financial assistance will not
``discriminate . . . because of . . . sex,'' \19\ the same language
from Title VII that the Supreme Court analyzed in Bostock. Finally, two
of the statutes identified in proposed Sec. 75.300(e) require services
to be provided ``without regard to . . . sex.'' \20\ For the purposes
of this rulemaking, the Department does not believe that any of these
variations are legally significant, or that these statutes should be
interpreted in a way that diverges from the Court's interpretation of
Title VII's language ``because of . . . sex'' in Bostock.\21\
---------------------------------------------------------------------------
\15\ 42 U.S.C. 290ff-1; 42 U.S.C. 290cc-33; 42 U.S.C. 295m; 42
U.S.C. 296g; 42 U.S.C. 300w-7; 42 U.S.C. 300x-57; 42 U.S.C. 708; 42
U.S.C. 9918; 42 U.S.C. 10406.
\16\ 42 U.S.C. 296g.
\17\ 42 U.S.C. 290cc-33(a)(2); 42 U.S.C. 300w-7; 42 U.S.C. 300x-
57(a)(2); 42 U.S.C. 708(a)(2); 42 U.S.C. 5151(a); 42 U.S.C. 8625; 42
U.S.C. 10406(c)(2)(B).
\18\ 42 U.S.C. 300w-7; see also OBRA, Public Law 97-35, 47 FR
4348-02.
\19\ 48 U.S.C. 9849(a).
\20\ 42 U.S.C. 295m; 8 U.S.C. 1522.
\21\ Five of the listed statutes contain separate provisions
prohibiting discrimination both ``on the basis of sex under Title
IX'' and ``on the grounds of sex.'' One statute contains separate
provisions prohibiting discrimination ``on the basis of sex'' and
requiring services to be provide ``without regard to . . . sex.'' 42
U.S.C. 295m. Another statute contains separate provisions
prohibiting discrimination ``because of . . . sex'' and ``on the
ground of sex.'' 42 U.S.C. 9849. Another statute contains a
provision with the heading ``Prohibition on discrimination on the
basis of sex, religion,'' which states, ``[n]o person shall on the
ground of sex or religion be excluded.'' 42 U.S.C. 10406(c)(2)(B).
---------------------------------------------------------------------------
Based on this statutory construction, it is logical in this context
to apply Bostock's reasoning that sex discrimination includes
discrimination on the basis of sexual orientation and gender identity
to each of these independent nondiscrimination provisions. Many courts,
including the Supreme Court, have concluded that varied verbal
formulations in antidiscrimination statutes should be interpreted
consistently with one another.\22\ In Bostock itself, for example, the
Court used both ``on the basis of'' and ``because of'' throughout the
decision to describe the unlawful discrimination at issue.\23\
---------------------------------------------------------------------------
\22\ See, e.g., Franklin v. Gwinnett Cnty. Pub. Sch., 503 U.S.
60, 75 (1992) (Title IX imposes ``the duty not to discriminate on
the basis of sex, and `when a supervisor sexually harasses a
subordinate because of the subordinate's sex, that supervisor
``discriminate[s]'' on the basis of sex' '') (quoting Meritor Sav.
Bank, FSB v. Vinson, 477 U.S. 57, 64 (1986)) (emphases added); Grimm
v. Gloucester Cnty. Sch. Bd., 972 F.3d 586, 616-17 (4th Cir. 2020)
(holding that Bostock's reasoning applies to Title IX, which
prohibits discrimination ``on the basis of sex,'' explaining that
``[a]lthough Bostock interprets Title VII . . . , it guides our
evaluation of claims under Title IX''); Gentry v. E. W. Partners
Club Mgmt. Co. Inc., 816 F.3d 228, 235-36 (4th Cir. 2016) (``The ADA
prohibits discrimination `on the basis of' disability. We see no
`meaningful textual difference' between this language and the terms
`because of,' `by reason of,' or `based on' ''); Lakoski v. James,
66 F.3d 751, 757 (5th Cir. 1995) (explaining that even though Title
IX uses the phrase ``on the basis of sex'' and Title VII uses the
phrase ``because of . . . sex,'' ``the prohibitions of
discrimination on the basis of sex of Title IX and Title VII are the
same'').
\23\ See, e.g., Bostock, 140 S. Ct. at 1738 (``on the basis of
sex.''); id. at 1741 (``because of sex'').
---------------------------------------------------------------------------
Discriminating against individuals in any of the programs,
activities, projects, assistance, and services covered by the statutes
in Sec. 75.300(e) on the basis of sexual orientation or gender
identity necessarily involves discriminating against them on the basis
of sex. Section 75.300(e) makes this interpretation clear to the
public.
The Department seeks comments on whether there is anything about
any of the statutes referenced in proposed Sec. 75.300(e), such as
their language, legislative history, or purpose, that would provide a
legal basis for distinguishing them from Bostock's interpretation of
Title VII, that sex discrimination includes discrimination on the basis
of sexual orientation and gender identity.
3. Notification of Views Regarding Application of Federal Religious
Freedom Laws
The Department takes seriously its obligations to comply with
Federal religious freedom laws, including the First Amendment and RFRA,
and it will continue to comply with these legal obligations. The
Department is fully committed to respecting religious freedom laws and
to thoroughly considering any organization's assertion that the
provisions of this rule conflict with their rights under those
laws.\24\ In determining whether an action is ``prohibited by federal
statute'' under proposed Sec. 75.300(c), the Department will consider
RFRA in its analysis when applicable. This proposal is similar to the
process laid out in the Section 1557 NPRM under proposed Sec. 92.302,
87 FR 47885-47886, which is consistent with the Department's broader
commitment to abiding by the First Amendment and RFRA.
---------------------------------------------------------------------------
\24\ No religious liberty claim was before the Court in Bostock.
The Court said the interaction of doctrines protecting religious
liberty with statutory nondiscrimination prohibitions were
``questions for future cases.'' 140 S. Ct. at 1754.
---------------------------------------------------------------------------
In applying RFRA, exemptions from the nondiscrimination
requirements of this rule would depend on application of RFRA's test,
which provides that the government may substantially burden a person's
exercise of religion only if it demonstrates that application of the
burden to the person is in furtherance of a compelling governmental
interest and is the least restrictive means of
[[Page 44755]]
furthering that compelling governmental interest. 42 U.S.C. 2000bb-
1(b). The U.S. Supreme Court has recognized that a fact-sensitive,
case-by-case analysis of such burdens and interests is needed under
RFRA,\25\ and the Department applies RFRA accordingly.
---------------------------------------------------------------------------
\25\ See, e.g., Gonzales v. O Centro Esp[iacute]rita Beneficente
Uni[atilde]o do Vegetal, 546 U.S. 418, 430-31 (2006) (when applying
RFRA, courts look ``beyond broadly formulated interests justifying
the general applicability of government mandates and scrutinized the
asserted harm of granting specific exemptions to particular
religious claimants''); cf. Ramirez v. Collier, 142 S. Ct. 1264,
1281 (2022) (holding that the Religious Land Use and
Institutionalized Persons Act, which applies RFRA's test for
religious exemptions in the prison context, ``requires that courts
take cases one at a time, considering only `the particular claimant
whose sincere exercise of religion is being substantially burdened'
'') (quoting Holt v. Hobbs, 574 U.S. 352, 363 (2015)).
---------------------------------------------------------------------------
In proposed Sec. 75.300(f), the Department specifically addresses
the application of Federal religious freedom protections. This proposed
provision is new, as neither the 2016 nor 2021 Rules provided a
specific, optional means for recipients to notify the Department of
their views regarding the application of Federal religious freedom
laws.\26\ Proposed Sec. 75.300(f) provides that, at any time, a
recipient may raise with the Department, their belief that the
application of a specific provision or provisions of this regulation as
applied to the recipient would violate Federal religious freedom
protections. Such laws include, but are not limited to, the First
Amendment and RFRA. Upon receipt of a notification, the Department
first assesses whether there is a sufficient, concrete factual basis
for making a determination based on the request.
---------------------------------------------------------------------------
\26\ While 45 CFR 75.102 allows for exceptions on a case-by-case
basis to part 75, which the Department had previously used to issue
the RFRA waivers to South Carolina, Michigan, and Texas, it is best
read to, and has been historically used to, address requests for
exceptions that pertain to financial and administrative management
of federal grants, such as deviations from normal allowable costs,
requirements applicable to for-profit subrecipients, costs requiring
prior approval, or computation of depreciation, rather than
providing exemptions from civil rights or anti-discrimination laws.
See, e.g., <a href="https://www.cfo.gov/assets/files/2CFR-FrequentlyAskedQuestions_2021050321.pdf">https://www.cfo.gov/assets/files/2CFR-FrequentlyAskedQuestions_2021050321.pdf</a> (guidance from the Office of
Management and Budget indicating waivers under 45 CFR75.102 are
primarily fiscal in nature); <a href="https://www.hhs.gov/conscience/religious-freedom/state-letter-to-texas-withdrawing-exception-from-non-discrimination-requirements/index.html">https://www.hhs.gov/conscience/religious-freedom/state-letter-to-texas-withdrawing-exception-from-non-discrimination-requirements/index.html</a> (rescission letter of
RFRA waiver).
---------------------------------------------------------------------------
Proposed Sec. 75.300(f) provides that once the awarding agency,
working jointly with ASFR or OCR (in the course of investigating a
civil rights complaint or compliance review), receives a notification
from a recipient seeking a religious exemption, the awarding agency,
working jointly with either ASFR or OCR, would promptly consider the
recipient's views that they are entitled to an exemption in (1)
responding to any complaints or (2) otherwise determining whether to
proceed with any investigation or enforcement activity regarding that
recipient's compliance with the relevant provisions of this regulation,
in legal consultation with the Office of the General Counsel (OGC).\27\
A recipient may also on their own initiative, before a complaint is
filed or an investigation opened, seek an exemption based upon the
application of a religious freedom law, and the Department would assess
whether there is a sufficient, concrete factual basis prior to making
any determination. Any relevant ongoing investigation or enforcement
activity regarding the recipient would be held in abeyance until a
determination has been made. Considering recipients' specific
religious-based concerns in the context of an open case or a claim
raised in the first instance by a particular recipient (i.e., when the
Department first has cause to consider the recipient's compliance,
whether through a complaint filed against the recipient, or through the
recipient raising the exemption on their own initiative), would allow
the awarding agency, working with ASFR, or OCR, in legal consultation
with OGC, to make an informed, case-by-case decision and, where
required by law, protect a recipient's religious freedom rights and
minimize any harm an exemption could have on third parties. As the
Supreme Court noted in Gonzales v. O Centro Esp[iacute]rita Beneficente
Uni[atilde]o do Vegetal, ``[C]ourts should strike sensible balances,
pursuant to a compelling interest test that requires the Government to
address the particular practice at issue.'' 546 U.S. 418, 439 (2006)
(emphasis added). The Department believes that the process set forth
under proposed Sec. 75.300(f) properly strikes that balance.
Similarly, holding ongoing investigations and enforcement activity in
abeyance alleviates the burden of a recipient having to respond to an
investigation or enforcement action until a recipient's objection has
been considered.
---------------------------------------------------------------------------
\27\ See 86 FR 67067 (Nov. 24, 2021) (the HHS Secretary
``delegate[s] responsibility to Department components to ensure full
compliance with RFRA and other constitutional requirements'' and
``Department components must consult with OGC on such matters and
provide appropriate consideration to RFRA- or Constitution-based
objections or requests, as well as take any actions that may be
appropriate.'').
---------------------------------------------------------------------------
Further, proposed Sec. 75.300(f) makes clear the awarding
agency's, ASFR's, and OCR's discretion to determine at any time whether
a recipient is wholly or partially exempt from certain provisions of
this part under Federal religious liberty protections, whether: (1)
after a complaint is raised against the recipient or (2) raised by the
recipient before a complaint is filed (provided the Department has a
sufficient, concrete factual basis for determining whether the
recipient is entitled to an exemption). Proposed Sec. 75.300(f)
requires that, in determining whether a recipient is exempt from the
application of the specific provision or provisions raised in its
notification, ASFR or OCR, in consultation with OGC, must assess
whether there is a sufficient, concrete factual basis for making a
determination and apply the applicable legal standards of the religious
freedom statute at issue.
Proposed Sec. 75.300(f) also provides that, upon making a
determination regarding whether a particular recipient is exempt from--
or subject to a modified requirement under--a specific provision of
this part, the awarding agency, working with ASFR or OCR, will
communicate that determination to the recipient in writing. The written
notification will clearly set forth the scope, applicable issues,
duration, and all other relevant terms of any exemption.
Proposed Sec. 75.300(f) provides that if the awarding agency,
working with ASFR or OCR, in legal consultation with OGC, determines
that a recipient is entitled to an exemption or modification of the
application of certain provisions of this rule based on the application
of religious liberty protections, that determination does not otherwise
limit the application of any other Federal law to the recipient.
HHS maintains an important civil rights interest in the proper
application of Federal religious freedom protections. HHS is thus
committed to complying with RFRA and all other applicable legal
requirements. The Department believes that this proposed approach will
assist the Department in fulfilling that commitment by providing the
opportunity for recipients to raise concerns with the Department, such
that the Department can determine whether an exemption or modification
of the application of certain provisions is appropriate under the
corresponding Federal religious freedom law. As noted above, the
Department also maintains a strong interest in taking a case-by-case
approach to such determinations that will allow it to account for and
minimize any harm an exemption could
[[Page 44756]]
have on third parties \28\ and, in the context of RFRA, to consider
whether the application of any substantial burden imposed on a person's
exercise of religion is in furtherance of a compelling interest and is
the least restrictive means of advancing that compelling interest.\29\
---------------------------------------------------------------------------
\28\ See Cutter v. Wilkinson, 544 U.S. 709, 720 (2005) (in
addressing religious accommodation requests, ``courts must take
adequate account of the burdens a requested accommodation may impose
on nonbeneficiaries'').
\29\ Cf. O Centro, 546 U.S. at 439 (``[C]ourts should strike
sensible balances, pursuant to a compelling interest test that
requires the Government to address the particular practice at
issue.'') (emphasis added).
---------------------------------------------------------------------------
The Department seeks comment on this proposed approach, including
whether such a provision should include additional procedures, the
potential burdens of such a provision on recipients and potential third
parties, and additional factors that the Department should take into
account when considering the relationship between Federal statutory and
constitutional rights to religious freedom and this rule's other civil
rights protections. We also seek comment on what alternatives, if any,
the Department should consider.
Finally, proposed Sec. 75.300(g) provides that if any provision of
this part is held to be invalid or unenforceable by its terms, or as
applied to any person or circumstance, it shall be severable from this
part and not affect the remainder thereof or the application of the
provision to other persons not similarly situated or to other,
dissimilar circumstances.
II. Reasons for the Proposed Rulemaking
A. The 2016 Rule and the Scope of 5 U.S.C. 301
HHS proposes to amend the language in 45 CFR 75.300(c) and (d) of
the 2016 Rule in light of arguments raised concerning HHS's statutory
authority under the Housekeeping Statute, 5 U.S.C. 301, and the
financial management statutes cited in 2 CFR 200.103 and 45 CFR 75.103,
including the Chief Financial Officer's Act, 31 U.S.C. 503; the Budget
and Accounting Act, 31 U.S.C. 1101-1125; and the Single Audit Act, 31
U.S.C. 6101-6106. After considering those arguments, HHS is now of the
view that its reliance on the Housekeeping Statute to promulgate Sec.
75.300(c) and (d) of the 2016 Rule may have resulted in uncertainty
about Department programs. We are accordingly proposing revisions to
those paragraphs to explain more clearly to grantees and beneficiaries
where and how nondiscrimination protections apply.
The Department has statutory authority to issue regulations to
enforce certain government-wide statutory civil rights statutes, such
as Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d et seq.
(prohibiting discrimination on the basis of race, color, or national
origin in programs or activities receiving Federal financial
assistance); Title IX of the Education Amendments of 1972, 20 U.S.C.
1681 (prohibiting discrimination on the basis of sex in education
programs or activities receiving Federal financial assistance), Section
504 of the Rehabilitation Act of 1973, 29 U.S.C. 794 (prohibiting
discrimination on the basis of disability in programs and activities
conducted by, or receiving financial assistance from, Federal
agencies), and the Age Discrimination Act, 42 U.S.C. 6101 et seq.
(prohibiting discrimination on the basis of age in programs and
activities receiving Federal financial assistance). There are also
certain program-specific statutory nondiscrimination provisions that
provide the Department with the authority to issue enforcement
regulations. These include section 471(a)(18) of the Social Security
Act (SSA), 42 U.S.C. 671(a)(18) (prohibiting discrimination on the
basis of race, color, or national origin in Title IV-E adoption and
foster care programs) and section 508 of the SSA, 42 U.S.C. 708
(prohibiting discrimination on the basis of age, race, color, national
origin, disability, sex, or religion in Maternal and Child Health
Services Block Grant programs).\30\
---------------------------------------------------------------------------
\30\ The Department is authorized to issue regulations for the
efficient administration of its functions in the Social Security Act
programs for which it is responsible. See SSA Sec. 1102(a), 42
U.S.C. 1302(a).
---------------------------------------------------------------------------
Section 75.300(c) and (d) in the 2016 Rule, however, were
promulgated under authority granted by the Housekeeping Statute, 5
U.S.C. 301. The Housekeeping Statute provides in relevant part: ``The
head of an Executive department or military department may prescribe
regulations for the government of his department, the conduct of its
employees, the distribution and performance of its business, and the
custody, use, and preservation of its records, papers, and property.''
Section 75.300(c) and (d) were issued to provide uniformity in
Departmental non-discrimination requirements by ``codif[ying] for all
HHS service grants what is already applicable for all HHS service
contracts, as required by the HHS Acquisition Regulation (HHSAR)
352.237-74'' and which ``makes explicit HHS's non-discrimination policy
when obligating appropriations for solicitations, contracts and orders
that deliver service under HHS's programs directly to the public.'' 81
FR 45271.
The Supreme Court has explained that the Housekeeping Statute is
``a grant of authority to the agency to regulate its own affairs . . .
authorizing what the [Administrative Procedure Act] terms `rules of
agency organization, procedure or practice' as opposed to `substantive
rules.''' Chrysler Corp. v. Brown, 441 U.S. 281, 309-10 (1979). In
2019, a Federal district court vacated a different regulation the
Department had promulgated, in part, under the Housekeeping Statute.
see New York v. HHS, 414 F. Supp. 3d 475 (S.D.N.Y. 2019) (vacating
``Protecting Statutory Conscience Rights in Health Care; Delegations of
Authority,'' 84 FR 23170 (May 21, 2019) (codified at 45 CFR pt. 88)).
That regulation interpreted and implemented Federal statutory
provisions that ``recognize[d] the right of an individual or entity to
abstain from participation in medical procedures, programs, services,
or research activities on account of a religious or moral objection.''
Id. at 496. The court vacated the rule because it was substantive
rather than a housekeeping measure, noting that ``[a] rule that
announces new rights and imposes new duties--one that shapes the
primary conduct of regulated entities--is substantive.'' Id. at 522.
After considering the arguments raised in New York concerning the
Department's authority under 5 U.S.C. 301 and how they might apply
here, the Department has reconsidered Sec. 75.300(c) and (d) of the
2016 Rule. Pursuant to, and consistent with, its authority under 5
U.S.C. 301, the Department proposes to revise Sec. 75.300(c) to
recognize the public policy requirement that otherwise eligible persons
not be excluded from participation in, denied the benefits of, or
subjected to discrimination in the administration of programs,
activities, projects, assistance, and services where such actions are
prohibited by Federal statute. The Department considers the proposed
language for paragraph (c) appropriate because it affirms that HHS
grants programs will be administered consistent with the Federal
statutes that govern the programs, including the nondiscrimination
statutes that Congress has adopted and made applicable to the
Department's programs. The adoption of regulatory language that makes
compliance simpler and more predictable for Federal grant recipients is
generally consistent with
[[Page 44757]]
the concept of controlling regulatory costs and relieving regulatory
burdens.
The Department also proposes to revise Sec. 75.300(d) to state
that the Department will follow all applicable Supreme Court decisions
in the administration of the Department's award programs. Section
75.300(d) notes that HHS will comply with Supreme Court decisions
generally, rather than referencing specific Supreme Court cases. This
approach simplifies compliance for federal grant recipients.
The Department believes the proposed language of Sec. 75.300(c)
and (d) confirms that its programs must comply with all applicable laws
and Supreme Court decisions, and allows its programs to minimize
disputes and litigation, provide greater stability and certainty, and
to remove regulatory barriers. OMB's UAR at 2 CFR 200.300 does not
impose specific public policy requirements beyond federal statutory
requirements. The Department considers it appropriate for Sec.
75.300(c) to similarly focus on statutory requirements and for Sec.
75.300(d) to inform grant recipients that the Department complies with
applicable Supreme Court decisions in administering its grant programs.
The Department also proposes to add paragraph (e) to 45 CFR 75.300
to clarify the Department interprets preexisting prohibition against
discrimination on the basis of sex to include discrimination on the
basis of sexual orientation and gender identity. The Department
believes that absent contrary statutory text, legislative history, or
Supreme Court case law, the best way to understand statutory sex
discrimination prohibitions is to apply the Supreme Court's reasoning
in Bostock v. Clayton County, 140 S. Ct. 1731 (2020), which issued
after the 2021 rulemaking was already underway. Section 75.300(e)
provides regulatory clarity to the public and helps facilitate the
efficient and equitable administration of HHS grants.
The Department proposes to add paragraph (f) to 45 CFR 75.300 to
state that it will comply with all federal religious freedom laws,
including RFRA and the First Amendment. As explained above, the
Department is fully committed to respecting religious freedom laws when
applying this rule, including when an organization asserts that the
application of the provisions of this rule conflict with their rights
under those laws. Further, the Department proposes a workable exemption
process, described above, that will assist the Department in fulfilling
that commitment by providing the opportunity for recipients to raise
recipient-specific concerns with the Department; allowing the
Department to evaluate exemption requests on a case-by-case basis while
accounting for third party harms; and providing written notification to
provide a recipient certainty in its receipt of HHS grants.
Finally, as noted above, the Department proposes to add paragraph
(g) to 45 CFR 75.300 to evidence the Department's intent that, should
any of the provisions of this rule as finalized by invalidated, the
rest remain intact.
B. Effect on the Notice of Nonenforcement
While this rulemaking process is ongoing, the 2019 Notice of
Nonenforcement remains in effect.
III. Executive Order 12866 and Related Executive Orders on Regulatory
Review
A. Executive Order 12866 Determination
We have examined the impacts of the proposed rule under Executive
Order 12866, Executive Order 13563, the Regulatory Flexibility Act (5
U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4). Executive Orders 12866 and 13563 direct us to assess all costs
and benefits of available regulatory alternatives and, when regulation
is necessary, to select regulatory approaches that maximize net
benefits (including potential economic, environmental, public health
and safety, and other advantages; distributive impacts; and equity).
The proposed rule states that grant recipients may not discriminate to
the extent prohibited by federal statutory nondiscrimination
provisions, would provide that HHS complies with applicable Supreme
Court decisions in administering its grant programs, and codifies in
regulation Supreme Court precedent related to sex discrimination. We
believe that this proposed rule is unlikely to result in economic
impacts that exceed the threshold for significant effects as defined in
section 3(1)(f) of Executive Order 12866, as amended by Executive Order
14094, because it does not impose new requirements but rather adds
clarity for regulated entities.
The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires
the Department to prepare a written statement, which includes an
assessment of anticipated costs and benefits, before proposing ``any
rule that includes any Federal mandate that may result in the
expenditure by State, local, and tribal governments, in the aggregate,
or by the private sector, of $100,000,000 or more (adjusted annually
for inflation) in any one year.'' The current threshold after
adjustment for inflation is $177 million, using the most current (2022)
Implicit Price Deflator for the Gross Domestic Product. This proposed
rule would not result in an expenditure in any year that meets or
exceeds this amount.
1. Alternatives Considered
The Department carefully considered several alternatives, but
rejected them for the reasons explained below. The first alternative
considered was to make no changes to the 2016 Rule. The Department
concluded that this alternative would potentially lead to legal
challenges, in part over the scope of the Department's authority under
5 U.S.C. 301, as discussed above. The second alternative considered was
to maintain the text of the 2016 Rule, but also promulgate a regulatory
exemption for faith-based organizations as provided under proposed
75.300(f). This alternative could address the religious exemption
issues raised by the 2016 Rule's application to certain faith-based
organizations that participate in, or seek to participate in,
Department-funded programs or activities. However, the provisions of
the 2016 Rule would be subject to the same legal challenges under 5
U.S.C. 301. The third alternative considered was to enumerate
applicable nondiscrimination provisions and the programs and
recipients/subrecipients to which the nondiscrimination provisions
would apply, as set forth in 75.300(e) without including a religious
exemption process. However, Federal religious freedom laws, such as the
First Amendment and RFRA, generally apply to these nondiscrimination
provisions, and providing a process by which such claims can be raised
by recipients on a case-by-case basis helps ensure that the Department
complies with its obligations under all these authorities.
2. Benefits
The benefits of the proposed rule help ensure that HHS grants
programs will be administered fairly and consistently with Supreme
Court precedent, Federal statutes that govern the programs covered in
this rule, including the nondiscrimination statutes that Congress has
adopted and made applicable to the Department's programs, and the U.S.
Constitution. Proposed 45 CFR 75.300(c) makes compliance simpler and
more predictable for federal grant recipients. Likewise, proposed 45
CFR 75.300(d) notes that HHS will comply with Supreme Court decisions,
which also simplifies compliance for federal grant recipients. Proposed
45 CFR 75.300(e)
[[Page 44758]]
clarifies the Department's interpretation of prohibition of
discrimination on the basis of sex includes discrimination on the basis
of sexual orientation and gender identity, consistent with Bostock v.
Clayton County, 140 S. Ct. 1731 (2020), which provides additional
regulatory clarity to the public and helps facilitate the efficient and
equitable administration of HHS grants. This also provides the benefit
of ensuring that individuals are not discriminated against on the basis
of sexual orientation or gender identity, which while difficult to
quantify, is of considerable value. Finally, proposed 45 CFR 75.300(f)
states that the Department will comply with all federal religious
freedom laws, including RFRA and the First Amendment, which will assist
the Department in fulfilling that commitment by providing the
opportunity for recipients to raise concerns with the Department and
for those concerns to be evaluated on a case-by-case basis. These
benefits for the fair and nondiscriminatory enforcement of the programs
covered by this rule are not quantified.
3. Costs
Consistent with the 2021 Rule, OCR identifies potential costs
associated with grantees becoming familiar with this proposed rule, and
follows the analytic approach contained in its analysis. The Department
issues many grants on an annual basis, and many recipients receive
multiple grants. Based on information in the Department's Tracking
Accountability in Government Grant Spending (TAGGS) system, the
Department estimates that it has a total of 12,202 grantees.\31\
Depending on the grantee, the task of familiarization could potentially
fall to the following occupation categories: (1) lawyers, with a $65.26
median hourly wage; (2) general and operations managers, with a $47.16
median hourly wage; (3) medical and health services managers, with a
$50.40 median hourly wage; (4) compliance officers, with a $34.47
median hourly wage; or (5) social and community service manager, with a
$35.69 median hourly wage.\32\ Across all grantees, we adopt a pre-tax
hourly wage that is the average across the median hourly wage rates for
these 5 categories, or $46.60 per hour. To compute the value of time
for on the-job-activities, we adopt a fully loaded wage rate that
accounts for wages, benefits, and other indirect costs of labor that is
equal to 200% of the pre-tax wage rate, or $93.19 per hour. The
Department anticipates that professional organizations, trade
associations and other interested groups may prepare summaries of the
proposed rule, if it is finalized. Accordingly, the Department
estimates that it would take a typical grantee approximately one hour
to become familiar with the proposed requirements. Thus, we expect that
the average cost for each grantee would be $93.19. Across all 12,202
grantees, the cost of grantee familiarization would be approximately
$1.1 million.
---------------------------------------------------------------------------
\31\ 86 FR 2257 at 2274.
\32\ U.S. Bureau of Labor Statistics. Occupational Employment
and Wage Statistics. May 2022 National Occupational Employment and
Wage Estimates. <a href="https://www.bls.gov/oes/current/oes_nat.htm">https://www.bls.gov/oes/current/oes_nat.htm</a>.
Accessed on June 13, 2022.
---------------------------------------------------------------------------
OCR considered additional potential sources of costs that would be
attributable to the proposed rule. Parts (c)-(e) of the rule codifies
for all covered grant what is already required by law. Some covered
entities may bear the transaction costs associated with notifying the
Department that they are seeking an exemption under proposed 45 CFR
75.300(f). However, there is no filing fee to seek an exemption with
OCR, ASFR, or the awarding agency and the costs would only be those a
covered entity chooses to expend.
Finally, to further quantity the costs associated with this
proposed rule, the Department has attempted to estimate whether the
number and composition of recipients changed in response to the prior
two rulemakings and how those costs will impact this proposed rule. The
2016 Rule has never been enforced since it was promulgated on December
12, 2016, 81 FR 89383. The Department also issued a Notice of
Nonenforcement in 2019, 84 FR 63831, that it would not enforce the 2016
Rule. And the 2021 Rule, 86 FR 2257, never went into effect. Because of
this, the Department does not have any data with regard to whether the
number and composition of recipients changed in response to prior
rulemakings, as there was no change in the enforcement of these rules
which would impact those grants.
However, the Department believes that its recipients generally fall
into one of the following three categories in how they have been
impacted by the prior two rulemakings.
The first category includes recipients that adopted the
nondiscrimination practices prior to the 2016 Rule, whether voluntarily
or as a result of state and/or local law. Their observance of
nondiscrimination requirements is not the result of the 2016 Rule and
thus, these recipients are not impacted by this proposed rule.
The second category includes recipients that had not adopted
nondiscrimination practices prior to the 2016 Rule, but that complied
since the 2016 Rule, including after the 2019 Notice of Nonenforcement
was issued, 84 FR 63831, and until now. However, because the 2016 Rule
did not contain any procedural enforcement mechanisms such as an
assurance of compliance or adoption of a grievance process, it is
difficult to quantity the costs, if any, incurred by this second
category of recipients. These recipients would likely continue to
follow such nondiscrimination practices voluntarily or because of new
or newly enforced state and/or local laws, given that they could have
declined to comply with the 2016 Rule requirements after the 2019
Notice of Nonenforcement issued, and yet have continued to comply with
those requirements notwithstanding that notice. Thus, these recipients
are similarly situated to the first category of recipients insofar as
they are not impacted by whether or not the 2016 Rule is in effect.
The third category includes recipients that had not followed, and
continue to not follow, the 2016 Rule. However, their practice was
likely not impacted by the 2016 Rule, as the rule was not enforced, and
the Department issued waivers under RFRA to South Carolina, Texas, and
Michigan in 2019 and 2020 exempting those recipients from the 2016
Rule. Further, the Department issued the 2019 Notice of Nonenforcement
which applied to all recipients covered by the 2016 Rule. Moreover,
these recipients could not have relied upon the 2021 Rule, since that
rule never went into effect. Since this proposed rule removes the 2016
Rule's requirements, and adds a religious exemption process, the
Department expects that these grantees will continue their current
practice 75.300(e) does not apply to the foster care programs at issue
in the South Carolina, Texas, and Michigan cases, though they may
additionally seek a religious exemption under 75.300(f) of the proposed
rule, which will not materially bear on additional costs.
Thus, the Department believes that apart from familiarization costs
and costs associated with filing a religious exemption request, there
will be little to no economic impact associated with Sec. 75.300(c)
through(f). The Department solicits comments and additional data on the
estimated costs of compliance.
3. Comparison of Costs and Benefits
In summary, the Department expects the benefits of regulatory
clarity will simplify compliance and ensure fair and nondiscriminatory
administration of covered programs under this rule. Costs associated
with implementing this administrative change include costs for
[[Page 44759]]
some covered entities who may seek an exemption. The Department
solicits comments regarding this assessment of impacts.
B. RFA--Initial Small Entity Analysis
The Department has examined the economic implications of this
proposed rule as required by the RFA (5 U.S.C. 601-612). The RFA
requires an agency to describe the impact of a proposed rulemaking on
small entities by providing an initial regulatory flexibility analysis
unless the agency expects that the proposed rule will not have a
significant impact on a substantial number of small entities, provides
a factual basis for this determination, and proposes to certify the
statement. 5 U.S.C. 603(a), 605(b). If an agency must provide an
initial regulatory flexibility analysis, this analysis must address the
consideration of regulatory options that would lessen the economic
effect of the rule on small entities. For purposes of the RFA, small
entities include small businesses, nonprofit organizations, and small
governmental jurisdictions. HHS generally considers a rule to have a
significant impact on a substantial number of small entities if it has
at least a three percent impact on revenue on at least five percent of
small entities.
As discussed, the proposed rule would:
<bullet> Require grant recipients to comply with applicable Federal
statutory nondiscrimination provisions.
<bullet> Provide that HHS complies with applicable Supreme Court
decisions in administering its grant programs.
Affected small entities include all small entities which may apply
for HHS grants; these small entities operate in a wide range of
sections involved in the delivery of health and human services. Grant
recipients are required to comply with applicable Federal statutory
nondiscrimination provisions by operation of such laws and pursuant to
45 CFR 75.300(a); HHS is required to comply with applicable Supreme
Court decisions. Thus, there would be no additional economic impact
associated with proposed sections 75.300(c)-(e). The Department
anticipates that this rulemaking, if finalized, would primarily serve
to provide information to the public. The Department anticipates that
this information will allow affected entities to better deploy
resources in line with established requirements for HHS grant
recipients. As a result, HHS has determined, and the Secretary proposes
to certify, that this proposed rule, if finalized, will not have a
significant impact on the operations of a substantial number of small
entities. The Department seeks comment on this analysis of the impact
of the proposed rule on small entities, and the assumptions that
underlie this analysis.
C. Executive Order 13132: Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a rule that imposes substantial
direct requirement costs on State and local governments or has
Federalism implications. The Department has determined that this
proposed rule does not impose such costs or have any Federalism
implications.
D. E.O. 12250 on Leadership and Coordination of Nondiscrimination Laws
Pursuant to E.O. 12250, the Attorney General has the responsibility
to ``review . . . proposed rules . . . of the Executive agencies''
implementing nondiscrimination statutes such as Title IX ``in order to
identify those which are inadequate, unclear or unnecessarily
inconsistent.'' The Attorney General has delegated that function to the
Assistant Attorney General for the Civil Rights Division for purposes
of reviewing and approving proposed rules. 28 CFR 0.51. The Department
has coordinated with the Department of Justice to review and approve
this proposed rule prior to publication in the Federal Register.
E. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
ch. 3506; 5 CFR part 1320 appendix A.1), the Department has reviewed
this proposed rule and has determined that there are no new collections
of information contained therein.
IV. Request for Comment
The Department seeks comment on this proposed rule, including its
likely impacts as compared to the 2016 Rule. As noted above, the
Department also seeks comment on whether the Department administers
other statutes prohibiting sex discrimination that are not set forth in
proposed Sec. 75.300(e). Finally, the Department seeks comments from
the public on whether there is anything about any of the statutes
referenced in proposed Sec. 75.300(e), such as their language,
legislative history, or purpose, that would provide a legal basis for
distinguishing them from Bostock's reasoning for Title VII.
List of Subjects in 45 CFR Part 75
Accounting, Administrative practice and procedure, Cost principles,
Grant programs, Grant programs--health, Grants Administration,
Hospitals, Nonprofit Organizations reporting and recordkeeping
requirements, and State and local governments.
For the reasons stated in the preamble, the Department of Health
and Human Services proposes to amend 45 CFR part 75 as follows:
PART 75--UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND
AUDIT REQUIREMENTS FOR HHS AWARDS
0
1. The authority citation for 45 CFR part 75 continues to read as
follows:
Authority: 5 U.S.C. 301, 2 CFR part 200.
0
2. Amend Sec. 75.300 by revising paragraphs (c) and (d), and adding
paragraphs (e), (f), and (g) to read as follows:
Sec. 75.300 Statutory and national policy requirements.
* * * * *
(c) It is a public policy requirement of HHS that no person
otherwise eligible will be excluded from participation in, denied the
benefits of, or subjected to discrimination in the administration of
HHS programs, activities, projects, assistance, and services, to the
extent doing so is prohibited by federal statute.
(d) HHS will follow all applicable Supreme Court decisions in
administering its award programs.
(e) In statutes that HHS administers which prohibit discrimination
on the basis of sex, the Department interprets those provisions to
include a prohibition against discrimination on the basis of sexual
orientation and gender identity, consistent with the Supreme Court's
decision in Bostock v. Clayton County, 140 S. Ct. 1731 (2020), and
other federal court precedent applying Bostock's reasoning that sex
discrimination includes discrimination based on sexual orientation and
gender identity. Paragraph (e) applies to the following HHS authorities
that prohibit discrimination on the basis of sex: 8 U.S.C. 1522,
Authorization for programs for domestic resettlement of and assistance
to refugees; 42 U.S.C. 290cc-33, Projects for Assistance in Transition
from Homelessness; 42 U.S.C. 290ff-1, Children with Serious Emotional
Disturbances; 42 U.S.C. 295m, Title VII Health Workforce Programs; 42
U.S.C. 296g. Nursing Workforce Development; 42 U.S.C. 300w-7,
Preventive Health Services Block Grant; 42 U.S.C. 300x-57, Substance
Abuse Treatment and Prevention Block Grant; Community Mental Health
Services Block Grant; 42 U.S.C. 708, Maternal and Child Health Block
Grant; 42 U.S.C. 5151, Disaster relief; 42 U.S.C. 8625, Low Income
[[Page 44760]]
Home Energy Assistance Program; 42 U.S.C. 9849, Head Start; 42 U.S.C.
9918, Community Services Block Grant Program; and 42 U.S.C. 10406,
Family Violence Prevention and Services.
(f)(1) At any time, a recipient may notify the HHS awarding agency,
the Office of the Assistant Secretary for Financial Resources (ASFR),
or the Office for Civil Rights (OCR) of the recipient's view that it is
exempt from, or requires modified application of, certain provisions of
this part due to the application of a federal religious freedom law,
including the Religious Freedom Restoration Act (RFRA) and the First
Amendment.
(2) Once the awarding agency, working jointly with ASFR or OCR,
receives such notification from a particular recipient, they shall
promptly consider those views in responding to any complaints,
determining whether to proceed with any investigation or enforcement
activity regarding that recipient's compliance with the relevant
provisions of this part, or in responding to a claim raised by the
recipient in the first instance, in legal consultation with the HHS
Office of the General Counsel (OGC). Any relevant ongoing compliance
activity regarding the recipient shall be held in abeyance until a
determination has been made on whether the recipient is exempt from the
application of certain provisions of this part, or whether modified
application of the provision is required as applied to specific
contexts, procedures, or services, based on a federal religious freedom
law.
(3) The awarding agency, working jointly with ASFR or OCR, will, in
legal consultation with OGC, assess whether there is a sufficient,
concrete factual basis for making a determination and will apply the
applicable legal standards of the relevant law, and will communicate
their determination to the recipient in writing. The written
notification will clearly set forth the scope, applicable issues,
duration, and all other relevant terms of the exemption request.
(4) If the awarding agency, working jointly with ASFR or OCR, and
in legal consultation with OGC, determines that a recipient is exempt
from the application of certain provisions of this part or that
modified application of certain provisions is required as applied to
specific contexts, procedures, or services, that determination does not
otherwise limit the application of any other provision of this part to
the recipient or to other contexts, procedures, or services.
(g) Any provision of this part held to be invalid or unenforceable
by its terms, or as applied to any person or circumstance, shall be
severable from this part and shall not affect the remainder thereof or
the application of the provision to other persons not similarly
situated or to other, dissimilar circumstances.
Dated: July 6, 2023.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2023-14600 Filed 7-11-23; 11:15 am]
BILLING CODE 4153-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on July 13, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.