[Federal Register: July 9, 2004 (Volume 69, Number 131)]
[Rules and Regulations]
[Page 41375-41383]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09jy04-1]
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Rules and Regulations
Federal Register
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[[Page 41375]]
DEPARTMENT OF AGRICULTURE
Office of the Secretary
7 CFR Part 16
RIN 0503-AA27
Equal Opportunity for Religious Organizations
AGENCY: Office of the Secretary, USDA.
ACTION: Final rule.
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SUMMARY: This final rule implements executive branch policy that,
within the framework of constitutional church-state guidelines,
religiously affiliated (or ``faith-based'') organizations should be
able to compete on an equal footing with other organizations for United
States Department of Agriculture (USDA) assistance. The final rule
revises USDA regulations to remove barriers to the participation of
faith-based organizations in USDA programs and to ensure that these
programs are implemented in a manner consistent with the requirements
of the Constitution, including the religion clauses of the first
amendment.
DATES: Effective date: August 9, 2004.
FOR FURTHER INFORMATION CONTACT: Juliet McCarthy, Director, Faith-Based
and Community Initiatives, United States Department of Agriculture,
Office of the Secretary, Room 200A, Washington, DC 20250; electronic
mail: Juliet.mccarthy@usda.gov; telephone: 202-720-3631 (this is not a
toll-free number). Hearing- or speech-impaired individuals may access
this telephone number via TTY by calling the toll-free Federal
Information Relay Service at 1-800-877-8339.
SUPPLEMENTARY INFORMATION:
I. Background--The March 5, 2004, Proposed Rule
On March 5, 2004, USDA published a proposed rule (69 FR 10354) to
adopt USDA regulations that would eliminate unwarranted barriers to the
participation of faith-based organizations in USDA programs. The
proposed rule was part of USDA's effort to fulfill its responsibilities
under two Executive Orders issued by President Bush. One of these
Orders, Executive Order 13280, which was published in the Federal
Register on December 16, 2002 (67 FR 77145), created a Center for
Faith-Based and Community Initiatives in USDA and charged USDA to
identify and eliminate regulatory, contracting, and other programmatic
barriers to the full participation of faith-based and community
organizations in its programs. The second of these Orders, Executive
Order 13279, also published in the Federal Register on December 16,
2002 (67 FR 77141), charged executive branch agencies to give equal
treatment to faith-based and community groups that apply for funds to
meet social needs in America's communities. The President called for an
end to discrimination against faith-based organizations and, consistent
with the first amendment to the Constitution, ordered implementation of
these policies throughout the executive branch, including, among other
things, allowing organizations to retain their religious autonomy over
their internal governance and composition of boards, and over their
display of religious art, icons, scriptures, or other religious
symbols, when participating in government-funded programs. The
Administration believes that there should be an equal opportunity for
all organizations--both religious and non-religious--to participate as
partners in Federal programs.
The March 5, 2004, rule proposed to add USDA regulations to achieve
the following objectives:
1. Equal Opportunity for faith-based organizations in USDA
programs. The proposed rule provided that organizations would be
eligible to participate in USDA programs without regard to their
religious character or affiliation, and that organizations could not be
excluded from competition for direct USDA assistance simply because
they were religious. Specifically, religious organizations would be
eligible to compete for USDA assistance on the same basis, and under
the same eligibility requirements, as all other non-profit
organizations. Under the proposed rule, USDA, as well as State and
local governments administering USDA programs, would be prohibited from
discriminating against organizations on the basis of religion,
religious belief, or religious character in the administration or
distribution of USDA assistance, including grants and commodities.
2. Inherently religious activities. The proposed rule described
requirements, which would be applicable to all recipient organizations,
restricting the use of direct USDA assistance \1\ for inherently
religious activities. Specifically, a participating organization could
not use direct USDA financial assistance from USDA to support
inherently religious activities, such as worship, religious
instruction, or proselytization. If the organization engaged in such
activities, it would be required to offer them separately, in time or
location, from the programs or services supported by direct USDA
assistance, and participation would have to be voluntary for the
beneficiaries of such programs or services. This requirement would
ensure that direct USDA assistance to religious organizations would not
be used to support inherently religious activities.
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\1\ As used in this final rule, the term ``direct USDA
assistance'' refers to direct aid within the meaning of the
Establishment Clause of the first amendment. For example, direct
USDA assistance may mean that the government or an intermediate
organization with similar duties as a governmental entity under a
particular USDA program selects an organization and purchases the
needed services straight from that organization. In contrast,
indirect funding scenarios may place the choice of service provider
in the hands of a beneficiary, and then pay for the cost of that
service through a voucher, certificate, or other similar means of
payment.
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This requirement does not mean that an organization that receives
direct USDA assistance cannot engage in inherently religious
activities. It means that an organization cannot pay for these
activities with direct USDA assistance or require program beneficiaries
to participate in such activities as a condition of receiving services.
The proposed rule further provided that these restrictions on
inherently religious activities would not apply where indirect USDA
assistance was provided to religious organizations as a result of a
genuine and independent private choice of a beneficiary (e.g., under a
program that gave a beneficiary a voucher, coupon, certificate, or
[[Page 41376]]
another funding mechanism from USDA designed to give that beneficiary a
choice among providers) or through other indirect means, provided the
religious organizations otherwise satisfied the secular requirements of
the program.
3. Independence of faith-based organizations. The proposed rule
also clarified that a religious organization that participated in USDA
programs would retain its independence and could continue to carry out
its mission, including the definition, practice, and expression of its
religious beliefs, provided that it did not use direct USDA assistance
to support any inherently religious activities, such as worship,
religious instruction, or proselytization. Among other things, a faith-
based organization could use space in its facilities to provide
services supported with direct USDA assistance without removing
religious art, icons, scriptures, or other religious symbols. In
addition, a religious organization could retain religious terms in its
organization's name, select its board members and otherwise govern
itself on a religious basis, and include religious references in its
organization's mission statements and other governing documents.
4. Nondiscrimination in providing assistance. The proposed rule
provided that an organization that received direct USDA assistance
would not be allowed, in providing program assistance supported by such
assistance, to discriminate against a program beneficiary or
prospective program beneficiary on the basis of religion or religious
belief.
5. Use of USDA funds for acquisition, construction, or
rehabilitation of structures. The proposed rule clarified that USDA
funds may be used for the acquisition, construction, or rehabilitation
of structures only to the extent that those structures are used for
conducting eligible activities under the specific USDA program
involved. Where a structure is used for both eligible and inherently
religious activities, the proposed rule clarified that USDA funds may
not exceed the cost of those portions of the acquisition, construction,
or rehabilitation that are attributable to eligible activities.
II. Discussion of Comments Received
USDA received comments on the proposed rule from 22 different
commenters, representing both individuals and organizations. Some of
the commenters were generally supportive of the proposed rule without
any specific recommendations or comments, while others were generally
opposed without specific recommendations or comments.
The following is a summary of specific comments and recommendations
and USDA responses. The comments are organized first by general
comments, second by comments in the order of the section of the rule
that they address, and finally by comments that raise issues not
specifically addressed by any section of the rule.
General Comments
Comment: Insufficient justification for the proposed rule. Two
commenters disagreed that there are currently barriers that prevent
participation of faith-based organizations in USDA Food and Nutrition
Service (FNS) programs. the commenters wrote that faith-based
organizations have been participating in FNS programs and anti-hunger
efforts for many years, and sometimes at a higher rate than secular
organizations.
USDA Response: The commenter is correct that many USDA programs
have partnered extensively with faith-based organizations for years.
The purpose of this rule is to ensure that all USDA programs are open
to faith-based organizations to the same extent that they are open to
other organizations, in accordance with Executive Order 13279. Some
USDA mission areas may already follow a number of these provisions in
practice, but this rule sets out a single set of overarching provisions
for the entire USDA in regard to equal opportunity for faith-based
organizations without singling out or distinguishing among many mission
areas within USDA.
Comment: Religious organizations are financially unaccountable. One
commenter alleged that religious organizations are unaccountable since
they do not have to file an annual report of revenue with the Internal
Revenue Service (IRS). However, the commenter would revisit the concern
if religious organizations are held to the same level of financial
accountability as other non-profit organizations.
USDA Response: USDA disagrees. Regardless of IRS filings, all
organizations receiving USDA assistance--both religious and non-
religious--must comply with audit and Office of Management and Budget
Circular requirements, applicable to assistance recipients. These
requirements provide transparency and accountability for faith-based
organizations just as they do for other organizations.
Comment: Unclear if non-financial as well as financial assistance
is included in the definition of ``direct USDA assistance.'' A number
of commenters wondered if non-financial assistance, such as
commodities, was included in the definition of direct USDA assistance
and referenced when the proposed rule referred to ``funding.'' Several
commenters wanted non-financial assistance included in the definition,
while another wanted it excluded. The commenter wanting it excluded
argued that it should be excluded from the definition and the rule
because the restrictions would ``go too far'' for the mere acceptance
of the non-financial assistance. The other commenter interpreted the
rule as excluding commodities from the definition of direct assistance
and insisted that it was constitutionally required to be a part of the
definition.
USDA Response: USDA intended for commodities to be included within
the definition of ``direct USDA assistance.''
Comment: Extend limitation on inherently religious activities to
indirect funding. Two commenters observed that in the proposed rule the
limitations on inherently religious activities applied only to direct
funding, and they argued that the limitation should apply to indirect
funding as well in order to protect the rights of beneficiaries.
USDA Response: USDA has not revised the rule in response to these
comments because the protections of the rights of beneficiaries in this
rule coincide with current Supreme Court precedent. Any USDA-funded
programs that involve indirect funding must, of course, comply with
Federal law (including current legal precedent), and nothing in the
proposed regulation provides otherwise. As explained above and in the
preamble of the proposed rule, the term ``direct USDA assistance''
refers to direct funding within the meaning of the Establishment Clause
of the First Amendment. In other words, USDA's use of the phrase
``direct assistance'' in this rule incorporates current First Amendment
jurisprudence into its definition.
The religious freedom of beneficiaries in an indirect funding
program is protected by the guarantee of genuine and independent
private choice. Officials administering public funding under an
indirect funding program would have an obligation to ensure that
everyone who is eligible receives services from some provider, and no
client maybe required to receive services from a provider to which the
client has a religious objection. In other words, vouchers and services
indirectly funded by the government must be available to all clients
regardless of their religious belief, and those who object to a
provider that has integrated inherently
[[Page 41377]]
religious activities into the provision of its services have a right to
services from some alternative provider. Again, for a program to be
considered voucher-like, this choice among providers must be genuine.
These requirements protect beneficiaries from having to participate in
religious activities to which they object.
Comment: Why is this rule restricted to programs for which non-
profit organizations are eligible? One commenter asked why the rule
applied only to programs for which non-profit organizations are
eligible, saying that such a restriction is unwarranted.
USDA Response: We agree and have revised 16.1(a) and 16.2(a) to
provide that a religious organization is eligible to the same extent an
organization is otherwise eligible. The intent of this regulation is to
ensure that religious organizations are given the same opportunity to
participate that similar non-religious organizations are given. For
example, if a secular charitable non-profit organization is not
eligible for a particular program, then neither would a religious non-
profit organization be eligible. In contrast, if a secular for-profit
corporation is eligible for a particular program, a religious for-
profit corporation would likewise be eligible.
Comment: Title and language of rule is inconsistent. One commenter
noted that the title of the rule and its sections refer to religious
organizations; however, the language of the rule appears to place
restrictions on all organizations, not just religious ones. For
example, 16.3(c) states that any organizations that receive direct USDA
assistance may not engage in inherently religious activities as part of
the services supported with such assistance. It does not restrict this
prohibition only to religious organizations. Therefore, the titles and
language are inconsistent.
USDA Response: USDA acknowledges this inconsistency in the language
of the rule. In this final rule, USDA has changed the title to ``Equal
Opportunity for Religious Organizations,'' reflecting the purpose
section of the rule. It has also changed the appropriate heading to
``Responsibilities of participating organizations'' (replacing
``Responsibilities of religious organizations'').
Purpose and Applicability
Comment: Change equal participation in purpose to equal opportunity
or treatment. One commenter mentioned that 16.1(a) states the purpose
of the rule is to set policy regarding equal participation of religious
organizations and suggested that the language be changed to ``equal
opportunity for religious organizations'' or ``promoting equal
treatment of religious organizations.''
USDA Response: USDA agrees with the commenter's suggestion and
amends 16.1(a) to reference the purpose as ``equal opportunity for
religious organizations to participate.'' It was not USDA's intent to
establish participation rates for religious organizations in USDA
programs; instead, as described in the preamble to the proposed rule,
the purpose of the rule was to ensure that any organization wanting to
participate in USDA programs, whether religious or secular, had an
equal opportunity to do so.
Eligibility of Religious Organizations
Comment: Allowing direct funding of pervasively sectarian
organizations violates the Constitution. Some commenters disagreed with
the proposed rule on the basis that it would allow Federal funds to be
given to ``pervasively sectarian'' organizations. They maintain that
the rule places no limitations on the kinds of religious organizations
that can receive funds, and they argued that ``pervasively sectarian''
organizations are barred from receiving direct Federal funding.
USDA Response: USDA does not agree that the Constitution requires
USDA to distinguish between different religious organizations in
providing direct USDA assistance. Religious organizations that receive
direct USDA assistance may not use that assistance for inherently
religious activities. These organizations must ensure that such
religious activities are separate in time or location from services
directly funded by USDA and also must ensure that participation in such
religious activities is voluntary. Furthermore, they are prohibited
from discriminating against a program beneficiary on the basis of
religion or a religious belief, and program participants that violate
these requirements will be subject to applicable sanctions and
penalties. The regulations thus ensure that there is no direct USDA
assistance of inherently religious activities, as required by current
precedent.
Retain Independence
Comment: Use of religious art or icons should not be permitted.
Some commenters wrote that the use of religious art or icons can
constitute a subtle but powerful form of proselytization or may be
offensive to some persons. The commenters stated that the rule should
require religious art or icons to be removed or covered and cite Spacco
v. Bridgewater School USDA, 722 F. Supp. 834, 843 (D. Mass. 1989).
USDA Response: USDA declines to impose this restriction on USDA
program participants that are faith-based organizations. A number of
Federal statutes affirm the principle embodied in this rule. See e.g.,
42 U.S.C. 290kk-1(d)(2)(B). A prohibition on the use of religious icons
would make it more difficult for many faith-based organizations to
participate in the program than other organizations, and would thus be
an inappropriate and excessive restriction, typical of the types of
regulatory barriers that this final rule seeks to eliminate. Consistent
with constitutional church-state guidelines, a faith-based organization
that participates in USDA programs will retain its independence and may
continue to carry out its mission, provided that it does not use direct
USDA assistance to support any inherently religious activities.
Accordingly, this final rule continues to provide that faith-based
organizations may use space in their facilities to provide services
supported with direct USDA assistance, without removing religious art,
icons, scriptures, or other religious symbols. Finally, the presence of
religious symbols in the building of a religious organization that
provides social services with USDA assistance is distinct from the
situation addressed in Spacco, where a public school (i.e., the
government itself) held classes in the facilities of a Catholic church.
Title VII Exemption
Comment: Recognition of religious organizations' Title VII
exemption. A number of commenters expressed views on the rule's
provision that religious organizations do not forfeit their Title VII
exemption by receiving direct USDA assistance, absent statutory
authority to the contrary. Some expressed appreciation that a religious
organization will retain its independence in this regard, while others
disagreed with the provision retaining the Title VII exemption. Some
argued that it is unconstitutional for the government to provide direct
assistance for provision of social services to an organization that
considers religion in its employment decisions. Others argued that
Congress must expressly preserve religious organizations' Title VII
exemption--as it has done in certain welfare reform and substance abuse
programs--for such organizations that receive Federal funds to retain
those exemptions, and in any event that it is unwise and unfair to
secular organizations to preserve such religious exemptions as a matter
of executive
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branch policy. These commenters requested that the proposed rule be
amended to provide that discrimination on the basis of religion with
respect to an employment position is not allowed if an organization is
federally funded.
USDA Response: USDA agrees with commenters who supported the
preservation of the religious hiring autonomy of faith-based
organizations, and it disagrees with the objections to the rule's
recognition that a religious organization does not forfeit its Title
VII exemption when administering services supported by USDA assistance.
As an initial matter, applicable statutory nondiscrimination
requirements are not altered by this rule. Congress establishes the
conditions under which religious organizations are exempt from Title
VII; this rule simply recognizes that these requirements, including
their limitations, are fully applicable to organizations supported by
USDA assistance unless Congress says otherwise. As to the suggestion
that the Constitution restricts the government from providing funding
for social services to religious organizations that consider faith in
hiring, that view does not accurately represent the law. The employment
decisions of organizations that receive extensive public funding are
not attributable to the State, see Rendell-Banker v. Kohn, 457 U.S. 830
(1982), and it has been settled for more than 100 years that the
Establishment Clause does not bar the provision of direct Federal
grants to organizations that are controlled and operated exclusively by
members of a single faith. See Bradfield v. Roberts, 175 U.S. 291
(1899); see also Bowen v. Kendrick, 487 U.S. 589, 609 (1988).
Accordingly, numerous courts have held that a religious organization
does not waive its Title VII exemption when it receives government
funds. See, e.g., Hall v. Baptist Memorial Health Care Corp., 215 F.3d
618, 625 (6th Cir. 2000); Little v. Wuerl, 929 F.2d 944, 951 (3d Cir.
1991). Finally, USDA notes that allowing religious groups to consider
faith in hiring when they receive government funds is much like
allowing a federally funded environmental organization to hire those
who share its views on protecting the environment: Both groups are
allowed to consider ideology and mission, which improves their
effectiveness and preserves their integrity. Thus, USDA declines to
amend the final rule to require religious organizations to forfeit
their Title VII rights.
Comment: Faith-based organizations and state action. Two commenters
claimed that there is a sufficient nexus between the organizations
covered by the proposed regulation and the government such that the
organizations are State actors subject to constitutional requirements.
USDA Response: USDA disagrees with these comments. The receipt of
government assistance does not convert a non-governmental organization
into a State actor subject to constitutional norms. See Rendell-Baker
v. Kohn, 457 U.S. 830 (1982) (holding that the employment decisions of
a private school that receives more than 90 percent of its funding from
the State are not State actors).
Comment: Proposed rule raises additional Establishment Clause
concerns. The commenter argues that the decision in Bob Jones
University v. United States, 461 U.S. 574(1983), which held that the
Federal government could deny a religiously run university tax benefits
because the university imposed a racially discriminatory anti-
miscegenation policy, is analogous to a prohibition against
organizations that receive Federal funding discriminating on the basis
of religion when hiring for government-funded positions.
USDA Response: USDA does not agree that the Bob Jones University
decision is analogous or requires that the rule be changed in order to
comply with the Establishment Clause. In the Bob Jones University
decision, the Supreme Court merely said that the Free Exercise Clause
permitted the government to deny tax-exempt status to religious
educational institutions that prescribed and enforced racially
discriminatory admission standards on the basis of religious doctrine.
The Court's limited discussion of the Establishment Clause in the case
(see 461 U.S. at 604 n.30) had nothing to do with whether organizations
that consider faith in making employment decisions are ineligible for
government funding. In addition, whereas the Court in Bob Jones
University concluded that racial discrimination in education was
contrary to public policy, permitting religious organizations to
consider faith in employment decisions is consistent with the public
policy established decades ago, and maintained today, in the civil
rights laws enacted by Congress.
Nondiscrimination Toward Beneficiaries
Comment: Neither organizations that receive direct USDA funding nor
organizations that receive indirect USDA funding should be able to
discriminate against a beneficiary or potential beneficiary on the
basis of religion. Generally, commenters believed that non-
discrimination toward a beneficiary on the basis of religion or
religious belief should apply to both direct and indirect USDA
assistance. One commenter also suggested that the regulation state that
participating organizations cannot deny beneficiaries for refusal to
participate in a religious practice.
USDA Response: As mentioned earlier, any USDA-funded programs that
were to involve indirect funding would, of course, have to comply with
Federal law (including current legal precedent), and nothing in the
regulation provides otherwise. Moreover, the religious freedom of
beneficiaries in an indirect funding program is protected by the
guarantee of genuine and independent private choice. Officials
administering public funding under an indirect funding program would
have an obligation to ensure that everyone who is eligible receives
services from some provider, and no client could be required to receive
services from a provider to which the client had a religious objection.
In other words, vouchers and services indirectly funded by the
government must be available to all clients regardless of their
religious belief, and those clients who object to a provider that has
integrated activities into the provision of its services have a right
to services from some alternative provider.
USDA believes that the religious freedom of beneficiaries is
sufficiently explicit. For example, inherently religious activities,
such as worship, religious instruction, and proselytization, must be
separate in time or location from programs or services supported with
direct USDA assistance, and participation in those inherently religious
activities must be voluntary for beneficiaries of programs or services
supported with direct assistance. Additionally, organizations that
participate in programs and activities supported by direct USDA
assistance programs are prohibited from discriminating against a
program beneficiary or prospective program beneficiary on the basis of
religion or religious belief. These protections require no further
elaboration.
Comment: Discrimination on the basis of sexual orientation. One
commenter objected to the ability of religious organizations, as well
as other organizations, to discriminate on the basis of sexual
orientation.
USDA Response: Although Federal law prohibits persons from being
excluded from USDA Federally assisted services or subjected to
discrimination based on race, color, national origin, sex, age, or
disability, it does not prohibit discrimination on the basis of
[[Page 41379]]
sexual orientation. We decline to impose such restrictions by
regulation.
Inherently Religious Activities
Comment: ``Inherently religious'' does not capture the full range
of prohibited activity. Some commenters asserted that the language
describing proscribed religious activities is unclear or incomplete.
These commenters suggest the rule be amended to make it clear that any
religious activity is prohibited and that the provision of government-
funded services must be entirely secular.
USDA Response: Concerning the treatment of ``inherently religious''
activities, it would be difficult to establish an acceptable list of
all inherently religious activities. Inevitably, the regulatory
definition would fail to include some inherently religious activities
or would include certain activities that are not inherently religious.
Rather than attempt to establish an exhaustive regulatory definition,
USDA has decided to retain the language of the proposed rule, which
provides examples of the general types of activities that are
prohibited by the regulations. This approach is consistent with Supreme
Court precedent, which has not comprehensively defined inherently
religious activities. For example, prayer and worship are inherently
religious, but services supported by direct USDA assistance do not
become inherently religious merely because they are conducted by
individuals who are religiously motivated to undertake them or view the
activities as a form of ``ministry.''
Finally, there is not constitutional support for the view that the
government must exclude from its programs those organizations that
convey religious messages or advance religion with their own funds. As
noted above, the Supreme Court has held that the Constitution forbids
the use of direct government funds for inherently religious activities,
but the Court has rejected the presumption that religious organizations
will inevitably divert such funds and use them for their own religious
purposes. In sum, USDA believes that the requirement that when an
organization receives direct USDA assistance, any inherently religious
activities must be privately funded and separate in time or location
from the USDA-assisted activities adequately sets out the parameters of
the Supreme Court's jurisprudence.
Comment: The provision on separation of inherently religious
activities is inadequate. Some commenters suggested that the
requirement is insufficient and that it be strengthened to require
separation in time and location. One commenter stated that the rule
failed to provide the separation requirement to food aid and
commodities. Another commenter stated that the restriction that
inherently religious activities need to be separated in time or
location gives insufficient flexibility to small faith-based
organizations. That commenters recommended adding the following
language to 16.3(c): ``Responses to genuine and independent voluntary
client-initiated requests for prayer or counseling, including the
reading of religious texts or materials, do not require a separate time
or location.''
USDA Response: USDA does not believe that the requirement
articulated in the regulation regarding separation necessitates any
additional guidance or requirements for proper adherence to the
Constitution. USDA believes that existing regulations and this rule are
clear that faith-based organizations, or any organizations for that
matter, using direct USDA assistance for certain activities must
separate their inherently religious activities from the activities
supported by such assistance. As to the suggestion that the rule must
require separation in both time and location, USDA believes that such a
requirement is not legally necessary and that it would impose an
unnecessarily harsh burden on small faith-based organizations, which
may have access to only one location that is suitable for the provision
of USDA-funded services. As commodities are a type of direct USDA
assistance, commodities are also subject to the separation requirement.
Nothing in this rule is intended to inhibit an organization's ability
to respond to voluntary, client-initiated requests of any kind,
including religious inquiries, provided that actual inherently
religious activities are separated from services supported by direct
USDA assistance. Thus, USDA disagrees that additional clarifying
language is necessary in the regulatory text.
Comment: Voluntary participation in any inherently religious
activities. While some commenters were encouraged by the voluntary
language of 16.3(c), others believed there were not enough safeguards
for beneficiaries in this area. Some commenters recommended that the
proposed rule be modified to require participating organizations to
inform program beneficiaries at the outset of their receipt of services
that participation in the organization's religious activities is
voluntary.
USDA Response: USDA believes that the language in the rule
prohibiting faith-based organizations from requiring program
beneficiaries to participate in religious activities is sufficiently
explicit. USDA also declines to require that religious organizations
provide a notice to a beneficiary or potential beneficiary assuring
that participation in religious activities would be entirely on a
voluntary basis. USDA recommends that both governmental officials
administering USDA assistance and participating organizations work to
ensure that clients and potential clients have a clear understanding of
the services offered by the organization, including any religious
activities, as well as the organization's expectations and
requirements. The requirement that participation be voluntary, however,
is sufficient to address concerns about the religious freedom of
program beneficiaries.
Comment: Clarify that students at religious schools that receive
school lunch assistance may be required to attend religion classes and
assemblies. One commenter noted that they appreciated the provision in
16.3(b) that allowed religious schools receiving assistance under the
School Lunch Act or the Child Nutrition Act to consider religion in
their admission practices. They argued that a similar allowance needs
to be made in 16.3(c) regarding the voluntariness language so that it
is clear that students at a religious school can be required to attend
the school's religion classes and assemblies.
USDA Response: USDA agrees that 16.3(c) should contain the same
allowance as is found in 16.3(b). Subsection (c) of the proposed rule
has been renumbered subsection (b), and the language previously found
in subsection (b) has been inserted into subsection (c) with a
clarification that this rule does not affect either the admission or
the attendance policies and curricular requirements of religious
schools.
Comment: A voucher program does not have adequate safeguards. Two
commenters claimed that the proposed rule authorizes a voucher program
for religious organizations without instituting adequate constitutional
safeguards and requested that the rule be revised to comply with the
framework instituted by Zelman v. Simmons Harris, 536 U.S. 639 (2002).
These commenters stated that secular alternatives are not available in
the social service context, eliminating the possibility of real choice
by program beneficiaries.
USDA Response: USDA respectfully declines to adopt the
recommendations of the commenters. Any USDA-funded programs that were
to involve indirect funding would, of course, have to
[[Page 41380]]
comply with Federal law--which includes current legal precedent such as
Zelman. USDA believes that the above discussion and the rule adequately
address these commenters' constitutional concerns.
Construction of Structures
Comment: The provision allowing use of funds for acquisition,
construction, or rehabilitation of structures is unconstitutional. Two
commenters content that Supreme Court rulings only permit use of
Federal funds on structures when those structures are used for solely
secular purposes in perpetuity. Another indicated that the guidance was
too vague on how to apportion costs for a dual-use structure. Finally,
one argued that enforcement of this provision would lead to unseemly
negotiations between the organizations and government over what are and
are not religious activities.
USDA Response: USDA believes that the prorated funding of
improvements to a structure that has a mixed use--both religious and
non-religious--it not itself a violation of the Constitution. In a
neutral program in which the government directly funds the capital
improvements of institutions that administer Federal social welfare
programs, the government need only put in place safeguards to ensure
that public money is not used to finance inherently religious
activities. The proposed rule satisfied this requirement by prohibiting
the use of USDA funds for the acquisition, construction, or
rehabilitation of structures to the extent that those structures are
used for inherently religious activities--a prohibition that is
enforced by generally applicable cost-accounting standards carefully
designed to ensure that USDA funds are not used to support any
ineligible activity.
USDA disagrees with those who commented that preventing the use of
direct USDA capital-improvement funds for inherently religious
activities would necessarily fail or, in the process, excessively
entangle the government in the affairs of recipients or subrecipients
that are religious organizations. Because inherently religious
activities are non-program activities, USDA need not distinguish
between program participants' religious and non-religious non-program
activities; the same mechanism by which USDA policies the line between
ineligible and eligible activities will serve to exclude inherently
religious activities from funding. This system of monitoring is more
than sufficient to address the commenters' concerns, and the amount of
oversight of religious organizations necessary to accomplish these
purposes is not greater than that involved in other publicly funded
programs that the Supreme Court has sustained.
Comment: Technical, non-substantive changes. One commenter
recommended in section 16.3(d)(1) that ``conducting activities'' should
be replaced with ``conducting USDA programs and activities.'' Another
commenter recommended that in the same section the first and second
sentences be reversed since the second sentence states the general rule
and the first sentence the exception to that rule.
USDA Response: USDA agrees with these recommendations and adopts
them in the final rule.
Effect on State and Local Funds and Laws
Comment: Need to clarify if the rule is intended to preempt State
and local civil rights and diversity requirements. A number of
commenters stated that the language regarding State and local agencies
disbursing Federal funds and the addition of State and local funds to
Federal funds is unclear as to whether the rules regarding the Federal
funds preempt any additional requirements that may be imposed by State
and/or local laws or regulations. One commenter suggested that it be
made clear that Federal rules govern these funds, while two commenters
suggested that various areas of State and local law be retained when
using these funds. The first commenter requested an explicit statement
that Federal power preempts State/local procurement restrictions on
religious staffing with USDA or commingled funds. One of the other
commenters requested that the regulation expressly require that any
recipients of this funding abide by State and local civil rights laws.
The final commenter requested that local/State laws requiring board
diversity not be preempted. That commenter also suggested that 16.2(b)
not be interpreted to preempt State and local laws in general and
employment restrictions specifically.
USDA Response: The requirements that govern funding under the USDA
programs at issue in these regulations do not directly address
preemption of State or local laws. Federal funds, however, carry
Federal requirements. No organization is required to apply for funding
under these programs, but organizations that apply and are selected for
funding must comply with the requirements applicable to the program
funds.
Comment: State and local governments should be required to
segregate funds. One commenter requested that USDA require that State
and local funds be kept separate from any Federal funds.
USDA Response: USDA disagrees with these comments. As an initial
matter, USDA believes it would be inappropriate to require States and
local governments to separate their own funds from Federal funds in
circumstances in which there is no matching or other required grantee
contribution. Where no matching requirement or other required grantee
contribution is applicable, whether to commingle State and Federal
funds is a decision for the States and local governments to make. In
addition, for the same reasons that language concerning voluntarily
commingled funds does not require clarification, USDA believes the rule
requires no clarification as to whether it applies to State funds. When
State and local governments have the option to commingle their funds
with Federal funds or to separate State and local funds from Federal
funds, Federal rules apply only if they choose to commingle their own
funds with Federal funds. Where a USDA program explicitly requires that
Federal rules apply to State ``matching'' funds, ``maintenance of
effort'' funds, or other grantee contributions that are commingled with
Federal funds (i.e., are part of the grant budget), Federal rules
remain applicable to both the Federal and State or local funds that
implement the program.
Compliance
Comment: Lack of an oversight mechanism. Some commenters were
concerned that the lack of special oversight/reporting requirements/
assurances would make it possible for religious organizations to
commingle Federal funds and not account for expenditure of the Federal
funds. A couple of commenters requested that religious organizations be
required to form separate 501(c)(3) organizations to receive Federal
funds. One commenter also noted that there was no notice to
beneficiaries of how to secure their rights or address a grievance if
they believe a religious organization is not fulfilling the
requirements of this regulation.
USDA Response: USDA generally does not impose such requirements. It
would be unfair to require religious organizations alone to comply with
these additional burdens. Further, USDA finds no basis for requiring
greater oversight and monitoring of faith-based organizations than of
other program participants simply because they are faith-based
organizations. As the Supreme Court stated in Allen,
[[Page 41381]]
``Absent evidence, we cannot assume that school authorities * * * are
unable to distinguish between secular and religious [materials] or that
they will not honestly discharge their duties under the law.'' Board of
Ed. of Central Sch. Dist. No. 1 v. Allen, 392 U.S. 236, 244-245 (1968).
All program participants must be monitored for compliance with program
requirements, and no program participant may use USDA funds for any
ineligible activity, whether that activity is an inherently religious
activity or a non-religious activity that is outside the scope of the
program at issue. Many secular organizations participating in USDA
programs also receive funding from several sources (private, State, or
local) to carry out activities that are ineligible for funding under
USDA programs. In many cases, the non-eligible activities are secular
activities but not activities eligible for funding under USDA programs.
All program participants receiving funding from various sources and
carrying out a wide range of activities must ensure through proper
accounting principles that each set of funds is applied only to the
activities for which the funding was provided.
Applicable policies, guidelines, and regulations prescribe the cost
accounting procedures that are to be followed in using USDA funds. This
system of monitoring is more than sufficient to address the commenters'
concerns, and the amount of oversight of religious organizations
necessary to accomplish these purposes is no different from that
involved in other publicly funded programs that the Supreme Court has
upheld.
Additional Comments
Comment: Ensure the availability of secular alternate service
providers. Some commenters wrote that USDA should clarify that
beneficiaries have a right to receive services from a different, non-
religious provider, and that the beneficiaries should be informed of
this right by the faith-based provider.
USDA Response: USDA declines to adopt the recommendations of the
commenters. Under this final rule, directly assisted religious
organizations are prohibited from discriminating against program
beneficiaries on the basis of ``religions or religious belief.''
In addition, the rule provides that religious organizations may not
use direct USDA assistance for inherently religious activities, that
such activities must be offered separately, in time or location, from
services directly assisted by USDA, and that no beneficiary served in a
program supported with direct USDA assistance will be required to
participate in inherently religious activities as a condition of
receiving services. These requirements sufficiently protect the rights
of program beneficiaries.
Comments: Inadequate protection in relation to what organizations
will receive funding. One commenter expressed concern that the
regulation fails to prevent government funds from flowing to ``anti-
Semitic, racist, or bigoted organizations.''
USDA Response: The existing protections of applicable civil rights
laws are not altered in any way by these regulations. Faith-based
organizations that receive funding must adhere to all of these
applicable Federal requirements.
Comment: Religious organizations hold a special place in society
and the Constitution. One commenter argued that equating or treating as
equal religious and non-religious organizations fails to recognize the
unique position religious organizations have in our society and
Constitutional scheme because religion should be above the fray of
government funding, government regulation, and government auditing, not
reduced to it.
USDA Response: USDA agrees with the commenter that religious
organizations have a unique position in our society and Constitutional
scheme; however, USDA does not agree that the unique nature of
religious organizations should prevent them from receiving an equal
opportunity to participate in federally funded programs, and this rule
does not present any violation of the Establishment Clause or Free
Exercise Clause. Rather, this rule governs the conscious decision of a
religious organization to administer regulated activities, by accepting
public funds to do so. Therefore, we have retained language that
enables faith-based organizations to compete on an equal footing for
funding within the framework of constitutional parameters. Whether to
participate in government funding is a decision of the particular
religious organization.
Comment: Barriers to specific USDA programs. Some commenters also
included examples of barriers they have encountered in specific USDA
programs.
USDA Response: Because these barriers have their roots in statutes
or regulations for specific programs and are not specific to faith-
based or community organizations it is not within our scope to address
them, but we encourage the commenters to direct their concerns to the
relevant divisions at USDA.
Comment: Rulemaking is unauthorized and undemocratic. One commenter
objected to the rule because the Constitution does not contain
rulemaking as a power of the executive branch. The commenter went on to
say that there is very weak link between rulemaking and democracy since
the rules are published in a obscure venue and are made through strict
processes. This makes participation and democratic accountability
difficult, if not impossible. Finally, the commenter expressed concern
about the sweeping nature of rules as opposed to administrative
adjudication, which decides just a specific case.
USDA Response: Rulemaking is a necessary component of the executive
branch's responsibly to uphold the Constitution and faithfully execute
legislation passed by Congress and programs contained. Moreover, the
Secretary is authorized to issue rules pursuant to 5 U.S.C. 301.
III. Findings and Certifications
Executive Order 12866--Regulatory Planning and Review
The final rule is issued in conformance with Executive Order 12866
on Regulatory Planning and Review. The Office of Management and Budget
has determined that this is a significant regulatory action as defined
by Executive Order 12866. Accordingly, the Office of Management and
Budget has reviewed this final rule.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1531-1538) established requirements for Federal agencies to assess the
effects of their regulatory actions on state, local, and tribal
governments and the private sector. This final rule does not impose any
Federal mandates on any state, local, or tribal governments or the
private sector within the meaning of the Unfunded Mandates Reform Act
of 1995.
Executive Order 13132, Federalism
Executive Order 13132, Federalism, requires that Federal agencies
consult with state and local governments and their officials in the
development of regulatory policies with federalism implications.
Consultation was accomplished through solicitation of comment on the
proposed rule.
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed and approved this final rule and in so
doing certifies that this rule will not have a significant
[[Page 41382]]
economic impact on a substantial number of small entities. The final
rule would not impose any new costs, or modify existing costs,
applicable to USDA assistance recipients. Rather, the purpose of the
rule is to remove policy prohibitions that currently restrict equal
participation of faith-based organizations in USDA assistance programs.
Government Paperwork Elimination Act
USDA is committed to compliance with the Government Paperwork
Elimination Act (Pub. L. 105-277), which requires government agencies
to provide the public the option of submitting information or
transacting business electronically to the maximum extent possible.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; see 5 CFR
1320) requires that the Office of Management and Budget approve all
collections of information by a Federal agency from the public before
they can be implemented. There is no additional information collection
burden imposed by this final rule.
List of Subjects in 7 CFR Part 16
Administrative practice and procedure, Agriculture, Grant programs,
Reporting and recordkeeping requirements.
0
For the reasons stated in the preamble, USDA proposes to add part 16 of
Title 7 of the Code of Federal Regulations as follows:
PART 16--EQUAL OPPORTUNITY FOR RELIGIOUS ORGANIZATIONS
Sec.
16.1 Purpose and applicability.
16.2 Rights of religious organizations.
16.3 Responsibilities of participating organizations.
16.4 Effect on State and local funds.
16.5 Compliance.
Authority: 5 U.S.C. 301; E.O. 13279, 67 FR 77141, 3 CFR, 2002
Comp., p. 258; E.O. 13280, 67 FR 77145, 3 CFR, 2002 Comp., p. 262.
Sec. 16.1 Purpose and applicability.
(a) The purpose of this part is to set forth USDA policy regarding
equal opportunity for 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 7 CFR parts 3015, 3016, or
3019 apply, and to recipients and subrecipients of Commodity Credit
Corporation assistance that is administered by agencies of USDA.
Sec. 16.2 Rights of religious organizations.
(a) A religious organization is eligible, on the same basis as any
other eligible private organization, to access and participate in USDA
assistance programs. Neither the Federal government nor a State or
local government receiving USDA assistance shall, in the selection of
service providers, discriminate for or against a religious organization
on the basis of the organization's religious character or affiliation.
(b) A religious organization that participates in USDA assistance
programs will retain its independence and may continue to carry out its
mission, including the definition, practice, and expression of its
religious beliefs, provided that it does not use USDA direct assistance
to support any inherently religious activities, such as worship,
religious instruction, or proselytization. Among other things, a
religious organization may:
(1) Use space in its facilities to provide services and programs
without removing religious art, icons, scriptures, or other
religious symbols,
(2) Retain religious terms in its organization's name,
(3) Select its board members and otherwise govern itself on a
religious basis, and
(4) Include religious references in its organizations' mission
statements and other governing documents.
(c) In addition, a 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 receives USDA
assistance.
Sec. 16.3 Responsibilities of participating organizations.
(a) An organization that participates in programs and activities
supported by direct USDA assistance programs shall not discriminate
against a program beneficiary or prospective program beneficiary on the
basis of religion or religious belief.
(b) Organizations that receive direct USDA assistance under any
USDA program may not engage in inherently religious activities, such as
worship, religious instruction, or proselytization, as part of the
programs or services supported with direct USDA assistance. If an
organization conducts such activities, the activities must be offered
separately, in time or location, from the programs or services
supported with direct assistance from USDA, and participation must be
voluntary for beneficiaries of the programs or services supported with
such direct assistance. These restrictions on inherently religious
activities do not apply where USDA funds or benefits are provided to
religious organizations as a result of a genuine and independent
private choice of a beneficiary or through other indirect funding
mechanisms, provided the religious organizations otherwise satisfy the
requirements of the program.
(c) Nothing in paragraphs (a) or (b) shall be construed to prevent
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.
(d)(1) Direct USDA assistance may be used for the acquisition,
construction, or rehabilitation of structures only to the extent that
those structures are used for conducting USDA programs and activities
and only to the extent authorized by the applicable program statutes
and regulations. Direct USDA 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 inherently religious activities. Where a structure is used for both
eligible and inherently religious activities, direct USDA 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 real property
disposition (see 7 CFR parts 3015, 3016 and 3019).
(2) Any use of direct USDA assistance funds for equipment,
supplies, labor, indirect costs and the like shall be prorated between
the USDA program or activity and any use for other purposes by the
religious organization in accordance with applicable laws, regulations,
and guidance.
(3) Nothing in this section shall be construed to prevent the
residents of
[[Page 41383]]
housing receiving direct USDA assistance funds from engaging in
religious exercise within such housing.
Sec. 16.4 Effect on State and local funds.
If a State or local government voluntarily contributes its own
funds to supplement activities carried out under programs governed by
this part, the State or local government has the option to separate out
the direct USDA assistance funds or commingle them. If the funds are
commingled, the provisions of this part shall apply to all of the
commingled funds in the same manner, and to the same extent, as the
provisions apply to the direct USDA assistance.
Sec. 16.5 Compliance.
USDA agencies will monitor compliance with this part in the course
of regular oversight of USDA programs.
Ann M. Veneman,
Secretary of Agriculture.
[FR Doc. 04-15678 Filed 7-7-04; 11:16 am]
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