`[Federal Register Volume 85, Number 243 (Thursday, December 17, 2020)]
[Rules and Regulations]
[Pages 82037-82148]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27084]



[[Page 82035]]

Vol. 85

Thursday,

No. 243

December 17, 2020

Part II





Department of Education





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2 CFR Part 3473

34 CFR Parts 75 and 76





Department of Homeland Security





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6 CFR Part 19





Department of Agriculture





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7 CFR Part 16





Agency for International Development





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6 CFR Part 19





Department of Housing and Urban Development





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24 CFR Parts 5, 92, et al.





Department of Justice





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28 CFR Part 38

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Department of Labor





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29 CFR Part 2





Department of Veterans Affairs





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38 CFR Parts 50, 61, et al.





Department of Health and Human Services





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Office of the Secretary

45 CFR Part 87





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Administration for Children and Families

45 CFR Part 1050





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Equal Participation of Faith-Based Organizations in the Federal 
Agencies' Programs and Activities; Final Rule

  Federal Register / Vol. 85, No. 243 / Thursday, December 17, 2020 / 
Rules and Regulations  

[[Page 82037]]


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DEPARTMENT OF EDUCATION

2 CFR Part 3474

34 CFR Parts 75 and 76

[ED-2019-OPE-0080]
RIN 1840-AD 45

DEPARTMENT OF HOMELAND SECURITY

6 CFR Part 19

[DHS-2019-0049]
RIN 1601-AA93

DEPARTMENT OF AGRICULTURE

7 CFR Part 16

[USDA-2020-0009]
RIN 0510-AA008

AGENCY FOR INTERNATIONAL DEVELOPMENT

22 CFR Part 205

[AID-2020-0001]
RIN 0412-AA99

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 5, 92, and 578

[HUD-2020-0017]
RIN 2501-AD91

DEPARTMENT OF JUSTICE

28 CFR Part 38

[DOJ-OAG-2020-0001; A.G. Order No. 4925-2020]
RIN 1105-AB58

DEPARTMENT OF LABOR

29 CFR Part 2

[DOL-2019-0006]
RIN 1291-AA41

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Parts 50, 61, and 62

[VA-2020-VACO-0003]
RIN 2900-AQ75

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of the Secretary

45 CFR Part 87

Administration for Children and Families

45 CFR Part 1050

[HHS-OS-2020-0001]
RIN 0991-AC13


Equal Participation of Faith-Based Organizations in the Federal 
Agencies' Programs and Activities

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

ACTION: Final rule.

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SUMMARY: This rule amends the regulations of the agencies listed above 
(``the Agencies'') to implement Executive Order 13831 of May 3, 2018 
(Establishment of a White House Faith and Opportunity Initiative). This 
rule provides clarity about the rights and obligations of faith-based 
organizations participating in the Agencies' Federal financial 
assistance programs and activities. This rulemaking is intended to 
ensure that the Agencies' Federal financial assistance programs and 
activities are implemented in a manner consistent with the requirements 
of Federal law, including the First Amendment to the Constitution and 
the Religious Freedom Restoration Act.

DATES: This final rule becomes effective on January 19, 2021.

FOR FURTHER INFORMATION CONTACT: For information regarding each 
Agency's implementation of these final regulations, the contact 
information for that Agency follows. If you use a telecommunications 
device for the deaf (``TDD'') or a text telephone (``TTY''), call the 
Federal Relay Service (``FRS''), toll free, at 800-877-8339:
     Department of Education: Lynn Mahaffie, Assistant General 
Counsel, Division of Regulatory Services, Office of the General 
Counsel, 202-453-7862, [email protected].
     Department of Homeland Security: Peter Mina, Deputy 
Officer for Programs and Compliance, Office for Civil Rights and Civil 
Liberties, 202-401-1474 (phone), 202-401-0470 (TTY).
     Department of Agriculture: Emily Tasman, Assistant General 
Counsel, Office of the General Counsel, 202-720-3351, 
[email protected].
     Agency for International Development: Brian Klotz, Deputy 
Director, Center for Faith & Opportunity Initiatives, 202-712-0217, 
[email protected].
     Department of Housing and Urban Development: Richard 
Youngblood, Director, Center for Faith-Based and Neighborhood 
Partnerships, 202-402-5958.
     Department of Justice: Michael L. Alston, Director, Office 
for Civil Rights, Office of Justice Programs, 202-514-2000, 
[email protected].
     Department of Labor: Mark Zelden, Director, Centers for 
Faith & Opportunity Initiatives, 202-693-6017, [email protected].
     Department of Veterans Affairs: Conrad Washington, 
Director, Center for Faith and Opportunity Initiatives, Office of 
Public and Intergovernmental Affairs, 202-461-7865.
     Department of Health and Human Services: Shannon O. Royce, 
Director, Center for Faith and Opportunity Initiatives, 202-260-6501.

SUPPLEMENTARY INFORMATION:

I. Background

    Shortly after taking office in 2001, President George W. Bush 
signed Executive Order 13199, 66 FR 8499 (Jan. 29, 2001) (Establishment 
of White House Office of Faith-Based and Community Initiatives). That 
Executive Order sought to ensure that ``private and charitable groups, 
including religious ones, . . . have the fullest opportunity permitted 
by law to compete on a level playing field'' in the delivery of social 
services. To do so, it created an office within the White House, the 
White House Office of Faith-Based and Community Initiatives, with 
primary responsibility to ``establish policies, priorities, and 
objectives for the Federal Government's comprehensive effort to enlist, 
equip, enable, empower, and expand the work of faith-based and other 
community organizations to the extent permitted by law.''
    On December 12, 2002, President Bush signed Executive Order 13279, 
67 FR 77141 (Dec. 12, 2002) (Equal Protection of the Laws for Faith-
Based and Community Organizations). Executive Order 13279 set forth the 
principles and policymaking criteria to guide Federal agencies in 
formulating and implementing policies with implications for faith-based 
organizations and other community organizations, to ensure equal 
protection of the laws for faith-based and community organizations, and 
to expand opportunities for, and strengthen the capacity of, faith-
based and other community organizations to meet social needs in 
America's communities. In addition, Executive Order 13279 directed 
specified agency heads to review and evaluate existing policies that 
had implications for faith-based and community organizations relating 
to their eligibility for Federal financial assistance for social 
service programs and, where appropriate, to implement new policies that 
were consistent with and necessary to further the fundamental 
principles and policymaking criteria articulated in the Executive 
Order.
    In 2004, the Department of Veterans Affairs (``VA'') promulgated 
regulations at 38 CFR part 61 consistent with Executive Order 13279. VA 
Homeless

[[Page 82038]]

Providers Grant and Per Diem Program; Religious Organizations, 69 FR 
31883 (June 8, 2004). The Department of Education similarly promulgated 
regulations at 34 CFR parts 74, 75, 76, and 80. Participation in 
Education Department Programs by Religious Organizations; Providing for 
Equal Treatment of All Education Program Participants, 69 FR 31708 
(June 4, 2004). In 2003 and 2004, the Department of Housing and Urban 
Development (``HUD'') promulgated three final rules to implement 
Executive Order 13279. See Providing for Equal Treatment of All Program 
Participants, 69 FR 62164 (Oct. 22, 2004); Equal Participation of 
Faith-Based Organizations, 69 FR 41712 (July 9, 2004); Participation in 
HUD's Native American Programs by Religious Organizations; 
Participation in HUD Programs by Faith-Based Organizations; Providing 
for Equal Treatment of all HUD Program Participants, 68 FR 56396 (Sept. 
30, 2003). In 2004, the Department of Justice (``DOJ''), Department of 
Agriculture (``USDA''), Department of Labor (``DOL''), Department of 
Health and Human Services (``HHS''), and Agency for International 
Development (``USAID'') issued regulations through notice-and-comment 
rulemaking implementing Executive Order 13279. See Participation in 
Justice Department Programs by Religious Organizations; Providing for 
Equal Treatment of All Justice Department Program Participants, 69 FR 
2832 (Jan. 21, 2004); Equal Opportunity for Religious Organizations, 69 
FR 41375 (July 9, 2004); Equal Treatment in Department of Labor 
Programs for Faith-Based and Community Organizations; Protection of 
Religious Liberty of Department of Labor Social Service Providers and 
Beneficiaries, 69 FR 41882 (July 12, 2004); Participation in Department 
of Health and Human Services Programs by Religious Organizations; 
Providing for Equal Treatment of All Department of Health and Human 
Services Program Participants, 69 FR 42586 (July 16, 2004); 
Participation by Religious Organizations in USAID Programs, 69 FR 61716 
(Oct. 20, 2004). DOL subsequently issued guidance detailing the process 
for recipients of financial assistance to obtain exemptions from 
religious nondiscrimination requirements under the Religious Freedom 
Restoration Act (``RFRA''), 42 U.S.C. 2000bb through 2000bb-4.\1\ DHS 
issued a Notice of Proposed Rulemaking (``NPRM'' or ``proposed rule'') 
in 2008, see Nondiscrimination in Matters Pertaining to Faith-Based 
Organizations, 73 FR 2187 (Jan. 14, 2008); however, DHS did not issue a 
final rule related to the participation of faith-based organizations in 
its programs prior to 2016.
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    \1\ See DOL, Guidance Regarding Federal Grants and Executive 
Order 13798, https://www.dol.gov/agencies/oasam/grants/religious-freedom-restoration-act.
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    President Obama maintained President Bush's program but modified it 
in certain respects. Shortly after taking office, President Obama 
signed Executive Order 13498, 74 FR 6533 (Feb. 5, 2009) (Amendments to 
Executive Order 13199 and Establishment of the President's Advisory 
Council for Faith-Based and Neighborhood Partnerships). This Executive 
Order changed the name of the White House Office of Faith-Based and 
Community Initiatives to the White House Office of Faith-Based and 
Neighborhood Partnerships, and it created the President's Advisory 
Council on Faith-Based and Neighborhood Partnerships, which 
subsequently submitted recommendations regarding the work of the 
Office.
    On November 17, 2010, President Obama signed Executive Order 13559, 
75 FR 71319 (Nov. 17, 2010) (Fundamental Principles and Policymaking 
Criteria for Partnerships with Faith-Based and Other Neighborhood 
Organizations). Executive Order 13559 made various changes to Executive 
Order 13279, which included: Making minor and substantive textual 
changes to the fundamental principles; adding a provision requiring 
that any religious social service provider refer potential 
beneficiaries to an alternative provider if the beneficiaries objected 
to the first provider's religious character; adding a provision 
requiring that the faith-based provider give notice of potential 
referral to potential beneficiaries; and adding a provision that awards 
must be free of political interference and not be based on religious 
affiliation or lack thereof. An interagency working group was tasked 
with developing model regulatory changes to implement Executive Order 
13279, as amended by Executive Order 13559, including provisions that 
clarified the prohibited uses of direct financial assistance, allowed 
religious social service providers to maintain their religious 
identities, and distinguished between direct and indirect assistance.
    These efforts eventually resulted in DHS's promulgating regulations 
and the other Agencies promulgating amendments to their regulations. In 
April 2016, the Agencies promulgated a joint final rule through notice-
and-comment rulemaking to ensure consistency with Executive Order 
13279, as amended by Executive Order 13559. See Federal Agency Final 
Regulations Implementing Executive Order 13559: Fundamental Principles 
and Policymaking Criteria for Partnerships With Faith-Based and Other 
Neighborhood Organizations, 81 FR 19355 (April 4, 2016).
    The revised regulations defined ``indirect Federal financial 
assistance'' in a way that sought to indicate that the aid must flow to 
a beneficiary from a religious provider only through the genuine and 
independent choice of the beneficiary. See, e.g., 81 FR at 19381 
(describing ``indirect'' assistance programs as those in which the 
benefits under the program are provided as a result of a ``genuine and 
independent choice''); id. at 19406-07 (defining ``indirect Federal 
financial assistance'' in terms of whether, inter alia, the 
``organization receives the assistance as the result of the decision of 
the beneficiary, not a decision of the government''). The rules also 
provided that aid would be considered ``indirect'' only if 
beneficiaries had at least one secular option as an alternative to the 
faith-based provider. See id. at 19407. Further, the rules not only 
required that faith-based providers give the notice of the right to an 
alternative provider specified in Executive Order 13559, but also 
required faith-based providers, but not other providers, to give 
written notice to beneficiaries and potential beneficiaries of programs 
funded with direct Federal financial assistance of various protections, 
including nondiscrimination based on religion, the requirement that 
participation in any religious activities must be voluntary and that 
they must be provided separately from the federally funded activity, 
and that beneficiaries may report violations. E.g., id. at 19423.
    President Trump has given new direction to the program established 
by President Bush and continued by President Obama. On May 4, 2017, 
President Trump issued Executive Order 13798, 82 FR 21675 (May 4, 2017) 
(Promoting Free Speech and Religious Liberty). Executive Order 13798 
states that ``Federal law protects the freedom of Americans and their 
organizations to exercise religion and participate fully in civic life 
without undue interference by the Federal Government. The executive 
branch will honor and enforce those protections.'' It directed the 
Attorney General to ``issue guidance interpreting religious liberty 
protections in Federal law.'' Pursuant to this instruction, the 
Attorney General subsequently published guidance in the Federal

[[Page 82039]]

Register. See Federal Law Protections for Religious Liberty, 82 FR 
49668 (Oct. 26, 2017) (``the Attorney General's Memorandum'').
    The Attorney General's Memorandum emphasizes that individuals and 
organizations do not give up religious liberty protections by providing 
government-funded social services, and that ``government may not 
exclude religious organizations as such from secular aid programs . . . 
when the aid is not being used for explicitly religious activities such 
as worship or proselytization.'' Id. at 49669.
    On May 3, 2018, President Trump signed Executive Order 13831, 83 FR 
20715 (May 3, 2018) (Establishment of a White House Faith and 
Opportunity Initiative), amending Executive Order 13279, as amended by 
Executive Order 13559, and other related Executive Orders. Among other 
things, Executive Order 13831 changed the name of the ``White House 
Office of Faith-Based and Neighborhood Partnerships'' as established in 
Executive Order 13498, to the ``White House Faith and Opportunity 
Initiative''; changed the way that the initiative is to operate; 
directed departments and agencies with ``Centers for Faith-Based and 
Community Initiatives'' to change those names to ``Centers for Faith 
and Opportunity Initiatives''; and ordered that departments and 
agencies without a Center for Faith and Opportunity Initiatives 
designate a ``Liaison for Faith and Opportunity Initiatives.'' 
Executive Order 13831 also eliminated the alternative provider referral 
requirement and requirement of notice thereof in Executive Order 13559 
described above.
    On January 17, 2020, DHS, USDA, USAID, DOJ, DOL, VA, HHS, and ED 
issued NPRMs with proposed regulatory amendments to implement Executive 
Order 13831 and conform more closely to the Supreme Court's current 
First Amendment jurisprudence; relevant Federal statutes such as RFRA; 
Executive Order 13279, as amended by Executive Orders 13559 and 13831; 
and the Attorney General's Memorandum. Equal Participation of Faith-
Based Organizations in DHS's Programs and Activities: Implementation of 
Executive Order 13831, 85 FR 2889 (Jan. 17, 2020); Equal Opportunity 
for Religious Organizations in U.S. Department of Agriculture Programs: 
Implementation of Executive Order 13831, 85 FR 2897 (Jan. 17, 2020); 
Equal Participation of Faith-Based Organizations in USAID's Programs 
and Activities: Implementation of Executive Order 13831, 85 FR 2916 
(Jan. 17, 2020); Equal Participation of Faith-Based Organizations in 
Department of Justice's Programs and Activities: Implementation of 
Executive Order 13831, 85 FR 2921 (Jan. 17, 2020); Equal Participation 
of Faith-Based Organizations in the Department of Labor's Programs and 
Activities: Implementation of Executive Order 13831, 85 FR 2929 (Jan. 
17, 2020); Equal Participation of Faith-Based Organizations in Veterans 
Affairs Programs: Implementation of Executive Order 13831, 85 FR 2938 
(Jan. 17, 2020); Ensuring Equal Treatment of Faith-Based Organizations, 
85 FR 2974 (Jan. 17, 2020); Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards, Direct Grant 
Programs, State-Administered Formula Grant Programs, Developing 
Hispanic-Serving Institutions Program, and Strengthening Institutions 
Program, 85 FR 3190 (Jan. 17, 2020). On February 13, 2020, HUD issued a 
parallel NPRM. Equal Participation of Faith-Based Organizations in HUD 
Programs and Activities: Implementation of Executive Order 13831, 85 FR 
8215 (Feb. 13, 2020). These NPRMs proposed to do the following:
     Remove the notice-and-referral requirements that were 
required of faith-based organizations but were not required of other 
organizations;
     Require the Agencies' notices or announcements of award 
opportunities and notices of awards or contracts to include language 
clarifying the rights and obligations of faith-based organizations that 
apply for and receive Federal funding. ED, DHS, USDA, DOJ, DOL, HUD, 
VA, and HHS proposed specific language in these notices to clarify 
that, among other things, a faith-based organization may apply for 
awards on the same basis as any other organization, the Agencies will 
not discriminate in selection on the basis of the organization's 
religious exercise or affiliation, a participating faith-based 
organization retains its independence and may carry out its mission 
consistent with--and may be able to seek an accommodation under--
religious freedom protections in Federal law, and a faith-based 
organization may not discriminate against beneficiaries on certain 
religious bases;
     Clarify that accommodations are available to faith-based 
organizations under existing Federal law and directly reference the 
definition of ``religious exercise'' from RFRA;
     Update the prohibitions against the Agencies (and, for 
some Agencies, their intermediaries) discriminating in selection and 
disqualifying an organization, so as to prohibit such conduct on the 
basis of religious exercise and affiliation;
     Update the definition of ``indirect Federal financial 
assistance'' to align more closely with the Supreme Court's decision in 
Zelman v. Simmons-Harris, 536 U.S. 639 (2002), by removing the 
requirement that beneficiaries have at least one secular option;
     Clarify the existing provision that a faith-based 
organization participating in an indirect Federal financial assistance 
program or activity need not modify its program to accommodate a 
beneficiary, so that it expressly states that such an organization need 
not modify its policies that require attendance in ``all activities 
that are fundamental to the program;''
     Clarify that faith-based organizations participating in 
Agency-funded programs shall retain their autonomy, right of 
expression, religious character, and independence;
     Clarify that none of the guidance documents that the 
Agencies or their intermediaries use in administering the Agencies' 
financial assistance shall require faith-based organizations to provide 
assurances or notices where similar requirements are not imposed on 
secular organizations, and that any restrictions on the use of grant 
funds shall apply equally to faith-based and secular organizations;
     Clarify that faith-based organizations need not remove, 
conceal, or alter any religious symbols or displays;
     Clarify the standard for permissible discrimination on the 
basis of religion with respect to employment or board membership, as 
relevant;
     Clarify the methods that can be used to demonstrate 
nonprofit status;
     Update the terminology to refer to ``faith-based 
organizations,'' not ``religious organizations;'' and
     Clarify that the Agencies and their intermediaries cannot 
advantage or disadvantage faith-based organizations affiliated with 
historic or well-established religions or sects in comparison with 
other religions or sects.
    These final regulations are effective on January 19, 2021. In light 
of the public comments and as explained further below, the Agencies are 
making the following changes from the NPRMs:
     Update the prohibitions against the Agencies (and, for 
some Agencies, their intermediaries) discriminating in selecting and 
disqualifying an organization, so as to prohibit such conduct on the 
basis of religious character and affiliation, and add such a 
prohibition against discrimination on the basis of religious exercise 
with

[[Page 82040]]

additional language based on the applicable Free Exercise Clause and 
RFRA standards; and
     Update the notices in the appendices for ED, DHS, USDA, 
DOJ, DOL, HUD, VA, and HHS to reflect that these prohibitions apply to 
discrimination on the basis of religious character, affiliation, or 
exercise. These Agencies are also updating such notices to indicate 
that the listed Federal laws provide religious freedom ``and 
conscience'' protections.
    Unless otherwise specified in the discussion below, these final 
regulations amend existing regulations or establish new regulations to 
do the following, consistent with the NPRMs:
     Remove the notice-and-referral requirements that were 
required of faith-based organizations but were not required of other 
organizations;
     Require the Agencies' notices or announcements of award 
opportunities and notices of awards or contracts to include language 
clarifying the rights and obligations of faith-based organizations that 
apply for and receive Federal funding. ED, DHS, USDA, DOJ, DOL, HUD, 
VA, and HHS are also including specific language in these notices to 
clarify that, among other things, a faith-based organization may apply 
for awards on the same basis as any other organization; a participating 
faith-based organization retains its independence and may carry out its 
mission consistent with--and may be able to seek an accommodation 
under--religious freedom (and conscience) protections in Federal law; 
\2\ and a faith-based organization may not discriminate against 
beneficiaries on certain religious bases;
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    \2\ In this rulemaking, the word ``accommodation'' refers both 
to provisions of relief from the burdens that a generally applicable 
law might impose on religious exercise, such as RFRA and the 
Religious Land Use and Institutionalized Persons Act (``RLUIPA,'' 42 
U.S.C. 2000cc et seq.), and to protections of conscience more 
generally, such as the Coats-Snowe Amendment (42 U.S.C. 238n), the 
Weldon Amendment (a rider in HHS's annual appropriation, see, e.g., 
Further Consolidated Appropriations Act, 2020, Pub. L. 116-94, div. 
A, sec. 507(d), 133 Stat. 2534, 2607 (Dec. 20, 2019)), the Church 
Amendments (42 U.S.C. 300a-7), and 42 U.S.C. 18113.
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     Clarify that accommodations are available under existing 
Federal law and directly reference the definition of ``religious 
exercise'' from RFRA;
     Update the definition of ``indirect Federal financial 
assistance'' to align more closely with the Supreme Court's decision in 
Zelman, 536 U.S. at 639, by removing the requirement that beneficiaries 
have at least one secular option;
     Clarify the existing provision that a faith-based 
organization participating in an indirect Federal financial assistance 
program or activity need not modify its program to accommodate a 
beneficiary, so that it expressly states that such an organization need 
not modify its policies that require attendance in ``all activities 
that are fundamental to the program;''
     Clarify that faith-based organizations participating in 
Agency-funded programs shall retain their autonomy, right of 
expression, religious character, and independence;
     Clarify that none of the guidance documents that the 
Agencies or their intermediaries use in administering the Agencies' 
financial assistance shall require faith-based organizations to provide 
assurances or notices where similar requirements are not imposed on 
secular organizations, and that any restrictions on the use of grant 
funds shall apply equally to faith-based and secular organizations;
     Clarify that faith-based organizations need not remove, 
conceal, or alter any religious symbols or displays;
     Clarify the standard for permissible discrimination on the 
basis of religion with respect to employment or board membership, as 
relevant;
     Clarify the methods that can be used to demonstrate 
nonprofit status;
     Update the terminology to refer to ``faith-based 
organizations,'' not ``religious organizations;'' and
     Clarify that the Agencies and their intermediaries cannot 
advantage or disadvantage faith-based organizations affiliated with 
historic or well-established religions or sects in comparison with 
other religions or sects.
    Additionally, in its NPRM, ED proposed to add severability clauses 
to each part of its regulations, and it is finalizing those 
severability clauses. USDA, DOL, DOJ, and HHS are also adding a 
severability provision indicating that, to the extent that any 
provision of this regulation is declared invalid by a court of 
competent jurisdiction, the Agency intends for all other provisions 
that are capable of operating in the absence of the specific provision 
that has been invalidated to remain in effect. They are making this 
addition because they conclude that each of the regulations discussed 
in this preamble would serve one or more important, related, but 
distinct purposes, as demonstrated by the extensive discussion of each 
provision below and in the USDA, DOL, DOJ, and HHS NPRMs. This 
provision is not a substantive addition, so the Agencies do not believe 
that notice and comment is required. Even if notice and comment were 
required, the absence of notice and comment for this provision would 
not be prejudicial, as commenters received an opportunity to provide 
their views on all substantive aspects of the rule. Hence, although the 
issue of severability was not raised in the USDA, DOL, DOJ, or HHS 
NPRMs, commenters were able to evaluate the practical impact of each 
facet of the proposed rules, and finalizing the proposed rules with a 
severability provision will not meaningfully alter the rules' impact on 
commenters. The Agencies accordingly have concluded that they will not 
re-notice the rules to raise the issue of severability. See First Am. 
Discount Corp. v. CFTC, 222 F.3d 1008, 1015 (D.C. Cir. 2000) (declining 
to decide whether additional notice was required where petitioner 
suffered no prejudice).
    The Agencies received over 95,000 comments in response to their 
NPRMs. The major cross-cutting issues raised in those comments are 
discussed in the Joint Preamble (Part II). Many commenters filed 
similar or identical comments with some or all of the Agencies. Thus, 
unless otherwise noted in response to a particular comment, the 
responses in this joint preamble are adopted by all Agencies, 
regardless of whether a particular Agency received a particular 
comment.
    Within each discussion of a category of comments, there are 
subheadings entitled ``Summary of Comments,'' ``Response,'' 
``Changes,'' and ``Affected Regulations.'' Under the ``Changes'' 
subheading, the Agencies describe the types of changes, if any, that 
they are making to the proposed rules as a result of the comments. 
Under the ``Affected Regulations'' subheading, the Agencies list the 
actual sections of the regulations that they have changed.
    Comments that raised issues specific to an Agency or that required 
an explanation of how a cross-cutting issue affects an Agency are 
addressed in the Agency-Specific Preambles (Part III).
    Following is the organization of this rulemaking:

I. Background
II. Joint Preamble
    A. General Support and Opposition
    B. Regulatory History and Legal Background
    1. Executive Orders 13199 and 13279
    2. Executive Orders 13498 and 13559
    3. Executive Orders 13798 and 13831 and the Attorney General's 
Memorandum
    C. Notice-and-Referral Requirements
    1. Beneficiary Rights
    a. Notice and Referral to Alternative Provider
    b. Other Notices
    2. Beneficiary Harms
    a. In General

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    b. Specific Examples, Studies, and Hypotheticals
    3. Tension With the Free Exercise Clause and RFRA
    a. Unequal Burdens
    b. Substantial Burdens
    c. Compelling Interests
    d. Least Restrictive Means and Appropriate Remedy
    e. Third-Party Harms
    D. Indirect Federal Financial Assistance
    1. Definition of ``Indirect Federal Financial Assistance''
    a. Consistency With Zelman v. Simmons-Harris
    b. Rights of Beneficiaries and Providers
    c. Harms to Beneficiaries and Providers
    2. Required Attendance at Religious Activities
    a. Establishment Clause
    b. Clarification
    E. Accommodations for Faith-Based Organizations
    F. Discrimination on the Basis of Religious Character or 
Exercise
    1. ``Religious Character''
    2. ``Religious Exercise''
    a. Scope of ``Religious Exercise''
    b. Clarified Basis for Protecting ``Religious Exercise''
    G. Rights of Faith-Based Organizations
    1. Religious Symbols
    2. Nonprofit Status
    3. Notice to Faith-Based Organizations
    4. Same Requirements for Faith-Based and Secular Organizations
    5. Religious Autonomy and Expression
    H. Employment and Board Membership
    1. Preserving the Section 702 Exemption
    2. Acceptance of or Adherence to Religious Tenets
    a. Employment
    b. Board Membership
    I. Conflicts With Other Federal Laws, Programs, and Initiatives
    J. Procedural Requirements
    1. Comment Period
    2. Arbitrariness and Capriciousness
    K. Regulatory Certifications
    1. Regulatory Impact Analysis (Executive Orders 12866 and 13563)
    2. Economic Significance Determination (Executive Order 12866)
    3. Deregulatory Action Determination (Executive Order 13771)
    4. Federalism (Executive Order 13132)
    5. Unfunded Mandates Reform Act
III. Agency-Specific Preambles
    A. Department of Education
    1. Comments in Support
    2. Comments in Opposition
    a. Concerns Regarding Discrimination and Impact on Programs
    b. Concerns Regarding Appropriate Use of Taxpayer Dollars
    c. Concerns Regarding Potential for Religious Compulsion
    d. Concerns Regarding Modifications
    e. Severability Clauses
    B. Department of Homeland Security
    C. Department of Agriculture
    D. Agency for International Development
    1. Notice and Alternative Provider Requirements
    2. ``Religious Organizations'' to ``Faith-Based Organizations''
    3. Reasonable Accommodations
    4. Religious Character and Religious Exercise
    5. Exemption From Title VII Prohibitions for Qualifying 
Organizations Hiring Based on Acceptance of, or Adherence to, 
Religious Tenets
    6. Assurances from Religious Organizations With Sincerely Held 
Religious Beliefs
    7. Findings and Certifications
    a. Regulatory Flexibility Act
    b. Paperwork Burden
    E. Department of Housing and Urban Development
    1. Other Conflicting Laws
    2. Conflicting Agency Programs and Policies
    3. Procedural Issues
    a. Comment Period
    b. Rulemaking Authority
    c. RIA/Administrative Sections
    F. Department of Justice
    G. Department of Labor
    1. Beneficiary Harms
    2. Notice Requirement
    3. Deregulatory Action Determination (Executive Order 13771)
    4. General Comments
    H. Department of Veterans Affairs
    I. Department of Health and Human Services
    1. Nondirective Mandate
    2. Certain Provisions of the ACA
    3. Notice Requirements in Other Department Regulations
    4. Medical Ethics
    5. Discrimination Against Women, Persons With Disabilities, Low-
Income Persons, and LGBT Persons
IV. General Regulatory Certifications
    A. Regulatory Planning and Review (Executive Order 12866); 
Improving Regulation and Regulatory Review (Executive Order 13563)
    1. Costs
    2. Cost Savings
    3. Benefits
    B. Regulatory Flexibility Analysis
    C. Civil Justice Reform (Executive Order 12988)
    D. Consultation and Coordination With Indian Tribal Governments 
(Executive Order 13175)
    E. Federalism (Executive Order 13132)
    F. Reducing Regulation and Controlling Regulatory Costs 
(Executive Order 13771)
    G. Paperwork Reduction Act
    H. Unfunded Mandates Reform Act
V. Final Regulations
    Department of Education
    Department of Homeland Security
    Department of Agriculture
    Agency for International Development
    Department of Housing and Urban Development
    Department of Justice
    Department of Labor
    Department of Veterans Affairs
    Department of Health and Human Services

II. Joint Preamble

A. General Support and Opposition

    Summary of Comments: Several commenters, including Members of 
Congress, agreed with the proposed rules and said that they protect 
religious liberty for faith-based organizations, including as 
guaranteed by the First Amendment to the U.S. Constitution. These 
commenters added that faith-based organizations are allowed to 
participate in Federal funding programs. Some commenters disagreed, 
however, arguing that no Federal funds should be given to faith-based 
organizations, including because such organizations are exempt from 
paying taxes. Some commenters argued that such faith-based 
organizations should be taxed.
    Several commenters supported the proposed rules because, they said, 
faith-based organizations should be allowed to compete on equal footing 
with secular organizations, without any discriminatory or unfair 
restrictions imposed based on religious character, affiliation, or 
exercise, which would raise constitutional problems. Some of these 
commenters also stated that such equal treatment aligns the proposed 
rules with Trinity Lutheran Church of Columbia, Inc. v. Comer, 137 S. 
Ct. 2012 (2017). A common theme among these commenters was that 
organizations should not be forced to check their faith at the door 
when participating in government programs. Other commenters argued, 
however, that faith-based organizations have no entitlement to receive 
discretionary Federal financial assistance from the Agencies. Rather, 
these commenters argued that faith-based organizations need to be made 
aware of their obligations to comply with program requirements and with 
beneficiaries' constitutional protections. Some commenters said that 
faith-based organizations can exercise religion fully with private 
funds but need to serve all if they choose to accept Federal funds. One 
of these commenters stated that the proposed rules presented a solution 
in search of a problem, arguing that there is no indication faith-based 
organizations were harmed under the prior rule.
    Some commenters supported the proposed rules because they would 
clarify and reinforce existing Federal law regarding faith-based 
organizations' rights to freely exercise their religion and participate 
in civic life. They argued that the proposed rules were not a radical 
shift in policy. Some of these commenters also noted that the proposed 
rules would provide faith-based organizations with clarity regarding 
these rights. These commenters argued that such rights were unclear, 
given what they perceived as conflicts between the prior rule and 
Federal law, including constitutional rights to be free from 
discrimination

[[Page 82042]]

based on religious character when participating in the Agencies' 
programs. For example, some commenters noted that the prior rule forced 
only faith-based organizations (and no other organizations) to give 
assurances and notices, which, they argued, was a violation of the Free 
Exercise Clause.
    Some commenters argued that the proposed rules, by creating greater 
clarity and removing burdens, would enhance faith-based organizations' 
participation in Federal programs, thus expanding the scope of social 
services provided to people in need. Some of these commenters also 
emphasized the role that faith-based organizations play in promoting 
the public good and human flourishing in the public square, including 
teaching, providing medical services, serving underserved communities, 
and participating in the foster care system. One commenter relied on 
data estimating the large dollar amounts--over one trillion dollars in 
total, and billions by specific groups and denominations--that 
religious organizations contribute to the economy annually. One 
commenter to HUD supported the proposed rules because equal 
participation by faith-based organizations is ``essential to 
revitalizing communities,'' including to ``bridge the gap between 
communities and government.''
    Other commenters argued that the proposed rules would violate the 
Establishment Clause. They argued that the proposed rules could create 
impermissible third-party harms, could lead to religious coercion or 
proselytizing, could result in the use of taxpayer funds to favor 
certain religions over others, could create divisiveness, and could 
further entangle government and religion. Some of these commenters were 
also concerned that the proposed rules would allow the use of taxpayer 
funding for religious exercise or programming, contrary to taxpayers' 
consciences. These commenters argued that such funding would be 
contrary to the views of James Madison, as expressed in the Memorial 
and Remonstrance Against Religious Assessments (``Memorial and 
Remonstrance'') in 1785, and of Thomas Jefferson, as expressed in a 
bill that ultimately became the Virginia Statute for Religious Freedom 
in 1786 (``Bill for Religious Freedom'').\3\
---------------------------------------------------------------------------

    \3\ See James Madison, To the Honorable the General Assembly of 
the Commonwealth of Virginia: A Memorial and Remonstrance (ca. June 
20, 1785), Founders Online, National Archives, https://founders.archives.gov/documents/Madison/01-08-02-0163 (``Memorial 
and Remonstrance''); Thomas Jefferson, A Bill for Establishing 
Religious Freedom (June 18, 1779), Founders Online, National 
Archives, https://founders.archives.gov/documents/Jefferson/01-02-02-0132-0004-0082 (``Bill for Religious Freedom'').
---------------------------------------------------------------------------

    Numerous commenters were concerned that the proposed rules did not 
place enough emphasis on the interests of, and the impact on, 
beneficiaries. Several of these commenters argued that the proposed 
rules would favor faith-based organizations over beneficiaries, 
especially vulnerable beneficiaries. Commenters emphasized that 
beneficiaries are the focus of these government-funded programs and 
deserve consideration equal to, if not greater than, that afforded to 
faith-based organizations.
    Several of these commenters were concerned that the proposed rules 
could cause harms to beneficiaries, including discrimination and denial 
of services. These commenters were particularly concerned about 
discrimination against groups that these commenters identified as 
vulnerable, marginalized, or underserved, including people from 
minority religions or professing no religion, women, LGBTQ \4\ people, 
people with low incomes, and people with disabilities. Commenters were 
concerned that beneficiaries' access to services would be impacted and 
that providers could impose religious litmus tests. Commenters were 
also concerned about removal of beneficiaries' religious liberty 
protections. One commenter also expressed concern regarding potential 
discrimination against volunteers.
---------------------------------------------------------------------------

    \4\ This rule uses the term ``LGBTQ'' to refer to people 
identifying as lesbian, gay, bisexual, transgender, transsexual, 
queer, questioning, intersex, asexual, allied, pansexual, or 
otherwise, regardless of whether commenters used alternative 
acronyms such as LGBTQ+ or LGBTIA.
---------------------------------------------------------------------------

    Some commenters impugned the motives behind the proposed rules. 
Some commented that the proposed rules were designed--consciously or 
unconsciously--to give preferences, and ensure aid flows, to specific 
officials' religious denominations. One commenter argued that the 
proposed rules were designed to further discrimination under the guise 
of promoting faith-based organizations' religious freedom.
    Response: The Agencies agree with the comments that said the 
proposed rules (and this final rule) protect the religious liberty of 
faith-based organizations. The First Amendment allows faith-based 
organizations to participate, and compete on equal footing with secular 
organizations, in neutral government funding programs. See, e.g., 
Espinoza v. Mont. Dep't of Revenue, 140 S. Ct. 2246, 2254 (2020) (``We 
have repeatedly held that the Establishment Clause is not offended when 
religious observers benefit from neutral government programs.''). This 
final rule applies to such neutral Federal financial assistance 
programs and activities, removes burdens that were imposed solely on 
faith-based organizations, prohibits the imposition of additional such 
burdens, and more clearly conforms these regulations with existing 
Federal law, including constitutional law.
    Contrary to some comments, the tax-exempt status of faith-based 
organizations does not preclude them from participating in Federal 
financial assistance programs and activities. See 26 U.S.C. 501(c)(3). 
The Agencies also note that these programs are open to tax-exempt 
secular organizations and, as discussed in Part III.G.2 below, to 
faith-based organizations that pay taxes.
    To be sure, the Agencies agree with commenters that faith-based 
organizations, like all other organizations, have no entitlement to 
receive discretionary Federal financial assistance from the Agencies. 
But this final rule does not provide for any such entitlement. This 
final rule merely removes barriers to equal competition. It does not 
require any faith-based organization to be awarded Federal financial 
assistance in any program. Under this final rule, such award decisions 
will be made on neutral terms, consistent with Federal law.
    The Agencies also agree with the comment that the added 
accommodation language merely clarifies and reinforces Federal law 
regarding faith-based organizations' rights to exercise their religion 
and participate in civic life. Federal law requires or permits certain 
accommodations, see, e.g., 42 U.S.C. 2000bb-1, and this final rule 
merely clarifies the application of this law, as discussed in Part 
II.E. Similarly, the changes discussed in Parts II.D, II.F, II.G, and 
II.H bring these regulations into clearer conformity with existing 
Federal religious liberty law in those areas. The other changes ensure 
that faith-based organizations are eligible on equal terms with other 
organizations, which is consistent with and alleviates tension with the 
First Amendment and RFRA, as discussed in Parts II.C and II.G.
    The Agencies also agree with the comment that said it is important 
to give faith-based organizations notice of their obligation to comply 
with program requirements and beneficiaries' protections. This final 
rule provides for such notice, as discussed in Parts II.C and II.G.3 
below.

[[Page 82043]]

    The Agencies disagree with the comment that said this final rule is 
a solution in search of a problem. Each provision in this final rule is 
being issued to address valid concerns, as discussed throughout this 
preamble. If anything, the alternative provider notice-and-referral 
requirements were solutions in search of a problem because, as 
discussed in Part II.C, there is no indication anyone sought a referral 
under those provisions, and there is no indication anyone has ever 
sought a referral under a separate HHS program where a statute mandates 
reporting of all referral requests.
    The Agencies disagree with the commenters that said this final rule 
violates the Establishment Clause. As discussed in each relevant 
section below, each change is consistent with the Establishment Clause. 
Third-party harms are discussed extensively in Parts II.C, II.D, and 
II.F, and this final rule retains the prohibition on religious coercion 
and proselytizing. Also, as demonstrated throughout this Joint 
Preamble, there is no indication that this final rule will lead to any 
improper use of taxpayer funds to favor certain religions, to create 
divisiveness, or to entangle government and religion.
    The Agencies also disagree with the commenters that the proposed 
rule would allow the use of taxpayer funds for religious exercise or 
programming in any improper way. This final rule retains the 
prohibition on explicitly religious activities in programs and 
activities funded with direct Federal financial assistance. Although 
indirect Federal financial assistance may be used for explicitly 
religious activities under this rule, the same was true under the prior 
rule, see, e.g., 81 FR at 19358, 19361-62, 19419. This practice is 
consistent with Federal religious liberty laws, including the Religion 
Clauses of the First Amendment, as discussed in Part II.D.
    The Agencies' conclusions are not affected by Madison's Memorial 
and Remonstrance or Jefferson's Bill for Religious Freedom. As they 
discuss throughout, this final rule is consistent with the Constitution 
and with governing statutes, as interpreted by the Federal courts. Any 
inconsistency with a pre-constitutional writing or State statute would 
not affect this final rule. Indeed, both documents cited by commenters 
contain several arguments that would not be considered appropriate for 
a government under current constitutional doctrine.\5\
---------------------------------------------------------------------------

    \5\ See, e.g., Memorial and Remonstrance (objecting to bill as 
``adverse to the diffusion of the light of Christianity'' because it 
should be the ``first wish of those who enjoy this precious gift'' 
to be that it ``may be imparted to the whole race of mankind''); 
Bill for Religious Freedom (stating that ``Almighty God hath created 
the mind''); id. (rejecting certain coercive civil actions as ``a 
departure from the plan of the holy author of our religion'').
---------------------------------------------------------------------------

    Regardless, this final rule is consistent with the broader 
principles animating Madison's Memorial and Remonstrance and 
Jefferson's Bill for Religious Freedom. Madison's Memorial and 
Remonstrance criticized a 1784 bill that would have provided for non-
neutral funding--it mandated a tax to fund Christian teachers, with 
categorical exemptions for specific denominations.\6\ Thus, similar to 
this final rule and current constitutional doctrine, Madison's Memorial 
and Remonstrance did not reflect opposition to faith-based 
organizations receiving neutral government funding on the same terms as 
other organizations.\7\
---------------------------------------------------------------------------

    \6\ Memorial and Remonstrance (charging that the 1784 bill 
``violates equality by subjecting some to peculiar burdens'' and 
``by granting to others peculiar exemptions'').
    \7\ See, e.g., Rosenberger v. Rector and Visitors of Univ. of 
Va., 515 U.S. 819, 854 (1995) (Thomas, J., concurring) (``Madison's 
objection to the assessment bill did not rest on the premise that 
religious entities may never participate on equal terms in neutral 
government programs. . . . Madison's comments are more consistent 
with the neutrality principle[.]'').
---------------------------------------------------------------------------

    Additionally, Jefferson's Bill for Religious Freedom denounced the 
power of the Government--as embodied by the ``magistrate''--to dictate 
permissible religious expression. For example, Jefferson's bill said 
that the civil magistrate cannot be allowed ``to restrain the 
profession or propagation of principles on supposition of their ill 
tendency,'' calling that ``a dangerous fa[l]lacy, which at once 
destroys all religious liberty.'' That sentiment is consistent with the 
added language in this final rule regarding faith-based organizations' 
religious autonomy and expression, as discussed in Part II.G.5.
    The Agencies agree with the comments that said this final rule 
provides greater clarity regarding faith-based organizations' religious 
liberties within the affected Federal financial assistance programs and 
activities. These rights were unclear under the prior rule, and 
improving clarity will increase participation for beneficiaries, 
including in unserved and underserved communities, as explained in the 
relevant Parts below. The Agencies also agree that these outcomes will 
help satisfy the needs of the beneficiaries of these programs, a 
consideration on which the Agencies place significant emphasis when 
designing and implementing these programs. And the Agencies recognize 
the contributions that both faith-based and secular organizations make 
to such beneficiaries, which contributions warrant allowing such 
organizations to compete on equal terms for Federal financial 
assistance. As discussed in detail throughout this preamble, the 
Agencies disagree that this final rule de-emphasizes, disfavors, or 
harms beneficiaries at the expense of faith-based organizations.
    There is no indication that any aspect of this final rule will lead 
to the harms asserted by commenters, including discrimination and 
denial of service, as explained in each section below. Because this 
final rule retains the prohibition on faith-based organizations 
discriminating against beneficiaries on religious bases, such 
organizations cannot impose a religious litmus test on beneficiaries. 
Faith-based organizations must comply with any other nondiscrimination 
provisions that apply to each program. This final rule does not change 
that requirement. The only relevant aspect of this final rule is the 
added accommodation language, which merely clarifies that otherwise 
binding Federal law applies. The accommodation language added in this 
final rule does not create any new bases for broader accommodations 
that would authorize discrimination or the denial of service, as 
discussed in Part II.E.
    Additionally, the treatment of volunteers is beyond the scope of 
this final rule. The prior rule, Executive Order 13831, and the NPRMs 
did not address volunteers. Therefore, the Agencies are not addressing 
volunteers directly in this final rule. To the extent that volunteers 
are impacted indirectly by any provision in this final rule, that 
provision is appropriate for the reasons discussed in the relevant Part 
below.
    Finally, this final rule is being promulgated for the reasons 
discussed throughout this preamble. The Agencies disagree with the 
comments that question the motivation behind this final rule. Because 
this final rule applies equally to all faith-based organizations, there 
is no basis for the comment that this rule is motivated by the desire 
to favor any specific religious denomination. Similarly, this final 
rule does not permit discrimination by faith-based organizations, 
indicating that a desire to allow for such discrimination was not a 
motive for the rule.
    Changes: None.
    Affected Regulations: None.

B. Regulatory History and Legal Background

    As explained in the NPRMs, the primary purpose of this final rule 
is to implement Executive Order 13831, the most recent in a series of 
executive

[[Page 82044]]

orders that address issues that affect faith-based and community 
organizations. As discussed in Part I above, the NPRMs provided a 
summary of those executive orders, as well as the Attorney General's 
Memorandum that was drafted and published pursuant to Executive Order 
13798. Because many of the commenters who addressed Executive Order 
13798 also referenced the Attorney General's Memorandum, the Agencies 
respond to those comments in the discussion of Executive Order 13798 
below.
1. Executive Orders 13199 and 13279
    Summary of Comments: A number of commenters who supported and 
opposed the proposed rules referenced President George W. Bush's 
Executive Orders 13199 and 13279. Some commenters stated that the 
proposed rules were consistent with Executive Order 13279, which helped 
to ensure that faith-based organizations have equal protection and 
opportunity under the law as they work to meet the social needs of 
American communities.
    Other commenters stated that removing the alternative provider 
requirements would stray greatly from tradition, current practice, and 
consensus in this area. They noted that ``Charitable Choice'' laws, 
which were precursors to the George W. Bush administration's faith-
based regulations, included alternative provider requirements. See, 
e.g., 42 U.S.C. 290kk-1(f), 300x-65(e), 604a(e). One commenter stated 
that the NPRMs would stray from Executive Orders 13199 and 13279 by 
reducing the efficacy of distributing Federal funding. Another 
commenter stated that repealing or weakening the core beneficiary 
protections in the 2016 final rule is inconsistent with Executive Order 
13279, which continues to bind the Agencies.
    One commenter objected that these executive orders sidestepped the 
bipartisan process and allowed for government-funded religious 
discrimination. Some commenters also expressed the sentiment that 
Executive Order 13279 and this final rule were contrary to the 
``separation of church and state.''
    Response: The Agencies disagree that removing the alternative 
provider notice-and-referral requirements undermines principles of 
equal treatment or strays from tradition. To the contrary, removing 
these requirements serves to remove unnecessary regulatory barriers to 
enable faith-based organizations to compete for, and participate fully 
in, Federal financial assistance without impairing their independence, 
autonomy, expression, or religious character. Additionally, removal of 
the notice-and-referral requirements does not ``stray greatly from 
tradition.'' First, doing so merely reinstates the status quo prior to 
2016. Second, although there may be a pre-2016 practice of requiring 
referrals in the programs to which the Charitable Choice statutes cited 
by the commenters are applicable, the Agencies are not aware that any 
beneficiary has ever sought such a referral under one of those 
statutes, or that any beneficiary ever sought a referral under 
analogous provisions of the prior rule. See Part II.C. The Agencies' 
experience thus demonstrates that maintaining the referral requirements 
is not necessary to avoid harm to beneficiaries.
    Additionally, the Agencies disagree that these final rules are 
inconsistent with any portions of Executive Orders 13199 and 13279 that 
are currently in effect. Executive Order 13199 was revoked by Executive 
Order 13831 on May 3, 2018. 83 FR at 20717. Even so, this rule would 
have been consistent with Executive Order 13199, which directed the 
predecessor White House Office of Faith-Based and Community Initiatives 
(now replaced by the White House Faith and Opportunity Initiative) ``to 
eliminate unnecessary . . . regulatory[] and other bureaucratic 
barriers that impede effective faith-based and other community efforts 
to solve social problems.'' 66 FR at 8500. This final rule removes 
unnecessary regulatory barriers to enable faith-based organizations to 
compete for, and participate fully in, Federal financial assistance 
programs and activities without impairing their independence, autonomy, 
expression, or religious character.
    Executive Order 13279 remains in effect, as amended by Executive 
Order 13559 and further amended by Executive Order 13831. Executive 
Order 13279 currently provides that faith-based organizations should be 
eligible to compete for Federal financial assistance used to support 
social service programs and to ``participate fully in [such programs] 
without impairing their independence, autonomy, expression, or 
religious character.'' 67 FR at 77142. This final rule fulfils that 
directive by removing unnecessary regulatory barriers that applied only 
to faith-based organizations that wished to participate in federally 
funded social service programs.
    The Agencies furthermore do not believe that this final rule will 
reduce the efficacy of awarding Federal funding. Rather, it will enable 
faith-based organizations to participate equally in competing for 
Federal funding with secular organizations. If anything, removal of 
unnecessary administrative burdens will improve the efficiency and 
efficacy of awarding Federal funding. Reduced compliance burdens may 
free more resources for beneficiaries, and the removal of requirements 
that chill faith-based organizations' participation in Federal 
assistance programs may result in a broader, more diverse, and more 
competitive pool of grant recipients. Moreover, this final rule 
provides greater clarity on several issues, as discussed in Parts II.C, 
II.D, II.E, II.G, II.G, and II.H.
    The Agencies also disagree that Executive Orders 13199 and 13279 
allow for government-funded religious discrimination. The opposite is 
true. Although it is no longer effective, the Agencies note that 
Executive Order 13199 stated that the delivery of social services in 
the United States ``should value the bedrock principles of pluralism, 
nondiscrimination, evenhandedness, and neutrality.'' 66 FR at 8499. 
Similarly, Executive Order 13279 currently provides that all 
organizations that receive Federal financial assistance under social 
services programs should be prohibited ``from discriminating against 
beneficiaries or prospective beneficiaries of the social services 
programs on the basis of religion or religious belief,'' and that such 
organizations, in their service-provision and outreach programs using 
Federal financial assistance, ``should not be allowed to discriminate 
against current or prospective program beneficiaries on the basis of 
religion, a religious belief, a refusal to hold a religious belief, or 
a refusal to actively participate in a religious practice.'' 67 FR at 
77142. This final rule maintains the regulatory prohibition on such 
religious discrimination.
    The Agencies also do not believe that it is sensible to charge that 
an executive order has sidestepped the bipartisan process. An executive 
order is the President's exercise of constitutional authority, and the 
Agencies have carried out Executive Order 13831 in accordance with 
established rules of administrative process that provide full 
opportunity for input from people of all parties and perspectives. The 
Agencies have carefully reviewed and considered each of the comments 
they have received. In most cases, the Agencies are not even aware of, 
and in all cases are indifferent to, a commenter's partisan 
affiliation. The Agencies have considered each comment based on its

[[Page 82045]]

independent merit. Additionally, to the extent the comment about the 
bipartisan process was referring to the 2010 President's Advisory 
Council on Faith-Based and Neighborhood Partnerships, the Agencies 
incorporate their discussion of that process from Part II.C.
    Finally, the Agencies disagree that these executive orders and this 
final rule are contrary to ``the separation of church and state.'' Some 
of these comments refer to and quote extensively from President Thomas 
Jefferson's letter of January 1, 1802 to the Baptist Association of 
Danbury, Connecticut, which letter described the First Amendment as 
``building a wall of separation between Church & State.'' Thomas 
Jefferson, Letter for the Danbury Baptist Association (Jan. 1, 1802), 
Founders Online, National Archives, https://founders.archives.gov/documents/Jefferson/01-36-02-0152-0006. The precise meaning and 
usefulness of this metaphor for constitutional adjudication remains 
unclear. As Justice Frankfurter cautioned, ``the mere formulation of a 
relevant Constitutional principle is the beginning of the solution of a 
problem, not its answer. This is so because the meaning of a spacious 
conception like that of separation of Church from State is unfolded as 
appeal is made to the principle from case to case.'' McCollum v. Bd. of 
Educ., 333 U.S. 203, 212-13 (1948) (Frankfurter, J., joined by Jackson, 
Rutledge, and Burton, JJ.). It is thus critical to recognize that, in 
actual cases, the Supreme Court has ``repeatedly held that the 
Establishment Clause is not offended when religious observers and 
organizations benefit from neutral government programs.'' Espinoza, 140 
S. Ct. at 2254. That result is what this final rule achieves, as 
explained throughout this preamble.
    Allowing for such participation is also consistent with many 
interpretations of Jefferson's letter, including that the wall of 
separation was intended to protect religion from the state, which this 
final rule does.\8\ Furthermore, the relevance of that letter to 
constitutional law jurisprudence has been questioned repeatedly, 
including because President Jefferson at times invoked religion in his 
official actions and approved the use of Federal Government funds for 
religious purposes.\9\ Significantly, and consistent with the Supreme 
Court's statement in Espinoza, then-Justice Rehnquist explained that, 
even when considering Jefferson's wall metaphor, ``[t]he Establishment 
Clause did not . . . prohibit the Federal Government from providing 
nondiscriminatory aid to religion.'' Wallace v. Jaffree, 472 U.S. 92, 
106 (1985) (Rehnquist, J., dissenting). In short, ``[t]he metaphor has 
served as a reminder that the Establishment Clause forbids an 
established church or anything approaching it. But the metaphor itself 
is not a wholly accurate description of the practical aspects of the 
relationship that in fact exists between church and state.'' Lynch v. 
Donnelly, 465 U.S. 668, 673 (1984)).
---------------------------------------------------------------------------

    \8\ See, e.g., Noah Feldman, Divided By God 40 (2007) (arguing 
that the ``Jefferson who drafted the Virginia statute'' was 
``focus[ed] . . . on protecting religion from government, not the 
other way around'').
    \9\ See, e.g., Wallace v. Jaffree, 472 U.S. 92, 103 & n.5 (1985) 
(Rehnquist, J., dissenting) (observing that a treaty entered into by 
the Jefferson administration ``provided annual cash support for [a 
Native American tribe's] Roman Catholic priest and church''); Engel 
v. Vitale, 370 U.S. 421, 446-49 & n.3 (1962) (Stewart, J., 
dissenting); McCollum, 333 U.S. at 245-47 (Reed, J., dissenting); 
see also Daniel L. Dreisbach, Thomas Jefferson and the Wall of 
Separation Between Church and State 21-23 (2003) (noting that, 
although Jefferson declined to issue religious proclamations of 
thanksgiving, nonetheless, ``as the nation's head of state, he 
personally encouraged and symbolically supported religion by 
attending public church services in the Capitol'' and ``attend[ing] 
worship services on government property''); id. at 29-30 (explaining 
the argument that the letter in which Jefferson expressed the wall 
metaphor was a ``political manifesto,'' rather than an attempt to 
define Establishment Clause jurisprudence). See generally Philip 
Hamburger, Separation of Church and State (2002).
---------------------------------------------------------------------------

    Changes: None.
    Affected Regulations: None.
2. Executive Orders 13498 and 13559
    Summary of Comments: A number of commenters--some who supported and 
some who opposed the proposed rules--referenced President Barack 
Obama's Executive Orders 13498 and 13559. Commenters who supported the 
proposed rules stated that the Obama Administration's changes to the 
equal treatment rule had placed extra and unfair burdens on faith-based 
entities, discriminated against such entities (including by allowing 
religious participation in indirect-aid programs only if there was a 
secular alternative without imposing a reverse requirement on secular 
providers), treated such entities as suspect purely because of their 
religious nature, and ignored the gravity of religious complicity-based 
objections, contrary to the First Amendment, RFRA, Supreme Court 
precedent, and binding legal principles described in the Attorney 
General's Memorandum.
    One commenter also asserted that the notice-and-referral 
requirements established by Executive Order 13559 were unconstitutional 
compelled speech under National Institute of Family Life Advocates v. 
Becerra, 138 S. Ct. 2361 (2018), because they required only faith-based 
organizations to give the scripted disclosure.
    Commenters who objected to the proposed rules drew attention to 
President Obama's 2016 Executive Order 13559, which they characterized 
as putting significant safeguards for beneficiaries into place based on 
consensus recommendations of the President's Advisory Council on Faith-
Based and Neighborhood Partnerships, a body composed of religious and 
community leaders from a wide range of faiths and organizations.
    A commenter from a faith-based organization supported the notice-
and-referral requirements of Executive Order 13559 as striking the 
right balance between ensuring the continuation of public-private 
partnerships with faith-based organizations to provide social services, 
consistent with the Constitution, RFRA, and Supreme Court precedent, 
and ensuring that millions of beneficiaries of these programs were not 
subject to proselytizing by publicly funded service providers and that 
viable secular alternatives are available and accessible.
    Finally, one commenter protested that the proposed rules would 
allow organizations that accept ``indirect'' aid to require 
beneficiaries to participate in religious activities, in conflict with 
Executive Order 13559.
    Response: The Agencies agree with the commenters who stated that 
the notice-and-referral requirements of Executive Order 13559 were in 
tension with Supreme Court precedent, RFRA, and free exercise 
principles, as explained in Part II.C.
    The Agencies disagree with the suggestions that they must follow 
the recommendations in the Final Report of the President's Advisory 
Council on Faith-Based and Neighborhood Partnerships (``Advisory 
Council Report''), although the Agencies have certainly given those 
recommendations all due consideration. As discussed at greater length 
in Part II.C, those recommendations were just that and are not 
controlling. The Agencies are promulgating this final rule after 
carefully considering over 95,000 public comments from a wide array of 
sources, including private citizens, advocacy groups, religious 
organizations, public policy organizations, State and local 
governments, and Members of Congress. That process reflects a diversity 
of input no less than did the recommendations of the Advisory Council 
comprising ``not more than 25 members appointed by the President'' in 
2009. See 74 FR at 6534.

[[Page 82046]]

    Further, the Advisory Council Report cited minimal justification 
for requiring religious organizations to make referrals based on 
objections to the provider's religious character. The Agencies did not 
find this justification persuasive, as discussed in Part II.C below. 
There is also no indication that any beneficiary sought such a 
referral, before or after the referral requirement was imposed in 2016, 
or that any beneficiary would be harmed by removing the referral 
requirement. The Agencies disagree that the referral requirement was a 
critical religious liberty protection and that it must be retained in 
order to put primary emphasis on the needs of beneficiaries.
    The Agencies respond to the comments regarding RFRA, free exercise, 
and related Supreme Court precedents at length elsewhere in this final 
rule, especially in Parts II.C, II.E, II.F, and II.G. They incorporate 
that analysis by reference here. The Agencies also clarify that they 
are not relying on the Free Speech Clause as a basis for removing the 
notice requirement. The Agencies do not rely on Becerra, 138 S. Ct. 
2361. That case is different for several reasons, including because the 
law in that case did not impose a notice requirement on recipients of 
government funding.
    Finally, the Agencies disagree that the updated definition of 
``indirect Federal financial assistance'' in this final rule conflicts 
with Executive Order 13559 because it would permit organizations 
receiving indirect aid, such as vouchers, to require religious 
observance as part of their activities. Indirect Federal financial 
assistance, by definition, permits the beneficiary to choose where to 
use the assistance. Executive Order 13559 recognized ``the distinction 
between `direct' and `indirect' Federal financial assistance,'' 75 FR 
at 71321, and it did not restrict what an organization at which a 
beneficiary chose to use the indirect assistance might require of the 
beneficiary in terms of religious observance. It imposed restrictions 
only on organizations receiving direct assistance, stating that 
organizations that engage in explicitly religious activities must 
perform such activities and offer such services outside of programs 
that are supported with ``direct'' Federal financial assistance; that 
such organizations must do so separately in time or location from any 
such programs or services supported with ``direct'' Federal financial 
assistance; and that participation in any such explicitly religious 
activities must be voluntary for the beneficiaries of the social 
service program supported with ``such'' Federal financial assistance.'' 
Id. at 73120. The updated definition of ``indirect Federal financial 
assistance'' is valid for all of the reasons discussed in Part II.D 
below.
    Changes: None.
    Affected Regulations: None.
3. Executive Orders 13798 and 13831 and the Attorney General's 
Memorandum
    Summary of Comments: A number of commenters--some who supported and 
some who opposed--the proposed rules referenced President Donald 
Trump's Executive Orders 13798 and 13831, as well as the Attorney 
General's Memorandum. Several commenters stated that the proposed rules 
were consistent with the provisions of Executive Orders 13798 and 
13831, the Attorney General's Memorandum, and the Constitution because 
of their equal treatment of religious groups. They said that these 
Executive Orders and the proposed rules restore constitutional 
freedoms, respect the rights of religious taxpayers and beneficiaries, 
and allow religious organizations to further support the community 
rather than focus on additional federally mandated burdens. Several 
commenters expressed their support for Executive Order 13831, including 
one organization that concluded that neutral treatment by government 
not only allows religious organizations to operate in accordance with 
their faith but also promotes the flourishing of the common good.
    A comment provided jointly by 21 current members of the House of 
Representatives stated that the final rule implementing Executive Order 
13831 ``will restore an environment of religious freedom across the 
country'' because ``an organization's religious affiliation will no 
longer subject individuals to unequal treatment by Federal, state, and 
local governments.''
    Other commenters contended that the proposed rules were contrary to 
Executive Order 13831 because they exhibited favoritism toward 
religious organizations for purely political reasons. One commenter 
charged that the proposed rules were inconsistent with Executive Order 
13798 because they would limit end-of-life care options for people with 
terminal illnesses.
    Another commenter said that Executive Order 13831 contradicted 
Executive Order 13798, which states that Federal law protects the 
freedom of Americans and their organizations to exercise religion and 
participate fully in civic life without undue interference by the 
Federal Government.
    One commenter stated that the Agencies' reliance on the Attorney 
General's Memorandum was misplaced, and that the Memorandum violated 
the Establishment Clause, had questionable legal authority, and was an 
expansion of religious freedom exemptions and protections that allowed 
religious institutions to discriminate and harm others. Another 
commenter said that Executive Order 13831 was contrary to the 
separation of church and state.
    Response: The Agencies agree that this final rule is consistent 
with Executive Order 13798, which states that the Federal Government 
will honor the ``freedom of Americans and their organizations to 
exercise religion and participate fully in civic life without undue 
interference by the Federal Government.'' 82 FR at 21675. The final 
rule fulfills this promise.
    The Agencies agree that the final rule is consistent with Executive 
Order 13831 as well. Executive Order 13831 charged the White House 
Faith and Opportunity Initiative with identifying ways to reduce 
``burdens on the exercise of religious convictions and legislative, 
regulatory, and other barriers to the full and active engagement of 
faith-based and community organizations'' in Government-funded 
programs, in accordance ``with Executive Order 13798 and the Attorney 
General's Memorandum.'' 83 FR at 20716.
    The Agencies disagree that there is any contradiction between 
Executive Orders 13798 and 13831. The Agencies further believe that the 
final rule is consistent with Executive Order 13798 and will not have 
any discernable impact on individuals with terminal illnesses because, 
as explained more fully in Part II.C.2, the rule will not negatively 
impact beneficiaries.
    The Agencies also agree that this final rule is consistent with the 
Attorney General's Memorandum, which summarizes current jurisprudence 
on religious liberty, including the First Amendment prohibition against 
discrimination based on religious character and RFRA protections. That 
Memorandum accurately canvasses the legal authorities governing 
executive branch agencies' treatment of religion, including the 
Constitution, Supreme Court precedents, Federal statutes (e.g., RFRA, 
Title VII of the Civil Rights Act of 1964, including the religious 
exemption to Title VII, the Religious Land Use and Institutionalized 
Persons Act, and the American Indian Religious Freedom Act), numerous 
executive orders, and the Guidelines on Religious Exercise and 
Religious Expression in the Federal Workplace, which President Clinton 
issued on August 14, 1997. Parts II.C, II.D, II.E, II.G.1, II.G.2, and 
II.J explain how the final rule is consistent with the principles 
articulated in the Attorney General's Memorandum. For

[[Page 82047]]

the same reasons, the Agencies do not believe their reliance on the 
Attorney General's Memorandum is misplaced. And because the final rule 
works to re-establish government neutrality toward religion, the 
Agencies do not agree that it favors religious organizations for 
political reasons.
    Finally, the Agencies disagree that Executive Order 13831 is 
contrary to separation of church and state, for the reasons discussed 
in Part II.B.1 above.
    Changes: None.
    Affected Regulations: None.

C. Notice-and-Referral Requirements

    All of the Agencies' existing regulations, with the exception of 
USAID's, require each religious organization receiving direct Federal 
financial assistance to give written notice to all beneficiaries that: 
(1) The religious organization could not discriminate against them 
based on religion or religious belief, a refusal to hold a religious 
belief, or a refusal to attend or participate in a religious practice; 
(2) the organization could not require them to participate in 
explicitly religious activities and any such participation had to be 
voluntary; (3) the organization had to separate explicitly religious 
activities from the funded program in time or location; (4) 
beneficiaries could object to the organization's ``religious 
character'' and the organization would then be required to undertake 
reasonable efforts to identify an alternative provider to which they 
did not object, though there was no guarantee such an alternative would 
be available; and (5) beneficiaries could report any violation of these 
protections through a specified process. The regulations of DOJ, USDA, 
DOL, HHS, HUD, ED, VA, and DHS required religious organizations to 
provide this notice to prospective beneficiaries as well. The Agencies 
prescribed the specific wording of this notice on forms attached in 
Appendices to their regulations in the Code of Federal Regulations.
    If a beneficiary were to object to receiving services or benefits 
from an organization with a religious character, the Agencies' 
regulations required the religious organization to exert reasonable 
efforts to refer them to an alternative provider of comparable services 
to whom they had no objection and to make a record of the referral. 
DOJ, USDA, DOL, HUD, ED, and DHS applied this referral requirement to 
organizations receiving direct Federal financial assistance. HHS and VA 
applied this referral requirement to organizations receiving both 
direct and indirect Federal financial assistance. Secular organizations 
were not subject to any equivalent notice-and-referral requirements.
    All of the Agencies' NPRMs proposed amending their regulations to 
eliminate the notice-and-referral requirements, as well as the 
prescribed notice text in the corresponding Appendices. Because USAID 
never adopted the notice-and-referral requirements, 81 FR 19384-85, the 
comments in this section do not apply to USAID, unless otherwise noted.
    Removal of the notice-and-referral requirements was discussed more 
extensively in the comments than any other issue in the Agencies' 
NPRMs. The Agencies, therefore, have decided to describe these comments 
in detail and respond to them at length. Many of the commenters were 
not precise in the scope of their comment, including with respect to 
what aspect or aspects of the notice-and-referral requirement they were 
addressing. The Agencies endeavor to respond to them as best as 
possible.
1. Beneficiary Rights
a. Notice and Referral to Alternative Provider
    Summary of Comments: The majority of comments regarding 
beneficiaries' rights focused on the referral requirement and the 
related aspect of the notice requirement, which are here referred to 
collectively as the ``alternative provider notice-and-referral 
requirements,'' or simply the ``notice-and-referral requirements.'' 
Many commenters supported removal of these requirements for the reasons 
discussed in Part II.C.2 below. Multiple commenters argued that the 
existing notice-and-referral requirements struck the appropriate 
balance between religious-freedom interests and the need to fulfil each 
Agency's mission. One commenter said that the requirements struck the 
appropriate balance between beneficiaries' right to access care and 
providers' right to maintain their faith-based principles. Other 
commenters said that the requirements helped maintain a balance between 
protecting beneficiaries' religious freedom and expanding service 
delivery through faith-based organizations. Some commenters also noted 
that the Advisory Council had agreed that the needs of the people 
seeking services must be the primary concern.
    Several commenters opposed removal of these requirements, arguing 
that they were important, necessary, ``critical,'' and longstanding 
protections for the religious liberties of beneficiaries. Many based 
this argument on the recommendations of the President's Advisory 
Council on Faith-Based and Neighborhood Partnerships' 2010 report. See 
President's Advisory Council on Faith-Based and Neighborhood 
Partnerships, A New Era of Partnerships: Report of Recommendations to 
the President at viii, 140-41 (Mar. 2010), https://obamawhitehouse.archives.gov/sites/default/files/docs/ofbnp-council-final-report.pdf (``2010 Advisory Council Report''). These commenters 
argued--independently and based on the Advisory Council Report--that 
these protections were part of current practice for respecting 
religious liberties, relying on the Charitable Choice statutes that 
govern the Substance Abuse and Mental Health Services Administration 
(``SAMHSA'') and the Temporary Assistance for Needy Families (``TANF'') 
program; the regulations implementing those statutes; proposed 
legislation that contained a referral requirement, including 
``signature legislation backed by President Bush''; and a statement 
from the Administration of President George W. Bush that the Charitable 
Choice provisions ``protect the religious freedom of beneficiaries.'' 
Other commenters reasoned that the referral requirement represents an 
important, though unexplained, principle that should be maintained.
    Some commenters argued that the alternative provider notice-and-
referral requirements should be retained in their entirety because they 
were pillars of the ``consensus'' and common-ground religious liberty 
recommendations from the 2010 Advisory Council. See 2010 Advisory 
Council Report at 140-41. They said that retaining these requirements 
would strengthen the partnerships that the Government had formed and 
would help build future consensus that would lead to stronger and more 
enduring rules. They also said that the 2010 Advisory Council Report's 
recommendations should be preserved because that report claimed to 
reflect the first consensus recommendation on these matters from such a 
diverse group of participants. Some commenters expressed concern that 
removing these requirements would negate this consensus. Some 
commenters opined that the Agencies offered no reasonable explanation 
for their decision to abandon this careful, consensus-based effort. The 
Chair of the 2010 Advisory Council (hereinafter the ``Council Chair''), 
who later became the Special Assistant to the President and Executive 
Director of the White House Office of Faith-Based and Neighborhood

[[Page 82048]]

Partnerships, and served as the main point of contact for the 2016 
final rule, 81 FR 19355, argued in a comment that this change would 
disserve beneficiaries, induce policy shifts on ``hotly contested'' 
issues from administration to administration, and make it harder to 
achieve such diverse consensus in the future. Instead, the Council 
Chair argued that there should be minimal changes. Some commenters 
expressed concern that consensus-based rules were being replaced with 
new rules that they claimed were polarizing and problematic and that 
put ideology above providing services to people in need.
    Several commenters claimed that the alternative provider referral 
requirement protected beneficiaries' right not to be ``uncomfortable'' 
receiving services from religious providers or in religious settings, 
even in programs that complied with secular content requirements. 
Several commenters said that beneficiaries ``might feel unwelcome'' if 
the provider was known to espouse views that characterized the 
beneficiaries as sinful or deviant. Some commenters argued that this 
referral requirement was imposed solely on faith-based organizations to 
protect beneficiaries from risks that do not exist when secular 
providers administer benefits.
    Some commenters argued that beneficiaries had a right to 
alternative provider notice to make them aware of their ability to 
object when the service provider was religious, had a religious 
affiliation, or exhibited a religious viewpoint. They emphasized the 
importance of alternative provider notice-and-referral requirements 
when the provider worked to promote, or was associated with, a faith 
known to espouse religious views or values contrary to beneficiaries' 
or that deemed beneficiaries as sinful or deviant. They said these 
requirements were also important in cases when certain providers 
alerted beneficiaries that the provider was exempt from certain Federal 
regulations and could not or would not help beneficiaries in some 
situations. They said that these notice-and-referral requirements 
enabled beneficiaries to seek services from providers that they knew 
would be required to adhere to all Federal regulations. One commenter 
said that potential beneficiaries needed the alternative provider 
notice-and-referral requirements to make them aware of alternatives 
when they encountered ``impractical or inconvenient services.''
    Finally, some commenters questioned the Agencies' bases for 
removing the alternative provider notice-and-referral requirements 
when, according to them, nothing had changed since 2016. Some 
recognized the subsequent decision in Trinity Lutheran but argued that 
it did not change the analysis because of the beneficiary harms 
discussed in Part II.C.2.a.
    Response: The Agencies work hard to safeguard beneficiaries' 
religious liberties. The Agencies disagree, however, that the 
alternative provider notice-and-referral requirements meaningfully 
protected those rights. The vast majority of commenters did not cite 
any legal basis for their claim, offering only an unexplained 
``principle.'' Moreover, the 2010 Advisory Council Report and those 
commenters that did cite a legal basis for their claim relied on 
statutes and implementing regulations specific to certain programs, 
such as SAMHSA and TANF, that require government entities to make 
referrals. However, this final rule removes a different notice-and-
referral requirement from other programs to which those statutes do not 
apply, as the 2016 final rule acknowledged, see 81 FR 19399. The 2010 
Advisory Council Report and these commenters also relied on legislation 
that had been introduced but was never enacted, as well as a generic 
statement from the Administration of President George W. Bush referring 
to religious liberty protections generally. These sources do not 
establish a general right to the alternative provider notice and 
referral.
    The Agencies also disagree that the alternative provider notice-
and-referral requirements were ``long-standing.'' Apart from the 
program-specific statutes, these requirements became part of Federal 
law only through the 2016 rulemaking, based on language added to 
Executive Order 13279 by Executive Order 13559 in 2010. In 2018, 
Executive Order 13831 removed that language. The Agencies appreciate 
the hard work, compromise, and consensus-building that went into the 
2010 Advisory Council Report's recommendation and the 2016 final rule. 
The Agencies do not doubt that the 2010 Advisory Council Report's 
recommendation to create notice-and-referral requirements was made in 
good faith. The Agencies disagree, however, with the contention that 
the 2010 Advisory Council Report made a sufficiently persuasive case 
that requiring only faith-based organizations to make such notices and 
referrals was necessary to protect the rights of beneficiaries. Also, 
the Agencies' experience with the alternative provider notice-and-
referral requirements has led to the conclusion that they were not 
needed and, in fact, raise a number of legal and policy concerns, as 
discussed later in Part II.C.
    Stakeholders should have flexibility to draw different lines at 
different times based on differing policy priorities, and no governing 
principle limits the Agencies to only minimal changes. The Agencies 
trust that diverse stakeholders will work on any future rulemakings in 
good faith, just as they have in commenting on this proposed rule and 
in countless other contexts. If anything, the changes from the 2016 
final rule to this final rule should narrow the scope of hotly 
contested issues in this area. The Agencies, of course, are retaining 
several of the 2010 Advisory Council Report's recommendations that were 
incorporated into the 2016 final rule, including those recommendations 
concerning nondiscrimination and explicitly religious activities. See 
2010 Advisory Council Report at 129-33.
    Accommodating objections to a provider's ``religious character'' 
did not and does not fit well within existing legal frameworks for 
beneficiaries' rights under provisions such as the Establishment 
Clause, the Free Exercise Clause, and RFRA. Beneficiaries have no 
Establishment Clause right to a referral if they object to a provider's 
religious character. Rather, the Supreme Court has ``repeatedly held 
that the Establishment Clause'' allows faith-based providers to receive 
and use Federal funding on neutral terms. Espinoza, 140 S. Ct. at 2254 
(citing Locke v. Davey, 540 U.S. 712, 719 (2004); Rosenberger v. Rector 
and Visitors of Univ. of Va., 515 U.S. 819, 839 (1995)). It did not 
condition these holdings on a requirement that the faith-based provider 
in a government-funded program refer a beneficiary to another provider 
in the event that the beneficiary objects to the provider's religious 
character. Moreover, the Agencies did not base these requirements on 
the Establishment Clause when they initially imposed them in 2016.
    The alternative provider notice-and-referral requirements also did 
not vindicate beneficiaries' rights under the Free Exercise Clause and 
RFRA, except perhaps in exceptional circumstances better addressed if 
and when they arise. Instead, they privileged mere discomfort with a 
provider's general religious character, irrespective of the 
beneficiary's religious status or exercise. The requirement to make a 
referral extended to objections with no basis in religious status or 
exercise, such as objections based on raw anti-religious animus. For 
example, a beneficiary could have objected to being served by a Muslim 
organization based on a biased

[[Page 82049]]

and secular view that Islam was to blame for terrorism. There is no 
Free Exercise Clause or RFRA right to be referred to another provider 
based on such an objection.
    At the same time, the referral requirement ignored a religious 
beneficiary's objection to receiving federally funded social services 
from a secular provider when the beneficiary was uncomfortable with the 
secular environment. From the beneficiary's perspective, such 
discomfort is no less a concern. In both cases, the discomfort is based 
on receiving services from an entity that does not share the 
beneficiary's religious beliefs. No interpretation of the Free Exercise 
Clause or RFRA requires that a beneficiary's objection to a provider's 
religious character should have greater salience than a beneficiary's 
objections to a provider's non-religious character. Furthermore, many 
citizens routinely accept burdensome conditions so that the Government 
can protect others' First Amendment rights. Although the Agencies want 
all beneficiaries to be comfortable, they do not believe potential 
discomfort over the identity of a provider is of sufficient magnitude 
to warrant blanket application of the alternative provider referral 
requirement. And with no right to referral, there is also no right to 
notice of a referral right.
    It is also not clear to what extent the referral requirement 
actually reduced the discomfort an objecting beneficiary might feel. To 
obtain a referral, the objecting beneficiary (if indeed there were any) 
had to disclose the objection to someone affiliated with the same 
religious organization the beneficiary considered objectionable. 
Moreover, in order for the provider to successfully refer the 
beneficiary to a provider to which the beneficiary had no objection, 
the objecting beneficiary likely needed to inform the objectionable 
organization of the nature of the objection and the scope of the needed 
services. Commenters provided the example of an unmarried pregnant 
woman who might not seek services from a religious provider that 
disapproves of sexual relations outside of marriage. Under the 2016 
final rule, this provider could not have provided an appropriate 
referral unless the beneficiary disclosed that she was seeking 
pregnancy services and needed a referral to another provider that did 
not disapprove of women having children outside of marriage. It is not 
clear that a beneficiary would feel more comfortable making such a 
disclosure than receiving the service from the religious provider or 
finding an alternative provider through independent means.
    There is an even greater disconnect reflected in one commenter's 
claim that the referral requirement was warranted to protect 
beneficiaries who encountered ``impractical or inconvenient services.'' 
Those objections have nothing to do with the religious character of the 
provider, and they apply equally to nonreligious providers, which have 
never had a referral obligation towards people who found their services 
impractical or inconvenient. The referral requirement simply was not 
designed to address those kinds of objections.
    The Agencies disagree that the alternative provider notice-and-
referral requirements were necessary to warn beneficiaries that the 
religious provider might be exempt from Federal regulations and to 
enable the beneficiary to seek services from another provider that 
adhered to all Federal regulations. The Federal regulations themselves 
provided no such notice and did not reference exemptions from Federal 
program requirements. Indeed, the 2016 final rule explicitly rejected 
calls to include information on ``any services or information that the 
provider refuses to provide due to religious or moral objections.'' 81 
FR 19363; see also id. at 19365. If anything, such notice could have 
been misleading because it would have listed requirements without 
indicating any possibility of exceptions, even though faith-based 
organizations could have sought accommodations from those requirements 
under the First Amendment, RFRA, and Uniform Administrative 
Requirements, Cost Principles, and Audit Requirements that all the 
Agencies have adopted. See 2 CFR 200.102 (Office of Management and 
Budget (``OMB'') guidance permitting the issuance of exceptions from 
grant requirements); see also, e.g., 2 CFR 2800.101 (DOJ). If it is 
appropriate for an exempt organization to provide notice and referrals, 
that requirement can be attached to an exemption, offering a more 
tailored solution that does not require all faith-based providers--
including those that adhere to all Federal regulations--to give notice 
and referrals to all beneficiaries.
    The Agencies also do not believe it generally appropriate to 
require notice or referrals merely because a beneficiary might disagree 
with the religious beliefs of the service provider or its affiliates. 
Under such a rule, a beneficiary could object, for example, to 
receiving services from nuns--providing purely secular services and 
taking no position on the objectionable issues--solely because those 
nuns were affiliated with a church that took positions to which the 
beneficiary objected. Beneficiaries are free to reject services from a 
provider because of that objection, but they do not have a right to 
demand that the provider assist in finding an alternative provider.
    For all of these reasons, the Agencies reach different conclusions 
about the alternative provider notice-and-referral requirement than 
they did in 2016. Their experiences with the 2016 final rule, their 
desire to avoid legal concerns over the alternative provider notice-
and-referral requirement created by recent Supreme Court cases, see 
Part II.C.2, and their skepticism about the wisdom of imposing 
categorical requirements in this area all factor into this decision. 
Removing the alternative provider notice-and-referral requirements is 
the appropriate legal and policy choice.
    Changes: None.
    Affected Regulations: None.
b. Other Notices
    Summary of Comments: Several commenters also addressed the other 
notices, namely, notice of the prohibition on certain religion-based 
discrimination, of the restrictions on explicitly religious activity, 
and of the opportunity to report violations of these provisions. 
Several commenters argued that these other notices should not be 
removed because they were necessary to make beneficiaries, especially 
vulnerable beneficiaries, aware of their rights and able to exercise or 
seek enforcement of those rights. Commenters said that such notices 
were part of beneficiaries' underlying rights to be free from 
discrimination based on religion and to receive services separate from 
explicitly religious activities. Some of these commenters also argued 
that nothing had changed since the Agencies' determination in 2016, 81 
FR 19365, that beneficiaries needed notice of these other ``valuable 
protections.''
    Regarding the need for the other notices, commenters disagreed 
about whether faith-based organizations were as likely as other 
organizations to follow the law. Some commenters agreed with the 
Agencies that such notices imposed unjustified additional 
administrative burdens that singled out faith-based providers. These 
commenters agreed with the explanation--in the NPRMs of DOJ, DOL, HHS, 
HUD, ED, VA, and DHS--that beneficiaries do not need ``prophylactic 
protections that create administrative burdens on faith-based providers 
and that are not imposed on other providers.'' 85 FR 2891 (DHS), 2924 
(DOJ), 2932 (DOL), 2941 (VA), 2977 (HHS) 3195 (ED), 8219 (HUD). Other 
commenters argued, however,

[[Page 82050]]

that this rationale did not support the wholesale repeal of the other 
notice requirements. One commenter claimed that these notices were 
valuable to reassure qualified beneficiaries that the religious 
organization would follow the law. The commenter provided the 
hypothetical example of qualified beneficiaries who had had negative 
encounters with religious organizations and who would be inclined to 
refuse services from a faith-based organization but might overcome that 
reluctance due to the assurances in the notice.
    Several commenters also charged that the Agencies had conceded the 
importance of these other notices by proposing to provide notices to 
faith-based organizations of their eligibility to seek and receive 
Federal funds. They said that beneficiaries should receive the same 
courtesy as potential applicants. Similarly, one commenter argued that 
Federal agencies had recognized the importance of notices in 
implementation of civil rights laws, pointing to HHS regulations 
regarding notice in 45 CFR 80.6(d), which have remained unchanged since 
their issuance in 1964 and are accompanied by model notice documents on 
the HHS website.
    Response: The Agencies understand that illegal discrimination can 
be harmful to beneficiaries and can result in their forgoing services. 
The Agencies are committed to fighting illegal discrimination and 
ensuring that all beneficiaries have equitable access to the benefits 
provided by the federally funded programs and services governed by this 
final rule. This final rule reaffirms each Agency's regulatory 
provisions prohibiting providers--faith-based or secular, recipients of 
direct or indirect aid--from discriminating against beneficiaries based 
on religion. Additionally, for direct aid programs, this final rule 
retains the provisions prohibiting use of funds for explicitly 
religious activity and requiring any beneficiary's participation in 
explicitly religious activity to be voluntary.
    The Agencies do not agree, however, that the other notices were 
vital to make beneficiaries aware of, and able to protect or seek 
enforcement of, these protections. No law mandates that beneficiaries 
receive such notice, and none was cited by the 2010 Advisory Council 
Report, the 2016 final rule, or the commenters on these proposed rules. 
As discussed in Part II.C.3.c, the Agencies believe the substantive 
provisions are adequate to protect beneficiaries' rights.
    The Agencies also disagree that it is justified to require only 
faith-based organizations receiving direct Federal financial assistance 
to provide notice of the other protections. Any provider--faith-based 
or secular--is capable of discriminating on the basis of religion or of 
incorporating religious elements into its programs, such as the 12-step 
addiction recovery program that commenters cited as explicitly 
religious and that is discussed in Part II.C.2.b. (Many government-
issued manuals promote 12-step programs, and many secular organizations 
conduct them as well.) Yet none of the secular providers were required 
to provide notices of these other protections. None of USAID's program 
participants--faith-based or secular--was required to provide such 
notices under the 2016 rule. And no provider in USDA's Child Nutrition 
Programs, including its school lunch program, was required to provide 
such notices.\10\ The Agencies thus have already recognized that many 
beneficiaries do not need the other notices, in order to be aware of, 
and able to exercise, their corresponding rights.
---------------------------------------------------------------------------

    \10\ The 2016 rule deemed the Child Nutrition programs indirect 
aid for purposes of exempting them from the notice (and referral) 
requirements, even though these programs otherwise meet the 
definition of ``direct Federal financial assistance.'' 81 FR at 
19381; see also id. at 19413-14 (Sec.  16.4(a), (g), (h)).
---------------------------------------------------------------------------

    The Agencies furthermore disagree that the other notice 
requirements can be justified as a measure to allay the fears of 
beneficiaries who might have had bad experiences with religious 
organizations. Beneficiaries might have had similar bad experiences 
with secular providers. Because the other notice requirements applied 
solely to religious organizations, they stigmatized religious 
organizations and risked stoking unnecessary fears by suggesting that 
religious organizations were more prone to violate program obligations 
that apply to all providers. A beneficiary who received the notices 
from a faith-based provider but not a secular provider of similar 
services might assume that the former was a serial violator, or that 
the latter was not subject, for example, to the nondiscrimination 
obligations. Additionally, research cited by some commenters found that 
people with an expectation of rejection or discrimination would feel 
that way ``whatever others profess'' to the contrary.\11\ That research 
undermines the supposition that a form notice required by the 
Government would meaningfully allay beneficiaries' fears that they 
would be subject to discrimination.
---------------------------------------------------------------------------

    \11\ Ilan H. Meyer, Prejudice, Social Stress, and Mental Health 
in Lesbian, Gay, and Bisexual Populations: Conceptual Issues and 
Research Evidence, 129(5) Psychol. Bull. 674, (Sept. 2003), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2072932/.
---------------------------------------------------------------------------

    Similarly, notice requirements that apply to other programs do not 
demonstrate that the Agencies should retain the notice requirement from 
the 2016 final rule. Commenters pointed to the notice in the HHS 
regulation at 45 CFR 80.6(d). That provision mandates that ``[e]ach 
recipient'' of funding ``shall make available to participants, 
beneficiaries, and other interested persons'' information regarding 
regulations effectuating Title VI of the Civil Rights Act of 1964 that 
bar discrimination based on race, color, or national origin. 45 CFR 
80.1, 80.2, 80.3, 80.6(d). The HHS notice applies comprehensively to 
all recipients and was designed to help eradicate racial discrimination 
by any provider. This stands in contrast to the notice requirement from 
the 2016 final rule, which compelled only faith-based organizations to 
provide notice of certain beneficiary protections without evidence that 
faith-based organizations violated those protections more regularly 
than other providers, if at all. This final rule is meant to enable 
faith-based organizations to participate equally in the Agencies' 
federally funded programs. Removing the notice requirement takes one 
step toward achieving that purpose. This analysis is further bolstered 
by HHS's response in Part III.I regarding the distinctions between this 
final rule and HHS's recent final rule, Protecting Statutory Conscience 
Rights in Health Care, 84 FR 23170 (May 21, 2019).
    Ultimately, the justification for imposing these notice 
requirements solely on faith-based providers participating in certain 
direct aid programs was prophylactic, perhaps based on the assumption 
that these providers were less likely to follow the law. But there is 
no basis on which to presume that faith-based providers are less likely 
than other providers to comply with their legal obligations. And any 
narrative to the contrary smacks of the now-repudiated Establishment 
Clause doctrine stating that ``pervasively sectarian'' institutions 
could not receive government funds, even for secular purposes, because 
they could not be trusted to prevent the diversion of government funds 
to religious uses. Cf. Agostini v. Felton, 521 U.S. 203, 224 (1997) 
(noting the Supreme Court's rejection of the idea that ``solely because 
of her presence on private school property, a public employee will be 
presumed to inculcate religion in the students''). Because, among other 
things, the Agencies now recognize that any such prophylactic concerns 
were

[[Page 82051]]

exaggerated as well as selectively applied, the Agencies are changing 
the 2016 final rule.
    As discussed in Part II.G.3, the Agencies will provide notice to 
potential applicants and awardees of their obligations under federally 
funded social service programs, including notice of the prohibitions on 
religion-based discrimination and explicitly religious activities. 
Those notices will ensure that the underlying requirements are 
incorporated into organizations' applications and compliance programs. 
Those notices are also consistent with Trinity Lutheran and RFRA, and 
they ensure that organizations are aware of their obligations under 
law--and of the Agencies' commitment to enforcement of these 
obligations--before applying for and accepting an award. Requiring 
these notices to faith-based providers does not conflict with removing 
the requirement to provide the other notices to beneficiaries. This 
final rule requires the Agencies and intermediaries to integrate such 
notices to faith-based organizations into the comprehensive program 
requirement materials already distributed to providers. This practice 
is materially different--for reasons discussed throughout Parts II.C 
and II.G.3--from requiring only faith-based providers to give the other 
notices to beneficiaries, especially notices that stigmatized faith-
based providers by implying that they were more likely than their 
secular peers to violate the law. Additionally, beneficiaries who 
received the other notices would already have been communicating with 
the faith-based provider, and they could have asked the provider 
questions to ensure their eligibility and understand the scope of 
available benefits. The other notices thus provided little marginal 
utility to beneficiaries. Rather, notices to providers are a more 
appropriate way to achieve compliance with legal obligations, 
consistent with the constitutional and other concerns discussed 
throughout Part II.C that the Agencies are seeking to avoid.
    Changes: None.
    Affected Regulations: None.
2. Beneficiary Harms
a. In General
    Summary of Comments: Several commenters claimed that removing all 
of the notice requirements, as well as the referral requirement, would 
cause various harms, burdens, and costs to beneficiaries. Some said 
that beneficiaries would no longer be aware of, and able to avail 
themselves of, the underlying religious liberty protections. Many 
claimed that removing the notice requirements would especially affect 
groups that commenters characterized as disadvantaged, including women, 
religious minorities, people of color, LGBTQ people, people with lower 
incomes, people with disabilities, and people in rural communities. 
Additionally, some commenters argued that the Agencies had not 
attempted to quantify the costs to beneficiaries associated with 
removal of these requirements.
    Several commenters were concerned that removing the all of the 
notice requirements and the referral requirement would expose 
beneficiaries to increased religious discrimination, denial of 
services, proselytization, bias, or coercion. Several commenters, 
including advocacy organizations and Members of Congress, anticipated 
that these harms would increase because beneficiaries would no longer 
be aware of, and able to safeguard, their rights. Some commenters added 
concerns that beneficiaries might be more vulnerable to efforts to 
coerce them to participate in religious activities if they mistakenly 
believed such activities were necessary to access support. Other 
commenters were concerned about impacts on vulnerable groups, such as 
women, adherents of minority faiths, and LGBTQ people. And some local 
governments claimed that certain faith-based providers openly 
discriminate on the basis of gender identity or sexual orientation.
    Some commenters argued that the Agencies had not adequately 
examined whether removing the notice would increase discrimination. 
They said the Agencies needed to provide evidence of other reliable, 
systematic ways to notify beneficiaries of these protections. Without 
such efforts, commenters claimed, these vulnerable beneficiaries--
including refugees, human trafficking victims, and homeless youth--
would be cut off from the one guaranteed way to ensure they know about 
these key protections.
    Multiple commenters claimed that removing the alternative provider 
notice-and-referral requirements would harm beneficiaries by requiring 
them to take on the burden of identifying alternatives. These 
commenters noted that DOJ, DOL, HHS, HUD, VA, DHS, and USDA had 
acknowledged in their NPRMs that there could be a cost to objecting 
beneficiaries from having to locate alternative providers on their own. 
85 FR 2894 (DHS), 2903 (USDA), 2926 (DOJ), 2935 (DOL), 2944 (VA), 2983 
(HHS), 8221 (HUD). Commenters argued that beneficiaries would 
``potentially'' have to miss work, find childcare, pay for 
transportation, and visit various other organizations to find 
alternative options, which would be ``extremely taxing'' or 
``insensitive'' to the people the organizations are meant to support. 
And some commenters were concerned that objecting beneficiaries might 
not be aware that alternative services exist or be able to identify 
those alternatives.
    Some commenters argued that the Agencies did not explain why low-
income program participants would be better positioned than provider 
grantees to identify alternatives. These commenters argued that the 
Agencies' proposals to remove the alternative provider notice-and-
referral requirements were inconsistent with their determination in the 
2016 final rule that faith-based providers would ``generally be in the 
best position to identify alternative providers in reasonable 
geographic proximity and to make a successful referral of objecting 
beneficiaries to those alternative providers.'' 81 FR 19366. 
Additionally, some commenters disagreed with placing the burdens of 
investigation on vulnerable beneficiaries, arguing that vulnerable 
beneficiaries were less likely to understand their rights than faith-
based organizations were to understand their rights to seek and receive 
Federal funding.
    Some commenters argued that the Agencies could not assume that any 
faith-based providers would make referrals if the requirements were 
removed. The Council Chair suggested that such an assumption is 
comparable to the assumption that the religious freedom of faith-based 
organizations would be protected. Two umbrella groups of faith-based 
organizations who otherwise opposed removal of the referral requirement 
commented that group members were ``willing and able'' to provide 
referrals upon request; others believed they had a ``moral obligation'' 
to make referrals to alternative providers upon request.
    Some commenters argued that, even if referrals were rare, the 
alternative provider notice-and-referral requirements should still be 
maintained to prevent harm to objecting beneficiaries. They argued that 
placing a burden on even one beneficiary would be significant.
    One comment asserted that beneficiaries who have objected to faith-
based providers in specific circumstances have sought referrals to 
alternative providers from organizations that share the beneficiaries' 
values rather than from the objected-to providers. As relevant here, 
the comment posited that beneficiaries may be less likely to seek 
alternatives--even

[[Page 82052]]

from these sources outside the prescribed process--if the alternative 
provider notice-and-referral requirements were eliminated. The comment 
also suggested that religious people might desire referrals to like-
minded organizations but lack the resources to find them. As a result, 
they might be forced to endure violations of their religious freedoms 
or forgo essential social services.
    Several commenters were concerned that, without the notice-and-
referral requirements, beneficiaries would be forced to compromise 
their religious rights and identities. Some described this as a choice 
between accepting objectionable services and forgoing benefits. Others 
described it as a choice between accessing needed services and 
retaining religious freedom protections. Two umbrella groups of faith-
based organizations expressed concern that members of minority 
religions seeking services from federally funded faith-based 
organizations of other religions could have their critical safety net 
benefits effectively conditioned on religious beliefs. Some of these 
commenters provided examples; one noted that veterans may be ``forced'' 
to accept ministry services from a religious group that they 
``revile.'' Other examples are outlined in detail in the discussion of 
the comments in Part II.C.2.b and include harms to beneficiaries 
seeking opioid use disorder treatment, domestic violence shelters, and 
veteran job training services.
    Some commenters claimed that beneficiaries would be blindsided by 
the provider's religious character in the absence of notice that the 
provider was religious, religiously affiliated, or promoted religious 
values, which would violate the constitutional principle that American 
government must remain secular. Another commenter suggested, however, 
that notice was not necessary because beneficiaries often know about a 
provider's religious character from the organization's title and can 
pursue a secular provider if they are uncomfortable with the provider's 
religious character.
    Numerous commenters were concerned that beneficiaries, especially 
vulnerable beneficiaries, would lose access to benefits or forgo 
services without the benefits of notice and referral; some 
characterized the lack of notice and referral as a potentially 
insurmountable hurdle to beneficiaries' obtaining the help they need. 
They claimed that this would constitute a follow-on effect from all of 
the other harms discussed above, especially increased discrimination, 
lack of notice that discrimination based on religion is prohibited, 
absence of referrals, difficulty identifying alternatives, and lack of 
notice regarding alternatives and referrals. Some commenters were 
concerned that removing notice of the prohibition on discrimination 
would prevent beneficiaries afraid of such discrimination from seeking 
needed services. Other commenters were particularly concerned that 
shifting the burden of investigating alternatives onto beneficiaries 
with limited resources would leave them with no services or no ability 
to access services. One of these commenters claimed that ``millions of 
Americans'' might forgo vital services if they were unable to locate 
alternative providers. Multiple commenters emphasized that these 
protections were being denied to some of society's most vulnerable and 
marginalized, who have no choice but to use government-funded social 
services and may find it harder without the notice and referral to get 
the services they need. Some commenters characterized the Agencies' 
proposals to remove the requirements as ``unconscionable and 
unethical,'' ``indefensible,'' and ``hurtful and discriminatory.'' 
Commenters also argued that removing the notice-and-referral 
requirements would undermine the goals of reducing poverty, empowering 
low-income populations, and providing services to all who need them in 
the most effective and efficient manner possible, as articulated in 
existing Federal laws, regulations, and Executive Orders, including 
Executive Order 13279.
    Some commenters focused on the final rule's combined effect of 
removing the notice requirement, removing the referral requirement, and 
allowing for religious accommodations. They were concerned that such 
changes would permit or increase the risk of discrimination or denial 
of service based on beneficiaries' protected statuses, such as sex, 
sexual orientation, gender identity, religion, and race. Some 
commenters said that this rule would roll back Federal protections 
against religious discrimination and thereby embolden, rather than 
deter, such discrimination. A few commenters were concerned that these 
changes would increase the need for referral, such as if a faith-based 
provider denied services to an eligible beneficiary, at the same time 
that these changes made referrals optional and, therefore, less likely 
to occur. Some argued that there would be increased costs to State 
regulatory agencies from an increase in complaints alleging 
discrimination in the provision of social services and medical care. 
That comment also referenced State nondiscrimination laws.
    Similarly, other commenters claimed that the notice-and-referral 
requirements were even more critical because the Agencies proposed to 
expand religious exemptions and alter the requirements for faith-based 
recipients of indirect aid.
    Response: For the reasons that follow, the Agencies disagree with 
the view that removal of the notice-and-referral requirements will 
cause the harms alleged, including discrimination, proselytization, 
bias, and coercion; burdens of investigating alternatives; choice 
between protecting religious liberties and accepting services; forgoing 
services altogether; and difficulty reporting violations of the 
provisions regarding discrimination and explicitly religious 
activities.
    First, the public comments do not point to a single actual instance 
of past harm or negative consequence--with no evidence to support 
claims of discrimination, proselytizing, bias, coercion, or other 
harm--that occurred in these programs before the introduction of the 
alternative provider notice-and-referral requirements in 2016 and 
attributable to the absence of those requirements. That is addressed in 
greater detail in Part II.C.2.b. Indeed, the prohibition on explicitly 
(or inherently) religious activities in directly funded social service 
programs has existed in some form since Executive Order 13279 was 
issued in 2002, and commenters did not point to any actual harms from 
beneficiaries' lack of notice for the 14 years from 2002 through the 
issuance of the 2016 final rule.
    Additionally, the notice-and-referral requirements never applied to 
any USAID program or to USDA's Child Nutrition Programs, including the 
school lunch program, which USDA deemed indirect aid for purposes of 
exempting them from those requirements. 81 FR 19381, 19384-85. Yet 
numerous comments catalogued hypothetical harms to beneficiaries that 
would occur if the notice or referral requirements were removed from 
USAID's programs and USDA's school lunch program. No comment to USAID 
or USDA cited an instance of actual harm that occurred over the past 
four years in the absence of these requirements in USAID or USDA 
programs. Despite their failure to point to concrete examples of harm, 
some of the same commenters still presented the same parade of 
horribles that would befall beneficiaries if the Agencies eliminated 
their nonexistent notice-and-referral requirements. The Agencies do not 
find this speculation persuasive.

[[Page 82053]]

    Second, the Agencies believe that removing the notice-and-referral 
requirements will cause negligible, if any, risk of harm. Secular 
organizations use Federal funds to provide social services to the same 
needy and vulnerable beneficiaries as their faith-based counterparts, 
beneficiaries who are just as likely to be unaware of their rights or 
afraid of discrimination. Commenters do not claim any harm, however, 
from the absence of notice and referral by secular providers. The 
Agencies correctly determined in 2016 that secular organizations did 
not need to provide these notices in order to protect beneficiaries 
from any serious risk of harm. Now, they extend that same determination 
to faith-based organizations. Beneficiaries in all programs will be 
equally well aware of their rights and equally well positioned to 
protect and safeguard those rights, including by reporting any 
violations.
    Third, the allegations that removing the referral requirement will 
harm beneficiaries are undermined by the Agencies' experience; 
referrals were rarely, if ever, sought under the prior rule. In fact, 
the Agencies are not aware of any actual instance of a request for a 
referral under the 2016 final rule or under SAMHSA programs, as 
discussed in Part II.C.3.c, and commenters did not cite any instance of 
a beneficiary who had sought such a referral. Removing the referral 
requirement also does not mean that a provider will refuse to make a 
referral if a beneficiary requests one. Service providers remain free 
to continue to make voluntary referrals to other providers. Indeed, 
some faith-based providers said they were willing and able to provide 
alternative-provider referrals, including one comment with over 7,000 
signatures professing a ``moral obligation'' to do so. Other publicly 
available resources and mechanisms for referral also exist, including 
like-minded organizations, locators, and hotlines. These resources and 
mechanisms are discussed in the following paragraphs.
    Fourth, the Agencies disagree that beneficiaries face any serious 
risk of harm from the process of finding alternatives themselves--
either from any search costs or from choosing to forgo services 
completely. No evidence supports the speculative assertion that 
beneficiaries would need to miss work, obtain childcare, pay 
transportation costs, or visit various organizations in-person to find 
an alternative provider. Beneficiaries can learn about alternative 
providers from numerous sources, including through the internet or 
telephone, providers' marketing, and government outreach programs. The 
Agencies, State and local governments, advocacy groups, and service 
providers offer hotlines and online locators for many of these 
services; these tools can be found quickly with rudimentary online 
searches. The Agencies' websites provide easy means to locate 
providers, including providers of the services listed in the 
commenters' hypothetical examples (some of which may not be subject to 
this final rule): Opioid use disorder treatment (https://findtreatment.samhsa.gov/), domestic violence shelters, (https://www.justice.gov/ovw/local-resources), and veteran job-training services 
(https://www.dol.gov/veterans/ findajob/). See also https://www.hud.gov/findshelter (homeless assistance and shelter locator); 
https://www.acf.hhs.gov/otip/victim-assistance/national-human-trafficking-hotline (human trafficking hotline and referral directory).
    The Agencies also provide broader resources for beneficiaries and 
potential beneficiaries, including resources available on their main 
websites. For example, DOL's main website, https://www.dol.gov, has 
easy-to-find links to a wide variety of programs, a toll-free contact 
line at 866-4-USA-DOL (866-487-2365), and a general contact page at 
https://www.dol.gov/general/contact.
    As ED explained in its NPRM: ``Beneficiaries need not rely on 
providers for information about other secular or faith-based 
organizations that provide social services. Beneficiaries are consumers 
of public information and are capable of researching available 
providers and making informed decisions about whether to choose to 
receive social services from secular or faith-based organizations.'' 85 
FR 3194. Providers and advocacy groups create numerous materials that 
contain information regarding alternative providers. One commenter 
submitted an attachment authored by Justice in Aging that listed 
organizations willing to provide referrals to local advocates for 
individuals who may face bias or discrimination in a nursing home or 
assisted living facility.\12\
---------------------------------------------------------------------------

    \12\ Justice in Aging, LGBT Older Adults in Long-Term Care 
Facilities: Stories from the Field 28 (updated June 2015), 
www.justiceinaging.org.customers.tigertech.net/wp-content/uploads/2015/06/Stories-from-the-Field.pdf.
---------------------------------------------------------------------------

    The Agencies thus no longer believe, as they did in 2016, that 
faith-based providers are ``generally . . . in the best position to 
identify alternative providers in reasonable geographic proximity and 
to make a successful referral of objecting beneficiaries to those 
alternative providers.'' 81 FR 19366. That position is not consistent 
with the Agencies' experience, which reveals that beneficiaries rarely 
invoke the referral requirement and that the resources to locate 
alternatives are readily available to beneficiaries. Additionally, 
beneficiaries know the scope of their needs and the sorts of 
organizations from which they may object to receiving services. 
Consequently, they will often be in the best position to find a 
suitable provider.
    Fifth, the Agencies disagree that they need to conduct further 
analysis to better understand the costs to beneficiaries to 
independently locate acceptable alternative providers. It is difficult 
to quantify these potential costs with any precision, but the 
information the Agencies have available suggests that any costs would 
be minimal and no greater than any parallel costs already borne by 
beneficiaries of program providers that are not required to provide 
referrals. Additionally, the Agencies invited commenters to provide 
data and suggest further ways to assess any ``potential cost'' of the 
change, see 85 FR 2894 (DHS), 2935 (DOL), 2944 (VA); see also 2903 
(USDA), 2926 (DOJ), 2983-84 (HHS). None of the over 95,000 comments 
received by the Agencies provided any data or insights on assessment 
methodologies that would meaningfully supplement the information the 
Agencies already have or demonstrate that costs would be more than 
minimal. The issue of costs and benefits is addressed in more detail in 
Part II.K.1.
    Sixth, the Agencies disagree that, without the notice requirement, 
beneficiaries will be blindsided by the religious nature of the 
Government-funded services they may receive from program providers. In 
2016 as today, all federally funded services offered by the programs 
must be secular. Beneficiaries do not need a warning of the religious 
nature of federally funded services when religious federally funded 
services are specifically prohibited.
    Seventh, the Agencies disagree that removing the requirement of the 
notices (regarding nondiscrimination rights and the like) would inhibit 
beneficiaries from reporting violations. As discussed, there is no 
indication that beneficiaries need notice of how to report violations 
of these rights. In fact, as discussed, beneficiaries have not received 
such notice from many other providers. Rather than relying on 
beneficiaries to safeguard their own rights, the Agencies prefer to put 
the onus on the providers, by giving them express notice of their 
obligations and making clear that the Agencies will enforce those 
obligations.

[[Page 82054]]

    Eighth, the Agencies disagree that the referral requirement should 
be retained because the need for referrals will increase due to 
provisions in this final rule that allow for certain accommodations to 
faith-based organizations. Any request for an accommodation will be 
assessed based on a context-specific analysis that will balance all of 
the relevant considerations, including whether the particular provider 
receiving the accommodation will be required to provide notice and 
referrals. For example, if a Sabbath-observant food pantry sought an 
accommodation to participate in a food pantry program while remaining 
closed on its Sabbath, the Agency would consider--as part of its 
inquiry into the burden on the food pantry weighed against the 
Government's justification and ability to accomplish its goals through 
means less restrictive of religious exercise--whether the pantry should 
give notice of this practice and should make referrals to ensure that 
beneficiaries can receive services on the pantry's Sabbath. The 
Agencies believe this case-by-case approach will better serve both 
providers and beneficiaries.
    Finally, the Agencies understand that invidious discrimination can 
be harmful to beneficiaries and can result in their forgoing services. 
The Agencies are committed to fighting such illegal discrimination and 
ensuring that all beneficiaries have equitable access to benefits from 
the federally funded programs and services governed by this final rule. 
This final rule reaffirms each Agency's rule prohibiting providers from 
discriminating against beneficiaries based on religion.
    However, the Agencies disagree that eliminating the notice 
requirements as well as the referral requirement threatens to increase 
discrimination based on sex, sexual orientation, gender identity, and 
race. This final rule does not roll back any such existing protections 
or allow faith-based organizations receiving direct aid to condition 
the receipt of benefits on acceptance of their religious beliefs. 
Moreover, other laws will continue to dictate the balance between 
providers' rights and beneficiaries' rights, including the right to be 
free from discrimination on the basis of sex.\13\ For example, in 
USDA's program to fund facilities for public use, regulations prohibit 
grant recipients from discriminating against beneficiaries on several 
grounds, including on the basis of sex. See, e.g., 7 CFR 1942.17(e), 
3570.61(f), 3575.20(e).
---------------------------------------------------------------------------

    \13\ See, e.g., Bostock v. Clayton Cty., 140 S. Ct. 1731, 1753-
54 (2020) (acknowledging the potential applications of the ``express 
statutory exception for religious organizations'' in Title VII; of 
the First Amendment, which ``can bar the application of employment 
discrimination laws'' in certain cases; and of RFRA, ``a kind of 
super statute,'' which ``might supersede Title VII's commands in 
appropriate cases,'' and noting that ``how these doctrines 
protecting religious liberty interact with Title VII are questions 
for future cases too''); Masterpiece Cakeshop, Ltd. v. Colo. Civil 
Rights Comm'n, 138 S. Ct. 1719, 1732 (2018) (recognizing that many 
such disputes ``await further elaboration in the courts'').
---------------------------------------------------------------------------

    The prior rule did not touch on those issues at all. It did not 
require informing beneficiaries that they could not be subject to 
discrimination based on sex, nationality, or any other protected 
classification. If anything, singling out religious discrimination in 
the notice could have implied that beneficiaries would not receive 
protection from other forms of discrimination. This final rule will 
touch on such issues only when a provider seeks a religious 
accommodation under the First Amendment or RFRA, in which case the 
Agencies will carefully review and balance the competing claims and 
apply relevant law, as discussed in Parts II.C.2, II.E, and II.F. This 
is the appropriate legal and policy choice to ensure that these rights 
are appropriately balanced and that religious liberty protections are 
not swept away by categorical rules. The Agencies have no reason to 
believe the notice requirements are necessary to promote the goals of 
reducing poverty, empowering low-income populations, and providing 
services to all who need them.
    Changes: None.
    Affected Regulations: None.
b. Specific Examples, Studies, and Hypotheticals
    Summary of Comments: Commenters offered a number of examples in an 
effort to show the harms discussed in Part II.C.2.a, based on court 
cases, surveys, studies, and personal experiences--either by the 
commenter or reported directly to the commenter. Although most of the 
examples cited by commenters were hypothetical, some relied on actual 
instances or studies. The most significant actual instances were 
provided in a comment by a national legal organization that represents 
LGBTQ people in litigation, policy advocacy, and public education. It 
cited actual instances of LGBTQ people experiencing discrimination or 
denial of service when ``accessing services of the sort provided by 
federally funded social service programs.'' It cited one of its 
transgender clients who was scheduled for a hysterectomy at a religious 
hospital but had the procedure cancelled due to the hospital's 
religious objection. It also described actual instances of 
beneficiaries feeling uncomfortable receiving services from faith-based 
organizations. Many of this commenter's examples involved religious 
individuals with no indication that they were affiliated with any 
faith-based organizations, much less a faith-based organization 
receiving Federal funding. This commenter's examples, amicus briefs, 
and studies also cited comparable examples of discrimination by secular 
organizations, without indicating which secular organizations may have 
received Federal funding.
    Another commenter cited court cases involving concrete examples of 
discrimination or denial of service that transgender people have faced 
in programs that offer alternatives to incarceration, such as 
probation. The commenter cited an example where, as part of a guilty 
plea, a transgender person was placed in a residential substance abuse 
treatment program; the person believed they were placed with the wrong 
sex and were ultimately transferred out of the program. As a result, 
this person failed to meet the terms of the plea agreement and was 
sentenced to another two and a half years in prison. See Wilson v. 
Phoenix House, No. 10-cv-7364, 2011 WL 3273179 (S.D.N.Y. Aug. 1, 2011); 
Wilson v. Phoenix House, 978 N.Y.S.2d 748 (Sup. Ct. 2013). The 
commenter also cited the case of a person who was denied eligibility by 
a halfway house in 2010 due to transgender status. Kaeo-Tomaselli v. 
Butts, No. 11-cv-00670, 2012 WL 5996436 (D. Haw. Nov. 30, 2012). 
Without citation, another commenter claimed actual instances of 
transgender people being sent back to prison when re-entry programs 
refused to serve them.
    Some commenters cited surveys and studies chronicling actual 
instances of discrimination against specific vulnerable groups. Several 
commenters relied on a 2015 survey of transgender people in the United 
States, conducted by the National Center for Transgender Equality.\14\ 
Commenters relied on this 2015 survey's examples of actual claimed 
instances of transgender people being misgendered intentionally, made 
to feel unsafe, and made to forgo further medical care. Commenters 
added that one transgender person who had been sexually assaulted 
reported in the 2015

[[Page 82055]]

survey that their case was not investigated; they were denied a rape 
kit; and authorities, including a university, threatened them with 
punishment for reporting the assault, which caused them to live in 
fear. Commenters highlighted that some of the survey respondents stated 
that they were admonished that they deserved to be raped or should 
return to their birth gender to receive services. One commenter also 
noted the 2015 survey's finding that, of transgender people who had 
visited a public assistance or government benefits office in the past 
year, 11 percent reported being denied equal treatment or service and 9 
percent reported being verbally harassed.
---------------------------------------------------------------------------

    \14\ Sandy E. James, et al., National Center for Transgender 
Equality, The Report of the 2015 U.S. Transgender Survey (Dec. 
2016), https://transequality.org/sites/default/files/docs/usts/USTS-Full-Report-Dec17.pdf.
---------------------------------------------------------------------------

    One commenter also provided specific reports that it collected of 
medical errors and misdiagnoses due to transgender status, 
transgendered people being turned away by doctors who claimed religious 
reasons, or being treated in a ``hateful'' way that included 
embarrassing the person in front of others due to transgender status. 
The commenter relayed other reports of medical mistreatment, including 
medical examinations halted in the middle when transgender status was 
revealed and hospitals placing transgender people in isolation. The 
commenter also described an older transgender adult who reported to a 
social worker having experienced sexual abuse and verbal harassment 
from nurse aides but did not want to report the incidents out of fear 
of retaliation and disclosure of transgender status to the patient's 
family.
    Some commenters cited surveys and studies indicating that 
experience with discrimination leads to other harms. One commenter said 
that HHS had identified discrimination against beneficiaries as harmful 
to the health of vulnerable populations, citing a study entitled 
Healthy People 2020.\15\ Others applied this general point to the LGBTQ 
community, noting that LGBTQ people report being or feeling unwelcome 
at social service providers, being subjected to discrimination, and 
forgoing care and services as a result. One of these comments pointed 
to a Center for American Progress national survey of LGBTQ adults 
published in 2017 that found 17 percent of respondents who had 
experienced anti-LGBTQ discrimination in the past year reported 
avoiding getting services that they or their family needed out of fear 
of facing further discrimination.\16\ By removing the requirement that 
providers take reasonable steps to refer beneficiaries to alternative 
providers, the commenters argued, this final rule would expose many 
LGBTQ people who use human services programs to discrimination and 
apprehension of discrimination, which will in turn lead to many 
forgoing care and services for which they are qualified. Other 
commenters made the similar point--based on experience rather than 
studies--that the LGBTQ community has faced a history of 
discrimination, denial of service, harassment, and pressure to 
compromise their authentic selves in order to receive equal access to 
social programs. Without a proactive referral requirement, they argued, 
this community would rely on its past experience to inform the 
relationship with service providers.
---------------------------------------------------------------------------

    \15\ Office of Disease Prevention and Health Promotion, Healthy 
People 2020 (last updated Oct. 8, 2020), https://www.healthypeople.gov/2020/topics-objectives/topic/social-determinants-health/interventions-resources/discrimination.
    \16\ Sejal Singh and Laura E. Durso, Center for American 
Progress, Widespread Discrimination Continues to Shape LGBT People's 
Lives in Both Subtle and Significant Ways (May 2, 2017), https://www.americanprogress.org/issues/lgbtq-rights/news/2017/05/02/429529/widespread-discrimination-continues-shape-lgbt-peoples-lives-subtle-significant-ways/.
---------------------------------------------------------------------------

    Some of these commenters cited studies showing people had negative 
experiences in certain sectors or with certain categories of service 
providers. A commenter cited a then-unpublished 2019 American Atheists 
national survey of 34,000 nonreligious individuals, many of whom 
reported ``negative experiences'' due to their secular or nonreligious 
beliefs within the previous three years: 17.7 percent reported such 
negative experiences when receiving mental health services, 15.2 
percent in substance abuse services, 10.7 percent in other health 
services, 6.2 percent in public benefits, and 4.5 percent in 
housing.\17\
---------------------------------------------------------------------------

    \17\ American Atheists, Reality Check: Being Nonreligious in 
America 23-24 & fig.14 (2019), https://static1.squarespace.com/static/5d824da4727dfb5bd9e59d0c/t/5ec6d6d8e8da850b30521353/1590089442015/Reality+Check+-+Being+Nonreligious+in+America.
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    Several commenters cited studies showing LGBTQ people had 
difficulty finding medical care providers. A commenter pointed to a 
2018 Center for American Progress Survey (``2018 CAP Survey'') that, it 
asserted, demonstrated the difficulties LGBTQ individuals face in 
receiving services, including 17 percent of respondents (and 31 percent 
of non-metro respondents) saying it would be ``very difficult'' or 
``not possible'' to find the same type of service they were seeking 
from a different community health center or clinic at a different 
provider.\18\ Another commenter relayed reports of one transgender 
person's taking years to find a primary care physician willing to treat 
them and another transgender person's residing in a rural and lower-
income area, struggling to attain basic healthcare.
---------------------------------------------------------------------------

    \18\ Shabab Ahmed Mirza and Caitlin Rooney, Center for American 
Progress, Discrimination Prevents LGBTQ People from Accessing 
Healthcare (Jan. 18, 2018), https://www.americanprogress.org/issues/lgbt/news/2018/01/18/445130/discrimination-prevents-lgbtq-people-accessing-health-care/.
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    Some commenters cited studies showing certain groups experience 
increased negative health outcomes that, these commenters claimed, 
would be exacerbated by removing the notice requirements and the 
referral requirement while providing for religious accommodations. A 
commenter cited studies indicating that LGBTQ individuals have negative 
health outcomes that have been termed ``minority stress.'' This 
commenter relied on studies indicating that gender-based discrimination 
against transgender people, especially in health care settings, is 
associated with increased rates of negative health outcomes, including 
depression, attempted suicide, and substance use. This commenter then 
argued that removing the notice and referral protections (as well as 
providing new accommodations) could contribute to significant health 
costs based on the direct medical and mental health impacts of 
discrimination alone. Similarly, another commenter claimed that older 
LGBTQ adults face pronounced health disparities and higher poverty 
rates compared to their peers, due in large part to historical and 
ongoing discrimination.\19\
---------------------------------------------------------------------------

    \19\ See Karen Fredriksen-Goldsen et al., The Aging and Health 
Report: Disparities and Resilience Among Lesbian, Gay, Bisexual, and 
Transgender Older Adults (November 2011), www.lgbtagingcenter.org/resources/resource.cfm?r=419.
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    A commenter focused on medical care for Bhutanese Hindu refugees. 
This commenter said that people in this group have already suffered 
immense trauma from forcible eviction from their home country due to 
their culture and religion, and they have experienced particular 
difficulty retaining their cultural and religious identity in the 
United States. The commenter claimed that removal of the notice-and-
referral requirements would strip this vulnerable group of protections 
against discrimination, proselytization, or religious coercion in 
government-funded social services. The commenter claimed that Bhutanese 
Hindu refugees have a particular need to know their rights fully and to 
access health services, including mental health

[[Page 82056]]

services, because their rates of suicide and mental health conditions 
are higher than those of the rest of the population. Additionally, 
without being informed of their rights, the commenter expressed concern 
that these refugees may feel pressured to convert to Christianity or 
attend Christian religious services because they incorrectly believe 
those actions are required to continue receiving services. The 
commenter claimed that these outcomes would risk exacerbating the group 
members' already-concerning health trends.
    Some of these commenters cited studies indicating that certain 
groups are more likely to receive government services, from which the 
commenters inferred that these groups are more likely to be harmed by 
removal of the notice-and-referral requirements. One commenter cited 
the 2018 CAP Survey to demonstrate that LGBTQ people are more likely to 
participate in a wide range of public programs. That commenter claimed 
this 2018 CAP Survey found that LGBTQ people with disabilities were 
especially likely to rely on government benefit programs, such as 
Supplemental Nutrition Assistance Program (``SNAP''), Medicaid, 
unemployment, and housing assistance. As a result, this commenter 
argued that ensuring access to federally funded social services 
programs by mandating referrals to alternative providers is vital for 
members of this vulnerable population. Another commenter stated that 
LGBTQ youth are at a higher risk of homelessness, citing Chapin Hall, 
Missed Opportunities: Youth Homelessness in America (2017), which 
reported LGBTQ youth at a 120 percent higher risk of homelessness than 
other young adults.
    Other commenters made similar statistical claims without providing 
the basis for their claims. Commenters claimed that 20-40 percent of 
homeless youth are ``LGBT-identified'' and that LGBT youth 
disproportionately represent 40 percent of the homeless youth 
population in New York City. One of these commenters also said that 
most homeless families are headed by unmarried women and that these 
families are not well situated to absorb the burdens from the changes 
in this final rule. Another commenter claimed that people with 
disabilities and their families face a national shortage of accessible 
and affordable housing, particularly the lowest-income people with 
disabilities, and that removing these requirements could impose another 
barrier to housing programs for this population, such as Section 811 
Supportive Housing for Persons with Disabilities.
    One commenter argued that LGBTQ senior citizens have a particular 
need for the notice-and-referral requirements to access long-term 
services and supports because they do not have traditional support 
systems in place and are therefore more likely to rely on personal care 
aides or enter care facilities.\20\ This commenter also conducted a 
survey that found LGBT older adults experienced discrimination in long-
term care facilities ranging from verbal and physical harassment, to 
visiting restrictions and isolation, to denial of basic care such as a 
shower or being discharged or refused admission. They also cited 
examples of LGBT older adults being ``prayed over'' without their 
consent or being told they would go to hell. This commenter attached 
its report to the comment.\21\ This commenter was concerned that 
eliminating the notice-and-referral requirements would make these types 
of discriminatory actions more common and make it harder for victims to 
seek recourse.
---------------------------------------------------------------------------

    \20\ See SAGE and Movement Advancement Project, Improving the 
Lives of LGBT Older Adults (March 2010), https://www.lgbtmap.org/file/improving-the-lives-of-lgbt-older-adults.pdf.
    \21\ Justice in Aging, LGBT Older Adults in Long-Term Care 
Facilities: Stories from the Field (updated June 2015), 
www.justiceinaging.org.customers.tigertech.net/wp-content/uploads/2015/06/Stories-from-the-Field.pdf.
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    Additionally, a retired physician commented that she had experience 
with end-of-life issues and that patients and families who do not wish 
to receive ``futile or heroic treatments'' from religious doctors 
should be referred for another opinion.
    Numerous commenters provided hypothetical examples of the harms 
they claimed would befall beneficiaries following removal of these 
notice-and-referral requirements. For example, two commenters to ED 
cited their extensive experience representing students in Federal court 
cases and administrative cases but claimed only that removing the 
notice-and-referral requirements ``would likely make it harder for 
beneficiaries to access programs serving marginalized young people,'' 
without citing any actual instances.
    The Council Chair insisted that the alternative-provider referral 
requirement was essential. She asked the Agencies to ``imagine'' a 
victim of human trafficking who does not speak English, is in an 
unfamiliar location, is a single parent, and does not have reliable 
internet, yet has to research an alternative provider while working and 
caring for young children. This commenter claimed it is ``insufficient 
to assume'' that this beneficiary would be given assistance, just as, 
the commenter claimed, it is insufficient to assume that the rights of 
faith-based organizations would be protected.
    Some of these commenters claimed removing the notice-and-referral 
requirements would especially harm beneficiaries in medical contexts. 
Multiple commenters expressed concern that critical care, including 
medical care, would be delayed or denied without a referral upon 
request. Commenters argued that removal of the referral requirement 
would impede access to medical care for beneficiaries who do not feel 
comfortable obtaining care from religious providers in rural areas that 
have medical care shortages and that often require farther travel, on 
poorer roads, with less access to public transportation than in urban 
areas. Commenters also highlighted concerns for children in the foster 
care, child welfare, and juvenile justice systems.
    Commenters highlighted other social service areas as well, as 
outlined in the bullet points below. One commenter argued that 
discrimination in access to social services would reduce timely access 
to critical social services. It provided the hypothetical example of 
discrimination that delays shelter for someone experiencing 
homelessness or housing insecurity, which would cause prolonged 
homelessness, poor health, victimization, and negative interactions 
with law enforcement. The commenter noted that a day in a shelter costs 
less than a day in jail or an emergency room visit, citing a study on 
the costs of homelessness.
    Some of these commenters claimed removing the alternative provider 
notice-and-referral requirements would harm beneficiaries from specific 
groups, which the commenters identified as vulnerable populations. 
Commenters argued that removing referrals would limit access and would 
disproportionately affect low-income communities, themselves already 
disproportionately made up of women, immigrants and refugees, LGBTQ 
people, and people with disabilities. These commenters argued that 
access is particularly important for these groups, which benefit from 
programs that help increase employment, alleviate poverty, and 
alleviate homelessness. According to these commenters, removing the 
referral requirement will only increase the likelihood of negative 
outcomes for these groups and will perpetuate the cycle that ties 
discrimination to an increased likelihood of unemployment and poverty.
    Many commenters claimed that removal of the referral requirement

[[Page 82057]]

would particularly burden LGBTQ beneficiaries. Some of these commenters 
claimed that referrals are ``vital'' for LGBTQ beneficiaries because 
they have unique difficulty obtaining secular or welcoming alternative 
service providers. Some of these commenters also argued that LGBTQ 
people may not be comfortable fully accessing the services they need in 
a religious environment. A comment on behalf of a local government 
suggested that LBGTQ people who already have concerns about their 
physical and emotional safety in accessing services--even in relatively 
welcoming communities, like San Francisco--will face further inequities 
because, the commenter believes, the proposed rules will encourage 
discrimination against LGBTQ people. Another commenter suggested that 
``a job-training organization could refuse to assist a transgender 
individual with resume editing or professional wardrobe development 
consistent with their gender identity.'' That commenter argued that 
removing the notice and referral protections would empower 
organizations operating critical social services to refuse to fully 
serve LGBTQ people if those providers believe that recognizing an 
individual's gender identity or same-sex relationship violates their 
religious belief. That commenter also argued that people in the LGBTQ 
community have faced a history of discrimination and, without proactive 
notice of their rights, they would rely on their past experience to 
inform relationships with service providers. This commenter added that 
unwillingness of an organization to recognize and respect LGBTQ 
identities is tantamount to a denial of care altogether, with the same 
negative outcomes.
    Commenters also argued that eliminating the notice-and-referral 
requirements would especially burden beneficiaries with disabilities 
who rely on service providers such as a case manager to coordinate 
necessary services, a transportation provider to attend appointments, 
and a personal care attendant to help with medications and managing 
daily activities. These commenters were concerned that such 
beneficiaries' access to services would be eliminated if such providers 
refused to provide a service and then refused to provide a referral for 
the beneficiary to obtain the service. These commenters were also 
concerned that beneficiaries with disabilities who are also in other 
historically disadvantaged groups were most likely to be refused 
service and would face greater challenges to receive accommodations.
    Some commenters hypothesized that faith-based organizations could 
deny services outright based on sex; could claim religious 
interpretations to avoid providing services based on prejudice, bias, 
or stigma (a point addressed in Part II.E); and could delay or deny 
services during emergencies. Others crafted more specific hypothetical 
examples:
     LGBTQ individuals might not have the same opportunities to 
return to their communities if they are denied access to a Second 
Chance Reentry Initiative program due to their sexual orientation or 
gender identity, and they might not be given referrals to alternative 
providers.
     A same-sex couple could be refused family housing in the 
wake of a natural disaster, or a transgender shelter seeker could be 
refused gender appropriate housing by a FEMA grantee. The shelter could 
also be empowered to refuse access to medically necessary care.
     A FEMA grantee could claim a right to refuse to assist a 
same-sex couple in requesting Federal disaster-relief benefits.
     A transgender woman could risk being turned away from a 
woman's emergency shelter or a same-sex couple could be refused family 
housing at a HUD-funded provider.
     People seeking treatment for opioid use disorder might be 
prevented from receiving such treatment.
     A woman seeking safety for herself and her family from 
domestic violence could be prevented from finding a shelter.
     A veteran re-entering the civilian workforce could be 
prevented from receiving job training.
     A woman could be denied benefits based on a provider's 
religious belief that women should not work outside the home.
     LGBTQ homeless teenagers might not seek housing, food, or 
counseling services they need, including from a facility funded with 
HUD's Emergency Shelter Grant (``ESG'') program, because they know the 
religion of the faith-based provider condemns them for being gay.
     A single mother or same-sex couple could be turned away 
from assistance with buying their first home or preventing foreclosure.
     A pregnant or parenting teenager who is unmarried or 
divorced might avoid a faith-based provider or leave a faith-based 
group home that she thinks will condemn her or because she is 
uncomfortable in the religious setting.
     Muslim people might forgo affordable housing funded by 
HUD's Housing Opportunities for Persons with AIDS (``HOPWA'') program 
because they feel uncomfortable at a facility with Christian 
iconography throughout, even though receipt of HOPWA funds requires 
that program content be secular.
     A ``kid'' or ``young adult'' seeking HHS's Transitional 
Living for Homeless Youth program services like a bed, educational 
opportunities, or job training might be forced to receive services from 
a faith-based provider and have no way to access an alternative 
provider.
     Unaccompanied minors might have no recourse to seek an 
alternative provider if they were denied services because of the 
provider's opposition to those services on religious grounds, such as 
denial of transportation or interpretation services to attend a medical 
appointment contrary to the provider's religious beliefs.
     A nonreligious veteran at risk of homelessness seeking 
help with case management who also wants services, including education, 
crisis intervention, and counseling might feel ``very uncomfortable'' 
at a faith-based provider and not be aware of alternatives.
     A homeless veteran seeking job training to gain employment 
might be forced to receive those services from a faith-based provider 
but feel uncomfortable because the program takes place in a room 
adorned with religious banners, Bible verses, and religious symbols.
     Victims of human trafficking seeking vital services to 
build lives away from their traffickers, like housing or financial 
assistance, might feel uncomfortable getting services from a faith-
based provider and drop out of the program, putting their safety at 
risk.
     An older LGBTQ person receiving food packages under the 
USDA Commodity Supplemental Food Program could be forced to pick them 
up in a church that he knows labels him as a sinner, when LGBTQ seniors 
already struggle to access culturally-competent support services.
     A student who identifies as LGBTQ or who is a child of 
LGBTQ parents might be confronted with open anti-LGBTQ hostility by an 
ED-funded social service program partnering with their public school to 
provide healthcare screening, transportation, shelter, clothing, or new 
immigrant services.
     Local food distribution agencies, such as food pantries or 
soup kitchens, might seek to deny services to vulnerable populations, 
including atheists, transgender people, single mothers and their 
children, and immigrants.

[[Page 82058]]

     An atheist required to attend a substance use disorder 
program might be compelled to attend a 12-step program that requires 
the recognition of a higher power and, without notice of her rights, 
might attend the program unsuccessfully, or forgo services, because she 
thinks all programs will require adherence to a higher power.
    Response: The Agencies believe that all people should be treated 
with dignity and respect and should be given every protection afforded 
by the Constitution and the laws passed by Congress. The Agencies do 
not condone the unjustified denial of needed medical care or social 
services, and they are committed to fully and vigorously enforcing all 
of the nondiscrimination statutes for which Congress has granted them 
jurisdiction. The Agencies take seriously the examples commenters have 
cited, both real and hypothetical, as well as the studies commenters 
referenced.
    The Agencies, however, disagree that harms discussed in these 
examples and studies overcome the reasons not to retain the notice 
requirements and the referral requirement. None of these harms, actual 
or hypothetical, arose in circumstances where those requirements would 
necessarily have had, or did necessarily have, any effect. The examples 
fail to show that these harms, if and when they occur, will necessarily 
increase in the absence of, or have been appreciably reduced because 
of, the notices and referrals required by the 2016 final rule. It will 
always be possible to imagine a circumstance where these requirements 
might have an effect, but the empirical data do not demonstrate that 
the requirements had any measurable impact in actual cases in which 
beneficiaries sought federally funded social services from religious 
providers.
    Commenters' most direct examples came from the national legal 
organization that cited its clients and several studies. But even those 
cases and studies do not involve the precise issues here. They do not 
show harm unique to faith-based organizations receiving direct Federal 
financial assistance attributable to beneficiaries' (1) not receiving 
notice of a prohibition on discrimination based on religion (nor on 
other grounds), (2) not receiving notice regarding explicitly religious 
activities, (3) not receiving notice regarding referrals based on 
objections to the provider's religious character, or (4) not receiving 
a referral from the faith-based organization if the beneficiaries 
object to the organization's religious character. The vast majority of 
commenters' examples did not even involve faith-based organizations 
providing services in connection with direct Federal financial 
assistance. The cited harms are far beyond the scope of this final rule 
and would not have been prevented by the notice requirements and the 
referral requirement. Also, to the extent that these examples raise 
conflicts between beneficiaries' rights and the religious liberties of 
faith-based providers, resolution will depend on context-specific 
analyses of those underlying rights, as discussed in Parts II.C.3, 
II.E, and II.F.
    For example, the national legal organization cited a case in which 
one of its transgender clients was scheduled for a hysterectomy at a 
religious hospital but had the procedure cancelled due to the 
hospital's religious objection. The client did not allege that the 
surgery was going to be provided through a Federal financial assistance 
program or activity, did not allege that the hospital had used direct 
Federal financial assistance for any explicitly religious activity, and 
did not allege anything else that would have been covered by the notice 
requirement. Complaint, Conforti v. St. Joseph's Healthcare Sys., No. 
17-cv-50 (D.N.J. Jan. 5, 2017), ECF No. 1. Moreover, this client raised 
the alleged discrimination with the commenting legal organization, 
which filed a complaint with HHS's Office for Civil Rights within six 
months. Id. ]] 8, 80. Also, this client alleged a desire to have the 
surgery at the religious hospital where the client had received 
previous care, without indicating any objection to the hospital's 
religious character, id. ]] 49-50, 58-72. It is thus unclear how the 
alternative-provider notice-and-referral requirements would have 
assisted this client.
    The court cases cited by another commenter involving discrimination 
and denial of service in the criminal-justice system are even less 
persuasive. There is no indication that the treatment provider in 
either case was a faith-based organization or that the potential 
beneficiary objected based on the religious character of the treatment 
provider. Additionally, the conduct in those cases would not have been 
covered by the other aspects of the notice because those cases did not 
allege a claim of discrimination based on religion or a claim related 
to explicitly religious activities. In Wilson v. Phoenix House, a 
defendant supervisor in New York's Drug Treatment Alternative to Prison 
program had denied a transgender client access to a support group. 2011 
WL 3273179, at *1 (S.D.N.Y. Aug. 1, 2011). In Kaeo-Tomaselli v. Butts, 
a librarian at the women's correctional center sought a halfway house 
for a transgender prisoner who had not yet been released from prison, 
and the defendants had refused the librarian's request. 2013 WL 
5295710, at *1 (D. Haw. Sept. 17, 2013). Again, it is unclear how the 
notice-and-referral requirements would have helped these individuals.
    The example of Bhutanese Hindu refugees is especially telling. The 
Agencies recognize the challenges faced by many immigrant and minority-
faith communities, including Bhutanese Hindu refugees. The Agencies are 
concerned about the statistics and health risks cited by the commenter, 
and the Agencies are proud that their programs serve this vulnerable 
population. But this group, like all others, continues to be protected 
from religious discrimination \22\ and, in direct Federal financial 
assistance programs and activities, from being required to participate 
in explicitly religious activities.
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    \22\ See, e.g., 8 U.S.C. 1522(a)(5) (expressly requiring States 
to provide assistance and services to refugees without regard to 
religion, race, or nationality in domestic resettlement programs).
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    The Agencies are not aware of any causal connection between this 
group's negative health outcomes and the notice or referral 
requirements. In fact, several studies have analyzed the causes of this 
group's increased risks and none attributed them to faith-based service 
providers, lack of notice of religious liberty protections, or the 
absence of a referral from a religious organization to a provider that 
the beneficiary (or the commenter) deemed unobjectionable.\23\ The 
concerns for Bhutanese Hindu refugees raised by these studies are 
beyond the scope of this final rule, and the Agencies have already 
begun to address them in other appropriate ways. For example, the 
Refugee Health Technical Assistance Center--funded by HHS's Office of 
Refugee Resettlement--

[[Page 82059]]

responds to the tragedy of suicide within refugee communities through 
both prevention and targeted intervention, with resources dedicated to 
Bhutanese refugees.\24\ And current research that proposes models to 
address these issues suggests that religious connection is beneficial 
but does not suggest that notice of religious liberty protections in 
federally funded programs would have any impact on suicide rates.\25\ 
The Agencies, therefore, have determined that removing the notice 
requirement will not harm this community and may assist this community 
by reducing barriers to entry into programs that address the causes of 
negative health impacts identified in the studies, including financial 
stresses, gender-based violence, mental health, alcohol abuse, and 
other vulnerabilities.
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    \23\ See, e.g., Trong Ao et al., Suicidal Ideation and Mental 
Health of Bhutanese Refugees in the United States, 18(4) J. Immig. & 
Minor. Health, 828 (Aug. 2016), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4905789/; Ashley K. Hagaman et al., An Investigation 
into Suicides Among Bhutanese Refugees Resettled in the United 
States Between 2008 and 2011, 18(4) J. Immigr. Minor. Health 819 
(Jan. 2016), https://www.researchgate.net/publication/290197605_An_Investigation_into_Suicides_Among_Bhutanese_Refugees_Resettled_in_the_United_States_Between_2008_and_2011; Jennifer Cochran 
et al., Suicide and Suicidal Ideation Among Bhutanese Refugees--
United States, 2009-2012, 62(26) Morbidity & Mortality Weekly Rep. 
533 (July 5, 2013), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4604782/; International Organization for Migration, Who Am I? 
Assessment of Psychosocial Needs and Suicide Risk Factors Among 
Bhutanese Refugees in Nepal and After Third Country Resettlement 
(2011), https://www.iom.int/sites/default/files/our_work/DMM/Migration-Health/MP_infosheets/Bhutanese-Mental-Health-Assessment-Nepal-23-March_0.pdf.
    \24\ See Refugee Health Technical Assistance Center, Suicide 
Prevention, https://refugeehealthta.org/physical-mental-health/mental-health/suicide/suicide-prevention/; see also Prangkush Subedi 
et al., Mental Health First Aid Training for the Bhutanese Refugee 
Community in the United States, Int'l J. Mental Health Sys. 9:20 
(2015), https://ijmhs.biomedcentral.com/track/pdf/10.1186/s13033-015-0012-z; Suicide Prevention Resources Center, Bhutanese Community 
Leaders Work to Prevent Suicide Among Refugees in New Hampshire (May 
16, 2014), http://www.sprc.org/news/bhutanese-community-leaders-work-prevent-suicide-among-refugees-new-hampshire (describing 
targeted programming based on a survey of Bhutanese refugees living 
in that community).
    \25\ Jonah Meyerhoff et al., Suicide and Suicide-Related 
Behavior Among Bhutanese Refugees Resettled in the United States, 
9(4) Asian Am. J. Psychol. 270 (Dec. 2018), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6980157/.
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    Some of the studies and reports cited by commenters claimed to 
demonstrate that LGBTQ beneficiaries have unique needs for which it is 
difficult to find alternative medical providers. If that is so, then 
notice and referrals are correspondingly less likely to be effective. 
Indeed, the cited studies identified the likely causes of these issues 
and prescribed solutions, but those studies did not mention notice of 
religious liberty protections or mandatory referrals by faith-based 
organizations as part of the problem or solution.\26\
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    \26\ See, e.g., Jaclyn M. White Hughto et al., Transgender 
Stigma and Health: A Critical Review of Stigma Determinants, 
Mechanisms, and Interventions, HHS Public Access, Author Manuscript 
at 5 (published in final edited form at 147 Soc. Sci. Med. 222 (Dec. 
2015)), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4689648/pdf/nihms739646.pdf (study cited by commenters, attributing the limited 
availability of appropriate transgender medical care primarily to 
lack of trained healthcare providers); id. at 11-12 (prescribing 
education and inter-group contact for providers).
---------------------------------------------------------------------------

    The American Atheists Survey is even less relevant.\27\ In addition 
to the general points that apply to many studies, that study analyzed 
self-reported ``negative experiences'' in specific ``locations'' 
without any indication that the negative experience was caused by the 
service provider. Additionally, while the study showed that between 4.5 
percent and 17.7 percent of atheists have negative experiences in 
certain service locations, 54.5 percent of those same respondents 
indicated such negative experiences when interacting with their own 
families and 19.1 percent of the respondents reported negative 
experiences when accessing ``private businesses.'' This survey does not 
demonstrate any harm that would result from removal of the notice-and-
referral requirements. To the extent this survey identifies a broader 
societal problem, the solution is beyond the scope of this final rule.
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    \27\ See American Atheists, Reality Check: Being Nonreligious in 
America (2020), https://static1.squarespace.com/static/5d824da4727dfb5bd9e59d0c/t/5ec6d6d8e8da850b30521353/1590089442015/Reality+Check+-+Being+Nonreligious+in+America (referenced in the 
comments as unpublished and reviewed by the Agencies subsequent to 
publication).
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    Similarly, some of these comments focused on the challenges of 
service availability in rural areas, based on the 2018 CAP Survey and 
other commenters' reports. The lower demand and fewer resources in 
rural areas can lead to provider shortages that result in beneficiaries 
having to travel farther, on poorer roads, with limited access to 
public transportation. The Agencies agree that obtaining services from 
an alternative provider can be more difficult in rural areas than in 
urban areas, and the relevant Agencies are working to address those 
concerns with rules, programs, and services apart from this final rule. 
But these challenges predated both the 2016 final rule and this final 
rule, and the Agencies disagree that the notice requirements and the 
referral requirement addressed these challenges in any meaningful way. 
Indeed, the preamble to the 2016 final rule recognized that it may be 
``impossible'' to guarantee an alternative provider for services 
provided in a ``remote location.'' 81 FR 19364; see also id. at 19368 
(``The Agencies believe that, in some cases, due to the location of the 
organization, availability of resources, the nature of the program, or 
other factors, a referral option may not be available.''). As a result, 
the referral requirement might be even less valuable to beneficiaries 
in rural areas. Whatever marginal value it might afford would not 
outweigh the other reasons given for eliminating the referral 
requirement.
    Many of the studies did not analyze the critical issues necessary 
to draw relevant conclusions regarding the alternative provider notice-
and-referral requirements. Those studies did not involve or 
specifically address federally funded programs, and the statistics 
cited by commenters differ from Federal data reported by grantees.\28\ 
The studies did not analyze the incidents of harms by faith-based 
providers as opposed to other providers. Also, they did not identify 
problems attributable to the absence of, or that would be remedied by, 
the notice-and-referral requirements. Instead, many of these studies 
raise broader concerns regarding issues that are beyond the scope of 
this final rule, such as discrimination and the balance between LGBTQ 
rights and religious liberties. Finally, many of the studies have 
methodological limitations, recognized the possibility that other 
factors could account for the observed behaviors, and called for 
further research.\29\
---------------------------------------------------------------------------

    \28\ For example, with regard to youth homelessness, one percent 
of unaccompanied youth self-identified as LGBT nationwide. HUD 
Exchange, HUD, PIT and HIC Data Since 2007 (Jan. 2020), https://www.hudexchange.info/resource/3031/pit-and-hic-data-since-2007. 
Also, a runaway and homeless youth site in New York reported 23.3 
percent of the youth homeless population it served to be LGBT. 
Administration for Children and Families, HHS, Final Report--Street 
Outreach Program Data Collection Study (Apr. 12, 2016), https://www.acf.hhs.gov/archive/fysb/resource/street-outreach-program-data-collection-study.
    \29\ See, e.g., American Atheists, Reality Check: Being 
Nonreligious in America (2020), https://static1.squarespace.com/static/5d824da4727dfb5bd9e59d0c/t/5ec6d6d8e8da850b30521353/1590089442015/Reality+Check+-+Being+Nonreligious+in+America 
(published after submission of comments); Office of Disease 
Prevention and Health Promotion, Healthy People 2020 (last updated 
Oct. 8, 2020), https://www.healthypeople.gov/2020/topics-objectives/topic/social-determinants-health/interventions-resources/discrimination; Caitlin Rooney et al., Center for American Progress, 
Protecting Basic Living Standards for LGBTQ People (2018) https://www.americanprogress.org/issues/lgbt/reports/2018/08/13/454592/protecting-basic-living-standards-lgbtq-people/; Sejal Singh 
andLaura E. Durso, Center for American Progress, Widespread 
Discrimination Continues to Shape LGBT People's Lives in Both Subtle 
and Significant Ways (May 2, 2017), https://www.americanprogress.org/issues/lgbtq-rights/news/2017/05/02/429529/widespread-discrimination-continues-shape-lgbt-peoples-lives-subtle-significant-ways/; Chapin Hall, Missed Opportunities: Youth 
Homelessness in America 10 (2017), https://voicesofyouthcount.org/wp-content/uploads/2017/11/VoYC-National-Estimates-Brief-Chapin-Hall-2017.pdf (mentioning the need to identify at-risk youth and 
initiate ``service referrals'' to an initial provider, with no 
mention of faith-based providers or objections to any provider); 
Sandy E. James et al., National Center for Transgender Equality, The 
Report of the 2015 U.S. Transgender Survey (Dec. 2016), https://transequality.org/sites/default/files/docs/usts/USTS-Full-Report-Dec17.pdf; Jaclyn M. White Hughto et al., Transgender Stigma and 
Health: A Critical Review of Stigma Determinants, Mechanisms, and 
Interventions, 147 Soc. Sci. Med. 222 (Dec. 2015), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4689648/pdf/nihms739646.pdf; 
Justice in Aging, LGBT Older Adults in Long-Term Care Facilities: 
Stories from the Field 11 (updated June 2015), 
www.justiceinaging.org.customers.tigertech.net/wp-content/uploads/2015/06/Stories-from-the-Field.pdf (citing examples of patients 
being ``prayed over'' or told they would go to hell but without 
referencing key factors, including whether the provider was faith-
based (or whether it was a religiously motivated staff person who 
caused the issue)); Karen Fredriksen-Goldsen et al., The Aging and 
Health Report: Disparities and Resilience Among Lesbian, Gay, 
Bisexual, and Transgender Older Adults 17-18, 38, 47 (Nov. 2011), 
https://www.lgbtagingcenter.org/resources/pdfs/LGBT%20Aging%20and%20Health%20Report_final.pdf (noting that 38 
percent of respondents ``currently attend spiritual or religious 
services or activities at least once a month''--and identifying 
``referral services'' as a needed service, apparently referencing 
initial provider referrals--and making no mention of objections); 
SAGE and Movement Advancement Project, Improving the Lives of LGBT 
Older Adults 52, 60 (Mar. 2010), https://www.lgbtmap.org/file/improving-the-lives-of-lgbt-older-adults.pdf (indicating that LGBT 
advocates should provide information and referrals, including to 
``local LGBT-friendly experts'').

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[[Page 82060]]

    Similarly, the example of end-of-life issues is not relevant. End-
of-life issues and the balance of rights between patients, healthcare 
employees, and affiliated organizations are governed by a complex set 
of statutes and regulations that fall outside the scope of this 
rulemaking. There is no reason to believe that the notice-and-referral 
requirements would affect the situation raised by the comment about 
disagreements over when it is appropriate to end aggressive treatments 
for a patient. The 2016 final rule did not require the notice to 
describe the religious character or tenets of the provider, such as a 
hospital's connection to the Roman Catholic Church or its adherence to 
ethical directives of the Catholic Church. The notice would not have 
conveyed in any helpful detail how a particular physician or treatment 
facility would approach an end-of-life scenario. That information is 
more likely to be discernible from the provider's name, especially when 
combined with the information on the provider's website, and other 
informational materials unaffected by this final rule.
    The Agencies also disagree that various groups' prevalent use of 
federally funded programs would translate into disproportionate harms 
to those groups from removal of the notice-and-referral requirements. 
The Agencies are proud that these comments, including ones supported by 
research, demonstrate that people with unique needs and challenges 
benefit from the Agencies' programs and services. The Agencies will 
continue to support appropriate programming for all communities in 
need. But for the reasons discussed in Part II.C, a community's 
widespread participation in federally funded programming does not show 
that the removal of the notice-and-referral requirements would increase 
the likelihood of negative outcomes, such as increased poverty and 
unemployment, among this population. None of the surveys or reports 
discussed in comments makes such a showing. Moreover, these surveys 
rely on programs not directly relevant here. For example, commenters 
relied on the portion of the 2018 CAP Survey that cited instances in 
indirect-aid programs, such as SNAP and some housing assistance 
programs, that were never subject to the notice-and-referral 
requirement. 81 FR 19363, 19386, 19414. As such, these sources cannot 
support the contention that the notice-and-referral requirements 
alleviated instances of alleged harm--or that the removal of such 
requirements would increase the risk of instances of such harm.
    All of these responses apply with equal or greater force to the 
commenters' hypothetical claims of harms. Many of the programs cited by 
the commenters operate in contexts that further minimize the risk of 
harm to beneficiaries. For example, several commenters claimed there 
were unique needs for objections to religious character by victims and 
survivors of human trafficking. As suggested by the Council Chair, the 
Agencies can certainly imagine a victim of human trafficking who does 
not speak English, is in an unfamiliar location, is a single parent and 
does not have reliable internet; who has to research an alternative 
provider while working and caring for young children; and who needs 
guaranteed assistance finding an alternative provider. The relevant 
Agencies are working very hard to support and provide services for 
victims of human trafficking, including those with any of the listed 
characteristics. Research shows that human trafficking victims and 
survivors face many substantial and documented hurdles to receiving 
care, especially those victims and survivors residing in regions that 
have limited resources. However, and even though many studies have 
included faith-based service providers, the Agencies are not aware of 
any research indicating that objections to the religious character of 
the provider is a hurdle for potential beneficiaries at all, let alone 
a substantial hurdle.\30\ Instead of addressing hypothetical harms that 
seem to arise infrequently at best, the Agencies and experts in the 
field are moving toward incorporating first-person victim experiences 
into trafficking policy, programs, research, evaluation, and responses, 
with safeguards to minimize re-victimization or re-traumatization.\31\ 
These data, in short, do not indicate a need for the notice 
requirements or the referral requirement.
---------------------------------------------------------------------------

    \30\ See, e.g., U.S. Department of State, Trafficking in Persons 
Report 20-21, 28-33 (20th ed. June 2020), https://www.state.gov/wp-content/uploads/2020/06/2020-TIP-Report-Complete-062420-FINAL.pdf 
(describing the challenges of ``trauma bonding,'' extraterritorial 
abuse and exploitation, the many ways providers need to 
``reengineer[ ]'' health care for survivors, and the intersection 
between trafficking and addiction); Elzbieta Gozdziak and Lindsay 
Lowell, After Rescue: Evaluation of Strategies to Stabilize and 
Integrate Adult Survivors of Human Trafficking to the United States 
5, 10-29 (Apr. 2016), https://www.ncjrs.gov/pdffiles1/nij/grants/249672.pdf (describing the challenges of survivors' needs and 
survivor stabilization facing programs, including ones run by faith-
based organizations before the referral requirement was 
promulgated); Laura Simich et al., Improving Human Trafficking 
Victim Identification--Validation and Dissemination of a Screening 
Tool 12, 184-87 (June 2014), https://www.ncjrs.gov/pdffiles1/nij/grants/246712.pdf (describing many of the challenges of meeting the 
needs of human trafficking victims and survivors in a study that 
worked with faith-based providers).
    \31\ See, e.g., National Institute of Justice, Expert Working 
Group on Trafficking in Persons Research Meeting 13-17 (Apr. 24-25, 
2014), https://www.ncjrs.gov/pdffiles1/nij/249914.pdf.
---------------------------------------------------------------------------

    The Agencies, moreover, recognize that faith-based providers have 
been integral to the national and international efforts to address 
human trafficking and to respond to the needs of victims and 
survivors.\32\ There is no suggestion that these faith-based 
organizations, which are committed to the fight against human 
trafficking and the care of trafficking victims and survivors, would 
further traumatize those individuals by seeking to convert them. The 
Agencies also recognize that some studies indicate that alternatives to 
traditional therapies, including ``offering organized religious or 
spiritual activities to help victims connect to something that will 
last beyond the program timeframe,'' are ``considered important adjunct 
therapies for this population.'' \33\ Human trafficking victims often 
interact with multiple agencies, including law enforcement agencies, 
that can provide referrals to alternative providers if the

[[Page 82061]]

victim would like one. Also, human trafficking service providers 
commonly have informational materials available in multiple languages, 
which reference national and regional hotlines that can otherwise 
provide referrals to any beneficiary who cannot undertake research or 
labor-intensive efforts to locate a provider. The Agencies determine, 
in their policy discretion, that it is appropriate to direct their 
funding and related requirements toward meeting the documented needs of 
human trafficking victims and survivors rather than an undocumented 
need to address objections to providers' religious character.
---------------------------------------------------------------------------

    \32\ See, e.g., U.S. Department of State, Trafficking in Persons 
Report 24-25 (20th ed. June 2020), https://www.state.gov/wp-content/uploads/2020/06/2020-TIP-Report-Complete-062420-FINAL.pdf 
(describing faith-based organizations' efforts to combat human 
trafficking and the reasons such organizations ``are powerful and 
necessary forces in the fight against human trafficking'').
    \33\ Heather Clawson et al., Treating the Hidden Wounds: Trauma 
Treatment and Mental Health Recovery for Victims of Human 
Trafficking 7 (Mar. 15, 2008) (describing the many challenges of 
treating human trafficking victims), https://aspe.hhs.gov/system/files/pdf/75356/ib.pdf.
---------------------------------------------------------------------------

    Commenters' hypothetical example of a faith-based organization 
acting with open hostility toward an LGBTQ public school student is 
similarly inapt. There is no basis to conclude that faith-based 
providers would show such anti-LGBTQ hostility in an ED-funded program 
run through a public school. Yet even so, it is unclear how the notice-
and-referral requirements would have helped the student. Students 
subjected to such hostility would most likely seek redress or referral 
to an alternative provider through their public school, not from the 
provider.
    The hypotheticals, provided in the comments, also relied on claims 
of discrimination on bases other than religion in reentry programs, 
disaster relief programs, food pantries, substance use disorder 
programs, medical care programs, women's emergency shelters, and HUD 
housing programs, without explaining how those harms were connected to, 
or were addressed by, the notice-and-referral requirements. The same is 
true for the hypotheticals suggesting that providers would deny 
services based on sex; delay or deny services during emergencies; deny 
services to unaccompanied minors; make beneficiaries uncomfortable; or 
claim religious interpretations to avoid providing services based on 
prejudice, bias, or stigma. For example, many domestic violence 
shelters admit women with male children only below a certain age to 
protect victims and minimize re-traumatization. Other laws and policies 
determine whether and when such a shelter must admit a transgender 
person. These policies are unrelated to the alternative provider 
notice-and-referral requirements. Nonetheless, for completeness, the 
Agencies note that, if such admission were required contrary to a 
faith-based provider's sincerely held religious beliefs, it could seek 
an accommodation under this final rule, which would be handled in a 
context-specific analysis that is explained in Part II.E. Otherwise, 
however, this issue is beyond the scope of this final rule regarding 
equal participation of faith-based organizations and, in all events, 
was not addressed by the notice-and-referral requirements.
    Many of these examples raise forms of discrimination or other 
conduct that are prohibited by other provisions within the Agencies' 
regulations but were not addressed by the notice-and-referral 
requirements. For instance, commenters' examples include a hypothetical 
beneficiary who seeks to participate in the Second Chance Act Reentry 
Initiative administered by DOJ's Office of Justice Programs but is 
excluded based on sexual orientation or gender identity. Like all DOJ 
grants, providers in this program must comply with several 
nondiscrimination provisions, including the prohibition on 
discrimination on the basis of sex under section 901 of Title IX of the 
Education Amendments of 1972.\34\ How those requirements would apply is 
beyond the scope of the final rule and entirely unaffected by removal 
of the notice-and-referral requirements. To the extent these commenters 
raise concerns about the use of religion as a pretext for unlawful 
discrimination, the Agencies address these concerns in Part II.E.
---------------------------------------------------------------------------

    \34\ See, e.g., Office of Justice Programs, Department of 
Justice Grants and Cooperative Agreements: Statutes and Regulations 
Related to Civil Rights and Nondiscrimination (updated Mar. 2018), 
https://www.ojp.gov/program/civil-rights/statutes-regulations.
---------------------------------------------------------------------------

    For all of these reasons, the Agencies determine that removing the 
notice requirements and the referral requirement will not unduly harm 
beneficiaries, including beneficiaries from the populations identified 
by commenters, and will not make it more likely that such vulnerable 
groups do not receive needed services. Removing these requirements is 
also appropriate to address the tension with the Free Exercise Clause 
and with RFRA, discussed next. To the extent any of these hypotheticals 
demonstrate that broader substantive protections are necessary, they 
should apply to non-faith-based providers as well as faith-based 
providers, and they are therefore beyond the scope of this final rule.
    Changes: None.
    Affected Regulations: None.
3. Tension With the Free Exercise Clause and RFRA
a. Unequal Burdens
    Summary of Comments: Several commenters said that, under the Free 
Exercise Clause, strict scrutiny applies to government funding programs 
that discriminate against, or impose special burdens on, faith-based 
organizations because of their religious character or status, as 
outlined in Trinity Lutheran Church of Columbia, Inc. v. Comer, 137 S. 
Ct. 2012 (2017); Church of the Lukumi Babalu Aye, Inc. v. City of 
Hialeah, 508 U.S. 520 (1993); Executive Order 13831; and the Attorney 
General's Memorandum. These commenters, including 21 current members of 
the House of Representatives and a State attorney general, argued that 
the notice-and-referral requirements should be removed because they 
imposed unfair and discriminatory burdens on faith-based organizations 
that either violated or were in tension with this Free Exercise Clause 
standard.
    Some commenters argued that the holding in Trinity Lutheran did not 
provide a sufficient justification for the removal of the notice-and-
referral requirements due to the dissimilarities discussed throughout 
this section that commenters perceived between the prior rule and 
issues presented in Trinity Lutheran--namely, that the notice-and-
referral requirements did not exclude faith-based organizations from 
participation in federally funded government programs; that the 
requirements were justified on the basis of religious activity, not 
religious character; and that the holding in Trinity Lutheran was not 
applicable, given its perceived limitation to the facts before the 
Court.
    Some commenters argued that the alternative provider notice-and-
referral requirements violated Trinity Lutheran's holding by facially 
discriminating on the basis of religious character. These commenters 
reasoned that the notice-and-referral requirements applied explicitly 
based on the providers' ``religious character.'' In one public comment, 
the Council Chair--who opposed removal of these requirements--agreed 
that these requirements applied only to religious organizations because 
they were based on ``a beneficiary's objection to an organization's 
`religious character.' '' And the other aspects of the notice 
requirement applied solely to faith-based organizations based on that 
status.
    Some commenters argued that strict scrutiny would apply to the 
notice-and-referral requirements under Trinity Lutheran--both as 
unequal treatment and as special burdens--because those requirements 
were imposed on faith-based, but not secular, organizations. Some of 
these commenters added that this unequal treatment stigmatized faith-
based providers as inferior, offensive, or ``second class citizens.'' 
Another commenter added that these

[[Page 82062]]

requirements created the impression that the Government considers 
religious people inherently suspect because of their faith, suggesting 
that the Government believes Americans are more likely to find 
religious providers objectionable than secular providers.
    Some of these commenters supported removal of these requirements to 
create a level playing field for faith-based and secular organizations, 
consistent with Trinity Lutheran. Some added that removing the 
requirements would restore an environment of religious freedom across 
the country and ensure that faith-based organizations are free to offer 
services, help their communities, and follow their missions unhindered 
by burdensome government regulations.
    Several commenters, however, argued that the Free Exercise Clause 
requirement to treat secular and religious organizations equally only 
applies when a rule ``categorically exclude[s]'' religious 
organizations from receiving grants or other benefits ``solely'' 
because of their religious character. Some of these commenters argued 
that Trinity Lutheran and McDaniel v. Paty, 435 U.S. 618 (1978) 
(plurality opinion), apply only when the benefit at issue was denied in 
its entirety, or the organization was deemed ineligible solely because 
of its religious character. These commenters argued that this standard 
does not apply to laws that allow faith-based organizations to 
participate in a program with safeguards to protect beneficiaries' 
religious liberty. A few advocacy organizations argued that Locke v. 
Davey, 540 U.S. 712 (2004), allows exclusions based on factors other 
than the religious character of an organization or program. They 
pointed to Locke's upholding a law barring state funding, even in an 
otherwise neutral indirect-aid program, for an ``essentially religious 
endeavor.'' In contrast, they said, Trinity Lutheran only applies to 
exclusions based solely on religious character.
    These commenters argued that the notice-and-referral requirements 
did not violate this standard because faith-based organizations were 
still allowed to compete to participate in the Agencies' programs as 
providers. They characterized the notice-and-referral requirements as 
appropriate safeguards balanced to protect the competing interests of 
providers and beneficiaries. Some said the requirements were applied 
only to faith-based providers to protect the religious rights of the 
people they serve, not to disfavor those providers for their religious 
character. Some commenters also claimed that the requirements did not 
create constitutional problems because, as they saw it, the 2016 final 
rule generally allowed faith-based organizations to receive grants on 
``the same basis as'' secular organizations. See 81 FR at 19358 
(describing this requirement).
    Several commenters argued that the notice-and-referral requirements 
had the effect of excluding faith-based organizations only if they 
declined to provide the required notice or referral, not because of 
their religious character. These commenters added that no Agency had 
pointed to evidence that any faith-based organization had actually been 
excluded because it had run afoul of these requirements. Some also 
noted that the 2016 final rule expressly stated that providers could 
not be excluded from participation in programs because of their 
religious character. Commenters added that, if an agency excluded a 
faith-based organization for refusing to comply with the rule, the 
Agencies could make clear that the exclusion was because of the 
organization's religious activity, not its religious character.
    One commenter argued that the notice-and-referral requirements were 
``simply one practical way to ensure that rules are understood and 
respected'' and that similar notices were required by the Fair Labor 
Standards Act (FLSA), 29 CFR 516.4; the Equal Employment Opportunity 
Act (EEOA), 29 CFR 1601.30; and the Family Medical Leave Act (FMLA), 29 
CFR 825.300(a). Another commenter made the same point based on a poster 
requirement that applies to ``all persons subject to section 804'' of 
the National Housing Act, 24 CFR 110.10.
    Several commenters asserted that Trinity Lutheran's holding applies 
only to the specific facts of that case--``discrimination based on 
religious identity with respect to playground resurfacing''--because of 
a footnote in the plurality portion of the opinion. 137 S. Ct. at 2024 
n.3. These commenters relied on the footnote's statement that the 
decision did not ``address religious uses of funding or other forms of 
discrimination.'' Id. Some added that cases decided by the U.S. Court 
of Appeals for the Third Circuit and District of Maine--Real 
Alternatives v. Sec'y HHS, 867 F.3d 338, 361 n.29 (3d Cir. 2017), and 
Carson v. Makin, 401 F. Supp. 3d 207, 211 (D. Me. 2019)--interpreted 
this footnote as limiting Trinity Lutheran to its facts. Several 
commenters argued that excluding a faith-based organization from a 
program to fund resurfacing material for playgrounds is very different 
from requiring a faith-based organization to comply with the notice-
and-referral requirements.
    Finally, one commenter cited Employment Division, Department of 
Human Resources of Oregon v. Smith, 494 U.S. 872, 878-79, 885 (1990), 
to argue that the notice-and-referral requirements were 
constitutionally permissible because the First Amendment does not 
provide individuals with an unconditional right to act in accordance 
with their religion.
    Response: The Agencies agree with the commenters who argued that 
the notice-and-referral requirements were in tension with the Supreme 
Court's subsequent decisions in Trinity Lutheran Church of Columbia, 
Inc. v. Comer, 137 S. Ct. 2012 (2017), and Espinoza v. Montana 
Department of Revenue, 140 S. Ct. 2246, 2255-26 (2020). Under Trinity 
Lutheran, government-funded programs that ``single out the religious 
for disfavored treatment'' are subject to the ``strictest'' or ``most 
exacting scrutiny.'' 137 S. Ct. at 2019, 2021. This standard ``protects 
religious observers against unequal treatment'' and from ``laws that 
target the religious for `special disabilities' based on their 
`religious status,''' id. at 2019, and is echoed in Executive Order 
13831 and the Attorney General's Memorandum. The Supreme Court recently 
reaffirmed the central holding of Trinity Lutheran and made clear that 
the decision is not limited to the facts of that case but more broadly 
addressed discrimination on the basis of religious status. Espinoza, 
140 S. Ct. at 2255-56 (quoting Trinity Lutheran and citing cases).
    It is unclear whether the holdings in these cases are limited to 
categorical exclusion from government-funded programs or benefits on 
account of religious character. To be sure, the facts of Espinoza and 
Trinity Lutheran involved such exclusions.\35\ But the Supreme Court 
also stated that a law may not ``regulate or outlaw conduct because it 
is religiously motivated'' or `` `impose[ ] special disabilities on the 
basis of religious status.' '' Trinity Lutheran, 137 S. Ct. at 2021 
(emphasis added) (quoting Lukumi, 508 U.S. at 533). Trinity Lutheran 
described ``the `injury in fact' '' in such cases as ``the inability to 
compete on an equal footing in the bidding process, not the loss of a 
contract.'' Id. at 2022 (quoting Ne. Fla. Chapter, Associated Gen. 
Contractors of Am. v. Jacksonville, 508 U.S. 656, 666 (1993)). In 
Espinoza, after repeating that

[[Page 82063]]

``status-based discrimination is subject to the `strictest scrutiny,' 
'' the Court hastened to add that ``[n]one of this is meant to suggest 
. . . that some lesser degree of scrutiny applies to discrimination 
against religious uses of government aid,'' an issue the Court declined 
to reach in that case. 140 S. Ct. at 2257 (quoting Trinity Lutheran, 
137 S. Ct. at 2022).\36\ Most recently, in Roman Catholic Diocese of 
Brooklyn v. Cuomo, 590 U.S. __, No. 20A87, 2020 WL 6948354 (Nov. 25, 
2020) (per curiam), the Supreme Court granted an application for 
preliminary injunctive relief from a governor's COVID-19 order that 
applied stricter limits in certain zones on the numbers of people who 
could gather in ``houses of worship'' than on the numbers who could 
gather in ``essential'' businesses. See id. at *3 (``Because the 
challenged restrictions are not `neutral' and of `general 
applicability' they must satisfy `strict scrutiny' . . . .'').
---------------------------------------------------------------------------

    \35\ See, e.g., Espinoza, 140 S. Ct. at 2260 (``When otherwise 
eligible recipients are disqualified from a public benefit `solely 
because of their religious character,' we must apply strict 
scrutiny.'') (quoting Trinity Lutheran, 137 S. Ct. at 2021).
    \36\ See also Central Rabbinical Congress of the U.S. & Can. v. 
N.Y. City Dep't of Health & Mental Hygiene, 763 F.3d 183, 194-95 (2d 
Cir. 2014) (applying strict scrutiny to law that singled out 
specific religious conduct performed by a particular religious 
group).
---------------------------------------------------------------------------

    Because these Supreme Court decisions suggest that the forbidden 
discrimination covers more than just categorical exclusions, the 
Agencies conclude that the notice-and-referral requirements are at 
least in tension with the Supreme Court's subsequent decisions in 
Trinity Lutheran and Espinoza. As the Council Chair acknowledged, these 
requirements applied solely to religious organizations, and the 
organizations' obligation to make a referral was triggered solely by 
beneficiaries' objections to their ``religious character.'' See 
Espinoza, 140 S. Ct. at 2255-56 (holding the provision at issue was 
based on religious character because it applied ``solely by reference 
to religious status''). The notice requirement applied to ``religious 
organizations,'' ``faith-based organization[s],'' or all ``religious 
organizations, regardless of beliefs or conduct.'' \37\ The referral 
requirement was triggered by objections to the organization's 
``religious character.'' \38\
---------------------------------------------------------------------------

    \37\ 81 FR at 19406-09 (ED, Sec. Sec.  3474.15(c)(1), 75.712, 
76.712)); id. at 19411 (DHS, Sec.  19.6(a)); id. at 19414 (USDA, 
Sec.  16.4(f)); id. at 19417 (HUD, Sec.  5.109(g)); id. at 19420 
(DOJ, Sec.  38.6(c)); id. at 19423 (DOL, 29 CFR 2.34(a)); id. at 
19425 (VA, Sec.  50.2(a); id. at 19428 (HHS, Sec.  87.3(i)(1)); see 
also 81 FR at 19406-09 (ED, Sec. Sec.  3474.15(c)(1), 75.713, 76.713 
(applying referral requirement to only ``a faith-based 
organization'')).
    \38\ 81 FR at 19407-09 (ED, Sec. Sec.  75.713(b)(1), 
76.713(b)(1)); id. at 19412 (DHS, Sec.  19.7(b)); id. at 19414 
(USDA, Sec.  16.4(g)(1)); id. at 19417 (HUD, Sec.  5.109(g)(3)(ii)); 
id. at 19421 (DOJ, Sec.  38.6(d)(2)); id. at 19423 (DOL, Sec.  
2.35(b)); id. at 19425 (VA, Sec.  50.3(b)); id. at 19428 (HHS, Sec.  
87.3(j)).
---------------------------------------------------------------------------

    The Agencies also disagree that Locke necessarily implies that the 
notice-and-referral requirements were permissible regulations of 
religious activity. The challenged law in Locke prohibited the use of 
State scholarship funds for ``religious training'' in ``devotional 
theology.'' 540 U.S. at 719-21. The program denied funds to a recipient 
because of what the recipient ``proposed to do--use the funds to 
prepare for the ministry.'' Trinity Lutheran, 137 S. Ct. at 2023-24; 
see also Espinoza, 140 S. Ct. at 2257 (distinguishing Locke). The Court 
in Locke drew a distinction based on conduct--the ``essentially 
religious endeavor'' of ``[t]raining someone to lead a congregation.'' 
540 U.S. at 721. In contrast, the notice-and-referral requirements were 
triggered by an organization's religious character alone, not its 
religious conduct, and applied to a use of funds that is required by 
the rule to be secular.
    Moreover, the Agencies disagree that notice-and-referral 
obligations borne solely by faith-based organizations cannot ever rise 
to the level of discrimination or impose special burdens. To be sure, 
the costs of compliance may have been minimal, particularly in view of 
the Agencies' experience that beneficiaries have almost never--and 
perhaps have never--sought to invoke the referral option. But the 
imposition of the notice-and-referral requirements arguably denied 
faith-based organizations the opportunity ``to compete with secular 
organizations'' on a level playing field, Trinity Lutheran, 137 S. Ct. 
at 2022, and may have cast doubt on the suitability of religious 
organizations to provide the social service in question. The 
requirements gave the impression that such religious providers were not 
favored or trusted to provide the particular social service in 
accordance with the general requirements of the law, were more likely 
to discriminate, or were more likely to be objectionable. The Agencies, 
therefore, disagree that the required notice and concomitant referral 
obligation could not have the effect of denigrating or casting a 
negative light on faith-based providers.
    The Agencies further disagree with commenters' suggestions that 
these negative implications were tempered in any meaningful way by the 
general assurances in the rule that religious organizations could 
compete ``on the same basis as'' secular organizations and would not be 
subject to discrimination based on their religious character. Those 
general statements did not change the specific terms and effects of the 
notice-and-referral requirements. The fact still remained that only 
religious organizations bore those burdens.
    The Agencies acknowledge that the notice-and-referral requirements 
were not meant to denigrate or punish religious organizations but to 
protect beneficiaries. The holdings in Trinity Lutheran and Espinoza, 
however, did not turn on the intent of the Government. Because of the 
uncertainty expressed above about what, if any, benefit the notice-and-
referral requirements provided beneficiaries, the Agencies are not 
confident that the requirements would always survive the ``strictest'' 
or ``most exacting scrutiny'' as applied to particular cases. The 
Agencies, therefore, conclude that prudential considerations justify 
the rescission of these requirements.
    The notice-and-referral requirements in the 2016 final rule were 
materially different from the notices required by laws such as the 
FMLA, EEOA, FLSA, and National Housing Act. Those laws required all 
covered employers to provide comprehensive notice of employees' rights 
irrespective of religious character. See, e.g., 29 CFR 516.4 (FLSA), 
1601.30 (EEOA), 825.300(a) (FMLA); 24 CFR 110.10 (National Housing 
Act). Employees receive those standard notices from every employer, and 
the content of the notices provides no reason to believe that their 
employer could be viewed with suspicion, or may be in some way 
objectionable, on account of any unique status.
    The Agencies also disagree with the comments that interpreted the 
plurality's footnote 3 to limit Trinity Lutheran's holding to the facts 
of that case--viz., playground resurfacing. As mentioned above, the 
Supreme Court recently confirmed in Espinoza that the `` `strictest 
scrutiny' '' applies to status-based discrimination on the basis of 
religion in the context of a different government benefit--tax credits 
for donations to organizations awarding scholarships.\39\ Nothing in 
the logic or discussion of Trinity Lutheran or Espinoza suggests that 
the nondiscrimination principle was limited to the facts of either 
case.
---------------------------------------------------------------------------

    \39\ Espinoza, 140 S. Ct. at 2257 (citing Trinity Lutheran, 137 
S. Ct. at 2021); see also id. at 2254 (``The Free Exercise Clause . 
. . protects religious observers against unequal treatment and 
against laws that impose special disabilities on the basis of 
religious status'').
---------------------------------------------------------------------------

    This is consistent with the Agencies' understanding of Trinity 
Lutheran. The Court's discussion of the principles it articulated 
pointed to applicability beyond the facts immediately before it. See, 
e.g., 137 S. Ct. at 2022 (``[T]he Free Exercise Clause protects against 
indirect

[[Page 82064]]

coercion or penalties on the free exercise of religion, not just 
outright prohibitions.'' (citing Lyng, 485 U.S. at 450)); id. at 2026 
n.3 (Gorsuch, J., concurring, joined by Thomas, J.) (``I worry that 
some might mistakenly read [footnote 3] to suggest that only 
`playground resurfacing' cases, or only those with some association 
with children's safety or health, or perhaps some other social good we 
find sufficiently worthy, are governed by the legal rules recounted in 
and faithfully applied by the Court's opinion.''). The lower court 
cases that the commenters cited reaching contrary conclusions--Real 
Alternatives and Carson--pre-date Espinoza and no longer have 
persuasive value with respect to the meaning of footnote 3.
    The Agencies also disagree that the Supreme Court's decision in 
Employment Division v. Smith insulated the notice-and-referral 
requirements from Free Exercise Clause concern. The notice-and-referral 
requirements were neither generally applicable (since they applied only 
to religious organizations) nor religion-neutral (since they required 
referrals based on objections to religious character, but not other 
characteristics of the provider). See Part II.F.2 (discussing the 
standard in Lukumi, which clarifies the meaning of Smith); see also 
Roman Catholic Diocese, 2020 WL 694354, at *2 (``Because the challenged 
restrictions are not `neutral' and of `general applicability,' they 
must satisfy `strict scrutiny,' and this means that they must be 
`narrowly tailored' to serve a `compelling' state interest.'' (quoting 
Lukumi, 508 U.S. at 546)).
    In sum, the Agencies' position in this rulemaking is an exercise of 
discretion and prudence, informed by principles of constitutional 
avoidance. Cf. Edward J. DeBartolo Corp. v. Fla. Gulf Coast Bldg. & 
Constr. Trades Council, 485 U.S. 568, 575 (1988). The Agencies have 
discretion under their authorizing statutes to remove the notice-and-
referral requirements to avoid the constitutional issues raised by the 
tension between those requirements and the Free Exercise Clause. 
Espinoza left open additional issues, including ``whether there is a 
meaningful distinction between discrimination based on use or conduct 
and that based on status.'' 140 S. Ct. at 2257. The Agencies make the 
reasonable decision, within their discretion, to eliminate this tension 
and avoid the burdens and uncertainty of litigating these unresolved 
issues. In so doing, the Agencies do not believe they have triggered 
any countervailing Establishment Clause concerns. The Supreme Court has 
``repeatedly held that the Establishment Clause is not offended when 
religious observers and organizations benefit from neutral government 
programs.'' Id. at 2254 (citing Locke, 540 U.S. at 719, and Rosenberger 
v. Rector and Visitors of Univ. of Va., 515 U.S. 819, 839 (1995)). 
Indeed, while upholding the prohibition on use of scholarships for 
training to become clergy in Locke, the Supreme Court emphasized that 
the Government could also have funded allowed such uses, consistent 
with the Establishment Clause. 540 U.S. at 719 (``[T]here is no doubt 
that the State could, consistent with the Federal Constitution, permit 
. . . [students funded by the program] to pursue a degree in devotional 
theology.'').
    For all of these reasons, the Agencies disagree with the commenters 
who suggest that relying on constitutional concerns potentially raised 
by Trinity Lutheran and Espinoza as one of the justifications for 
eliminating the notice-and-referral requirements is arbitrary and 
capricious.
    Changes: None.
    Affected Regulations: None.
b. Substantial Burdens
    Summary of Comments: Some commenters argued that the notice-and-
referral requirements imposed, or could impose, substantial burdens on 
faith-based organizations' religious exercise under RFRA. These 
commenters argued that faith-based organizations could have complicity-
based objections to providing such notice and referral, and that those 
objections should be respected, as were the complicity-based objections 
in Burwell v. Hobby Lobby, 573 U.S. 682 (2014). One religious 
organization commented that many religions prohibit complicity in sin 
and argued that the previous administration mistakenly had tried to 
downplay the gravity of such religious objections. Another commenter 
said that, by singling out faith-based providers, the notice-and-
referral requirements were in tension with RFRA and the related 
principles in the Attorney General's Memorandum. Some commenters 
contended that it was irrelevant to the substantial burden analysis 
whether an organization could exercise its religious beliefs in other 
ways.
    Several commenters argued that the Agencies could not rely on RFRA 
because they had not actually asserted that, or adequately explained 
how, notice-and-referral requirements imposed a substantial burden 
under RFRA. They charged that the Agencies were unable to point to any 
specific situation where these requirements had imposed substantial 
burdens on providers, including any situation where a faith-based 
organization claimed that the requirements compelled it to violate its 
sincerely held beliefs. As a result, some of these commenters argued 
that the Agencies' analysis was inadequate to support removal of these 
requirements based on RFRA.
    Some commenters relied on a court of appeals decision holding that 
a substantial burden requires `` `substantial pressure on an adherent 
to modify his behavior and to violate [their] beliefs.' '' Kaemmerling 
v. Lappin, 553 F.3d 669, 678 (D.C. Cir. 2008) (quoting Thomas v. Review 
Bd., 450 U.S. 707, 718 (1981)). Others cited language from a different 
court of appeals that a substantial burden ``is one that forces the 
adherents of a religion to refrain from religiously motivated conduct, 
inhibits or constrains conduct or expression that manifests a central 
tenet of a person's religious beliefs, or compels conduct or expression 
that is contrary to those beliefs.'' Civil Liberties for Urban 
Believers v. City of Chi., 342 F.3d 752, 761 (7th Cir. 2003) 
(``C.L.U.B.'') (citation omitted); see also id. (holding that a law 
``that imposes a substantial burden on religious exercise is one that 
necessarily bears direct, primary and fundamental responsibility for 
rendering religious exercise . . . effectively impracticable'').
    Many commenters argued that the burdens imposed by the notice-and-
referral requirements did not meet these legal standards. Some 
commenters argued that the notice-and-referral requirements could not 
have imposed a substantial burden because the burden of compliance was 
``de minimis,'' imposed only ``minor costs,'' or was only a ``minimal 
imposition.'' They reasoned that faith-based organizations only had to 
provide a notice, reproduce language provided by the Agencies, exert 
``reasonable'' efforts to find an alternative provider when requested, 
and notify the awarding agency if they were unable to find an 
alternative. Some argued that there was no substantial burden because 
the costs of compliance were offset by the Government's funding that 
the religious service providers had accepted. Others argued that 
participation in government-funded programs was voluntary, so faith-
based organizations could decline the funding and avoid the associated 
requirements. Multiple commenters argued that the Agencies' position 
that the referral requirement was rarely invoked is at odds with the 
position that it imposed a substantial burden.

[[Page 82065]]

    Several commenters cited RFRA cases to discredit the notion that 
the notice-and-referral requirements could raise complicity-based 
objections. Some distinguished Hobby Lobby because it did not involve a 
referral requirement or because it concerned a privately held 
corporation whose employees were not obligated to work. According to 
these commenters, faith-based organizations freely choose to seek 
Federal funding for the programs governed by this rule and understand 
that they serve a ``captive audience'' whose religious liberty must be 
protected by the Constitution. Another commenter argued that the act of 
referral cannot create a substantial burden because the organization is 
actually objecting to ``what follows from'' the referral, meaning the 
conduct that the beneficiary might engage in with the alternate 
provider. The commenter argued that two appellate decisions \40\ 
involving objections to what is colloquially referred to as the 
contraceptive mandate demonstrate that faith based organizations ``have 
no recourse'' for such an objection. Some commenters argued that any 
faith-based organization refusing to provide a referral to an 
alternative provider was not truly religious, was not being faithful to 
its religious beliefs, or was not ``truly Christian.''
---------------------------------------------------------------------------

    \40\ See California v. U.S. Dep't of Health & Human Servs., 941 
F.3d 410 (9th Cir. 2019), vacated by Dep't of Health & Human Servs. 
v. California, No. 19-1038, 2020 WL 3865243 (July 9, 2020); 
Pennsylvania v. Trump, 930 F.3d 543, 573 (3d Cir. 2019), rev'd by 
Little Sisters of the Poor Saints Peter & Paul Home v. Pennsylvania, 
140 S. Ct. 2367 (July 8, 2020) (``Little Sisters'').
---------------------------------------------------------------------------

    Some organizations argued that the notice-and-referral requirements 
did not impose a substantial burden because of countervailing 
interests. For example, a faith-based organization argued that referral 
requirements did not ``substantially burden'' the ``religious 
exercise'' of faith-based organizations because the requirements were 
``clearly tied'' to the objectives of a government service that the 
organization voluntarily provides. Similarly, other commenters pointed 
to a passage from the preamble to the 2016 final rule that the required 
notice language ``does not place an undue burden on recipients of 
Federal financial assistance, particularly when balanced against the 
notice's benefit--informing beneficiaries of valuable protections of 
their religious liberty.'' Some commenters relied on Locke v. Davey, 
which found that a condition on funding imposed a ``relatively minor 
burden.'' 540 U.S. at 725 (2004).
    Response: The Agencies disagree with any contention that the 
notice-and-referral requirements categorically did or did not impose a 
substantial burden. Rather, the Agencies take the position that these 
requirements were in tension with RFRA because they could have imposed 
a substantial burden in certain circumstances, as the Agencies 
explained in the NPRMs.
    A regulation imposes a substantial burden when it (1) requires a 
person to take, or abstain from, an action contrary to the person's 
sincerely held religious exercise (2) under substantial pressure to 
comply. Hobby Lobby, 573 U.S. at 720-24; Sherbert, 374 U.S. at 405-06. 
For the first element, the believer's sincerely held religious 
understanding determines the scope of the religious exercise and 
whether compliance violates that exercise. This applies with full force 
to compliance that would make an organization complicit in the activity 
of others that it believes would violate its religious exercise, just 
as it would apply to compliance that would make the organization 
undertake such action directly. Little Sisters of the Poor Saints Peter 
& Paul Home, 140 S. Ct. 2367, 2383-84 (2020) (``Little Sisters''); 
Hobby Lobby, 573 U.S. at 723-25. A Catholic women's shelter, for 
example, might sincerely believe that referring a prospective client to 
another organization that provides birth control or abortions would 
render the Catholic shelter complicit in grave sin.
    The Agencies thus disagree with the commenters who relied on the 
contrary attenuation theory. Under that theory, a religious believer or 
organization cannot be substantially burdened by ``what follows from'' 
the required conduct, including when the organization's action triggers 
activity by others that ultimately violates the organization's 
religious exercise. The Supreme Court has repeatedly rejected this 
view. In Little Sisters, the Supreme Court said that Federal agencies 
``must accept the sincerely held complicity-based objections of 
religious entities.'' 140 S. Ct. at 2383. In Hobby Lobby, the Supreme 
Court rejected the argument that a complicity-based objection was 
``simply too attenuated.'' 573 U.S. at 723. The Supreme Court stated 
that ``federal courts have no business addressing whether the religious 
belief asserted in a RFRA case is reasonable.'' Id. at 724.\41\ ``Where 
to draw the line in a chain of causation that leads to objectionable 
conduct is a difficult moral question, and our cases have made it clear 
that courts cannot override the sincere religious beliefs of an 
objecting party on that question.'' Little Sisters, 140 S. Ct. at 2391 
(Alito, J., concurring).
---------------------------------------------------------------------------

    \41\ See also Thomas, 450 U.S. at 715 (crediting Jehovah's 
Witness who objected that making tank turrets would be participating 
in war in violation of his sincere religious exercise, even though 
he was willing to make raw materials for the tanks).
---------------------------------------------------------------------------

    Although the Agencies do not identify here any religion with such a 
complicity-based objection to the notice-and-referral requirements, the 
Agencies cannot rule out the possibility. Many religions sincerely 
believe that complicity in certain actions they consider immoral is 
similar (morally speaking) to committing the underlying action itself. 
The Agencies cannot agree with comments that a complicity-based 
objection to a referral is not ``truly'' religious, or that such an 
objection cannot be sincerely held.\42\ No principle articulated in 
Little Sisters, Hobby Lobby, Thomas or any other relevant Supreme Court 
decision precludes the possibility that the notice-and-referral 
requirements could on this basis give rise to a substantial burden on 
the exercise of religion.
---------------------------------------------------------------------------

    \42\ See, e.g., United States v. Ballard, 322 U.S. 78, 87 (1944) 
(Under the Constitution, ``[m]an's relation to his God was made no 
concern of the state. He was granted the right to worship as he 
pleased and to answer to no man for the verity of his religious 
views.'').
---------------------------------------------------------------------------

    For the second element of what constitutes a ``substantial 
burden,'' there are myriad ways that a law could exert substantial 
pressure for a person or organization to abandon its religious beliefs. 
As relevant here, it could constitute substantial pressure when the 
Government conditions an organization's receipt of Federal funds to 
administer a social service on taking actions that would contravene the 
organization's religious beliefs. Such a condition would force the 
organization ``to choose between the exercise of a First Amendment 
right and participation in an otherwise available public program.'' 
\43\ In 1963, the Supreme Court held it was ``too late in the day to 
doubt'' that this kind of conditional government benefit could 
constitute a substantial burden on religious exercise.\44\ Thus, the

[[Page 82066]]

Department of Justice determined that RFRA was reasonably construed to 
require an exemption from a requirement not to discriminate on the 
basis of religion in employment under a Department-funded social 
service program when the grantee sincerely believed that employment of 
people who did not adhere to its core beliefs would undermine its 
religious mission. See Application of the Religious Freedom Restoration 
Act to the Award of a Grant Pursuant to the Juvenile Justice and 
Delinquency Prevention Act, 31 Op. O.L.C. 162 (2007) (``World 
Vision'').
---------------------------------------------------------------------------

    \43\ Thomas, 450 U.S. at 716; see also id. at 717-18 (``Where 
the state conditions receipt of an important benefit upon conduct 
proscribed by a religious faith, or where it denies such a benefit 
because of conduct mandated by religious belief, thereby putting 
substantial pressure on an adherent to modify his behavior and to 
violate his beliefs, a burden upon religion exists. While the 
compulsion may be indirect, the infringement upon free exercise is 
nonetheless substantial.'').
    \44\ Sherbert v. Verner, 374 U.S. 398, 404 (1963); see 42 U.S.C. 
2000bb(b) (``The purposes of this [Act] are--(1) to restore the 
compelling interest test as set forth in Sherbert v. Verner, 374 
U.S. 398 (1963) and Wisconsin v. Yoder, 406 U.S. 205 (1972) and to 
guarantee its application in all cases where free exercise of 
religion is substantially burdened; and (2) to provide a claim or 
defense to persons whose religious exercise is substantially 
burdened by government.'').
---------------------------------------------------------------------------

    As mentioned above, some commenters argued that the notice-and-
referral requirements did not rise to the level of ``substantial 
pressure on an adherent to modify his behavior and to violate [his] 
beliefs,'' Kaemmerling, 553 F.3d at 678, or could not be said to 
``bear[ ] direct, primary and fundamental responsibility for rendering 
religious exercise effectively impracticable,'' C.L.U.B., 342 F.3d at 
761. The burden, they contended, was at best de minimis. In Kaemmerling 
and C.L.U.B., however, the conditions for participating in a government 
benefit program were not at issue. C.L.U.B. arose in the land-use 
context. Further, C.L.U.B. required the land-use regulation to burden 
``a central tenet'' of the believer's faith, 342 F.3d at 761, which is 
contrary to the definition of ``religious exercise'' in both RLUIPA and 
RFRA, see 42 U.S.C. 2000cc-5(7)(A); id. 2000bb-2(4). The Seventh 
Circuit has also abandoned the ``effectively impracticable'' standard 
from C.L.U.B., recognizing that Hobby Lobby and a more recent RLUIPA 
case, Holt v. Hobbs, 574 U.S. 352 (2015), ``articulate[d] a standard 
much easier to satisfy'' than the ``effectively impracticable'' 
standard. Jones v. Carter, 915 F.3d 1147, 1149 (7th Cir. 2019) 
(citation omitted).
    The notice-and-referral requirements, imposed as conditions for 
receiving grants to carry out social services, could place substantial 
pressure on faith-based organizations to abandon or modify their 
beliefs. The grants under the programs covered by the rule were 
otherwise generally available on a religion-neutral basis to qualifying 
entities. It does not matter whether the organization could choose not 
to accept the grant.\45\ What would make the burden on religious 
exercise ``substantial'' is the pressure from the inability to acquire 
that Federal funding. An organization might in those circumstances feel 
compelled either to bend its beliefs or forgo the Federal funding 
altogether. It is irrelevant that the organization might be able to 
practice its religion in other ways. See, e.g., Holt, 574 U.S. at 361-
62 (rejecting the argument that alternative forms of religious exercise 
are relevant to the substantial burden analysis); see also Attorney 
General Memorandum, Principles 4 and 10.
---------------------------------------------------------------------------

    \45\ Thomas, 450 U.S. at 716 (``[A] person may not be compelled 
to choose between the exercise of a First Amendment right and 
participation in an otherwise available public program.''); 
Sherbert, 374 U.S. at 412 (Douglas, J., concurring) (This inquiry 
``turns not on the degree of injury, which may indeed be nonexistent 
by ordinary standards. The harm is the interference with the 
individual's scruples or conscience--an important area of privacy 
which the First Amendment fences off from government.'').
---------------------------------------------------------------------------

    The Agencies also disagree with the commenters who contended that 
countervailing interests, such as the benefit of providing notices and 
referrals to beneficiaries of the social service program, would 
ameliorate any substantial burden imposed by those requirements on an 
organization's religious exercise. Countervailing interests are 
relevant to the next stage of the inquiry: Whether the Government has a 
compelling interest that might justify the imposition of a substantial 
burden on the recipient of a grant. See, e.g., United States v. Lee, 
455 U.S. 252, 257-58 (1982) (finding a burden sufficient to reach 
strict scrutiny and only then considering the impact on third parties).
    For all of these reasons, the Agencies recognize the possibility 
that the alternative provider notice-and-referral requirements would 
impose a substantial burden on faith-based organizations with sincerely 
held complicity-based objections to those requirements. The Agencies 
are obligated to ``overtly consider'' this possibility when 
promulgating rules that raise concerns regarding ``the sincerely held 
complicity-based objections of religious entities.'' Little Sisters, 
140 S. Ct. at 2383. Failure to consider it could make the Agencies 
``susceptible to claims that the rules were arbitrary and capricious 
for failing to consider an important aspect of the problem.'' Id. at 
2384. Supreme Court precedent does not require the Agencies to 
determine conclusively that a regulation would always impose a 
substantial burden in order for the Agencies to address such concerns 
proactively, as explained further in Part II.C.3.d. It is consistent 
with--though not required by--the fact- and context-specific nature of 
RFRA for the Agencies to decline to state definitively whether the 
notice-and-referral requirements constitute a substantial burden in 
this context, and instead to promulgate a prophylactic rule that avoids 
the imposition of any burden that, for reasons discussed in the next 
section, do not seem justified by a compelling interest.
    Changes: None.
    Affected Regulations: None.
c. Compelling Interests
    Summary of Comments: Some commenters agreed with the Agencies that 
the lack of evidence of actual instances of a beneficiary's seeking a 
referral under the 2016 rule undermined any compelling interest--under 
both the Free Exercise Clause and RFRA--in imposing the notice-and-
referral requirements. See 85 FR at 2891 (DHS); id. at 2900 (USDA); id. 
at 2923 (DOJ); id.at 2931 (DOL); id. at 2940 (VA); id. at 2977 (HHS); 
id. at 3194 (ED). A national religious organization confirmed that it 
was also not aware of any instance of a referral request. Other 
commenters, however, argued that the Agencies did not have adequate 
documentation to prove that beneficiaries were not seeking referrals 
because the Agencies were not tracking successful referral requests. 
They claimed that the Agencies' inadequate documentation could not 
prove that the Government lacked a compelling interest and thus did not 
meet the Agencies' burden to justify removing the notice-and-referral 
requirements, making this proposed rule arbitrary and capricious. Other 
commenters similarly argued that the Agencies had not conducted a 
thorough analysis of the frequency with which beneficiaries requested 
referrals.
    One organization claimed that, under the existing regulations, it 
and similar organizations had received complaints from nonreligious 
beneficiaries claiming that religious providers were denying them 
services or violating their religious freedom. In its comment to HUD, 
this commenter said it had found an alternative provider for a 
beneficiary who had contacted the organization to find an alternative 
to a 12-step program in a Medicaid-funded emergency shelter 
administered by a faith-based organization. The commenter argued that 
such programs were pervasively religious, based on Inouye v. Kemna, 504 
F.3d 705 (9th Cir. 2007), and Hazle v. Crofoot, 727 F.3d 983 (9th Cir. 
2013), and claimed that another secular organization had regularly 
received similar complaints from shelter residents.
    One commenter also argued that HHS and the other Agencies were not 
entitled to remove the notice-and-referral requirements based on HHS's 
experience with the notice-and-referral

[[Page 82067]]

requirement in the SAMHSA programs. Under those requirements, 
participating faith-based organizations must report all referrals, see 
85 FR 2984, but to date the Agency has received no such report. The 
commenter stated that the Agencies should not generalize from this 
experience to all of the programs affected by this final rule without 
conducting a rigorous statistical analysis of the Agencies' programs 
more broadly. Additionally, some commenters argued that there was 
tension in claiming that the notice-and-referral requirements imposed a 
substantial burden while denying that a compelling interest exists due 
to the absence of beneficiaries seeking referrals.
    Some commenters contended that the notice-and-referral requirements 
would survive strict scrutiny because they furthered some combination 
of the compelling government interests in (1) protecting third-party 
beneficiaries' religious liberty and (2) providing critical services 
effectively to millions of vulnerable people. The commenters argued 
that these interests outweighed the burdens on faith-based 
organizations.
    Regarding the first putative interest, commenters argued that the 
notice-and-referral requirements served a compelling interest in 
protecting beneficiaries' fundamental religious liberty. They contended 
that this interest outweighed any burden on faith-based organizations, 
which as previously noted they variously characterized as ``de 
minimis,'' as imposing only ``minor costs,'' or as only a ``minimal 
imposition.'' See Part II.K.1 (Regulatory Impact Analysis). They 
reasoned that the burden imposed on faith-based organizations to comply 
with these requirements was not ``undue'' when weighed against the 
benefit of informing beneficiaries of their religious rights, as the 
2016 final rule concluded. They also said the cost to providers of 
notice and referral was minimal compared to the cost to beneficiaries 
of seeking out alternative service providers. See id.
    The second interest was presented with some variations. Some 
commenters said the interest was in ensuring that federally funded 
social-services programs effectively serve the vulnerable populations 
that the programs were created to help. Others said the interest was in 
ensuring that no unnecessary obstacles would prevent beneficiaries from 
receiving needed services.
    Response: Although they do not dismiss the argument out of hand, 
the Agencies do not believe it to be clear that the notice-and-referral 
requirements would serve any compelling interest, let alone that they 
would do so in the particularized way required by RFRA. Under that 
statute, the burden is not on the Government to disprove the existence 
of a compelling interest. Rather, assuming that a social service 
provider could show that the notice-and-referral requirements imposed a 
substantial burden on its religious exercise, the burden would shift to 
the Government to prove that a compelling interest exists. ``Only the 
gravest abuses, endangering paramount interests'' could ``give 
occasion'' to satisfy this test. Sherbert, 374 U.S. at 406; see also 
Yoder, 406 U.S. at 215 (``[O]nly those interests of the highest order 
and those not otherwise served can overbalance legitimate claims to the 
free exercise of religion.''). Additionally, to demonstrate a 
compelling interest under RFRA, the Agencies would need to show that 
their interest was compelling with regard to the application of these 
requirements ``to the person'' affected. 42 U.S.C. 2000bb-1(b). This 
``rigorous standard'' requires a particularized showing. See, e.g., 
Holt, 574 U.S. at 363-64; Gonzales v. O Centro Espirita Beneficente 
Uniao Do Vegetal, 546 U.S. 418, 431-32 (2006). For example, Congress's 
determination that an illegal hallucinogen was exceptionally dangerous 
with no medical use and a high risk of abuse was not sufficient to show 
a compelling interest in applying that ban to a specific religious use 
in Gonzales. 546 U.S. at 432-34. It is not clear that either putative 
compelling interest cited by commenters could meet these standards.
    While the Agencies recognize that protecting the religious liberty 
of third-party beneficiaries can be compelling, they do not believe it 
is clear that the notice-and-referral requirements were always 
protecting beneficiaries' religious liberties. See Part II.C.1. The 
referral requirement enabled objections based on feelings of 
discomfort, dislike, and even rank prejudice against particular 
religious groups for providing social services that the rule required, 
and will still require, to be free of any religious content. 
Furthermore, the rule required, and still requires, a social service 
provider to keep any religious activities that it conducts with its own 
funds separate in time or place from the Government-funded program, and 
to ensure that beneficiary participation in such activities is 
voluntary. If, in a particular case, the environment in which a 
religious provider delivered a federally funded social service was so 
overwhelming as to actually infringe on a beneficiary's religious 
liberty, the Agency or its intermediary could be required by RFRA to 
make an appropriate accommodation, which might include referring the 
beneficiary elsewhere. As discussed more below, the Agencies believe 
from their experience that this circumstance is sufficiently rare that 
it does not warrant imposing a potentially burdensome, possibly 
stigmatizing, across-the-board rule on all religious providers. It is 
within the Agencies' legal and policy discretion to address any such 
concern as the case arises.
    For at least three reasons, it is not clear that the notice-and-
referral requirements furthered a compelling interest in providing 
services effectively to vulnerable beneficiaries. First, the notice-
and-referral requirements addressed a problem that rarely arises. 
Second, the notice-and-referral requirements did not apply to many 
organizations. Third, with occasional exceptions for specific programs, 
Congress itself has not applied these requirements to the Agencies.
    Under the prior rule, religious social service providers were 
permitted to fulfill their referral obligation by making referrals to 
non-federally funded providers, which the Government could not have 
ensured were providing the services in a manner as effective as the 
programs it was funding. And, as discussed above and in the paragraphs 
that follow, there is no indication that any individual beneficiary 
actually sought a referral. To be compelling, an interest must have a 
``high degree of necessity,'' Brown v. Entm't Merchs. Ass'n, 564 U.S. 
786, 804 (2011), which means there must be ``an `actual problem' in 
need of solving, and the curtailment of [the right] must be actually 
necessary to the solution.'' Id. at 799 (citation omitted); Korte v. 
Sebelius, 735 F.3d 654, 685 (7th Cir. 2013) (applying this test to 
RFRA); see also Sherbert, 374 U.S. at 403 (the regulated conduct must 
``pose[ ] some substantial threat to public safety, peace[,] or 
order''). The same is true with regard to the First Amendment, to the 
extent strict scrutiny applies, as discussed in Part II.F below.
    Seven of the eight Agencies said in their 2020 NPRMs that they were 
not aware of any circumstance in which a beneficiary ``actually sought 
an alternative provider'' since the requirement went into effect in 
2016. See 85 FR at 2891 (DHS); id. at 2900 (USDA); id. at 2923 (DOJ); 
id. at 2931 (DOL); id. at 2940 (VA); id. at 2977 (HHS); id. at 3194 
(ED). All eight Agencies now confirm that they are not aware of any 
such referrals, based on their experiences while the notice-and-

[[Page 82068]]

referral requirements were in effect. The Agencies' employees who have 
administered and provided legal support to the relevant programs 
throughout this time period confirmed that they were not aware of any 
such referral requests. For example, VA's Supportive Services for 
Veteran Families program has not received a single request or concern 
from a beneficiary of any provider--faith-based or not--seeking an 
alternative provider. And, in VA's review of records, it found no 
record of a single report or referral indicating that any beneficiary 
requested a referral under the prior rule. Cf. 81 FR 19368 (discussing 
recordkeeping and reporting requirements). Similarly, while preparing 
this final rule, HUD confirmed that it was not aware of any faith-based 
organization that had reported a request for a referral.
    The Agencies' experience is consistent with SAMHSA's. As the 
Agencies recognized when promulgating the 2016 final rule, that program 
requires all referrals to be reported. The Agencies said that HHS had 
received no reports of referrals in the SAMHSA programs, so ``the 
Agencies believe[d] that the number of requests for referrals [would] 
be minimal.'' 81 FR 19366. In its January 2020 NPRM, HHS reaffirmed 
that no referrals had been reported for the SAMHSA programs and that 
``few if any referrals have been requested'' in the other programs to 
which the 2016 rule applied. 85 FR at 2984. HHS reaffirms that there 
have been no reported referral requests in the SAMHSA programs. As they 
did in 2016, the Agencies believe that the SAMHSA experience is 
relevant. It is a helpful data point because all referrals must be 
reported, and those regulations have been in place since 2003.
    Furthermore, although the Agencies have said multiple times in the 
public record--in the 2016 final rule and the 2020 NPRMs--that 
referrals were rarely or never used, not one comment (among the more 
than 95,000 public comments received) cited or described an actual 
instance of a referral requested under the rule. In fact, the only 
comment on actual practice connected to the prior rule was from a 
national faith-based organization that said it had not experienced any 
such referral request. Another commenter referred to a practice of 
beneficiaries' calling like-minded organizations for referrals, but 
these referrals seem to have occurred outside the context of the 
referral requirement at issue here. There is no indication that the 
beneficiaries seeking these referrals had previously sought services 
from a faith-based provider receiving direct Federal financial 
assistance or that they had sought referrals from such providers. If 
anything, the comment demonstrated that unofficial or non-government-
imposed processes were sufficient for beneficiaries to obtain 
referrals, without the need to impose the burden on faith-based 
organizations. As discussed in Part II.C, it also makes sense that 
beneficiaries who will not accept benefits from a faith-based 
organization would seek a referral from an organization that they do 
not find objectionable, rather than the one to which they objected.
    For all of these reasons, the Agencies have a sufficient basis to 
conclude that referrals were rarely (if ever) sought under the notice-
and-referral requirements. That conclusion diminishes the Government's 
interest in these requirements because it shows that, in practice, 
these requirements have turned out to be merely symbolic, which would 
mean they ``cannot suffice to abrogate'' religious liberty. Smith, 494 
U.S. at 911 (Blackmun, J., dissenting) (applying the standard that was 
restored by RFRA).
    The Agencies disagree that this conclusion is in tension with their 
finding that complying with the notice-and-referral requirements could 
impose a substantial burden. To be clear, the Agencies are not saying 
that the notice-and-referral requirements always and in every case 
posed a substantial burden on the religious exercise of faith-based 
organizations or categorically violated RFRA. As explained in Part 
II.C.3.b, conditioning a benefit on a faith-based organization's 
willingness to give a notice or a referral could exert substantial 
pressure to forgo complicity-based beliefs. That is true even if no 
beneficiary ultimately seeks a referral, but the Agencies recognize 
that not all faith-based organizations necessarily share such beliefs 
or face that difficult choice. The Agencies nevertheless do not see the 
need to create even the prospect of such a choice, and force potential 
applicants to rely on obtaining case-specific exemptions under RFRA, 
given that the need for imposing the notice-and-referral requirements 
is slight. Some otherwise-qualified organizations might simply decline 
to apply for a grant, for fear that the Government would not grant them 
the exemption when the need arises. The Agencies wish to avoid that 
chilling effect.
    Additionally, secular organizations were exempt from the notice-
and-referral requirements despite similar risks of harm to the 
allegedly compelling interests in protecting beneficiaries from 
discrimination and receiving a social service in an environment that 
made them uncomfortable. The notice-and-referral requirements also did 
not apply to any USAID programs, or to USDA's school lunch program, 
even though that program otherwise met the definition of ``direct 
Federal financial assistance.'' 81 FR at 19381; see also id. at 19413-
14 (sections 16.4(a), (g), (h)). The notice requirement did not apply 
to any faith-based organizations receiving indirect Federal financial 
assistance, nor did the referral requirement, except for organizations 
receiving indirect aid from VA or HHS. As discussed in Part II.C, those 
providers posed the same supposed risks of harm to beneficiaries' 
religious liberty protections and receipt of services. See Espinoza, 
140 S. Ct. at 2261 (proffered interest in promoting public schools was 
undermined because secular private schools would have the same impact, 
yet could receive funding). A law does not serve a compelling interest 
when it exempts conduct that would serve the ``supposedly vital 
interest.'' Lukumi, 508 U.S. at 547 (citation omitted); Gonzales, 546 
U.S. at 433 (citation omitted).
    Moreover, Congress itself did not see fit to impose notice-and-
referral requirements in most of the social service programs covered by 
this rule, whereas it did in the Charitable Choice statutes that apply 
to the SAMHSA and TANF programs. See 42 U.S.C. 290kk-1(f)(1); id. 
604a(e); id. 300x-65(e)(1). As the 2016 final rule recognized, the 
applicable Charitable Choice statutes ``govern[ ]'' and ``take 
precedence over these regulations,'' and ``the Government will continue 
to bear the full burden of making referrals as specified in those 
statutes.'' 81 FR at 19366. That remains true today and will continue 
to remain true after this final rule takes effect. Congress's decision 
to impose the referral requirement only in the Charitable Choice 
statutes undercuts the interest in imposing the referral requirements 
on faith-based organizations in the programs governed by this final 
rule. ``[I]t was Congress, not the Departments, that declined to 
expressly require'' notice and referral here and ``that has failed to 
provide the protection'' that the commenters seek. Little Sisters, 140 
S. Ct. at 2382.
    In short, the Agencies conclude that they have insufficient 
evidence to determine that imposing the notice-and-referral 
requirements on all religious social service providers would in all 
cases serve a compelling government interest.
    Changes: None.

[[Page 82069]]

    Affected Regulations: None.
d. Least Restrictive Means and Appropriate Remedy
    Summary of Comments: Some commenters argued that striking the 
notice-and-referral requirements was the appropriate remedy for the 
tension with the Free Exercise Clause and RFRA, including because there 
was little indication that these requirements would be necessary for 
either faith-based or secular providers. For example, an organization 
representing over 720 schools commented that barriers to participation, 
like referral requirements, should be removed for all providers. That 
commenter added that removing this requirement was ``crucial'' to 
protect religious freedom and ensure that religious organizations could 
continue working to improve society.
    Some commenters argued, however, that the notice-and-referral 
requirements should not be altered because they were narrowly tailored 
to the interests discussed in Part II.C.3.c above. They said that the 
requirements were narrowly tailored because they imposed minimal costs 
and required only ``reasonable efforts'' to find another provider for a 
beneficiary who requested one.
    Some commenters argued generally that the Agencies should provide 
substitute mechanisms to ensure that beneficiaries are aware of their 
rights and can receive services from a nonreligious provider. 
Commenters also argued that the Agencies should provide evidence about 
what alternative, reliable mechanisms exist. Several commenters argued 
that the Agencies were instead required by RFRA to conduct a fact-
specific inquiry on a case-by-case basis and not to impose broader 
exemptions or changes of policy. These commenters relied on California, 
941 F.3d at 427-28; Real Alternatives, Inc. v. Sec'y of Health & Human 
Servs., 867 F.3d 338, 358 & n.23 (3d Cir. 2017); and EEOC v. R.G. & 
G.R. Harris Funeral Homes, Inc., 884 F.3d 560, 588 (6th Cir. 2018), 
aff'd on other grounds, Bostock v. Clayton Cty., 140 S. Ct. 1731 
(2020).
    Commenters suggested four potential regulatory alternatives that 
they believed would be less restrictive than removing the requirements 
altogether. First, several commenters argued that it would be less 
restrictive for the Agencies to expand these notice-and-referral 
requirements to secular providers. Some argued that this 
``modification'' would achieve equal treatment of religious and secular 
organizations, including to remove any stigma, without eliminating the 
beneficiary protections. Some commenters noted that HHS's NPRM said 
this was the ``clearest alternative approach.'' 85 FR at 2984. These 
commenters stated that notice-and-referral requirements could properly 
be developed and tailored for the parallel issues that beneficiaries 
would likely encounter with secular providers. Some of these commenters 
argued that secular organizations already receiving Federal funding 
could easily absorb the de minimis burden of such notice-and-referral 
requirements. Another commenter, however, said that expanding these 
requirements to secular organizations would be ``on its face . . . 
ridiculous'' because these measures were meant to prevent religious 
coercion and, by definition, such organizations would be incapable of 
religious coercion.
    Second, multiple commenters suggested that it would be less 
restrictive for the Government or an intermediary to provide the notice 
and make the referrals, which would remove the burden from faith-based 
organizations while preserving the benefit for beneficiaries. 
Commenters added that this would be consistent with the Charitable 
Choice statutes and how such provisions operated before the 2016 rule. 
Multiple commenters contended that Government control would improve 
administration and safeguards of stakeholders' rights and that the 
Agencies would have superior knowledge of which other providers in the 
area were also being funded and would be able to provide the services 
being sought. Commenters also contended that, because the Agencies 
asserted that few referrals had been requested to date, there would be 
minimal burden on the Government to respond to such referrals.
    Third, multiple commenters suggested combining the first two 
alternatives by having the Government provide the notice and referral 
for all providers. These commenters argued that this alternative would 
eliminate the alleged status-based discrimination while expanding the 
supposed benefits of the rule.
    Fourth, an advocacy organization suggested that the Agencies could 
also consider allowing individual requests for exemptions to the 
notice-and-referral requirements.
    Response: The Agencies agree with the commenters who said that the 
Agencies can and should remedy the tension with Trinity Lutheran and 
RFRA by striking the notice-and-referral requirements. If there is no 
compelling interest, then there is also no need to analyze the least 
restrictive means to achieve that interest.\46\ Even assuming the 
notice-and-referral requirements served a compelling government 
interest, it is not clear that any of the alternatives proposed by 
commenters would qualify as the least restrictive means of furthering 
any of the interests discussed above. ``An infringement of First 
Amendment rights,'' assuming there is one, ``cannot be justified by a 
State's alternative view that the infringement advances religious 
liberty.'' Espinoza, 140 S. Ct. at 2260. The Supreme Court has held 
that the least restrictive means is an ``exceptionally demanding'' 
standard. Hobby Lobby, 573 U.S. at 728. To meet this standard, an 
agency must ``sho[w] that it lacks other means of achieving its desired 
goal without imposing a substantial burden on the exercise of 
religion.'' Id. But an alternative is less restrictive only when it 
would both further the compelling interest as effectively as the 
existing requirement and alleviate the burden that triggered strict 
scrutiny.\47\
---------------------------------------------------------------------------

    \46\ See, e.g., Gonzales, 546 U.S. at 429 (``[T]he Government 
failed on the first prong of the compelling interest test, and did 
not reach the least restrictive means prong.''); see also World 
Vision, 31 Op. O.L.C. at 184 (not addressing least restrictive means 
because compelling interest was not satisfied).
    \47\ See, e.g., Hobby Lobby, 573 U.S. at 731 (holding the 
accommodation was a less restrictive means for those plaintiffs 
because ``it does not impinge on the plaintiffs' religious belief 
that providing insurance coverage for the contraceptives at issue 
here violates their religion, and it serves HHS's stated interests 
equally well'').
---------------------------------------------------------------------------

    First, it is unclear that extending the notice-and-referral 
requirements to secular providers would be a less restrictive means. 
The Agencies agree that this may be the clearest way to achieve equal 
treatment under Trinity Lutheran and that costs to individual secular 
providers would likely be minimal, as they are for individual faith-
based providers. But it would not alleviate the tension with RFRA. See, 
e.g., Hobby Lobby, 573 U.S. at 728 (a less restrictive means achieves 
the compelling interest ``without imposing a substantial burden''). 
Applying these requirements to all providers would extend any potential 
substantial burden to faith-based organizations that were exempt from 
these requirements under the 2016 final rule. Additionally, as 
explained in ED's NPRM, the Agencies do not want to affect 
beneficiaries' receipt of secular services when no religious 
alternative is available and do not want to impose burdens on any 
secular organizations that oppose referrals to religious alternatives. 
85 FR 3194. Also, beneficiaries have access to public information 
regarding potential

[[Page 82070]]

secular or religious alternatives. Id.; see also Part II.C.2.a 
(describing and citing examples of public information).
    Second, it is not clear that it is a less restrictive means for the 
Agencies or their intermediaries to assume responsibility to provide 
the notices and referrals. The Agencies agree that this might alleviate 
the potential substantial burden under RFRA--assuming the faith-based 
provider was not involved in a way that raised complicity-based 
objections--while preserving whatever benefit inures to beneficiaries. 
But it would retain the tension with Trinity Lutheran because these 
requirements would continue applying solely to faith-based 
organizations based on their religious character. Additionally, 
requiring Government entities to handle such referrals raises 
additional problems, such as assessing the religious character of the 
alternatives in order to make appropriate referrals. It is also unclear 
that the Agencies would have uniquely helpful information to make 
referrals. Many of the Agencies' programs have thousands of 
participants that are funded by intermediaries. The Agencies will not 
necessarily know what providers are funded in any given area. For other 
programs, the Agencies or other stakeholders have helpful publicly 
available resources that list the alternative providers and are easily 
accessible to beneficiaries, as discussed in Part II.C.2.a above. 
Although few or no referrals have been requested under the prior rule, 
the Agencies would still bear burdens to implement across all of these 
programs notice and referral systems that would be accessible and 
available to all in compliance with all other applicable Federal laws.
    Third, the Agencies recognize that the combined alternative 
proposal--extending these notice-and-referral requirements to secular 
organizations and requiring the Government or its intermediary to 
assume the responsibility to carry them out--could alleviate the 
tension with both Trinity Lutheran and RFRA. But it would have to avoid 
involving faith-based organizations in ways that would elicit 
complicity-based objections, which it is not clear can be accomplished. 
Even if that could be accomplished, the Agencies would still exercise 
their discretion not to impose that combined alternative proposal for 
all of the other reasons discussed regarding the individual proposals.
    Fourth, the Agencies do not believe it is a less restrictive means 
to retain a rarely invoked rule and require objecting faith-based 
organizations instead to make individual requests for exemptions under 
RFRA. Such a regime still shifts the burden to the organization to 
demonstrate that the possibility of having to make a referral would 
affect its religious exercise. The remedy of requiring all faith-based 
organizations to follow the rule and request individualized exemptions 
when necessary would not be narrowly tailored to serve a government 
interest that is speculative at best.
    In any event, the Agencies elect to exercise their discretion to 
remove the notice-and-referral requirements rather than implement these 
alternatives, for all of the reasons discussed throughout this section. 
The Agencies have discretion to determine how to alleviate the tension 
with the Free Exercise Clause. Removing these requirements is well 
within the Agencies' discretion of ``room for play in the joints'' to 
decide how to fashion appropriate religious accommodations and 
exemptions. Walz v. Tax Comm'n of City of New York, 397 U.S. 664, 669 
(1970); Texas Monthly, Inc. v. Bullock, 489 U.S. 1, 18 n.8 (1989) 
(Establishment Clause allows regulatory exemptions beyond those 
required by Free Exercise Clause). This is especially so given 
uncertainty about whether the Government even has a compelling interest 
in applying the notice-and-referral requirements. And it is also within 
the Agencies' discretion to avoid serious constitutional issues and the 
burdens of related litigation. Cf. DeBartolo, 485 U.S. at 575.
    The Agencies have similar discretion under RFRA and disagree with 
the comments that RFRA does not allow them to change a regulation to 
eliminate a requirement that potentially burdens the exercise of 
religion. See Little Sisters, 140 S. Ct. at 2383-84. Instead, the 
Agencies believe that they have discretion to determine how to avoid 
potential or actual RFRA violations, including discretion to determine 
whether to impose a categorical rule or address concerns on a case-by-
case basis. RFRA directs the ``[g]overnment'' to comply with its terms, 
42 U.S.C. 2000bb-1(a) to (b), with regard to ``the implementation'' of 
``all Federal law.'' 42 U.S.C. 2000bb-2(a). When an Agency determines 
that its mode of implementing Federal law might in certain cases burden 
an organization's exercise of religion, the Agency has discretion to 
modify its implementation to avoid any violations of RFRA. That is 
consistent with the executive branch's responsibility to ``take 
[c]are'' that the [l]aws be faithfully executed.'' U.S. Const. art. II, 
sec. 3.
    That is also consistent with the most recent Supreme Court 
decisions on these issues. In Little Sisters, the Court held that 
agencies must consider sincere complicity-based objections when 
promulgating rules and that failure to do so can make the rule 
arbitrary and capricious. 140 S. Ct. at 2383-84. Several Justices 
separately ``appear[ed] to agree'' that a regulatory agency has 
``authority under RFRA to `cure' any RFRA violations caused by its 
regulations.'' Id. at 2382 n.11.\48\ Indeed, Justice Ginsburg 
recognized that ``[n]o party argues that agencies can act to cure 
violations of RFRA only after a court has found a RFRA violation, and 
this opinion does not adopt any such view.'' Id. at 2407 n.17 
(Ginsburg, J., dissenting).
---------------------------------------------------------------------------

    \48\ See also id. at 2395 (Alito, J., concurring) (``Once it is 
recognized that the prior accommodation violated RFRA in some of its 
applications, it was incumbent on the Departments to eliminate those 
violations, and they had discretion in crafting what they regarded 
as the best solution.''); id. at 2400 (Kagan, J., concurring in the 
judgment) (those agencies ``have wide latitude over exemptions, so 
long as they satisfy the requirements of reasoned decisionmaking''); 
id. at 2407 (Ginsburg, J., dissenting) (``The parties here agree 
that federal agencies may craft accommodations and exemptions to 
cure violations of RFRA.'' (citations and footnote omitted)).
---------------------------------------------------------------------------

    RFRA would be unworkable if it did not permit accommodations beyond 
what it affirmatively required. Under such a rule, the Agencies would 
have to guess the exact accommodation that courts would approve. A 
little less accommodation than necessary would violate RFRA. A little 
more accommodation than necessary would exceed the Agency's authority. 
That cannot be the standard, especially when the Government has 
traditionally been granted ``room for play in the joints'' to decide 
the scope of religious accommodations under both the First Amendment 
and RFRA. Walz, 397 U.S. at 669.\49\ That would also be inconsistent 
with the Supreme Court's recent reaffirmation that ``RFRA `provide[s] 
very broad protection for religious liberty,' '' Little Sisters, 140 S. 
Ct. at 2483 (quoting Hobby Lobby, 573 U.S. at 693 (alteration in 
original)), and with the definition of ``religious exercise'' in RFRA 
and RLUIPA that Congress mandated ``be construed in favor of a broad 
protection of religious exercise, to the maximum extent permitted by 
the terms of this chapter and the Constitution.'' 42 U.S.C. 2000cc-3(g) 
(RLUIPA); id. 2000bb-2(4) (RFRA); Hobby Lobby, 573 U.S. at 696 & n.5. 
RFRA empowers courts to provide relief when the Government has exceeded 
RFRA's bounds. 42 U.S.C. 2000bb-1(c). But nothing in RFRA requires the 
Government to implement

[[Page 82071]]

or maintain regulations that go right up to the line of what courts 
would find acceptable.
---------------------------------------------------------------------------

    \49\ See also World Vision, 31 Op. O.LC. at 168; Texas Monthly, 
489 U.S. at 18 n.8 (Establishment Clause allows regulatory 
exemptions beyond those required by the Free Exercise Clause).
---------------------------------------------------------------------------

    Moreover, RFRA and the Agencies' organic statutes do not 
``prescribe the remedy by which the government must eliminate'' a 
substantial burden. 83 FR 57545. The Agencies' choice to remove the 
notice-and-referral requirements is reasonable given the legal 
uncertainty as to whether those requirements might in some cases 
violate RFRA.\50\ When it has found that a regulation violated RFRA, 
the Supreme Court has let the regulatory agency determine the correct 
remedy.\51\ The same should be true for potential violations. As a 
result, the Agencies have discretion to determine the appropriate 
accommodation. As Justice Alito recently explained, RFRA ``does not 
require . . . that an accommodation of religious belief be narrowly 
tailored to further a compelling interest. . . . Nothing in RFRA 
requires that a violation be remedied by the narrowest permissible 
corrective.'' Little Sisters, 140 S. Ct. at 2396 (Alito, J., 
concurring).
---------------------------------------------------------------------------

    \50\ Cf. Ricci v. DeStefano, 557 U.S. 557, 585 (2009) (holding 
an employer need only have a strong basis to believe that an 
employment practice violates Title VII's disparate impact ban in 
order to take certain types of remedial action that would otherwise 
violate Title VII's disparate-treatment ban).
    \51\ See, e.g., Hobby Lobby, 573 U.S. at 726, 731, 736; 79 FR at 
51118 (2014) (proposed modification in light of Hobby Lobby); 80 FR 
41324 (final rule explaining that ``[t]he Departments believe that 
the definition adopted in these regulations complies with and goes 
beyond what is required by RFRA and Hobby Lobby'').
---------------------------------------------------------------------------

    Commenters rely on contrary cases from the United States Courts of 
Appeals that preceded Little Sisters. But those cases cannot override 
the rule in Little Sisters that the Agencies should consider potential 
complicity-based objections. Indeed, one of those cases, the Ninth 
Circuit's California v. Trump decision, was expressly vacated and 
remanded in light of Little Sisters. See 140 S. Ct. 2367. The Third 
Circuit's Real Alternatives decision did not address the scope of any 
agency's regulatory discretion under RFRA, 867 F.3d 338, 358 & n.23, 
and its reasoning was essential to Pennsylvania v. Trump, 930 F.3dat 
573 & n.30, which Little Sisters reversed and remanded. Accordingly, in 
light of Little Sisters, the Agencies do not believe that those cases 
remain good law.
    Additionally, the Agencies question the continued vitality of the 
Sixth Circuit's decision regarding RFRA in Harris Funeral Homes. Most 
significantly, the substantial-burden reasoning in Harris Funeral 
Homes, which was relied on by some commenters, was based on the 
attenuation theory from HHS Mandate cases, including Michigan Catholic 
Conference. Harris Funeral Homes, 884 F.3d at 589-90, aff'd on other 
grounds, Bostock v. Clayton Cnty., 140 S. Ct. 1731 (2020). As discussed 
in Part II.C.3.b, the Supreme Court has expressly rejected that theory 
as contrary to RFRA. Little Sisters, 140 S. Ct. at 2383; Hobby Lobby, 
573 U.S. at 723-25; see also Little Sisters, 140 S. Ct. at 2389-91 
(Alito, J., concurring). Removing the notice-and-referral requirements 
is justified more directly by Little Sisters, Hobby Lobby, and the 
other Supreme Court cases on which they rely. See also Part II.E 
(further discussing Harris Funeral Homes).
    In sum, the Agencies exercise their discretion to remove notice-
and-referral requirements because it is their position that doing so is 
the appropriate administrative response to the Free Exercise Clause and 
RFRA issues that those requirements created. In the Agencies' view, 
eliminating these requirements is a more effective means of alleviating 
the tension with the First Amendment and RFRA than the alternatives 
proposed by commenters. This view is informed by the Agencies' 
experience that they are not aware of any actual referral requests 
under the prior rule. Also, eliminating the notice-and-referral 
requirements avoids the potential for litigation that could burden and 
delay the issuance of grants to eligible organizations. Moreover, the 
Agencies are acting within their discretion because, as discussed in 
Part II.C.1, ``it was Congress, not the Departments, that declined to 
expressly require'' notice and referral in the vast majority of program 
statutes that govern the Agencies here, and ``that has failed to 
provide the protection'' for beneficiary objections to a provider's 
religious exercise that the commenters seek. Little Sisters, 140 S. Ct. 
at 2382.
    Finally, the Agencies may provide information voluntarily to 
beneficiaries as they deem appropriate within existing frameworks. For 
example, DOL and VA noted in their NPRMs that they ``could supply 
information to beneficiaries seeking an alternate provider'' when they 
``make[ ] publicly available information about grant recipients that 
provide benefits under its programs.'' 85 FR at 2931 (DOL), 2940 (VA). 
The other Agencies agree that this is a possibility for some of the 
programs that they fund. Under this final rule, the provision of such 
information remains, as it has always been, an option but not a 
requirement.
    Changes: None.
    Affected Regulations: None.
e. Third-Party Harms
    Summary of Comments: Several commenters argued that the Free 
Exercise Clause and RFRA cannot justify removing the notice-and-
referral requirements because of the potential impacts on 
beneficiaries. These commenters argued that this change fails to 
protect beneficiaries' interests based on a number of cases--Bd. of Ed. 
of Kiryas Joel Village Sch. Dist. v. Grumet, 512 U.S. 687 (1994); 
Estate of Thornton v. Caldor, 472 U.S. 703 (1985); Texas Monthly; Hobby 
Lobby; and Cutter v. Wilkinson, 544 U.S. 709 (2005)--which held that 
religious exemptions that can harm third parties implicate the 
Establishment Clause. Some of these commenters argued that Hobby Lobby 
assumed no burden on third parties and that any third-party harm 
precludes a Government accommodation under the Free Exercise Clause or 
RFRA. The Agencies incorporate the summary of such comments from Part 
II.E.
    These commenters argued that beneficiaries would be subject to the 
third-party harms discussed in the comments summarized in Part II.C.2. 
For example, some said that beneficiaries would not be able to make 
informed decisions without knowledge of the religious character of the 
service provider. Some claimed that removing the notice-and-referral 
requirements would impose ``significant'' hardships on beneficiaries--
specifically, the costs of searching for alternative providers, 
including ``potentially missing work, finding childcare, paying for 
transportation, and visiting various other organizations.'' Commenters 
also expressed concern that these burdens may be especially harmful to 
the beneficiaries of programs designed to help those with limited 
resources and facing poverty or other deprivations.
    Finally, one commenter argued that this change in the final rule 
would treat faith-based and secular organizations equally, which, 
according to this commenter, violates the Establishment Clause.
    Response: The Agencies disagree that removing the notice-and-
referral requirements will unlawfully or inappropriately burden third 
parties.
    Third-party burdens are part of the Establishment Clause analysis 
but do not preclude accommodations or removal of beneficiary 
protections. This is true even when the Free Exercise Clause does not 
require the accommodation or exemption.\52\ Under

[[Page 82072]]

controlling Supreme Court precedent, the Establishment Clause allows 
accommodations that remove a burden of government rules from religious 
organizations, reduce the chilling effect on religious conduct, or 
reduce government entanglement. See Corp. of Presiding Bishop of the 
Church of Jesus Christ of Latter-day Saints v. Amos, 483 U.S. 327, 334-
39 (1987). Any third-party burdens that might result from such 
accommodations are attributable to the organization that benefits from 
the accommodation, not to the Government, and, as a result, do not 
violate the Establishment Clause. Id. at 337 n.15. In the Sherbert line 
of Free Exercise Clause cases that later became the basis of RFRA, 
dissents and concurrences routinely pointed to such burdens on third 
parties but did not persuade the majorities of any Establishment Clause 
violation.\53\
---------------------------------------------------------------------------

    \52\ See, e.g., Texas Monthly, 489 U.S. at 18 n.8; see also 
Cutter, 544 U.S. at 713 (``[T]here is room for play in the joints 
between the Free Exercise and Establishment Clauses, allowing the 
government to accommodate religion beyond free exercise 
requirements, without offense to the Establishment Clause.'' 
(internal quotation omitted)).
    \53\ See, e.g., Thomas, 450 U.S. at 723 n.1 (Rehnquist, J., 
dissenting) (citing several burdens on the system and other 
beneficiaries, including that ``[w]e could surely expect the State's 
limited funds allotted for unemployment insurance to be quickly 
depleted''); Yoder, 406 U.S. at 240 (White, J., concurring) 
(outlining the State's legitimate interest in educating Amish 
children, especially those who leave their community, but finding 
the evidence of harm insufficient); id. at 245 (Douglas, J., 
dissenting) (arguing that the decision ``imperiled'' the ``future'' 
of the Amish children, not their parents).
---------------------------------------------------------------------------

    The Supreme Court has applied this principle to allow 
accommodations that litigants claimed caused significant third-party 
harms. For example, the Supreme Court upheld the Title VII exemption 
for religious employers--discussed in Part II.H--despite the alleged 
significant harms of expressly permitting discrimination against 
employees on the basis of religion. See Texas Monthly, 489 U.S. at 18 
n.8 (citing Amos, 483 U.S. at 327).\54\ This is consistent with Hobby 
Lobby, which expressly held that a burden lawfully may be removed from 
a religious organization even if it allows such a religious objector to 
withhold a benefit from third parties. Ultimately, government action 
that removes such a benefit merely leaves the third party in the same 
position in which it would have been had the Government not regulated 
the religious objector in the first place. Otherwise, any accommodation 
could be framed as burdening a third party. That would ``render[ ] RFRA 
meaningless.'' Hobby Lobby, 573 U.S. at 729 n.37. ``[F]or example, the 
Government could decide that all supermarkets must sell alcohol for the 
convenience of customers (and thereby exclude Muslims with religious 
objections from owning supermarkets), or it could decide that all 
restaurants must remain open on Saturdays to give employees an 
opportunity to earn tips (and thereby exclude Jews with religious 
objections from owning restaurants).'' Id.; see also Attorney General's 
Memorandum, Principle 15, 82 FR at 49670.
---------------------------------------------------------------------------

    \54\ Hobby Lobby, 573 U.S. at 729 n.37 (``Nothing in the text of 
RFRA or its basic purposes supports giving the Government an 
entirely free hand to impose burdens on religious exercise so long 
as those burdens confer a benefit on other individuals.'').
---------------------------------------------------------------------------

    The Agencies are acting consistently with these principles here. 
Removing the notice-and-referral requirements will not impose greater 
burdens on third parties than the Title VII exemption that was upheld 
in Amos.\55\ A beneficiary who does not receive notice or referral from 
a faith-based direct aid recipient ``is not the victim of a burden 
imposed by the rule''; rather, that person ``is simply not the 
beneficiary of something that federal law does not provide.'' Little 
Sisters, 140 S. Ct. at 2396 (Alito, J., concurring). The Agencies are 
merely returning to a status quo that existed until 2016, that remains 
for USAID funding recipients, and that has always existed for most 
Agencies' indirect funding recipients. The Agencies have reasonably 
concluded that removing the notice-and-referral requirements will not 
unlawfully burden third parties.
---------------------------------------------------------------------------

    \55\ See Amos, 483 U.S. at 337 n.15 (``Undoubtedly [the 
employee's] freedom of choice in religious matters was impinged 
upon'' by the church gymnasium's exemption from the religious 
nondiscrimination requirement in Title VII'').
---------------------------------------------------------------------------

    The other cases cited by commenters do not warrant a different 
result. In those cases, the Supreme Court found Establishment Clause 
violations because the law at issue both singled out a specific 
religious practice or sect for special treatment and imposed 
obligations without considering the impacts on third parties.\56\ But 
the Agencies have assessed the burdens on third parties here, and the 
Establishment Clause permits the Government to alleviate government-
imposed burdens on religious exercise through accommodations available 
to all religions equally.\57\ As in Amos, this final rule alleviates 
the Government-imposed burdens of the notice-and-referral requirements 
and applies equally to all religious organizations. Indeed, removal of 
the notice-and-referral requirements does not go as far as Amos did 
when it provided an exemption to religious organizations from an 
otherwise generally applicable law. Rather, the change in this final 
rule ensures equal treatment of faith-based and secular organizations, 
and it does not obligate or enable any grantee under the rule to impose 
burdens on beneficiaries that did not exist before with respect to the 
social service program in question.
---------------------------------------------------------------------------

    \56\ Kiryas Joel, 512 U.S. at 706-07; Estate of Thornton, 472 
U.S. at 709-10; see also Cutter, 544 U.S. at 722 (explaining that 
the Court in Estate of Thornton ``struck down'' the statute at issue 
``because it `unyieldingly weighted' the interests of Sabbatarians 
`over all other interests' '' and required employers to privilege 
employee requests for Sabbath accommodations (alterations omitted)).
    \57\ See, e.g., Amos, 483 U.S. at 334-39; id. at 337 n.15 
(distinguishing Estate of Thornton); cf. Hobbie v. Unemployment 
Appeals Comm'n of Fla., 480 U.S.136, 145 n.11 (1987) (distinguishing 
Estate of Thornton because the provision of unemployment benefits to 
people fired for any religious reason ``does not single out a 
particular class of such persons for favorable treatment and thereby 
have the effect of implicitly endorsing a particular religion''); 
see also Cutter, 544 U.S. at 720, 722, 724 (upholding RLUIPA under 
the Establishment Clause despite alleged burdens).
---------------------------------------------------------------------------

    Finally, the Agencies disagree that treating faith-based and 
secular organizations on the same terms could violate the Establishment 
Clause. To the contrary, the Supreme Court has ``repeatedly held that 
the Establishment Clause is not offended when religious observers and 
organizations benefit from neutral government programs.'' Espinoza, 140 
S. Ct. at 2254 (citing Locke, 540 U.S. at 719, and Rosenberger, 515 
U.S. at 839). Treating faith-based and secular organizations equally 
under this rule does not violate the Establishment Clause.
    Changes: None.
    Affected Regulations: None.

D. Indirect Federal Financial Assistance

1. Definition of ``Indirect Federal Financial Assistance''
    Existing regulations included in their definition of ``indirect 
Federal financial assistance'' a requirement that beneficiaries have at 
least one adequate secular option for use of the Federal financial 
assistance. The notices of proposed rulemaking proposed to amend those 
regulations to eliminate this secular alternative requirement.
a. Consistency With Zelman v. Simmons-Harris
    Summary of Comments: Several commenters contended that eliminating 
the secular alternative requirement would be inconsistent with the 
Supreme Court's decision in Zelman v. Simmons-Harris, 536 U.S. 639 
(2002). These commenters argued that Zelman and its predecessor cases 
interpreted the Establishment Clause to require that voucher programs 
include a secular option. Without secular options, these

[[Page 82073]]

commenters argued, beneficiaries cannot make a genuine and independent 
private choice of a religious provider. According to these commenters, 
that interpretation did not change in subsequent cases. Other 
commenters contended that certain factors emphasized in the Zelman 
decision do not make sense unless there exists at least one adequate 
secular option. These commenters contended that, for the programs at 
issue here, the proposed change will not guarantee that secular options 
exist, unlike in Zelman where public school options were mandated.
    Some commenters claimed that eliminating the alternative provider 
requirement would undercut Zelman. These commenters also argued that--
combined with elimination of the written notice requirement, which, 
according to these commenters, would allow religious service providers 
to ``hide their religious character''--such a change would render 
beneficiaries unable to ``engage in `true private choice' when the very 
nature of that choice is hidden from them.''
    Some of these commenters characterized the proposed change as 
contrary to Zelman's requirement that indirect aid be neutral toward 
religion. These commenters claimed that the proposed change would 
effectively design programs in such a way that only religious providers 
are available as options, and thus it would be the Government, not the 
beneficiary, that is determining that the government aid reaches 
inherently religious programs.
    Other commenters questioned Zelman itself. Some commenters 
contended that the Zelman decision was not unanimous and that it 
conflicted with earlier Supreme Court precedent. Some characterized 
Zelman as an ``already questionable rule.''
    Other commenters, however, opined that eliminating the secular 
alternative requirement would align with Zelman. Some of these 
commenters observed that Zelman upheld the tuition-assistance program 
that it reviewed because the program conferred assistance on a broad 
class of individuals without reference to religion, and the Court 
rejected an argument that the program was unconstitutional simply 
because religiously affiliated schools received a majority of the 
vouchers. These commenters further argued that, under Zelman, the 
constitutionality of an indirect-aid program cannot turn on whether a 
secular provider chooses to establish a location within the geographic 
area of religious providers.
    Response: The Agencies agree with commenters who observed that the 
proposed elimination of the secular alternative requirement would be 
consistent with Supreme Court precedent, and the Agencies disagree with 
commenters who argued otherwise.
    In Zelman, the Supreme Court rejected an Establishment Clause 
challenge to a tuition-assistance program in which a large majority of 
the participating schools were religious, and nearly all of the 
beneficiaries chose to expend the aid on tuition at religious schools. 
The Court observed that ``[a]ny private school, whether religious or 
nonreligious,'' could participate in the program provided that it met 
the program's religion-neutral criteria, 536 U.S. at 645, and it was 
undisputed that the program ``was enacted for the valid secular purpose 
of providing educational assistance to poor children in a demonstrably 
failing public school system,'' id. at 649. The Court then summarized 
its decisions as having held that ``where a government aid program is 
neutral with respect to religion, and provides assistance directly to a 
broad class of citizens who, in turn, direct government aid to 
religious [providers] wholly as a result of their own genuine and 
independent private choice, the program is not readily subject to 
challenge under the Establishment Clause.'' Id. at 652.
    The Court upheld the tuition-assistance program at issue in Zelman 
because it was ``neutral in all respects toward religion''; it 
``confer[red] educational assistance directly to a broad class of 
individuals defined without reference to religion'' (i.e., parents of 
schoolchildren); it ``permit[ted] the participation of all schools 
within the district, religious or nonreligious''; and the Government 
did nothing to ``skew the program toward religious schools'' because 
the aid was ``allocated on the basis of neutral, secular criteria that 
neither favor nor disfavor religion'' and was ``made available to both 
religious and secular beneficiaries on a nondiscriminatory basis.'' Id. 
at 653-54 (emphasis in original, internal quotation marks and 
alteration omitted). The Supreme Court further reasoned that ``[a]ny 
objective observer familiar with the full history and context of the . 
. . program would reasonably view it as one aspect of a broader 
undertaking to assist poor children in failed schools, not as an 
endorsement of religious schooling in general.'' Id. at 655.
    The indirect-aid programs covered by the modified definition in 
this rulemaking will share these characteristics. They will be neutral 
in all respects toward religion. They will allow organizations--both 
faith-based and secular--to participate as service providers, so long 
as they meet the programs' religion-neutral criteria. And they will 
make aid available on the basis of secular, nondiscriminatory criteria 
to religious and non-religious beneficiaries alike. Thus, the statutory 
programs that meet the definition of ``indirect Federal financial 
assistance'' as modified by this rulemaking will do nothing to skew the 
programs toward religious providers or services toward religious 
beneficiaries. To the extent the endorsement test still applies as it 
did in Zelman, any reasonable observer familiar with such programs 
would reasonably view them as efforts to provide assistance to the 
program's beneficiaries, rather than as endorsements of religion. In 
sum, the terms of the modified definition are consistent with, and do 
not move these programs out of compliance with, Zelman.
    Although the Zelman Court did note the availability of secular 
schools in the program that it reviewed, id. at 655, it did not say 
that secular options must be available in a given geographic area in 
order for an indirect-aid program to satisfy the Establishment Clause. 
Indeed, the Court specifically declined to rest its holding on the 
geographically varying distribution of religious and secular schools. 
As the Court explained, the distribution of religious and non-religious 
schools ``did not arise as a result of the program,'' and resting its 
holding on that distribution ``would lead to the absurd result that a 
neutral school-choice program might be permissible in some parts of 
Ohio . . . but not in'' others. Id. at 656-57. ``The constitutionality 
of a neutral . . . aid program simply does not turn on whether and why, 
in a particular area, at a particular time, most private [providers] 
are run by religious organizations, or most recipients choose to use 
the aid at a religious [provider].'' Id. at 658. Because the secular 
alternative requirement made the definition of ``indirect Federal 
financial assistance'' hinge on the geographically varying availability 
of secular providers, it went beyond what the Establishment Clause 
requires and actually created the result that the Zelman Court deemed 
``absurd.''
    The Agencies also disagree with commenters who contended that, in a 
geographic area lacking a secular provider, a choice to expend aid on a 
faith-based provider cannot be a genuine and independent choice of 
private individuals under Zelman. As the Zelman Court summarized, the 
mechanism by which indirect aid reaches religious programs--``numerous

[[Page 82074]]

private choices, rather than the single choice of a government,'' id. 
at 652-53 (internal quotation marks omitted)--drives the Establishment 
Clause analysis. Under this final rule, private choices will continue 
to be the mechanism by which aid reaches religious programs. The 
programs covered by the modified definition of indirect aid will be 
open to administration by secular and faith-based providers alike. 
Moreover, beneficiaries participating in a program in one geographic 
area may spur new alternatives to serve that area and, as the 
experience of the COVID-19 pandemic has evidenced, many services can be 
obtained remotely from other geographic areas. Therefore, it cannot be 
said that a single government choice determines the distribution of aid 
in the programs.
    The Agencies likewise disagree with a commenter's suggestion that 
elimination of the written notice requirement will preclude the 
programs at issue in this rulemaking from qualifying as indirect-aid 
programs. Nowhere in Zelman, or in the cases on which Zelman relied, 
did the Supreme Court suggest, much less hold, that indirect-aid 
programs must require providers to post or provide notices regarding 
their religious character and the availability of other providers. See 
Zelman, 536 U.S. 639; see also Zobrest v. Catalina Foothills Sch. 
Dist., 509 U.S. 1 (1993); Witters v. Wash. Dep't of Servs. for the 
Blind, 474 U.S. 481 (1986); Mueller v. Allen, 463 U.S. 388 (1983).
    One commenter suggested that Zelman is distinguishable because it 
arose in the education context (where certain public school options had 
to exist by law). The Agencies are unpersuaded that the distinction 
amounts to a difference. As already explained, Zelman summarized the 
Establishment Clause inquiry as whether it is ``numerous private 
choices, rather than the single choice of a government,'' that 
determines the flow of aid to religious providers. 536 U.S. at 652-53. 
Under the definition the Agencies adopt today, beneficiary and provider 
choices, rather than a single government choice, will determine the 
flow of indirect aid.
    Changes: None.
    Affected Regulations: None.
b. Rights of Beneficiaries and Providers
    Summary of Comments: The Agencies received both supportive and 
opposing comments regarding the impacts of the proposal to eliminate 
the secular alternative requirement on the rights of beneficiaries and 
providers. Some commenters argued that elimination of the requirement 
would violate the constitutional rights of some beneficiaries by 
leaving them with no choice but to attend a program that includes 
explicitly religious content, or by effectively adding a religious test 
for receipt of government services. Similarly, others contended that 
elimination of the secular alternative requirement would put certain 
religious beneficiaries to the choice of adhering to their faith while 
refusing benefits or participating in religious activities against 
their faith to obtain the benefits.
    On the other hand, one commenter opined that eliminating the 
secular alternative requirement was necessary to bring the Agencies' 
regulations into compliance with Trinity Lutheran, RFRA, and the 
Attorney General's Memorandum. Specifically, the commenter argued that 
by precluding religious beneficiaries in certain geographic areas from 
expending indirect aid on religious service providers of their choice, 
the requirement imposed an impermissible burden on those beneficiaries 
in violation of Trinity Lutheran and RFRA.
    Other commenters, including groups representing minority religions, 
supported the proposal and pointed to a perception of disfavored 
treatment of faith-based providers in the existing definition of 
indirect Federal financial assistance. These commenters observed that, 
under the 2016 rule, secular providers could be considered indirect-aid 
recipients where beneficiaries lacked an adequate religious 
alternative, but faith-based providers could not be considered 
indirect-aid recipients where beneficiaries lacked an adequate secular 
alternative.
    Response: The Agencies again do not agree that eliminating the 
secular alternative requirement would preclude genuine and independent 
choices of private individuals under Zelman or would result in 
involuntary or compulsory participation in religious activities. As 
already explained, beneficiaries' use of indirect aid to participate in 
programs with religious content will remain a function of private 
choice. Any participation requirements that a faith-based provider 
might impose on a beneficiary who chooses to expend indirect aid on 
that provider's program would result from private choice rather than 
government action and, therefore, would not implicate the beneficiary's 
constitutional rights.\58\
---------------------------------------------------------------------------

    \58\ Cf. Manhattan Cmty. Access Corp. v. Halleck, 139 S. Ct. 
1921, 1928 (2019) (``In accord with the text and structure of the 
Constitution, this Court's state-action doctrine distinguishes the 
government from individuals and private entities.'').
---------------------------------------------------------------------------

    The Agencies agree with the commenters who argued that, at least 
under some circumstances, the secular alternative requirement was in 
tension with providers' and beneficiaries' rights under the Free 
Exercise Clause of the First Amendment. Under Trinity Lutheran and 
Espinoza, disparate treatment of secular and faith-based providers is 
in tension with the Free Exercise Clause. In Espinoza, the Supreme 
Court reaffirmed its holding in Trinity Lutheran that ``disqualifying 
otherwise eligible recipients from a public benefit solely because of 
their religious character imposes a penalty on the free exercise of 
religion that triggers the most exacting scrutiny.'' Espinoza, 140 S. 
Ct. at 2255 (quoting Trinity Lutheran, 137 S. Ct. at 2021 (internal 
quotation marks omitted)).
    The secular alternative requirement resulted in some level of 
distinction between secular and religious providers based solely on 
religious character. When a secular provider option was not present, 
this requirement precluded ``otherwise eligible recipients''--the 
beneficiaries and the providers--from accessing a public benefit 
``solely because of'' the provider's ``religious character.'' A secular 
organization in the same position, where it was the only provider, 
would still be eligible to provide services. The validity of such a 
distinction has been called into question by Trinity Lutheran and 
Espinoza. Furthermore, the secular alternative requirement may burden 
the free exercise rights of both beneficiaries and providers. In 
Espinoza, the Supreme Court addressed claims brought by the parents of 
school-aged children, who were the beneficiaries. 140 S. Ct. at 2251-
52. The opinion, however, addressed not only the parents' liberty 
interests, but also those of the religious schools, which were the 
providers. The Court found that excluding religious provider options 
from the State-run program ``burdens not only religious schools but 
also the families whose children attend or hope to attend them.'' Id. 
at 2261.
    For these reasons, the Agencies have concluded that the secular 
alternative requirement was in tension with Trinity Lutheran and 
Espinoza and may burden the free exercise rights of beneficiaries and 
providers under the First Amendment and RFRA. See Attorney General's 
Memorandum, 82 FR at 49674.
    Changes: None.
    Affected Regulations: None.
c. Harms to Beneficiaries and Providers
    Summary of Comments: Some commenters argued that the proposed

[[Page 82075]]

new definition of ``indirect Federal financial assistance'' would harm 
beneficiaries in various ways. They argued that it would leave some 
beneficiaries with only programs that include explicitly religious 
content and program requirements; force some beneficiaries to 
participate in, or be subjected to, religious activities that make them 
uncomfortable or that violate their own religious beliefs; and subject 
beneficiaries to discrimination or bias, including on the basis of 
religion. Commenters argued that these consequences would be 
experienced by religious minorities, by female-led households, by 
racial minorities, by individuals who identify as transgender, and by 
individuals who are lesbian, gay, or bisexual.
    Response: The Agencies do not agree that the new definition of 
``indirect Federal financial assistance'' will adversely impact 
beneficiaries who are religious minorities, racial minorities, lesbian, 
gay, bisexual, transgender, or in female-led households. The comments 
predicting mistreatment of, or discrimination against, beneficiaries 
lacked supporting evidence, anecdotal or otherwise. Moreover, faith-
based providers, like other providers, will be required to follow the 
requirements and conditions applicable to the grants and contracts they 
receive and will be forbidden to deny services in violation of these 
requirements. There is no basis on which to presume that faith-based 
providers are less likely than other providers to comply with their 
obligations. See Mitchell v. Helms, 530 U.S. 793, 856-57 (2000) 
(O'Connor, J., concurring in the judgment). And in any event, the 
distinction between direct and indirect aid has no bearing on the scope 
and substance of programs' nondiscrimination requirements; rather, the 
distinction governs whether faith-based providers may use Federal 
financial assistance to engage in, and may require beneficiaries to 
participate in, explicitly religious activities or, instead, must 
separate their explicitly religious activities from the supported 
programs.
    In this rulemaking, the Agencies have sought to retain all 
necessary protections for beneficiaries while removing barriers to the 
full and equal participation of faith-based organizations in federally 
supported programs. In so doing, the Agencies recognize that, for many 
faith-based organizations, the provision of services to those in need 
is an exercise of their religious beliefs, and many faith-based 
organizations therefore view their explicitly religious activities as 
integral parts of the programs and services that they provide. The 
Agencies also are mindful that an unduly restrictive definition of 
indirect Federal financial assistance--the definition that controls 
whether and when federally supported programs may incorporate 
explicitly religious activities--could discourage such faith-based 
organizations from participating in federally supported programs. This 
result would harm not only faith-based organizations whose religious 
activities are fundamental to their programs and services, but also 
beneficiaries by discouraging such faith-based organizations from 
operating in unserved and underserved communities.
    Indeed, elimination of the secular alternative requirement will 
make a difference only in circumstances where there is no adequate 
secular provider in a geographic area. It is better, in the Agencies' 
view, for beneficiaries in such unserved or underserved communities to 
have a faith-based option to receive indirect-aid services--even one 
that incorporates explicitly religious activities in which the 
beneficiaries otherwise might prefer not to participate--than to have 
no option at all. At the same time, the Agencies recognize that some 
beneficiaries may wish not to participate in explicitly religious 
activities that make them uncomfortable or that are inconsistent with 
their own religious beliefs. The Agencies, however, believe that this 
interest is served by this final rule, which will place the choice of 
service provider in the hands of beneficiaries and will not require 
them to accept the services of faith-based providers. Although the 
Agencies recognize that, in unserved or underserved communities, 
beneficiaries' needs for services may motivate them to choose service 
providers that they otherwise might not prefer, the Agencies believe 
they are better served by having an option, rather than having no 
option at all. It will still be their choice, not the Government's, to 
accept services from the faith-based provider.
    This conclusion is consistent with the Court's reasoning in 
Espinoza, which rejected the argument that the ``no-aid provision'' at 
issue ``actually promotes religious freedom'' by ``keeping the 
government out of [religious organizations'] operations.'' 140 S. Ct. 
at 2260 (emphasis in original). That some potential recipients might 
decline to participate does not justify ``eliminating any option to 
participate in the first place,'' id. at 2261, and certainly does not 
provide support for ``disqualifying otherwise eligible recipients from 
a public benefit solely because of their religious character,'' id. at 
2255 (internal quotation marks omitted), as some commenters would have 
the Agencies do.
    Moreover, the purposes of this final rule include ensuring that 
otherwise eligible faith-based providers can participate on equal terms 
as secular providers and are not deterred from applying due to 
unnecessary or unclear rules, including fear of litigation. Faith-based 
providers might not have participated in indirect-aid programs because 
they were unaware of existing secular alternative providers or were 
unsure whether the existing secular providers would be deemed 
``adequate.'' Although these instances and harms are difficult to 
quantify, beneficiaries in unserved and underserved areas would have 
been harmed by the absence of any federally funded programming.
    In sum, the Agencies are exercising their discretion to finalize 
this amended definition of ``indirect Federal financial assistance,'' 
in order to avoid potential constitutional problems and to achieve the 
policy goals of expanding the availability of federally funded services 
to beneficiaries and of limiting obstacles to the equal participation 
of religious providers in those programs.
    Changes: None.
    Affected Regulations: None.
2. Required Attendance at Religious Activities
    Under eight of the Agencies' current regulations, a religious 
organization ``that participates in a program funded by indirect 
financial assistance need not modify its program activities to 
accommodate a beneficiary who chooses to expend the indirect aid on the 
organization's program.'' E.g., 28 CFR 38.5(c). HUD's current 
regulations have slightly different wording, stating that ``this 
section does not require any organization that only receives indirect 
Federal financial assistance to modify its program or activities to 
accommodate a beneficiary that selects the organization to receive 
indirect aid.'' 24 CFR 5.109(h).
    The NPRMs proposed amending this language to clarify that this 
extends to an organization's attendance policies, where such policies 
require attendance at ``all activities that are fundamental to the 
program.'' HUD proposed to keep its unique language and to add the new 
language at the end of the provision.
a. Establishment Clause
    Summary of Comments: Some comments opposed the proposed change on 
the ground that allowing any providers in an indirect-aid program to 
include required religious elements in their programs violates the

[[Page 82076]]

Establishment Clause. Other comments supported the change and viewed 
the change as consistent with established precedent.
    Some commenters argued that this proposal violates the 
Establishment Clause when considered alongside the proposed elimination 
of the adequate secular alternative requirement from the definition of 
``indirect Federal financial assistance.'' As the commenters 
characterized this interplay, the changes taken together would have the 
effect of allowing providers to impose religious exercise on 
beneficiaries in circumstances in which no adequate secular alternative 
is available, effectively conditioning government aid on participation 
in a religious activity and, thereby advancing religion. A commenter 
cited Corporation of Presiding Bishop of Church of Jesus Christ of 
Latter-Day Saints v. Amos, 483 U.S. 327, 334-35 (1987), as support for 
this position.
    Response: The Agencies disagree with the commenters who argued that 
allowing providers to require attendance at all activities that are 
fundamental to an indirect-aid program violates the Establishment 
Clause. The Supreme Court has repeatedly upheld government programs in 
which aid, directed by private choice, is used by the beneficiary to 
attend programs with a required religious element.\59\ The Court upheld 
the use of government funds in these programs because the ``link 
between government and religion [was] attenuated by private choices.'' 
Espinoza, 140 S. Ct. at 2261. The beneficiary's voluntary use of such 
aid is not ``state action sponsoring or subsidizing religion.'' 
Witters, 474 U.S. at 488 (emphasis in original). ``Nor does the mere 
circumstance that [a beneficiary] has chosen to use neutrally available 
state aid'' for a religious program ``confer any message of state 
endorsement of religion.'' Id. at 488-89. Allowing beneficiaries in an 
indirect-aid program to choose to use aid on programs that may require 
attendance at religious ``activities that are fundamental to the 
program'' thus does not contravene the Establishment Clause.
---------------------------------------------------------------------------

    \59\ See, e.g., Zelman, 536 U.S. 639; Zobrest, 509 U.S. 1 
(holding that the Establishment Clause did not bar a public school 
district from providing an interpreter to a deaf student attending 
Catholic high school); Witters, 474 U.S. 481 (finding no bar to 
State rehabilitation program used to assist blind man to train for 
ministry); Mueller, 463 U.S. 388 (finding no bar to State tax 
deduction for education expenses incurred by parents of children 
attending parochial schools).
---------------------------------------------------------------------------

    The Agencies also disagree with commenters who argue that the 
interplay between the new definition of indirect aid and the prospect 
that a program at which the beneficiary uses indirect aid will require 
participation at religious activities creates an Establishment Clause 
problem. As discussed in the preceding paragraphs, under the Supreme 
Court's indirect-aid cases, allowing beneficiaries in an indirect-aid 
program to choose to use aid on programs that may require attendance at 
religious ``activities that are fundamental to the program'' does not 
conflict with the Establishment Clause because there is no government 
endorsement of religion, much less coercion. And, as explained in Part 
II.D.1, use of indirect aid by programs with required religious 
participation will remain a function of private choice, no matter what 
alternatives might be available. In an area where the only provider of 
a certain social service happens to be a faith-based organization that 
requires participation in religious activities, it would make no sense 
to deny the availability of the Federal aid altogether, instead of at 
least giving beneficiaries in the area the choice whether to use it at 
that organization. The result of such a rule would be to discriminate 
in the availability of indirect Federal assistance along regional 
lines. See Zelman, 536 U.S. at 657-58. Absent the Government endorsing 
or coercing beneficiaries to accept the social service in question, the 
Agencies do not believe that the two provisions, taken together, give 
rise to Establishment Clause violations.
    Amos lends no support to the commenters' position. In the passage 
the commenters cited, the Supreme Court noted that accommodation of 
religion ``may devolve into an unlawful fostering of religion.'' 483 
U.S. at 334-35 (internal quotation marks omitted). But, according to 
the Supreme Court in Amos, for a government accommodation to have such 
``forbidden `effects,' . . . it must be fair to say that the government 
itself has advanced religion through its own activities and 
influence.'' Id. at 337 (emphasis in original). As discussed in Part 
II.D.1.a, such is not the case with indirect Federal financial 
assistance, which is not so much a religious accommodation as an 
allowance for participation by all qualified providers. Any religious 
or non-religious use of the funds is attributable to the beneficiary's 
choice--not the Government's. The same analysis holds true with respect 
to the presence or the absence of providers in a locale, for the 
reasons given in Part II.D.1.b and the previous paragraph. Therefore, 
the Agencies do not believe there is any conflict with the 
Establishment Clause.
    Finally, for consistency and uniformity, HUD finalizes its 
regulation with language similar to what the other Agencies are using: 
``an organization that participates in a program funded by indirect 
Federal financial assistance need not modify its program or activities 
to accommodate a beneficiary who chooses to expend the indirect aid on 
the organization's program and may require attendance at all activities 
that are fundamental to the program.'' HUD notes that it did not 
receive any comments regarding its language.
    Changes: HUD is adopting language consistent with that used by the 
other Agencies.
    Affected Regulations: 24 CFR 5.109(g).
b. Clarification
    Summary of Comments: Some commenters praised the proposals in the 
NPRMs--including this proposed change--that remove incentives for 
religious organizations to modify the degree of their religious 
expression, reducing burdens on the free exercise of religion. Some 
also highlighted the religious liberty interests a beneficiary may have 
in choosing to participate in a program that includes required 
religious activities that are fundamental to the program. Other 
commenters argued that the changes are not necessary to promote 
religious liberty.
    Some commenters argued that the proposed clarifying language 
contravened the nondiscrimination requirements of Executive Order 
13559, which applied to providers of both direct and indirect Federal 
financial assistance. One commenter supported this argument by 
referencing the 2016 final rule in which the Agencies chose not to 
include language similar to the current proposal because Executive 
Order 13559 purportedly prohibited it.
    Response: The Agencies agree with the comments suggesting that 
restricting beneficiaries from accessing, or providers from 
maintaining, indirect-aid programs that include religious activities 
may burden the free exercise rights of both beneficiaries and faith-
based providers. Since Sherbert v. Verner, 374 U.S. 398 (1963), the 
Supreme Court has held that conditioning neutrally available benefits 
on action contrary to religious exercise can place a substantial burden 
on a person's free exercise rights.\60\ Although

[[Page 82077]]

the Supreme Court subsequently curtailed the application of these cases 
for Free Exercise Clause purposes in Employment Division v. Smith, 494 
U.S. 872, Congress chose in RFRA to impose the same protections in 
Federal programs. See Attorney General's Memorandum, 82 FR at 49674. 
Conditioning a religious organization's ability to participate in an 
indirect-aid program on its willingness to modify attendance 
requirements for activities fundamental to the program may, in similar 
fashion, impose a ``unique disability upon those who exhibit a defined 
level of intensity or involvement in protected religious activity.'' 
McDaniel, 435 U.S. at 632 (Brennan, J., concurring in the judgment). It 
would also deprive beneficiaries who would otherwise choose to 
participate in a program with religious activities of that option. As 
previously discussed in Part II.D, whether beneficiaries in a given 
locality have available the full range of potential options, secular or 
religious, should not be reason to deprive beneficiaries of the choice 
offered even in cases where the menu of options might be more limited. 
In the Agencies' view, some choice will be better than none.
---------------------------------------------------------------------------

    \60\ See Sherbert, 374 U.S. at 404-06 (``It is too late in the 
day to doubt that the liberties of religion and expression may be 
infringed by the denial of or placing of conditions upon a benefit 
or privilege.''); see also Hobbie, 480 U.S. at 141 (`` `Where the 
state conditions receipt of an important benefit upon conduct 
proscribed by a religious faith, or where it denies such a benefit 
because of conduct mandated by religious belief, thereby putting 
substantial pressure on an adherent to modify his behavior and to 
violate his beliefs, a burden upon religion exists. While the 
compulsion may be indirect, the infringement upon free exercise is 
nonetheless substantial.' '' (quoting Thomas, 450 U.S. at 717-18 
(emphasis omitted))).
---------------------------------------------------------------------------

    The Agencies do not interpret the current regulations to require an 
organization at which beneficiaries choose to use their indirect aid to 
modify its programs to eliminate required participation in explicitly 
religious activities. As the preamble to the 2016 final rule makes 
clear, Executive Order 13559 provided that organizations receiving 
Federal financial assistance ``shall not, in providing services or in 
outreach activities related to such services, discriminate against a 
program beneficiary or prospective program beneficiary on the basis of 
religion, a religious belief, a refusal to hold a religious belief, or 
a refusal to attend or participate in a religious practice.'' 81 FR at 
19361. At the same time, the 2016 rule added that ``an organization 
that participates in a program funded by indirect financial assistance 
need not modify its program activities to accommodate a beneficiary who 
chooses to expend the indirect aid on the organization's program.'' Id. 
Using a 12-step program as an example, the 2016 preamble explained that 
a program funded through indirect aid that ``includes religious content 
that is integral to the program would not be required to alter its 
program to accommodate an objector who pays for the program with 
indirect aid.'' Id. (emphasis added). Requiring that such programs 
include the ability to opt out of religious activity does not make 
sense given their inherently religious character and the fact that the 
beneficiaries will have freely chosen the program with that religious 
content. The Agencies did not believe that an organization declining to 
undertake such a modification would have violated the nondiscrimination 
provisions of Executive Order 13559 or those of the Agencies' rule in 
2016. The Agencies view the issue the same way today.
    However, given the comments received arguing that the prior 
regulations required such an organization to undertake such a 
modification, the Agencies believe it appropriate to include language 
clarifying this issue in the final rule. The final rule includes 
language to eliminate any uncertainty over this issue in the future. 
Religious providers at which beneficiaries choose to use indirect aid 
will not be required to alter any fundamental program elements that 
require participation in religious activities.
    Changes: None.
    Affected Regulations: None.

E. Accommodations for Faith-Based Organizations

    DHS's existing regulations provided that ``[n]othing in this part 
shall be construed to preclude DHS or any of its components from 
accommodating religious organizations and persons to the fullest extent 
consistent with the Constitution and laws of the United States.'' 6 CFR 
19.3(d). Additionally, DOL's existing regulations specified that its 
provision prohibiting religion-based discrimination against 
beneficiaries did not ``preclude'' DOL or its intermediaries ``from 
accommodating religion in a manner consistent with the Establishment 
Clause of the First Amendment to the Constitution.'' 29 CFR 2.33(a). 
The other Agencies' existing regulations did not contain parallel 
provisions that explicitly addressed religious accommodations for 
faith-based organizations.
    All of the Agencies proposed to add express language regarding 
accommodations. When providing that faith-based organizations are 
eligible on the same basis as any other organization, they all proposed 
adding that eligibility is subject to the Agencies' ``considering'' 
accommodations. All eight of the Agencies that proposed specific text 
for notices to faith-based organizations--DHS, DOJ, DOL, ED, HHS, HUD, 
VA, and USDA--also proposed to include specific language in those 
notices indicating that religious accommodations may also be sought 
under many of the listed Federal laws. Additionally, when providing 
that all organizations are required to carry out all eligible 
activities in accordance with all program requirements, DHS, DOJ, DOL, 
ED, HHS, HUD, and VA proposed to add that this is ``subject to'' any 
accommodations. USDA proposed to add more generally that ``[t]he 
requirements established in this part do not prevent a USDA awarding 
agency or any State or local government or other intermediary from 
accommodating religion in a manner consistent with [F]ederal law and 
the Religion Clauses of the First Amendment to the U.S. Constitution.''
    Within these provisions, DHS, DOJ, ED, HHS, USAID, and USDA 
proposed that such accommodations be ``appropriate under'' or 
``consistent with'' the U.S. Constitution and Federal laws. HUD 
proposed to expressly reference RFRA.
    Summary of Comments: To the extent that the comments regarding the 
scope and application of RFRA discussed in Parts II.C and II.F are 
relevant to the added accommodation language discussed in this section, 
the Agencies incorporate those comments and responses from Parts II.C 
and II.F. Similarly, some of the examples and hypotheticals discussed 
in Part II.C were repeated by other commenters, or could be construed 
broadly, as comments on the proposed accommodation language discussed 
in this section. Therefore, the Agencies incorporate any such relevant 
examples here.
    Several commenters supported the accommodation language in the 
proposed rules because it provides expressly for accommodations that 
the Agencies were already required or permitted to grant under existing 
Federal law, including RFRA. Most of these commenters explained that 
adding this language was important to make clear--to faith-based 
organizations, the Agencies, State and local governments, and any other 
intermediaries--that faith-based providers do not lose their rights to 
seek such accommodations in the Federal funding process. One of these 
commenters added that this accommodation language recognizes and 
clarifies that existing law protects religious exercise, not just 
religious identity. One of these commenters also outlined specific 
principles from RFRA

[[Page 82078]]

and Free Exercise Clause cases that should guide the accommodation 
inquiry, and these principles are listed in the response section below.
    The Agencies solicited comments on whether to define the terms that 
they each proposed to describe such accommodations. Some commenters 
stated that the Agencies should not define the term because there is an 
accepted legal usage of ``accommodation'' that would be difficult to 
capture in a single definition. Certain national religious medical 
organizations proposed that the Agencies define an accommodation as ``a 
provision made by the [F]ederal government for the free exercise of 
religion of a [F]ederal-funded recipient, who collaborates with the 
[F]ederal government in meeting the health or social service needs of a 
specific population, but the intent for which [F]ederal dollars are not 
explicitly allocated and expended.''
    Several other commenters argued that the terms used by the Agencies 
to describe accommodations were vague and would only create confusion, 
including because the Agencies did not provide any explanation of the 
meaning of those terms. Some of these commenters argued that this 
accommodation language would create confusion because there are no 
clear lines in this area and because the Agencies do not identify any 
real-world or hypothetical examples of an accommodation that would be 
granted. One of these commenters noted that Congress has used the term 
``reasonable accommodation'' differently in various statutes but it has 
almost always been accompanied by the express or implicit requirement 
that it not impose an ``undue hardship'' on others, citing 42 U.S.C. 
2000e, 42 U.S.C. 12112(b)(5)(A), and Shapiro v. Cadman Towers, Inc., 51 
F.3d 328, 334-35 (2d Cir. 1995).
    Some of these commenters argued that the accommodation language 
would create confusion by suggesting that faith-based organizations 
could seek accommodations from program requirements, including to 
refuse to provide the program's services to eligible beneficiaries. 
They were particularly concerned about accommodations from requirements 
that are very important to any government-funded program. Some of these 
commenters also argued that the proposed references to accommodations 
in multiple sections of the proposed rules would create additional 
confusion for providers and beneficiaries. One of these commenters 
argued that the Agencies had not identified any evidence or analysis 
for why this vague new language is needed at this time.
    Several commenters argued that the Agencies were creating new 
accommodations where none should be granted. Some of these commenters 
argued that such accommodations would be contrary to, or not required 
by, Trinity Lutheran because they would give faith-based organizations 
exemptions and preferential treatment, whereas Trinity Lutheran 
requires a level playing field. One of these commenters added that this 
accommodation language was not required by operative--though uncited--
legal authority and should be rejected.
    Some of these commenters argued that the accommodation language 
contradicted other aspects of this final rule. They argued that it was 
internally contradictory for the Agencies to provide that faith-based 
organizations are eligible ``on the same basis as any other 
organization'' while adding ``subject to'' accommodations that give 
preferential exemptions from rules. One of these commenters argued that 
applying these accommodation standards solely to faith-based 
organizations contradicted the Agencies' assertion that they removed 
``certain standards'' because those standards applied solely to faith-
based organizations. One of these commenters added that allowing 
accommodations for faith-based organizations was contrary to the 
provision in this final rule that an organization receiving indirect 
Federal financial assistance does not need to modify its program or 
activities to accommodate a beneficiary.
    Multiple commenters opposed any exemption of faith-based 
organizations from laws and regulations that otherwise apply 
universally. Some of these commenters argued that accommodations are 
not permitted from generally applicable laws that prohibit 
discrimination because religiously motivated conduct does not receive 
special protection from general, neutrally applied legal requirements 
under Fulton v. City of Philadelphia, 922 F.3d 140, 159 (3d Cir. 2019), 
cert. granted, 140 S. Ct. 1104 (U.S. Feb. 24, 2019). Similarly, other 
commenters argued that the Supreme Court had either rejected or had not 
adopted a general rule that faith-based organizations could deny 
individuals service under a public accommodations law in Masterpiece 
Cakeshop, Ltd. v. Colorado Civil Rights Commission, 138 S. Ct. 1719 
(2018).
    One commenter argued that religious accommodations are unnecessary 
because providing the federally funded services is not a 
``fundamental'' or ``central'' religious activity and faith-based 
organizations are not obligated to participate in Federal programs or 
funding. Several commenters argued that faith-based organizations 
should either comply with nondiscrimination laws or forgo taxpayer 
money.
    Several commenters argued that the added accommodation language 
would grant new or expanded accommodations from program requirements 
that would be inappropriate. Some of these commenters argued that 
exempting grantees from program requirements would be contrary to 
Congressional intent in establishing these programs because the 
legislation under which these programs are authorized does not allow 
discriminatory denial of service by the entities receiving funding. 
Similarly, multiple commenters argued that providing accommodations 
from program requirements would undermine the central goal of these 
programs, which is to provide people with the services they need.
    Some commenters argued that the Agencies had not adequately 
accounted for the costs of accommodations that beneficiaries would 
bear. They argued that the NPRMs did not discuss the need to protect 
the program beneficiaries' religious freedom or their access to 
services, especially beneficiaries for whom these services may be a 
matter of life and death. These commenters were concerned that 
additional accommodations would further threaten the health and well-
being of individuals across the country because faith-based 
organizations could flout established applicable guidelines, bypass 
standards of care, discriminate against clients or potential clients, 
or deny evidence-based services or treatments. Some commenters also 
argued that beneficiaries could be uncomfortable or forgo services, as 
discussed in Part II.C. Some of these commenters also argued that a 
faith-based organization's religious beliefs should not be the basis to 
deny needed services to beneficiaries.
    Some of these commenters argued that any such third-party harms 
should preclude accommodations under the Establishment Clause, citing 
Hobby Lobby, Cutter, Texas Monthly, Kiryas Joel, Amos, and Estate of 
Thornton. They argued that Hobby Lobby was premised on the 
accommodation's imposing no third-party harms. Other commenters argued 
that third-party harms implicate, but do not categorically violate, the 
Establishment Clause under the cases cited above. One of these 
commenters also disagreed with the statement in the Attorney General's

[[Page 82079]]

Memorandum that ``the fact that an exemption would deprive a third 
party of a benefit does not categorically render an exemption 
unavailable.'' 82 FR at 49670.
    Some of these commenters argued that the accommodation language 
does not acknowledge the constitutional limits on such exemptions when 
they cause harm to others. One of these commenters claimed that the 
accommodation language puts the interests of faith-based providers 
above those of the program beneficiaries whose rights and access to 
needed program services will be put at risk. Another commenter argued 
that such explanation was absent from the proposed regulatory text but 
acknowledged that the Agencies had recognized these limits on 
accommodations in the NPRMs.
    Some of these commenters also argued that the Agencies do not 
explain why they are providing express accommodations for faith-based 
organizations, but not for beneficiaries. These commenters argued that 
it is just as legitimate to accommodate beneficiaries as faith-based 
providers. Another commenter argued that it was arbitrary to claim that 
accommodations for faith-based organizations are warranted because 
``few will need them,'' while claiming accommodations for 
beneficiaries' religious freedom are not warranted because ``few will 
need them.''
    Several commenters argued that expanded accommodations from program 
requirements would allow faith-based providers to seek accommodations 
to discriminate against beneficiaries or refuse to provide services 
that are otherwise required. Some of these commenters argued 
categorically that faith-based organizations should not be able to 
obtain accommodations or exemptions from nondiscrimination laws. One of 
these commenters argued that courts have long rejected arguments that 
faith-based organizations can be exempt from antidiscrimination 
requirements, citing Bob Jones University v. United States, 461 U.S. 
574 (1983), Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400 
(1968), Dole v. Shenandoah Baptist Church, 899 F.2d 1389 (4th Cir. 
1990), and Hamilton v. Southland Christian School, Inc., 680 F.3d 1316 
(11th Cir. 2012). These commenters were concerned that faith-based 
providers would seek and obtain such accommodations more often than 
they had before.
    Some of these commenters argued that providing services without 
discrimination is key to an organization's ability to effectively carry 
out the Agencies' objectives. Some of these commenters pointed to other 
areas where the Agencies had recognized the existence of, and harm 
from, discrimination. One of these commenters argued that denial of 
service or care in healthcare settings can be deadly.
    A few commenters argued that the added accommodation language would 
enable faith-based providers to limit their services to co-religionists 
or those who share the organizations' beliefs. Some commenters argued 
that the Agencies had not adequately explained the reason for creating 
what they described as vast new exemptions that may allow religious 
providers to avoid providing the services for which they are accepting 
taxpayer funds. A commenter argued that, to the extent these 
accommodations would allow organizations to discriminate on the basis 
of a beneficiary's religious belief or practice, or lack thereof, it 
would conflict with the prohibition on such discrimination in Executive 
Order 13279.
    Some commenters were concerned that faith-based organizations would 
use religion as a pretext to discriminate against beneficiaries. These 
commenters argued that the Government should not endorse and fund such 
discrimination against religious minorities, LGBTQ people, and others 
who do not act in accordance with the organization's religious beliefs, 
such as not attending religious services, marrying a person of the same 
sex, getting divorced, using birth control, or engaging in sexual 
relations when unmarried. One of the commenters opposing this language 
recognized that RFRA sometimes allows the denial of services but this 
commenter considered that to be improper discrimination. Some 
commenters argued categorically that requiring compliance with Federal 
civil rights laws does not infringe anyone's freedom of conscience or 
demand anyone change their religious beliefs.
    Some commenters argued that faith-based organizations could not 
satisfy the RFRA standard to warrant an accommodation that would allow 
discrimination. Some commenters argued that there is no RFRA 
substantial burden for being required to serve LGBTQ people because the 
Sixth Circuit held that mere toleration of transgender characteristics 
is not tantamount to official endorsement or support of those traits, 
which would be necessary to establish a substantial burden. Harris 
Funeral Homes, 884 F.3d at 587-88. These commenters also argued that 
the Agencies would be able to satisfy strict scrutiny for prohibitions 
on such discrimination based on Harris Funeral Homes, Fulton, and 
Norwood v. Harrison, 413 U.S. 455 (1973). According to these 
commenters, these cases held that eradicating and prohibiting 
discrimination are compelling interests and that mandating compliance 
with nondiscrimination laws is the least restrictive means of pursuing 
such interests.
    Several commenters argued that allowing discrimination in taxpayer-
funded programs would violate other principles. Some of these 
commenters were concerned that allowing such discrimination would 
violate the Establishment Clause by providing direct financial support 
for religion. One of these commenters argued that this would amount to 
giving faith-based organizations ``the right to use taxpayer money to 
impose [their beliefs] on others,'' quoting ACLU of Massachusetts v. 
Sebelius, 821 F. Supp. 2d 474 (D. Mass. 2012), which is discussed in 
Part II.F.2.a. Another commenter argued that the U.S. Constitution bars 
the Government from directly funding or providing aid to private 
institutions that engage in discrimination, citing Norwood, 413 U.S. at 
465-66. See also Christian Legal Soc. v. Martinez, 561 U.S. 661, 682 
(2010). Some individual commenters argued that it would violate their 
religious liberties if they were forced to fund--through taxpayer 
dollars--organizations that discriminate in the provision of federally 
funded services.
    Other commenters were worried that the accommodation language was 
based on the Attorney General's Memorandum. These commenters argued 
that the Attorney General's Memorandum potentially violated the 
Establishment Clause because it did not put any checks on religious 
exercise, seemed to elevate the right to religious exemptions above 
other legal and constitutional rights, and said that organizations, not 
just people, have religious freedom. These commenters argued that the 
added accommodation language based on the Attorney General's Memorandum 
dangerously expands the ability for religious entities to request 
special treatment that may enable discrimination against beneficiaries.
    Several commenters were particularly concerned, including based on 
their experiences, that the accommodation language could allow entities 
to discriminate against or deny service to traditionally marginalized 
groups and underserved communities, including women (especially women 
of color), persons with disabilities, LGBTQ

[[Page 82080]]

persons, and those living in rural communities. These commenters were 
concerned that denial of care could exacerbate existing disparities for 
these groups. Some of these commenters were also concerned that these 
communities could face added barriers to accessing services in 
religious spaces, which would cause further harm.
    Some commenters pointed to past examples to support or oppose this 
accommodation language. One commenter pointed to a court's granting a 
religious exemption to a faith-based shelter for homeless women when a 
city tried to force it to comply with a local public accommodation law 
that was contrary to the shelter's religious mission and message. See 
Downtown Soup Kitchen v. Municipality of Anchorage, 406 F. Supp. 3d 776 
(D. Alaska 2019). This commenter argued that the accommodations 
language in the rule would make clear that faith-based organizations 
could be protected from such requirements in federally funded programs.
    Another commenter pointed to an example where HHS granted an 
exemption to allow a Protestant child welfare agency that received 
Federal funding to deny services to women from other religions.\61\ 
This commenter argued that the exemption for the provider's ``religious 
identity'' was used to rob the women of their religious freedom, deny 
them the ability to become foster parents, and dictate that a group of 
children from all backgrounds be placed exclusively in Protestant 
homes.
---------------------------------------------------------------------------

    \61\ See Frank J. Bewkes et al., Center for American Progress, 
Welcoming All Families (Nov. 20, 2018) https://www.americanprogress.org/issues/lgbtq-rights/reports/2018/11/20/461199/welcoming-all-families.
---------------------------------------------------------------------------

    Other commenters relied on hypothetical examples, including many of 
the ones listed in Part II.C. Additionally, some commenters were 
concerned that faith-based organizations could deny reproductive health 
access for women and girls, including contraception for unwed 
adolescent girls. They were similarly concerned about denials of 
condoms to men who have sex with men and to transgender individuals in 
HIV treatment and prevention programs, which would undermine the 
overall program goals. Another commenter, however, said it would be 
appropriate, for example, to exempt a Muslim food kitchen from 
providing pork on its menu.
    A commenter argued that the Agencies had considered RFRA when 
adopting the 2016 final rule and presented no reasoned analysis for 
discarding those conclusions now.
    Some commenters argued that the accommodation language, in 
combination with the provisions that permit religious organizations to 
maintain their religious character and expression, could result in 
faith-based organizations proselytizing or expressing religious views 
in connection with providing federally funded services. One of these 
commenters speculated that such activities could discourage LGBTQ 
individuals from seeking critical services and could create unnecessary 
discomfort for beneficiaries who disagree.
    Another commenter was also concerned that the accommodation 
language--combined with the other changes addressed in Parts II.F and 
II.G--would increase preferential treatment for religious 
organizations.
    Finally, some commenters argued that the accommodation language was 
unwarranted, arbitrary, and capricious.
    Response: The Agencies agree with the comments that supported the 
accommodation language. The constitutional and statutory accommodations 
addressed by this language were required or permitted under the prior 
rule. The same is true for the other Federal laws that require 
accommodations or that prohibit discrimination based on conscience, 
including 42 U.S.C. 238n, 42 U.S.C. 300a-7, 42 U.S.C. 2000e-1(a) and 
2000e-2(e), 42 U.S.C. 12113(d), 42 U.S.C. 18113, and the Weldon 
Amendment, see, e.g., Further Consolidated Appropriations Act, 2020, 
Public Law 116-94, div. A, sec. 507(d), 133 Stat. 2534, 2607 (Dec. 20, 
2019). Protections under these constitutional and statutory provisions 
were available under the 2016 final rule and continue to be available. 
Also, the Agencies were always obligated to consider the RFRA 
implications of their program requirements, as discussed in Part II.C. 
See, e.g., Little Sisters, 140 S. Ct. at 2383-84 (failure to consider 
such RFRA rights could make the Agencies ``susceptible to claims that 
the rules were arbitrary and capricious for failing to consider an 
important aspect of the problem''). The accommodation language in this 
final rule merely recognizes that governing law; it is not a 
``substantive change,'' as HHS explained in its NPRM. 85 FR at 2979, 
2981.
    The Agencies determine that it is important to add clarifying 
language to ensure that this existing law is clear to faith-based 
organizations, the Agencies, State and local governments, any other 
intermediaries, and any potential challengers to faith-based 
organizations' participation. Based on various Agencies' experience and 
research, faith-based organizations with accommodation needs have been 
deterred from participating, sued when they participated, and denied 
participation in Federal financial assistance programs or activities. 
See, e.g., Franciscan Alliance, Inc. v. Burwell, 227 F. Supp. 3d 660, 
691-93 (N.D. Tex. 2016) (holding in the alternative that faith-based 
health care providers were likely to succeed on the merits of their 
claim to a RFRA accommodation to refuse to perform, refer for, or cover 
gender reassignment surgeries or abortions that had been required by a 
nondiscrimination provision connected to receipt of Federal financial 
assistance); cf. Exclusion of Religiously Affiliated Schools from 
Charter-School Grant Program, 44 Op. O.L.C. ___, *6 (Feb. 18, 2020), 
https://www.justice.gov/olc/file/1330966/download (``Forbidding charter 
schools under the program from affiliating with religious organizations 
discriminates on the basis of religious status.''); Religious 
Restrictions on Capital Financing for Historically Black Colleges and 
Universities, 43 Op. O.L.C. ___, *9 (Aug. 15, 2019), https://www.justice.gov/olc/file/1200986/download (``Religious Restrictions'') 
(``The Establishment Clause permits the Government to include religious 
institutions, along with secular ones, in a generally available aid 
program that is secular in content.'').
    Also, some have challenged the premise that the Agencies may 
proactively grant accommodations to religious providers. The 
persistence of such arguments was demonstrated by the public comments 
on this final rule and by litigation on the issue, including Little 
Sisters. Although substantive disagreements regarding the scope of such 
accommodations will continue, the Agencies determine to add express 
accommodation language at this time to ensure that faith-based 
organizations know their religious exercise can, in appropriate 
circumstances, be protected and accommodated in federally funded 
programs, to ensure that such accommodations are proactively requested 
and considered in the application process, and to help eliminate 
disputes regarding the availability of such accommodations. The 
Agencies agree with commenters that faith-based organizations are more 
likely to seek such accommodations under this final rule.
    The Agencies determine that this clarity is also appropriate 
because of how some accommodations have been handled recently by State 
and local

[[Page 82081]]

governments where RFRA and other Federal protections do not apply. In 
an example cited by commenters, the City of Philadelphia cancelled a 
contract with a faith-based foster care agency that could not certify 
same-sex couples consistent with its religious beliefs. The faith-based 
organization was willing to refer any same-sex couple to one of the 
many other agencies in the city. The city has argued that it ``has no 
authority to grant exemptions to the contract's nondiscrimination 
requirement.'' Br. for City Respondents at 35, Fulton v. City of 
Philadelphia, No. 19-123 (U.S. Aug. 1, 2020). This final rule makes 
clear that, when it comes to Federal financial assistance programs and 
activities, the Agencies and their intermediaries do have such 
authority where permitted by existing Federal laws. The Agencies also 
note that the Fulton case is pending at the U.S. Supreme Court, see 140 
S. Ct. 1104, and any relevant decision will be incorporated into the 
accommodation analysis going forward.
    One commenter gave the example of an HHS exemption involving a 
Protestant child welfare agency. But HHS granted that exemption to the 
State of South Carolina, to be applied with respect to certain 
similarly situated faith-based providers, and not directly to the 
faith-based provider itself. It was also based on a provision that 
applies equally to requests for deviations or exceptions by secular 
organizations; \62\ and it was based on an appropriate context-specific 
analysis of the religious freedom rights of faith-based providers under 
RFRA. In addition, that exemption did not deny anyone the ability to 
become a foster parent, and did not dictate that children be placed in 
Protestant homes. Indeed, the exempt agency (or another similarly 
situated agency) was required to refer prospective foster parents with 
whom it could not work to another child placement agency or to the 
State program. This example thus demonstrates the reasonable outcomes 
from applying the appropriate accommodation analysis, as discussed in 
Part II.C. The accommodation language in this final rule makes clear 
that such accommodations are available but does not change the 
substance of that accommodation analysis. For these reasons, the 
Agencies are adding this accommodation language now, although they 
chose not to include such language in the 2016 final rule. See 81 FR at 
19370-71 (concluding that a RFRA-based process for employment 
exemptions was beyond the scope of the 2016 final rule).
---------------------------------------------------------------------------

    \62\ See 2 CFR 200.102 (OMB uniform guidance for executive 
branch agencies).
---------------------------------------------------------------------------

    The Agencies agree with the comments that said the Agencies should 
not further define the terms regarding these accommodations. As 
demonstrated by the proposed definition submitted by a commenter and by 
the list of principles in the next paragraph, it is difficult to fully 
capture all of the nuances in a single definition. It would also be 
difficult for any single definition to capture the nuances among the 
available types of accommodations, as well as the full current case 
law, let alone retain flexibility to incorporate future developments in 
Federal statutes and case law.
    Many of the comments that opposed the accommodation language did so 
based on incorrect or inapplicable legal standards. This language is 
not being added based on Trinity Lutheran. That case reaffirmed that 
faith-based organizations cannot be disfavored based on religious 
character. That is a basis for the aspects of this final rule that 
provide for equal treatment, as discussed in Parts II.C, II.D, II.F, 
and II.G. But other First Amendment principles and Federal statutes 
mandate or permit accommodations that enable faith-based organizations 
to act in accordance with their religious beliefs and consciences. For 
example, the Federal Government can permit such organizations to 
participate in federally funded programs without substantial burdens to 
their religious exercise. The accommodation language incorporates those 
legal principles. As a result, there is no contradiction between 
mandating eligibility ``on the same basis as any other organization'' 
consistent with Trinity Lutheran, while also providing that this is 
``subject to'' accommodations consistent with the other binding legal 
principles. For the same reasons, it is not internally inconsistent to 
remove the alternative provider notice-and-referral requirements that 
applied solely to faith-based organizations, in tension with Trinity 
Lutheran and RFRA, while also providing expressly for accommodations 
that are required or mandated by existing Federal law, including RFRA.
    Commenters also mistakenly argued that accommodations are not 
available from neutral laws of general applicability. This final rule 
applies to Federal financial assistance programs that are governed by 
RFRA and other existing Federal laws that require or permit certain 
accommodations even from neutral laws of general applicability. These 
commenters relied on Fulton and Masterpiece Cakeshop, but those cases 
involved State and local governments that were not subject to RFRA or 
the other Federal laws addressed here. And, as discussed elsewhere, 
current Free Exercise Clause and Establishment Clause jurisprudence 
does not preclude permissive accommodations.
    Additionally, future RFRA accommodations are not precluded by the 
Sixth Circuit's decision in the Harris Funeral Homes case cited by 
commenters. That case applied a substantial burden standard that is 
arguably inconsistent with Hobby Lobby and prior cases, as discussed in 
Part II.C.3.d. See, e.g., Hobby Lobby, 573 U.S. at 723-25; see also 
Little Sisters, 140 S. Ct. at 2383 (explaining that, in Hobby Lobby, 
``we made it abundantly clear that, under RFRA, the Departments must 
accept the sincerely held complicity-based objections of religious 
entities''). Moreover, Harris Funeral Homes must be considered 
alongside the Supreme Court's opinion in Bostock. In that case, the 
Court acknowledged the potential application of Title VII's ``express 
statutory exception for religious organizations''; of the First 
Amendment, which ``can bar the application of employment discrimination 
laws'' in certain cases; and of RFRA, ``a kind of super statute'' which 
``might supersede Title VII's commands in appropriate cases.'' 140 S. 
Ct. at 1754 (noting that ``how these doctrines protecting religious 
liberty interact with Title VII are questions for future cases too'').
    Commenters also mistakenly argued that accommodations are 
foreclosed because participation in these Federal financial assistance 
programs and activities is not ``fundamental'' or ``central'' to any 
religious activity or obligation. None of the applicable accommodation 
statutes requires the religious activity or obligation to be central or 
fundamental. Doing so would put the Government in the difficult 
position of making inherently religious judgments. See, e.g., Emp't 
Div., Dep't of Human Res. of Ore. v. Smith, 494 U.S. 872, 887 (1990) 
(``Judging the centrality of different religious practices is akin to 
the unacceptable business of evaluating the relative merits of 
differing religious claims.'' (internal quotation marks omitted)). The 
definition of ``religious exercise'' that applies to RLUIPA and RFRA 
``includes any exercise of religion, whether or not compelled by, or 
central to, a system of religious belief.'' 42 U.S.C. 2000cc-5(7)(A) 
(RLUIPA); 42 U.S.C. 2000bb-2(4) (RFRA incorporating the definition from 
RLUIPA). And RFRA accommodations are available whether or not 
participation is fundamental or central,

[[Page 82082]]

even if the conduct is voluntary, as discussed in Parts II.C and II.F.
    Contrary to commenters' assertions, any accommodation analyses 
conducted in connection with the requirements of this final rule will 
consider all relevant Establishment Clause principles and any relevant 
impact on taxpayers' religious liberties. There is no basis to claim 
that the Agencies and their intermediaries will not follow Federal law, 
including the Establishment Clause. Indeed, DHS, DOJ, ED, HHS, HUD, 
USAID, and USDA are all adding regulatory text in these provisions with 
express references to constitutional limits, RFRA, and other Federal 
laws. Additionally, the eight Agencies with prescribed text for notices 
to faith-based organizations all expressly reference these Federal 
laws, as discussed in Part II.G.3. Also, as discussed in Part II.F.2.a, 
the Agencies disagree with the commenter that relied on ACLU of 
Massachusetts v. Sebelius, which is distinguishable on legal and 
factual grounds but does show how a faith-based organization can 
receive an appropriate accommodation as the highest ranking applicant 
under one version of a program but not receive an accommodation under 
another version where other providers rank higher. See ACLU of Mass. v. 
U.S. Conference of Catholic Bishops, 705 F.3d 44, 49-51 (1st Cir. 2013) 
(summarizing facts).
    For similar reasons, the Agencies disagree that these 
accommodations should not be based on the Attorney General's 
Memorandum. The Attorney General's Memorandum accurately describes 
existing Federal law, including the relevant Establishment Clause 
principles and the checks on religious exercise. Contrary to these 
commenters' claims, it is well established that faith-based 
organizations, not just individuals, are entitled to religious freedom. 
See, e.g., Hobby Lobby, 573 U.S. at 707-09 (recognizing that 
corporations can exercise religion under the Free Exercise Clause and 
RFRA).
    Commenters also mistakenly argued that the accommodation language 
is foreclosed by third-party harms. As discussed in Part II.C.3.e, 
third-party burdens do not categorically preclude accommodations under 
RFRA. Indeed, Hobby Lobby rejected this argument. 573 U.S. at 729 n.37. 
That case was the basis for the statement in the Attorney General's 
Memorandum that ``the fact that an exemption would deprive a third 
party of a benefit does not categorically render an exemption 
unavailable.'' 82 FR at 49670, 49675 (citing Hobby Lobby).
    The Agencies also disagree that the addition of accommodation 
language to this final rule will create any third-party burdens beyond 
what current law, as discussed above, already allows and, in some 
cases, mandates. To the extent that third-party burdens are relevant to 
a specific accommodation determination, the Agencies and their 
intermediaries will consider such burdens. The Agencies and their 
intermediaries will consider, for example, the impact on the health and 
well-being of beneficiaries when determining whether there is a 
compelling interest in a particular program requirement and whether 
less restrictive means are available. The Agencies also incorporate 
their discussions of these issues in Parts II.C and II.F.
    The Agencies disagree that nondiscrimination laws categorically bar 
accommodations. Rather, like any other accommodation, they are 
available in particular cases, based on context and applicable Federal 
law. See, e.g., Hobby Lobby, 573 U.S. at 729 n.37; World Vision, 31 Op. 
O.L.C. 162 (concluding that RFRA was reasonably construed to require 
that an organization be exempt from a statute's religious 
nondiscrimination provision).
    The Agencies oppose discrimination and seek to protect 
beneficiaries from it. The Agencies reiterate that this final rule 
continues to expressly prohibit discrimination against beneficiaries on 
the basis of religion, a religious belief, a refusal to hold a 
religious belief, or a refusal to attend or participate in a religious 
practice. The Agencies' other program requirements bar discrimination 
on other protected bases. If an accommodation were sought from those 
requirements based on a sincerely held religious belief, the Agencies 
and their intermediaries would evaluate it appropriately under existing 
law, including without ``religious hostility.'' Masterpiece Cakeshop, 
138 S. Ct. at 1724, 1729-31.
    Although evaluation of accommodation requests is context-dependent, 
the Agencies cannot conceive of granting such an accommodation to 
discriminate based on race. As the Supreme Court has recognized, there 
is a compelling interest in eradicating racial discrimination, and the 
Court has frequently upheld outright prohibitions on such 
discrimination. Bob Jones Univ., 461 U.S. 574; see also Newman, 390 
U.S. 400 (private lawsuit to enjoin racial discrimination at 
restaurants was ``vindicating a policy that Congress considered of the 
highest priority''). The Agencies recognize that ``[r]acial bias is 
distinct.'' Pena-Rodriguez v. Colorado, 137 S. Ct. 855, 868 (2017). 
Indeed, a long history of the Supreme Court's ``decisions demonstrate 
that racial bias implicates unique historical, constitutional, and 
institutional concerns.'' Id.
    The Agencies will evaluate any other accommodation request under 
the applicable law and will not prejudge the outcome of that context-
specific analysis. Accommodations are available from certain 
nondiscrimination provisions in certain contexts, as the World Vision 
opinion explained. See Part II.C. Under RFRA, for example, it is 
possible that there is no compelling governmental interest in imposing 
the burden at issue, that a general compelling interest is not 
compelling ``to the person,'' or that there is a less restrictive means 
of furthering the interest. The Agencies and their intermediaries will 
consider all of these factors and the impact of any accommodation, as 
appropriate under existing law.
    For context, the Agencies have considered the example of a Jewish 
ritual bath, known as a ``mikveh.'' In addition to the ritual aspects 
of the mikveh, it provides a unique setting for a trusted female 
community member to identify signs of domestic violence and medical 
conditions, including cancers, on religious women who often dress in 
religiously modest clothing at all other times. See, e.g., Anna 
Behrmann, I Spotted a Lump when Preparing for My Ritual Bath, BBC News, 
July 2, 2019, https://www.bbc.com/news/world-middle-east-47734665. 
However, a mikveh will often exclude some people based on the 
sponsoring organization's sincerely held religious beliefs, such as 
serving only co-religionists.
    Like all faith-based organizations, the added accommodation 
language tells an organization that runs such a mikveh that it can 
apply for Federal financial assistance related to identifying domestic 
violence or cancer, even if its religious exercise did not permit 
compliance with all program requirements. The relevant Agency would 
then consider the accommodation request in the context of that program, 
as required or permitted under existing Federal accommodation laws. 
Whether the Agency grants the accommodation will depend on the facts 
and circumstances. Whether the mikveh organization receives the award 
will ultimately depend on even more facts and circumstances, including 
the quality and impact of the proposed use of funds. But refusal to 
consider such a request--as some commenters would have the Agencies 
do--would be

[[Page 82083]]

contrary to Federal law. The accommodation language in this final rule 
follows existing law in allowing context-specific determinations.
    The accommodation language is consistent with the other cases cited 
by commenters. Commenters mistakenly rely on Christian Legal Society v. 
Martinez, 561 U.S. 661, for the principle that the U.S. Constitution 
bars the Government from directly funding or providing aid to private 
institutions that engage in discrimination. Martinez held only that the 
First Amendment does not preclude a State university from applying an 
``accept-all-comers'' policy to any group seeking access to a limited 
public forum, including a religious group. Id. at 667-69, 675-90. It 
did not hold that the First Amendment precluded the State university 
from granting an accommodation to a religious group, and it did not 
address the application of an accommodation statute such as RFRA. See 
id. at 697 n.27 (explaining that the student group's Free Exercise 
Clause claim was unsuccessful under Smith).
    Commenters also relied on Norwood v. Harrison, which did not 
involve any claim for religious accommodation. 413 U.S. at 464-66. The 
Supreme Court recognized in Norwood that its analysis regarding 
providing textbooks to non-sectarian private schools that racially 
discriminate was different from the applicable analysis for providing 
textbooks or funding to religious schools. Id. at 468-70. As the Court 
recognized, when it comes to assisting religious schools, ``our 
constitutional scheme leaves room for `play in the joints,' '' meaning 
the Government often has discretion to provide assistance to religious 
entities that is neither required by the Free Exercise Clause nor 
prohibited by the Establishment Clause. Id. at 469. The Court concluded 
that religious beliefs are afforded protections not afforded to bias on 
other grounds. Id. at 470. That is consistent with the accommodation 
language in this final rule.
    Commenters also relied on Dole v. Shenandoah Baptist Church, 899 
F.2d at 1392, which further demonstrates the need for context-specific 
analyses. In that case, a religious school argued that it was entitled 
to an accommodation--applying the free exercise test prevailing at the 
time, which is now incorporated into RFRA--that would allow the school 
to pay male teachers more than female teachers, rather than comply with 
the FLSA. Id. at 1397. The court evaluated the contours of the 
articulated religious beliefs, but found that they would be minimally 
burdened by complying with the FLSA, found a compelling governmental 
interest in that context, found that granting an exemption would be 
contrary to that compelling interest, and found that compliance with 
the FLSA was the least restrictive means of achieving the Government's 
aims. Id. at 1397-99. That reinforces the appropriateness of the 
context-specific analyses that the Agencies and their intermediaries 
will conduct under this final rule, which they were required to conduct 
under existing Federal law even without the accommodation language.
    The Agencies also note that the analysis in Dole pre-dated RFRA, so 
some of the specific considerations may no longer apply. For example, 
it is not appropriate under RFRA to require that the challenged 
requirement ``cut to the heart of [the organization's] beliefs.'' Id. 
at 1397. The Agencies further note that Dole applied the ministerial 
exception in 1990, id. at 1396-97, without the benefit of recent 
Supreme Court cases, which could affect the analysis. See Our Lady of 
Guadalupe Sch. v. Morrissey-Berru, 140 S. Ct. 2049 (2020); Hosanna-
Tabor Evangelical Lutheran Church & Sch. v. EEOC, 565 U.S. 171 (2012). 
Moreover, the Dole case recognized that accommodations and exemptions--
such as the ones referenced in this final rule--can be 
``constitutionally permissible.'' 899 F.2d at 1396 (citing cases).
    The Agencies disagree that the accommodation language will allow 
faith-based organizations to use religious faith as a pretext for 
discrimination. Existing accommodation principles appropriately screen 
for pretext while balancing respect for religious autonomy. For 
example, commenters relied on Hamilton v. Southland Christian School, 
Inc., 680 F.3d 1316 (11th Cir. 2012), in which the appeal hinged on 
whether the teacher had been fired because she had premarital sexual 
relations or because of her pregnancy. Id. at 1319-21. The court found 
a genuine issue of fact on that issue and remanded the case for further 
proceedings. Also, the Supreme Court has explained that the compelling 
interest test prevents discrimination on the basis of race in hiring 
from being ``cloaked as religious practice to escape legal sanction.'' 
Hobby Lobby, 573 U.S. at 733.
    The Agencies note that, in rare but appropriate cases, pretext can 
be screened by challenging the religiosity or sincerity of a claimed 
religious exercise.\63\ To be sure, such challenges should be narrow, 
rare, and subject to all of the other protections of the Religion 
Clauses and RFRA, including that the Government cannot question the 
truth or reasonableness of the believer's line-drawing. See, e.g., 
United States v. Ballard, 322 U.S. 78, 86-88 (1944) (observing that the 
First Amendment prohibits evaluating ``the truth or falsity of the 
religious beliefs or doctrines''); Attorney General's Memorandum, 82 FR 
at 49674 (citing cases).
---------------------------------------------------------------------------

    \63\ See, e.g., Ballard, 322 U.S. at 79-83 (affirming jury 
instruction asking whether fraud defendants ``honestly and in good 
faith believe[d]'' that they were ``divine messengers'' who could 
heal ailments and diseases and had done so hundreds of times); 
United States v. Quaintance, 608 F.3d 717, 721-23 (10th Cir. 2010) 
(Gorsuch, J.) (explaining that extensive evidence showed criminal 
defendants who sold large quantities of marijuana ``were motivated 
by commercial or secular motives rather than sincere religious 
conviction,'' including inducting a co-conspirator into the religion 
which they founded in order to ``insulate their drug transactions 
from confiscation'').
---------------------------------------------------------------------------

    Contrary to certain comments, the Agencies cannot conclude that 
compliance with nondiscrimination laws will never substantially burden 
a faith-based organization's sincerely held religious beliefs. The 
World Vision opinion (discussed above and in Part II.C) and the 
examples discussed above demonstrate that nondiscrimination laws can 
impose such burdens. The Agencies cannot dismiss requests for 
accommodations from nondiscrimination laws categorically. See, e.g., 
Thomas v. Review Bd. of Indiana Employment Sec. Div., 450 U.S. 707, 
713-16 (1981).
    Some commenters criticized potential accommodations that would 
exempt faith-based providers from various laws in various contexts, 
including reproductive health requirements. Such requirements tend to 
arise in the context of programs funded or administered by HHS, many 
under the Public Health Service Act, 42 U.S.C. 201 et seq. There are 
Federal conscience protection statutes, for example, specific to the 
recipients of funds under the Public Health Service Act, or to programs 
administered by the Secretary of HHS, that bar discrimination against 
health care entities or personnel that refuse to participate in certain 
health services or research activities on the basis of religious belief 
or moral conviction.\64\

[[Page 82084]]

Because of the applicable prohibitions, these Federal conscience 
provisions may effectively require religious or moral accommodations 
with respect to reproductive health requirements in certain 
circumstances. The Agencies also note that accommodations from such 
reproductive health requirements are discussed further in Part II.F.2.a 
below.
---------------------------------------------------------------------------

    \64\ For example, the Church Amendments, 42 U.S.C. 300a-7, apply 
to entities funded under the Public Health Service Act and two other 
laws administered by HHS and protect the conscience rights of 
individuals and entities that object to performing or assisting in 
the performance of abortion or sterilization procedures if doing so 
would be contrary to the provider's religious beliefs or moral 
convictions. The Church Amendments also prohibit (1) recipients of 
HHS funds for biomedical or behavioral research from discriminating 
against health care personnel who refuse to perform or assist in the 
performance of any health care service or research activity on the 
grounds that their performance or assistance in the performance of 
such service or activity would be contrary to their religious 
beliefs or moral convictions, and (2) individuals from being 
required to perform or assist in the performance of any part of a 
health service program or research activity funded in whole or in 
part under a program administered by HHS if their performance or 
assistance in the performance of such part of such program or 
activity would be contrary to their religious beliefs or moral 
convictions.
    Section 245 of the Public Health Service Act, 42 U.S.C. 238n, 
prohibits the Federal Government and any State or local government 
receiving Federal financial assistance from discriminating against 
any health care entity (which includes both individuals and 
institutions) on the basis that the entity (1) refuses to undergo 
training in the performance of induced abortions, to require or 
provide such training, to perform such abortions, or to provide 
referrals for such training or such abortions; (2) refuses to make 
arrangements for such activities; or (3) attends (or attended) a 
post-graduate physician training program, or any other program of 
training in the health professions, that does not (or did not) 
perform induced abortions or require, provide, or refer for training 
in the performance of induced abortions, or make arrangements for 
the provision of such training.
    The Weldon Amendment, a rider in HHS's annual appropriation, 
provides that ``[n]one of the funds made available in this Act may 
be made available to a Federal agency or program, or to a State or 
local government, if such agency, program, or government subjects 
any institutional or individual health care entity to discrimination 
on the basis that the health care entity does not provide, pay for, 
provide coverage of, or refer for abortions.'' E.g., Further 
Consolidated Appropriations Act, 2020, Public Law 116-94, div. A, 
sec. 507(d), 133 Stat. 2534, 2607 (Dec. 20, 2019).
    Section 1303(b)(4) of the Affordable Care Act, 42 U.S.C. 
18023(b)(4), provides that ``[n]o qualified health plan offered 
through an Exchange may discriminate against any individual health 
care provider or health care facility because of its unwillingness 
to provide, pay for, provide coverage of, or refer for abortions.'' 
Section 1553(a) of that Act, 42 U.S.C. 18113(a), provides that 
``[t]he Federal Government, and any State or local government or 
health care provider that receives Federal financial assistance 
under this Act (or under an amendment made by this Act) or any 
health plan created under this Act (or under an amendment made by 
this Act), may not subject an individual or institutional health 
care entity to discrimination on the basis that the entity does not 
provide any health care item or service furnished for the purpose of 
causing, or for the purpose of assisting in causing, the death of 
any individual, such as by assisted suicide, euthanasia, or mercy 
killing.''
---------------------------------------------------------------------------

    Other accommodation statutes require context-specific analysis. 
Under RFRA, for example, the Agencies and intermediaries would consider 
the sincerity of the professed belief, the pressure to compromise that 
belief posed by conditioning the Federal financial assistance on 
compliance with the program requirement, the scope of the program 
requirement, the Government's interest in that requirement, any 
exemptions or accommodations that would make the interest less 
compelling, and the availability of less restrictive means to achieve 
that interest. Based on that analysis, they will determine whether a 
faith-based organization must comply with the requirement as written, 
can comply in a different way, must provide a referral if appropriate, 
or must take some other action in order to justify the accommodation. 
Where there is no compelling interest in the service or program 
requirement, the faith-based organization may be able to deny the 
service or provide the service without that requirement. Where there is 
a compelling interest in the service or program requirement, the Agency 
or intermediary will ensure that the compelling interest is satisfied, 
either through the faith-based organization or some other less 
restrictive means. Some accommodation requests will have to be denied. 
That is how RFRA has always worked. This final rule does not change 
that analysis or prejudge the outcome in any case.
    The Agencies disagree that their accommodation language is vague or 
creates confusion. Consistent with the legal standards discussed above 
and in Parts II.C and II.F, the Agencies are ensuring that context-
specific considerations, including countervailing considerations, are 
analyzed whenever determining whether to grant any accommodations. As 
part of this analysis, the Agencies will consider ``undue hardship'' 
whenever it is relevant. This final rule mentions some potential 
accommodations but does not contain specific examples due to the 
context-specific nature of that analysis.
    Additionally, the Agencies disagree that they created confusion by 
adding two references to religious accommodations. This language is 
being added in the two places where it applies: (1) Eligibility and (2) 
compliance. Rather than creating confusion, this wording creates 
greater clarity. This added language provides expressly that 
accommodations are available to alleviate burdens on faith-based 
providers from program requirements, where warranted under existing 
Federal law. As explained, all of the commenters' concerns regarding 
such accommodations--including discrimination, denial of service, 
discomfort, importance of the requirement to the government program, 
and compelling interest--will be considered and addressed when the 
Agencies and intermediaries determine whether to grant an 
accommodation. With regard to very important program requirements, a 
faith-based organization may be less likely to receive an 
accommodation, but circumstances may still warrant one, as discussed 
above and in Parts II.C and II.F. Such accommodations are not contrary 
to Congressional intent. For example, RFRA ``operates as a kind of 
super statute, displacing the normal operation of other Federal laws,'' 
Bostock, 140 S. Ct. at 1754, unless Congress expressly provides 
otherwise.
    The Agencies are committed to protecting the religious liberty of 
faith-based organizations and beneficiaries equally. But express 
accommodations for beneficiaries are beyond the scope of this final 
rule. This final rule addresses accommodations that relieve government-
imposed burdens on faith-based organizations. For reasons discussed 
elsewhere, the Agencies do not believe that this final rule is likely 
to impose substantial burdens on beneficiaries, see Parts II.C.1, 
II.C.2, and II.C.3.e, particularly in the context of indirect Federal 
financial assistance, see Part II.D, although the Agencies do not rule 
out that possibility in any particular case. Also, the Agencies did not 
claim that beneficiary accommodations were not warranted because ``few 
will need them.'' They expressly disavow such reasoning. Beneficiaries 
are entitled to accommodations, where appropriate, from government-
imposed burdens.
    Only DOL and DHS addressed accommodations in the 2016 final rule. 
They did so in a manner consistent with this final rule. DOL retained a 
provision that provided for accommodations consistent with the 
Constitution, which ``means that otherwise valid religious 
accommodations do not violate the religious nondiscrimination 
requirement in this regulation.'' 81 FR at 19393; id. at 19422 (DOL, 29 
CFR 2.33(a)). DHS added a similar provision in the 2016 final rule. Id. 
at 19411 (DHS, 6 CFR 19.3(d)); see also 80 FR 47284, 47297 (Aug. 6, 
2015) (proposing such language); 73 FR 2187, 2189 (Jan. 14, 2008) 
(proposing such language initially). No commenter has pointed to any 
issues or harms due to those provisions.
    The Agencies also disagree that the accommodation language in this 
final rule, in combination with provisions that permit religious 
organizations to maintain their religious character and expression, 
will necessarily result in faith-based organizations' improperly 
proselytizing or expressing religious views while providing federally 
funded

[[Page 82085]]

services. Each Agency has retained its prohibition on proselytizing in 
direct Federal financial assistance programs and activities, and the 
Agencies do not foresee granting accommodations that would exempt 
faith-based organizations from that prohibition. As discussed in Part 
II.D, recipients of indirect Federal financial assistance are permitted 
to engage in explicitly religious activities, including 
proselytization, within such programs, as they were under the 2016 
final rule. Also, faith-based recipients of both direct and indirect 
programs retain their rights of expression, including to express 
religious views, as discussed in Part II.G.5. The accommodation 
language does not change these aspects of the Agencies' rules.
    The Agencies also disagree that the accommodation language--
combined with the other changes addressed in Parts II.F and II.G--will 
increase preferential treatment for religious organizations. As 
explained, the accommodation language merely clarifies existing law. 
Whatever preferential treatment might result would have resulted anyway 
under existing law.
    For all of these reasons, the Agencies' addition of the 
accommodation language is reasonable and not unwarranted, arbitrary, or 
capricious.
    Changes: None.
    Affected Regulations: None.

F. Discrimination on the Basis of Religious Character or Exercise

    Existing regulations required eight of the Agencies and their 
intermediaries not to discriminate in selection of service providers 
based on ``religious character'' or ``affiliation.'' VA's existing 
parallel provision barred discrimination based on ``religion or 
religious belief or lack thereof.'' 38 CFR 50.4. Existing regulations 
for DHS, USAID, DOJ, DOL, and HHS also required any grant, document, 
agreement, covenant, memorandum of understanding, policy, or regulation 
used by the Agencies (and, for some Agencies, their intermediaries) not 
to ``disqualify'' any organization based on its ``religious character'' 
or ``affiliation.'' USDA, VA, ED, and HUD did not have such an existing 
provision on disqualification.
    In the NPRMs, all Agencies proposed changes relating to such 
provisions. With regard to discrimination, DHS and HUD proposed to 
include prohibitions when based on religious ``character,'' 
``affiliation,'' or ``exercise,'' while the other Agencies proposed to 
include a prohibition when based on religious ``exercise'' or 
``affiliation'' but not religious ``character.'' With regard to 
disqualification, eight Agencies proposed to include prohibitions when 
based on ``religious exercise'' or ``affiliation,'' USDA omitted that 
language from its proposal, and no Agency proposed a prohibition when 
based on ``religious character.'' Eight Agencies proposed to add that 
``religious exercise'' for multiple provisions, including these 
provisions, incorporates the statutory definition from RLUIPA that also 
applies to RFRA.
    HHS's NPRM provided the most extensive explanation for these 
proposed changes. It explained that it was proposing to delete 
``religious character'' from these provisions because there was not a 
body of law providing legal guidance on that standard and because the 
phrases ``religious character'' and religious ``affiliation'' created 
confusion. 85 FR at 2979. HHS explained that it was proposing to change 
the language to ``religious exercise'' because that phrase is defined 
by Congress in RLUIPA and used in RFRA and RLUIPA, and because there is 
an ``extensive legal framework'' and ``body of law'' providing legal 
guidance on that standard. Id. HHS also expressed concern that the 
phrase ``religious character'' created confusion because the phrase 
would presumably have a different meaning than ``religious 
affiliation'' or ``exercise,'' but ``it is unclear what that 
distinction would be.'' Id.
1. ``Religious Character''
    Summary of Comments: Several commenters stated that these 
provisions should continue to prohibit discrimination and 
disqualification based on ``religious character,'' which is the 
standard in Trinity Lutheran. They explained that Trinity Lutheran 
outlined the Free Exercise Clause's ``blanket ban'' on discrimination 
based on ``religious character.''
    With respect to HHS's explanation, some commenters responded that 
there is a well-established body of law regarding the definition of 
``religious character,'' including that this term was a central focus 
of Trinity Lutheran. Commenters also stated that the terms religious 
``character'' and ``exercise'' have unique meanings, as articulated in 
Trinity Lutheran and other First Amendment cases. They then pointed to 
the language in Trinity Lutheran that the bright-line bar applies to 
laws that ``single out the religious for disfavored treatment,'' 137 S. 
Ct. at 2021, which the commenters interpreted to mean discrimination 
based on religious character.
    Response: The Agencies agree that Trinity Lutheran subjects 
discrimination based on ``religious character'' to the ``most exacting 
scrutiny.'' 137 S. Ct. at 2021. After the comment period closed, the 
Supreme Court reaffirmed that holding in Espinoza, 140 S. Ct. at 2255. 
The body of law confirming this First Amendment principle has thus 
developed even further. The Agencies also note that DHS and HUD had 
proposed to keep the phrase ``religious character'' in their 
nondiscrimination provisions. 85 FR at 2896 (DHS, 19.3(b)); id. at 8223 
(HUD, 5.109(c)).
    Nevertheless, the Agencies continue to be concerned that the term 
``religious character'' may not be entirely clear. The Supreme Court 
has not defined ``religious character.'' It has held, however, that 
discrimination against ``any [grant] applicant owned or controlled by a 
church, sect, or denomination of religion,'' Trinity Lutheran, 137 S. 
Ct. at 2017, 2021, or any school ``owned or controlled in whole or in 
part by any church, sect, or denomination,'' Espinoza, 140 S. Ct. at 
2252, 2255, constitutes discrimination on the basis of ``religious 
character.'' In some cases, the Court has also appeared to equate 
``religious character'' and ``religious status,'' without explaining 
whether there are any differences between the two concepts. Espinoza, 
140 S. Ct. at 2255, 2260 (``character''); id. at 2254-57, 2262 
(``status''); Trinity Lutheran, 137 S. Ct. at 2021, 2022, 2024 
(``character''); id. at 2019, 2020, 2021 (``status''). The Court has 
contrasted those terms with religious ``use,'' which is a similarly 
undefined reference to religious conduct. Espinoza, 140 S. Ct. at 2255-
57. Also, some Justices have questioned the ability of courts--let 
alone regulatory agencies and their intermediaries--to apply the 
distinction between ``religious character'' and ``religious use.'' \65\
---------------------------------------------------------------------------

    \65\ See Espinoza, 140 S. Ct. at 2257; id. at 2275-78 (Gorsuch, 
J., concurring); Trinity Lutheran, 137 S. Ct. at 2025-26 (Gorsuch, 
J., concurring in part, joined by Thomas, J.) (questioning ``the 
stability of such a line'').
---------------------------------------------------------------------------

    Despite these concerns, the Agencies agree with the commenters that 
there is a body of case law protecting against discrimination based on 
``religious character.'' To avoid tension with this case law, all of 
the Agencies finalize these provisions to include the phrase 
``religious character.'' For purposes of these provisions, the Agencies 
interpret discrimination based on ``religious character'' to mean 
distinctions based on the organization's religious status, including as 
a church, sect, denomination, or comparable classification of any 
religion; the organization's control by a church, sect, or 
denomination; the organization's identification as religious; or the

[[Page 82086]]

organization's operation based on religious principles. An agency would 
violate these provisions if it used an applicant's religious character 
as a basis to deny the application for Federal financial assistance 
entirely, or to penalize the applicant by, for example, awarding it 
fewer points in scoring that might be part of determining who will 
receive the assistance.
    The Agencies also include the word ``affiliation'' in their final 
rules, prohibiting discrimination based on an organization's 
affiliation with--even if it is not controlled by--a religious 
denomination, sect, umbrella organization, or other faith-based 
organization. See Attorney General's Memorandum, Principles 6, 8. 
Certain organizations might not describe themselves as religious but 
still could be affiliated with a religious entity. Discrimination 
against such organizations on the basis of their affiliation raises 
many of the same concerns and issues raised by discrimination against 
the religious affiliates directly. See Exclusion of Religiously 
Affiliated Schools from Charter-School Grant Program, 44 Op. O.L.C. __, 
*3 (Feb. 18, 2020) (``The religious-affiliation restriction in [20 
U.S.C. 7221i(2)(E)] broadly prohibits charter schools in the program 
from associating with religious organizations. . . . That is 
discrimination on the basis of religious status.''). By prohibiting 
discrimination based on both religious ``character'' and 
``affiliation,'' the Agencies create consistency across their final 
rules.
    The Agencies disagree, however, that Trinity Lutheran imposes a 
``blanket ban'' that is qualitatively different from other Free 
Exercise Clause and RFRA standards that trigger strict scrutiny. The 
Supreme Court left open in Trinity Lutheran whether discrimination on 
the basis of religious character amounted to discrimination on the 
basis of religious belief, which `` `is never permissible.' '' 137 S. 
Ct. at 2024 n.4 (quoting Lukumi, 508 U.S. at 533); see also Masterpiece 
Cakeshop, Ltd. v. Colo. Civil Rights Comm'n, 138 S. Ct. 1719, 1731-32 
(2018) (government ``cannot impose regulations that are hostile to the 
religious beliefs of affected citizens''). Instead, as noted, the Court 
applied the ``most rigorous scrutiny,'' Trinity Lutheran, 137 S. Ct. at 
2024 (internal quotation marks omitted), and determined that the 
discrimination in that case could not ``survive strict scrutiny in any 
event,'' id. at 2024 n.4. See also Espinoza, 140 S. Ct. at 2260 (``When 
otherwise eligible recipients are disqualified from a public benefit 
`solely because of their religious character,' we must apply strict 
scrutiny.'') (quoting Trinity Lutheran, 137 S. Ct. at 2021). The 
Agencies do not in this final rule take a position on whether the First 
Amendment categorically prohibits discrimination against religious 
character.
    Finally, for consistency and completeness, any Agency that requires 
notice of these provisions using prescribed text whose terms were 
included in an Appendix to the regulatory text in the Code of Federal 
Regulations is also adding ``religious character'' to that notice.
    Changes: All Agencies include ``religious character'' in these 
substantive provisions in this final rule, as DHS and HUD had proposed 
regarding discrimination, and in any applicable notice. USDA also 
includes religious ``affiliation'' in its substantive provision 
prohibiting disqualification.
    Affected Regulations: 2 CFR 3474.15(b)(2), (b)(4), 34 CFR 
75.52(a)(2), (a)(4), 76.52(a)(2), (a)(4), 34 CFR part 75 Appendix A 
(ED); 6 CFR 19.3(e), 19.4(c), 6 CFR part 19 Appendix A (DHS); 7 CFR 
16.3(a), (d)(3), 7 CFR part 16 Appendix A (USDA); 22 CFR 205.1(a), (f) 
(USAID); 24 CFR 5.109(h), 24 CFR part 5 Appendix A (HUD); 28 CFR 
38.4(a), 38.5(d), 28 CFR part 38 Appendix A (DOJ); 29 CFR 2.32(a), (c), 
29 CFR part 2 Appendix A (DOL); 38 CFR 50.2(a), (e), 38 CFR part 50 
Appendix A (VA); 45 CFR 87.3(a), (e), 45 CFR part 87 Appendix A (HHS).
2. ``Religious Exercise''
a. Scope of ``Religious Exercise''
    Summary of Comments: The Agencies received a variety of comments on 
the proposal to prohibit discrimination in selection and 
disqualification on the basis of ``religious exercise.'' Several 
commenters argued that these provisions should not use the phrase 
``religious exercise'' from RFRA because some discrimination is 
permitted based on ``religious exercise.'' They reasoned that RFRA 
applies a case-specific test that allows awarding agencies to 
discriminate based on ``religious exercise,'' when there is no 
substantial burden or when the law satisfies strict scrutiny. They 
argued that the bright-line nondiscrimination rule from Trinity 
Lutheran should not apply to ``religious exercise'' without RFRA's 
fact-specific inquiry.
    Some commenters recognized the body of case law regarding the 
definition of ``religious exercise,'' which HHS referenced in its 
preamble, but argued that using ``religious exercise'' for a blanket 
ban on discrimination here does not ``reflect'' that body of law. Some 
commented that there was no confusion in the provisions because 
``religious exercise'' and ``character'' have distinct meanings, as 
articulated in Trinity Lutheran and other First Amendment cases. They 
then pointed to the language in Trinity Lutheran, 137 S. Ct. at 2021, 
that distinguished neutral laws of general applicability that implicate 
``religious exercise''--which commenters said can take many forms and 
against which discrimination may be allowed--from laws that 
discriminate based on religious character. Such neutral laws of general 
applicability that burden ``religious exercise'' are subject to the 
fact-sensitive test from RFRA that, commenters said, can be difficult 
to apply and requires consideration of the burden on the religious 
entity, of the Government's interest, and of available alternative 
means.
    Some commenters argued that these provisions barring discrimination 
in selection of service providers for Agency programs can use 
``religious exercise'' only if they have RFRA-related limiting 
language. Without such limiting language, commenters claimed that these 
provisions would lead to blanket exemptions that are not required by 
the Free Exercise Clause or RFRA. Commenters expressed concern that 
such exemptions would tilt the balance ``far too heavily in the 
direction of catering to religious service providers rather than to 
program beneficiaries,'' which would be contrary to these programs' 
central goal of providing services to people in need. A few commenters 
argued that this change to ``religious exercise'' would likely infringe 
on the religious-freedom rights and well-being of program 
beneficiaries, with some adding that government programs can be a 
matter of life and death for some beneficiaries. Other commenters were 
concerned that the use of ``religious exercise'' without any limiting 
language would enable faith-based organizations to receive Federal 
funding even if they are unwilling to abide by any program requirement, 
no matter how essential it is to furthering a compelling governmental 
interest and no matter how narrowly tailored. Multiple commenters said, 
for example, that organizations could opt out of providing services to 
individuals who do not adhere to the provider's religious beliefs, 
including denying access to condoms in an HIV-prevention program to 
people whose relationships the provider deems sinful, or might make 
non-religious beneficiaries ``uncomfortable'' accessing the federally 
funded services. Another commenter argued that it is not discrimination 
to

[[Page 82087]]

exclude faith-based organizations whose religious exercise precludes 
fulfilling program requirements to an extent that would harm 
beneficiaries, just as the Agencies can exclude any non-religious 
providers that will not fulfill such program requirements.
    Several commenters were concerned that this change would impose 
burdens on third parties contrary to RFRA and the Establishment Clause. 
Some of these commenters argued that religious exemptions and 
accommodations are not permitted when they harm third parties--citing 
Hobby Lobby, 573 U.S. 682, Justice Kennedy's concurrence in Hobby 
Lobby, 573 U.S. at 736, Justice Ginsburg's concurrence in Holt v. 
Hobbs, 574 U.S. at 370, and Estate of Thornton, 472 U.S. 703--and 
added, without citation, that this is ``all the more true where the 
harm is government funded.'' Others added that Hobby Lobby emphasized 
that accommodation was appropriate where beneficiaries continued 
receiving the benefits and faced minimal hurdles, whereas an exemption 
from a program requirement may be inappropriate if it failed to protect 
beneficiaries as effectively as non-accommodation. One commenter added 
that the Agencies must not create exemptions that give grantees the 
right to decline to provide services, which amounts to giving them 
``the right to use taxpayer money to impose [their beliefs] on 
others,'' quoting ACLU of Massachusetts v. Sebelius, 821 F. Supp. 2d 
474, 488 n.26 (D. Mass. 2012), vacated as moot, ACLU of Mass. v. U.S. 
Conference of Catholic Bishops, 705 F.3d 44 (1st Cir. 2013). Some 
commenters argued that such exemptions would violate the Establishment 
Clause by ``devolv[ing] into something unlawful'' under Corporation of 
Presiding Bishop, 483 U.S. 327, ``overrid[ing] other significant 
interests,'' or ``impos[ing] unjustified burdens on other[s]'' under 
Cutter, 544 U.S. at 722, 726. Some also commented that the Agencies 
failed to acknowledge or address the economic and non-economic costs 
this change would create for beneficiaries and taxpayers.
    For these reasons, some of these commenters added that using the 
RFRA phrase ``religious exercise'' in this context fosters confusion 
and is vague.
    Several other commenters supported the change. These commenters 
agreed with using the definition of ``religious exercise'' from RFRA 
and RLUIPA. Some of these commenters argued that adding the phrase 
``religious exercise'' emphasizes the important place that RFRA 
continues to occupy in protecting claims of religious infringement, 
including because it applies to ``any exercise of religion, whether or 
not compelled by, or central to, a system of religious belief.'' 42 
U.S.C. 2000cc-5(7)(A) (definition of ``religious exercise'' in RLUIPA, 
incorporated by reference into definition of ``exercise of religion'' 
in RFRA, 42 U.S.C. 2000bb-2(4)). One of these commenters argued that 
this change (along with others) ``send[s] a strong message . . . and 
will enhance the participation of faith-based entities in administering 
Federal programs, thereby providing more assistance to more needy 
Americans.'' Another commenter argued that ``religious exercise'' adds 
protection for the ``public dimension of religious activity'' whereas 
``religious character'' applies only to the ``private dimension.''
    Response: The Agencies agree that their regulations should be 
updated to protect faith-based organizations from improper 
discrimination based on their ``religious exercise,'' including to 
protect the public dimension of religious activity. But they also agree 
with the commenters that additional language is appropriate to clarify 
the scope of this prohibition, tether it more closely to the applicable 
Religion Clauses and RFRA standards, and ensure that this provision 
only creates exemptions from program requirements based on RFRA when 
there is proper case-specific balancing.
    By ``discriminate'' in the selection process on the basis of an 
organization's religious ``exercise'' and by ``disqualify'' faith-based 
or religious organizations because of their religious ``exercise,'' the 
Agencies' NPRMs intended to capture forms of discrimination that may be 
more subtle than outright rejection of an organization because of its 
religious character. The Supreme Court has long held that ``a law 
targeting religious beliefs as such is never permissible'' and that 
``if the object of a law is to infringe upon or restrain practices 
because of their religious motivation,'' the law is subject to the most 
rigorous form of scrutiny. Lukumi, 508 U.S. at 533. The Court has also 
recognized that governmental hostility toward religion can be ``masked 
as well as overt,'' and has thus instructed courts to survey 
meticulously laws that burden religious exercise to determine whether 
they are neutral and generally applicable. Id. at 534. ``Neutrality and 
general applicability are interrelated, and . . . failure to satisfy 
one requirement is a likely indication that the other has not been 
satisfied.'' Id. at 531. Failure to satisfy either requirement triggers 
strict scrutiny. Id. at 546; see also Central Rabbinical Congress, 763 
F.3d at 194-95 (holding that strict scrutiny must be applied to law 
that singled out specific religious conduct). A law is not neutral if 
it singles out particular religious conduct for adverse treatment; 
treats the same conduct as lawful when undertaken for secular reasons 
but unlawful when undertaken for religious reasons; visits ``gratuitous 
restrictions on religious conduct;'' or ``accomplishes . . . a 
`religious gerrymander,' an impermissible attempt to target [certain 
individuals] and their religious practices.'' Lukumi, 508 U.S. at 535, 
538 (citation omitted); see Smith, 494 U.S. at 878. A law is not 
generally applicable if, ``in a selective manner [it] impose[s] burdens 
only on conduct motivated by religious belief,'' including by 
``fail[ing] to prohibit nonreligious conduct that endangers [its] 
interest in a similar or greater degree than . . . does'' the 
prohibited conduct. Lukumi, 508 U.S. at 543. Even a neutral law of 
general applicability can run afoul of the First Amendment if the 
Government interprets or applies the law in a manner that discriminates 
against religious exercise. See Lukumi, 508 U.S. at 537; Fowler v. 
Rhode Island, 345 U.S. 67, 69-70 (1953) (government discriminatorily 
enforced ordinance prohibiting meetings in public parks against a 
religious group). In recognition of this case law and as the 
appropriate policy choice, the Agencies expressly prohibit 
discrimination and disqualification based on ``religious exercise.'' 
The Agencies do not believe that they have any legitimate interest in 
disqualifying or discriminating against an organization for engaging in 
conduct for religious reasons that the Agencies would tolerate if 
engaged in for secular reasons.
    Independently, the Agencies' NPRMs also intended that these 
provisions apply so as to avoid RFRA issues. RFRA applies to these 
regulations. See Parts II.C and II.E; World Vision, 31 Op. O.L.C. 162. 
Discrimination against an organization at the selection phase, or 
disqualification of an organization from a federally funded social 
service program, based on conditions of participation that conflict 
with an organization's sincerely held religious beliefs, may constitute 
a substantial burden under RFRA by placing substantial pressure on the 
organization to abandon those beliefs. Then, as with the First 
Amendment standards discussed above, RFRA would trigger strict 
scrutiny. Where religious conduct can be accommodated such that the 
organization can meet the program requirements in a way that is 
appropriate under the circumstances, the Agencies do not believe that 
they will have a compelling governmental

[[Page 82088]]

interest in refusing to consider potential accommodations as part of 
their grant application process. RFRA thus supports this provision.
    To delineate the scope of protected religious conduct, the Agencies 
agree with the comments that supported adopting the definition of 
``religious exercise'' that applies to RFRA and RLUIPA. This definition 
of ``religious exercise'' is set out clearly in RLUIPA, 42 U.S.C. 
2000cc-5(7)(A), and incorporated by reference into RFRA, 42 U.S.C. 
2000bb-2(4). This definition has been applied in an extensive body of 
cases and is appropriate to complement the protections for religious 
``character'' and ``affiliation.'' See Part II.F.1. Although the 
Agencies recognize that the Supreme Court has tried to distinguish 
between religious ``character'' and ``use,'' including in Trinity 
Lutheran, 137 S. Ct. at 2021-24, they observe that the Court has also, 
as noted above, recognized protection for religious exercise apart from 
restrictions that burden religious character. See Lukumi, 508 U.S. at 
533-34, 537, 543. The definition also reflects that RFRA provides 
broader protection for religious exercise than the Supreme Court's 
current Free Exercise Clause doctrine.
    But the Agencies also recognize that many commenters apparently 
interpreted the proposed addition of ``religious exercise'' more 
broadly than intended. The Agencies did not intend in their NPRMs to 
suggest that faith-based organizations must be deemed eligible for 
grants when they are unable or unwilling to meet a particular program's 
requirements under the circumstances, even with an appropriate 
accommodation. Thus, a grant-awarding agency may decide, for example, 
to disqualify a faith-based organization that, taking into account any 
appropriate accommodation, cannot meet the program's requirements. By 
the same token, it is not discrimination in favor of religious exercise 
to grant an appropriate accommodation; the effect is to allow both 
religious and secular organizations to participate as service providers 
on terms that advance the purposes of the program. Moreover, as 
discussed in greater detail in Parts II.C.3 and II.E, an appropriate 
accommodation of religious exercise does not violate the Establishment 
Clause, see, e.g., Cutter, 544 U.S. at 713-14, 719-24; Amos, 483 U.S. 
at 334-34, and the Agencies exercise their discretion to include 
accommodations in these provisions. The Agencies apply the same 
analysis and discretion to their provisions that prohibit disqualifying 
faith-based organizations because of their religious exercise.
    The Agencies view appropriate accommodations to include any that 
would be required by RFRA or other law, as well as any that would be 
permitted by law and not be significantly burdensome for beneficiaries 
and the Agency. The Agencies determine that there is no compelling 
interest in denying such accommodations. By including express language 
regarding such accommodations, the Agencies further their policy 
determination to prohibit disqualification and discrimination in the 
selection of providers based on religious exercise. The Agencies have 
discretion to adopt this approach to avoid potential RFRA issues, as 
discussed in greater detail in Parts II.C.3 and II.E above (discussing 
Little Sisters and other authority). Moreover, as outlined below, the 
Agencies expressly limit these provisions to accommodations that are 
consistent with the Religion Clauses. The Agencies use the term 
``appropriate accommodation'' to be clear that they do not incorporate 
the standards for reasonable accommodations of disabilities or for 
workplace accommodation of religion, such as the no-more-than-de-
minimis standard.
    The Agencies also clarify that these provisions prohibit 
discrimination in selection and disqualification from participation in 
programs, but do not mandate that any faith-based organization receive 
a grant, which would depend on all of the other relevant factors. The 
Agencies provide for appropriate accommodation because they have 
concluded that it is possible, and indeed beneficial, for a program to 
afford such accommodations where appropriate in light of all the 
circumstances. But the Agencies do not intend to create blanket 
exemptions that could improperly favor faith-based organizations. 
Accommodations should be granted only after case-specific analysis and 
balancing.
    In sum, the Agencies add language to these provisions in this final 
rule to make clear that these nondiscrimination and non-
disqualification provisions prohibit discrimination against an 
organization on the basis of religious exercise, which means 
disfavoring an organization, including by failing to select an 
organization, disqualifying an organization, or imposing any condition 
or selection criterion that otherwise disfavors or penalizes an 
organization in the selection process or has such an effect: (i) 
Because of conduct that would not be considered grounds to disfavor a 
secular organization, (ii) because of conduct that must or could be 
granted an appropriate accommodation in a manner consistent with RFRA 
or the Religion Clauses of the First Amendment to the Constitution, or 
(iii) because of the actual or suspected religious motivation of the 
organization's religious exercise. See Attorney General's Memorandum, 
Principles 5, 7. That additional language is supported by the Free 
Exercise Clause and RFRA, and it ensures that the nondiscrimination 
provisions do not unreasonably supplant program requirements that apply 
equally to faith-based and non-faith-based organizations. Just like 
with ``religious character,'' this language ensures that the 
prohibitions on discrimination and disqualification apply where strict 
scrutiny would otherwise apply, and the Government has determined that 
this scrutiny standard would not be met. For all of these reasons, the 
Agencies conclude that prohibiting such discrimination and 
disqualification does not improperly turn a case-specific standard into 
a blanket exemption.
    The Agencies believe that this additional language also addresses 
the commenters' concerns regarding harms to beneficiaries' religious 
liberty and well-being, including the concerns about third-party harms. 
The Agencies disagree with the comments that religious exemptions and 
accommodations are prohibited categorically when they impose any 
burdens on third parties. Third-party burdens are relevant to 
evaluating the least restrictive means under the First Amendment and 
RFRA, and such burdens can be relevant to the Establishment Clause 
analysis. But third-party burdens are not an automatic bar to 
accommodations and exemptions, as Hobby Lobby held explicitly. 573 U.S. 
at 729 n.37 (discussed in greater detail in Part II.C.3.e above).
    The Agencies also disagree, as a factual matter, that these changes 
would create cognizable economic or non-economic burdens on third 
parties. Beneficiaries have no right to demand that the Government work 
with any particular applicant for a grant, and certainly have no right 
to demand that the Government discriminate against any applicant on the 
basis of religion or religious exercise. Subsections (i) and (iii) of 
these provisions, based on free exercise principles, merely prohibit 
discrimination in selection or disqualification that involves targeting 
or singling out religious exercise for disparate treatment from 
comparable secular conduct. Such mandated equal treatment does not 
impose impermissible burdens on third parties. Similarly, subsection 
(ii) of these provisions, based on RFRA, merely

[[Page 82089]]

prohibits discrimination in selection or disqualification when there is 
an appropriate accommodation, which, as discussed above, necessarily 
addresses these concerns. The Agencies note that these provisions are 
parallel to the provisions that prohibited discrimination based on 
religious character, which did not impose burdens on third parties, and 
which no commenter claimed had imposed such burdens. And the Agencies 
determine that these provisions are the appropriate policy choice.
    For the same reasons, the Agencies conclude that these provisions 
are consistent with the Establishment Clause. Additionally, subsections 
(i) and (iii) add standards for ``religious exercise'' that are 
supported by the Free Exercise Clause and that alleviate burdens on 
religious exercise, without burdening third parties to a degree that 
counsels against providing the exemptions. See Part II.C.3 and II.E. 
Subsection (ii) likewise alleviates burdens on religious exercise 
consistent with the authority found in RFRA and expressly incorporates 
the limits imposed by the Religion Clauses, which includes the 
Establishment Clause. That language also resolves any comments that 
opposed the proposed rules based on Establishment Clause and RFRA cases 
regarding third-party burdens. Additionally, the Agencies have 
maintained other limits addressing Establishment Clause concerns, 
including limits on direct Federal funding of explicitly religious 
activities. Based on their experience administering grant programs and 
the comments received on this rulemaking, the Agencies do not believe 
that these changes will create any third-party burdens that would 
warrant further limiting such accommodations.
    Based on their experience, the Agencies also disagree with comments 
that these changes would permit grantees inappropriately to withhold 
services or impose their religious beliefs on others. The Agencies have 
been subject to RFRA since 1993. In that time, there is no indication 
that any accommodation adopted under that statute resulted in such 
harms, and no commenter has pointed to any instance of such actual 
harms, as discussed in greater detail in Parts II.C and II.E. HHS, for 
example, has responded to numerous accommodation requests in that time 
and is not aware of any actual instance of these hypothetical issues 
described by commenters. The ACLU of Massachusetts case cited by 
commenters, which challenged an HHS contract to a faith-based 
organization, does not demonstrate any such harms, is distinguishable 
on many legal and factual grounds, and shows how a faith-based 
organization can receive an appropriate accommodation as the highest 
ranking applicant under one version of a program but not receive one 
under another version where other providers rank higher. See 705 F.3d 
at 49-51. The Agencies conclude that these provisions ensure equal 
treatment for faith-based organizations in the selection and 
disqualification processes for participation in federally funded 
programs. And these provisions prohibit discrimination or 
disqualification where ``appropriate accommodations'' are available. 
Such accommodations would not allow organizations to inappropriately 
withhold services or impose their religious beliefs on others. These 
organizations, if selected, will also be bound to comply with the 
applicable prohibitions of discrimination against a beneficiary on the 
basis of religion and of engaging in explicitly religious activities. 
See, e.g., 2 CFR 3474.15(f); 34 CFR 75.532(a)(1), 76.532(a)(1).
    A commenter's example of denying access to condoms in an HIV-
prevention program is instructive. A program that required grantees to 
provide condoms as part of the funded services would violate this final 
rule if--on its face or as implemented--it disqualified or 
discriminated against a grantee based on its religious character or 
affiliation, it allowed secular but not religious grantees to opt out 
of that program requirement, or it disqualified or discriminated 
against a grantee based on its religious motivations for objecting to 
that requirement. If the requirement did not violate those principles, 
however, then the requirement to provide condoms could be imposed on 
all organizations, unless it was determined that there was an 
appropriate accommodation for a faith-based organization to decline to 
provide such condoms. That determination would hinge on a fact-specific 
inquiry into the relevant factors, such as the burden on the faith-
based organization's religious exercise from distributing the condoms, 
the importance of condoms to the Government and the government program, 
the demand for the faith-based organization to provide condoms contrary 
to its religious exercise, the availability of condoms from other 
sources, and the availability of alternatives to meet the program's 
goals that would not violate the faith-based organization's religious 
beliefs (e.g., other HIV-prevention methods or referral to entities 
that will provide condoms). RFRA already requires the Agencies and 
their intermediaries to engage in such analysis. These provisions in 
this final rule merely reiterate that requirement. These provisions 
also establish that the Agencies and their intermediaries must grant 
both required and permissible accommodations, as appropriate.
    In addition to all of the other reasons outlined in this section, 
the Agencies determine that these provisions will benefit program 
beneficiaries by removing eligibility barriers for qualified faith-
based organizations. In the Agencies' experience, some faith-based 
organizations do not apply for grants when their eligibility is 
unclear, both to avoid wasting time on applications when the grants at 
issue could be denied for reasons related to their religion and to 
avoid litigation regarding any grant they are awarded. These provisions 
help to make such faith-based organizations' eligibility clearer.
    Together, all of these changes strike the proper balance between 
protecting faith-based organizations against discrimination or 
disqualification based on established First Amendment and RFRA case 
law, protecting beneficiaries, and ensuring that program requirements 
are met with appropriate accommodations that are consistent with the 
First Amendment and RFRA. Additionally, the Agencies define their terms 
and explain how these standards complement each other. As a result, 
these changes also address the commenters' concerns regarding vagueness 
and confusion. Recognizing this protection for religious exercise also 
ensures that there is no confusion for the Agencies, States, local 
governments, other pass-through entities, applicants, grantees, or 
beneficiaries.
    Finally, because these standards align with constitutional and 
statutory requirements that already applied to the prior provisions, 
the Agencies determine that they would impose negligible additional 
costs to beneficiaries and taxpayers. If anything, these changes will 
save beneficiaries and taxpayers the costs of litigation and confusion 
from the prior provisions' omission of the constitutional and RFRA 
standards. And beneficiaries will benefit from the services that faith-
based organizations can provide without threat of unconstitutional 
discrimination or disqualification. Even if these changes would impose 
additional costs on beneficiaries and taxpayers, the Agencies would 
still exercise their discretion to make these changes because this is 
the appropriate policy choice.

[[Page 82090]]

    Changes: All Agencies have added regulatory language to clarify 
that these discrimination and disqualification provisions prohibit 
discrimination on the basis of the organization's religious exercise, 
which means to disfavor an organization, including by failing to select 
an organization, disqualifying an organization, or imposing any 
condition or selection criterion that otherwise disfavors or penalizes 
an organization in the selection process or has such an effect: (i) 
Because of conduct that would not be considered grounds to disfavor a 
secular organization, (ii) because of conduct that must or could be 
granted an appropriate accommodation in a manner consistent with RFRA 
or the Religion Clauses of the First Amendment to the Constitution, or 
(iii) because of the actual or suspected religious motivation of the 
organization's religious exercise.
    Affected Regulations: 2 CFR 3474.15(b)(2), (b)(4), 34 CFR 
75.52(a)(2), (a)(4), (c)(3); 34 CFR 76.52(a)(2), (a)(4), (c)(3) (ED); 6 
CFR 19.3(b), (e), 19.4(c) (DHS); 7 CFR 16.2, 16.3(a), (d)(3) (USDA); 22 
CFR 205.1(a), (f) (USAID); 24 CFR 5.109(c), (h) (HUD); 28 CFR 38.4(a), 
38.5(d) (DOJ); 29 CFR 2.32(a), (c), (d) (DOL); 38 CFR 50.2(a), (e) 
(VA); 45 CFR 87.3(a), (e) (HHS).
b. Clarified Basis for Protecting ``Religious Exercise''
    Summary of Comments: One commenter criticized multiple Agencies for 
justifying the Agencies' proposals to protect faith-based organizations 
from disqualification or discrimination on the basis of ``religious 
exercise'' by reference to Trinity Lutheran. The commenter asserted 
that Trinity Lutheran provided no justification for such protections 
because it barred only discrimination based on ``religious character,'' 
not ``religious exercise.'' This commenter cited the preamble sections 
that described the changes to the discrimination and disqualification 
provisions.
    Response: While the Agencies believe that their changes in this 
regard are consistent with Trinity Lutheran, the Agencies did not 
intend to suggest that the changes were necessarily required by that 
decision. See 85 FR 2893 (DHS, Sec.  19.3(e)); id. at 2901 (USDA, Sec.  
16.3(a)); id. at 2918 (USAID, Sec.  205.1(a)); id. at 2925 (DOJ, Sec.  
38.4(a)); id. at 2933 (DOL, Sec.  2.32(a)); id. at 2942 (VA, Sec.  
50.2(a)); id. at 2979 (HHS, Sec.  87.3(a)); id. at 8220 (HUD, Sec.  
5.109(c)). Rather, the changes are warranted to alleviate tension with 
the First Amendment and RFRA principles outlined in Part II.F.2.a 
above, as well as tension with the related Principles 6, 8, 10-15, and 
20 in the Attorney General's Memorandum. See 85 FR 2892-93 (DHS, Sec.  
19.3(b), Sec.  19.4(c)); id. at 2901 (USDA, Sec.  16.3(d)); id. at 2925 
(DOJ Sec.  38.5(d)); id. at 2918 (USAID, Sec.  205.1(f)); id. at 2933 
(DOL, Sec.  2.32(c)); id. at 2942 (VA, Sec.  50.2(e)); id. at 2981 
(HHS, Sec.  87.3(e)); id. at 3201 (ED, Sec.  3474.15(b)(2), (b)(4)); 
id. at 3203-04 (ED, Sec.  75.52(a)(2), (a)(4), Sec.  76.52(a)(2), 
(a)(4)); id. at 8220 (HUD, Sec.  5.109(h)).
    Changes: None.
    Affected Regulations: None.

G. Rights of Faith-Based Organizations

1. Religious Symbols
    For both direct and indirect Federal financial assistance, existing 
regulations expressly allowed faith-based organizations to use space in 
their facilities to provide federally funded social services without 
removing religious art, icons, scriptures, or other religious symbols 
from those facilities. DOL and ED regulations also provided that such 
symbols need not be ``alter[ed],'' and DHS regulations provided that 
the symbols need not be ``conceal[ed].'' In the NPRMs, all Agencies 
proposed changes to adopt a uniform standard and clarify that faith-
based organizations may use space in their facilities to provide 
federally funded social services without removing, altering, or 
concealing religious symbols.
    Summary of Comments: Several commenters stated that the display of 
religious symbols could make some beneficiaries feel uncomfortable, and 
that this might lead those beneficiaries to forgo needed social 
services. In particular, commenters suggested that religious 
minorities, non-believers, or LGBT individuals might feel unwelcome in 
the presence of certain art, iconography, or scripture, including 
symbols or messages that might be interpreted as critical of their 
beliefs or conduct. Some commenters also argued that the presence of 
religious symbols would convey a message of government endorsement of 
religion, in violation of the Constitution's Establishment Clause. One 
commenter argued that Trinity Lutheran was already satisfied by the 
regulations and that requiring beneficiaries to receive federally 
funded services in a place with religious iconography is a ``far cry'' 
from the playground resurfacing in Trinity Lutheran.
    Other commenters supported the Agencies' changes. One commenter 
stated that the changes helpfully clarify that faith-based 
organizations are protected against not only the removal of religious 
symbols, but also their alteration or concealment. Another commenter 
noted that many Americans find comfort in religious artifacts and 
suggested that the presence of such symbols could be part of a holistic 
approach to meeting the social service needs of vulnerable populations.
    Response: Although the Agencies wish for each beneficiary to be 
comfortable receiving social services, they disagree that the proposed 
changes to these provisions would appreciably add to any beneficiary 
discomfort or cause government endorsement of religion, to the extent 
endorsement remains a measure of a government establishment of 
religion. Instead, this final rule merely fleshes out the existing 
regulatory principle that faith-based organizations are permitted to 
use their facilities to provide Agency-funded social services even 
though their facilities display religious art, icons, scriptures, or 
other religious symbols. The Agencies generally do not limit other 
displays by other organizations receiving Federal funding.
    The Agencies' regulations already allowed displays of religious 
symbols, consistent with existing Federal statutes and regulations. In 
accord with Executive Order 13279, and Federal statutes such as 42 
U.S.C. 290kk-1(d)(2)(B), all Agencies already had regulations that 
expressly permitted faith-based organizations to provide services 
without removing religious symbols. Some Agencies also expressly 
permitted the display of religious symbols without their alteration or 
concealment. None of the Agencies' regulations required the removal, 
alteration, or concealment of religious symbols. As noted in the 2016 
final rule, such a requirement would be inconsistent with ``the general 
practice of Agencies that do not otherwise limit art or symbols that 
recipients of Federal financial assistance may display in the 
structures where agency-funded activities are conducted.'' 81 FR at 
19372. The Agencies' proposed changes thus helpfully clarify the rights 
of faith-based organizations without imposing meaningfully greater 
burdens on beneficiaries and bring the Agencies' treatment of faith-
based organizations' displays into line with their treatment of secular 
organizations' displays.
    The Agencies disagree with the commenters who said that this change 
would be improper because religious symbols might make some 
beneficiaries feel uncomfortable. As a factual matter, in the Agencies' 
experience, discomfort with religious symbols has not been a 
significant issue for beneficiaries. For example, the Agencies are not 
aware of any beneficiaries that availed themselves of the alternative 
provider

[[Page 82091]]

referral requirement on that basis. See Part II.C.3.c. Moreover, even 
if the commenters could show that some beneficiaries would be 
uncomfortable with religious symbols, the commenters do not identify 
any authority supporting a constitutional or other legal right to be 
free from such discomfort. Indeed, it is unclear whether any 
beneficiary would even have grounds to challenge such a display based 
on such offense, objection, or disagreement, no matter how `` `sharp 
and acrimonious it may be.' '' Am. Legion v. Am. Humanist Ass'n, 139 S. 
Ct. 2067, 2098 (2019) (Gorsuch, J., concurring in judgment) (quoting 
Diamond v. Charles, 476 U.S. 54, 62 (1986)); see Valley Forge Christian 
Coll. v. Ams. United for Separation of Church & State, Inc., 454 U.S. 
464, 485 (1982).
    Furthermore, in addition to breaking with longstanding practice, 
singling out religious providers for censorship of art or symbols would 
be in tension with First Amendment principles, RFRA, the binding legal 
principles summarized in the Attorney General's Memorandum and 
Executive Order 13559. See, e.g., E.O. 13559, 75 FR at 71320 (``Among 
other things, faith-based organizations that receive Federal financial 
assistance may use their facilities to provide social services 
supported with Federal financial assistance, without removing or 
altering religious art, icons, scriptures, or other symbols from these 
facilities.''). Such targeted censoring of faith-based organizations 
would risk imposing ``special disabilities'' on religious groups based 
purely on their religious status and imposing a substantial burden on 
such groups' religious exercise. Trinity Lutheran, 137 S. Ct. at 2019; 
42 U.S.C. 2000bb-1; Attorney General's Memorandum, Principle 6, 82 FR 
at 49669. As explained in Part II.C.3.a, the Supreme Court has made 
clear in Espinoza that the First Amendment prohibition of 
discrimination on the basis of religious character from Trinity 
Lutheran is a general principle not limited to grants for playground 
resurfacing.
    Even if some beneficiaries might theoretically prefer not to 
encounter religious art or symbols, the same issue may arise with 
respect to certain non-religious art or symbols. For example, a 
beneficiary may be uncomfortable receiving services in a facility 
adorned with secular art or symbols that reflect values inconsistent 
with his or her moral, political, or religious beliefs. A blanket ban 
on all symbols that cause discomfort would be beyond the scope of the 
final rules, has not been suggested by any commenter, and would have 
additional First Amendment implications. Permitting the display of 
religious symbols is therefore consistent with the Agencies' practices, 
with the principle of freedom of speech, and with the principle of 
government neutrality toward religion. Even if the Agencies' clarifying 
amendments could impose some additional burdens on beneficiaries, the 
Agencies would still exercise their discretion to make these changes 
because they believe the burden would be slight compared to the burden 
a contrary rule would impose on religious organizations.
    Moreover, the Agencies have concluded that allowing religious 
displays can benefit both beneficiaries and providers. As one commenter 
noted (and as with non-religious symbols), many Americans find comfort 
in religious artifacts and the presence of such symbols could be part 
of a holistic approach to meeting the social services needs of 
vulnerable populations. Others certainly might have different feelings, 
but going so far as to order the removal, alteration, and concealment 
of a religious group's cherished symbols may well lead to that 
religious group feeling uncomfortable or unwelcome at the hands of the 
Government. As the Supreme Court recently observed, eliminating 
religious symbols (or requiring their alteration or concealment) may 
appear ``hostile to religion'' rather than ``neutral.'' Am. Legion, 139 
S. Ct. at 2084-85. There is a particular risk of the Agencies 
displaying such hostility if they required such elimination, 
alteration, or concealment here because they do not generally restrict 
parallel secular displays, no matter how offensive to certain 
beneficiaries.
    The Agencies disagree that the display of religious symbols by 
faith-based organizations constitutes a government endorsement of 
religion in violation of the Establishment Clause. As an initial 
matter, the Supreme Court has declined to apply the ``endorsement'' 
test in recent Establishment Clause cases, and several Justices have 
questioned its vitality, including in cases challenging official 
displays of religious symbols. See, e.g., Am. Legion, 139 S. Ct. at 
2080-82 (plurality); id. at 2092 (Kavanaugh, J., concurring); id. at 
2100-02 (Gorsuch, J., concurring); Van Orden v. Perry, 545 U.S. 677, 
698-705 (Breyer, J., concurring in judgment). Instead, the Court has 
interpreted the Establishment Clause ``by reference to historical 
practices and understandings.'' Town of Greece v. Galloway, 572 U.S. 
565, 576 (2014) (internal quotation marks omitted).\66\ The Agencies 
are not aware of any history or tradition of prohibiting religious 
displays by private faith-based organizations that receive Federal 
funding, and no commenter pointed to any.
---------------------------------------------------------------------------

    \66\ See also Am. Legion, 139 S. Ct. at 2087 (same) (plurality); 
id. at 2090-91 (Breyer, J., concurring) (stating that ``I have long 
maintained that there is no single formula for resolving 
Establishment Clause challenges,'' and``[t]he Court appropriately 
looks to history for guidance'') (internal quotation marks omitted); 
id. at 2092 (Kavanaugh, J., concurring) (``Consistent with the 
Court's case law, the Court today applies a history and tradition 
test.''); id. at 2094 (Kagan, J., concurring in part) (``I agree 
that rigid application of the Lemon test does not solve every 
Establishment Clause problem[.] . . . I too look to history for 
guidance.'') (alteration and internal quotation marks omitted); id. 
at 2096 (Thomas, J., concurring in judgment) (``[T]he plaintiff must 
demonstrate that he was actually coerced by government conduct that 
shares the characteristics of an establishment as understood at the 
founding.''); id. at 2101 (Gorsuch, J., concurring in judgment) 
(``[W]hat matters . . . is whether the challenged practice fits 
within the tradition of this country.'') (internal quotation marks 
omitted).
---------------------------------------------------------------------------

    To the extent that the ``endorsement'' test survives, moreover, 
there is no reason to think it would require the removal, alteration, 
or concealment of religious symbols in this context. Unlike in a 
typical Establishment Clause case that involves a religious display on 
government property, see, e.g., Cty. of Allegheny v. ACLU Greater 
Pittsburgh Chapter, 492 U.S. 573, 579 (1989) (barring cr[egrave]che in 
the ``most public'' part of a county courthouse), the provisions at 
issue here concern the display of religious symbols by private 
organizations on private property. A reasonable observer would 
understand that such a display--considered alongside the displays, both 
religious and secular, by all the other private organizations that help 
to administer Federal social service programs--does not convey a 
message of endorsement by the Federal Government. In this context, 
where the Government is not sponsoring the display and the Government-
funded programs are open to a variety of religious and non-religious 
participants, a ban on the display of religious symbols might even 
constitute an impermissible viewpoint-based regulation of private 
religious expression. Cf. Capitol Square Review & Advisory Bd. v. 
Pinette, 515 U.S. 753, 759-63 (1995). The government does not endorse 
religion in general, or a faith in particular, by allowing a faith-
based organization to participate equally in delivering federally 
funded services and to maintain a display that reflect its religious 
identity, especially when a secular organization does not need to 
remove a comparable display.
    Changes: None.

[[Page 82092]]

    Affected Regulations: None.
2. Nonprofit Status
    Existing regulations for DOJ, DOL, ED, HHS, and USAID provided 
that, where eligibility for funding is limited to nonprofit 
organizations, nonprofit status can be demonstrated by several means: 
(1) Proof that the IRS currently recognizes the applicant as an 
organization to which contributions are tax deductible under section 
501(c)(3) of the Internal Revenue Code; (2) a statement from a State 
taxing body or the State secretary of state certifying that the 
organization is a nonprofit organization operating within the State and 
that no part of its net earnings may lawfully benefit any private 
shareholder or individual; (3) a certified copy of the applicants' 
certificate of incorporation or similar document that clearly 
establishes the nonprofit status of the applicant; or (4) any of the 
foregoing methods of proof if applicable to a State or national parent 
organization, together with a statement by the State or parent 
organization that the applicant is a local nonprofit affiliate.
    Under the proposed rules, DHS, HUD, and VA would adopt the same 
four provisions. Also, DHS, DOJ, DOL, ED, HHS, HUD, and VA would add a 
fifth provision stating that, if an entity has a sincerely held 
religious belief that it cannot apply for a determination as tax-exempt 
under section 501(c)(3), the entity may demonstrate nonprofit status by 
submitting ``evidence sufficient to establish that the entity would 
otherwise qualify as a nonprofit organization'' under the four 
provisions. Because USAID and USDA did not propose any changes to their 
existing regulations regarding determination of nonprofit status, the 
discussion below does not apply to them, unless otherwise noted.
    Summary of Comments: A few commenters criticized the Agencies' 
proposed changes. One commenter to ED and HHS characterized the changes 
as allowing faith-based organizations to ``self-certify their nonprofit 
status,'' whereas in the commenter's view, a ``formal determination of 
tax-exempt status'' promotes greater accountability by ensuring the 
record-keeping and transparency needed to monitor grant compliance. The 
same commenter suggested that alternative pathways for demonstrating 
nonprofit status are unnecessary because, in the commenter's view, 
requiring 501(c)(3) status imposes no substantial burden on religion. 
The commenter cited for support Locke v. Davey, 540 U.S. 712, which the 
commenter characterized as holding that denying government funding for 
``religious activity'' does not infringe religious freedom. Finally, 
this commenter asserted that there is ``no evidence that the current 
requirement is burdensome'' to faith-based organizations that receive 
Federal financial assistance to provide social services.
    Another commenter asserted in cursory fashion that the proposed 
accommodation ``means that anything goes for a religious 
organization,'' that it constitutes ``special treatment,'' and that it 
amounts to an unconstitutional ``establishment of religion.''
    One commenter supported the Agencies' changes, stated that the 
changes provide ``an accommodation for those religious nonprofits whose 
sincerely held religious beliefs impede or bar their application'' for 
501(c)(3) status, and stated that this clarification is appropriate and 
commendable.
    Response: The Agencies disagree that the addition of language 
providing alternative means for demonstrating nonprofit status would 
reduce transparency and accountability. The Agencies' grants and 
programs have appropriate record-keeping requirements and mechanisms 
for monitoring compliance that apply regardless of 501(c)(3) status. 
Moreover, in the Agencies' experience, formal determination of tax-
exempt status is of little relevance in facilitating grant transparency 
and accountability. Indeed, many faith-based 501(c)(3) organizations 
are exempt from those record keeping requirements. For example, the 
Agencies issue grants to 501(c)(3) entities that are exempt from filing 
Form 990s, such as churches, integrated auxiliaries, and certain 
schools affiliated with churches. 26 CFR 1.6033-2(g). Five of the 
Agencies already allowed three of these alternatives for demonstrating 
nonprofit status--(2), (3), and (4) listed above--without any evidence 
of transparency or accountability issues. And the new fifth alternative 
requires evidence sufficient to establish one of the other 
alternatives, so it should not lower the bar. Additionally, the 
organizations that meet these alternatives may be subject to State or 
other oversight that imposes further transparency and accountability.
    The Agencies also disagree with the comment regarding entities 
self-certifying their nonprofit status. This comment appears to 
misunderstand the proposed changes. None of the Agencies proposes to 
allow faith-based organizations to ``self-certify'' their nonprofit 
status. Rather, an organization can submit formal documentation of its 
own State nonprofit status, its incorporation, or its parent 
organization's national or State nonprofit status. Again, five of the 
Agencies already allowed those methods of proof. Additionally, for 
seven Agencies, this final rule adds an option permitting a faith-based 
organization with a sincere religious belief that prevents it from 
obtaining tax-exempt status under section 501(c)(3) of the Internal 
Revenue Code to submit other documentary evidence that ``is sufficient 
to establish'' that the organization operates as a nonprofit. This is 
not a mere self-certification.
    The Agencies also disagree with the commenter's suggestion that the 
alternative pathways are unnecessary because obtaining 501(c)(3) status 
does not impose a substantial burden on religion. As a preliminary 
matter, the Agencies exercise their discretion to allow alternative 
ways to show that an organization is a nonprofit because that is the 
appropriate policy decision for the reasons discussed in the NPRMs and 
throughout this section. They do not need to show a substantial burden 
to do so.
    The commenter's reliance on Locke v. Davey is misplaced. Locke held 
only that, in the unique context of the historically sensitive issue of 
government funding for the training of clergy, the Free Exercise Clause 
did not compel a State to include funding for theology degrees in a 
scholarship aid program. See 540 U.S. at 725. The Court did not hold 
that denying funding to religious organizations can never infringe 
religious liberty or that funding of religious organizations can be 
justified only to relieve them of a substantial burden. In fact, the 
Court held expressly that the Government has discretion to fund 
religious organizations in many programs, including in the unique 
context of training for clergy, where funding is not constitutionally 
required. See id. at 718-19; see also Part II.C.3.a (discussing Locke).
    Furthermore, the Agencies agree with the commenter that said faith-
based organizations may have sincere religious beliefs that prevent 
them from meeting certain prerequisites for 501(c)(3) status. For these 
organizations, requiring a formal determination of 501(c)(3) status 
could impose a meaningful burden. Accordingly, in the Agencies' 
judgment, adding an alternative for such organizations, while requiring 
evidence sufficient to meet one of the other alternatives, will promote 
consistency with the principles of religious liberty set forth in RFRA, 
Supreme Court precedent, and the Attorney General's Memorandum.

[[Page 82093]]

    As one commenter pointed out, existing regulations for several 
Agencies, including ED and HHS, already provided alternatives to 
501(c)(3) registration for demonstrating nonprofit status. The Agencies 
agree that those provisions are helpful, so DHS, HUD, and VA are 
adopting them. DHS, HUD, VA, DOJ, DOL, ED, and HHS are also adding the 
alternative mechanism for entities with specific sincerely held 
religious objections to ensure that such objections do not prevent them 
from otherwise demonstrating nonprofit status. Additionally, in the 
Agencies' experience, faith-based organizations may be reluctant to 
apply for grants when it is unclear whether they are eligible or when 
there is a risk that they could be subject to litigation if awarded the 
grant. The Agencies believe that the additional provision may be 
helpful in eliminating any potential doubt that alternative methods of 
proof are available when eligibility to apply for a grant is limited to 
(or includes) nonprofit organizations, including organizations whose 
objection to 501(c)(3) registration is grounded in sincere religious 
belief. This additional provision also clarifies that evidence that 
would otherwise be used to demonstrate nonprofit status as part of the 
501(c)(3) registration process may be sufficient to demonstrate 
nonprofit status for purposes of the grant application.
    Finally, the Agencies disagree with the assertion that the proposed 
changes constitute special treatment for religious organizations or 
violate the Establishment Clause. Under the final rule, any 
organization with a sincerely held religious belief that it cannot 
apply for 501(c)(3) status, faith-based or secular, may demonstrate 
nonprofit status by methods other than providing proof of 501(c)(3) 
status. The changes are consistent with most Agencies' existing 
regulations, and simply help to ensure equal treatment of faith-based 
organizations with sincere religious beliefs that may warrant an 
accommodation. Moreover, the final subsection does not relieve faith-
based organizations of the obligation to demonstrate nonprofit status; 
rather, it clarifies the type of evidence required to establish such 
status. No commenter has even attempted to explain how this modest 
accommodation could amount to an unconstitutional establishment of 
religion, and the Agencies do not believe there is any plausible 
doctrinal basis for such a claim.
    Changes: None.
    Affected Regulations: None.
3. Notice to Faith-Based Organizations
    Existing regulations did not require specific notice to faith-based 
organizations regarding their eligibility to participate on equal terms 
in the programs governed by these regulations and regarding their 
obligations to beneficiaries.
    All of the Agencies proposed to require such notice. In its notices 
or announcements of award opportunities, USAID proposed to require 
notice indicating that faith-based organizations are eligible on the 
same basis as any other organization, subject to the protections and 
requirements of Federal law. In their notices or announcements of award 
opportunities, the other eight Agencies proposed to require notice 
``substantially similar'' to the language in a relevant Appendix A, 
which explained that: (1) Faith-based organizations may apply on the 
same basis as any other organization as set forth in each Agency's 
section of these regulations and in RFRA; (2) the Agency will not 
discriminate in selection on the basis of religious exercise or 
affiliation; (3) a faith-based organization that participates in the 
program will retain its independence from the Government and may 
continue to carry out its mission consistent with the religious freedom 
protections in Federal laws, including the Free Speech Clause, the Free 
Exercise Clause, RFRA, and other statutes; (4) religious accommodations 
``may also be sought'' under many of these religious freedom protection 
laws; (5) faith-based organizations may not use direct Federal 
financial assistance to support or engage in any explicitly religious 
activities, except when consistent with the Establishment Clause and 
any other applicable requirements; and (6) a faith-based organization 
may not, in providing services funded by the Agencies, discriminate 
against a program beneficiary or prospective beneficiary on the basis 
of religion, a religious belief, a refusal to hold a religious belief, 
or a refusal to attend or participate in a religious practice. In their 
notices of award or contract, seven Agencies--not including USAID and 
HUD--proposed notices ``substantially similar'' to the language in an 
Appendix B, which was the same as items 3 through 6 from Appendix A.
    Summary of Comments: The Agencies incorporate the comments 
addressed in Parts II.C.1 and II.E that are relevant to the importance 
of notice to faith-based organizations compared to notice to 
beneficiaries.
    Some commenters said that the proposed notice for faith-based 
organizations embeds equality in these programs and clarifies that the 
Agencies will not discriminate against faith-based organizations. 
Multiple commenters recognized that notice to faith-based organizations 
of the prohibition against discrimination based on religious character, 
exercise, and affiliation is consistent with the First Amendment rights 
discussed in Part II.F.
    Some commenters, including 34 Members of Congress, generally 
opposed providing special notices for faith-based organizations that 
invite accommodation requests, including from generally applicable 
civil rights laws. Most of these commenters argued that this notice of 
the availability of accommodations will encourage or pave the way for 
providers to refuse to provide key services and to discriminate in 
taxpayer-funded programs, as discussed in Part II.E. One of these 
commenters disagreed that this final rule adds clarity, arguing that 
this notice's reference to accommodations eliminates clear lines by 
suggesting that faith-based providers can be excused from rules that 
apply to other providers. Commenters also argued that such notice of 
the availability of accommodations puts the interests of faith-based 
organizations over the needs of people who depend on the services.
    A commenter argued that the Agencies acknowledged the limits on the 
duty to accommodate but failed to reflect those limits in their 
proposed new notices.
    One commenter argued that the proposal to give notice that faith-
based organizations retain independence from the Government is 
inconsistent with the Religion Clauses and Article IV, Section 4 of the 
U.S. Constitution because, in this commenter's view, faith-based 
organizations should be treated differently than, and essentially worse 
than, secular organizations. This commenter argued that the First 
Amendment mandates that `` `Faith Based' entities are not the same as 
secular entities and are not to be treated the same for fear that they 
would create the problems they have created throughout history.'' This 
commenter reasoned that the First Amendment's references to religion 
implied that equal treatment was not intended.
    This commenter also argued, regarding notice of faith-based 
organizations retaining their independence consistent with the Free 
Speech Clause, that Free Speech is not an absolute right. This 
commenter added that the Government and ``government surrogates'' 
cannot minister to recipients, so faith-based organizations' Free 
Speech rights should

[[Page 82094]]

not include ministering to beneficiaries when performing a government 
function.
    Response: The Agencies incorporate the discussion of the notice and 
accommodation requirements in Parts II.C.1 and II.E above. 
Additionally, the Agencies agree with comments that this notice helps 
effectuate the religious liberty protections for beneficiaries in these 
programs and clarifies that the Agencies and their intermediaries will 
not discriminate against faith-based organizations based on religious 
character, affiliation, or exercise. The nondiscrimination provision is 
consistent with the First Amendment and RFRA, as discussed in Part 
II.F.
    The Agencies disagree that this notice to faith-based organizations 
will invite any improper denials of service or discrimination. As 
discussed in Parts II.C, II.E, and II.F, the Free Exercise Clause and 
other Federal laws, including RFRA, required or permitted certain 
accommodations under the 2016 final rule. The notice provided for in 
this final rule does not change that substantive law regarding 
accommodations. This notice merely ensures that faith-based 
organizations, the Agencies, intermediaries, and advocacy organizations 
are aware of that governing Federal law regarding accommodations. To 
the extent that the Agencies accommodate a faith-based organization 
with regard to a generally applicable requirement, including allowing 
the faith-based organization to engage in conduct that might otherwise 
be considered discrimination or denial of service, that accommodation 
would be governed by the Free Exercise Clause and other Federal laws, 
including RFRA, not by this notice requirement. The comments that 
disagree with this notice appear to disagree with the underlying 
Federal law regarding accommodations. The Agencies exercise their 
discretion to notify faith-based providers (and others, including the 
Agencies' intermediaries) of that governing Federal law regarding 
accommodations to protect those rights, ensure that the Agencies and 
their intermediaries recognize and protect those rights, minimize 
erroneous lawsuits challenging whether those rights apply in these 
programs, and eliminate the confusion created by the absence of any 
such reference in the 2016 final rule.
    The Agencies also disagree with the commenter that claimed these 
notices do not reference the limitations on accommodations. In fact, 
all of the prescribed notice texts expressly refer to the 
constitutional and statutory bases for these accommodations, each of 
which contain their own limits.
    Additionally, the Agencies believe a commenter was mistaken to 
argue, in essence, that the Religion Clauses and Article IV, Section 4 
of the U.S. Constitution require faith-based organizations to be 
treated worse than secular entities and thus that providing notice of 
rights and obligations to faith-based organizations would be 
unconstitutional. To the contrary, as discussed throughout this 
preamble, the Establishment Clause permits, and the Free Exercise 
Clause and RFRA sometimes require, and other times permit, the 
Government to provide special accommodations for religious exercise. 
Moreover, Article IV, Section 4 of the U.S. Constitution guarantees to 
every State a ``Republican Form of Government,'' protection against 
``Invasion,'' and, on application, protection against ``domestic 
Violence.'' The Agencies do not see how this constitutional provision 
is implicated by providing notices to faith-based organizations.
    The Agencies agree that the Free Speech Clause is not absolute and 
that there are circumstances in which funding explicitly religious 
activities is prohibited as part of direct Federal financial assistance 
programs and activities. But this final rule requires notice of such 
limitations on speech, including limitations on explicitly religious 
activities, in addition to notice that faith-based organizations retain 
their free speech rights. Also, the notice of the right to expression 
merely clarifies that such existing rights are retained, not expanded, 
as discussed in Part II.G.5 below. The Agencies have determined in 
their discretion that such a comprehensive notice appropriately 
balances the rights of beneficiaries and faith-based organizations.
    In addition to all of the other reasons outlined in this section 
and in Parts II.C, II.E, and II.F, this additional notice to faith-
based organizations will maximize the services available to 
beneficiaries. For example, this notice will ensure that faith-based 
organizations are aware that they can apply to participate in these 
programs on neutral terms and should not face lawsuits challenging such 
awards. At the same time, these notices make clear to faith-based 
organizations--when applying for and accepting an award--that they 
cannot discriminate against beneficiaries based on religion and that 
they cannot incorporate explicitly religious activities into the funded 
programs, unless consistent with the Establishment Clause. Moreover, 
these notices will be provided by the Agencies or intermediaries, as 
part of notices that were already being sent and that already describe 
other eligibility and program requirements. And, these notices are 
appropriate to clarify the law in light of the confusion--including 
confusion by intermediaries and pass-through entities--created by the 
2016 final rule. Indeed, the 2016 final rule did not provide for 
accommodations for faith-based organizations, even though the First 
Amendment and RFRA permitted certain accommodations when that rule 
applied. The Agencies have determined in their discretion that this is 
the appropriate means to protect faith-based organizations and 
beneficiaries, as well as to maximize the availability of appropriate 
federally funded services.
    Finally, ED, DHS, USDA, HUD, DOJ, DOL, VA, and HHS are adding 
clarifying language to these notices regarding conscience protections. 
The notices refer to the listed ``protections in Federal law'' as 
``religious freedom protections.'' To ensure there is no confusion 
regarding the listed conscience clauses--such as the Coats-Snowe 
Amendment (42 U.S.C. 238n), the Weldon Amendment, and 42 U.S.C. 18113, 
some of which might not be viewed as religious freedom protections 
only--the Agencies are adding clarifying language to indicate that 
these are both ``religious freedom and conscience protections in 
Federal law.'' This does not change the substance or scope of the 
notices. This does not apply to USAID, which is not providing an 
Appendix with language for its notice.
    Changes: ED, DHS, USDA, HUD, DOJ, DOL, VA, and HHS include ``and 
conscience'' protections in their notices. See also Part II.F.1 
(discussing these Agencies' addition of ``religious character'').
    Affected Regulations: 34 CFR part 75 Appendices A & B (ED); 6 CFR 
part 19 Appendices A & B (DHS); 7 CFR part 16 Appendices A & B (USDA); 
24 CFR part 5 Appendix A (HUD); 28 CFR part 38 Appendices A & B (DOJ); 
29 CFR part 2 Appendices A & B (DOL); 38 CFR part 50 Appendices A & B 
(VA); 45 CFR part 87 Appendices A & B (HHS). See also Part II.F.1 
above.
4. Same Requirements for Faith-Based and Secular Organizations
    Existing regulations for DOJ, DOL, HHS, and USAID provided that no 
grant document, agreement, covenant, memorandum of understanding, 
policy, or regulation that these Agencies or their intermediaries used 
to administer financial assistance from these Agencies shall require 
only faith-based organizations to provide certain

[[Page 82095]]

assurances that they would not use funding for explicitly religious 
activities. DHS, ED, HUD, USDA, and VA did not have specific parallel 
requirements.
    All of the Agencies proposed to modify their existing provision or 
to add language to provide that none of the documents listed above 
shall require faith-based organizations to provide any assurances or 
notices where such assurances or notices are not required of non-
religious organizations.
    Summary of Comments: Some commenters, including a State attorney 
general, agreed with the Agencies' addition of the provision barring 
any required additional assurances from faith-based organizations that 
are not required from secular organizations. These commenters explained 
that this provision is consistent with the Religion Clauses, including 
under Trinity Lutheran; ensures faith-based organizations can receive 
Federal funding on the same footing as other organizations; and 
eliminates confusion.
    One commenter argued to multiple Agencies, however, that the 
provision barring additional assurances or notices from faith-based 
organizations that are not required from secular organizations violates 
the First Amendment's Free Exercise and Establishment Clauses, as well 
as Article IV, Section 4 of the U.S. Constitution.
    Another commenter to USAID argued that prohibiting such unique 
assurances, in combination with the changes discussed in Part II.F, 
threatens the rights of marginalized populations.
    Another commenter to HUD argued that additional assurances may be 
necessary to ensure that the faith-based provider can offer the 
services required under the program. This commenter provided the 
hypothetical example of an organization affiliated with a religion 
that, according to the commenter, has a history of ``anti-LGBTQ'' 
sentiment and action being required to provide additional assurances of 
nondiscrimination based on sexual orientation or that its physical 
space would be welcoming to LGBTQ individuals.
    Response: The Agencies agree that this modified or added 
prohibition is consistent with the Religion Clauses, including under 
Trinity Lutheran; ensures faith-based organizations can receive Federal 
funding on the same footing as other organizations; and eliminates 
confusion. The Agencies do not see any reason to preserve the language 
that limited this prohibition to explicitly religious activities when 
all of the other substantive provisions apply equally to faith-based 
and non-faith-based providers within each program. If notice or 
assurance is warranted to ensure services are provided under a program, 
such notice or assurance should be equally warranted for all providers 
that are subject to the underlying requirement, as explained in detail 
in Part II.C. There is no indication that barring the requirement of 
such unique assurances from faith-based organizations would threaten 
the rights of any beneficiaries.
    This conclusion is bolstered by the commenter's hypothetical 
example of a specific faith-based organization with a history of what 
the commenter called ``anti-LGBTQ'' sentiment. The Agencies could 
require any participant with a history of anti-beneficiary sentiment to 
provide additional assurances. This final rule would permit such a 
requirement, if applied neutrally to all providers without engaging in 
viewpoint discrimination. But there is no reason to require such 
assurances only from religious organizations without requiring the same 
from similarly situated secular organizations. This change in the final 
rule provides merely that such assurance and notice requirements be 
applied neutrally, which ensures that these requirements are imposed to 
protect beneficiaries, not to discriminate against or stigmatize faith-
based organizations. Similarly, there is no indication that there would 
be any harm from combining this provision with the provisions 
prohibiting discrimination against faith-based organizations that were 
discussed in II.F.
    Finally, as discussed in Part II.G.3, the Agencies disagree with 
commenters who contended that equal treatment of faith-based and non-
faith-based organizations is inconsistent with the Religion Clauses and 
Article IV, Section 4 of the U.S. Constitution.
    Changes: None.
    Affected Regulations: None.
5. Religious Autonomy and Expression
    ED's existing regulations provided that a faith-based organization 
participating in its programs ``may retain its independence, autonomy, 
right of expression, religious character, and authority over its 
governance.'' 2 CFR 3474.15(e)(1); 34 CFR 75.52(d)(1), 76.52(d)(1). 
Existing regulations applicable to the other Agencies provided that a 
religious organization participating in a Federal financial assistance 
program or activity will retain its independence, and ``may continue to 
carry out its mission, including the definition, development, practice, 
and expression of its religious beliefs.'' Additionally, the existing 
regulations for DOJ, DOL, and HHS provided that a faith-based 
organization retains such ``independence from Federal, State, and local 
governments.''
    DHS, DOJ, DOL, HHS, HUD, USDA, and VA proposed to amend the rights 
retained by a participant in such programs to be consistent with ED, 
such that a faith-based organization retains its ``autonomy; right of 
expression; religious character;'' and ``independence,'' and may 
continue to carry out its mission, including the expression of its 
religious beliefs. Additionally, DHS, USDA, and VA proposed to add 
language clarifying that a faith-based organization retains such 
independence ``from Federal, State, and local governments,'' which DOJ, 
DOL, and HHS proposed to retain. USAID proposed to add language that a 
faith-based organization retains its ``autonomy, religious character, 
and independence'' and may continue to carry out its mission 
``consistent with religious freedom protections in Federal law,'' 
including expression of its religious beliefs.
    Summary of Comments: Several commenters supported these changes to 
clarify that faith-based organizations retain these rights, including 
multiple commenters who opposed other provisions of this final rule. 
One commenter specified that this clarification describes the First 
Amendment's broad protections for the freedom to exercise religion, for 
the sphere of religious autonomy in which government cannot interfere, 
and from government entanglement with religion.
    Many of these commenters stated that this clarification was 
important to ensure faith-based providers can participate in these 
programs without fear of having to abandon their autonomy and rights 
that are protected by other Federal laws and that should not be checked 
at the door when interacting with the Government. One commenter argued 
that faith-based organizations' autonomy and expression are interests 
of the highest order. Some commenters argued that this is one of the 
changes in this final rule that will help restore an environment of 
religious freedom across the country.
    Some commenters opposed this clarification for varying reasons. 
Some commenters argued generally that this clarification was 
problematic and would endanger beneficiaries' rights. One commenter 
recognized that faith-based organizations should be able to retain 
their autonomy, right of expression, religious character, and 
independence but argued that, if they accepted government contracts or 
financing, those organizations should not be able

[[Page 82096]]

to force their opinions or choices on beneficiaries. One commenter 
expressed concern that Federal funding suggests government support of 
the funding recipient's message.
    One commenter argued that the wording being added by DHS, USDA, and 
VA that faith-based organizations retain their ``independence from 
Federal, State, and local governments'' is irrational because everyone 
is bound by the Governments' laws, with the commenter listing specific 
criminal laws of murder, fraud, trespass, and theft.
    One commenter argued that adding the language that a faith-based 
organization may carry out its mission, including the ``definition, 
development, practice, and expression of its religious beliefs'' would 
expand the ability of federally funded organizations to attack the 
rights of their beneficiaries. This commenter provided the example of 
an organization receiving HIV prevention funding claiming that anti-
LGBTQ activities were an expression of religious beliefs, which could 
undermine the organization's ability to become a trusted service 
provider within the community.
    One commenter to HHS cited survey respondents that claimed negative 
experiences with health professionals who expressed religiously 
grounded bias toward LGBT patients, which was discussed in detail in 
Part II.C.2.b.
    Response: The Agencies agree with the comments that this added 
autonomy language clarifies the rights retained by faith-based 
organizations. This language expressly does not create any new rights, 
it merely clarifies that these pre-existing religious liberties are not 
waived by participation in these Federal financial assistance programs 
or activities. This approach is appropriate because these are existing 
core religious liberties that faith-based organizations should not have 
to, and should not be asked to, waive in order to participate in 
Federal financial assistance programs or activities. The Agencies agree 
that this clarification will help restore an environment of religious 
freedom.
    The Agencies disagree that this added autonomy language will be 
problematic or endanger beneficiaries. Faith-based organizations will 
still have to comply with the other requirements in this final rule, 
including prohibitions against explicitly religious activities, which 
expressly include proselytizing. Also, as discussed throughout this 
final rule, the Agencies are not supporting the message of any 
organization that participates in these Federal financial assistance 
programs or activities. If they were, the Agencies would also need to 
regulate the autonomy and expression of secular organizations.
    The addition by DHS, USDA, and VA that the retained independence is 
``from Federal, State and local governments,'' is rational. This 
language does not create any new independence. It merely clarifies that 
faith-based organizations' independence is not sacrificed merely by 
participating in a Federal financial assistance program or activities. 
Civil and criminal laws still apply to the extent they did before. 
Additionally, this provision makes the language used by DHS, USDA, and 
VA consistent with the language used by DOJ, DOL, and HHS. 81 FR at 
19419 (DOJ, 28 CFR 38.5(b)); id. at 19422 (DOL, 29 CFR 2.32(b)); id. at 
19427 (HHS, 45 CFR 87.3(c)). And no commenter pointed to any issue 
created by this language in the regulations of DOJ, DOL, or HHS.
    The prior rule contained the language that carrying out a faith-
based organization's mission includes the ``definition, development, 
practice, and expression of its religious beliefs.'' 81 FR at 19406 
(ED, 2 CFR 3474.15(e)(2)(ii)); id. at 19412 (DHS, 6 CFR 19.8(a)); id. 
at 19415 (USAID, 22 CFR 205.1(c)); id. at 19416 (HUD, 24 CFR 
5.109(d)(1)); id. at 19419 (DOJ, 28 CFR 38.2(a), 38.5(b)); id. at 19422 
(DOL, 29 CFR 2.32(b)); id. at 19424 (VA, 38 CFR 50.1(a)); see also id. 
at 19413 (USDA, 7 CFR 16.3(b)); id. at 19427 (HHS, 45 CFR 87.3(c)). 
Thus, contrary to the understanding of the commenter that opposed the 
addition of this language, the Agencies are not adding this language in 
this final rule. The Agencies are merely retaining it from the 2016 
final rule. Moreover, this language is an appropriate description of 
what it means for a faith-based organization to carry out its mission.
    Also, contrary to this commenter's claim, this final rule is not 
the appropriate mechanism for ensuring that each provider becomes a 
trusted service provider within the community. Any such concern should 
also apply equally to all providers. Any organization's expression 
could alienate, or cause negative experiences for, beneficiaries by 
taking a position on any controversial issue.
    Additionally, this analysis is not affected by the study that a 
commenter cited regarding negative experiences. The Agencies 
incorporate the discussion of that study from Part II.C.2.b, including 
that it did not show harms specific to faith-based organizations 
receiving Federal financial assistance. And the added language 
discussed in this section does not affect the scope of permissible 
religious expression, so any negative experiences will be attributable 
to the existing protections of such expression.
    Changes: None.
    Affected Regulations: None.

H. Employment and Board Membership

    Existing regulations for eight of the Agencies provided that, by 
receiving Federal financial assistance, a religious organization did 
not forfeit its protection under section 702 of the Civil Rights Act of 
1964 (``section 702 exemption''), which allowed it to hire persons ``of 
a particular religion'' to carry out work connected with the 
organization. VA was the only Agency that did not have any language 
specifically addressing the section 702 exemption in its existing 
regulation. VA's regulation simply stated that faith-based 
organizations participating in a social service program supported with 
Federal financial assistance retained their independence and could 
continue to carry out their missions. 38 CFR 50.1(a).
    VA proposed to join the other Agencies by adding explicit language 
stating that the section 702 exemption continues to apply when a 
religious organization receives Federal financial assistance. ED, HHS, 
HUD, DOL, USAID, and VA proposed adding language to clarify that 
allowing the hiring of persons on the basis that they are ``of a 
particular religion'' under section 702 includes allowing hiring of 
persons on the basis of their acceptance of or adherence to particular 
religious tenets.
    Similarly, existing regulations for DHS, HUD, DOJ, and other 
Agencies provided that a religious organization receiving Federal 
funding retained its right to select its board members ``on a religious 
basis.'' See, e.g., 28 CFR 38.5(b) (DOJ). DHS, HUD, and DOJ proposed 
clarifying that choosing board members of the organization based on 
religion allowed selecting members based on their acceptance of or 
adherence to particular religious tenets.
1. Preserving the Section 702 Exemption
    Summary of Comments: Many comments opposed allowing employers that 
receive Federal funding to invoke the section 702 exemption at all. 
Some stated that allowing an organization receiving Federal funding to 
claim the section 702 exemption violates the Constitution's 
Establishment Clause. Others expressed concern that this provision 
disadvantages religious minorities and the nonreligious. Some 
commenters expressed concern that this provision would lead to a 
decrease in available jobs and would harm the economy and called for 
this economic

[[Page 82097]]

effect to be considered in the cost-benefit analysis of the rules.
    Many other commenters supported VA's proposed addition and the 
other Agencies' existing rules that specified that the section 702 
exemption is preserved when religious organizations accept Federal 
funding. They stated that these provisions help preserve the autonomy 
and identities of religious organizations. Some commenters stressed 
that this is particularly important for minority religious 
organizations seeking to preserve their identities, in light of the 
fact that the broader labor pool is overwhelmingly not of the same 
faith as the minority religious organizations.
    Response: The Agencies disagree that the Establishment Clause 
prohibits religious organizations from claiming the section 702 
exemption when providing federally funded services. That argument has 
been rejected expressly. See, e.g., Lown v. Salvation Army, Inc., 393 
F. Supp. 2d 223, 249 (S.D.N.Y. 2005) (``[T]he notion that the 
Constitution would compel a religious organization contracting with the 
state to secularize its ranks is untenable in light of the Supreme 
Court's recognition that the government may contract with religious 
organizations for the provision of social services.'' (citing Bowen v. 
Kendrick, 487 U.S. 589, 609 (1988))). Moreover, to force faith-based 
charities to forgo their statutory right under Title VII to hire 
coreligionists because they accept Federal funding for part of their 
operations would effectively exclude many religious organizations from 
providing federally supported services. This would undermine the 
purpose of these rules to allow religious organizations to participate 
on an equal footing with nonreligious organizations in the provision of 
needed social services. It also might violate RFRA to deny certain 
recipients the ability to claim the exemption as a condition of 
receiving Federal funds, as explained in the World Vision opinion.
    The section 702 exemption is critical to preserve faith-based 
organizations' religious autonomy and identities, and the comments 
showed that this is particularly true for minority religions and 
denominations. Section 702 is a long-standing statutory exemption, so 
any impact on employees or potential employees was caused by that 
statute, not by regulations making clear that this statutory right is 
preserved. The Agencies thus agree with those commenters who said that 
it is important to preserve the section 702 exemption that Congress 
provided to religious organizations, whether or not they participate in 
the provision of federally funded services.
    The Agencies disagree with the comments that said this provision 
would harm the economy by reducing the number of jobs. At most, this 
provision presents a question of the distribution of jobs and who will 
provide federally funded services. This provision would not reduce the 
net number of jobs or the amount of federally funded services. The 
reduction of barriers to faith-based organizations participating in 
providing federally funded services may in fact increase overall the 
national capacity for provision of services and thus the total number 
of jobs. See Part II.K.
    Changes: None.
    Affected Regulations: None.
2. Acceptance of or Adherence to Religious Tenets
a. Employment \67\
---------------------------------------------------------------------------

    \67\ The discussion in Part III.H.2.a is solely on behalf of the 
six Agencies--ED, HHS, HUD, DOL, USAID, and VA--that proposed to 
explicate the section 702 exemption in this way.
---------------------------------------------------------------------------

    Summary of Comments: Many commenters opposed the proposals of six 
Agencies to specify that, for purposes of section 702, hiring 
``individuals of a particular religion'' allows for requiring 
``acceptance of or adherence to the religious tenets of the 
organization.'' Many expressed fear that this change could lead to 
discrimination based on race, sex (including pregnancy), sexual 
orientation, or transgender status. Some said it conflicted with the 
Equal Employment Opportunity Commission (``EEOC'') Compliance Manual. 
Some commenters inferred from the contrast between the Americans with 
Disabilities Act, which specifies that employees may be required to 
``conform to the religious tenets'' of a religious organization, 42 
U.S.C. 12113(d)(2), and section 702, which does not have such express 
language, that Title VII was not intended to permit religious employers 
to discriminate on the basis of adherence to their religious tenets.
    Other commenters supported this change, saying it would make clear 
that religious organizations have the ability to preserve their 
identities and autonomy. A State attorney general added that this 
change would ensure that the people who carry out a faith-based 
organization's programs (employees) will share the organization's 
faith.
    Response: The ordinary meaning of the phrase ``of a particular 
religion'' in the section 702 exemption encompasses the language that 
these six Agencies proposed, ``acceptance of or adherence to religious 
tenets.'' Religion as ordinarily understood is more than a label people 
use to self-identify or which others may use to identify them or their 
backgrounds. It encompasses profound beliefs about the nature of all 
things and about how one should live based on those beliefs. See, e.g., 
EEOC v. Abercrombie & Fitch Stores, Inc., 135 S. Ct. 2028, 2033 (2015) 
(``Congress defined `religion,' for Title VII's purposes, as 
`includ[ing] all aspects of religious observance and practice, as well 
as belief.''' (quoting 42 U.S.C. 2000e(j)); Burwell v. Hobby Lobby 
Stores, Inc., 573 U.S. 682, 710 (2014) (``exercise of religion involves 
not only belief and profession but the performance of (or abstention 
from) physical acts that are engaged in for religious reasons'' 
(internal quotations omitted)); Widmar v. Vincent, 454 U.S. 263, 272 
n.11 (1981) (``many and various beliefs meet the constitutional 
definition of religion'' (internal quotation omitted)). Adherence to or 
acceptance of a set of religious beliefs is encompassed within the 
phrase ``of a particular religion'' and is thus a natural application 
of the statutory term.
    Accordingly, courts have consistently interpreted ``of a particular 
religion'' in Title VII to encompass adherence to or acceptance of 
particular religious beliefs. See, e.g., Hall v. Baptist Mem'l Health 
Care Corp., 215 F.3d 618, 624 (6th Cir. 2000) (``The decision to employ 
individuals `of a particular religion' . . . has been interpreted to 
include the decision to terminate an employee whose conduct or 
religious beliefs are inconsistent with those of its employer.''); 
Little v. Wuerl, 929 F.2d 944, 951 (3d Cir. 1991) (upholding 
termination of employee for violations of ``Cardinal's Clause,'' which 
included ``entry by a teacher into a marriage which is not recognized 
by the Catholic Church''); Maguire v. Marquette Univ., 627 F. Supp. 
1499, 1503 (E.D. Wis. 1986), aff'd in part and vacated in part, 814 
F.2d 1213 (7th Cir. 1987) (professor who was Catholic but was fired for 
views on abortion barred by section 702 exemption from bringing 
religious discrimination claim because ``[s]uch an inquiry would 
require the Court to immerse itself not only in the procedures and 
hiring practices of the theology department of a Catholic University 
but, further, into definitions of what it is to be a Catholic''). The 
Agencies' determination that ``of a particular religion'' encompasses 
adherence to or acceptance of a set of religious beliefs is, thus, 
supported by

[[Page 82098]]

the case law in addition to the ordinary meaning of the words.
    The Agencies agree with commenters that this change makes clear 
that faith-based organizations can preserve their autonomy and 
identities when participating in federally funded programs. Religious 
organizations function through their employees, and the purpose of the 
1972 revision of the section 702 exemption was to respect the 
organizations' religious autonomy and identities with regard to all 
employees. Indeed, when upholding that 1972 amendment, the Supreme 
Court expressly referenced the impact of ``religious tenets'' on faith-
based organizations' ``religious mission.'' Amos, 483 U.S. at 336. 
Faith-based organizations' religious autonomy and identities would be 
diminished substantially if those organizations could not ensure that 
their staffs accepted and adhered to their religious tenets. The 
Agencies thus agree with the State attorney general's comment that this 
change ensures that the people who carry out programs (employees) will 
share the organization's faith.
    The Agencies disagree with comments that said this provision 
permits discrimination on grounds other than religion, such as race, 
sex, or sexual orientation. Existing protections for non-religious 
classes remain in force. For example, where a tenet of a religious 
organization forbids engaging in sexual conduct outside of marriage, 
the section 702 exemption permits dismissing employees who violate this 
tenet, but it would prohibit discharging only women who had engaged in 
such conduct and not men. See Cline v. Catholic Diocese of Toledo, 206 
F.3d 651, 658 (6th Cir. 2000) (``[C]ourts have made clear that if the 
school's purported `discrimination' is based on a policy of preventing 
nonmarital sexual activity which emanates from the religious and moral 
precepts of the school, and if that policy is applied equally to its 
male and female employees, then the school has not discriminated based 
on pregnancy in violation of Title VII.''); Redhead v. Conference of 
Seventh-Day Adventists, 440 F. Supp. 2d 211, 223 (E.D.N.Y. 2006) 
(``[W]here religious school employers have asserted fornication as a 
reason for terminating a pregnant unmarried woman, courts have held 
that an employer enforcing such a policy unevenly--e.g., only against 
women or only by observing or having knowledge of a woman's pregnancy--
is evidence of pretext.''). Additionally, the Agencies incorporate 
their discussions from Parts II.C and II.E of the context-specific 
analysis and the unique treatment of discrimination on the basis of 
race.
    Commenters who said that the proposed rules conflicted with the 
EEOC Compliance Manual are mistaken. That manual merely says that the 
section 702 exemption does not provide an exemption from prohibitions 
against other forms of discrimination, such as race or sex 
discrimination. That is completely consistent with the Agencies' 
interpretation of the rule, as explained above.
    The Agencies also disagree with drawing inferences from the fact 
that Title VII does not specifically include the ``tenets'' language, 
while the Americans with Disabilities Act (``ADA'') does. The section 
702 exemption was enacted in 1964. The ADA was enacted in 1990 and 
included a provision that tracked the Title VII ``individuals of a 
particular religion'' language, 42 U.S.C. 12113(d)(1), and then added a 
provision clarifying that ``[u]nder this subchapter, a religious 
organization may require that all applicants and employees conform to 
the religious tenets of such organization,'' id. 12113(d)(2). That 
Congress added this language is no less evidence that ``individuals of 
a particular religion'' meant something different 26 years earlier in 
Title VII than that Congress wished to confirm its understanding of 
what the phrase already meant. See, e.g., Jackson v. Birmingham Bd. of 
Educ., 544 U.S. 167, 175-77 (2005) (not drawing negative inference from 
fact that Title IX prohibition of sex discrimination did not include an 
express prohibition of retaliation for complaint of sex discrimination, 
whereas Title VII prohibition of sex discrimination did). If anything, 
the clarifying language here is consistent with the ADA clarifying 
language.
    Changes: None.
    Affected Regulations: None.
b. Board Membership \68\
---------------------------------------------------------------------------

    \68\ The discussion in Part II.H.2.b is solely on behalf of the 
three Agencies: DHS, DOJ, and HUD.
---------------------------------------------------------------------------

    As noted, DHS, DOJ, and HUD proposed to make clear that a faith-
based organization participating in a federally funded social service 
program could, as part of retaining its independence and consistent 
with the prohibition on using direct Federal financial assistance to 
engage in explicitly religious activities, continue to hire its board 
members on the basis of acceptance of or adherence to the religious 
tenets of the organization.
    Summary of Comments: Some commenters raised the same concerns 
discussed in Part II.H.2.a with regard to this proposal. Other 
commenters supported this proposal, saying it would enable religious 
organizations to preserve their identities and autonomy. A State 
attorney general observed that this proposal was beneficial in ensuring 
that the leaders of the organization would actually advance its 
religious mission.
    Response: These three Agencies determine that the added 
``acceptance of or adherence to'' language is appropriate for board 
members. The comments that expressed the same concerns discussed in 
Part II.H.2.a miss the mark here because, while the revisions discussed 
in Part II.H.2.a interpreted the Title VII exemption for faith-based 
organizations ``with respect to employment of individuals of a 
particular religion,'' the changes made by these three Agencies do not 
purport to comment on the applicability of employment nondiscrimination 
provisions. Instead, they clarify that part of faith-based 
organizations' maintaining their independence when accepting Federal 
assistance is that, in general and subject to nondiscrimination 
requirements in program statutes for which the First Amendment and RFRA 
do not provide an exception, those organizations may continue to select 
their board members consistent with the organizations' religious views. 
Ensuring that the board members of a religious organization heed its 
``religious tenets and sense of mission,'' Amos, 483 U.S. at 336, is 
particularly significant because board members shape the policy and 
governance of the organization. It would be catastrophic if a faith-
based organization that was organized, for example, to put its 
religious beliefs on abortion--pro or con--into effect could not 
exclude board members who did not adhere to such beliefs. Appointing 
leaders who would undercut the organization's essential religious 
charter is tantamount to institutional apostasy. The Agencies thus 
agree with the State attorney general that this clarification is 
important.
    Changes: None.
    Affected Regulations: None.

I. Conflicts With Other Federal Laws, Programs, and Initiatives

    Summary of Comments: Multiple comments claimed that the NPRMs could 
create inconsistency with numerous Federal statutes. They also charged, 
without any additional specifics or elaboration, that the NPRMs failed 
``to consider conflicts with applicable nondiscrimination statutes, 
including Titles VI and VII of the 1964 Civil Rights Act, the Americans 
with

[[Page 82099]]

Disabilities Act, Section 504 of the Rehabilitation Act, Title IX of 
the Education Amendments of 1972, Section 1557 of the Affordable Care 
Act, the Fair Housing Act, the Violence Against Women Act, the Victims 
of Crime Act, the Omnibus Crime Control and Safe Streets Act, the 
Family Violence Prevention Services Act, and Executive Order 11246.''
    One commenter claimed that the NPRMs were improper because they 
violated the Treasury and General Government Appropriations Act of 
1999, Public Law 105-277, div. A, 101(h) [title VI, 654], codified at 5 
U.S.C. 601 note, by failing to include a Family Policymaking 
Assessment, which, in certain circumstances, requires agencies to 
assess the impact of proposed agency actions on family well-being. The 
commenter critiqued the NPRMs because the Agencies failed to determine 
whether a proposed regulatory action ``strengthens or erodes the 
stability or safety of the family'' or ``increases or decreases 
disposable income or poverty of families and children.''
    A commenter stated that the NPRMs would burden the constitutional 
rights to privacy that extend to sexual and reproductive choices as 
enshrined in Lawrence v. Texas, 539 U.S. 558 (2003), Griswold v. 
Connecticut, 381 U.S. 479 (1965), and Roe v. Wade, 410 U.S. 113 (1973).
    The Agencies received comments that the NPRMs would create 
inconsistencies with numerous major interagency and government-wide 
initiatives, including Federal strategies to promote the health of the 
nation and address homelessness, HIV, opioid abuse, and related 
illnesses and deaths.
    Response: The Agencies disagree with the comments that this final 
rule creates inconsistency with any Federal statutes, much less the 
nondiscrimination statutes identified by commenters. To the contrary, 
as stated in the NPRMs, one of the purposes of this final rule is to 
align the Federal regulations governing several executive branch 
agencies more closely with Federal statutes (e.g., RFRA, 42 U.S.C. 
2000bb et seq., and RLUIPA, 42 U.S.C. 2000cc et seq.). The Agencies 
believe that, if anything, the rule makes existing regulations more 
consistent with statutes such as the Family Violence Prevention 
Services Act, which contains an express statutory prohibition on 
discrimination on the basis of religion. 42 U.S.C. 10406(c)(2)(B)(i). 
Further, the Agencies drafted the NPRMs in part to alleviate tension 
with the Free Exercise Clause's prohibition on discrimination against 
religious organizations by removing requirements that were not imposed 
equally on secular organizations. Additionally, as discussed in Parts 
II.C, II.E, and II.G, this final rule does not affect the applicability 
of those other nondiscrimination laws. Therefore, the contention that 
this final rule conflicts with any Federal nondiscrimination statute is 
facially unconvincing. Moreover, as discussed in Part II.H, the 
Agencies making each change in that section believe that this final 
rule is consistent with Title VII.
    Section 5(b) of Executive Order 13831 clearly requires that the 
order be ``implemented consistent with applicable law.'' The Agencies 
have been mindful of this requirement in drafting the NPRMs, in 
evaluating the thousands of public comments received, and in drafting 
this final rule. It is the position of the Agencies that this final 
rule satisfies that requirement. The Agencies note that the argument 
that the NPRMs violated a number of statutes consists predominantly of 
merely identifying statutes by title without specific legal analysis as 
to which sections have been allegedly violated, which specific 
provisions of the NPRMs are involved, and what the nature of the 
violations might be.
    The Agencies disagree that the NPRMs violated 5 U.S.C. 601 note in 
failing to conduct a Family Policymaking Assessment. Such assessments 
are only required prior to an agency's implementation of ``policies and 
regulations that may affect family well-being.'' 5 U.S.C. 601 note. 
Under that provision, the term ``family'' is defined as ``a group of 
individuals related by blood, marriage, adoption, or other legal 
custody who live together as a single household'' and ``any individual 
who is not a member of such group, but who is related by blood, 
marriage, or adoption to a member of such group, and over half of whose 
support in a calendar year is received from such group.'' Id. The 
Agencies have determined that this Assessment does not apply to this 
final rule because it does not focus on a ``family,'' and indeed makes 
no reference to such.
    The Agencies disagree that this final rule will harm privacy and 
reproductive rights as protected by Roe v. Wade and other Supreme Court 
jurisprudence. This final rule does not change the scope of any such 
rights or jurisprudence, and commenters did not identify any such harm.
    The Agencies have considered the comment that the NPRMs would 
create inconsistencies with numerous major interagency and government-
wide initiatives, including Federal strategies to promote the health of 
the nation and address homelessness, opioid abuse and related illnesses 
and deaths, and HIV infection. The Agencies conclude that the opposite 
is true. This final rule will benefit those important Federal 
initiatives, in addition to others. Indeed, for each initiative, the 
commenters simply speculate that there would be a conflict. But that 
speculation is incorrect because, as discussed in Parts II.C, II.D, 
II.E, II.F, and II.G, this final rule alleviates burdens placed on 
faith-based organizations that hindered them from applying for, or 
participating in, these federally funded programs. Moreover, each of 
the programs discussed by this comment actually cited the benefits of 
participation by faith-based organizations, so it is unclear how 
expanding eligibility of faith-based organizations would be contrary to 
those programs. When more organizations are eligible to compete for 
Federal funds, the Agencies believe that the quality of the resulting 
recipients and the services provided increases.
    Regarding homelessness, the comment was made that the NPRMs would 
conflict with the objectives of a 2018 report \69\ adopted by the U.S. 
Interagency Council on Homelessness (``USICH''), of which most of the 
Agencies are members. But the very 2018 report cited by the commenter 
consistently relied on the proposition that faith-based organizations 
play an important role in helping the nation alleviate homelessness.
---------------------------------------------------------------------------

    \69\ United States Interagency Council on Homelessness, Home, 
Together: The Federal Strategic Plan to Prevent and End Homelessness 
(2018), https://www.usich.gov/resources/uploads/asset_library/Home-Together-Federal-Strategic-Plan-to-Prevent-and-End-Homelessness.pdf.
---------------------------------------------------------------------------

    The commenter cited this report ten separate times, each time 
omitting the references to the role of the faith community in 
addressing homelessness. The report stated that social services to 
address homelessness ``and other federal, state, and local programs, 
must be well-coordinated among themselves, and with the business, 
philanthropic, and faith communities that can supplement and enhance 
them.'' Id. at 3 (emphasis added).
    Objective 1.1 in that report was to ``collaboratively build lasting 
systems that end homelessness.'' Id. at 11. To achieve that objective, 
the report recommended that ``leaders from all levels of government and 
the private, nonprofit, and faith sectors can come together to'' make 
critical advancements, including building momentum behind a common 
vision, understanding the scope of the problem, gathering relevant 
data, and

[[Page 82100]]

implementing solutions. Id. at 11-12 (emphasis added).
    Objective 1.2 was to ``increase capacity and strengthen practices 
to prevent housing crises and homelessness.'' Id. at 12. To achieve 
that objective, the report noted the importance of targeted assistance, 
which it said ``may include a combination of financial assistance, 
mediation and diversion, housing location, legal assistance, employment 
services, or other supports--many of which can be provided by public, 
nonprofit, faith-based, and philanthropic programs within the 
community.'' Id. at 13 (emphasis added).
    The report highlighted the important role that faith-based service 
providers play for those in need who reject other sources of help. It 
stated:

    Many individuals experiencing homelessness are disengaged from--
and may be distrustful of--public and private programs, agencies, 
and systems, and they may be reluctant to seek assistance. Helping 
individuals to overcome these barriers often requires significant 
outreach time and effort, and can take months or even years of 
proactive and creative engagement to build trust. In order to 
comprehensively identify and engage all people experiencing 
homelessness, partnerships across multiple systems and sectors are 
critically important, particularly among homelessness service 
systems and health and behavioral health care providers, schools, 
early childhood care providers and other educators--including higher 
education institutions--child welfare agencies, TANF agencies, law 
enforcement, criminal justice system stakeholders, workforce 
systems, faith-based organizations, and other community-based 
partners.'' Id. at 16 (emphasis added).

    Objective 2.3 of the report was to ``implement coordinated entry to 
standardize assessment and prioritization processes and streamline 
connections to housing and services.'' Id. at 19. In support of that 
objective, the report stated, ``[c]oordinated entry systems also create 
the opportunity to bring non-traditional partners and resources to the 
table as part of a broad and collaborative community effort that 
engages other public programs and community- and faith-based 
organizations in preventing and ending homelessness.'' Id. (emphasis 
added).
    It might also be noted that the 2015 report by the USICH \70\ 
placed even greater emphasis on the role of faith-based organizations 
in addressing homelessness in America. The very first recommendation 
made in the report was to increase leadership, collaboration, and civic 
engagement. One of the key strategies the report identified for this 
recommendation was to ``[i]nclude people with firsthand experience with 
homelessness, businesses, nonprofits, faith-based organizations, 
foundations, and volunteers.'' Id. at 33 (emphasis added). The report 
also stated:
---------------------------------------------------------------------------

    \70\ USICH, Opening Doors: Federal Strategic Plan to Prevent and 
End Homelessness, https://www.usich.gov/resources/uploads/asset_library/USICH_OpeningDoors_Amendment2015_FINAL.pdf.
---------------------------------------------------------------------------

     The homeless assistance system alone cannot address the 
nation's critical shortage of affordable housing for people who live in 
poverty. With 7.7 million low-income households experiencing ``worst 
case housing needs,'' it is inevitable that many of these households 
will experience housing crises, and will turn to family, friends, 
faith-based and community organizations, and government programs for 
assistance. Id. at 30 (emphasis added).
     Throughout the nation, collaborations involving VA Medical 
Centers, public housing agencies, housing providers, faith-based and 
community organizations, local governments, the private sector, and 
other partners have come together in organized efforts to reach and 
engage Veterans and the most vulnerable and unsheltered people 
experiencing homelessness to link them to permanent housing with needed 
supports. Id. at 15 (emphasis added).
     Successful implementation occurs when there is broad 
support for the strategies--this is evidenced by the involvement of 
business and civic leadership, local public officials, faith-based 
volunteers, and mainstream systems that provide housing, human 
services, and health care. Id. at 32 (emphasis added).
     Working together, we will continue to harness public and 
private resources--consistent with principles of ``value for money''--
to finish the effort started by mayors, governors, legislatures, 
nonprofits, faith-based and community organizations, and business 
leaders across our country to end homelessness. Id. at 60 (emphasis 
added).
    The revised Federal strategic plan published by the USICH in 2020 
continues to support engagement with faith-based and community partners 
as part of the whole-of-government response to homelessness.\71\
---------------------------------------------------------------------------

    \71\ USICH, Expanding the Toolbox: The Whole-of-Government 
Response to Homelessness 19 (Oct. 2020), https://www.usich.gov/resources/uploads/asset_library/USICH-Expanding-the-Toolbox.pdf; see 
also Administration for Children and Families, HHS, 2019 ACF 
Regional Listening Sessions on Family Homelessness (Feb. 2020), 
https://www.acf.hhs.gov/fysb/resource/2019-acf-regional-listening-sessions-on-family-homelessness (``We will continue to work across 
ACF programs and with other federal agencies and faith-based and 
community partners to strengthen our efforts to address family and 
youth homelessness.'' (emphasis added)).
---------------------------------------------------------------------------

    Regarding opioid abuse, a comment noted that the NPRMs ``could'' 
conflict with the objectives of HHS's recent Strategy to Combat Opioid 
Abuse, Misuse, and Overdose (2017), https://www.hhs.gov/opioids/sites/default/files/2018/09/opioid-fivepoint-strategy-20180917/508compliant.pdf (``HHS Strategy''). However, the very HHS Strategy 
cited by the commenter provided direct support for the important role 
that faith-based organizations play in helping the nation address abuse 
of opioids and other drugs. The first strategy presented by HHS was to 
``[i]mprove access to prevention, treatment, and recovery support 
services to prevent the health, social, and economic consequences 
associated with opioid misuse and addiction, and to enable individuals 
to achieve long-term recovery.'' Id. at 3. The HHS Strategy's 
implementation relied on faith-based organizations for prevention, 
treatment of addiction to opioids and other drugs, and recovery, making 
a recommendation to ``[e]ngage community and faith-based organizations 
to use evidence-based messages on prevention, treatment, and 
recovery.'' Id. (emphasis added). It also added this component 
regarding recovery from abuse of opioids and other drugs: ``[e]nhance 
discharge coordination for people leaving inpatient treatment 
facilities who require linkages to home and community-based services 
and social supports, including case management, housing, employment, 
food assistance, transportation, medical and behavioral health 
services, faith-based organizations, and sober/transitional living 
facilities.'' Id. at 5 (emphasis added).
    Regarding HIV, a comment said that ``[w]eakening beneficiary 
protections could create inconsistency with the President's Ending the 
HIV Epidemic: A Plan for America initiative (``EHE Initiative''), which 
seeks to reduce new HIV infections by 75% in five years and by 90% in 
ten years.'' \72\ The same web page announcing the EHE Initiative 
declares the importance of faith-based organizations in reducing HIV 
infections nationwide. It states:
---------------------------------------------------------------------------

    \72\ HHS, Overview, About Ending the HIV Epidemic: Plan for 
America, https://www.hiv.gov/federal-response/ending-the-hiv-epidemic/overview.

    Achieving EHE's goals will require a whole-of-society effort. In 
addition to the coordination across federal agencies, the success of 
this initiative will also depend on

[[Page 82101]]

dedicated partners working at all sectors of society, including 
people with HIV or at risk for HIV; city, county, tribal, and state 
health departments and other agencies; local clinics and healthcare 
facilities; healthcare providers; providers of medication-assisted 
treatment for opioid use disorder; professional associations; 
advocates; community- and faith-based organizations; and academic 
and research institutions, among others. Engagement of community in 
developing and implementing jurisdictional EHE plans as well as in 
the planning, design, and delivery of local HIV prevention and care 
---------------------------------------------------------------------------
services are vital to the initiative's success.

(Emphasis added.)
    When the Agency programs highlight the benefits of participation by 
faith-based organizations, it is hard to see how it is contrary to 
those programs to ensure that such organizations are eligible to 
participate in those programs on equal terms with secular organizations 
and subject to accommodations provided for in existing Federal laws. 
The objectives of these programs are consistent with this final rule 
and could not override the First Amendment and RFRA concerns that are 
part of the basis for this final rule. And to be clear, in the event of 
any unanticipated conflict between the final rule and an applicable 
program statute for which the First Amendment, RFRA, or another Federal 
law do not provide an exception, the Agencies will follow the 
requirements of the program statute.
    Changes: None.
    Affected Regulations: None.

J. Procedural Requirements

1. Comment Period
    HUD provided a 60-day comment period for its NPRM. The eight other 
Agencies provided a 30-day comment period.
    Summary of Comments: Some commenters argued that the other 
Agencies' comment periods should have been longer because the proposed 
rules were complex, pointing out that OMB designated this coordinated 
rulemaking a significant regulatory action. Some comments asserted that 
the APA, 5 U.S.C. 551 et seq.; Executive Order 12866 of September 30, 
1993, Regulatory Planning and Review, 58 FR 51735, and Executive Order 
13563 of January 18, 2011, Improving Regulation and Regulatory Review, 
76 FR 3821; and ``agency precedents'' provide that comment periods 
should generally be at least 60 days, and courts hold that a shorter 
period must be justified by the ``good cause'' exception in the APA. 
Some comments also cited Housing Study Group v. Kemp, 736 F. Supp. 321, 
334 (D.D.C. 1990). Some comments asserted that the Agencies had worked 
on the proposals for ``many months,'' so the public should have more 
than 30 days to respond. Some comments pointed out that HUD allowed 60 
days for comments, so the other Agencies also should have provided that 
many days, or should at least consider the comments made to HUD.
    Response: The APA does not specify a minimum public comment period. 
See 5 U.S.C. 553(b). Executive Orders 12866 and 13563 encourage 
agencies to provide comment periods of at least 60 days, but do not 
mandate this. And, aside from HUD, no ``agency precedents'' bind the 
Agencies to 60-day comment periods. In contrast, HUD, pursuant to its 
unique rule on rulemaking at 24 CFR 10.1, requires a 60-day comment 
period. And HUD complied with that requirement here.
    The Agencies disagree that Housing Study Group applies here. That 
case addressed an interim final rule that was promulgated after a 30-
day notice-and-comment period. 736 F. Supp. at 334. But the court 
recognized later in the same case that the 60-day requirement is based 
on HUD's unique regulations. See Housing Study Group v. Kemp, 739 F. 
Supp. 633, 635 n.6 (D.D.C. 1990) (citing 24 CFR 10.1).
    The eight other Agencies that selected a 30-day comment period 
provided sufficient opportunity for interested persons to meaningfully 
review the proposed rules and provide informed comment. The large 
number of comments received, many of which were substantive and 
detailed, show that the comment period was adequate.\73\ Moreover, the 
existing regulations are not lengthy or complex. For example, DOJ's 
regulations in 28 CFR part 38 (including the two short appendices) 
consist of a few pages of text. Also, the NPRMs are not lengthy and are 
mostly repetitive. For example, the NPRMs for DHS, USDA, USAID, DOJ, 
DOL, VA, HHS, and HUD are each between 6 and 14 pages, with the 
regulatory text appearing on 2 to 4 pages. To be sure, ED's NPRM is 
longer, but it also separated out the unique aspects of its proposed 
rules into a separate final rule that has already been promulgated. 
Direct Grant Programs, State-Administered Formula Grant Programs, Non 
Discrimination on the Basis of Sex in Education Programs or Activities 
Receiving Federal Financial Assistance, Developing Hispanic-Serving 
Institutions Program, Strengthening Institutions Program, Strengthening 
Historically Black Colleges and Universities Program, and Strengthening 
Historically Black Graduate Institutions Program, 85 FR 59916 (Sept. 
23, 2020).
---------------------------------------------------------------------------

    \73\ Cf. Nat'l Lifeline Ass'n v. FCC, 921 F.3d 1102, 1117 (D.C. 
Cir. 2019) (``When substantial rule changes are proposed, a 30-day 
comment period is generally the shortest time period sufficient for 
interested persons to meaningfully review a proposed rule and 
provide informed comment.'' (citations omitted)).
---------------------------------------------------------------------------

    Although OMB designated the proposed rules as significant 
regulatory actions, such a designation, in itself, is not necessarily 
indicative of how much time is needed to review and comment on that 
rule. See E.O. 12866, sec. 3(f) (setting out a variety of factors for 
designation). Similarly, the length of time an agency works on a 
proposed rule does not necessarily correspond to the length of time an 
agency should allow for comment. Here, the coordination prior to 
publication resulted in a rule coordinated (and generally consistent) 
across several Agencies, thus reducing complexity for commenters. The 
Agencies considered all comments submitted in response to the 
concurrent rulemaking, including those submitted to HUD during its 60-
day comment period, as commenters recommended. In fact, most of the 
comments on the HUD version overlap with those submitted to DOJ, 
suggesting that additional time was not required for robust review and 
comment.
    Changes: None.
    Affected Regulations: None.
2. Arbitrariness and Capriciousness
    Summary of Comments: Some commenters, including a local government 
and advocacy organizations, asserted that the proposed rules violated 
the APA because the proposed changes were ``arbitrary and capricious.'' 
They reasoned that the Agencies did not establish a ``rational 
connection'' between the underlying facts and their policy choices and 
did not offer a ``reasoned explanation'' for their changes to existing 
requirements, citing Motor Vehicle Manufacturers Ass'n of the United 
States v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 43 
(1983). Some advocacy organizations stated that the proposed rules were 
contrary to the APA because the Agencies ``failed to consider an 
important aspect of the problem'' when they issued the proposed rules. 
Id. A few advocacy organizations warned that agency actions based on 
arguments ``counter to the evidence'' do not meet the requirements of 
the APA. Id.
    Similarly, another organization criticized the Agencies for 
offering little explanation or the required rational connection for 
changes that could adversely affect individuals. One organization 
asserted that the Agencies

[[Page 82102]]

did not fulfill their obligations under the APA to support each 
proposed change from the status quo with a ``reasoned analysis,'' Motor 
Vehicle Mfrs., 463 U.S. at 42; Washington v. Azar, 376 F. Supp. 3d 
1119, 1131 (E.D. Wash. 2019), vacated and remanded sub nom. Becerra v. 
Azar, 950 F.3d 1067 (9th Cir. 2020), that addresses the facts and 
arguments underlying the existing provision, Encino Motorcars, LLC v. 
Navarro, 136 S. Ct. 2117, 2125-26 (2017); FCC v. Fox Television 
Stations, Inc., 556 U.S. 502, 515 (2009), and clearly justifies the 
reversal. The commenter described a presumption against changes lacking 
support in the rulemaking record, Motor Vehicle Mfrs., 463 U.S. at 42, 
and warned that, although Executive Order 13831 overturned the 
Government-wide notice-and-referral requirements of Executive Order 
13279, as amended, the Agencies must still justify the corresponding 
changes to the regulations. The commenter stated that the Agencies 
offered ``no evidence'' in the proposed rules that the provisions were 
not functioning and required replacement. A different organization 
argued that when agencies propose material changes in policy, adherence 
to APA requirements is of greater significance because of the potential 
harm to ``serious reliance interests,'' Fox Television Stations, 556 
U.S. at 515, and commented that failure to explain a departure from 
standing policy could constitute ``an arbitrary and capricious change 
from agency practice,'' Nat'l Cable & Telecomms. Ass'n v. Brand X 
Internet Servs., 545 U.S. 967, 981 (2005). The commenter also stated 
that, because the Agencies did not scrutinize the proposed rules' 
effect on beneficiaries or employees, the proposed rules did not meet 
the reasoned analysis standard under the APA.
    Some advocacy organizations criticized the rationales provided for 
the proposed revisions as inadequate. One organization commented that 
the Agencies neglected to identify what problems of administration the 
proposed rules were meant to correct and lacked support for the claim 
that the notice-and-referral requirements burdened providers. 
Additionally, the commenter argued that the Agencies failed to justify 
the expansion of religious exemptions for providers and did not account 
for how coercion or lack of alternatives would affect beneficiaries. A 
different organization, citing the Agencies' statements in the NPRMs 
that they could not quantify the cost of the referral requirement and 
welcomed data that would aid in developing such estimates, concluded 
that the Agencies could not provide an adequate basis for rescinding 
the requirement. The commenter criticized the Agencies' reliance on 
RFRA and Trinity Lutheran for support as ``cursory and flawed,'' and 
maintained that the Agencies had not met their burden under the APA to 
offer a reasoned explanation for the change, citing Fox Television 
Stations, 556 U.S. at 515. Addressing other proposed revisions, the 
commenter stated that the proposals to broaden religious exemptions and 
redefine indirect assistance also lacked sufficient rationales as the 
Agencies' arguments concerning alignment with the First Amendment and 
RFRA were inadequate.
    Response: The Agencies disagree with comments that suggested the 
proposed rulemaking was ``arbitrary and capricious'' in violation of 
the APA because it ``failed to present a reasoned analysis'' for a 
substantial change in policy and ``failed to articulate a rational 
connection between the facts found and the choices made.'' Under the 
APA, courts review the Agencies' exercise of discretion under the 
deferential ``arbitrary and capricious'' standard. See 5 U.S.C. 
706(2)(A). The court's review is ``narrow,'' and the court may review 
the Agencies' exercise of discretion only to determine if the Agencies 
``examined `the relevant data' and articulated `a satisfactory 
explanation' for [the] decision, including a rational connection 
between the facts found and the choice made.'' Dep't of Commerce v. New 
York, 139 S. Ct. 2551, 2569 (2019) (citations omitted). Courts may not 
substitute their judgments for the Agencies', ``but instead must 
confine [them]selves to ensuring that [the Agencies] remained `within 
the bounds of reasoned decision-making.' '' Id. (citation omitted).
    The Supreme Court has recognized that agencies may change policy 
when such changes are ``permissible under the statute, . . . there are 
good reasons for [them], and . . . the agency believes [them] to be 
better'' than prior policies. Fox Television Stations, 556 U.S. at 515. 
Courts also have noted that agencies are not bound by prior policies or 
interpretations of their statutory authority.\74\ In addition, an 
agency need not prove that the new interpretation is the best 
interpretation but should acknowledge that it is making a change, 
provide a reasoned explanation for the change, and indicate why it 
believes the new interpretation of its authority is better. See 
generally Fox Television Stations, 556 U.S. 502.
---------------------------------------------------------------------------

    \74\ See, e.g., Rust v. Sullivan, 500 U.S. 173, 186-87 (1991) 
(acknowledging that changed circumstances and policy revision may 
serve as a valid basis for changes in agency interpretations of 
statutes); Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 
467 U.S. 837, 863-64 (1984) (``The fact that the agency has from 
time to time changed its interpretation of the term `source' does 
not, as respondents argue, lead us to conclude that no deference 
should be accorded the agency's interpretation of the statute. An 
initial agency interpretation is not instantly carved in stone. On 
the contrary, the agency, to engage in informed rulemaking, must 
consider varying interpretations and the wisdom of its policy on a 
continuing basis.''); Motor Vehicle Mfrs., 463 U.S. at 42 (agencies 
``must be given ample latitude to `adapt their rules and policies to 
the demands of changing circumstances' '' (quoting Permian Basin 
Area Rate Cases, 390 U.S. 747, 784 (1968))).
---------------------------------------------------------------------------

    The Agencies easily meet these requirements of the APA by providing 
detailed and reasoned explanations for their proposed changes. As the 
Agencies explained in proposing the amendments, the proposed changes 
implement Executive Order 13831 and conform the regulations more 
closely to the Supreme Court's current First Amendment jurisprudence; 
relevant Federal statutes such as RFRA; Executive Order 13279, as 
amended by Executive Orders 13559 and 13831; and the Attorney General's 
Memorandum.
    The NPRMs explained that, in order to be consistent with these 
authorities, the proposed rules would conform to Executive Order 13279, 
as amended, by deleting the requirement that faith-based social service 
providers refer beneficiaries objecting to receiving services from them 
to an alternative provider and the requirement that faith-based 
organizations provide notices that are not required of secular 
organizations. As the NPRMs also explained, President Obama's Executive 
Order 13559 imposed notice and referral burdens on faith-based 
organizations that are not imposed on secular organizations. Section 
1(b) of Executive Order 13559 had amended section 2 of Executive Order 
13279 in pertinent part by adding a new subsection (h) to section 2. As 
amended, section 2(h)(i) provided that if a beneficiary or a 
prospective beneficiary of a social service program supported by 
Federal financial assistance objected to the religious character of an 
organization that provided services under the program, that 
organization was required, within a reasonable time after the date of 
the objection, to refer the beneficiary to an alternative provider. 
Section 2(h)(ii) directed the Agencies to establish policies and 
procedures to ensure that referrals would be timely and would follow 
privacy laws and regulations; that providers notify the Agencies of and 
track referrals; and that

[[Page 82103]]

each beneficiary ``receive [] written notice of the protections set 
forth in this subsection prior to enrolling in or receiving services 
from such program.'' The reference to ``this subsection'' rather than 
to ``this section'' indicated that the notice requirement of section 
2(h)(ii) was referring only to the alternative provider provisions in 
subsection (h), not all of the protections in section 2.
    When revising their regulations in 2016, the Agencies explained 
that the revisions would implement the alternative provider provisions 
in Executive Order 13559. Executive Order 13831, however, has removed 
the alternative provider requirements articulated in Executive Order 
13559. The Agencies also previously took the position that the 
alternative provider provisions would protect religious liberties of 
social service beneficiaries. But such methods of protecting those 
rights were not required by the Constitution or any applicable law. 
Indeed, the selected methods were in tension with more recent Supreme 
Court precedent--including Espinoza and Trinity Lutheran--regarding 
nondiscrimination against religious organizations, with the binding 
legal principles discussed in the Attorney General's Memorandum, and 
with RFRA, as explained in the NPRMs and in detail in Part II.C. The 
Agencies also now disagree that these requirements meaningfully 
protected any beneficiary's religious liberties, as discussed in Part 
II.C.1. And the Agencies incorporate their analysis of the costs and 
benefits from Part IV below.
    Executive Order 13831 chose to eliminate the alternative provider 
requirement for good reason. This decision avoids tension with the 
nondiscrimination principles articulated in Trinity Lutheran and 
summarized in the Attorney General's Memorandum, avoids problems that 
may arise under RFRA, and fits within the Administration's broader 
deregulatory agenda. Moreover, as explained in detail in Part II.C, the 
Agencies exercise their discretion to remove the alternative provider 
requirement because that is the appropriate legal and policy choice.
    Similarly, the Agencies have provided reasoned explanations 
throughout this preamble for all of the other clarifications, 
additions, and changes in this final rule, which they incorporate here.
    Thus, the Agencies disagree that this rulemaking is ``arbitrary and 
capricious,'' has not been explained or adequately supported, or 
otherwise has violated the requirements of the APA.
    Changes: None.
    Affected Regulations: None.

K. Regulatory Certifications

1. Regulatory Impact Analysis (Executive Orders 12866 and 13563)
    Summary of Comments: Commenters argued that the proposed rules did 
not adequately or accurately assess all costs and benefits associated 
with the proposed rules. A few advocacy organizations commented that 
``reasonable regulation ordinarily requires paying attention to the 
advantages and the disadvantages of agency decisions,'' citing Michigan 
v. EPA, 576 U.S. 743, 753 (2015). Another commenter relied on the 
principles that, to achieve compliance with the APA, an agency ``must 
examine the relevant data and articulate a satisfactory explanation,'' 
and that agency action may be arbitrary and capricious if it ``failed 
to consider an important aspect of the problem.'' Motor Vehicle Mfrs., 
463 U.S. at 43. Commenters added that Executive Orders 12866 and 13563 
require the Agencies to accurately assess the costs and benefits of a 
proposed rule--both quantifiable and unquantifiable--and then make a 
reasoned determination that the benefits justify the costs and that the 
regulation is tailored ``to impose the least burden on society.'' 
Additionally, commenters emphasized that Executive Order 12866 requires 
agencies to ``assess all costs and benefits'' and to ``select those 
approaches that maximize net benefits.''
    Applying these standards, commenters argued that the Agencies did 
not adequately address the costs to beneficiaries and employees from 
the regulatory changes. Some commenters argued that the Agencies had 
not recognized non-quantifiable benefits (avoided costs or burdens) for 
beneficiaries from the prior rule. Multiple commenters argued that the 
Agencies failed to quantify the costs of removing the notice-and-
referral requirements, including failing to consider all relevant 
economic and non-economic costs, failing to substantiate the claimed 
cost savings with data, and asserting without support that removing a 
protection would benefit beneficiaries.
    One commenter listed categories of potential costs to beneficiaries 
from removing the notice-and-referral requirements that, this commenter 
claimed, the Agencies had not addressed. Specifically, these potential 
costs included: Experiencing discrimination and barriers to access; 
health costs due to discrimination; health costs from the stigmatizing 
message of rules that permit discrimination; cost shifting to other 
service agencies; increased confusion, familiarization, administrative, 
and legal costs; and decreased fairness, dignity, and respect for the 
religious freedom and constitutional rights of beneficiaries. This 
commenter argued that the Agencies should use available data and 
research on the costs of discrimination and the benefits of 
nondiscrimination protections to try to quantify the true impacts. The 
commenter claimed that depression is associated with the stress of 
having faced discrimination and cited research purporting to show that 
reducing the disparity in incidents of depression among LGBTQ adults by 
25 percent could yield cost savings in Michigan, Arizona, Florida, and 
Texas of between $78 million and $290 million annually, each.\75\ The 
commenter argued that the Agencies' economic analyses were 
``fundamentally flawed'' due to their failure to take into account 
these costs.
---------------------------------------------------------------------------

    \75\ Christy Mallory et al., The Impact of Stigma and 
Discrimination Against LGBT People in Michigan 66 (Williams 
Institute 2019) (``Michigan Study''), https://williamsinstitute.law.ucla.edu/wp-content/uploads/Michigan-Economic-Impact-May-2019.pdf; Christy Mallory et al., The Impact of Stigma 
and Discrimination Against LGBT People in Arizona 63 (Williams 
Institute 2018) (``Arizona Study''), https://williamsinstitute.law.ucla.edu/wp-content//Arizona-Impact-Discrimination-March-2018.pdf; Christy Mallory et al., The Impact of 
Stigma and Discrimination Against LGBT People in Florida 64 
(Williams Institute 2017) (``Florida Study''), https:/
/.law.ucla.edu//impact-lgbt-discrimination/; Christy Mallory et al., 
The Impact of Stigma and Discrimination Against LGBT People in Texas 
67 (Williams Institute 2017)) (``Texas Study''), https://williamsinstitute.law.ucla.edu/wp-content//Impact-of-Stigma-and-Discrimination-Report-April-2017.pdf.
---------------------------------------------------------------------------

    Commenters also argued that the Agencies only acknowledged, but did 
not attempt to quantify, the discrete costs to objecting beneficiaries 
that need to identify alternative providers due to removal of the 
referral requirement. This commenter urged the Agencies to consider all 
of the costs and benefits of the proposed rules, as well as the 
possibility that the costs would outweigh the benefits.
    One of these commenters argued that the Agencies had also failed to 
quantify the costs of the employment law changes discussed in Part 
II.H.
    Additionally, one commenter asserted that the Agencies relied on 
``increased clarity'' as a benefit of the proposed rules but had not 
recognized that beneficiaries would not benefit from such ``increased 
clarity.'' 85 FR at 2935.
    Commenters also discussed the benefits to faith-based organizations 
from this final rule. Several commenters argued that faith-based 
organizations

[[Page 82104]]

were not harmed by the notice-and-referral requirements. Some of these 
commenters argued that the Agencies did not present sufficient 
evidence--beyond assumptions or ``vague references'' to administrative 
burden and costs--that the notice-and-referral requirements had unduly 
burdened religious service providers either economically or in their 
practical ability to provide help for the needy in accord with their 
faiths. Some of these commenters argued that the Agencies had not 
presented any actual or even hypothetical examples of how this 
requirement meaningfully burdened faith-based organizations or 
interfered with their abilities to service program beneficiaries. 
Another commenter said that the regulations were working well and that 
the Agencies had not provided any supported reason for their changes.
    Some commenters argued that there was no burden to religious 
service providers because providing referrals should have been seen as 
part of the services for which such providers were receiving taxpayer 
funds. Another commenter claimed that the notice requirement imposed no 
burden at all on faith-based providers because they were being funded 
by taxpayer dollars to serve the beneficiaries.
    Several commenters argued that the notice-and-referral requirements 
imposed only minimal burdens on faith-based providers. Some of these 
commenters emphasized that the Agencies had indicated that the costs of 
the referral requirement were minimal, nonexistent, or unquantifiable. 
Multiple commenters emphasized that the cost of notice was minimal 
because each Agency estimated such cost to be no more than $200 per 
religious organization, with some estimating the costs to be lower, in 
the 2016 or 2020 rulemakings. For all of these reasons, these 
commenters concluded that removal of the notice requirement would not 
result in substantial savings for faith-based organizations.
    Some of these commenters disagreed with the Agencies' claims that 
removing the notice-and-referral requirements could create cost savings 
that faith-based providers could re-allocate to increase services or 
that could incentivize them to increase their participation in 
federally funded programs. These commenters argued that, because 
compliance required minor efforts and costs, removing these 
requirements would neither make significant extra resources available 
nor result in significant additional providers. Some of these 
commenters claimed that the Agencies had not demonstrated that any 
religious organization was not participating in these programs because 
of these requirements, or that there were insufficient providers to 
meet the programs' needs. Some commenters also argued that it was 
contradictory or inconsistent for the Agencies to claim that the cost 
savings from removing the notice-and-referral requirements could 
trigger a noticeable increase in services, see, e.g., 85 FR at 2935, 
8221-22, but then to claim that beneficiaries did not use referrals.
    For these reasons, commenters argued that cost savings to faith-
based organizations cannot justify removal of the notice-and-referral 
requirements. One commenter to multiple Agencies, however, explained 
that removal of the notice-and-referral requirements would enable 
religious organizations to continue working towards strengthening 
society.
    Commenters also compared the benefits and burdens to beneficiaries 
against the benefits and burdens to faith-based organizations. Several 
commenters argued that any burdens on faith-based organizations imposed 
by the notice-and-referral requirements were outweighed by the benefits 
they provided to beneficiaries. Relying on the discussions in this 
section and in Part II.C, these commenters compared the various 
described burdens to faith-based organizations, which they claimed were 
minimal or non-existent, to the various claimed benefits to 
beneficiaries, which they claimed were significant. Some of these 
commenters stated that the unquantified costs to beneficiaries 
associated with removal of the notice-and-referral requirements could 
offset or exceed any savings for providers. One commenter argued that 
the Agencies provided ``no evidence'' that any of the changes to 
beneficiaries' protections would result in net benefits because of the 
high costs to beneficiaries and society.
    Some commenters expressed concern that the Agencies appeared to 
value the religious liberty of providers above that of beneficiaries 
and urged the Agencies to evaluate them equally. These commenters 
criticized the Agencies for proposing several measures to remove ``any 
possible burden'' or lack of clarity for providers while eliminating 
``the only means'' for beneficiaries to receive notice of their rights 
as well as the requirement to be given a referral upon request.
    Some commenters argued that nothing had changed since 2016 to 
justify the Agencies' changed positions regarding the balance of 
benefits and burdens. In 2016, the Agencies concluded that the notice 
requirement was ``designed to limit the burden on'' providers while 
being ``justified by the value to beneficiaries'' (i.e., ``valuable 
protections of their religious liberty''). 81 FR at 19365. 
Additionally, in 2016, the Agencies determined that there was no 
``undue burden'' from requiring notice of such ``valuable protections'' 
of beneficiaries' ``religious liberty.'' Id. These commenters argued 
that it was ``contradictory'' to claim now that the burdens of these 
requirements justify their removal and that the Agencies had dismissed 
these conclusions without evidence or reasoned analysis.
    Other commenters pointed to the 2010 Advisory Council Report that, 
they claimed, had recognized the notice-and-referral requirements could 
impose significant monetary costs on providers but still concluded that 
those costs were necessary to adequately protect beneficiaries' 
unquantifiable fundamental religious liberties. Advisory Council Report 
at 141.
    Finally, a commenter argued that the reasoned explanation standard 
was not met when eight of the Agencies (all except HHS) stated that 
they based removal of the notice-and-referral requirements (and other 
regulatory provisions) on a ``reasoned determination'' that the 
proposal would significantly decrease costs for providers, citing 85 FR 
at 2894 (DHS); id. at 2902-03 (USDA); id. at 2919 (USAID); id. at 2925-
26 (DOJ); id. at 2935 (DOL); id. at 2944 (VA); id. at 3215, 3219 (ED); 
id. at 8221-22 (HUD).
    Response: In this final rule, the Agencies adequately and 
appropriately consider the costs and benefits of this final rule, as 
well as the balance between them, to select the approaches that 
maximize net benefits and that impose the smallest burdens on society. 
The Agencies disagree with the comments to the contrary.
    In the relevant sections above for each regulatory provision, the 
Agencies have addressed the specific comments regarding the potential 
impact on beneficiaries or employees that were raised in the comments, 
including by explaining the Agencies' experiences over the past four 
years, where relevant. Most of these comments focus on removal of the 
notice-and-referral requirements. The Agencies have considered the 
alleged harms to beneficiaries from removing these requirements as 
described in great detail in Part II.C, including detailed analyses of 
commenters' actual examples, studies, surveys, and hypothetical 
examples. For all of the reasons discussed there, the Agencies disagree 
that removing the notice-and-referral requirements will cause the harms

[[Page 82105]]

claimed by commenters. Indeed, as discussed, there is no indication by 
any Agency or commenter that anyone actually sought a referral at any 
time during the last four years.
    Part II.C addresses in detail the reasons that removal of the 
notice-and-referral requirements will not lead to increased 
discrimination against any beneficiaries. Additionally, the studies 
cited by a commenter regarding the impact of reducing LGBTQ depression 
do not indicate that there will be any increase in discrimination or 
depression due to removal of the notice-and-referral requirements, that 
faith-based providers have higher incidents of discrimination, or that 
any discrimination or depression would be prevented or reduced by 
notice and referral. For example, those surveys point to the prevalence 
of LGBT people using Federal programs, such as SNAP, but do not point 
to prevalent discrimination in those programs, let alone discrimination 
particular to faith-based providers in such programs.\76\ Moreover, 
those studies specifically did not discuss Federal protections in the 
programs governed by this final rule that prohibit discrimination based 
on sex, including under Title VII, because that was ``outside the scope 
of'' each study.\77\ The Agencies have, thus, considered these costs 
and reasonably determined that specific calculations are not warranted.
---------------------------------------------------------------------------

    \76\ Michigan Study at 41-42; Arizona Study at 36-37; Florida 
Study at 40-41; Texas Study at 39-40.
    \77\ Michigan Study at 16 n.67; Arizona Study at 12 n.47; 
Florida Study at 13 n.43; Texas Study at 13 n.50.
---------------------------------------------------------------------------

    As a result, and as discussed in Part II.C, the Agencies determine 
that removal of these notice-and-referral requirements will not cause 
the harms to beneficiaries cited by commenters. Because removing these 
requirements will not increase discrimination, there will not be 
increased costs to beneficiaries from experiencing discrimination and 
barriers to access, health costs due to discrimination, health costs 
from the stigmatizing message of rules that permit discrimination, or 
cost shifting to other service agencies. Additionally, there is no 
reason to believe that beneficiaries will experience increased 
confusion, familiarization costs, administrative costs, or legal costs, 
just as there is no reason to believe that they have experienced such 
costs when receiving services from the providers that were exempt from 
these requirements. And there is no reason to believe that removal will 
cause decreased fairness, dignity, and respect for the religious 
freedom and constitutional rights of beneficiaries, which are not 
affected by this rule change, as discussed in Part II.C. Also, as 
discussed in Parts II.C, II.E, II.F, and II.G.3, the Agencies address 
any such burdens within their notices to faith-based organizations of 
the applicable beneficiary protections and within the context-specific 
accommodation analyses under other existing Federal laws that are 
explicitly recognized in this final rule.
    Moreover, beneficiaries may benefit from removal of these notice-
and-referral requirements. As discussed in Part II.C, this final rule 
removes the various confusing aspects of these requirements, including 
the implications that they applied only to faith-based organizations, 
that accommodations were not available, contrary to the Free Exercise 
Clause and RFRA (which overrode any such implication in the 
regulations), and that discrimination on grounds other than religion 
was not prohibited. At the very least, these beneficiaries will be in 
the same position as beneficiaries of providers that were never subject 
to these requirements.
    The Agencies have also considered the costs for beneficiaries, if 
they object based on religious character, to identify an alternative 
provider. The Agencies incorporate their discussion of this alleged 
burden from Part II.C, including that they have no indication that 
anyone sought a referral under the prior rule and that there are 
readily available ways for any such beneficiary to locate a substitute, 
to the extent one is available. Additionally, the Agencies expressly 
invited comments on any data by which they could calculate such costs, 
see, e.g., 85 FR at 2926 (DOJ), but no commenter provided any such 
information. The Agencies invited similar information regarding how 
they could better assess other actual costs and benefits of the prior 
rule but did not receive any responses that provided a reliable 
methodology for such assessments. The Agencies have considered these 
issues and reasonably determine that further calculations are not 
warranted.
    In contrast, the Agencies conclude that the notice-and-referral 
requirements imposed substantial non-monetary burdens on faith-based 
organizations due to unequal treatment, in tension with the Free 
Exercise Clause and RFRA, and concerns that could have deterred faith-
based organizations from applying to participate in such grant 
programs, as discussed in Part II.C. Additionally, the notice 
requirement created confusion because it omitted any discussion of 
accommodations, was inconsistent with the provisions in four Agencies' 
regulations that no additional assurance or notice be required from 
faith-based organizations regarding explicitly religious activities as 
discussed in Part II.G.4, and was in tension with each Agency's general 
provision in the rule promising that faith-based organizations retained 
their independence. In combination with all of the other changes in 
this final rule, removing the notice-and-referral requirements provides 
much-needed clarity that faith-based organizations can participate in 
these programs on equal terms with secular organizations, consistent 
with the Religion Clauses and RFRA. And, as discussed in Parts II.E and 
II.F above, otherwise eligible faith-based organizations have been 
abstaining from applying for these programs, have been excluded from 
these programs, or have been challenged for participating in these 
programs due to the lack of clarity in the 2016 rule. As discussed in 
Part II.C, these notice-and-referral requirements stigmatized faith-
based organizations as most likely to be objectionable or to violate 
beneficiaries' rights. Although the Agencies agree that they cannot 
quantify these burdens, they do not agree that these unquantifiable 
burdens are insufficient bases for rule changes. Also, the supportive 
comments demonstrate that some faith-based providers were burdened by 
the notice-and-referral requirements, including the stigmatization that 
such requirements caused.
    The Agencies disagree with the contention that mandatory referrals 
by only specific faith-based organizations should be seen as part of 
the federally funded service. The Federal financial assistance is for 
the provision of services, whereas referral was the non-provision of 
services. To assert that mandatory referrals constituted a part of the 
federally funded service misunderstands the nature of Federal funding, 
where a Federal grant award supports particular enumerated activities 
to be undertaken by a recipient. Commenters making this claim did not 
provide any indication that such mandatory referrals were included as 
an enumerated activity to be undertaken by any Agency with Federal 
funding. Further, referral as part of the service is hard to reconcile 
with the referral requirement's function of allowing objecting 
beneficiaries to avoid receiving any services from a provider. If the 
referral were part of the provider's service, then the referral would 
undermine the claimed protection and could make the referral itself 
objectionable. Under this final rule, religious organizations remain 
free to

[[Page 82106]]

make such referrals if they choose, and some commenters indicated that 
they will continue to do so.
    Similarly, the Agencies disagree that there can be no burden on the 
faith-based providers because they were receiving taxpayer funding and 
must adhere to religious freedom safeguards. Receipt of taxpayer 
funding does not cause faith-based organizations to waive their 
constitutional and statutory religious liberties, just as it does not 
waive such rights for beneficiaries. These comments directly contradict 
Espinoza, Trinity Lutheran, many applications of RFRA, and countless 
other Supreme Court cases that allowed faith-based providers to 
participate in government-funded programs without surrendering their 
religious character or liberty. Additionally, the Agencies determine 
that the notice-and-referral requirements did not safeguard 
beneficiaries' religious freedoms, as discussed in Part II.C.
    The Agencies agree with the comments that said the notice-and-
referral requirements likely imposed minimal monetary costs on faith-
based organizations and that removal will not create significant 
financial savings for faith-based organizations. Neither notices nor 
referrals were particularly expensive, as the Agencies noted in the 
2016 rule and in their 2020 NPRMs. Also, there is no indication anyone 
actually requested a referral under the prior rule, as discussed in 
Part II.C.3.c. Nevertheless, based on their experiences and the 
comments they received, the Agencies have re-evaluated the number of 
known faith-based organizations receiving their grants and estimated 
the cost savings for those providers from removal of the notice-and-
referral requirements. An updated analysis of these costs and benefits 
is set out below in the Regulatory Certifications section addressing 
Executive Orders 12866 and 13563.
    The Agencies expressly conclude that those cost savings will not be 
substantial and are not the basis for removal of the notice-and-
referral requirements in this final rule. Although the cost savings 
from removing the notice requirement are not significant and will not 
make available significant funding for significant increases in 
services, the Agencies also exercise their discretion to allow faith-
based providers, like other providers, to save those costs and be able 
to allocate any savings toward providing additional services to 
beneficiaries. It is consistent to conclude that these savings are 
minimal and that they can be allocated toward providing services to 
beneficiaries.
    Additionally, the Agencies disagree that their conclusion here 
regarding the burden of referrals is inconsistent with their conclusion 
that beneficiaries rarely or never sought referrals. For both, the 
Agencies conclude that referrals were rarely or never sought. As 
discussed above, the Agencies are not claiming substantial savings to 
faith-based providers from removing the referral requirement, including 
because there were few, if any, requests for such referrals. But that 
does not diminish the constitutional and other non-quantified burdens 
on faith-based organizations that are the bases for removing the 
referral requirement. Moreover, faith-based service providers that are 
subject to these regulations will save costs as a result of removing 
the notice requirement.
    The Agencies conclude that removing the notice-and-referral 
requirements reaches the appropriate balance between benefits and 
burdens for all stakeholders and society, for all of the reasons 
discussed throughout this final rule, including in this section. As 
discussed above, the Agencies conclude that such removal will 
substantially benefit faith-based organizations, may benefit 
beneficiaries, and will not harm beneficiaries. Additionally, the 
Agencies are further accounting for beneficiaries' rights by separately 
giving express notice to faith-based providers that they must comply 
with the applicable beneficiary protections and providing for context-
specific accommodations that further balance stakeholder interests, 
which may result in targeted and appropriate notices and referrals. 
That is the appropriate policy choice for all of the reasons discussed 
throughout Parts II.C, II.E, and II.G.3.
    Since 2016, the Agencies have re-evaluated their analyses on this 
balancing of interests with respect to the notice-and-referral 
requirements for all of the reasons explained throughout this section 
and Part II.C, including their experiences of no known actual instances 
of referrals (and, thus, the lack of need for such requirement) and the 
developments in First Amendment and RFRA case law, such as the Supreme 
Court's decisions in Little Sisters, Espinoza, and Trinity Lutheran. 
Additionally, this final rule is a deregulatory action under Executive 
Order 13771 of January 30, 2017, Reducing Regulation and Controlling 
Regulatory Costs, 82 FR 9339, with the cost savings of this rulemaking 
at $190,409 (in 2016 dollars) when annualized over a perpetual time 
horizon at a 7 percent discount rate.
    The Agencies note that a commenter misquoted the Advisory Council 
Report. The commenter claimed that the Advisory Council Report 
acknowledged there would be significant monetary costs to ``providers'' 
from such notice-and-referral requirements. However, the cited page of 
the Advisory Council Report actually said there would be significant 
monetary costs to the Government. Advisory Council Report at 141. The 
Agencies acknowledge that they have absorbed costs due to those 
recommendations. But, as discussed above, the Agencies do not find, and 
do not base this final rule on, substantial costs to providers (or to 
themselves) from these requirements.
    Even if the burdens on beneficiaries from removing the notice-and-
referral requirements were to outweigh the benefits to faith-based 
organizations, the Agencies find ample bases to exercise their 
discretion to remove these requirements for all of the other reasons 
discussed in Part II.C, especially to alleviate the tension with the 
Free Exercise Clause and with RFRA. Those bases do not improperly 
prioritize faith-based organizations over beneficiaries. Even the 2010 
Advisory Council recommended that Executive Order 13279 be amended ``to 
make it clear that fidelity to constitutional principles is an 
objective that is as important as the goal of distributing Federal 
financial assistance in the most effective and efficient manner 
possible.'' Advisory Council Report at 127 (Recommendation 4). The 
Agencies agree. Serving beneficiaries is an important goal of these 
programs, but the programs serving beneficiaries must be operated 
consistent with constitutional principles, including protection of the 
religious liberty of organizations that implement them.
    The Agencies have also considered the costs and benefits of the 
other changes in this final rule. The Agencies do not anticipate harm 
to beneficiaries from the modifications to indirect Federal financial 
assistance for the reasons discussed in Part II.D. Beneficiaries select 
those providers through genuine independent choice, beneficiaries are 
free to decide whether or not to accept such services from faith-based 
organizations, and other protections continue to apply. The minimal or 
nonexistent harms to beneficiaries are justified by the benefits of 
this final rule, as described in Part II.D, including the non-
quantifiable qualitative benefits of reconciling the tension between 
this provision and the constitutional standard, ensuring that faith-
based organizations are not discouraged from participating in Federal 
financial assistance programs and activities, and ensuring that

[[Page 82107]]

services are available in unserved and underserved communities. 
Additionally, as discussed in Part II.D, this provision is the 
appropriate policy choice, including because the Agencies prioritize 
making services available in unserved and underserved communities.
    Similarly, the benefits and burdens of the other changes are 
addressed above in Parts II.E, II.F, II.G, and II.H. As discussed in 
Parts II.E and II.F, the Agencies are retaining the constitutional and 
statutory accommodation and nondiscrimination standards, which do not 
cause any new burden to beneficiaries. Any burden caused by each 
standard would exist whether or not that standard is expressly 
incorporated into this final rule. Also, those existing standards 
incorporate context-specific balancing that evaluates the costs and 
benefits as appropriate. As discussed in Part II.F, the Agencies have 
also considered the comments regarding burdens on beneficiaries due to 
the proposed language in the NPRMs for the RFRA standard and have 
modified the regulatory text to ensure the appropriate balance with 
regard to prohibiting discrimination based on religious exercise. The 
benefits of clearly applying these standards and ensuring faith-based 
providers can participate on equal terms justify the potential burdens.
    For similar reasons and as discussed in Part II.G, the benefits 
justify the potential burdens--and the Agencies do not anticipate 
burdens--from clarifying the scope of allowed religious displays, 
clarifying how an organization can demonstrate nonprofit status, giving 
notice to faith-based organizations, barring unique assurances or 
notices solely from faith-based organizations, and clarifying that 
faith-based organizations retain their autonomy and expression rights. 
Indeed, those clarifications will protect both faith-based 
organizations and beneficiaries from uncertainty. And the notice to 
faith-based organizations will make clear their obligations to protect 
beneficiaries' rights, as discussed in Parts II.C and II.G.3.
    Finally, and as explained in Part II.H, ED, HHS, HUD, DOL, USAID, 
and VA conclude that the benefits justify any burdens from clarifying 
that faith-based organizations retain their Title VII exemption 
regarding acceptance of and adherence to religious tenets. This well-
established Title VII standard was subsumed within the prior rule. This 
final rule merely adds clarity, ensures faith-based organizations can 
preserve their autonomy and identities, and does not alter protections 
against discrimination on other bases, as discussed in II.H.2.a. 
Additionally, DHS, DOJ, and HUD conclude that the benefits of 
clarifying that faith-based organizations' independence generally 
allows them to select board members based on acceptance of or adherence 
to religious tenets justifies any costs that such change might cause, 
as discussed in II.H.2.b.
    For all of these reasons, the Agencies' NPRMs and this final rule 
reasonably assess the costs and benefits associated with this rule, pay 
attention to the advantages and disadvantages of this rule, examine the 
relevant data and articulate a satisfactory explanation, and consider 
the important aspects of the problem. The Agencies have considered all 
comments submitted, including those addressing costs and benefits, in 
publishing this final rule.
    Changes: None.
    Affected Regulations: None.
2. Economic Significance Determination (Executive Order 12866)
    Summary of Comments: A commenter asserted that the proposed rules 
would be economically significant under Executive Order 12866, both 
because the costs would total over $100 million per year, and because 
it ``may . . . adversely affect in a material way . . . public health 
or safety, or State, local, or tribal governments or communities.'' 
This commenter argued that the Agencies' cost analyses were too narrow, 
excluding potentially significant costs to third parties (e.g., 
beneficiaries, communities, and funded organizations) because of the 
scale of programs affected by the proposed rules.
    Response: The Office of Information and Regulatory Affairs 
(``OIRA'') within OMB determined that this final rule is a significant, 
but not an economically significant, regulatory action subject to 
review by OMB under section 3(f) of Executive Order 12866. As discussed 
in the updated Regulatory Impact Analysis in Part IV below and in Parts 
II.C and II.K.1 above, this final rule will not create new marginal 
costs from the status quo, even though the underlying programs involve 
government spending. In fact, this final rule will result in de minimis 
cost savings, and it is deregulatory because it reduces qualitative 
burdens. Consequently, it does not approach the threshold for being an 
economically significant rule (annual effect of $100 million or more) 
under Executive Order 12866, nor, for the reasons set out in detail in 
the other sections, does it adversely affect in a material way the 
other items listed in section 3(f)(1) of that order.
    Changes: None.
    Affected Regulations: None.
3. Deregulatory Action Determination (Executive Order 13771)
    Summary of Comments: A commenter criticized multiple Agencies for 
concluding that removal of the notice-and-referral requirements 
promotes the Administration's deregulatory agenda. The commenter argued 
that doing so privileges policy goals above religious freedom.
    Response: Removing the notice-and-referral requirements promotes 
the Administration's deregulatory agenda, which is a desirable policy 
outcome for the Agencies. But that is not the primary basis for 
removing them. The Agencies base the removal of the notice-and-referral 
requirements on all of the reasons discussed throughout Parts II.C and 
II.K.1 above, including that those requirements were imposed solely on 
faith-based organizations, creating tension with the Free Exercise 
Clause and RFRA, and that there was no evidence anybody had actually 
sought a referral in one of the programs covered by the rule.
    Changes: None.
    Affected Regulations: None.
4. Federalism (Executive Order 13132)
    Summary of Comments: A commenter criticized multiple Agencies' 
federalism analyses as flawed, arguing that because the proposed rules 
introduced loopholes and overturned the existing regulatory regime, 
State and local jurisdictions would have a harder time protecting their 
workers and enforcing nondiscrimination laws of general applicability. 
Additionally, the commenter asserted that the proposed rules would 
burden State governments by increasing unemployment and, therefore, the 
need for State-funded welfare benefits, because more people will be 
turned down for employment. Similarly, the commenter maintained that 
both State and local governments would face higher demands for the 
social services they fund because beneficiaries will experience 
barriers to access in programs funded by the Agencies. The commenter 
warned that the proposed rules violated the APA because the Agencies' 
determinations regarding federalism implications were not based on a 
reasoned analysis.
    Response: Executive Order 13132 of August 4, 1999, Federalism, 64 
FR 43255, directs that, to the extent practicable and permitted by law, 
an agency shall not promulgate any regulation that has federalism 
implications, that imposes substantial direct compliance costs on State 
and local governments, and that is not

[[Page 82108]]

required by statute, or any regulation that preempts State law, unless 
the agency meets the consultation and funding requirements of section 6 
of the Executive Order. None of the changes made by this rule has 
federalism implications as defined in the Executive Order, nor imposes 
direct compliance costs on State and local governments. None of the 
changes made by this rule preempts State or local law within the 
meaning of the Executive Order, as stated expressly regarding Executive 
Orders 12988 and 13132. See Part IV below (regarding both Executive 
Orders); 85 FR at 2895 (DHS); id. at 2904 (USDA); id. at 2920 (USAID); 
id. at 2927 (DOJ); id. at 2935-36 (DOL); id. at 2944 (VA); id. at 2985 
(HHS); id. at 8222 (HUD). The Agencies do not expect that this rule 
will increase unemployment or unlawful discrimination in any way (see 
the detailed analysis in Parts II.C, II.E, and II.H), and thus the 
commenter's hypothesized effects on State welfare benefits and social 
services are unlikely to materialize.
    Moreover, it is not clear that any of the costs cited in the 
comments would qualify as ``direct'' under Executive Order 13132. The 
express terms of this final rule do not require State or local 
governments to pay any costs to comply. Rather, the comments pointed to 
indirect costs from theoretical alleged consequences of this final 
rule. Consequently, although Executive Order 13132 does not create any 
privately enforceable rights, the Agencies conclude that this final 
rule does not violate provisions in that Executive Order.
    Changes: None.
    Affected Regulations: None.
5. Unfunded Mandates Reform Act
    Summary of Comments: Some commenters asserted that the Agencies 
incorrectly claimed an exemption from the requirement, in the Unfunded 
Mandates Reform Act of 1995 (``UMRA''), to assess a proposal's costs 
and benefits for States and local governments and the private sector, 
arguing that Trinity Lutheran and RFRA do not enforce statutory rights 
prohibiting discrimination. Some of these commenters added that Trinity 
Lutheran does not meet this standard because it is merely case law and 
that RFRA does not meet this standard because it permits individuals to 
seek relief from burdens on religious exercise but does not establish a 
categorical right against religious discrimination. One commenter urged 
multiple Agencies to conduct an UMRA analysis before issuing a final 
rule.
    Response: Section 4 of UMRA, 2 U.S.C. 1503(1)-(2), excludes from 
coverage under that Act any proposed or final Federal regulation that 
``enforces constitutional rights'' or ``establishes or enforces any 
statutory rights that prohibit discrimination on the basis of race, 
color, religion, sex, national origin, age, handicap, or disability.'' 
The provisions of the proposed rule, and of this final rule, are 
designed in substantial part to maintain a full protection of the 
constitutional and statutory rights to be free from discrimination on 
the basis of religion--set forth in the First Amendment to the U.S. 
Constitution, and numerous other statutes, including 42 U.S.C. 2000bb 
et seq., 42 U.S.C. 18113, 42 U.S.C. 2000e-1(a) and 2000e-2(e), and 42 
U.S.C. 12113(d). For example, the core protection of this rule, which 
has been in place since 2004, is that Agencies may not discriminate for 
or against an organization on the basis of its religious character or 
affiliation. The Supreme Court has since confirmed, in its 2017 
decision in Trinity Lutheran and its 2020 decision in Espinoza, that 
this nondiscrimination right is grounded in the Free Exercise Clause. 
The clarifications that the Agencies provide to protect organizations 
from certain forms of discrimination on the basis of ``religious 
exercise'' are designed to give full effect to this protection and to 
the protections of RFRA that, as the Supreme Court has made clear in 
its 2014 decision in Hobby Lobby and in its 2020 decision in Little 
Sisters, extend to organizations as well as individuals. And the 
clarifications that certain of the Agencies have provided regarding the 
scope of the Title VII exemption is designed to enforce that statute.
    Furthermore, this final rule does not impose any Federal mandate 
that will result in the expenditure of funds by State, local, or tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more in any one year. Most, if not all, expenditures by such 
governments--for example, as primary recipients of Federal financial 
assistance--will be directly funded by the Federal program and will be 
mandated by the underlying program, not this final rule.
    For the foregoing reasons, the Agencies disagree that they are 
required to take any action under the provisions of UMRA.
    Changes: None.
    Affected Regulations: None.

III. Agency-Specific Preambles

A. Department of Education 78
---------------------------------------------------------------------------

    \78\ The remainder of the proposed provisions in the Department 
of Education's NPRM, including proposed changes to 34 CFR 75.500, 34 
CFR 75.700, 34 CFR 76.500, 34 CFR 76.700, 34 CFR 106.12(c), 34 CFR 
606.10, 34 CFR 607.10, 34 CFR 608.10, and 34 CFR 609.10 as well as 
the addition of a severability clause in 34 CFR 75.684, 34 CFR 
75.741, 34 CFR 76.684, 34 CFR 76.784, 34 CFR 606.11, 34 CFR 607.11, 
34 CFR 608.12, 34 CFR 609.12, already have been promulgated through 
a different rulemaking. Office of Postsecondary Education, U.S. 
Department of Education, Direct Grant Programs, State-Administered 
Formula Grant Programs, Non-Discrimination on the Basis of Sex in 
Education Programs or Activities Receiving Federal Financial 
Assistance, Developing Hispanic-Serving Institutions Program, 
Strengthening Institutions Program, Strengthening Historically Black 
Colleges and Universities Program, and Strengthening Historically 
Black Graduate Institutions Program, 85 FR 59,916-82 (Sept. 23, 
2020) (``Religious Liberty and Free Inquiry Final Rule''). To the 
extent that any comments such as comments about the length of the 
public comment period and requests for extension of the public 
comment period included in the Religious Liberty and Free Inquiry 
Final Rule concern the regulations in this final rule, the 
Department of Education refers to those comments and its responses 
to those comments in the Religious Liberty and Free Inquiry Final 
Rule. Id.
---------------------------------------------------------------------------

1. Comments in Support
    Summary of Comments: Commenters noted that the proposed rule would 
reinforce Americans' religious liberties and the rule of law. Some 
commenters argued that the proposed rule appropriately eliminates 
potentially unequal treatment of religious institutions when applying 
for Department grants and restores fairness.
    One commenter emphasized that First Amendment religious freedom 
rights for faith-based institutions and for students are essential to 
the operation and success of America's rich and diverse educational 
system. This commenter also asserted that faith-based organizations and 
faith-based schools may offer meaningful services to those in need.
    Another commenter acknowledged that some may believe the proposed 
rule would have the effect of permitting schools to discriminate 
against the LGBTQ community, women, and pregnant students. However, 
this commenter emphasized that to categorically prohibit Federal 
funding to religiously affiliated organizations and schools would 
unfairly marginalize them. The commenter suggested that such 
organizations and schools can effectively serve marginalized groups.
    Response: The Department appreciates the comments in support of the 
proposed rule. We agree that the proposed rule would appropriately 
protect religious liberty and prevent discrimination against faith-
based

[[Page 82109]]

organizations. Furthermore, we acknowledge that faith-based 
organizations and schools make meaningful contributions to the richness 
and diversity of our Nation's educational system. And such entities 
also provide critical services to vulnerable populations and those in 
need.
    We wish to emphasize that it is certainly not the intent of the 
Department to encourage discrimination, including against the LGBTQ 
community, women, or pregnant students, and we do not believe that 
these final regulations do so. Grantees provide secular services to all 
persons and are precluded from discriminating against beneficiaries on 
the basis of religion or religious belief, a refusal to hold a 
religious belief, or refusal to attend or participate in a religious 
practice.\79\ We also agree with the commenter that faith-based 
organizations may effectively serve diverse groups of people, including 
marginalized groups. As one commenter correctly observed, the proposed 
rule was aimed at redressing the unfair treatment of faith-based 
organizations. In short, the final rule will have the effect of 
leveling the playing field such that faith-based organizations and 
religious individuals would not be treated any differently than other 
organizations or individuals.
---------------------------------------------------------------------------

    \79\ 2 CFR 3474.15(f); 34 CFR 75.52(e); 34 CFR 76.52(e).
---------------------------------------------------------------------------

    Changes: None.
    Affected Regulations: None.
2. Comments in Opposition
a. Concerns Regarding Discrimination and Impact on Programs
    Summary of Comments: Many commenters expressed concern that the 
proposed rule would unfairly eliminate religious freedom protections in 
college preparatory and work-study programs intended to help low-income 
high school students prepare for college. One commenter clarified a 
concern that the proposed rule would eliminate religious freedom 
protections for non-religious participants in those programs.
    Commenters also warned that the proposed rule may negatively impact 
federally funded afterschool and summer learning programs for students 
in high-poverty and low-performing schools. Some commenters argued that 
the proposed rule would undermine access to critical services for youth 
such as school lunch programs, 4-H development, youth mentoring 
programs, youth career development, and employment opportunity 
programs.
    Commenters asserted that, in America, no individual's ability to 
receive an education should depend on whether he or she shares the 
religious beliefs of government-funded organizations.
    Several commenters believed the proposed rule would result in 
unfair discrimination and expressed a concern that the separation of 
church and state would be undermined by the proposed rule.
    One commenter, a veteran, wrote that he completed a Department-
funded program called Veteran's Upward Bound to complete his GED and 
college preparation. This commenter noted that, with the services he 
received that were delivered without regard for religion or involving 
religious organizations, including the ``old G.I. bill'' and Pell 
grants, he was able to earn his undergraduate and graduate degrees. The 
commenter asserted that, had these programs engaged in discrimination, 
then he may not have been able to continue his education.
    One commenter stated that, under the proposed rule, an unmarried 
pregnant student might be refused services by a government-funded 
social service agency partnering with a public school to provide 
healthcare screening, transportation, or other services. Similarly, 
another commenter believed that under the proposed rule an LGBTQ 
student or child of LGBTQ parents could be confronted with open anti-
LGBTQ hostility by a Department-funded social service program 
partnering with their public school to provide important services such 
as healthcare screening, transportation, shelter, clothing, or new 
immigrant services.
    One commenter argued that a fundamental responsibility of the 
Department is to provide equal access to all people and freedom from 
discrimination. This commenter suggested that no taxpayer money go to 
schools that discriminate, including those that discriminate out of 
sincerely held religious beliefs.
    Another commenter stated that the proposed rule would allow 
providers to discriminate on the basis of religion. For example, this 
commenter claimed a Jewish or Muslim student might be turned away from 
a 21st Century Community Learning Center but may not be aware of 
alternative providers.
    Response: The Department disagrees with commenters who suggest that 
the rule will eliminate religious freedom protections for non-religious 
participants in college preparatory and work-study programs intended to 
help low-income high school students. The regulation expressly 
prohibits all organizations (including faith-based organizations who 
are grantees or who contract with grantees or subgrantees) from 
discriminating against beneficiaries on the basis of religion or 
religious belief, a refusal to hold a religious belief, or a refusal to 
attend or participate in a religious practice.\80\ Neither will the new 
regulations allow providers administering the Veteran's Upward Bound 
program to discriminate against beneficiaries based on religion; such 
discrimination would violate the conditions of the organization's 
Federal grant. Further, under the proposed rules, any faith-based 
organization that provides such social services must offer its 
religious activities separately in time or location from any programs 
or services funded by the Department, and any attendance or 
participation in such explicitly religious activities by beneficiaries 
supported by the programs must be voluntary.\81\
---------------------------------------------------------------------------

    \80\ 2 CFR 3474.15(f); 34 CFR 75.52(e); 34 CFR 76.52(e).
    \81\ 2 CFR 3474.15(d)(1); 2 CFR 75.52(c)(1); 2 CFR 76.52(c)(1).
---------------------------------------------------------------------------

    The Department notes that commenters arguing that the new 
regulations will have a detrimental impact on critical youth services 
do not explain how the new regulations will harm school lunch programs, 
4-H development, youth mentoring programs, youth career development, 
employment opportunity programs, after school programs, and summer 
learning programs. To the contrary, these regulations provide stringent 
religious liberty protections for their beneficiaries. Indeed, as 
previously discussed, providers may not discriminate against 
beneficiaries on the basis of religion, and their federally funded 
services may not contain religious programming or activities.
    The Department emphasizes that the final regulations' restriction 
against discriminating on the basis of religion or religious belief 
applies equally to faith-based organizations and secular organizations. 
Thus, no individual's ability to receive an education depends on 
whether they share the religious beliefs of the Government-funded 
organization, and access to government services is broadened, not 
undermined. On the other hand, to deny Federal funding to faith-based 
organizations because they hold sincerely held religious beliefs is 
unconstitutional under the Supreme Court's decision in Trinity Lutheran 
Church of Columbia, Inc. v. Comer.\82\ A beneficiary will never

[[Page 82110]]

be required to attend a religious activity in direct aid programs, and 
a beneficiary through a genuine, independent choice may use a voucher, 
certificate, or other means of government-funded payment, which is 
considered ``Indirect Federal financial assistance,'' for a private 
organization that may require attendance or participation in a 
religious activity.\83\ This latter result would only happen because of 
the independent choice of the beneficiary, not coercion or pressure 
from the Department.
---------------------------------------------------------------------------

    \82\ 137 S. Ct. 2012, 2019 (2017) (internal quotation marks 
omitted) (``denying a generally available benefit solely on account 
of religious identity imposes a penalty on the free exercise of 
religion that can be justified only by a state interest of the 
highest order.'').
    \83\ See 34 CFR 75.52(c)(3)(ii) and 34 CFR 76.52(c)(3)(ii).
---------------------------------------------------------------------------

    The Department notes that a government-funded social service agency 
partnering with a public school may not refuse services to an unmarried 
pregnant student. In fact, such a student at a public school receives 
express protections under Title IX.\84\ The changes under the new 
regulations will not impact any student seeking social services from a 
social service agency partnering with a public school. Under the new 
regulations, a private organization that contracts with a grantee or 
subgrantee, including a State, may not discriminate against any student 
on the basis of religion or religious belief.\85\
---------------------------------------------------------------------------

    \84\ See, e.g., 34 CFR 106.21(c); 34 CFR 106.40; 34 CFR 106.51; 
34 CFR 106.57.
    \85\ 2 CFR 3474.15(f); 34 CFR 75.52(e); 34 CFR 76.52(e).
---------------------------------------------------------------------------

    The Department reiterates that, under the new regulations, no 
providers receiving Federal funds may discriminate on the basis of 
religion. A federally funded learning center that turns away a Jewish 
or Muslim student because of his or her sincerely held religious 
beliefs, as described in the commenter's hypothetical, would be in 
violation of a material condition of its grant and risks consequences 
as a result of such a material breach.\86\
---------------------------------------------------------------------------

    \86\ Id.
---------------------------------------------------------------------------

    Lastly, no wall of separation between church and state is offended 
by the new regulations. Rather, preventing faith-based institutions 
from receiving grant money based on their religious nature would 
violate the Constitution, as discussed elsewhere in this preamble and 
in the preamble of the Department's NPRM.\87\ The Supreme Court has 
explained that the Constitution does not ``require complete separation 
of church and state; it affirmatively mandates accommodation, not 
merely tolerance, of all religions, and forbids hostility toward any.'' 
\88\ Indeed, this ``metaphor has served as a reminder that the 
Establishment Clause forbids an established church or anything 
approaching it.'' \89\ The Department is not making any revisions to 34 
CFR 75.532 and 34 CFR 76.532, which prohibit the use of a grant to pay 
for religious worship, religious instruction, or proselytization, and 
also prohibit the use of a grant to pay for any equipment or supplies 
to be used for such activities. The new regulations do not establish a 
church or anything approaching it; instead, they require faith-based 
institutions to keep their religious activities separate from any 
federally funded programs and mandate equal treatment of faith-based 
and secular institutions.
---------------------------------------------------------------------------

    \87\ 85 FR 3190, 3191-96, 3200-10.
    \88\ Lynch v. Donnelly, 465 U.S. 668, 673 (1984).
    \89\ Id.
---------------------------------------------------------------------------

    Changes: None.
    Affected Regulations: None.
b. Concerns Regarding Appropriate Use of Taxpayer Dollars
    Summary of Comments: One commenter asserted that Department grant 
programs should be implemented no differently than Federal funding for 
other industries under contracts that require non-discriminatory 
practices as a condition of receiving those funds.
    Several commenters expressed opposition to the idea of using 
taxpayer funds to support religious or private schools, such as through 
school vouchers. Commenters believed that taxpayer money should only go 
to public schools. One commenter asserted that funding for public 
schools should increase so public school teachers earn incomes 
comparable with faculty at institutions of higher education.
    The commenter also believed that all schools providing accredited 
degrees or diplomas should be required to follow a base curriculum of 
non-negotiable lessons provided by the Department. Another commenter 
expressed opposition to taxpayer dollars going to charter schools and 
argued that charter schools are often intertwined with the religious 
community and tend to prioritize religious dogma in their instruction 
over scientific evidence.
    Response: The Department responds that its grant programs already 
require adherence to principles of nondiscrimination, subject to 
exemptions rooted in countervailing constitutional considerations. 
Indeed, several provisions of the new regulations condition the award 
of Federal funds on public institutions not engaging in discrimination. 
For example, faith-based organizations are eligible to contract with 
grantees and subgrantees, including States, on the same basis as any 
other private organization, with respect to contracts for which such 
other organizations are eligible, and considering any permissible 
accommodation.\90\ And, as discussed at length previously, all 
organizations--public, charter, private, and/or faith-based--are 
required to refrain from discrimination on the basis of religion in 
offering social services. These provisions are intended to prevent 
institutions that receive Federal funds from engaging in 
discrimination. This also means that the Department may lawfully 
provide Federal funds to charter schools, regardless of these 
organizations' ties to the religious community, on the condition that 
those schools do not use the funds for explicitly religious 
purposes.\91\
---------------------------------------------------------------------------

    \90\ 2 CFR 3474.15(b).
    \91\ See, e.g., 34 CFR 75.532; 34 CFR 76.532.
---------------------------------------------------------------------------

    The Department reiterates that denying religious schools public 
benefits afforded to public schools because of their religious status, 
as one commenter suggested, is a violation of the Free Exercise Clause 
and Supreme Court precedent in Trinity Lutheran.\92\ With respect to 
vouchers, the Supreme Court has supported their application to 
religious institutions, reasoning that ``where a government aid program 
is neutral with respect to religion, and provides assistance directly 
to a broad class of citizens who, in turn, direct government aid to 
religious schools wholly as a result of their own genuine and 
independent private choice, the program is not readily subject to 
challenge under the Establishment Clause.'' \93\
---------------------------------------------------------------------------

    \92\ 137 S. Ct. 2021-25.
    \93\ Zelman v. Simmons-Harris, 536 U.S. 639, 652 (2002).
---------------------------------------------------------------------------

    The Department further responds that it is not within the authority 
of the Department to establish a national curriculum or regulate 
teacher incomes. Indeed, in creating the Department of Education, 
Congress specified that:

    No provision of a program administered by the Secretary or by 
any other officer of the Department shall be construed to authorize 
the Secretary or any such officer to exercise any direction, 
supervision, or control over the curriculum, program of instruction, 
administration, or personnel of any educational institution, school, 
or school system, over any accrediting agency or association, or 
over the selection or content of library resources, textbooks, or 
other instructional materials by any educational institution or 
school system, except to the extent authorized by law.\94\
---------------------------------------------------------------------------

    \94\ Public Law 96-88, sec. 103(b), 93 Stat. 668, 670-71 (1979).


[[Page 82111]]


---------------------------------------------------------------------------

Curricula and setting teacher salaries are responsibilities handled by 
the various States and districts as well as by public and private 
organizations of all kinds, not by the Department.
    Changes: None.
    Affected Regulations: None.
c. Concerns Regarding Potential for Religious Compulsion
    Summary of Comments: One commenter expressed concern that, under 
the proposed rule, a low-income student participating in an Upward 
Bound program may be forced to accept services from a faith-based 
service provider that repeatedly invites them to participate in 
additional religious activities. This commenter noted the student may 
find such pressure uncomfortable but would not know that they can 
access an alternative provider nor how to find one.
    Another commenter asserted that, under the proposed rule, an LGBTQ 
student participating in an Upward Bound college preparation program 
may be forced to select a faith-based provider who forces the student 
to participate in religious programming that may be hostile to the 
LGBTQ community. And one commenter expressed concern that the proposed 
rule would undermine important safeguards for beneficiaries of voucher 
programs and explicitly allow service providers to require individuals 
in voucher programs to participate in religious activities. The 
commenter explained that religious minorities who have to use a voucher 
to obtain services and have no available secular option to choose from 
may effectively be coerced into participating in religious activities. 
For example, a Hindu American who is forced to utilize a voucher for a 
religious school may be forced into taking part in Christian religious 
services and face pressure to compromise or hide his own religious 
beliefs. The commenter concluded that a voucher program that offers no 
genuine and independent private choices that are secular would violate 
basic constitutional protections against the establishment of religion 
and the Government funding of religious programs.
    Response: The Department clarifies that Upward Bound programming is 
prohibited from containing religious content or religious activities, 
even if the Upward Bound programming is provided by a faith-based 
provider. Indeed, faith-based providers are required to hold their 
religious activities separately in time or location from activities or 
services associated with the Upward Bound project, and the providers 
may not force or pressure beneficiaries to participate in these 
religious activities. The secular content of Upward Bound programming, 
which does not include religious programming or activities of any kind, 
is codified at 34 CFR 645.11
    It is possible that a faith-based organization may be the only 
servicer providing an Upward Bound program to a geographic region of 
beneficiaries, but this faith-based organization would be providing 
only secular content. Moreover, the Department has received no 
complaints regarding a situation in which this has occurred. In any 
event, as discussed, that faith-based provider is required to keep its 
Upward Bound programming independent from its religious activities, is 
prohibited from pressuring students to engage in religious programming, 
and must also refrain from discriminating against any beneficiaries on 
the basis of religion or religious belief. Additionally, a beneficiary 
may research available providers and make an informed decision about 
whether to choose to receive social services from a secular or faith-
based organization.
    With respect to vouchers, which are a form of indirect Federal 
financial assistance, the Department has received no complaints about 
any voucher programs in which there are no secular alternatives, nor 
did the commenter who expressed concern about this refer to any 
existing voucher program in which this is presently occurring. The 
Department reiterates that it cannot force beneficiaries to engage in 
religious activities or coerce beneficiaries to choose the services of 
a faith-based organization, nor do these final regulations do so.
    Changes: None.
    Affected Regulations: None.
d. Concerns Regarding Modifications
    Summary of Comments: One commenter requested that the Department 
amend 2 CFR 3474.15(a) such that ``contractors'' would replace 
``subgrantees.'' This commenter believed that, despite clearly 
established law, public institutions of higher education continue to 
violate the First Amendment rights of students and professors, and 
often by targeting minority viewpoints for discriminatory treatment. 
The commenter did not further clarify why this change should be made. 
Another commenter expressed a general concern that the proposed rule 
may not go far enough to protect the deferment of loan payments when a 
former student is engaged in religious activities with a nonprofit 
religious organization.
    Response: The commenter who suggested that 2 CFR 3474.15(a) be 
amended to reinforce First Amendment rights may have misunderstood the 
proposed rules. The provisions of the proposed rules that relate to the 
First Amendment and free inquiry matters are contained in Sec. Sec.  
75.500, 75.700, 76.500, and 76.700 of title 34 of the Code of Federal 
Regulations, which were promulgated through a different rulemaking. It 
is unclear how amending the proposed rule's language as suggested by 
the commenter would affect free speech rights. Changing ``subgrantees'' 
to ``contractors'' would not affect the entity that must comply with 2 
CFR 3474.15(a). The Department also wishes to clarify that loan 
deferment is outside the scope of the proposed rule. Indeed, the 
Department specifically addressed the loan deferment matters that the 
commenter raised in a separate rulemaking.\95\
---------------------------------------------------------------------------

    \95\ Office of Postsecondary Education, U.S. Department of 
Education, Notice of Proposed Rulemaking, 84 FR 67778 (Dec. 11, 
2019).
---------------------------------------------------------------------------

    Changes: None.
    Affected Regulations: None.
e. Severability Clauses
    Summary of Comments: None.
    Response: The Department proposed adding severability clauses in 2 
CFR 3474.21, 34 CFR 75.63, 34 CFR 76.53, 34 CFR 75.741, and 34 CFR 
76.784, in the NPRM.\96\ We believe that each of the regulations 
discussed in this final rule would serve one or more important and 
related but distinct purposes. Each provision would provide a distinct 
value to the Department, grantees, subgrantees, recipients, students, 
beneficiaries, the public, taxpayers, the Federal Government, and 
institutions of higher education separate from, and in addition to, the 
value provided by the other provisions. To best serve these purposes, 
we included this administrative provision in the final regulations to 
make clear that the regulations are designed to operate independently 
of each other and to convey the Department's intent that the potential 
invalidity of one provision should not affect the remainder of the 
provisions. Similarly, the validity of any of the regulations, which 
were proposed in ``Part 1--Religious Liberty'' of the NPRM, should not 
affect the validity of any of the regulations, which were proposed in 
``Part 2--Free Inquiry'' of the NPRM.
---------------------------------------------------------------------------

    \96\ 85 FR 3201, 3204, 3205.
---------------------------------------------------------------------------

    As the Department already promulgated the severability clauses in 
34 CFR 76.784 and 34 CFR 75.741 through a different rulemaking that 
also finalizes the remainder of the regulations proposed in the NPRM, 
the

[[Page 82112]]

Department does not include those severability clauses in this 
rulemaking. Nonetheless, those severability clauses apply to the 
relevant final regulations in this rulemaking.
    Changes: None.
    Affected Regulations: None.

B. Department of Homeland Security

    DHS did not identify any comments or issues unique to the 
Department; accordingly, DHS is making no further changes to its 
regulations beyond those explained above.

C. Department of Agriculture

    USDA did not identify any comments or issues unique to the 
Department; accordingly, USDA is making no further changes to its 
regulations beyond those explained above.

D. Agency for International Development

    USAID received a total of 28,518 comments on its January 17, 2020 
NPRM, and did not consider any comments received after that comment end 
date of February 18, 2020. Of the comments received, 28,044 were 
identical or nearly identical to other comments received, leaving 474 
comments that were unique or representative of a group of substantially 
similar comments. In addition, many of those comments were identical to 
comments provided to the other Agencies and addressed above in the 
Joint Preamble, and most of these cross-cutting comments did not 
directly apply, or did not apply in the same way, to USAID. Some of 
those cross-cutting comments included additional remarks or references 
specific to USAID's proposed rule.
    As reflected below, unless otherwise specified, for those comments 
received by USAID that are addressed fully in the Joint Preamble, USAID 
adopts those responses to the extent applicable to USAID's regulations. 
We address in this Part III.D of the preamble the USAID-specific 
comments not addressed elsewhere in the preamble and provide the USAID-
specific findings and certifications.
    Some of the cross-cutting comments addressed in the Joint Preamble 
were not received by USAID, but are nevertheless applicable to the 
USAID regulations. Unless noted either in the Joint Preamble or this 
agency-specific Part III.D, we concur in the resolution of the issues 
in that part of the preamble.
1. Notice and Alternative Provider Requirements
    USAID does not adopt the discussion of the cross-cutting comments 
related to the notice and alternative provider requirements in Part 
II.C. Instead, USAID addresses the comments it received on that topic 
in the following discussion.
    Summary of Comments: USAID received comments both criticizing and 
supporting the elimination of provisions (a) requiring service 
providers to provide written notice of beneficiary protections, and (b) 
requiring referrals to alternative providers for beneficiaries who 
object to the religious character of a service provider. USAID did not 
receive any comments on these issues that were different from or more 
specific than the applicable cross-cutting comments that are summarized 
in Section 3 of this preamble.
    Response: Unlike various domestic agencies, USAID never adopted 
notice and alternative provider requirements in response to Executive 
Order 13559. The reasons for this, many of which relate to the 
international context in which USAID operates, are detailed in the 2016 
joint final rule (81 FR 19,355). Accordingly, the comments regarding 
the elimination of those requirements are not applicable to USAID.
    Changes: None.
    Affected Regulations: None.
2. ``Religious Organizations'' to ``Faith-Based Organizations''
    Summary of Comments: USAID received comments about its change of 
the term ``Religious Organizations'' in certain instances to ``Faith-
Based Organizations,'' expressing concern that the change could result 
in a broader pool of organizations that are eligible to participate in 
USAID programs, or that may be entitled to the exemptions and 
protections listed in the rule.
    Response: USAID makes the regulatory changes noted below to make 
the terminology in its regulation consistent with that in Executive 
Order 13831. Because USAID does not recognize a qualitative difference 
between the terms, USAID does not believe that choosing one term over 
the other will change the pool of organizations that are eligible to 
participate in USAID programs, or that may be entitled to the 
exemptions and protections listed in the rule.
    Changes: Revise 22 CFR 205.1(a), (c), and (f) to replace the term 
``religious organizations'' with ``faith-based organizations.''
    Affected Regulations: 22 CFR 205.1(a), (c), and (f).
3. Reasonable Accommodations
    Summary of Comments: USAID did not receive any comments on the 
issue of reasonable accommodations that were different from or more 
specific than the applicable cross-cutting comments that are summarized 
in Part II.E.
    Response: USAID makes the regulatory changes noted below, 
consistent with the explanation provided in the applicable cross-
cutting comments that are summarized in Part II.E.
    Changes: Revise 22 CFR 205.1(a) to clarify the text by stating 
explicitly the applicability of the First Amendment and the Religious 
Freedom Restoration Act, under which accommodations for faith-based 
organizations could be available.
    Affected Regulations: 22 CFR 205.1(a).
4. Religious Character and Religious Exercise
    Summary of Comments: USAID did not receive any comments regarding 
the change from ``religious character'' to ``religious exercise'' that 
were different from or more specific than the applicable cross-cutting 
comments that are summarized in Part II.F.
    Response: USAID makes the regulatory changes noted below, 
consistent with the explanation provided in the applicable cross-
cutting comments that are summarized in Part II.F.
    Changes: Revise 22 CFR 205.1(a) and (f) to note that USAID and/or 
USAID grantees will not discriminate against potential service 
providers on the basis of their ``religious exercise'', rather than 
their ``religious character,'' as previously stated.
    Affected Regulations: 22 CFR 205.1(a) and (f).
5. Exemption From Title VII Prohibitions for Qualifying Organizations 
Hiring Based on Acceptance of, or Adherence to, Religious Tenets
    Summary of Comments: USAID did not receive any comments regarding 
the religious employment exemption that were different from or more 
specific than the applicable cross-cutting comments that are summarized 
in Part II.H.
    Response: USAID makes the regulatory changes noted below, 
consistent with the explanation provided in the applicable cross-
cutting comments that are summarized in Part II.H.
    Changes: Revise 22 CFR 205.1(g) to state that an organization that 
qualifies for an exemption from discriminatory hiring practices based 
on religion may select its employees on the basis of their acceptance 
of, and/or adherence to, the religious tenets of the organization.
    Affected Regulations: 22 CFR 205.1(g).

[[Page 82113]]

6. Assurances From Religious Organizations With Sincerely Held 
Religious Beliefs
    Summary of Comments: One commenter proposed that religious 
organizations partnering with USAID that take anti-LGBTI stances should 
be required to provide assurances that they will provide services 
without prejudice and do so in conditions that respect the privacy and 
dignity of all individuals. The commenter expressed that this proposed 
action is necessary because of a heightened potential for religious 
organizations to discriminate against potential LGBTI beneficiaries, 
caused by the inclusion of language regarding ``reasonable 
accommodation'' and the change in certain instances of the term 
``religious character'' to ``religious exercise.''
    Response: Regarding the assertion that the addition of the phrase 
``reasonable accommodation'' and the substitutions of certain instances 
of the term ``religious character'' with ``religious exercise'' could 
allow religious organizations to discriminate against any 
beneficiaries, USAID adopts the explanation provided in Parts II.E and 
II.F in response to the cross-cutting comments of this nature. 
Regarding the proposal to require certain assurances from religious 
organizations, USAID notes that, consistent with the First Amendment 
and the Religious Freedom Restoration Act, USAID's rule emphasizes that 
notices and assurances shall not be required by faith-based 
organizations if they are not also required of secular organizations. 
Accordingly, any proposed assurances could not be limited to faith-
based organizations. Nor does the concern raised--the impact of 
sincerely held religious beliefs on an organization's ability to serve 
beneficiaries--appear to be one that is necessarily specific to 
religious organizations. Therefore, USAID does not view this rule as 
the appropriate vehicle through which to address the proposal.
    USAID is committed to ensuring that all beneficiaries have 
equitable access to the benefits of development assistance. USAID's 
rule requires that all organizations that participate in USAID programs 
must carry out eligible activities in accordance with all program 
requirements and other applicable requirements that govern the conduct 
of USAID-funded activities. Agency policy further requires that grant 
recipients not discriminate against any beneficiaries in the 
implementation of their awards, including on the basis of sex. These 
requirements are included as standard provisions in all of USAID's 
grants to NGOs, and must be flowed down to any sub-recipients.
    Changes: None.
    Affected Regulations: None.
7. Findings and Certifications
a. Regulatory Flexibility Act
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601 et seq.), USAID has considered the economic 
impact of the regulations. USAID certifies that the regulations will 
not have a significant economic impact on a substantial number of small 
entities.
b. Paperwork Burden
    These regulations do not impose any new recordkeeping requirements, 
nor do they change or modify an existing information collection 
activity. Thus, the Paperwork Reduction Act does not apply to these 
final regulations.

E. Department of Housing and Urban Development

1. Other Conflicting Laws
    Summary of Comments: One commenter stated that the proposed rule's 
removal of the written notice-and-referral requirements conflicts with 
HUD's obligation to comply with the Fair Housing Act by prohibiting 
discrimination in sale, rental, or financing housing based on race, 
color, religion, sex, disability, familial status, or national origin. 
The commenter also stated that the references to definitions of 
``religious exercise'' and ``indirect Federal financial assistance'' 
violate the Fair Housing Act and go beyond Congressional Authority 
without explanation, statutory basis, or compelling reason.
    Another commenter stated the proposed rule suggests that religious 
accommodations could be made that would exempt faith-based 
organizations from generally applicable laws and regulations 
prohibiting discrimination, including the Fair Housing Act of 1968 and 
its regulations. The commenter stated that the proposed rule completely 
dismantles the protections in the Fair Housing Act and the 2012 and 
2016 Equal Access Rules that currently protect LGBTQ individuals. It 
would be discriminatory and harmful to allow programs to opt out of 
these provisions based on the religious beliefs of the housing or 
homeless services provider. For example, the 2012 Equal Access Rule 
defines a family regardless of gender identity or sexual orientation of 
the family members. A religious exemption from this definition of 
family by a provider who objects to same-sex marriage would result in 
otherwise impermissible discrimination.
    Response: HUD does not agree that this rule conflicts with the Fair 
Housing Act. Removing the written notice requirement does not affect an 
individual's ability to file a complaint with HUD under the Fair 
Housing Act, nor will it affect HUD's administration of such 
complaints. A complaint of discrimination based on religion or any 
other protected characteristic may be investigated and enforced under 
the Fair Housing Act. Complaints can be filed online through HUD's 
Office of Fair Housing and Equal Opportunity (``FHEO'').\97\ HUD also 
disagrees that references to definitions of ``religious exercise'' and 
``indirect Federal financial assistance'' violate the Fair Housing Act. 
These references ensure that HUD's programs and activities are 
consistent with the First Amendment to the Constitution and the 
requirements of Federal law, including the Religious Freedom 
Restoration Act.
---------------------------------------------------------------------------

    \97\ U.S. Department of Housing and Urban Development, File a 
Complaint, https://www.hud.gov/program_offices/fair_housing_equal_opp/online-complaint. Additionally, FHEO intake 
specialists can be reached by calling 800-669-9777 or 800-877-8339.
---------------------------------------------------------------------------

    More specifically, the rule is designed to treat religious 
organizations the same as non-religious organizations by subjecting all 
organizations to the same requirements. As made clear in the proposed 
rule, HUD will not, in the selection of recipients, discriminate 
against an organization based on the organization's religious exercise 
or affiliation. Furthermore, religious freedom protections make clear 
that a faith-based organization retains its independence from the 
Government and may continue to carry out its mission even when it 
participates in a Federal program, including a HUD program. 
Nevertheless, alleged cases of discrimination, including discrimination 
on the basis of ``sex,'' are evaluated based on current law and court 
interpretation and discrimination on the basis of gender identity or 
sexual orientation would be evaluated under HUD's program specific 
requirements.
    Changes: None.
    Affected Regulations: None.
2. Conflicting Agency Programs and Policies
    Summary of Comments: One commenter stated the proposed rule would 
be contrary to HUD's mission of ``ensuring access to housing for all 
Americans.'' Another commenter also said HUD should not be responsible 
for upholding this executive order as it is outside the scope of HUD's 
programs.

[[Page 82114]]

The commenter stated that this program will in no way be of any use to 
HUD and should not be implemented because it is not providing any type 
of relief or assistance and that if there are disputes over religious 
bias, it should be taken up with the courts, not dictated by a US 
Federal department that does not normally deal with religion.
    Commenters also stated that HUD money should not be funding 
religion because it is not HUD's purpose, nor does it have to do with 
HUD's activities, while another commenter said they were opposed to 
religious interference in the implementation of HUD procedures. Some 
commenters said HUD social services programs affected by the Proposed 
Rule would include, but not be limited to, housing counseling grants, 
continuum of care programs, supportive housing for the elderly and 
persons with disabilities, emergency shelters, CDBG, and housing 
opportunities for persons with HIV (HOPWA), and the proposed rule runs 
counter to these programs' intended purpose by increasing the 
likelihood of inefficiencies, exposing beneficiaries to potential 
harms, and hindering access to vital government services.
    According to one commenter, the Proposed Rule is wholly 
inconsistent with HUD's core mission and preventing discrimination 
because it authorizes faith-based organizations to obtain religious 
accommodations that could lead to such federally funded providers 
discriminating against, or electing not to assist, LGBTQ individuals--
or other individuals with whom they might disagree--based on asserted 
religious grounds.
    Response: HUD believes that this rule is consistent with HUD's 
mission to ensure housing for all Americans. As stated in this 
preamble, the purpose of the rule is to treat religious organizations 
equally with non-religious organizations by subjecting all 
organizations to the same requirements. HUD believes that in doing so, 
it is further strengthening its mission by ensuring that religious 
organizations can participate in HUD's program. This rule guarantees 
that these organizations will maintain their liberty protections found 
in the Constitution and Federal law and eliminate the fear that they 
will compromise their sincerely held religious beliefs or will lose 
their independence.
    Furthermore, HUD does not agree that allowing religious 
organizations to maintain their independence as dictated by the 
Constitution and Federal statutes amounts to funding religion, nor does 
HUD believe that religious organizations participating in a HUD program 
or religious organizations receiving Federal funds for non-religious 
activities amounts to HUD adopting, supporting, or otherwise promoting 
the religious beliefs of the participating organization.
    The purpose of the proposed rule is to ensure that HUD's programs 
and activities are consistent with the First Amendment to the 
Constitution and the requirements of Federal law, including the 
Religious Freedom Restoration Act. In order for HUD's programs and 
activities to be consistent, HUD will not, in the selection of 
recipients, discriminate against an organization based on the 
organization's religious exercise or affiliation. HUD does not believe 
this rule will interfere with the implementation of HUD programs nor 
will it increase inefficiencies, create potential harms, or create a 
hinderance to access HUD programs as suggested by the commenter. The 
rule will actually provide more opportunities for participation by 
faith-based organizations, provide religious organizations the ability 
to participate on equal footing with other organizations, and will 
allow more participation and therefore greater availability of 
services.
    Moreover, the rule does not affect an individual's ability to file 
a complaint with HUD alleging discrimination under the Fair Housing 
Act, nor will it affect HUD's administration of such complaint. Cases 
of discrimination are evaluated based on current law and court 
interpretation. Therefore, HUD believes that it is appropriate to issue 
regulations that guarantee religious protections across HUD's programs.
    Changes: None.
    Affected Regulations: None.
3. Procedural Issues
a. Comment Period
    Summary of Comments: Some commenters requested the comment period 
on this proposed rule be extended beyond the COVID-19 emergency prior 
to any effort to proceed with this proposed rule. Commenters wrote to 
Secretary Carson to request that all rulemakings unrelated to response 
to the COVID19 emergency or other critical health, safety, and security 
matters be halted. Halting such rulemakings will permit HUD staff to 
focus on America's response to the coronavirus's health and economic 
effects. Doing so also would permit the public adequate time to provide 
meaningful comments on proposals that effect important functions of our 
government. Interested organizations and individual members of the 
public should not be deprived of the opportunity to comment on these 
matters as they struggle to cope with the effects of a pandemic on our 
society.
    Response: HUD's Federal rulemaking policies and procedures are 
described in 24 CFR part 10. According to the regulation, it is HUD's 
policy that its notices of proposed rulemaking generally afford the 
public not less than 60 days for submission of comments (24 CFR 10.1). 
These notice and comment procedures, including the time period, are 
consistent with Executive Order 12866, and the APA (5 U.S.C. 553). 
Pursuant to these policies, HUD published a notice on February 13, 
2020, ``Equal Participation of Faith-Based Organizations in HUD 
Programs and Activities: Implementation of Executive Order 13831'' (FR-
6130-P-01). That notice provided for 60 days of public comment, which 
ended on April 13, 2020. HUD received over 2,495 comments in response 
to the proposed rule. HUD's provision of 60 days for submission of 
comments is adequate. HUD notes that public comments can be, and 
usually are, submitted electronically at www.regulations.gov. In view 
of the comment period beginning 30 days before the President's March 
13, 2020 Declaration of a National Emergency and the public's continued 
ability to comment electronically, HUD determined that the public had 
adequate time to comment.
    Changes: None.
    Affected Regulations: None.
b. Rulemaking Authority
    Summary of Comments: Commenters stated that the language ``in the 
event of any conflict, will control over any HUD guidance document'' 
should not be adopted because it is an indication that HUD is 
overreaching and attempting to act beyond its authority. The commenters 
also stated that the language ``intended to be consistent with E.O. 
13891, Oct. 9, 2019, which provides guidance documents lack force of 
law, except as authorized by law or as incorporated into a contract'' 
should not be adopted because it is government overreach without 
explanation of how the change relates to HUD's congressional purpose or 
any statutory objective related to housing. The commenters stated that 
the entire proposed rule is an abuse of discretion by HUD, should be 
viewed with scrutiny, and should not be adopted.
    Response: The language to which the commenters referred was located 
in the proposed rule's preamble, not within the proposed regulatory 
text. This language will not be codified in the final regulation, but 
rather explained the proposed rule's relationship with guidance 
documents and Executive

[[Page 82115]]

Order 13891. The language, however, is consistent with the APA, 5 
U.S.C. 551, et seq., and Executive Order 13891. HUD believes that the 
proposed rule was promulgated under proper authority.
    Changes: None.
    Affected Regulations: None.
c. RIA/Administrative Sections
    Summary of Comments: According to commenters, HUD failed to meet 
its burden under the APA because it did not explain why the Proposed 
Rule was necessary, nor did it consider the burden on beneficiaries. 
The commenters stated regulations based on Executive Order 13559 have 
been working well since 2016, and HUD has not provided any reason for 
the Proposed Rule except that it assumes, without evidence, that there 
is a significant burden to religious organizations. The commenters 
referenced that HUD previously estimated a cost to providers ``of no 
more than 2 burden hours and $100 annual materials cost for notices and 
2 burden hours per referral'' in the 2016 final rule. HUD now concedes 
that the burden per notice is no more than 2 minutes. According to the 
commenters, while HUD estimates a cost savings of $656,128 for the 
elimination of these vital protections, it provides no analysis on how 
much was actually spent on notice-and-referral requirements, nor does 
it provide reasoning for its inflated estimate. The commenters said HUD 
recognizes that the removal of the notice-and-referral requirements 
could impose some costs on beneficiaries who will now need to find 
alternative providers on their own if they object to the religious 
character of a potential provider. The commenters argued HUD's baseless 
estimates of cost savings do not justify the increased burden on 
beneficiaries nor the risk to their vital constitutional protections.
    The commenters continued that employment discrimination has 
numerous costs for workers and society, including lost wages and 
benefits, lost productivity, and negative impacts on mental and 
physical health. According to the commenters, HUD fails to acknowledge 
the potential costs the proposed rule could generate, and this is a 
case law manipulation to allow organizations to discriminate under 
false pretenses and deny access to reproductive health care. The 
commenters argued HUD fails to account for economic and noneconomic 
costs to employees in the form of lost wages and benefits, out of 
pocket medical expenses, costs associated with job searches, and costs 
related to negative mental and physical health consequences of 
discrimination.
    Response: As HUD explained in the proposed rule, Executive Order 
13831 eliminated the alternative provider referral requirement and 
requirement of notice established in Executive Order 13559. In 
addition, HUD cited recent Supreme Court decisions that addressed 
freedom and anti-discrimination protections that must be afforded 
religious organizations and individuals under the U.S. Constitution and 
Federal law since the current regulations implementing Executive Order 
13559 were promulgated. HUD removed the alternative provider referral 
requirement and notice requirement because it placed a burden on 
religious organizations, whereas there was no corresponding burden on 
non-religious organizations.
    As for the commenters' concerns regarding beneficiaries' burden, 
HUD considered the cost to potential beneficiaries to be minimal and 
such cost and benefits are discussed above in the joint-agency 
response. Beneficiaries prior to the 2016 rule and after this rule will 
continue to seek alternative providers for many different reasons and 
requests for such alternatives from HUD offices and grantees can 
continue without placing a specific burden on religious organizations. 
As for costs, this rule removes the requirement that all faith-based 
organizations under the 2016 rule were required to provide notices to 
every beneficiary which is a determinable cost for which HUD can 
estimate burden reduction. HUD also incorporates the discussion of 
costs and benefits from Part II.K.1 above.
    As for the concern regarding employment discrimination, HUD is not 
making any changes to its regulation concerning the exemption for Title 
VII employment discrimination requirements that was in this prior to 
the 2016 regulation at 24 CFR 5.109(i).
    Changes: None.
    Affected Regulations: None.

F. Department of Justice

    DOJ did not identify any comments or issues unique to the 
Department; accordingly, DOJ is making no further changes to its 
regulations beyond those explained above.

G. Department of Labor

1. Beneficiary Harms
    Summary of Comments: One commenter to the Department of Labor's 
proposed rule addressed underlying disparities in the need for social 
services that would make transgender people more vulnerable to 
discrimination following the removal of certain beneficiary 
protections. More specifically, the commenter addressed disparities in 
the following areas that are relevant to Department programs: 
Unemployment and employment opportunities (Employment and Training 
Administration programs); disability-related needs (Employment and 
Training Administration programs); incarceration and re-entry supports 
(Reentry Employment Opportunities program); and veterans assistance 
(Homeless Veterans' Reintegration Program). In addition, some faith-
based advocacy organizations warned that the proposed rule would 
disserve a wide range of Federal programs, including the Department's 
Senior Community Service Employment Program and Homeless Veterans' 
Reintegration Program.
    Response: While these commenters focused on specific Department of 
Labor programs, the assertion that the removal of beneficiary 
protections would be harmful or would disserve beneficiaries was also 
raised by commenters on proposed rules other than the Department of 
Labor's and was addressed previously at Parts II.C.2.a, II.C.2.b, and 
II.C.3.e. The Department of Labor does not believe that removing the 
alternative provider notice-and-referral requirements unlawfully or 
inappropriately burdens third parties as the Department maintains that 
the final rule does not change any existing requirements regarding the 
services provided to beneficiaries.
    Changes: None.
    Affected Regulations: None.
2. Notice Requirement
    Summary of Comments: An advocacy organization commented that the 
Department's rationale that faith-based organizations are not less 
likely than other providers to follow the law did not justify the 
repeal of the notice requirement. This advocacy organization referred 
to the inconsistency among Federal Agencies' citation of alignment with 
RFRA in repealing notice requirements.
    In addition, an individual commenter requested that the Department 
provide evidence about alternative, reliable mechanisms to ensure that 
beneficiaries are aware of their rights. The Council Chair also 
commented that the Department, in the present rulemaking, had not 
considered alternative methods of ensuring that beneficiaries receive 
notice of their rights or referrals to alternative providers, such as 
requiring governmental bodies to provide such notice and make referrals 
upon request.

[[Page 82116]]

    Response: The first comment assumes that the Department is 
obligated to justify the removal of a burden on religious persons. But 
RFRA provides just the opposite: ``Government shall not substantially 
burden a person's exercise of religion'' unless it can justify imposing 
the burden. 42 U.S.C.2000bb-1(a) (emphasis added). Even absent RFRA, 
the Department sees no reason to continue imposing additional 
requirements solely on religious groups without evidence that they are 
different, such as by being more prone to violate the law--for which 
the Department has no evidence. As previously discussed in Part II.C, 
the prior regulations singled out religious groups, placing burdens on 
them that were not otherwise placed on non-religious groups. This final 
rule eliminates extraneous burdens on faith-based organizations and 
will ensure that federally funded social service programs are 
implemented in a manner that is consistent with the requirements of 
Federal law.
    As previously discussed in Part II.C.3.d, the Department is within 
its discretion to resolve the tension between rights here, especially 
in light of the uncertainty about whether there is a compelling 
interest in applying the alternative provider notice-and-referral 
requirements solely to religious organizations. And it is also within 
the Agencies' discretion to avoid serious constitutional issues and the 
burdens of related litigation. While it remains questionable what 
rights beneficiaries have to a secular provider under the Zelman v. 
Simmons-Harris standard, in any event, however, the Department's Civil 
Rights Center continues to enforce civil rights protections for 
applicants, participants, and beneficiaries of programs and activities 
that receive Federal financial assistance from the Department, as well 
as programs and activities funded or otherwise financially assisted 
under Title I of the Workforce Innovation and Opportunity Act.
    Alternative notice arrangements were previously discussed in Part 
II.C.3.d. In addition, the Department did not propose imposing such 
requirements on governmental bodies, but it did note that ``the 
Department could supply information to beneficiaries seeking an 
alternate provider'' when it ``makes publicly available information 
about grant recipients that provide benefits under its programs.'' 85 
FR 2931. Imposing notice-and-referral requirements on governmental 
bodies when faith-based organizations provide services would conflict 
with the nondiscrimination principle articulated in Trinity Lutheran 
and the Attorney General's Memorandum and, moreover, would be 
inconsistent with the Administration's broader deregulatory agenda. 
Under the final rule, the provision of such information remains an 
option but not a requirement.
    Changes: None.
    Affected Regulations: None.
3. Deregulatory Action Determination (Executive Order 13771)
    Summary of Comments: The Council Chair objected to the Department's 
conclusion that notice-and-referral requirements conflict with the 
administration's deregulatory agenda, because doing so privileges 
policy goals above religious freedom.
    Response: The Department disagrees that removing the notice-and-
referral requirements privileges policy goals above religious freedom. 
On the contrary, the removal of those requirements is intended to 
protect and enhance religious liberty, see Burwell v. Hobby Lobby 
Stores, Inc., 573 U.S. 682, 709 (2014) (furthering organizations' 
``religious freedom also furthers individual religious freedom'' 
(quotation marks omitted)), consistent with the Administration's policy 
goals. With regard to the E.O. 13771 determination, deregulatory 
actions are measured by the presence or absence of government mandates. 
The final rule will relieve faith-based organizations in the private 
sector of the regulatory mandates of notice and referral, thereby 
reducing government-imposed requirements placed on the private sector. 
It is therefore deregulatory.
    Changes: None.
    Affected Regulations: None.
4. General Comments
    Summary of Comments: An individual commented that the Department's 
goal in issuing the proposed rule appeared to be using faith-based 
organizations to privatize government services. Another individual 
commenter suggested that organizations with interests that go against 
U.S. foreign policy objectives, domestic policy agendas, agencies, or 
regulations should be ineligible to apply. Finally, an anonymous 
commenter asked how the proposal would affect the quantity and quality 
of government services, what data collection measures would be used to 
independently monitor and assess the changes, and where the public 
could find annual reports on how well the proposed changes worked.
    Response: The Department's purpose in promulgating this rule is not 
to privatize services. It is to implement the nondiscrimination 
principle articulated in Trinity Lutheran and the Attorney General's 
Memorandum--that is, to level the playing field, not to favor or 
disfavor faith-based organizations. Any concern about ``privatization'' 
of government services could apply equally to any government grant 
where a private, non-government entity, regardless of its religious 
character, offers services to the public using grant funding. In 
addition, neither the proposal nor the final rule would change the 
extent of so-called privatization or the amount or allocation of 
grants. The rule is aimed only at clarifying faith-based organizations' 
ability to participate equally in the Department's programs and 
activities. It does not change eligibility criteria for grants or 
disfavor applicants of particular agendas.
    Unless the quantity of grants changes, the Department does not 
expect the final rule to change the overall quantity or quality of 
services offered. However, the Department does expect an increase in 
the capacity of faith-based providers to provide services, both because 
these providers will be able to shift resources otherwise spent 
fulfilling the notice-and-referral requirements to providing services 
and because more faith-based social service providers may participate 
in the marketplace under these streamlined regulations. It is entirely 
possible that the participation by additional organizations may enhance 
competition to provide services to the public and that this could 
result in higher quality government services, but the Department is not 
claiming that such a result will necessarily result from this change to 
reduce the unequal burden on faith-based providers. No mechanisms for 
data collection, monitoring, or reporting were proposed or are included 
in the final rule. However, recipients of financial assistance from the 
Department remain subject to financial and performance reporting 
requirements and audit requirements to ensure proper grants management 
practices. See, e.g., 2 CFR parts 200, 2900. In addition, recipients of 
financial assistance under WIOA Title I must collect and maintain data 
and information related to nondiscrimination. See 29 CFR 38.41 through 
38.45.
    Changes: None.
    Affected Regulations: None.

H. Department of Veterans Affairs

    Summary of Comments: VA received a comment seeking clarification on 
who will benefit from the new rule and what motivated the new rule. Two 
commenters asked how the new rule will affect the quality or quantity 
of

[[Page 82117]]

government services and whether government services will improve. 
Another commenter asked whether data collection measures will be used 
to independently monitor and assess the changes and if the public will 
have access to annual reports on how well the proposed change worked.
    Response: Faith-based organizations will likely benefit from the 
new rule because it provides clarity about the rights and obligations 
of faith-based organizations participating in the Department's social 
services programs and removes burdensome requirements only imposed on 
faith-based organizations. It will promote fairness and wider 
participation in VA programs by ensuring that faith-based organizations 
can participate on an equal footing with other entities. To the extent 
that the removal of this burden encourages faith-based organizations to 
apply to participate in the Department's programs, it may encourage 
participation in those programs, leading to improved quality or 
quantity of services provided. Notwithstanding the removal of the 
burdensome requirements on faith-based organizations, grantees will 
still assist Veterans in accessing needed services either from within 
the current provider or through referrals to an alternative provider as 
needed.
    In addition, VA does not anticipate the need for monitoring the 
changes or compiling annual reports. Grantees will still be bound by 
the rules and policies of the grant program. Any issues or questions 
about the changes will be addressed by the relevant program office as 
they arise.
    Changes: VA has revised the final regulatory text for clarity and 
accuracy. The final regulatory text will state ``VA program'' instead 
of ``VA awarding agency''.
    Affected Regulations: 38 CFR 50.2(a), (b), (c), (e), (f), (g), (h), 
(j), 61.64(a), (d), (e), 62.62(e).

I. Department of Health and Human Services

1. Nondirective Mandate
    Summary of Comments: One commenter said that the Proposed Rule 
violates Congress's nondirective mandate in the Title X program. The 
commenter stated that, in appropriations bills since 1996, Congress has 
mandated that ``all pregnancy counseling'' in Title X family planning 
projects ``shall be nondirective.'' The commenter argued that, when 
faith-based organizations provide or offer referrals for certain 
services but not others--like abortion or to obtain contraception--the 
omission of medical options flies in the face of the nondirective 
mandate.
    Response: HHS disagrees that the final rule conflicts with the non-
directive pregnancy counseling rider applicable to the Title X program, 
which provides funding for preconception family planning services. The 
Title X program has its own regulations at 42 CFR part 59, and certain 
provisions of that rule specifically govern certain types of referrals 
and their relation to the non-directive pregnancy counseling rider. To 
that extent, the Title X regulations would apply to how that program 
handles those referral matters. This final rule does not change how the 
provisions of the Title X regulation govern matters concerning the non-
directive pregnancy counseling rider and referrals in the Title X 
program, especially since the Title X regulations do not identify part 
87 as applicable to Title X grants. See 42 CFR 59.10 (identifying the 
``other HHS regulations [that] apply to grants under this subpart'').
    HHS also disagrees with the commenter's view concerning the non-
directive pregnancy counseling rider for Title X. The commenter 
contends the rider requires Title X grantees to make referrals for all 
post-conception treatment options. But the rider only requires that if 
pregnancy counseling is provided, it shall be non-directive. Thus, 
contrary to the commenter's suggestion, the nondirective pregnancy 
counseling rider only applies to post-conception counseling; it does 
not apply to post-conception referrals. It is important to note that in 
the Title X program, post-conception referrals are referrals out of the 
Title X program for health care services that are not provided under 
the Title X program; in contrast, the referrals required by the 2016 
rule which are being eliminated by this final rule are referrals from 
one service provider to another service provider within the same 
program. Furthermore, as the en banc court of appeals for the Ninth 
Circuit recently stated in upholding the Title X rule, non-directive 
only means options must be provided in a neutral manner, not that all 
conceivable options must be presented. California v. Azar, 950 F.3d 
1067 (9th Cir. 2020). Thus, even if these equal treatment regulations 
were applicable to the Title X program, there is no tension between the 
Title X non-directive pregnancy counseling rider and this final rule.
    Changes: None.
    Affected Regulations: None.
2. Certain Provisions of the ACA
    Summary of Comments: A few commenters said that the final rule will 
clash with several provisions of the Patient Protection and Affordable 
Care Act (ACA), because it will allow entities to decline to provide 
information and referrals. Commenters argued that the rule violates 
section 1554 of the ACA, which prohibits the Secretary of HHS from 
creating barriers to healthcare, and section 1557, which prohibits 
discrimination in health programs or activities. Another commenter said 
that the final rule transforms the Department's role from an agency 
focused on ensuring nondiscriminatory provision of health care to one 
that facilitates refusals of care. The commenter said that giving 
health care providers enhanced powers to refuse patient care in the 
name of ``conscience'' should be reconciled with the protections for 
patients under the ACA and other statutes.
    Response: HHS disagrees with commenters' characterization of the 
final rule. The rule merely ensures that HHS's programs are implemented 
in a manner consistent with Federal law, by ensuring that faith-based 
organizations may participate in social service programs funded by HHS 
on an equal basis with secular service providers, consistent with the 
law. Nothing in the rule addresses the provision of health care per se 
by health care providers, or provides health care providers with 
enhanced powers to refuse patient care. In addition, the equal 
treatment regulations only apply to ``HHS social service programs'' 
under Sec.  87.2, which the final rule does not modify. Many of the 
instances of which commenters are concerned may not be encompassed by 
the final rule.
    Section 1554 of the ACA, 42 U.S.C. 18114, provides that, 
``[n]otwithstanding any other provision of this Act [the ACA],'' the 
Secretary of Health and Human Services shall not promulgate any 
regulation that creates any unreasonable barriers to the ability of 
individuals to obtain appropriate medical care, impedes timely access 
to health care services, interferes with communications regarding a 
full range of treatment options between the patient and the provider, 
restricts the ability of health care providers to provide full 
disclosure of all relevant information to patients making health care 
decisions, violates the principles of informed consent and the ethical 
standards of health care professionals, or limits the availability of 
health care treatment for the full duration of a patient's medical 
needs. The clear meaning of

[[Page 82118]]

``[n]otwithstanding any other provision of this Act,'' is that--to the 
extent that section 1554 contains enforceable limitations on the 
Secretary's regulatory authority \98\--the provision limits the 
Secretary's regulatory authority under the ACA, not with respect to any 
other regulatory authorities possessed by the Secretary.\99\
---------------------------------------------------------------------------

    \98\ Section 1554's subsections are open-ended. Nothing in the 
statute specifies, for example, what constitutes an ``unreasonable 
barrier[ ],'' ``appropriate medical care[,]'' ``all relevant 
information[,]'' or ``the ethical standards of health care 
professionals[.]'' 42 U.S.C. 18114. And there is nothing in the 
ACA's legislative history that sheds light on the provision. Under 
these circumstances, it is a substantial question whether section 
1554 claims are reviewable under the APA at all. See Citizens to 
Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 420 (1971) 
(explaining that the APA bars judicial review of agency decision 
where, among other circumstances, ``statutes are drawn in such broad 
terms that in a given case there is no law to apply'' (citation 
omitted)).
    \99\ See, e.g., California by & through Becerra v. Azar, 927 
F.3d 1068, 1079 (9th Cir.), reh'g en banc granted sub nom. State by 
& through Becerra v. Azar, 927 F.3d 1045 (9th Cir. 2019) (``The 
preamble to Sec.  1554 also suggests that this section was not 
intended to restrict HHS interpretations of provisions outside the 
ACA. If Congress intended Sec.  1554 to have sweeping effects on all 
HHS regulations, even those unrelated to the ACA, it would have 
stated that Sec.  1554 applies `notwithstanding any other provision 
of law,' rather than `[n]otwithstanding any other provision of this 
Act.'''); id. (``[T]he phrase `notwithstanding any other provision 
of law' in 8 U.S.C. 1252(f)(2) meant that the provision `trumps any 
contrary provision elsewhere in the law''' (quoting Andreiu v. 
Ashcroft, 253 F.3d 477, 482 (9th Cir. 2001)).
---------------------------------------------------------------------------

    A reconsideration and elimination of certain regulatory provisions, 
particularly regulations not promulgated under the ACA, neither creates 
unreasonable regulatory barriers nor impedes timely access to health 
care. If it were otherwise, section 1554 would essentially serve as a 
one-way ratchet, preventing HHS from ever reconsidering any regulation 
that could be characterized as improving access to healthcare in some 
sense, regardless of the other burdens such regulation may impose on 
access to health care. HHS's approach in this final rule is consistent 
with the Ninth Circuit's recent interpretation of section 1554: ``The 
most natural reading of Section 1554 is that Congress intended to 
ensure that HHS, in implementing the broad authority provided by the 
ACA, does not improperly impose regulatory burdens on doctors and 
patients.'' California v. Azar, No. 19-15974, 2020 WL 878528, at 18 
(9th Cir. Feb. 24, 2020) (en banc). As explained throughout the 
preamble, the final rule avoids precisely such burdens by removing 
notice-and-referral requirements that imposed burdens on faith-based 
organizations without burdening similarly situated secular 
organizations. In addition, this final rule is not promulgated under 
any provision of the ACA. Rather, it amends HHS's equal treatment for 
faith-based organizations regulations (45 CFR part 87) (``equal 
treatment regulations'') in order to implement Executive Order 13831, 
on the Establishment of a White House Faith and Opportunity Initiative. 
80 FR 47271. Executive Order 13831 requires removal of the alternative 
provider notice-and-referral requirements, which eliminates the burdens 
that the regulations promulgated in 2016, pursuant to Executive Order 
13559, imposed exclusively on faith-based organizations. The removal of 
the alternative provider provisions places faith-based organizations on 
a level playing field with secular organizations, while alleviating the 
tension with recent Supreme Court precedent regarding nondiscrimination 
against religious organizations, the Attorney General's Memorandum, and 
RFRA, 42 U.S.C. 2000bb et seq. Additionally, the final rule does not 
create barriers for individuals to obtain appropriate medical care. 
Faith-based providers of social services, like other providers of 
social services, are required to follow the law and the requirements 
and conditions applicable to the grants and contracts they receive. 
There is no basis on which to presume that they are less likely than 
secular social service providers to follow the law. There is, 
therefore, no need for preventive or prophylactic protections that 
create administrative burdens on faith-based providers that are not 
imposed on similarly situated secular providers.
    HHS also disagrees with the comment alleging that the elimination 
of the alternative provider requirements conflict with ACA section 
1557, 42 U.S.C. 18116. Section 1557 generally provides that an 
individual shall not be excluded from participation in, be denied 
benefits of, or be subjected to discrimination under any health program 
or activity that receives Federal financial assistance, including 
credits, subsidies, or contracts of insurance, or under any program or 
activity that is administered by HHS or any entity established under 
Title I of the ACA. 42 U.S.C. 18116(a). Section 1557 prohibits 
discrimination on the basis of certain protected classes in the cited 
civil rights laws, namely race, color, national origin, sex, age, or 
disability. Section 1557 applies, to such health programs or 
activities, the long-standing and familiar Federal civil rights laws: 
Title VI of the Civil Rights Act of 1964, Title IX of the Education 
Amendments of 1972, section 504 of the Rehabilitation Act of 1973 and 
the Age Discrimination Act of 1975. Section 1557 applies exclusively to 
health programs or activities receiving Federal financial assistance or 
to entities created under Title I of the ACA. As noted above, this rule 
only applies to ``HHS social service programs'' under Sec.  87.2, which 
the final rule does not modify. Many of the instances of which 
commenters are concerned under section 1557 of the ACA may not be 
encompassed by the final rule. The elimination of the alternative 
provider notice-and-referral requirements merely places faith-based 
organizations on an even-playing field with secular organizations. 
Faith-based providers of social services, like other social service 
providers, must still adhere to the requirements of other applicable 
laws, which may (or may not) include section 1557.
    Changes: None.
    Affected Regulations: None.
3. Notice Requirements in Other Department Regulations
    Summary of Comments: One commenter said that Federal agencies have 
routinely included notice requirements for individual program 
beneficiaries in other nondiscrimination regulations, and in voluntary 
resolution agreements, including for large entities where the 
administrative effort involved may be significant. The commenter stated 
that removing the alternative provider requirements contrasts to the 
approach taken by HHS in a recent final rule, Protecting Statutory 
Conscience Rights in Health Care, which included a provision that ``OCR 
will consider an entity's voluntary posting of a notice of 
nondiscrimination as non-dispositive evidence of compliance.'' 
Protecting Statutory Conscience Rights in Health Care; Delegations of 
Authority, 84 FR 23170 (May 21, 2019) (vacated, see, e.g., New York v. 
United States Department of Health and Human Services, 414 F. Supp. 3d 
475 (S.D.N.Y. 2019)).
    Response: HHS disagrees that the approach of the proposed rule and 
this final rule with respect to notice is inconsistent with the 
approach to notice taken in the recent final rule, Protecting Statutory 
Conscience Rights in Health Care, 84 FR 23170 (May 21, 2019) (2019 
Conscience Rule), or in voluntary resolution agreements. The 
commenter's example of notice requirements in the context of voluntary 
resolution agreements is not analogous to the alternative provider 
requirements being eliminated in this final rule. Voluntary resolution 
agreements are used when there has been a finding of a violation of 
Federal laws. And the provision in

[[Page 82119]]

the Department's 2019 Conscience Rule (vacated, see, e.g., New York v. 
United States Department of Health and Human Services, 414 F.Supp.3d 
475 (S.D.N.Y. 2019)), refers to a situation where HHS's Office for 
Civil Rights (OCR) may be undertaking a compliance review or 
investigating a covered entity which is in alleged violation of Federal 
laws. That rule merely states that ``OCR will consider an entity's 
voluntary posting of a notice of nondiscrimination as non-dispositive 
evidence of compliance with the applicable substantive provisions of 
this part, to the extent such notices are provided according to the 
provisions of this section and are relevant to the particular 
investigation or compliance review.'' Id. at 23270. In that context, 
the voluntary notice would state that the entity complies with 
applicable Federal conscience and nondiscrimination laws and that 
individuals may have the right under Federal law to decline to perform, 
assist in the performance of, refer for, undergo, or pay for certain 
health care-related treatments, research, or services that violate the 
individual's conscience. The 2019 Conscience Rule, which would apply to 
all entities to which the Federal conscience laws apply, provides, with 
respect to all such entities, that the voluntary posting of such a 
nondiscrimination notice establishes non-dispositive evidence of 
compliance with the 2019 Conscience Rule. In contrast, the current 
regulation requires a subset of the recipients of HHS-funded social 
services grants--namely, faith-based organizations that receive funds 
from the HHS--to provide, to each beneficiary whom they would serve, 
notice of the beneficiary's right to receive services from a secular 
service provider. HHS, thus, disagrees with the commenter that this 
alternative provider notice requirement placed solely on faith-based 
organizations is, in any way, analogous to the voluntary 
nondiscrimination notices contemplated by the 2019 Conscience Rule.
    The alternative provider requirements, moreover, raise serious 
concerns under the First Amendment and RFRA. As the Supreme Court 
clarified in Trinity Lutheran Church of Columbia, Inc. v. Comer, 137 S. 
Ct. 2012, 2019 (2017) (quoting Church of Lukumi Babalu Aye, Inc. v. 
Hialeah, 508 U.S. 520, 533 (1993) (alteration in original)): ``The Free 
Exercise Clause `protect[s] religious observers against unequal 
treatment' and subjects to the strictest scrutiny laws that target the 
religious for `special disabilities' based on their `religious status.' 
'' The Court in Trinity Lutheran added: ``[T]his Court has repeatedly 
confirmed that denying a generally available benefit solely on account 
of religious identity imposes a penalty on the free exercise of 
religion that can be justified only by a state interest `of the highest 
order.' '' Id. (quoting McDaniel v. Paty, 435 U.S. 618, 628 (1978) 
(plurality opinion)); see also Mitchell v. Helms, 530 U.S. 793, 827 
(2000) (plurality opinion) (``The religious nature of a recipient 
should not matter to the constitutional analysis, so long as the 
recipient adequately furthers the Government's secular purpose.''). 
Additionally, the Attorney General's Memorandum noted that ``Government 
may not target religious individuals or entities for special 
disabilities based on their religion.'' Principle 6 of the Attorney 
General's Memorandum, 82 FR 49668 (October 26, 2017). Applying the 
alternative provider requirements categorically to all faith-based 
providers, but not to other, secular providers, of federally funded 
social services, is thus in tension with the nondiscrimination 
principle articulated in Trinity Lutheran and the Attorney General's 
Memorandum.
    In addition, the alternative provider requirements could in certain 
circumstances run afoul of the protections established by RFRA. Under 
RFRA, where the Federal Government substantially burdens an entity's 
exercise of religion, the Federal Government must prove that the burden 
is in furtherance of a compelling government interest and is the least 
restrictive means of furthering that interest. 42 U.S.C. 2000bb-1(b). 
Most faith-based organizations engaged in the provision of social 
services do so as part of their religious mission--because their 
religious beliefs compel them to serve their fellow human beings. In 
such circumstances, the alternative service provider notice requirement 
may substantially burden the religious exercise of those recipients. 
See Application of the Religious Freedom Restoration Act to the Award 
of a Grant Pursuant to a Juvenile Justice and Delinquency Prevention 
Act, 31 O.L.C. 162, 169-71, 174-83 (June 29, 2007). Requiring faith-
based organizations to comply with the alternative provider notice 
requirement could impose this burden, such as in a case in which a 
faith-based organization has a religious objection to referring the 
beneficiary to an alternative provider that provided services in a 
manner that violates the organization's religious tenets. See, e.g., 
Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682, 720-26 (2014).
    Changes: None.
    Affected Regulations: None.
4. Medical Ethics
    Summary of Comments: One commenter said that eliminating the 
alternative provider requirements will place nurses in burdensome 
ethical dilemmas. The commenter explained that, to the extent that a 
nurse is employed by a provider whose service offerings may be limited 
by moral or religious objections, the Code of Ethics for Nurses 
requires that nurses with conscientious objections to certain medical 
procedures must communicate their objection as soon as possible, in 
advance and in time for alternative arrangements to be made for patient 
care.
    Response: HHS disagrees that removing the alternative provider 
notice-and-referral requirements will place nurses in burdensome 
ethical dilemmas. First, the final rule only applies to ``HHS social 
service programs'' under Sec.  87.2. Therefore, many instances 
commenters are concerned about regarding nurses may not be encompassed 
by this rule. Second, the final rule does not prohibit organizations or 
individuals from informing beneficiaries that they can receive services 
from a secular provider or from voluntarily referring beneficiaries to 
some other provider. Rather, it merely removes the alternative provider 
notice-and-referral requirements that were placed solely on faith-based 
organizations and not on similarly situated secular organizations. 
Thus, to the extent that an organization or individual believes that 
its or his/her ethical obligations require the provision of notice to 
beneficiaries of alternative providers of social services, such 
organization or individual remains free to provide such notice.
    HHS notes, however, that if it were not to remove the current 
alternative provider notice-and-referral requirements, the exact 
concern raised by the commenter could occur: Nurses and faith-based 
providers could foreseeably be placed in burdensome ethical dilemmas 
under the current notice-and-referral requirements. For example, either 
a faith-based organization or an individual nurse may hold a religious 
objection to referring a beneficiary to an alternative provider that 
provides services in a manner that violates the organization's or 
nurse's religious tenets. See, e.g., Burwell v. Hobby Lobby Stores, 
Inc., 573 U.S. 682, 720-26 (2014). When a faith-based recipient carries 
out its social service programs, it may engage in an exercise of 
religion protected by RFRA, and certain conditions on receiving those 
grants may substantially burden the

[[Page 82120]]

religious exercise of that recipient. See Application of the Religious 
Freedom Restoration Act to the Award of a Grant Pursuant to a Juvenile 
Justice and Delinquency Prevention Act, 31 O.L.C. 162, 169-71, 174-83 
(June 29, 2007).
    Changes: None.
    Affected Regulations: None.
5. Discrimination Against Women, Persons With Disabilities, Low-Income 
Persons, and LGBT Persons
    Summary of Comments: Several commenters stated that removing the 
notice-and-referral requirements will adversely impact women, LGBT, 
persons with disabilities, or low-income persons. Two commenters stated 
that women of color in many States disproportionately receive their 
care at Catholic-affiliated hospitals, which often follow an ethical 
directive that prohibits the hospital from providing emergency 
contraception, sterilization, abortion, fertility services, and some 
treatments for ectopic pregnancies. Accordingly, commenters expressed 
concern that, if the final rule is implemented, more women, 
particularly women of color, will be put in situations where they will 
either lack access to certain reproductive health care services or be 
required to find another provider willing to provide comprehensive 
reproductive health services, if such services are available in their 
communities.
    Other commenters said that the final rule would permit 
discrimination against LGBT parents and children in adoption, foster 
care, and child welfare services. Commenters stated that the proposed 
rule would result in more children remaining in foster and congregate 
care by allowing religious providers to discriminate against LGBT 
people seeking to adopt. Commenters also said that the final rule would 
allow faith-based providers to discriminate against LGBT children 
trying to access services. Other commenters voiced concern that the 
final rule would cause a public health crisis for LGBT persons who may 
be left without knowledge of alternative providers to faith-based 
health care providers in emergency situations. Another commenter stated 
that the rule would contribute to significant health costs from the 
medical and mental health impacts of discrimination, citing a study 
that found that experiencing discrimination in health care, among other 
sectors, is associated with higher prevalence of suicidal thoughts and 
attempts among individuals who identify as transgender. Commenters 
noted that, because no other agency in the Government offers more 
grants than HHS, HHS's changes to the alternative provider requirement 
will create the highest incidence of discrimination because of the very 
scale at which the agency operates.
    Numerous commenters also stated that the final rule would allow 
people in faith-based organizations to use their religion to spread 
hatred and cause harm to anyone with whom the faith-based provider 
disagrees. These commenters said that the final rule returns the 
Department to a time when American citizens can be denied any and all 
services as long as the refuser says that the denial is due to the 
provider's religious beliefs. Other commenters said that they support 
the participation of faith-based organizations in federally funded 
service programs. These commenters opined that religious providers are 
the backbone of America, and that no organization should be 
discriminated against because of its religious or moral beliefs. 
Commenters stated that, as long as faith-based service providers can 
meet the necessary eligibility requirements to participate in service 
programs, commenters saw no downside to allowing such groups to 
participate, because such participation would create the provision of 
more services in communities, especially in communities that face 
greater obstacles in obtaining services. Other commenters stated that 
faith-based organizations bring large numbers of people who provide 
services as an outgrowth of their religious beliefs and because of 
their love for the people in their communities. Some commenters noted 
that religious persons comprise the most prolific pool of adoptive 
families in the nation. Commenters also said that they support the 
final rule because it clarifies that faith-based providers, including 
hospitals, homeless shelters, and adoption and foster care providers 
among others, may operate according to their religious beliefs and 
still participate in Federal service programs.
    Response: HHS believes that all people should be treated with 
dignity and respect, especially in its programs, and that they should 
be given every protection afforded by the Constitution and the laws 
passed by Congress. HHS does not condone the unjustified denial of 
needed medical care or social services to anyone. And it is committed 
to fully and vigorously enforcing all of the nondiscrimination statutes 
entrusted to it by Congress. HHS does not agree with commenters who 
claim that the final rule will create a high incidence of 
discrimination, raise the costs of health care, cause harm, spread 
hatred, keep more children in foster and congregate care, or adversely 
impact women, persons with disabilities, low-income, or self-
identifying LGBT persons. HHS is not aware of an instance in which a 
beneficiary has sought a referral for an alternative provider. 
Commenters who voiced concern about HHS's removal of the alternative 
provider requirements generally did not provide evidence, anecdotal or 
otherwise, that beneficiaries sought referrals required under those 
provisions. Thus, removing the alternative provider requirements would 
likely not raise health care costs, jeopardize benefits, or cause a 
public health crisis for beneficiaries. HHS beneficiaries, even in 
times of emergencies, are capable of obtaining services, and have 
obtained such services, without requiring HHS to place requirements on 
faith-based providers that it did not place on similarly situated 
secular providers. HHS also notes that this final rule applies to 
certain social services programs under Sec.  87.2. Therefore, many of 
the situations that commenters are concerned about regarding nurses may 
not be encompassed by this rule.
    In response to commenters who expressed concerns about the ability 
of faith-based providers to adequately serve the general public, HHS 
notes, first, that faith-based organizations have a long history of 
providing social services, independently and as part of programs funded 
by HHS.\100\ Despite that long history, HHS is not aware of evidence 
that faith-based organizations would, as a result of their religious 
beliefs, be unable to provide services to the general public or to 
specific vulnerable populations. Faith-based providers, like other 
providers, are required to follow the requirements and conditions of 
their Federal grants and contracts and may not violate those 
requirements. HHS finds no basis on which to presume that faith-based 
providers are less likely than other providers to follow the law. See 
Mitchell v. Helms, 530 U.S. 856-57 (2000) (O'Connor, J., concurring in 
judgment). Thus, religious providers cannot deny ``any and all services 
as long as the refuser says that the denial is due to the

[[Page 82121]]

provider's religious belief,'' as some commenters claimed.
---------------------------------------------------------------------------

    \100\ See, e.g., Lisa McCracken, Faith and the Not-For-Profit 
Provider, Ziegler Investment Banking, Aug. 25, 2014, http://image.exct.net/lib/ff021271746401/d/4/zNews_Featured_082514.pdf; 
Byron Johnson et al., Assessing the Faith-Based Response to 
Homelessness in America: Findings from Eleven Cities, Baylor 
Institute for Studies of Religion (2017), http://www.baylorisr.org/wp-content/uploads/ISR-Homeless-FINAL-01092017-web.pdf; Catholic 
Health Association of the United States, Catholic Health Care in the 
United States (last updated Jan. 2017), https://www.chausa.org/about/about/facts-statistics.
---------------------------------------------------------------------------

    Second, HHS recognizes, as noted in Executive Orders 13279 and 
13831, the important work that faith-based providers perform for 
communities in need of services. Executive Order 13279 identifies that 
faith-based providers participating in social service programs, as 
defined by the Executive Order, work to reduce poverty, improve 
opportunities for low-income children, revitalize low-income 
communities, empower low-income families and individuals to become 
self-sufficient, and otherwise help people in need. E.O. 13279, 67 FR 
77141 (2002). Similarly, as Executive Order 13831 observed, faith-based 
organizations have a special ability to provide services to 
individuals, families, and communities through means that are 
``different from those of government and with capacity that often 
exceeds that of government.'' E.O. 13831, 83 FR 20715 (2018). The 
Executive Order further states that faith-based providers ``lift people 
up, keep families strong, and solve problems at the local level.'' Id. 
And several commenters opined that faith-based providers and the 
individuals who work for them are motivated by a desire to serve and 
help the people in their communities. Commenters also noted that 
religious beneficiaries comprise the most prolific pool of adoptive 
families in the nation, which helps remove children from foster and 
congregate care and place them in permanent homes with forever 
families.
    In addition, HHS does not agree with commenters who predict that 
the final rule will result in beneficiaries losing access to services, 
because the participation of faith-based providers will generally 
increase the amount of services available to all beneficiaries, 
including religious minorities, women, women of color, low-income, and 
LGBT persons, and persons with disabilities. Allowing a broader 
spectrum of providers increases the possibility for all beneficiaries, 
including vulnerable populations, religious minorities, or persons with 
disabilities, to be able to locate providers whose goals and values 
more closely align with their own values. Furthermore, HHS funds 
several resource centers, hotlines and helplines to provide 
beneficiaries referrals to a diversity of social service providers 
which include secular and faith-based organizations.\101\
---------------------------------------------------------------------------

    \101\ See, e.g., 42 U.S.C. 10410 (Family Violence Prevention 
Services Act national resource centers); Administration for Children 
and Families, HHS, ACF Hotlines/Helplines, https://www.acf.hhs.gov/acf-hotlines-helplines (domestic violence, runaway and homeless 
youth, and human trafficking hotlines and referral directories).
---------------------------------------------------------------------------

    Commenters who voiced concerns about women, including women of 
color, accessing reproductive services such as abortion, contraception, 
sterilization, and certain infertility treatments, should note that, 
for the last 50 years, Congress has protected providers and other 
health care entities from being forced by public authorities (or by the 
recipients of certain HHS funds) to perform certain health care 
procedures to which they object. First, Congress enacted the Church 
Amendments in the 1970s to ensure, among other things, that the 
judicially recognized right to abortions, sterilizations, or related 
practices would not lead to a requirement that individuals or entities 
receiving certain HHS health service and research grants must 
participate in activities to which they have religious or moral 
objections. 42 U.S.C. 300a-7. Second, Congress passed in 1996 the 
Coats-Snowe Amendment, which prohibits Federal, State, or local 
governments from discriminating against any health care entity that 
refuses to provide, require, or undergo training in performing 
abortions, referring beneficiaries for abortions or abortion training, 
or making arrangements for any of those activities. 42 U.S.C. 
238n(a)(1)-(2). And third, Congress passed the Weldon Amendment in 2004 
and readopted (or incorporated by reference) the amendment in each 
subsequent appropriations act for the Departments of Labor, Health and 
Human Services, and Education. See, e.g., Further Consolidated 
Appropriations Act, 2020, Public Law 116-94, div. A, sec. 507(d), 133 
Stat. 2534, 2607 (Dec. 20, 2019). The Weldon Amendment provides that 
none of the funds made available in the applicable Labor, HHS, and 
Education appropriations act may be made available to a Federal agency 
or program, or to a State or local government, if such agency, program, 
or government subjects any institutional or individual health care 
entity to discrimination on the basis that the health care entity does 
not provide, pay for, provide coverage of, or refer for abortions. The 
alternative provider notice-and-referral requirements did not alter 
these protections adopted by Congress, and removing such requirements 
does not change these protections.
    Finally, the Government may not compel faith-based providers to 
change their religious identity or mission as a result of accepting 
direct Federal financial assistance. Individuals and organizations do 
not give up religious liberty protections because they provide 
government-funded social services. The ``government may not exclude 
religious organizations as such from secular aid programs . . . when 
the aid is not being used for explicitly religious activities such as 
worship or proselytization.'' Principle 6 of the Attorney General's 
Memorandum, 82 FR 49668 (October 26, 2017). Accordingly, religious 
organizations may retain their autonomy, right of expression, and 
religious character in the provision of public services. HHS recognizes 
that for many faith-based organizations, the provision of services to 
those in need is an exercise of religion, and many faith-based 
organizations view their explicitly religious activities as integral 
parts of the programs and services that they provide.
    Changes: None.
    Affected Regulations: None.

IV. General Regulatory Certifications

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

    This final rule was drafted in conformity with Executive Order 
12866 and Executive Order 13563.
    Executive Order 12866 directs agencies, to the extent permitted by 
law, to propose or adopt a regulation only upon a reasoned 
determination that its benefits justify its costs; tailor the 
regulation to impose the least burden on society, consistent with 
obtaining the regulatory objectives; and, in choosing among alternative 
regulatory approaches, select those approaches that maximize net 
benefits. Executive Order 13563 recognizes that some benefits and costs 
are difficult to quantify and provides that, where appropriate and 
permitted by law, agencies may consider and discuss qualitatively 
values that are difficult or impossible to quantify, including equity, 
human dignity, fairness, and distributive impacts.
    Under Executive Order 12866, OIRA must determine whether this 
regulatory action is ``significant'' and, therefore, subject to the 
requirements of the executive order and subject to review by OMB.
    OIRA has determined that this final rule is a significant, but not 
economically significant, regulatory action subject to review by OMB 
under section 3(f) of Executive Order 12866. Accordingly, OMB has 
reviewed this final rule. Pursuant to the Congressional Review Act, 5 
U.S.C. 801 et seq., OIRA

[[Page 82122]]

designated this rule as not a major rule, as defined by 5 U.S.C. 
804(2).
    The Agencies have also reviewed these regulations under Executive 
Order 13563, which supplements and reaffirms the principles, 
structures, and definitions governing regulatory review established in 
Executive Order 12866. To the extent permitted by law, section 1(b) of 
Executive Order 13563 requires that an agency engage in a cost-benefit 
analysis. 76 FR at 3821. Section 1(c) of Executive Order 13563 also 
requires an agency ``to use the best available techniques to quantify 
anticipated present and future benefits and costs as accurately as 
possible.'' Id. OIRA has emphasized that these techniques may include 
``identifying changing future compliance costs that might result from 
technological innovation or anticipated behavioral changes.'' 
Memorandum for the Heads of Executive Departments and Agencies, and of 
Independent Regulatory Agencies, from Cass R. Sunstein, Administrator, 
Office of Information and Regulatory Affairs, OMB M-11-10, Re: 
Executive Order 13563, ``Improving Regulation and Regulatory Review'' 
at 1 (Feb. 2, 2011), https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2011/m11-10.pdf.
    The Agencies are issuing these final rules upon a reasoned 
determination that their benefits justify their costs. In choosing 
among alternative regulatory approaches, the Agencies selected those 
approaches that maximize net benefits. Based on the analysis that 
follows, the Agencies believe that these final rules are consistent 
with the principles in Executive Order 13563. It is the reasoned 
determination of the Agencies that these final rules would, to a 
significant degree, eliminate costs that have been incurred by faith-
based organizations as they complied with the requirements of section 
2(b) of Executive Order 13559, while not adding any other requirements 
on those organizations.
    The Agencies also have determined that this regulatory action does 
not unduly interfere with State, local, or tribal governments in the 
exercise of their governmental functions.
    In accordance with Executive Orders 12866 and 13563, the Agencies 
have assessed the potential costs, cost savings, and benefits, both 
quantitative and qualitative, of this regulatory action.
1. Costs
    The removal of the notice-and-referral requirements could impose 
some costs on beneficiaries who may now need to investigate alternative 
providers on their own if they object to the religious character of a 
potential social service provider. The Agencies invited comments on any 
information that they could use to quantify this potential cost, but 
did not receive any comments that specifically addressed the cost of 
compliance. Although the Agencies cannot quantify this cost with a 
reasonable degree of confidence, we expect this cost to be de minimis. 
The number of beneficiaries who will be denied services and therefore 
would incur costs to identify an alternative provider would likely be 
very small since this rule makes it clear that such organizations are 
not permitted to discriminate in the provision of services.
2. Cost Savings
    The potential cost savings associated with this regulatory action 
are those resulting from the removal of the notice requirements and the 
referral requirement, and those determined to be necessary for 
administering the Agencies' programs and activities.
    DOL previously estimated the cost of imposing the notice 
requirements at no more than $200 per organization per year (in 2013 
dollars). 81 FR at 19395. This cost estimate was based on the 
expectation that it would take no more than two minutes for a provider 
to print, duplicate, and distribute an adequate number of disclosure 
notices for potential beneficiaries and $100 material costs annually. 
Id. The Agencies have adjusted that amount to $220 (in 2020 dollars) 
using the consumer price index (``CPI'').\102\ The Agencies solicited 
comments on the compliance costs associated with the notice 
requirements but received no comments.
---------------------------------------------------------------------------

    \102\ Bureau of Labor Statistics CPI data published on June 10, 
2020, https://www.bls.gov/news.release/cpi.htm.
    \103\ Number of faith-based organizations that are DOL grant 
recipients in FY2019.
    \104\ Average number of faith-based organizations that are HHS 
grant recipients in FY2019 and FY2020.
    \105\ Number of faith-based organizations that are USCIS grant 
recipients as of June 30, 2020.
    \106\ Number of faith-based organizations that are USDA grant 
recipients in FY2019.
    \107\ Number of faith-based organizations that are DOJ grant 
recipients in FY2019.
    \108\ HUD reported no faith-based organizations affected by this 
final rule.
    \109\ USAID did not have the notice and referral requirements 
previously, so this final rule change would not reduce any costs to 
faith-based organizations that are USAID grant recipients.
    \110\ VA identified 34 out of 257 Supportive Services for 
Veteran Families grantees that appear to be faith-based.
    \111\ A total of 904 institutions of higher education were 
reported as having a religious affiliation in the Integrated 
Postsecondary Education Data System in academic years 2018-2019.
---------------------------------------------------------------------------

    As shown in Table 1, the Agencies estimated the annual cost savings 
resulting from the removal of the notice requirements by multiplying 
the number of faith-based organizations affected by the annual 
compliance cost of the notice requirements ($220).

              Table 1--The Annual Cost-Savings of the Removal of the Notice Requirements by Agency
----------------------------------------------------------------------------------------------------------------
                                                                     Number of     Cost-savings
                            Agencies                                faith-based         per        Annual  cost-
                                                                   organizations   organization       savings
                                                                             (A)             (B)     (C = A x B)
----------------------------------------------------------------------------------------------------------------
DOL.............................................................        \103\ 14            $220          $3,080
HHS.............................................................       \104\ 119             220          26,180
DHS.............................................................        \105\ 30             220           6,600
USDA............................................................        \106\ 16             220           3,520
DOJ.............................................................        \107\ 67             220          14,740
HUD.............................................................         \108\ 0             220               0
USAID...........................................................         \109\ 0             220               0
VA..............................................................        \110\ 34             220           7,480
ED..............................................................       \111\ 904             220         198,880
                                                                 -----------------------------------------------
    Total.......................................................  ..............  ..............         260,480
----------------------------------------------------------------------------------------------------------------


[[Page 82123]]

    In the 2016 final rule, the Agencies were previously unable to 
quantify the cost of the referral requirement. 81 FR at 19395. However, 
DOL estimated that each referral request would require no more than two 
hours of a Training and Development Specialist's time to process. The 
Agencies invited comment or any data by which they could assess the 
actual implementation costs of the referral requirements. Although 
commenters did not provide specific data regarding the burdens of the 
referral requirement, several commenters did indicate that referral to 
a new provider might result in some additional burdens for program 
beneficiaries as they attempted to familiarize themselves with new 
providers. The Agencies agree that this is a possible burden that 
program beneficiaries may face but cannot effectively quantify it. The 
Agencies assume that these burdens would be higher in situations where 
new providers had dramatically different policies and procedures than 
previous providers and would be relatively small in situations where 
old and new providers have highly similar practices. Given that all 
such providers would be operating Federal programs governed by the same 
set of regulations and statutes, the Agencies believe the total amount 
of potential differentiation among providers would likely be relatively 
limited.
    Although the Agencies do not have any way to accurately determine 
the number of referrals that will occur in any one year, they do not 
expect this number will be significant or that referral costs will be 
appreciable for small service providers. Based on the Agencies' 
records, referral requests are rare, and the Agencies are not aware of 
any beneficiary who sought a referral under the prior requirement. See 
Part III.C.
    Table 2 shows the total annualized cost savings at a 7 percent 
discounting by Agency for the removal of notification.\112\ For 
example, the annualized cost savings for DOL-regulated entities is 
$3,080 at a 7 percent discounting. Under Executive Order 13771 when 
annualized over a perpetual time horizon at a 7 percent discount rate, 
the cost savings of this rulemaking for DOL is $2,251 (in 2016 
dollars).\113\
---------------------------------------------------------------------------

    \112\ Since the annual cost savings by each Agency remain 
constant over time, the total annual cost savings and the total 
annualized cost savings at a 3 percent and a 7 percent are the same.
    \113\ To comply with Executive Order 13771 accounting, the 
Agencies multiplied the annual cost-savings ($3,080) for DOL by the 
GDP deflator (0.9582) to convert the cost savings to 2016 dollars 
($2,951). Assuming the rule takes effect in 2020, we divided $2,951 
by (1.07)\4\, which equals $2,251. The Agencies used this result to 
determine the perpetual annualized cost ($2,251) at a 7 percent 
discount rate in 2016 dollars.

                  Table 2--The Cost Savings of the Removal of the Notice Requirements by Agency
----------------------------------------------------------------------------------------------------------------
                                                                                                     Perpetual
                                                                    Annual cost        Total        annualized
                                                                  savings of the    annualized     cost savings
                             Agency                               removal of the   cost savings   at a 7 percent
                                                                      notice      at a 7 percent    discounting
                                                                   requirements     discounting      (in 2016
                                                                        (C)                          dollars)
----------------------------------------------------------------------------------------------------------------
DOL.............................................................          $3,080          $3,080          $2,251
HHS.............................................................          26,180          26,180          19,137
DHS.............................................................           6,600           6,600           4,824
USDA............................................................           3,520           3,520           2,573
DOJ.............................................................          14,740          14,740          10,775
HUD.............................................................               0               0               0
USAID...........................................................               0               0               0
VA..............................................................           7,480           7,480           5,467
ED..............................................................         198,880         198,880         145,382
                                                                 -----------------------------------------------
    Total.......................................................  ..............         260,480         190,409
----------------------------------------------------------------------------------------------------------------

3. Benefits
    In terms of benefits, the Agencies recognize a non-quantified 
benefit to religious liberty that comes from removing requirements 
imposed solely on faith-based organizations, in tension with the 
principles of free exercise articulated in Trinity Lutheran. The 
Agencies also recognize a non-quantified benefit to grant recipients 
and beneficiaries alike that comes from increased clarity in the 
regulatory requirements that apply to faith-based organizations 
operating social service programs funded by the Federal Government. 
Beneficiaries will also benefit from the increased capacity of faith-
based social service providers to provide services, both because these 
providers will be able to shift resources--even if only minimal--
otherwise spent fulfilling the notice-and-referral requirements to 
provision of services, and because more faith-based social service 
providers may participate in Federal programs under these regulations.

B. Regulatory Flexibility Analysis

    The Regulatory Flexibility Act of 1980 (``RFA''), 5 U.S.C. 601 et 
seq., as amended by the Small Business Regulatory Enforcement Fairness 
Act of 1996, Public Law 104-121, tit. II, 110 Stat. 847, 857, requires 
Federal agencies engaged in rulemaking to consider the impact of their 
proposals on small entities, consider alternatives to minimize that 
impact, and solicit public comment on their analyses. The RFA requires 
the assessment of the impact of a regulation on a wide range of small 
entities, including small businesses, not-for-profit organizations, and 
small governmental jurisdictions. Agencies must perform a review to 
determine whether a proposed or final rule would have a significant 
economic impact on a substantial number of small entities. 5 U.S.C. 
603-05.
    The Agencies believe that the estimated cost savings of $220 per 
provider per year is far less than one percent of annual revenue of 
even the smallest faith-based organizations. The Agencies therefore 
certify that this final rule will not have a significant economic 
impact on a substantial number of small entities.

[[Page 82124]]

C. Civil Justice Reform (Executive Order 12988)

    This final rule has been reviewed in accordance with Executive 
Order 12988 of February 5, 1996, Civil Justice Reform, 61 FR 4729. The 
provisions of this rule will not have preemptive effect with respect to 
any State or local laws, regulations, or policies that conflict with 
such provisions or which otherwise impede their full implementation. 
The rule will not have retroactive effect.

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

    In accordance with Executive Order 13175 of November 6, 2000, 
Consultation and Coordination With Indian Tribal Governments, 65 FR 
67249, HUD consulted with representatives of tribal governments 
concerning the subject of this rule. HUD, through a letter dated July 
16, 2019, provided Indian tribes and Alaska Native Villages the 
opportunity to comment on the substance of the regulatory changes 
during the development of the proposed rule. HUD received one comment 
in response to those letters, regarding the ability of faith-based 
organizations to access funds designated for Indian tribes under the 
Indian Community Development Block Grant program. Additionally, the 
February 13, 2020, proposed rule provided Indian tribes with an 
additional opportunity to comment on the proposed regulatory changes.
    The other Agencies have assessed the impact of their provisions in 
this rule on Indian tribes and determined that those provision do not, 
to their knowledge, have tribal implications that require tribal 
consultation under Executive Order 13175.

E. Federalism (Executive Order 13132)

    Executive Order 13132 directs that, to the extent practicable and 
permitted by law, an agency shall not promulgate any regulation that 
has federalism implications, that imposes substantial direct compliance 
costs on State and local governments, and that is not required by 
statute, or that preempts State law, unless the agency meets the 
consultation and funding requirements of section 6 of the Executive 
Order. Because each change in this rule does not have federalism 
implications as defined in the Executive Order, does not impose direct 
compliance costs on State and local governments, and does not preempt 
State law within the meaning of the Executive Order, the Agencies have 
concluded that compliance with the requirements of section 6 is not 
necessary.

F. Reducing Regulation and Controlling Regulatory Costs (Executive 
Order 13771)

    Section 2(a) of Executive Order 13771 requires an agency, unless 
prohibited by law, to identify at least two existing regulations to be 
repealed when the agency publicly proposes for notice and comment, or 
otherwise promulgates, a new regulation. In furtherance of this 
requirement, section 2(c) of Executive Order 13771 requires that the 
new incremental costs associated with new regulations shall, to the 
extent permitted by law, be offset by the elimination of existing costs 
associated with at least two prior regulations. This rule is considered 
to be a deregulatory action under that order.

G. Paperwork Reduction Act

    This rule does not contain any new or revised ``collection[s] of 
information'' as defined by the Paperwork Reduction Act of 1995, 44 
U.S.C. 3501 et seq.

H. Unfunded Mandates Reform Act

    Section 4(1) and (2) of UMRA, 2 U.S.C. 1503(1)-(2), excludes from 
coverage under that Act any proposed or final Federal regulation that 
``enforces constitutional rights'' or ``establishes or enforces any 
statutory rights that prohibit discrimination on the basis of race, 
color, religion, sex, national origin, age, handicap, or disability.'' 
Alternatively, this final rule would not qualify as an ``unfunded'' 
mandate because the requirements in this final rule apply exclusively 
in the context of Federal financial assistance, so most, if not all, 
mandates are funded. The rule in any event will not require 
expenditures by State, local, or tribal governments of $100 million or 
more per year. Accordingly, this rulemaking is not subject to the 
provisions of UMRA.

Final Regulations

List of Subjects

2 CFR Part 3474

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

6 CFR Part 19

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

7 CFR Part 16

    Administrative practice and procedure, Grant programs.

22 CFR Part 205

    Foreign aid, Grant programs, Nonprofit organizations.

24 CFR Part 5

    Administrative practice and procedure, Aged, Claims, Crime, 
Government contracts, Grant programs--housing and community 
development, Individuals with disabilities, Intergovernmental 
relations, Loan programs--housing and

[[Page 82125]]

community development, Low and moderate income housing, Mortgage 
insurance, Penalties, Pets, Public housing, Rent subsidies, Reporting 
and recordkeeping requirements, Social security, Unemployment 
compensation, Wages.

24 CFR Part 92

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

24 CFR Part 578

    Community facilities, Continuum of Care, Emergency solutions 
grants, Grant programs--housing and community development, Grant 
programs--social programs, Homeless, Rural housing, Reporting and 
recordkeeping requirements, Supportive housing programs--housing and 
community development, Supportive services.

28 CFR Part 38

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

29 CFR Part 2

    Administrative practice and procedure, Claims, Courts, Government 
employees, Religious discrimination.

34 CFR Part 75

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

34 CFR Part 76

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

38 CFR Part 50

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

38 CFR Part 61

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

38 CFR Part 62

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

45 CFR Part 87

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

45 CFR Part 1050

    Grant programs--social programs.

DEPARTMENT OF EDUCATION

    For the reasons discussed in the preamble, the Secretary of 
Education amends part 3474 of title 2 of the Code of Federal 
Regulations (CFR) and parts 75 and 76 of title 34 of the CFR, 
respectively, as follows:

Title II--Grants and Agreements

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

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

    Authority:  20 U.S.C. 1221e-3, 3474; 42 U.S.C. 2000bb et seq.; 
and 2 CFR part 200, unless otherwise noted.


0
2. Section 3474.15 is revised to read as follows:


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

    (a) This section establishes responsibilities that grantees and 
subgrantees have in selecting contractors to provide direct Federal 
services under a program of the Department. Grantees and subgrantees 
must ensure compliance by their subgrantees with the provisions of this 
section and any implementing regulations or guidance.
    (b)(1) A faith-based organization is eligible to contract with 
grantees and subgrantees, including States, on the same basis as any 
other private organization, with respect to contracts for which such 
organizations are eligible and considering any permissible 
accommodation.
    (2) In selecting providers of goods and services, grantees and 
subgrantees, including States, must not discriminate for or against a 
private organization on the basis of the organization's religious 
character, affiliation, or exercise, as defined in 34 CFR 75.52(c)(3) 
and 76.52(c)(3), and must ensure that the award of contracts is free 
from political interference, or even the appearance of such 
interference, and is done on the basis of merit, not on the basis of 
religion or religious belief, or lack thereof. Notices or announcements 
of award opportunities and notices of award or contracts shall include 
language substantially similar to that in appendices A and B, 
respectively, to 34 CFR part 75.
    (3) No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by a grantee or 
subgrantee in administering Federal financial services from the 
Department shall require faith-based organizations to provide 
assurances or notices where they are not required of non-faith-based 
organizations. Any restrictions on the use of grant funds shall apply 
equally to faith-based and non-faith-based organizations. All 
organizations that participate in Department programs or services, 
including organizations with religious character or affiliation, must 
carry out eligible activities in accordance with all program 
requirements, subject to any required or appropriate religious 
accommodation, and other applicable requirements governing the conduct 
of Department-funded activities, including those prohibiting the use of 
direct financial assistance to engage in explicitly religious 
activities.

[[Page 82126]]

    (4) No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by a grantee or 
subgrantee shall disqualify faith-based organizations from 
participating in Department-funded programs or services because such 
organizations are motivated or influenced by religious faith to provide 
social services, or because of their religious character or 
affiliation, or on grounds that discriminate against organizations on 
the basis of the organizations' religious exercise, as defined in 34 
CFR 75.52(c)(3) and 76.52(c)(3).
    (c)(1) The provisions of 34 CFR 75.532 and 76.532 that apply to a 
faith-based organization that is a grantee or subgrantee also apply to 
a faith-based organization that contracts with a grantee or subgrantee, 
including a State.
    (2) The requirements referenced under paragraph (c)(1) of this 
section do not apply to a faith-based organization that provides goods 
or services to a beneficiary under a program supported only by indirect 
Federal financial assistance, as defined in 34 CFR 75.52(c)(3) and 
76.52(c)(3).
    (d)(1) A private organization that provides direct Federal services 
under a program of the Department and engages in explicitly religious 
activities, such as worship, religious instruction, or proselytization, 
must offer those activities separately in time or location from any 
programs or services funded by the Department through a contract with a 
grantee or subgrantee, including a State. Attendance or participation 
in any such explicitly religious activities by beneficiaries of the 
programs and services supported by the contract must be voluntary.
    (2) The limitations on explicitly religious activities under 
paragraph (d)(1) of this section do not apply to a faith-based 
organization that provides services to a beneficiary under a program 
supported only by indirect Federal financial assistance, as defined in 
34 CFR 75.52(c)(3) and 76.52(c)(3).
    (e)(1) A faith-based organization that contracts with a grantee or 
subgrantee, including a State, will retain its independence, autonomy, 
right of expression, religious character, and authority over its 
governance. A faith-based organization that receives Federal financial 
assistance from the Department does not lose the protections of law.

    Note 1 to paragraph (e)(1): Memorandum for All Executive 
Departments and Agencies, From the Attorney General, ``Federal Law 
Protections for Religious Liberty'' (Oct. 6, 2017) (describing 
Federal law protections for religious liberty).

    (2) A faith-based organization that contracts with a grantee or 
subgrantee, including a State, may, among other things--
    (i) Retain religious terms in its name;
    (ii) Continue to carry out its mission, including the definition, 
development, practice, and expression of its religious beliefs;
    (iii) Use its facilities to provide services without concealing, 
removing, or altering religious art, icons, scriptures, or other 
symbols from these facilities;
    (iv) Select its board members on the basis of their acceptance of 
or adherence to the religious tenets of the organization; and
    (v) Include religious references in its mission statement and other 
chartering or governing documents.
    (f) A private organization that contracts with a grantee or 
subgrantee, including a State, may not discriminate against a 
beneficiary or prospective beneficiary in the provision of program 
goods or services on the basis of religion or religious belief, a 
refusal to hold a religious belief, or refusal to attend or participate 
in a religious practice. However, an organization that participates in 
a program funded by indirect financial assistance need not modify its 
program activities to accommodate a beneficiary who chooses to expend 
the indirect aid on the organization's program and may require 
attendance at all activities that are fundamental to the program.
    (g) A religious organization's exemption from the Federal 
prohibition on employment discrimination on the basis of religion, in 
section 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 2000e-1(a), 
is not forfeited when the organization contracts with a grantee or 
subgrantee. An organization qualifying for such an exemption may select 
its employees on the basis of their acceptance of or adherence to the 
religious tenets of the organization.
    (h) No grantee or subgrantee receiving funds under any Department 
program or service shall construe these provisions in such a way as to 
advantage or disadvantage faith-based organizations affiliated with 
historic or well-established religions or sects in comparison with 
other religions or sects.

0
3. Section 3474.21 is added to read as follows:


Sec.  3474.21   Severability.

    If any provision of this part or its application to any person, 
act, or practice is held invalid, the remainder of the part or the 
application of its provisions to any person, act, or practice shall not 
be affected thereby.

Title 34--Education

PART 75--DIRECT GRANT PROGRAMS

0
4. The authority citation for part 75 continues to read as follows:

    Authority:  20 U.S.C. 1221e-3 and 3474, unless otherwise noted.


0
5. Section 75.51 is amended by revising paragraphs (b)(3) and (4), 
adding paragraph (b)(5), and removing the parenthetical authority 
citation at the end of the section to read as follows:


Sec.  75.51  How to prove nonprofit status.

* * * * *
    (b) * * *
    (3) A certified copy of the applicant's certificate of 
incorporation or similar document if it clearly establishes the 
nonprofit status of the applicant;
    (4) Any item described in paragraphs (b)(1) through (3) of this 
section if that item applies to a State or national parent 
organization, together with a statement by the State or parent 
organization that the applicant is a local nonprofit affiliate; or
    (5) For an entity that holds a sincerely held religious belief that 
it cannot apply for a determination as an entity that is tax-exempt 
under section 501(c)(3) of the Internal Revenue Code, evidence 
sufficient to establish that the entity would otherwise qualify as a 
nonprofit organization under paragraphs (b)(1) through (4) of this 
section.

0
6. Section 75.52 is revised to read as follows:


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

    (a)(1) A faith-based organization is eligible to apply for and to 
receive a grant under a program of the Department on the same basis as 
any other organization, with respect to programs for which such other 
organizations are eligible and considering any permissible 
accommodation. The Department shall provide such religious 
accommodation as is consistent with Federal law, the Attorney General's 
Memorandum of October 6, 2017 (Federal Law Protections for Religious 
Liberty), and the Religion Clauses of the First Amendment to the U.S. 
Constitution.
    (2) In the selection of grantees, the Department may not 
discriminate for or against a private organization on the basis of the 
organization's religious character, affiliation, or exercise and must 
ensure that all decisions about grant awards are free from political 
interference, or even the appearance of

[[Page 82127]]

such interference, and are made on the basis of merit, not on the basis 
of religion or religious belief, or the lack thereof. Notices or 
announcements of award opportunities and notices of award or contracts 
shall include language substantially similar to that in appendices A 
and B, respectively, to this part.
    (3) No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by the Department 
shall require faith-based organizations to provide assurances or 
notices where they are not required of non-faith-based organizations. 
Any restrictions on the use of grant funds shall apply equally to 
faith-based and non-faith-based organizations. All organizations that 
receive grants under a program of the Department, including 
organizations with religious character or affiliation, must carry out 
eligible activities in accordance with all program requirements, 
subject to any required or appropriate religious accommodation, and 
other applicable requirements governing the conduct of Department-
funded activities, including those prohibiting the use of direct 
financial assistance to engage in explicitly religious activities.
    (4) No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by the Department 
shall disqualify faith-based organizations from applying for or 
receiving grants under a program of the Department because such 
organizations are motivated or influenced by religious faith to provide 
social services, or because of their religious character or 
affiliation, or on grounds that discriminate against organizations on 
the basis of the organizations' religious exercise.
    (b) The provisions of Sec.  75.532 apply to a faith-based 
organization that receives a grant under a program of the Department.
    (c)(1) A private organization that applies for and receives a grant 
under a program of the Department and engages in explicitly religious 
activities, such as worship, religious instruction, or proselytization, 
must offer those activities separately in time or location from any 
programs or services funded by a grant from the Department. Attendance 
or participation in any such explicitly religious activities by 
beneficiaries of the programs and services funded by the grant must be 
voluntary.
    (2) The limitations on explicitly religious activities under 
paragraph (c)(1) of this section do not apply to a faith-based 
organization that provides services to a beneficiary under a program 
supported only by ``indirect Federal financial assistance.''
    (3) For purposes of 2 CFR 3474.15, this section, Sec.  75.714, and 
appendices A and B to this part, the following definitions apply:
    (i) Direct Federal financial assistance means financial assistance 
received by an entity selected by the Government or a pass-through 
entity (under this part) to carry out a service (e.g., by contract, 
grant, or cooperative agreement). References to Federal financial 
assistance will be deemed to be references to direct Federal financial 
assistance, unless the referenced assistance meets the definition of 
indirect Federal financial assistance.
    (ii) Indirect Federal financial assistance means financial 
assistance received by a service provider when the service provider is 
paid for services rendered by means of a voucher, certificate, or other 
similar means of government-funded payment provided to a beneficiary 
who is able to make a choice of a service provider. Federal financial 
assistance provided to an organization is indirect under this 
definition if--
    (A) The government program through which the beneficiary receives 
the voucher, certificate, or other similar means of government-funded 
payment is neutral toward religion; and
    (B) The organization receives the assistance as the result of the 
genuine, independent choice of the beneficiary.
    (iii) Federal financial assistance does not include a tax credit, 
deduction, exemption, guaranty contract, or the use of any assistance 
by any individual who is the ultimate beneficiary under any such 
program.
    (iv) Pass-through entity means an entity, including a nonprofit or 
nongovernmental organization, acting under a contract, grant, or other 
agreement with the Federal Government or with a State or local 
government, such as a State administering agency, that accepts direct 
Federal financial assistance as a primary recipient or grantee and 
distributes that assistance to other organizations that, in turn, 
provide government-funded social services.
    (v) Religious exercise has the meaning given to the term in 42 
U.S.C. 2000cc-5(7)(A).
    (vi) Discriminate against an organization on the basis of the 
organization's religious exercise means to disfavor an organization, 
including by failing to select an organization, disqualifying an 
organization, or imposing any condition or selection criterion that 
otherwise disfavors or penalizes an organization in the selection 
process or has such an effect because of:
    (A) Conduct that would not be considered grounds to disfavor a 
secular organization,
    (B) Conduct that must or could be granted an appropriate 
accommodation in a manner consistent with RFRA (42 U.S.C. 2000bb 
through 2000bb-4) or the Religion Clauses of the First Amendment to the 
Constitution, or
    (C) The actual or suspected religious motivation of the 
organization's religious exercise.

    Note 1 to paragraph (c)(3): The definitions of direct Federal 
financial assistance and indirect Federal financial assistance do 
not change the extent to which an organization is considered a 
recipient of Federal financial assistance as those terms are defined 
under 34 CFR parts 100, 104, 106, and 110.

    (d)(1) A faith-based organization that applies for or receives a 
grant under a program of the Department will retain its independence, 
autonomy, right of expression, religious character, and authority over 
its governance. A faith-based organization that receives Federal 
financial assistance from the Department does not lose the protections 
of law.

    Note 1 to paragraph (d)(1):  Memorandum for All Executive 
Departments and Agencies, From the Attorney General, ``Federal Law 
Protections for Religious Liberty'' (Oct. 6, 2017) (describing 
Federal law protections for religious liberty).

    (2) A faith-based organization that applies for or receives a grant 
under a program of the Department may, among other things--
    (i) Retain religious terms in its name;
    (ii) Continue to carry out its mission, including the definition, 
development, practice, and expression of its religious beliefs;
    (iii) Use its facilities to provide services without concealing, 
removing, or altering religious art, icons, scriptures, or other 
symbols from these facilities;
    (iv) Select its board members and employees on the basis of their 
acceptance of or adherence to the religious tenets of the organization; 
and
    (v) Include religious references in its mission statement and other 
chartering or governing documents.
    (e) An organization that receives any Federal financial assistance 
under a program of the Department shall not discriminate against a 
beneficiary or prospective beneficiary in the provision of program 
services or in outreach activities on the basis of religion or 
religious belief, a refusal to hold a

[[Page 82128]]

religious belief, or refusal to attend or participate in a religious 
practice. However, an organization that participates in a program 
funded by indirect Federal financial assistance need not modify its 
program activities to accommodate a beneficiary who chooses to expend 
the indirect aid on the organization's program and may require 
attendance at all activities that are fundamental to the program.
    (f) If a grantee contributes its own funds in excess of those funds 
required by a matching or grant agreement to supplement federally 
funded activities, the grantee has the option to segregate those 
additional funds or commingle them with the funds required by the 
matching requirements or grant agreement. However, if the additional 
funds are commingled, this section applies to all of the commingled 
funds.
    (g) A religious organization's exemption from the Federal 
prohibition on employment discrimination on the basis of religion, in 
section 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 2000e-1, is 
not forfeited when the organization receives financial assistance from 
the Department. An organization qualifying for such exemption may 
select its employees on the basis of their acceptance of or adherence 
to the religious tenets of the organization.
    (h) The Department shall not construe these provisions in such a 
way as to advantage or disadvantage faith-based organizations 
affiliated with historic or well-established religions or sects in 
comparison with other religions or sects.

0
7. Section 75.63 is added to read as follows:


Sec.  75.63   Severability.

    If any provision of this subpart or its application to any person, 
act, or practice is held invalid, the remainder of the subpart or the 
application of its provisions to any person, act, or practice shall not 
be affected thereby.


Sec.  75.712  [Removed and Reserved]

0
8. Section 75.712 is removed and reserved.


Sec.  75.713  [Removed and Reserved]

0
9. Section 75.713 is removed and reserved.

0
10. Section 75.714 is revised to read as follows:


Sec.  75.714  Subgrants, contracts, and other agreements with faith-
based organizations.

    If a grantee under a discretionary grant program of the Department 
has the authority under the grant to select a private organization to 
provide services supported by direct Federal financial assistance under 
the program by subgrant, contract, or other agreement, the grantee must 
ensure compliance with applicable Federal requirements governing 
contracts, grants, and other agreements with faith-based organizations, 
including, as applicable, Sec. Sec.  75.52 and 75.532, appendices A and 
B to this part, and 2 CFR 3474.15. If the pass-through entity is a 
nongovernmental organization, it retains all other rights of a 
nongovernmental organization under the program's statutory and 
regulatory provisions.

0
11. Appendix A to part 75 is revised to read as follows:

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

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

0
12. Appendix B to part 75 is added to read as follows:

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

    (a) A faith-based organization that participates in this program 
retains its independence from the Government and may continue to 
carry out its mission consistent with religious freedom and 
conscience protections in Federal law, including the Free Speech and 
Free Exercise Clauses of the Constitution, 42 U.S.C. 2000bb et seq., 
238n, 18113, 2000e-1(a) and 2000e-2(e), and 12113(d), and the Weldon 
Amendment, among others. Religious accommodations may also be sought 
under many of these religious freedom and conscience protection 
laws.
    (b) A faith-based organization may not use direct financial 
assistance from the Department in contravention of the Establishment 
Clause or any other applicable requirements. Such an organization 
also may not, in providing services funded by the Department, 
discriminate against a program beneficiary or prospective program 
beneficiary on the basis of religion, a religious belief, a refusal 
to hold a religious belief, or a refusal to attend or participate in 
a religious practice.

PART 76--STATE-ADMINISTERED FORMULA GRANT PROGRAMS

0
13. The authority citation for part 76 continues to read as follows:

    Authority:  20 U.S.C. 1221e-3 and 3474, unless otherwise noted.


0
14. Section 76.52 is revised to read as follows:


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

    (a)(1) A faith-based organization is eligible to apply for and to 
receive a subgrant under a program of the Department on the same basis 
as any other private organization, with respect to programs for which 
such other organizations are eligible and considering any permissible 
accommodation. A State pass-through entity shall provide such religious 
accommodation as would be required to a recipient under Federal law, 
the Attorney General's Memorandum of October 6, 2017 (Federal Law 
Protections for Religious Liberty), and the Religion Clauses of the 
First Amendment to the U.S. Constitution.
    (2) In the selection of subgrantees and contractors, States may not 
discriminate for or against a private organization on the basis of the 
organization's religious character, affiliation, or exercise and must 
ensure that all decisions about subgrants are free from political 
interference, or even the appearance of such interference, and are made 
on the basis of merit, not on the basis of religion or religious 
belief, or a lack thereof. Notices or announcements of award 
opportunities and notices of award or contracts shall include language 
substantially similar to that in appendices A and B, respectively, to 
34 CFR part 75.
    (3) No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by States in 
administering a program of the Department shall require faith-based 
organizations to provide assurances or notices where they are not 
required of non-faith-based organizations. Any restrictions on the

[[Page 82129]]

use of subgrant funds shall apply equally to faith-based and non-faith-
based organizations. All organizations that receive a subgrant from a 
State under a State-Administered Formula Grant program of the 
Department, including organizations with religious character or 
affiliation, must carry out eligible activities in accordance with all 
program requirements, subject to any required or appropriate religious 
accommodation, and other applicable requirements governing the conduct 
of Department-funded activities, including those prohibiting the use of 
direct financial assistance in contravention of the Establishment 
Clause.
    (4) No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by States shall 
disqualify faith-based organizations from applying for or receiving 
subgrants under a State-Administered Formula Grant program of the 
Department because such organizations are motivated or influenced by 
religious faith to provide social services, or because of their 
religious character or affiliation, or on grounds that discriminate 
against organizations on the basis of the organizations' religious 
exercise.
    (b) The provisions of Sec.  76.532 apply to a faith-based 
organization that receives a subgrant from a State under a State-
Administered Formula Grant program of the Department.
    (c)(1) A private organization that applies for and receives a 
subgrant under a program of the Department and engages in explicitly 
religious activities, such as worship, religious instruction, or 
proselytization, must offer those activities separately in time or 
location from any programs or services funded by a subgrant from a 
State under a State-Administered Formula Grant program of the 
Department. Attendance or participation in any such explicitly 
religious activities by beneficiaries of the programs and services 
supported by the subgrant must be voluntary.
    (2) The limitations on explicitly religious activities under 
paragraph (c)(1) of this section do not apply to a faith-based 
organization that provides services to a beneficiary under a program 
supported only by ``indirect Federal financial assistance.''
    (3) For purposes of 2 CFR 3474.15, this section, and Sec.  76.714, 
the following definitions apply:
    (i) Direct Federal financial assistance means financial assistance 
received by an entity selected by the Government or a pass-through 
entity (under this part) to carry out a service (e.g., by contract, 
grant, or cooperative agreement). References to ``Federal financial 
assistance'' will be deemed to be references to direct Federal 
financial assistance, unless the referenced assistance meets the 
definition of ``indirect Federal financial assistance.''
    (ii) Indirect Federal financial assistance means financial 
assistance received by a service provider when the service provider is 
paid for services rendered by means of a voucher, certificate, or other 
means of government-funded payment provided to a beneficiary who is 
able to make a choice of service provider. Federal financial assistance 
provided to an organization is indirect under this definition if--
    (A) The government program through which the beneficiary receives 
the voucher, certificate, or other similar means of government-funded 
payment is neutral toward religion; and
    (B) The organization receives the assistance as the result of the 
genuine, independent choice of the beneficiary.
    (iii) Federal financial assistance does not include a tax credit, 
deduction, exemption, guaranty contract, or the use of any assistance 
by any individual who is the ultimate beneficiary under any such 
program.
    (iv) Pass-through entity means an entity, including a nonprofit or 
nongovernmental organization, acting under a contract, grant, or other 
agreement with the Federal Government or with a State or local 
government, such as a State administering agency, that accepts direct 
Federal financial assistance as a primary recipient or grantee and 
distributes that assistance to other organizations that, in turn, 
provide government-funded social services.
    (v) Religious exercise has the meaning given to the term in 42 
U.S.C. 2000cc-5(7)(A).
    (vi) Discriminate against an organization on the basis of the 
organization's religious exercise means to disfavor an organization, 
including by failing to select an organization, disqualifying an 
organization, or imposing any condition or selection criterion that 
otherwise disfavors or penalizes an organization in the selection 
process or has such an effect because of:
    (A) Conduct that would not be considered grounds to disfavor a 
secular organization,
    (B) Conduct that must or could be granted an appropriate 
accommodation in a manner consistent with RFRA (42 U.S.C. 2000bb 
through 2000bb-4) or the Religion Clauses of the First Amendment to the 
Constitution, or
    (C) The actual or suspected religious motivation of the 
organization's religious exercise.

    Note 1 to paragraph (c)(3):  The definitions of direct Federal 
financial assistance and indirect Federal financial assistance do 
not change the extent to which an organization is considered a 
recipient of Federal financial assistance as those terms are defined 
under 34 CFR parts 100, 104, 106, and 110.

    (d)(1) A faith-based organization that applies for or receives a 
subgrant from a State under a State-Administered Formula Grant program 
of the Department will retain its independence, autonomy, right of 
expression, religious character, and authority over its governance. A 
faith-based organization that receives Federal financial assistance 
from the Department does not lose the protection of law.

    Note 1 to paragraph (d)(1):  Memorandum for All Executive 
Departments and Agencies, From the Attorney General, ``Federal Law 
Protections for Religious Liberty'' (Oct. 6, 2017) (describing 
Federal law protections for religious liberty).

    (2) A faith-based organization that applies for or receives a 
subgrant from a State under a State-Administered Formula Grant program 
of the Department may, among other things--
    (i) Retain religious terms in its name;
    (ii) Continue to carry out its mission, including the definition, 
development, practice, and expression of its religious beliefs;
    (iii) Use its facilities to provide services without concealing, 
removing, or altering religious art, icons, scriptures, or other 
symbols from these facilities;
    (iv) Select its board members and employees on the basis of their 
acceptance of or adherence to the religious tenets of the organization; 
and
    (v) Include religious references in its mission statement and other 
chartering or governing documents.
    (e) An organization that receives any Federal financial assistance 
under a program of the Department shall not discriminate against a 
beneficiary or prospective beneficiary in the provision of program 
services or in outreach activities on the basis of religion or 
religious belief, a refusal to hold a religious belief, or refusal to 
attend or participate in a religious practice. However, an organization 
that participates in a program funded by indirect financial assistance 
need not modify its program activities to accommodate a beneficiary who 
chooses to expend the indirect aid on the organization's program and 
may require attendance at all activities that are fundamental to the 
program.

[[Page 82130]]

    (f) If a State or subgrantee contributes its own funds in excess of 
those funds required by a matching or grant agreement to supplement 
federally funded activities, the State or subgrantee has the option to 
segregate those additional funds or commingle them with the funds 
required by the matching requirements or grant agreement. However, if 
the additional funds are commingled, this section applies to all of the 
commingled funds.
    (g) A religious organization's exemption from the Federal 
prohibition on employment discrimination on the basis of religion, in 
section 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 2000e-1, is 
not forfeited when the organization receives Federal financial 
assistance from the Department. An organization qualifying for such 
exemption may select its employees on the basis of their acceptance of 
or adherence to the religious tenets of the organization.
    (h) The Department shall not construe these provisions in such a 
way as to advantage or disadvantage faith-based organizations 
affiliated with historic or well-established religions or sects in 
comparison with other religions or sects.

0
15. Section 76.53 is added to subpart A to read as follows:


Sec.  76.53   Severability.

    If any provision of this subpart or its application to any person, 
act, or practice is held invalid, the remainder of the subpart or the 
application of its provisions to any person, act, or practice shall not 
be affected thereby.


Sec.  76.712  [Removed and Reserved]

0
16. Section 76.712 is removed and reserved.


Sec.  76.713  [Removed and Reserved]

0
17. Section 76.713 is removed and reserved.

0
18. Section 76.714 is revised to read as follows:


Sec.  76.714  Subgrants, contracts, and other agreements with faith-
based organizations.

    If a grantee under a State-Administered Formula Grant program of 
the Department has the authority under the grant or subgrant to select 
a private organization to provide services supported by direct Federal 
financial assistance under the program by subgrant, contract, or other 
agreement, the grantee must ensure compliance with applicable Federal 
requirements governing contracts, grants, and other agreements with 
faith-based organizations, including, as applicable, Sec. Sec.  76.52 
and 76.532 and 2 CFR 3474.15. If the pass-through entity is a 
nongovernmental organization, it retains all other rights of a 
nongovernmental organization under the program's statutory and 
regulatory provisions.

Department of Homeland Security

    For the reasons set forth in the preamble, DHS amends part 19 of 
title 6 of the CFR as follows:

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

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

    Authority:  5 U.S.C. 301; Pub. L. 107-296, 116 Stat. 2135 (6 
U.S.C. 101 et seq.); E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 
258; E.O. 13403, 71 FR 28543, 3 CFR, 2006 Comp., p. 228; E.O. 13498, 
74 FR 6533, 3 CFR, 2009 Comp., p. 219; E.O. 13559, 75 FR 71319, 3 
CFR, 2010 Comp., p. 273; and E.O. 13831, 83 FR 20715, 3 CFR, 2018 
Comp., p. 806; 42 U.S.C. 2000bb et seq.


0
20. Amend Sec.  19.2 by:
0
a. Revising the definition of ``Direct Federal financial assistance or 
Federal financial assistance provided directly'';
0
b. In the definition of ``Financial assistance,'' adding a sentence to 
the end;
0
c. Revising the definition of ``Indirect Federal financial assistance 
or Federal financial assistance provided indirectly''; and
0
d. Adding a definition for ``Religious exercise'' in alphabetical 
order.
    The revisions and addition read as follows:


Sec.  19.2   Definitions.

* * * * *
    Direct Federal financial assistance or Federal financial assistance 
provided directly means financial assistance received by an entity 
selected by the Government or an intermediary (under this part) to 
carry out a service (e.g., by contract, grant, or cooperative 
agreement). References to ``Federal financial assistance'' will be 
deemed to be references to direct Federal financial assistance, unless 
the referenced assistance meets the definition of ``indirect Federal 
financial assistance'' or ``Federal financial assistance provided 
indirectly''.
* * * * *
    Financial assistance * * * Financial assistance does not include a 
tax credit, deduction, exemption, guaranty contract, or the use of any 
assistance by any individual who is the ultimate beneficiary under any 
such program.
    Indirect Federal financial assistance or Federal financial 
assistance provided indirectly means financial assistance received by a 
service provider when the service provider is paid for services 
rendered by means of a voucher, certificate, or other means of 
government-funded payment provided to a beneficiary who is able to make 
a choice of a service provider. Federal financial assistance provided 
to an organization is considered ``indirect'' when:
    (1) The government program through which the beneficiary receives 
the voucher, certificate, or other similar means of government-funded 
payment is neutral toward religion; and
    (2) The organization receives the assistance as a result of a 
genuine, independent choice of the beneficiary.
* * * * *
    Religious exercise has the meaning given to the term in 42 U.S.C. 
2000cc-5(7)(A).
* * * * *

0
21. Amend Sec.  19.3 by revising paragraphs (a), (b), and (e) and 
adding paragraph (f) to read as follows:


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

    (a) Faith-based organizations are eligible, on the same basis as 
any other organization and considering any religious accommodations 
appropriate under the Constitution or other provisions of Federal law, 
including but not limited to 42 U.S.C. 2000bb et seq., 42 U.S.C. 238n, 
42 U.S.C. 18113, 42 U.S.C. 2000e-1(a) and 2000e-2(e), 42 U.S.C. 
12113(d), and the Weldon Amendment, to seek and receive direct 
financial assistance from DHS for social service programs or to 
participate in social service programs administered or financed by DHS.
    (b) Neither DHS, nor a State or local government, nor any other 
entity that administers any social service program supported by direct 
financial assistance from DHS, shall discriminate for or against an 
organization on the basis of the organization's religious motivation, 
character, affiliation, or exercise. For purposes of this part, to 
discriminate against an organization on the basis of the organization's 
religious exercise means to disfavor an organization, including by 
failing to select an organization, disqualifying an organization, or 
imposing any condition or selection criterion that otherwise disfavors 
or penalizes an organization in the selection process or has such an 
effect:
    (1) Because of conduct that would not be considered grounds to 
disfavor a secular organization,

[[Page 82131]]

    (2) Because of conduct that must or could be granted an appropriate 
accommodation in a manner consistent with RFRA (42 U.S.C. 2000bb 
through 2000bb-4) or the Religion Clauses of the First Amendment to the 
Constitution; or
    (3) Because of the actual or suspected religious motivation of the 
organization's religious exercise.
* * * * *
    (e) All organizations that participate in DHS social service 
programs, including faith-based organizations, must carry out eligible 
activities in accordance with all program requirements, subject to any 
reasonable religious accommodation, and other applicable requirements 
governing the conduct of DHS-funded activities, including those 
prohibiting the use of direct financial assistance from DHS to engage 
in explicitly religious activities. No grant document, agreement, 
covenant, memorandum of understanding, policy, or regulation that is 
used by DHS or an intermediary in administering financial assistance 
from DHS shall disqualify a faith-based organization from participating 
in DHS's social service programs because such organization is motivated 
or influenced by religious faith to provide social services or because 
of its religious character or affiliation, or on grounds that 
discriminate against an organization on the basis of the organization's 
religious exercise, as defined in this part.
    (f) No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation used by DHS or an intermediary in 
administering financial assistance from DHS shall require faith-based 
organizations to provide assurances or notices where they are not 
required of non-faith-based organizations. Any restrictions on the use 
of grant funds shall apply equally to faith-based and non-faith-based 
organizations.

0
22. Amend Sec.  19.4 by revising paragraphs (b) and (c) to read as 
follows:


Sec.  19.4   Explicitly religious activities.

* * * * *
    (b) Organizations receiving direct financial assistance from DHS 
for social service programs are free to engage in explicitly religious 
activities, but such activities must be offered separately, in time or 
location, from the programs or services funded with direct financial 
assistance from DHS, and participation must be voluntary for 
beneficiaries of the programs or services funded with such assistance.
    (c) All organizations that participate in DHS social service 
programs, including faith-based organizations, must carry out eligible 
activities in accordance with all program requirements, subject to any 
religious accommodations appropriate under the Constitution or other 
provisions of Federal law, including but not limited to 42 U.S.C. 
2000bb et seq., 42 U.S.C. 238n, 42 U.S.C. 18113, 42 U.S.C. 2000e-1(a) 
and 2000e-2(e), 42 U.S.C. 12113(d), and the Weldon Amendment, and in 
accordance with all other applicable requirements governing the conduct 
of DHS-funded activities, including those prohibiting the use of direct 
financial assistance from DHS to engage in explicitly religious 
activities. No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by DHS or a State or 
local government in administering financial assistance from DHS shall 
disqualify a faith-based organization from participating in DHS's 
social service programs because such organization is motivated or 
influenced by religious faith to provide social services or because of 
its religious character or affiliation, or on grounds that discriminate 
against an organization on the basis of the organization's religious 
exercise, as defined in this part.
* * * * *


Sec.  19.5   [Amended]

0
23. Amend Sec.  19.5 in the last sentence by removing ``organization's 
program'' and adding in its place ``organization's program and may 
require attendance at all activities that are fundamental to the 
program''.

0
24. Revise Sec.  19.6 to read as follows:


Sec.  19.6   How to prove nonprofit status.

    In general, DHS does not require that a recipient, including a 
faith-based organization, obtain tax-exempt status under section 
501(c)(3) of the Internal Revenue Code to be eligible for funding under 
DHS social service programs. Many grant programs, however, do require 
an organization to be a nonprofit organization in order to be eligible 
for funding. Funding announcements and other grant application 
solicitations for social service programs that require organizations to 
have nonprofit status will specifically so indicate in the eligibility 
section of the solicitation. In addition, any solicitation for social 
service programs that requires an organization to maintain tax-exempt 
status will expressly state the statutory authority for requiring such 
status. Recipients should consult with the appropriate DHS program 
office to determine the scope of any applicable requirements. In DHS 
social service programs in which an applicant for funding must show 
that it is a nonprofit organization, the applicant may do so by any of 
the following means:
    (a) Proof that the Internal Revenue Service currently recognizes 
the applicant as an organization to which contributions are tax 
deductible under section 501(c)(3) of the Internal Revenue Code;
    (b) A statement from a State or other governmental taxing body or 
the State secretary of State certifying that:
    (1) The organization is a nonprofit organization operating within 
the State; and
    (2) No part of its net earnings may benefit any private shareholder 
or individual;
    (c) A certified copy of the applicant's certificate of 
incorporation or similar document that clearly establishes the 
nonprofit status of the applicant;
    (d) Any item described in paragraphs (a) through (c) of this 
section if that item applies to a State or national parent 
organization, together with a statement by the State or parent 
organization that the applicant is a local nonprofit affiliate; or
    (e) For an entity that holds a sincerely held religious belief that 
it cannot apply for a determination as an entity that is tax-exempt 
under section 501(c)(3) of the Internal Revenue Code, evidence 
sufficient to establish that the entity would otherwise qualify as a 
nonprofit organization under paragraphs (a) through (d) of this 
section.


Sec.  19.7   [Removed and Reserved]

0
25. Remove and reserve Sec.  19.7.

0
26. Revise Sec.  19.8 to read as follows:


Sec.  19.8  Independence of faith-based organizations.

    (a) A faith-based organization that applies for, or participates 
in, a social service program supported with Federal financial 
assistance will retain its autonomy; right of expression; religious 
character; authority over its governance; and independence from 
Federal, State, and local governments; and may continue to carry out 
its mission, including the definition, development, practice, and 
expression of its religious beliefs, provided that it does not use 
direct Federal financial assistance contrary to Sec.  19.4.
    (b) Faith-based organizations may use space in their facilities to 
provide social services using financial assistance from DHS without 
removing, concealing, or altering religious articles, texts, art, or 
symbols.
    (c) A faith-based organization using financial assistance from DHS 
for social

[[Page 82132]]

service programs retains its authority over its internal governance, 
and it may retain religious terms in its organization's name, select 
its board members on the basis of their acceptance of or adherence to 
the religious tenets of the organization, and include religious 
references in its organization's mission statements and other governing 
documents.

0
27. Add Sec.  19.11 to read as follows:


Sec.  19.11   Nondiscrimination among faith-based organizations.

    Neither DHS nor any State or local government or other intermediary 
receiving funds under any DHS social service program shall construe 
these provisions in such a way as to advantage or disadvantage faith-
based organizations affiliated with historic or well-established 
religions or sects in comparison with other religions or sects.

0
28. Revise appendix A to part 19 to read as follows:

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

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

0
29. Add appendix B to part 19 to read as follows:

Appendix B to Part 19: Notice of Award or Contract

    (a) A faith-based organization that participates in this program 
retains its independence from the Government and may continue to 
carry out its mission consistent with religious freedom and 
conscience protections in Federal law, including the Free Speech and 
Free Exercise Clauses of the Constitution, 42 U.S.C. 2000bb et seq., 
42 U.S.C. 238n, 42 U.S.C. 18113, 42 U.S.C. 2000e-1(a) and 2000e-
2(e), 42 U.S.C. 12113(d), and the Weldon Amendment, among others. 
Religious accommodations may also be sought under many of these 
religious freedom and conscience protection laws.
    (b) A faith-based organization may not use direct financial 
assistance from DHS to support or engage in any explicitly religious 
activities except when consistent with the Establishment Clause and 
any other applicable requirements. Such an organization also may 
not, in providing services funded by DHS, discriminate against a 
program beneficiary or prospective program beneficiary on the basis 
of religion, a religious belief, a refusal to hold a religious 
belief, or a refusal to attend or participate in a religious 
practice.

Department of Agriculture

    For the reasons set forth in the preamble, USDA amends part 16 of 
title 7 of the CFR as follows:

PART 16--EQUAL OPPORTUNITY FOR RELIGIOUS ORGANIZATIONS

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

    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; 
E.O. 13559, 75 FR 71319, 3 CFR, 2010 Comp., p. 273; E.O. 13831, 83 
FR 20715, 3 CFR, 2018 Comp., p. 806; 42 U.S.C. 2000bb et seq.


0
31. Amend Sec.  16.1 by redesignating paragraph (b) as paragraph (c) 
and adding a new paragraph (b) to read as follows:


Sec.  16.1  Purpose and applicability.

* * * * *
    (b) The requirements established in this part do not prevent a USDA 
awarding agency or any State or local government or other intermediary 
from accommodating religion in a manner consistent with Federal law and 
the Religion Clauses of the First Amendment to the U.S. Constitution.
* * * * *

0
32. Revise Sec.  16.2 to read as follows:


Sec.  16.2  Definitions.

    As used in this part:
    Direct Federal financial assistance, Federal financial assistance 
provided directly, Direct funding, or Directly funded means financial 
assistance received by an entity selected by the Government or 
intermediary (under this part) to carry out a service (e.g., by 
contract, grant, loan agreement, or cooperative agreement). References 
to Federal financial assistance will be deemed to be references to 
direct Federal financial assistance, unless the referenced assistance 
meets the definition of indirect Federal financial assistance or 
Federal financial assistance provided indirectly. Except as otherwise 
provided by USDA regulation, the recipients of sub-grants that receive 
Federal financial assistance through State-administered programs (e.g., 
flow-through programs such as the National School Lunch Program 
authorized under the Richard B. Russell National School Lunch Act, 42 
U.S.C. 1751 et seq.) are not considered recipients of USDA indirect 
assistance. These recipients of sub-awards are considered recipients of 
USDA direct financial assistance.
    Discriminate against an organization on the basis of the 
organization's religious exercise means to disfavor an organization, 
including by failing to select an organization, disqualifying an 
organization, or imposing any condition or selection criterion that 
otherwise disfavors or penalizes an organization in the selection 
process or has such an effect:
    (1) Because of conduct that would not be considered grounds to 
disfavor a secular organization;
    (2) Because of conduct that must or could be granted an appropriate 
accommodation in a manner consistent with RFRA (42 U.S.C. 2000bb 
through 2000bb-4) or the Religion Clauses of the First Amendment to the 
Constitution; or
    (3) Because of the actual or suspected religious motivation of the 
organization's religious exercise.
    Explicitly religious activities include activities that involve 
overt religious content such as worship, religious instruction, or 
proselytization. Any such activities must be offered separately, in 
time or location, from the programs or services funded under the 
agency's grant or cooperative agreement, and participation must be 
voluntary for beneficiaries of the agency grant or cooperative 
agreement-funded programs and services.
    Federal financial assistance does not include a guarantee or 
insurance, regulated programs, licenses, procurement contracts at 
market value, or programs that provide direct benefits.
    Indirect Federal financial assistance or Federal financial 
assistance provided indirectly refers to situations where the choice of 
the service provider is placed in the hands of the beneficiary, and the 
cost of that service is paid through a voucher, certificate, or other 
similar means of government-funded payment

[[Page 82133]]

in accordance with the First Amendment of the U.S. Constitution.
    Intermediary means an entity, including a non-governmental 
organization, acting under a contract, grant, or other agreement with 
the Federal Government or with a State or local government that accepts 
USDA direct assistance and distributes that assistance to other 
organizations that, in turn, provide government-funded services. If an 
intermediary, acting under a contract, grant, or other agreement with 
the Federal Government or with a State or local government that is 
administering a program supported by Federal financial assistance, is 
given the authority under the contract, grant, or agreement to select 
non-governmental organizations to provide services funded by the 
Federal Government, the intermediary must ensure compliance by the 
recipient of a contract, grant, or agreement with this part and any 
implementing rules or guidance. If the intermediary is a non-
governmental organization, it retains all other rights of a non-
governmental organization under the program's statutory and regulatory 
provisions.
    Religious exercise has the meaning given to the term in 42 U.S.C. 
2000cc-5(7)(A).

0
33. Revise Sec.  16.3 to read as follows:


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

    (a)(1) A faith-based or religious organization is eligible, on the 
same basis as any other organization, and considering a religious 
accommodation, to access and participate in any USDA assistance 
programs for which it is otherwise eligible. Neither the USDA awarding 
agency nor any State or local government or other intermediary 
receiving funds under any USDA awarding agency program or service 
shall, in the selection of service providers, discriminate against an 
organization on the basis of the organization's religious character, 
affiliation, or exercise.
    (2) Additionally, decisions about awards of USDA direct assistance 
or USDA indirect assistance must be free from political interference 
and must be made on the basis of merit, not on the basis of the 
religious affiliation of a recipient organization or lack thereof. 
Notices or announcements of award opportunities and notices of award or 
contracts shall include language substantially similar to that in 
appendices A and B to this part.
    (b) A faith-based or religious organization that participates in 
USDA assistance programs will retain its autonomy; right of expression; 
religious character; authority over its governance; and independence 
from Federal, State, and local governments, and may continue to carry 
out its mission, including the definition, development, practice, and 
expression of its religious beliefs, provided that it does not use USDA 
direct assistance to support any ineligible purposes, including 
explicitly religious activities that involve overt religious content 
such as worship, religious instruction, or proselytization. A faith-
based or religious organization may:
    (1) Use its facilities to provide services and programs funded with 
financial assistance from USDA awarding agency without concealing, 
altering, or 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 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 participates 
in a USDA assistance program.
    (d) A faith-based or religious organization is eligible to access 
and participate in USDA assistance programs on the same basis as any 
other organization. No grant document, agreement, covenant, memorandum 
of understanding, policy, or regulation that is used by a USDA awarding 
agency or a State or local government in administering Federal 
financial assistance from the USDA awarding agency shall require faith-
based or religious organizations to provide assurances or notices where 
they are not required of non-religious organizations.
    (1) Any restrictions on the use of grant funds shall apply equally 
to religious and non-religious organizations.
    (2) All organizations that participate in USDA awarding agency 
programs or services, including organizations with religious character 
or affiliations, must carry out eligible activities in accordance with 
all program requirements and other applicable requirements governing 
the conduct of USDA awarding agency-funded activities, including those 
prohibiting the use of direct financial assistance to engage in 
explicitly religious activities.
    (3) No grant or agreement, document, loan agreement, covenant, 
memorandum of understanding, policy or regulation that is used by the 
USDA awarding agency or a State or local government in administering 
financial assistance from the USDA awarding agency shall disqualify 
faith-based or religious organizations from participating in the USDA 
awarding agency's programs or services because such organizations are 
motivated by or influenced by religious faith, or because of their 
religious character or affiliation, or on grounds that discriminate 
against organizations on the basis of the organizations' religious 
exercise, as defined in this part.
    (e) If an intermediary, acting under a contract, grant, or other 
agreement with the Federal Government or with a State or local 
government that is administering a program supported by Federal 
financial assistance, is delegated the authority under the contract, 
grant, or agreement to select non-governmental organizations to provide 
services funded by the Federal Government, the intermediary must ensure 
compliance by the subrecipient with the provisions of this part and any 
implementing regulations or guidance. If the intermediary is a non-
governmental organization, it retains all other rights of a non-
governmental organization under the program's statutory and regulatory 
provisions.
    (f)(1) USDA direct financial assistance may be used for the 
acquisition, construction, or rehabilitation of structures to the 
extent authorized by the applicable program statutes and regulations. 
USDA direct assistance may not be used for the acquisition, 
construction, or rehabilitation of structures to the extent that those 
structures are used by the USDA funding recipients for explicitly 
religious activities. Where a structure is used for both eligible and 
ineligible purposes, USDA direct financial assistance may not exceed 
the cost of those portions of the acquisition, construction, or 
rehabilitation that are attributable to eligible activities in 
accordance with the cost accounting requirements applicable to USDA 
funds. Sanctuaries, chapels, or other rooms that an organization 
receiving direct assistance from USDA uses as its principal place of 
worship, however, are ineligible for USDA-funded improvements. 
Disposition of real property after the term of the grant or any change 
in use of the property during the term of the grant is subject to 
government-wide regulations governing real property disposition (see 2 
CFR part 400).
    (2) Any use of USDA direct financial assistance for equipment, 
supplies,

[[Page 82134]]

labor, indirect costs, and the like shall be prorated between the USDA 
program or activity and any ineligible 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 housing who are receiving USDA direct assistance funds 
from engaging in religious exercise within such housing.
    (g) If a recipient contributes its own funds in excess of those 
funds required by a matching or grant agreement to supplement USDA 
awarding agency supported activities, the recipient has the option to 
segregate those additional funds or commingle them with the Federal 
award funds. If the funds are commingled, the provisions of this 
section shall apply to all of the commingled funds in the same manner, 
and to the same extent, as the provisions apply to the Federal funds. 
With respect to the matching funds, the provisions of this section 
apply irrespective of whether such funds are commingled with Federal 
funds or segregated.

0
34. Revise Sec.  16.4 to read as follows:


Sec.  16.4   Responsibilities of participating organizations.

    (a) Any organization that receives direct or indirect Federal 
financial assistance shall not, with respect to services, or, in the 
case of direct Federal financial assistance, outreach activities funded 
by such financial assistance, discriminate against a current or 
prospective program beneficiary on the basis of religion, religious 
belief, a refusal to hold a religious belief, or a refusal to attend or 
participate in a religious practice. However, an organization that 
participates in a program funded by indirect financial assistance need 
not modify its program activities to accommodate a beneficiary who 
chooses to expend the indirect aid on the organization's program and 
may require attendance at all activities that are fundamental to the 
program.
    (b) Organizations that receive USDA direct assistance under any 
USDA program may not engage in explicitly religious activities, 
including activities that involve overt religious content such as 
worship, religious instruction, or proselytization, as part of the 
programs or services funded by USDA direct assistance. If an 
organization conducts such activities, the activities must be offered 
separately, in time or location, from the programs or services 
supported with USDA direct assistance, and participation must be 
voluntary for beneficiaries of the programs or services supported with 
such USDA direct assistance. The use of indirect Federal financial 
assistance is not subject to this restriction. Nothing in this part 
restricts the Department's authority under applicable Federal law to 
fund activities that can be directly funded by the Government 
consistent with the Establishment Clause.
    (c) Nothing in paragraph (a) or (b) of this section shall be 
construed to prevent faith-based organizations that receive USDA 
assistance under the Richard B. Russell National School Lunch Act, 42 
U.S.C. 1751 et seq., the Child Nutrition Act of 1966, 42 U.S.C. 1771 et 
seq., or USDA international school feeding programs from considering 
religion in their admissions practices or from imposing religious 
attendance or curricular requirements at their schools.

0
35. Revise Sec.  16.5 to read as follows:


Sec.  16.5   Severability.

    To the extent that any provision of this regulation is declared 
invalid by a court of competent jurisdiction, USDA intends for all 
other provisions that are capable of operating in the absence of the 
specific provision that has been invalidated to remain in effect.


Sec.  16.6   [Removed]

0
36. Remove Sec.  16.6.

0
37. Revise appendix A to part 16 to read as follows:

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

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

0
38. Add appendix B to part 16 to read as follows:

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

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

Agency for International Development

    For the reasons set forth in the preamble, USAID amends part 205 of 
title 22 of the CFR as follows:

PART 205--PARTICIPATION BY RELIGIOUS ORGANIZATIONS IN USAID 
PROGRAMS

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

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


0
40. In Sec.  205.1, revise paragraphs (a), (c), (f), (g) and add 
paragraph (l) to read as follows:


Sec.  205.1   Grants and cooperative agreements.

    (a) Faith-based organizations are eligible, on the same basis as 
any other organization and considering any reasonable accommodation, as 
is consistent with Federal law, the Attorney General's Memorandum of 
October 6, 2018 (Federal Law Protections for Religious Liberty), and 
the Religion Clauses of the First Amendment to the U.S. Constitution, 
to participate in any USAID program for which they are otherwise 
eligible. In the selection of service-providers, neither USAID nor 
entities that make and administer sub-awards of USAID funds shall 
discriminate for, or against, an organization on the basis of the 
organization's religious character,

[[Page 82135]]

affiliation, or exercise. For purposes of this part, to discriminate 
against an organization on the basis of the organization's religious 
exercise means to disfavor an organization, including by failing to 
select an organization, disqualifying an organization, or imposing any 
condition or selection criterion that otherwise disfavors or penalizes 
an organization in the selection process or has such an effect:
    (1) Because of conduct that would not be considered grounds to 
disfavor a secular organization;
    (2) Because of conduct that must or could be granted an appropriate 
accommodation in a manner consistent with RFRA (42 U.S.C. 2000bb 
through 2000bb-4) or the Religion Clauses of the First Amendment to the 
Constitution; or
    (3) Because of the actual or suspected religious motivation of the 
organization's religious exercise.
    (4) Notices or announcements of award opportunities shall include 
language to indicate that faith-based organizations are eligible on the 
same basis as any other organization and subject to the protections and 
requirements of Federal law. As used in this section, the term 
``program'' refers to federally funded USAID grants and cooperative 
agreements, including subgrants and sub-agreements. The term also 
includes grants awarded under contracts. As used in this section, the 
term ``grantee'' includes a recipient of a grant or a signatory to a 
cooperative agreement, as well as sub-recipients of USAID assistance 
under grants, cooperative agreements, and contracts.
* * * * *
    (c) A faith-based organization that applies for, or participates 
in, USAID-funded programs or services (including through a prime award 
or sub-award) will retain its autonomy, religious character, and 
independence, and may continue to carry out its mission consistent with 
religious freedom protections in Federal law, including the definition, 
development, practice, and expression of its religious beliefs, 
provided that it does not use direct financial assistance from USAID 
(including through a prime award or sub-award) to support or engage in 
any explicitly religious activities (including activities that involve 
overt religious content such as worship, religious instruction, or 
proselytization), or in any other manner prohibited by law. Among other 
things, a faith-based organization that receives financial assistance 
from USAID may use space in its facilities, without concealing, 
altering, or removing religious art, icons, scriptures, or other 
religious symbols. In addition, a faith-based organization that 
receives financial assistance from USAID retains its authority over its 
internal governance, and it may retain religious terms in its 
organization's name, select its board members on a religious basis, and 
include religious references in its organization's mission statements 
and other governing documents.
* * * * *
    (f) No grant document, contract, agreement, covenant, memorandum of 
understanding, policy, or regulation used by USAID shall require faith-
based organizations to provide assurances or notices where the Agency 
does not require them of non-faith-based organizations. Any 
restrictions on the use of grant funds shall apply equally to faith-
based and non-faith-based organizations. All organizations that 
participate in USAID's programs (including through a prime award or 
sub-award), including faith-based ones, must carry out eligible 
activities in accordance with all program requirements and other 
applicable requirements that govern the conduct of USAID-funded 
activities, including those that prohibit the use of direct financial 
assistance from USAID to engage in explicitly religious activities. No 
grant document, contract, agreement, covenant, memorandum of 
understanding, policy, or regulation used by USAID shall disqualify 
faith-based organizations from participating in USAID's programs 
because such organizations are motivated or influenced by religious 
faith to provide social services or other assistance, or because of 
their religious character or affiliation, or on grounds that 
discriminate against organizations on the basis of the organizations' 
religious exercise, as defined in this part.
    (g) A religious organization does not forfeit its exemption from 
the Federal prohibition on employment discrimination on the basis of 
religion, set forth in section 702(a) of the Civil Rights Act of 1964, 
42 U.S.C. 2000e-1, when the organization receives financial assistance 
from USAID. An organization that qualifies for such exemption may 
select its employees on the basis of their acceptance of, and/or 
adherence to, the religious tenets of the organization.
* * * * *
    (l) Nothing in this section shall be construed in such a way as to 
advantage, or disadvantage, faith-based organizations affiliated with 
historic or well-established religions or sects in comparison with 
other religions or sects.

Department of Housing and Urban Development

    For the reasons set forth in the preamble, HUD amends parts 5, 92, 
and 578 of title 24 of the CFR as follows:

PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

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

    Authority:  12 U.S.C. 1701x; 42 U.S.C. 1437a, 1437c, 1437f, 
1437n, 3535(d); Sec. 327, Pub. L. 109-115, 119 Stat. 2396; Sec. 607, 
Pub. L. 109-162, 119 Stat. 3051 (42 U.S.C. 14043e et seq.); E.O. 
13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 258; E.O. 13559, 75 FR 
71319, 3 CFR, 2010 Comp., p. 273; E.O 13831, 83 FR 20715, 3 CFR, 
2018 Comp., p. 806; 42 U.S.C. 2000bb et seq.


0
42. Amend Sec.  5.109 by:
0
a. Revising paragraph (a);
0
b. In paragraph (b), revising the definition of ``Indirect Federal 
financial assistance'' and adding a definition for ``Religious 
exercise'' in alphabetical order;
0
c. Revising paragraphs (c) and (d);
0
d. Adding a sentence to the end of paragraph (e);
0
e. Removing paragraph (g);
0
f. Redesignating paragraph (h) as paragraph (g) and revising it; and
0
g. Adding a new paragraph (h) and paragraphs (l) and (m).
    The revisions and additions read as follows:


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

    (a) Purpose. Consistent with Executive Order 13279, entitled 
``Equal Protection of the Laws for Faith-Based and Community 
Organizations,'' as amended by Executive Order 13559, entitled 
``Fundamental Principles and Policymaking Criteria for Partnerships 
With Faith-Based and Other Neighborhood Organizations,'' and as amended 
by Executive Order 13831, entitled ``Establishment of a White House 
Faith and Opportunity Initiative,'' this section describes requirements 
for ensuring the equal participation of faith-based organizations in 
HUD programs and activities. These requirements apply to all HUD 
programs and activities, including all of HUD's Native American 
Programs, except as may be otherwise noted in the respective program 
regulations in title 24 of the Code of Federal Regulations (CFR), or 
unless inconsistent with certain HUD program authorizing statutes.
    (b) * * *
    Indirect Federal financial assistance means Federal financial 
assistance

[[Page 82136]]

provided when the choice of the provider is placed in the hands of the 
beneficiary, and the cost of that service is paid through a voucher, 
certificate, or other similar means of Government-funded payment. 
Federal financial assistance provided to an organization is considered 
indirect when the Government program through which the beneficiary 
receives the voucher, certificate, or other similar means of 
Government-funded payment is neutral toward religion meaning that it is 
available to providers without regard to the religious or non-religious 
nature of the institution and there are no program incentives that 
deliberately skew for or against religious or secular providers; and 
the organization receives the assistance as a result of a genuine, 
independent choice of the beneficiary.
* * * * *
    Religious exercise has the meaning given to the term in 42 U.S.C. 
2000cc-5(7)(A).
    (c) Equal participation of faith-based organizations in HUD 
programs and activities. Faith-based organizations are eligible, on the 
same basis as any other organization, to participate in any HUD program 
or activity, considering any permissible accommodations, particularly 
under the Religious Freedom Restoration Act. Neither the Federal 
Government, nor a State, tribal or local government, nor any other 
entity that administers any HUD program or activity, shall discriminate 
against an organization on the basis of the organization's religious 
character, affiliation, or lack thereof, or on the basis of the 
organization's religious exercise. For purposes of this part, to 
discriminate against an organization on the basis of the organization's 
religious exercise means to disfavor an organization, including by 
failing to select an organization, disqualifying an organization, or 
imposing any condition or selection criterion that otherwise disfavors 
or penalizes an organization in the selection process or has such an 
effect:
    (1) Because of conduct that would not be considered grounds to 
disfavor a secular organization;
    (2) Because of conduct that must or could be granted an appropriate 
accommodation in a manner consistent with RFRA (42 U.S.C. 2000bb 
through 2000bb-4) or the Religion Clauses of the First Amendment to the 
Constitution; or
    (3) Because of the actual or suspected religious motivation of the 
organization's religious exercise.
    (4) In addition, decisions about awards of Federal financial 
assistance must be free from political interference or even the 
appearance of such interference and must be made on the basis of merit, 
not based on the organization's religious character, affiliation, or 
lack thereof, or based on the organization's religious exercise. 
Notices of funding availability, grant agreements, and cooperative 
agreements shall include language substantially similar to that in 
appendix A to this subpart, where faith-based organizations are 
eligible for such opportunities.
    (d) Independence and identity of faith-based organizations. (1) A 
faith-based organization that applies for, or participates in, a HUD 
program or activity supported with Federal financial assistance retains 
its autonomy, right of expression, religious character, authority over 
its governance, and independence, and may continue to carry out its 
mission, including the definition, development, practice, and 
expression of its religious beliefs. A faith-based organization that 
receives Federal financial assistance from HUD does not lose the 
protections of law.

    Note 1 to Paragraph (d)(1):  Memorandum for All Executive 
Departments and Agencies, From the Attorney General, ``Federal Law 
Protections for Religious Liberty'' (Oct. 6, 2017) (describing 
Federal law protections for religious liberty).

    (2) A faith-based organization that receives direct Federal 
financial assistance may use space (including a sanctuary, chapel, 
prayer hall, or other space) in its facilities (including a temple, 
synagogue, church, mosque, or other place of worship) to carry out 
activities under a HUD program without concealing, altering, or 
removing religious art, icons, scriptures, or other religious symbols. 
In addition, a faith-based organization participating in a HUD program 
or activity retains its authority over its internal governance, and may 
retain religious terms in its organization's name, select its board 
members and employees on the basis of their acceptance of or adherence 
to the religious tenets of the organization consistent with paragraph 
(i) of this section), and include religious references in its 
organization's mission statements and other governing documents.
    (e) * * * The use of indirect Federal financial assistance is not 
subject to this restriction. Nothing in this part restricts HUD's 
authority under applicable Federal law to fund activities, that can be 
directly funded by the Government consistent with the Establishment 
Clause of the U.S. Constitution.
* * * * *
    (g) Nondiscrimination requirements. Any organization that receives 
Federal financial assistance under a HUD program or activity shall not, 
in providing services with such assistance or carrying out activities 
with such assistance, discriminate against a beneficiary or prospective 
beneficiary on the basis of religion, religious belief, a refusal to 
hold a religious belief, or a refusal to attend or participate in a 
religious practice. However, an organization that participates in a 
program funded by indirect Federal financial assistance need not modify 
its program or activities to accommodate a beneficiary who chooses to 
expend the indirect aid on the organization's program and may require 
attendance at all activities that are fundamental to the program.
    (h) No additional assurances from faith-based organizations. A 
faith-based organization is not rendered ineligible by its religious 
nature to access and participate in HUD programs. Absent regulatory or 
statutory authority, no notice of funding availability, grant 
agreement, cooperative agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by HUD or a recipient 
or intermediary in administering Federal financial assistance from HUD 
shall require otherwise eligible faith-based organizations to provide 
assurances or notices where they are not required of similarly situated 
secular organizations. All organizations that participate in HUD 
programs or activities, including organizations with religious 
character or affiliations, must carry out eligible activities in 
accordance with all program requirements, subject to any required or 
appropriate accommodation, particularly under the Religious Freedom 
Restoration Act, and other applicable requirements governing the 
conduct of HUD-funded activities, including those prohibiting the use 
of direct financial assistance to engage in explicitly religious 
activities. No notice of funding availability, grant agreement, 
cooperative agreement, covenant, memorandum of understanding, policy, 
or regulation that is used by HUD or a recipient or intermediary in 
administering financial assistance from HUD shall disqualify otherwise 
eligible faith-based organizations from participating in HUD's programs 
or activities because such organization is motivated or influenced by 
religious faith to provide such programs and activities, or because of 
its religious character or affiliation, or on grounds that discriminate 
against an organization on the basis of the

[[Page 82137]]

organization's religious exercise, as defined in this part.
* * * * *
    (l) Tax exempt organizations. In general, HUD does not require that 
a recipient, including a faith-based organization, obtain tax-exempt 
status under section 501(c)(3) of the Internal Revenue Code to be 
eligible for funding under HUD programs. Many grant programs, however, 
do require an organization to be a nonprofit organization in order to 
be eligible for funding. Notices of funding availability that require 
organizations to have nonprofit status will specifically so indicate in 
the eligibility section of the notice of funding availability. In 
addition, if any notice of funding availability requires an 
organization to maintain tax-exempt status, it will expressly state the 
statutory authority for requiring such status. Applicants should 
consult with the appropriate HUD program office to determine the scope 
of any applicable requirements. In HUD programs in which an applicant 
must show that it is a nonprofit organization but this is not 
statutorily defined, the applicant may do so by any of the following 
means:
    (1) Proof that the Internal Revenue Service currently recognizes 
the applicant as an organization to which contributions are tax 
deductible under section 501(c)(3) of the Internal Revenue Code;
    (2) A statement from a State or other governmental taxing body or 
the State secretary of State certifying that--
    (i) The organization is a nonprofit organization operating within 
the State; and
    (ii) No part of its net earnings may benefit any private 
shareholder or individual;
    (3) A certified copy of the applicant's certificate of 
incorporation or similar document that clearly establishes the 
nonprofit status of the applicant;
    (4) Any item described in paragraphs (l)(1) through (3) of this 
section, if that item applies to a State or national parent 
organization, together with a statement by the State or parent 
organization that the applicant is a local nonprofit affiliate; or
    (5) For an entity that holds a sincerely held religious belief that 
it cannot apply for a determination as an entity that is tax-exempt 
under section 501(c)(3) of the Internal Revenue Code, evidence 
sufficient to establish that the entity would otherwise qualify as a 
nonprofit organization under paragraphs (l)(1) through (4) of this 
section.
    (m) Rule of construction. Neither HUD nor any recipient or other 
intermediary receiving funds under any HUD program or activity shall 
construe these provisions in such a way as to advantage or disadvantage 
faith-based organizations affiliated with historic or well-established 
religions or sects in comparison with other religions or sects.

0
43. Add appendix A to subpart A of part 5 to read as follows:

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

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

PART 92--HOME INVESTMENT PARTNERSHIPS PROGRAM

0
44. The authority citation for part 92 continues to read as follows:

    Authority: 42 U.S.C. 3535(d), 12 U.S.C. 1701x and 4568.


Sec.  92.508   [Amended]

0
45. Amend Sec.  92.508 by removing paragraph (a)(2)(xiii).

Department of Justice

0
For the reasons set forth in the preamble, DOJ revises part 38 of title 
28 of the CFR to read as follows:

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

Sec.
38.1 Purpose.
38.2 Applicability and scope.
38.3 Definitions.
38.4 Policy.
38.5 Responsibilities.
38.6 Procedures.
38.7 Assurances.
38.8 Enforcement.

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

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

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


Sec.  38.1   Purpose.

    The purpose of this part is to implement Executive Order 13279, 
Executive Order 13559, and Executive Order 13831.


Sec.  38.2  Applicability and scope.

    (a) A faith-based organization that applies for, or participates 
in, a social service program supported with Federal financial 
assistance may retain its independence and may continue to carry out 
its mission, including the definition, development, practice, and 
expression of its religious beliefs, provided that it does not use 
direct Federal financial assistance, whether received through a prime 
award or sub-award, to support or engage in any explicitly religious 
activities, including activities that involve overt religious content 
such as worship, religious instruction, or proselytization.
    (b) The use of indirect Federal financial assistance is not subject 
to this restriction.
    (c) Nothing in this part restricts the Department's authority under 
applicable Federal law to fund activities, such as the provision of 
chaplaincy services, that can be directly funded by the Government 
consistent with the Establishment Clause.
    (d) To the extent that any provision of this regulation is declared 
invalid by a court of competent jurisdiction, the Department intends 
for all other provisions that are capable of operating in the absence 
of the specific provision that has been invalidated to remain in 
effect.


Sec.  38.3  Definitions.

    As used in this part:
    (a)(1) ``Direct Federal financial assistance'' or ``Federal 
financial

[[Page 82138]]

assistance provided directly'' refers to situations where the 
Government or an intermediary (under this part) selects the provider 
and either purchases services from that provider (e.g., via a contract) 
or awards funds to that provider to carry out a service (e.g., via a 
grant or cooperative agreement). In general, and except as provided in 
paragraph (a)(2) of this section, Federal financial assistance shall be 
treated as direct, unless it meets the definition of ``indirect Federal 
financial assistance'' or ``Federal financial assistance provided 
indirectly.''
    (2) Recipients of sub-grants that receive Federal financial 
assistance through State administering agencies or State-administered 
programs are recipients of ``direct Federal financial assistance'' (or 
recipients of ``Federal financial assistance provided directly'').
    (b) ``Indirect Federal financial assistance'' or ``Federal 
financial assistance provided indirectly'' refers to situations where 
the choice of the service provider is placed in the hands of the 
beneficiary, and the cost of that service is paid through a voucher, 
certificate, or other similar means of government-funded payment. 
Federal financial assistance is considered ``indirect'' when:
    (1) The government program through which the beneficiary receives 
the voucher, certificate, or other similar means of government-funded 
payment is neutral toward religion and
    (2) The service provider receives the assistance as a result of an 
independent choice of the beneficiary, not a choice of the Government.
    (c)(1) ``Intermediary'' or ``pass-through entity'' means an entity, 
including a nonprofit or nongovernmental organization, acting under a 
contract, grant, or other agreement with the Federal Government or with 
a State or local government, such as a State administering agency, that 
accepts Federal financial assistance as a primary recipient or grantee 
and distributes that assistance to other organizations that, in turn, 
provide government-funded social services.
    (2) When an intermediary, such as a State administering agency, 
distributes Federal financial assistance to other organizations, it 
replaces the Department as the awarding entity. The intermediary 
remains accountable for the Federal financial assistance it disburses 
and, accordingly, must ensure that any providers to which it disburses 
Federal financial assistance also comply with this part.
    (d) ``Department program'' refers to a grant, contract, or 
cooperative agreement funded by a discretionary, formula, or block 
grant program administered by or from the Department.
    (e) ``Grantee'' includes a recipient of a grant, a signatory to a 
cooperative agreement, or a contracting party.
    (f) The ``Office for Civil Rights'' refers to the Office for Civil 
Rights in the Department's Office of Justice Programs.
    (g) ``Religious exercise'' has the meaning given to the term in 42 
U.S.C. 2000cc-5(7)(A).


Sec.  38.4   Policy.

    (a) Grants (formula and discretionary), contracts, and cooperative 
agreements. Faith-based organizations are eligible, on the same basis 
as any other organization and considering any religious accommodations 
appropriate under the Constitution or other provisions of Federal law, 
including but not limited to 42 U.S.C. 2000bb et seq., 42 U.S.C. 38n, 
42 U.S.C. 18113, 42 U.S.C. 2000e-1(a) and 2000e-2(e), 42 U.S.C. 
12113(d), and the Weldon Amendment, to participate in any Department 
program for which they are otherwise eligible. Neither the Department 
nor any State or local government receiving funds under any Department 
program shall, in the selection of service providers, discriminate for 
or against an organization on the basis of the organization's religious 
character or affiliation, or lack thereof, or on the basis of the 
organization's religious exercise. For purposes of this part, to 
discriminate against an organization on the basis of the organization's 
religious exercise means to disfavor an organization, including by 
failing to select an organization, disqualifying an organization, or 
imposing any condition or selection criterion that otherwise disfavors 
or penalizes an organization in the selection process or has such an 
effect:
    (1) Because of conduct that would not be considered grounds to 
disfavor a secular organization;
    (2) Because of conduct that must or could be granted an appropriate 
accommodation in a manner consistent with the Religious Freedom 
Restoration Act (42 U.S.C. 2000bb et seq.) or the Religion Clauses of 
the First Amendment to the Constitution; or
    (3) Because of the actual or suspected religious motivation of the 
organization's religious exercise.
    (b) Political or religious affiliation. Decisions about awards of 
Federal financial assistance must be free from political interference 
or even the appearance of such interference and must be made on the 
basis of merit, not on the basis of religion, religious belief, or lack 
thereof.


Sec.  38.5  Responsibilities.

    (a) Organizations that receive direct Federal financial assistance 
from the Department may not engage in explicitly religious activities, 
including activities that involve overt religious content such as 
worship, religious instruction, or proselytization, as part of the 
programs or services funded with direct Federal financial assistance 
from the Department. If an organization conducts such explicitly 
religious activities, the activities must be offered separately, in 
time or location, from the programs or services funded with direct 
Federal financial assistance from the Department, and participation 
must be voluntary for beneficiaries of the programs or services funded 
with such assistance.
    (b) A faith-based organization that participates in Department-
funded programs or services shall retain its autonomy; right of 
expression; religious character; and independence from Federal, State, 
and local governments, and may continue to carry out its mission, 
including the definition, practice, and expression of its religious 
beliefs, provided that it does not use direct Federal financial 
assistance from the Department to fund any explicitly religious 
activities, including activities that involve overt religious content 
such as worship, religious instruction, or proselytization. Among other 
things, a faith-based organization that receives Federal financial 
assistance from the Department may use space in its facilities without 
concealing, altering, or removing religious art, icons, messages, 
scriptures, or symbols. In addition, a faith-based organization that 
receives Federal financial assistance from the Department retains its 
authority over its internal governance, and it may retain religious 
terms in its name, select its board members on the basis of their 
acceptance of or adherence to the religious tenets of the organization, 
and include religious references in its mission statements and other 
governing documents.
    (c) Any organization that participates in programs funded by 
Federal financial assistance from the Department shall not, in 
providing services, discriminate against a program beneficiary or 
prospective program beneficiary on the basis of religion, a religious 
belief, a refusal to hold a religious belief, or a refusal to attend or 
participate in a religious practice. However, an organization that 
participates in a program funded by indirect Federal financial 
assistance need not modify its

[[Page 82139]]

program activities to accommodate a beneficiary who chooses to expend 
the indirect aid on the organization's program and may require 
attendance at all activities that are fundamental to the program.
    (d) No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that the Department or a State or 
local government uses in administering Federal financial assistance 
from the Department shall require faith-based or religious 
organizations to provide assurances or notices where they are not 
required of non-faith-based organizations. Any restrictions on the use 
of grant funds shall apply equally to faith-based and non-faith-based 
organizations. All organizations, including religious ones, that 
participate in Department programs must carry out all eligible 
activities in accordance with all program requirements, subject to any 
religious accommodations appropriate under the Constitution or other 
provisions of Federal law, including but not limited to 42 U.S.C. 
2000bb et seq., 42 U.S.C. 238n, 42 U.S.C. 18113, 42 U.S.C. 2000e-1(a) 
and 2000e-2(e), 42 U.S.C. 12113(d), and the Weldon Amendment, and other 
applicable requirements governing the conduct of Department-funded 
activities, including those prohibiting the use of direct Federal 
financial assistance from the Department to engage in explicitly 
religious activities. No grant, document, agreement, covenant, 
memorandum of understanding, policy, or regulation that is used by the 
Department or a State or local government in administering Federal 
financial assistance from the Department shall disqualify faith-based 
or religious organizations from participating in the Department's 
programs because such organizations are motivated or influenced by 
religious faith to provide social services, or because of their 
religious character or affiliation, or on grounds that discriminate 
against organizations on the basis of the organizations' religious 
exercise, as defined in this part.
    (e) A faith-based organization's exemption from the Federal 
prohibition on employment discrimination on the basis of religion, set 
forth in section 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 
2000e-1(a), is not forfeited when the organization receives direct or 
indirect Federal financial assistance from the Department. Some 
Department programs, however, contain independent statutory provisions 
requiring that all grantees agree not to discriminate in employment on 
the basis of religion. Accordingly, grantees should consult with the 
appropriate Department program office to determine the scope of any 
applicable requirements.
    (f) If an intermediary, acting under a contract, grant, or other 
agreement with the Federal Government or with a State or local 
government that is administering a program supported by Federal 
financial assistance, is given the authority under the contract, grant, 
or agreement to select organizations to provide services funded by the 
Federal Government, the intermediary must ensure the compliance of the 
recipient of a contract, grant, or agreement with the provisions of 
Executive Order 13279, as amended by Executive Order 13559 and further 
amended by Executive Order 13831, and any implementing rules or 
guidance. If the intermediary is a nongovernmental organization, it 
retains all other rights of a nongovernmental organization under the 
program's statutory and regulatory provisions.
    (g) In general, the Department does not require that a grantee, 
including a faith-based organization, obtain tax-exempt status under 
section 501(c)(3) of the Internal Revenue Code to be eligible for 
funding under Department programs. Many grant programs, however, do 
require an organization to be a ``nonprofit organization'' in order to 
be eligible for funding. Individual solicitations that require 
organizations to have nonprofit status will specifically so indicate in 
the eligibility sections of the solicitations. In addition, any 
solicitation that requires an organization to maintain tax-exempt 
status shall expressly state the statutory authority for requiring such 
status. Grantees should consult with the appropriate Department program 
office to determine the scope of any applicable requirements. In 
Department programs in which an applicant must show that it is a 
nonprofit organization, the applicant may do so by any of the following 
means:
    (1) Proof that the Internal Revenue Service currently recognizes 
the applicant as an organization to which contributions are tax 
deductible under section 501(c)(3) of the Internal Revenue Code;
    (2) A statement from a State taxing body or the State secretary of 
state certifying that:
    (i) The organization is a nonprofit organization operating within 
the State; and
    (ii) No part of its net earnings may lawfully benefit any private 
shareholder or individual;
    (3) A certified copy of the applicant's certificate of 
incorporation or similar document that clearly establishes the 
nonprofit status of the applicant;
    (4) Any item described in paragraphs (g)(1) through (3) of this 
section if that item applies to a State or national parent 
organization, together with a statement by the State or parent 
organization that the applicant is a local nonprofit affiliate; or
    (5) For an entity that holds a sincerely held religious belief that 
it cannot apply for a determination as an entity that is tax-exempt 
under section 501(c)(3) of the Internal Revenue Code, evidence 
sufficient to establish that the entity would otherwise qualify as a 
nonprofit organization under paragraphs (g)(1) through (4) of this 
section.
    (h) Grantees should consult with the appropriate Department program 
office to determine the applicability of this part in foreign countries 
or sovereign lands.
    (i) Neither the Department nor any State or local government or 
other pass-through entity receiving funds under any Department program 
or service shall construe these provisions in such a way as to 
advantage or disadvantage faith-based organizations affiliated with 
historic or well-established religions or sects in comparison with 
other religions or sects.


Sec.  38.6   Procedures.

    (a) Effect on State and local funds. If a State or local government 
voluntarily contributes its own funds to supplement activities carried 
out under the applicable programs, the State or local government has 
the option to separate out the Federal funds or commingle them. If the 
funds are commingled, the provisions of this section shall apply to all 
of the commingled funds in the same manner, and to the same extent, as 
the provisions apply to the Federal funds.
    (b) Notices or announcements. Notices or announcements of award 
opportunities and notices of award or contracts shall include language 
substantially similar to that in appendices A and B, respectively, to 
this part.


Sec.  38.7   Assurances.

    (a) Every application submitted to the Department for direct 
Federal financial assistance subject to this part must contain, as a 
condition of its approval and the extension of any such assistance, or 
be accompanied by, an assurance or statement that the program is or 
will be conducted in compliance with this part.
    (b) Every intermediary must provide for such methods of 
administration as are required by the Office for Civil Rights to give 
reasonable assurance that

[[Page 82140]]

the intermediary will comply with this part and effectively monitor the 
actions of its recipients.


Sec.  38.8   Enforcement.

    (a) The Office for Civil Rights is responsible for reviewing the 
practices of recipients of Federal financial assistance to determine 
whether they are in compliance with this part.
    (b) The Office for Civil Rights is responsible for investigating 
any allegations of noncompliance with this part.
    (c) Recipients of Federal financial assistance determined to be in 
violation of any provisions of this part are subject to the enforcement 
procedures and sanctions, up to and including suspension and 
termination of funds, authorized by applicable laws.
    (d) An allegation of any violation or discrimination by an 
organization, based on this regulation, may be filed with the Office 
for Civil Rights or the intermediary that awarded the funds to the 
organization.

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

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

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

    (a) A faith-based organization that participates in this program 
retains its independence from the Government and may continue to 
carry out its mission consistent with religious freedom and 
conscience protections in Federal law, including the Free Speech and 
Free Exercise Clauses of the Constitution, 42 U.S.C. 2000bb et seq., 
42 U.S.C. 238n, 42 U.S.C. 18113, 42 U.S.C. 2000e-1(a) and 2000e-
2(e), 42 U.S.C. 12113(d), and the Weldon Amendment, among others. 
Religious accommodations may also be sought under many of these 
religious freedom and conscience protection laws.
    (b) A faith-based organization may not use direct Federal 
financial assistance from the Department of Justice to support or 
engage in any explicitly religious activities except when consistent 
with the Establishment Clause of the First Amendment and any other 
applicable requirements. An organization receiving direct Federal 
financial assistance also may not, in providing services funded by 
the Department of Justice, discriminate against a program 
beneficiary or prospective program beneficiary on the basis of 
religion, a religious belief, a refusal to hold a religious belief, 
or a refusal to attend or participate in a religious practice.

DEPARTMENT OF LABOR

    For the reasons set forth in the preamble, DOL amends part 2 of 
title 29 of the Code of Federal Regulations as follows:

PART 2--GENERAL REGULATIONS

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

    Authority:  5 U.S.C. 301; E.O. 13198, 66 FR 8497, 3 CFR, 2001 
Comp., p. 750; E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 258; 
E.O. 13559, 75 FR 71319, 3 CFR, 2010 Comp., p. 273; E.O. 13831, 83 
FR 20715, 3 CFR, 2018 Comp., p. 806; 42 U.S.C. 2000bb et seq.

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

0
47. Amend Sec.  2.31 by revising paragraphs (a) introductory text and 
(a)(2) and adding paragraph (h) to read as follows:


Sec.  2.31   Definitions.

* * * * *
    (a) The term Federal financial assistance means assistance that 
non-Federal entities (including State and local governments) receive or 
administer in the form of grants, contracts, loans, loan guarantees, 
property, cooperative agreements, direct appropriations, or other 
direct or indirect assistance, but does not include a tax credit, 
deduction, or exemption, nor the use by a private participant of 
assistance obtained through direct benefit programs (such as 
Supplemental Nutrition Assistance Program, social security, pensions). 
Federal financial assistance may be direct or indirect.
* * * * *
    (2) The term indirect Federal financial assistance or Federal 
financial assistance provided indirectly means that the choice of the 
service provider is placed in the hands of the beneficiary, and the 
cost of that service is paid through a voucher, certificate, or other 
similar means of government-funded payment. Federal financial 
assistance provided to an organization is considered indirect when:
    (i) The Government program through which the beneficiary receives 
the voucher, certificate, or other similar means of Government-funded 
payment is neutral toward religion; and
    (ii) The organization receives the assistance as a result of a 
genuine, independent choice of the beneficiary.
* * * * *
    (h) The term religious exercise has the meaning given to the term 
in 42 U.S.C. 2000cc-5(7)(A).

0
48. Revise Sec.  2.32 to read as follows:


Sec.  2.32   Equal participation of faith-based organizations.

    (a) Faith-based organizations must be eligible, on the same basis 
as any other organization and considering any reasonable accommodation, 
to seek DOL support or participate in DOL programs for which they are 
otherwise eligible. DOL and DOL social service intermediary providers, 
as well as State and local governments administering DOL support, must 
not discriminate for or against an organization on the basis of the 
organization's religious character, affiliation, or exercise, although 
this requirement does not preclude DOL, DOL social service providers, 
or State or local governments administering DOL support from 
accommodating religion in a manner consistent with the Religion Clauses 
of the First Amendment to the Constitution. In addition, because this 
rule does not affect existing constitutional requirements, DOL, DOL 
social service providers (insofar as they may otherwise be subject to 
any constitutional requirements), and State and local governments 
administering DOL support must continue to comply with otherwise 
applicable constitutional principles, including, among others, those 
articulated in the Establishment, Free Speech, and Free Exercise 
Clauses of the First Amendment to the

[[Page 82141]]

Constitution. Notices and announcements of award opportunities and 
notices of award and contracts shall include language substantially 
similar to that in appendices A and B, respectively, to this part.
    (b) A faith-based organization that is a DOL social service 
provider retains its autonomy; right of expression; religious 
character; and independence from Federal, State, and local governments 
and must be permitted to continue to carry out its mission, including 
the definition, development, practice, and expression of its religious 
beliefs. Among other things, such a faith-based organization must be 
permitted to:
    (1) Use its facilities to provide DOL-supported social services 
without concealing, removing, or altering religious art, icons, 
scriptures, or other religious symbols from those facilities; and
    (2) Retain its authority over its internal governance, including 
retaining religious terms in its name, selecting its board members and 
employees on the basis of their acceptance of or adherence to the 
religious requirements or standards of the organization, and including 
religious references in its mission statements and other governing 
documents.
    (c) A grant document, contract or other agreement, covenant, 
memorandum of understanding, policy, or regulation that is used by DOL, 
a State or local government administering DOL support, or a DOL social 
service intermediary provider must not require faith-based 
organizations to provide assurances or notices where they are not 
required of non-faith-based organizations. Any restrictions on the use 
of financial assistance under a grant shall apply equally to faith-
based and non-faith-based organizations. All organizations, including 
religious ones that are DOL social service providers, must carry out 
DOL-supported activities, subject to any required or appropriate 
religious accommodation, in accordance with all program requirements, 
including those prohibiting the use of direct DOL support for 
explicitly religious activities (including worship, religious 
instruction, or proselytization). A grant document, contract or other 
agreement, covenant, memorandum of understanding, policy, or regulation 
that is used by DOL, a State or local government, or a DOL social 
service intermediary provider in administering a DOL social service 
program must not disqualify organizations from receiving DOL support or 
participating in DOL programs because such organizations are motivated 
or influenced by religious faith to provide social services, or because 
of their religious character or affiliation, or lack thereof, on 
grounds that discriminate against organizations on the basis of the 
organizations' religious exercise.
    (d) For purposes of this subpart, to discriminate against an 
organization on the basis of the organization's religious exercise 
means to disfavor an organization, including by failing to select an 
organization, disqualifying an organization, or imposing any condition 
or selection criterion that otherwise disfavors or penalizes an 
organization in the selection process or has such an effect:
    (1) Because of conduct that would not be considered grounds to 
disfavor a secular organization;
    (2) Because of conduct that must or could be granted an appropriate 
accommodation in a manner consistent with the Religious Freedom 
Restoration Act (RFRA) (42 U.S.C. 2000bb through 2000bb-4) or the 
Religion Clauses of the First Amendment to the Constitution; or
    (3) Because of the actual or suspected religious motivation of the 
organization's religious exercise.


Sec.  2.33  [Amended]

0
49. Amend Sec.  2.33 as follows:
0
a. In the second sentence of paragraph (a), by adding ``and may require 
attendance at all activities that are fundamental to the program'' 
after ``organization's program''.
0
b. In paragraph (c), by adding ``and further amended by Executive Order 
13831'' after ``13559''.


Sec. Sec.  2.34 and 2.35   [Removed and Reserved]

0
50. Remove and reserve Sec. Sec.  2.34 and 2.35.

0
51. Revise Sec.  2.37 to read as follows:


Sec.  2.37   Effect of DOL support on Title VII employment 
nondiscrimination requirements and on other existing statutes.

    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 the organization receives direct or indirect DOL 
support. An organization qualifying for such exemption may make its 
employment decisions on the basis of an applicant's or employee's 
acceptance of or adherence to the religious requirements or standards 
of the organization, but not on the basis of any other protected 
characteristic. Some DOL programs, however, were established through 
Federal statutes containing independent statutory provisions requiring 
that recipients refrain from discriminating on the basis of religion. 
Accordingly, to determine the scope of any applicable requirements, 
including in light of any additional constitutional or statutory 
protections for employment decisions that may apply, recipients and 
potential recipients should consult with the appropriate DOL program 
official or with the Civil Rights Center, U.S. Department of Labor, 200 
Constitution Avenue NW, Room N4123, Washington, DC 20210, (202) 693-
6500. Individuals with hearing or speech impairments may access this 
telephone number via TTY by calling the toll-free Federal Information 
Relay Service at 1-800-877-8339.

0
52. Amend Sec.  2.38 by revising paragraphs (b)(3) and (4) and adding 
(b)(5) to read as follows:


Sec.  2.38   Status of nonprofit organizations.

* * * * *
    (b) * * *
    (3) A certified copy of the applicant's certificate of 
incorporation or similar document that clearly establishes the 
nonprofit status of the applicant;
    (4) Any item described in paragraphs (b)(1) through (3) of this 
section, if that item applies to a State or national parent 
organization, together with a statement by the State or national parent 
organization that the applicant is a local nonprofit affiliate of the 
organization; or
    (5) For an entity that holds a sincerely held religious belief that 
it cannot apply for a determination as an entity that is tax exempt 
under section 501(c)(3) of the Internal Revenue Code, evidence 
sufficient to establish that the entity would otherwise qualify as a 
nonprofit organization under paragraphs (b)(1) through (4) of this 
section.


Sec.  2.39  [Amended]

0
53. Amend Sec.  2.39 by removing ``not on the basis of religion or 
religious belief or lack thereof'' and adding in its place ``not on the 
basis of the religious affiliation of a recipient organization or lack 
thereof''.

0
54. Add Sec.  2.40 to read as follows:


Sec.  2.40  Nondiscrimination among faith-based organizations.

    Neither DOL nor any State or local government or other entity 
receiving financial assistance under any DOL program or service shall 
construe the provisions of this part in such a way as to advantage or 
disadvantage faith-based organizations affiliated with historic or 
well-established religions or sects in comparison with other religions 
or sects.

0
55. Add Sec.  2.41 to read as follows:

[[Page 82142]]

Sec.  2.41  Severability.

    Should a court of competent jurisdiction hold any provision(s) of 
this subpart to be invalid, such action will not affect any other 
provision of this subpart.

0
56. Revise appendices A and B to read as follows:

Appendix A to Part 2--Notice or Announcement of Award Opportunities

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

Appendix B to Part 2--Notice of Award or Contract

    (a) A faith-based organization that participates in this program 
retains its independence from the Government and may continue to 
carry out its mission consistent with religious freedom and 
conscience protections in Federal law, including the Free Speech and 
Free Exercise Clauses of the First Amendment to the Constitution, 42 
U.S.C. 2000bb et seq., 42 U.S.C. 238n, 42 U.S.C. 18113, 42 U.S.C. 
2000e-1(a) and 2000e-2(e), 42 U.S.C. 12113(d), and the Weldon 
Amendment, among others. Religious accommodations may also be sought 
under many of these religious freedom and conscience protection 
laws.
    (b) A faith-based organization may not use direct financial 
assistance from DOL to engage in any explicitly religious activities 
except when consistent with the Establishment Clause of the First 
Amendment and any other applicable requirements. Such an 
organization also may not, in providing services financially 
assisted by DOL, discriminate against a program beneficiary or 
prospective program beneficiary on the basis of religion, a 
religious belief, a refusal to hold a religious belief, or a refusal 
to attend or participate in a religious practice.

DEPARTMENT OF VETERANS AFFAIRS

    For the reasons set forth in the preamble, VA amends parts 50, 61, 
and 62 of title 38 of the CFR as follows:

0
57. Part 50 is revised to read as follows:

PART 50--EQUAL TREATMENT FOR FAITH BASED ORGANIZATIONS

Sec.
50.1 Definitions.
50.2 Faith-based organizations and Federal financial assistance.
Appendix A to Part 50--Notice or Announcement of Award 
Opportunities.
Appendix B to Part 50--Notice of Award or Contract.

    Authority: 38 U.S.C. 501 and as noted in specific sections.


Sec.  50.1   Definitions.

    (a) Direct Federal financial assistance, Federal financial 
assistance provided directly, direct funding, or directly funded means 
financial assistance received by an entity selected by the Government 
or pass-through entity (under this part) to carry out a service (e.g., 
by contract, grant, or cooperative agreement). References to ``Federal 
financial assistance'' will be deemed to be references to direct 
Federal financial assistance, unless the referenced assistance meets 
the definition of ``indirect Federal financial assistance'' or 
``Federal financial assistance provided indirectly.''
    (b) Indirect Federal financial assistance or Federal financial 
assistance provided indirectly means financial assistance received by a 
service provider when the service provider is paid for services by 
means of a voucher, certificate, or other means of government-funded 
payment provided to a beneficiary who is able to make a choice of a 
service provider. Federal financial assistance provided to an 
organization is considered ``indirect'' within the meaning of the 
Establishment Clause of the First Amendment to the U.S. Constitution 
when--
    (1) The government program through which the beneficiary receives 
the voucher, certificate, or other similar means of government funded 
payment is neutral toward religion; and
    (2) The organization receives the assistance as a result of a 
genuine, independent choice of the beneficiary.
    (c) Federal financial assistance does not include a tax credit, 
deduction, exemption, guaranty contracts, or the use of any assistance 
by any individual who is the ultimate beneficiary under any such 
program.
    (d) Pass-through entity means an entity, including a nonprofit or 
nongovernmental organization, acting under a contract, grant, or other 
agreement with the Federal Government or with a State or local 
government, such as a State administering agency, that accepts direct 
Federal financial assistance as a primary recipient or grantee and 
distributes that assistance to other organizations that, in turn, 
provide government-funded social services.
    (e) Programs or services has the same definition as ``social 
service program'' in Executive Order 13279.
    (f) Recipient means a non-Federal entity that receives a Federal 
award directly from a Federal awarding agency to carry out an activity 
under a Federal program. The term recipient does not include 
subrecipients, but does include pass-through entities.
    (g) Religious exercise has the meaning given to the term in 42 
U.S.C. 2000cc-5(7)(A).


Sec.  50.2  Faith-based organizations and Federal financial assistance.

    (a) Faith-based organizations are eligible, on the same basis as 
any other organization and considering any permissible accommodation, 
to participate in any VA program or service. Neither the VA program nor 
any State or local government or other pass-through entity receiving 
funds under any VA program shall, in the selection of service 
providers, discriminate for or against an organization on the basis of 
the organization's religious character, affiliation, or exercise. 
Notices or announcements of award opportunities and notices of award or 
contracts shall include language substantially similar to that in 
appendix A and B, respectively, to this part. For purposes of this 
part, to discriminate against an organization on the basis of the 
organization's religious exercise means to disfavor an organization, 
including by failing to select an organization, disqualifying an 
organization, or imposing any condition or selection criterion that 
otherwise disfavors or penalizes an organization in the selection 
process or has such an effect:
    (1) Because of conduct that would not be considered grounds to 
disfavor a secular organization;
    (2) Because of conduct that must or could be granted an appropriate 
accommodation in a manner consistent

[[Page 82143]]

with RFRA (42 U.S.C. 2000bb through 2000bb-4) or the Religion Clauses 
of the First Amendment to the Constitution; or
    (3) Because of the actual or suspected religious motivation of the 
organization's religious exercise.
    (b) Organizations that receive direct financial assistance from a 
VA program may not engage in any explicitly religious activities 
(including activities that involve overt religious content such as 
worship, religious instruction, or proselytization) as part of the 
programs or services funded with direct financial assistance from the 
VA program, or in any other manner prohibited by law. If an 
organization conducts such activities, the activities must be offered 
separately, in time or location, from the programs or services funded 
with direct financial assistance from the VA program, and participation 
must be voluntary for beneficiaries of the programs or services funded 
with such assistance. The use of indirect Federal financial assistance 
is not subject to this restriction. Nothing in this part restricts VA's 
authority under applicable Federal law to fund activities, such as the 
provision of chaplaincy services, that can be directly funded by the 
Government consistent with the Establishment Clause.
    (c) A faith-based organization that participates in programs or 
services funded by a VA program will retain its autonomy; right of 
expression; religious character; and independence from Federal, State, 
and local governments, and may continue to carry out its mission, 
including the definition, development, practice, and expression of its 
religious beliefs. A faith-based organization that receives direct 
Federal financial assistance may use space in its facilities to provide 
programs or services funded with financial assistance from the VA 
program without concealing, removing, or altering religious art, icons, 
scriptures, or other religious symbols. In addition, a faith-based 
organization that receives Federal financial assistance from a VA 
program does not lose the protections of law. Such a faith-based 
organization retains its authority over its internal governance, and it 
may retain religious terms in its name, select its board members on the 
basis of their acceptance of or adherence to the religious tenets of 
the organization, and include religious references in its mission 
statements and other governing documents.

    Note 1 to paragraph (c): Memorandum for All Executive 
Departments and Agencies, From the Attorney General, ``Federal Law 
Protections for Religious Liberty'' (Oct. 6, 2017) (describing 
Federal law protections for religious liberty).

    (d) An organization that receives direct or indirect Federal 
financial assistance shall not, with respect to services, or, in the 
case of direct Federal financial assistance, outreach activities funded 
by such financial assistance, discriminate against a program 
beneficiary or prospective program beneficiary on the basis of 
religion, a religious belief, a refusal to hold a religious belief, or 
a refusal to attend or participate in a religious practice. However, an 
organization receiving indirect Federal financial assistance need not 
modify its program activities to accommodate a beneficiary who chooses 
to expend the indirect aid on the organization's program and may 
require attendance at all activities that are fundamental to the 
program.
    (e) A faith-based organization is not rendered ineligible by its 
religious exercise or affiliation to access and participate in 
Department programs. No grant document, agreement, covenant, memorandum 
of understanding, policy, or regulation that is used by a VA program or 
a State or local government in administering Federal financial 
assistance from any VA program shall require faith-based organizations 
to provide assurances or notices where they are not required of non-
faith-based organizations. Any restrictions on the use of grant funds 
shall apply equally to faith-based and non-faith-based organizations. 
All organizations that participate in VA programs or services, 
including organizations with religious character or affiliations, must 
carry out eligible activities in accordance with all program 
requirements, subject to any required or appropriate religious 
accommodation, and other applicable requirements governing the conduct 
of activities funded by any VA program, including those prohibiting the 
use of direct financial assistance to engage in explicitly religious 
activities. No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by VA or a State or 
local government in administering financial assistance from VA shall 
disqualify faith-based organizations from participating in the VA 
program's programs or services because such organizations are motivated 
or influenced by religious faith to provide social services, or because 
of their religious character or affiliation, or on grounds that 
discriminate against organizations on the basis of the organizations' 
religious exercise, as defined in this part.
    (f) A religious organization's exemption from the Federal 
prohibition on employment discrimination on the basis of religion, in 
section 702(a) of the Civil Rights Act of 1964 (42 U.S.C. 2000e-1), is 
not forfeited when the organization receives direct or indirect Federal 
financial assistance from a VA program. An organization qualifying for 
such exemption may select its employees on the basis of their 
acceptance of or adherence to the religious tenets of the organization. 
Some VA programs, however, contain independent statutory provision 
affecting a recipient's ability to discriminate in employment. 
Recipients should consult with the appropriate VA program office if 
they have questions about the scope of any applicable requirement, 
including in light of any additional constitutional or statutory 
protections for employment decisions that may apply.
    (g) In general, VA programs do not require that a recipient, 
including a faith-based organization, obtain tax-exempt status under 
section 501(c)(3) of the Internal Revenue Code to be eligible for 
funding under VA programs. Some grant programs, however, do require an 
organization to be a nonprofit organization in order to be eligible for 
funding. Funding announcements and other grant application 
solicitations that require organizations to have nonprofit status will 
specifically so indicate in the eligibility section of the 
solicitation. In addition, any solicitation that requires an 
organization to maintain tax-exempt status will expressly state the 
statutory authority for requiring such status. Recipients should 
consult with the appropriate VA program office to determine the scope 
of any applicable requirements. In VA programs in which an applicant 
must show that it is a nonprofit organization, the applicant may do so 
by any of the following means:
    (1) Proof that the Internal Revenue Service currently recognizes 
the applicant as an organization to which contributions are tax 
deductible under section 501(c)(3) of the Internal Revenue Code;
    (2) A statement from a State or other governmental taxing body or 
the State secretary of State certifying that:
    (i) The organization is a nonprofit organization operating within 
the State; and
    (ii) No part of its net earnings may benefit any private 
shareholder or individual;
    (3) A certified copy of the applicant's certificate of 
incorporation or similar document that clearly establishes the 
nonprofit status of the applicant;
    (4) Any item described in paragraphs (g)(1) through (3) of this 
section if that item applies to a State or national parent 
organization, together with a statement

[[Page 82144]]

by the state or parent organization that the applicant is a local 
nonprofit affiliate; or
    (5) For an entity that holds a sincerely held religious belief that 
it cannot apply for a determination as an entity that is tax-exempt 
under section 501(c)(3) of the Internal Revenue Code, evidence 
sufficient to establish that the entity would otherwise qualify as a 
nonprofit organization under paragraphs (g)(2) through (4) of this 
section.
    (h) If a recipient contributes its own funds in excess of those 
funds required by a matching or grant agreement to supplement VA 
program-supported activities, the recipient has the option to segregate 
those additional funds or commingle them with the Federal award funds. 
If the funds are commingled, the provision 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 Federal funds. With respect to the 
matching funds, the provisions of this part apply irrespective of 
whether such funds are commingled with Federal funds or segregated.
    (i) Decisions about awards of Federal financial assistance must be 
made on the basis of merit, not on the basis of the religious 
affiliation, or lack thereof, of a recipient organization, and must be 
free from political interference or even the appearance of such 
interference.
    (j) Neither VA nor any State or local government or other pass-
through entity receiving funds under any VA program or service shall 
construe these provisions in such a way as to advantage or disadvantage 
faith-based organizations affiliated with historic or well-established 
religions or sects in comparison with other religions or sects.
    (k) If a pass-through entity, acting under a contract, grant, or 
other agreement with the Federal Government or with a State or local 
government that is administering a program supported by Federal 
financial assistance, is given the authority under the contract, grant, 
or agreement to select non-governmental organizations to provide 
services funded by the Federal Government, the pass-through entity must 
ensure compliance with the provisions of this part and any implementing 
regulations or guidance by the sub-recipient. If the pass-through 
entity is a non-governmental organization, it retains all other rights 
of a non-governmental organization under the program's statutory and 
regulatory provisions.

Appendix A to Part 50--Notice or Announcement of Award Opportunities

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

Appendix B to Part 50--Notice of Award or Contract

    (a) A faith-based organization that participates in this program 
retains its independence from the Government and may continue to 
carry out its mission consistent with religious freedom and 
conscience protections in Federal law, including the Free Speech and 
Free Exercise Clauses of the Constitution, 42 U.S.C. 2000bb et seq., 
42 U.S.C. 238n, 42 U.S.C. 18113, 42 U.S.C. 2000e-1(a) and 2000e-
2(e), 42 U.S.C. 12113(d), and the Weldon Amendment, among others. 
Religious accommodations may also be sought under many of these 
religious freedom and conscience protection laws.
    (b) A faith-based organization may not use direct financial 
assistance from the Department to support or engage in any 
explicitly religious activities except when consistent with the 
Establishment Clause and any other applicable requirements. Such an 
organization also may not, in providing services funded by the 
Department, discriminate against a program beneficiary or 
prospective program beneficiary on the basis of religion, a 
religious belief, a refusal to hold a religious belief, or a refusal 
to attend or participate in a religious practice.

PART 61--VA HOMELESS PROVIDERS GRANT AND PER DIEM PROGRAM

0
58. The authority citation for part 61 continues to read as follows:

    Authority:  38 U.S.C. 501, 2001, 2002, 2011, 2012, 2013, 2061, 
2064.


0
59. Revise Sec.  61.64 to read as follows:


Sec.  61.64  Faith-based organizations.

    (a) Organizations that are faith-based are eligible, on the same 
basis as any other organization, to participate in VA programs under 
this part. Decisions about awards of Federal financial assistance must 
be free from political interference or even the appearance of such 
interference and must be made on the basis of merit, not on the basis 
of religion or religious belief or lack thereof.
    (b)(1) No organization may use direct financial assistance from VA 
under this part to pay for any of the following:
    (i) Explicitly religious activities such as, religious worship, 
instruction, or proselytization; or
    (ii) Equipment or supplies to be used for any of those activities.
    (2) For purposes of this section, ``Indirect financial assistance'' 
means Federal financial assistance in which a service provider receives 
program funds through a voucher, certificate, agreement or other form 
of disbursement, as a result of the genuine, independent choice of a 
private beneficiary. ``Direct Federal financial assistance'' means 
Federal financial assistance received by an entity selected by the 
Government or a pass-through entity as defined in 38 CFR 50.1(d) to 
provide or carry out a service (e.g., by contract, grant, or 
cooperative agreement). References to ``financial assistance'' will be 
deemed to be references to direct Federal financial assistance, unless 
the referenced assistance meets the definition of ``indirect Federal 
financial assistance'' in this paragraph (b)(2).
    (c) Organizations that engage in explicitly religious activities, 
such as worship, religious instruction, or proselytization, must offer 
those services separately in time or location from any programs or 
services funded with direct financial assistance from VA, and 
participation in any of the organization's explicitly religious 
activities must be voluntary for the beneficiaries of a program or 
service funded by direct financial assistance from VA.
    (d) A faith-based organization that participates in VA programs 
under this part will retain its independence from Federal, State, or 
local governments and may continue to carry out its mission, including 
the definition, practice and expression of its religious beliefs, 
provided that it does not use direct financial assistance from VA under 
this part to support any explicitly religious activities, such as 
worship, religious instruction, or proselytization. Among

[[Page 82145]]

other things, faith-based organizations may use space in their 
facilities to provide VA-funded services under this part, without 
concealing, removing, or altering religious art, icons, scripture, or 
other religious symbols. In addition, a VA-funded faith-based 
organization retains its authority over its internal governance, and it 
may retain religious terms in its organization's name, select its board 
members and otherwise govern itself on a religious basis, and include 
religious reference in its organization's mission statements and other 
governing documents.
    (e) An organization that participates in a VA program under this 
part shall not, in providing direct program assistance, discriminate 
against a program beneficiary or prospective program beneficiary 
regarding housing, supportive services, or technical assistance, on the 
basis of religion or religious belief.
    (f) If a State or local government voluntarily contributes its own 
funds to supplement federally funded activities, the State or local 
government has the option to segregate the Federal funds or commingle 
them. However, if the funds are commingled, this provision applies to 
all of the commingled funds.
    (g) To the extent otherwise permitted by Federal law, the 
restrictions on explicitly religious activities set forth in this 
section do not apply where VA funds are provided to faith-based 
organizations through indirect assistance as a result of a genuine and 
independent private choice of a beneficiary, provided the faith-based 
organizations otherwise satisfy the requirements of this part. A faith-
based organization may receive such funds as the result of a 
beneficiary's genuine and independent choice if, for example, a 
beneficiary redeems a voucher, coupon, or certificate, allowing the 
beneficiary to direct where funds are to be paid, or a similar funding 
mechanism provided to that beneficiary and designed to give that 
beneficiary a choice among providers.

PART 62--SUPPORTIVE SERVICES FOR VETERAN FAMILIES PROGRAM

0
60. The authority citation for part 62 continues to read as follows:

    Authority:  38 U.S.C. 501, 2044, and as noted in specific 
sections.


0
61. Revise Sec.  62.62 to read as follows:


Sec.  62.62  Faith-based organizations

    (a) Organizations that are faith-based are eligible, on the same 
basis as any other organization, to participate in the Supportive 
Services for Veteran Families Program under this part. Decisions about 
awards of Federal financial assistance must be free from political 
interference or even the appearance of such interference and must be 
made on the basis of merit, not on the basis of religion or religious 
belief or lack thereof.
    (b)(1) No organization may use direct financial assistance from VA 
under this part to pay for any of the following:
    (i) Explicitly religious activities such as, religious worship, 
instruction, or proselytization; or
    (ii) Equipment or supplies to be used for any of those activities.
    (2) For purposes of this section, ``Indirect financial assistance'' 
means Federal financial assistance in which a service provider receives 
program funds through a voucher, certificate, agreement or other form 
of disbursement, as a result of the genuine, independent choice of a 
private beneficiary. ``Direct Federal financial assistance'' means 
Federal financial assistance received by an entity selected by the 
Government or a pass-through entity as defined in 38 CFR 50.1(d) to 
provide or carry out a service (e.g., by contract, grant, or 
cooperative agreement). References to ``financial assistance'' will be 
deemed to be references to direct Federal financial assistance, unless 
the referenced assistance meets the definition of ``indirect Federal 
financial assistance'' in this paragraph (b)(2).
    (c) Organizations that engage in explicitly religious activities, 
such as worship, religious instruction, or proselytization, must offer 
those services separately in time or location from any programs or 
services funded with direct financial assistance from VA under this 
part, and participation in any of the organization's explicitly 
religious activities must be voluntary for the beneficiaries of a 
program or service funded by direct financial assistance from VA under 
this part.
    (d) A faith-based organization that participates in the Supportive 
Services for Veteran Families Program under this part will retain its 
independence from Federal, State, or local governments and may continue 
to carry out its mission, including the definition, practice and 
expression of its religious beliefs, provided that it does not use 
direct financial assistance from VA under this part to support any 
explicitly religious activities, such as worship, religious 
instruction, or proselytization. Among other things, faith-based 
organizations may use space in their facilities to provide VA-funded 
services under this part, without concealing, removing, or altering 
religious art, icons, scripture, or other religious symbols. In 
addition, a VA-funded faith-based organization retains its authority 
over its internal governance, and it may retain religious terms in its 
organization's name, select its board members and otherwise govern 
itself on a religious basis, and include religious reference in its 
organization's mission statements and other governing documents.
    (e) An organization that participates in a VA program under this 
part shall not, in providing direct program assistance, discriminate 
against a program beneficiary or prospective program beneficiary 
regarding housing, supportive services, or technical assistance, on the 
basis of religion or religious belief.
    (f) If a State or local government voluntarily contributes its own 
funds to supplement federally funded activities, the State or local 
government has the option to segregate the Federal funds or commingle 
them. However, if the funds are commingled, this provision applies to 
all of the commingled funds.
    (g) To the extent otherwise permitted by Federal law, the 
restrictions on explicitly religious activities set forth in this 
section do not apply where VA funds are provided to faith-based 
organizations through indirect assistance as a result of a genuine and 
independent private choice of a beneficiary, provided the faith-based 
organizations otherwise satisfy the requirements of this part. A faith-
based organization may receive such funds as the result of a 
beneficiary's genuine and independent choice if, for example, a 
beneficiary redeems a voucher, coupon, or certificate, allowing the 
beneficiary to direct where funds are to be paid, or a similar funding 
mechanism provided to that beneficiary and designed to give that 
beneficiary a choice among providers.

DEPARTMENT OF HEALTH AND HUMAN SERVICES

    For the reasons set forth in the preamble, HHS amends parts 87 and 
1050 of title 45 of the CFR as follows:

PART 87--EQUAL TREATMENT FOR FAITH-BASED ORGANIZATIONS

0
62. The authority citation for part 87 is revised to read as follows:

    Authority: 5 U.S.C. 301; 42 U.S.C. 2000bb et seq.


0
63. Revise Sec.  87.1 to read as follows:


Sec.  87.1   Definitions.

    The following definitions apply for the purposes of this part.
    (a) Direct Federal financial assistance, Federal financial 
assistance provided directly, or direct funding means

[[Page 82146]]

financial assistance received by an entity selected by the Government 
or a pass-through entity (as defined in this part) to carry out a 
service (e.g., by contract, grant, or cooperative agreement). 
References to Federal financial assistance will be deemed to be 
references to direct Federal financial assistance, unless the 
referenced assistance meets the definition of indirect Federal 
financial assistance or Federal financial assistance provided 
indirectly.
    (b) Directly funded means funded by means of direct Federal 
financial assistance.
    (c) Indirect Federal financial assistance or Federal financial 
assistance provided indirectly means financial assistance received by a 
service provider when the service provider is paid for services 
rendered by means of a voucher, certificate, or other means of 
government-funded payment provided to a beneficiary who is able to make 
a choice of a service provider.
    (d) Federal financial assistance does not include a tax credit, 
deduction, exemption, guaranty contract, or the use of any assistance 
by any individual who is the ultimate beneficiary under any such 
program.
    (e) Pass-through entity means an entity, including a nonprofit or 
nongovernmental organization, acting under a contract, grant, or other 
agreement with the Federal Government or with a State or local 
government, such as a State administering agency, that accepts direct 
Federal financial assistance as a primary recipient or grantee and 
distributes that assistance to other organizations that, in turn, 
provide government funded social services.
    (f) Recipient means a non-Federal entity that receives a Federal 
award directly from a Federal awarding agency to carry out an activity 
under a Federal program. The term recipient does not include 
subrecipients, but does include pass-through entities.
    (g) Religious exercise has the meaning given to the term in 42 
U.S.C. 2000cc-5(7)(A).

0
64. Revise Sec.  87.3 to read as follows:


Sec.  87.3   Faith-based organizations and Federal financial 
assistance.

    (a) Faith-based organizations are eligible, on the same basis as 
any other organization, and considering any permissible accommodation, 
to participate in any HHS awarding agency program or service for which 
they are otherwise eligible. The HHS awarding agency program or service 
shall provide such accommodation as is consistent with Federal law, the 
Attorney General's Memorandum of October 6, 2017 (Federal Law 
Protections for Religious Liberty), and the Religion Clauses of the 
First Amendment to the U.S. Constitution. Neither the HHS awarding 
agency nor any State or local government or other pass-through entity 
receiving funds under any HHS awarding agency program or service shall, 
in the selection of service providers, discriminate against an 
organization on the basis of the organization's religious character, 
affiliation, or exercise. Notices or announcements of award 
opportunities and notices of award or contracts shall include language 
substantially similar to that in appendices A and B of this part. For 
purposes of this part, to discriminate against an organization on the 
basis of the organization's religious exercise means to disfavor an 
organization, including by failing to select an organization, 
disqualifying an organization, or imposing any condition or selection 
criterion that otherwise disfavors or penalizes an organization in the 
selection process or has such an effect:
    (1) Because of conduct that would not be considered grounds to 
disfavor a secular organization;
    (2) Because of conduct that must or could be granted an appropriate 
accommodation in a manner consistent with the Religious Freedom 
Restoration Act (42 U.S.C. 2000bb through 2000bb-4) or the Religion 
Clauses of the First Amendment to the Constitution; or
    (3) Because of the actual or suspected religious motivation of the 
organization's religious exercise.
    (b) Organizations that receive direct financial assistance from an 
HHS awarding agency may not engage in any explicitly religious 
activities (including activities that involve overt religious content 
such as worship, religious instruction, or proselytization) as part of 
the programs or services funded with direct financial assistance from 
the HHS awarding agency, or in any other manner prohibited by law. If 
an organization conducts such activities, the activities must be 
offered separately, in time or location, from the programs or services 
funded with direct financial assistance from the HHS awarding agency, 
and participation must be voluntary for beneficiaries of the programs 
or services funded with such assistance. The use of indirect Federal 
financial assistance is not subject to this restriction. Nothing in 
this part restricts HHS's authority under applicable Federal law to 
fund activities, such as the provision of chaplaincy services, that can 
be directly funded by the Government consistent with the Establishment 
Clause.
    (c) A faith-based organization that participates in HHS awarding-
agency funded programs or services will retain its autonomy; right of 
expression; religious character; and independence from Federal, State, 
and local governments, and may continue to carry out its mission, 
including the definition, development, practice, and expression of its 
religious beliefs. A faith-based organization may use space in its 
facilities to provide programs or services funded with financial 
assistance from the HHS awarding agency without concealing, removing, 
or altering religious art, icons, scriptures, or other religious 
symbols. Such a faith-based organization retains its authority over its 
internal governance, and it may retain religious terms in its name, 
select its board members on the basis of their acceptance of or 
adherence to the religious tenets of the organization, and include 
religious references in its mission statements and other governing 
documents. In addition, a faith-based organization that receives 
financial assistance from the HHS awarding agency does not lose the 
protections of law.

    Note 1 to paragraph (c): Memorandum for All Executive 
Departments and Agencies, From the Attorney General, ``Federal Law 
Protections for Religious Liberty'' (Oct. 6, 2017) (describing 
Federal law protections for religious liberty).

    (d) An organization, whether faith-based or not, that receives 
Federal financial assistance shall not, with respect to services or 
activities funded by such financial assistance, discriminate against a 
program beneficiary or prospective program beneficiary on the basis of 
religion, a religious belief, a refusal to hold a religious belief, or 
a refusal to attend or participate in a religious practice. However, a 
faith-based organization receiving indirect Federal financial 
assistance need not modify any religious components or integration with 
respect to its program activities to accommodate a beneficiary who 
chooses to expend the indirect aid on the organization's program and 
may require attendance at all activities that are fundamental to the 
program.
    (e) No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation used by an HHS awarding agency or 
a State or local government in administering Federal financial 
assistance from the HHS awarding agency shall require faith-based 
organizations to provide assurances or

[[Page 82147]]

notices where they are not required of non-faith-based organizations. 
Any restrictions on the use of grant funds shall apply equally to 
faith-based and non-faith-based organizations. All organizations, 
whether faith-based or not, that participate in HHS awarding agency 
programs or services must carry out eligible activities in accordance 
with all program requirements (except where modified or exempted by any 
required or appropriate religious accommodations) including those 
prohibiting the use of direct Federal financial assistance to engage in 
explicitly religious activities. No grant document, agreement, 
covenant, memorandum of understanding, policy, or regulation used by an 
HHS awarding agency or a State or local government in administering 
Federal financial assistance from the HHS awarding agency shall 
disqualify faith-based organizations from participating in the HHS 
awarding agency's programs or services because such organizations are 
motivated or influenced by religious faith to provide social services, 
or because of their religious character or affiliation, or on grounds 
that discriminate against organizations on the basis of the 
organizations' religious exercise, as defined in this part.
    (f) A faith-based organization's exemption from the Federal 
prohibition on employment discrimination on the basis of religion, set 
forth in the Civil Rights Act of 1964, 42 U.S.C. 2000e-1 and 2000e-2 
and the Americans with Disabilities Act, 42 U.S.C. 12113(d)(2), is not 
forfeited when the faith-based organization receives direct or indirect 
Federal financial assistance from an HHS awarding agency. An 
organization qualifying for such exemption may select its employees on 
the basis of their acceptance of or adherence to the religious tenets 
of the organization. Recipients should consult with the appropriate HHS 
awarding agency program office if they have questions about the scope 
of any applicable requirement, including in light of any additional 
constitutional or statutory protections or requirements that may apply.
    (g) In general, the HHS awarding agency does not require that a 
recipient, including a faith-based organization, obtain tax-exempt 
status under section 501(c)(3) of the Internal Revenue Code to be 
eligible for funding under HHS awarding agency programs. Many grant 
programs, however, do require an organization to be a nonprofit 
organization in order to be eligible for funding. Funding announcements 
and other grant application solicitations that require organizations to 
have nonprofit status will specifically so indicate in the eligibility 
section of the solicitation. In addition, any solicitation that 
requires an organization to maintain tax-exempt status will expressly 
state the statutory authority for requiring such status. Recipients 
should consult with the appropriate HHS awarding agency program office 
to determine the scope of any applicable requirements. In HHS awarding 
agency programs in which an applicant must show that it is a nonprofit 
organization, the applicant may do so by any of the following means:
    (1) Proof that the Internal Revenue Service currently recognizes 
the applicant as an organization to which contributions are tax 
deductible under section 501(c)(3) of the Internal Revenue Code;
    (2) A statement from a State or other governmental taxing body or 
the State secretary of State certifying that:
    (i) The organization is a nonprofit organization operating within 
the State; and
    (ii) No part of its net earnings may benefit any private 
shareholder or individual;
    (3) A certified copy of the applicant's certificate of 
incorporation or similar document that clearly establishes the 
nonprofit status of the applicant;
    (4) Any item described in paragraphs (g)(1) through (3) of this 
section, if that item applies to a State or national parent 
organization, together with a statement by the State or parent 
organization that the applicant is a local nonprofit affiliate; or
    (5) For an entity that holds a sincerely held religious belief that 
it cannot apply for a determination as an entity that is tax-exempt 
under section 501(c)(3) of the Internal Revenue Code, evidence 
sufficient to establish that the entity would otherwise qualify as a 
nonprofit organization under any of paragraphs (g)(1) through (4) of 
this section.
    (h) If a recipient contributes its own funds in excess of those 
funds required by a matching or grant agreement to supplement HHS 
awarding agency-supported activities, the recipient has the option to 
segregate those additional funds or commingle them with the Federal 
award funds. 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 Federal funds. With 
respect to the matching funds, the provisions of this part apply 
irrespective of whether such funds are commingled with Federal funds or 
segregated.
    (i) Decisions about awards of direct Federal financial assistance 
must be made on the basis of merit, not on the basis of the religious 
affiliation, or lack thereof, of a recipient organization, and must be 
free from political interference or even the appearance of such 
interference.
    (j) Neither the HHS awarding agency nor any State or local 
government or other pass-through entity receiving funds under any HHS 
awarding agency program or service shall construe these provisions in 
such a way as to advantage or disadvantage faith-based organizations 
affiliated with historic or well-established religions or sects in 
comparison with other religions or sects.
    (k) If a pass-through entity, acting under a contract, grant, or 
other agreement with the Federal Government or with a State or local 
government that is administering a program supported by Federal 
financial assistance, is given the authority under the contract, grant, 
or agreement to select non-governmental organizations to provide 
services funded by the Federal Government, the pass-through entity must 
ensure compliance with the provisions of this part and any implementing 
regulations or guidance by the sub-recipient. If the pass-through 
entity is a non-governmental organization, it retains all other rights 
of a non-governmental organization under the program's statutory and 
regulatory provisions.

0
65. Add Sec.  87.4 to read as follows:


Sec.  87.4   Severability.

    Any provision of this part held to be invalid or unenforceable by 
its terms, or as applied to any person or circumstance, shall be 
construed so as to continue to give maximum effect to the provision 
permitted by law, unless such holding shall be one of utter invalidity 
or unenforceability, in which event the provision 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.

0
66. Add appendices A and B to part 87 to read as follows:

Appendix A to Part 87--Notice or Announcement of Award Opportunities

    (a) Faith-based organizations may apply for this award on the 
same basis as any other organization, as set forth at and, subject 
to the protections and requirements of this part and 42 U.S.C. 
2000bb et seq., the Department will not, in the selection of 
recipients, discriminate against an organization on the basis of the 
organization's religious character, affiliation, or exercise.
    (b) A faith-based organization that participates in this program 
will retain its independence from the Government and may

[[Page 82148]]

continue to carry out its mission consistent with religious freedom, 
nondiscrimination, and conscience protections in Federal law, 
including the Free Speech and Free Exercise Clauses of the First 
Amendment of the U.S. Constitution, the Religious Freedom 
Restoration Act (42 U.S.C. 2000bb et seq.), the Coats-Snowe 
Amendment (42 U.S.C. 238n), Title VII of the Civil Rights Act of 
1964 (42 U.S.C. 2000e-1(a) and 2000e-2(e)), the Americans with 
Disabilities Act, 42 U.S.C. 12113(d)(2), section 1553 of the Patient 
Protection and Affordable Care Act (42 U.S.C. 18113), the Weldon 
Amendment (e.g., Further Consolidated Appropriations Act, 2020, 
Public Law 116-94, 133 Stat. 2534, 2607, div. A, sec. 507(d) (Dec. 
20, 2019)), or any related or similar Federal laws or regulations. 
Religious accommodations may also be sought under many of these 
religious freedom and conscience protection laws.
    (c) A faith-based organization may not use direct financial 
assistance from the Department to engage in any explicitly religious 
activities (including activities that involve overt religious 
content such as worship, religious instruction, or proselytization). 
Such an organization also may not, in providing services funded by 
the Department, discriminate against a program beneficiary or 
prospective program beneficiary on the basis of religion, a 
religious belief, a refusal to hold a religious belief, or a refusal 
to attend or participate in a religious practice.

Appendix B to Part 87--Notice of Award or Contract

    (a) A faith-based organization that participates in this program 
retains its independence from the Government and may continue to 
carry out its mission consistent with religious freedom, 
nondiscrimination, and conscience protections in Federal law, 
including the Free Speech and Free Exercise Clauses of the First 
Amendment of the U.S. Constitution, the Religious Freedom 
Restoration Act (42 U.S.C. 2000bb et seq.), the Coats-Snowe 
Amendment (42 U.S.C. 238n), Title VII of the Civil Rights Act of 
1964 (42 U.S.C. 2000e-1(a) and 2000e-2(e)), the Americans with 
Disabilities Act (42 U.S.C. 12113(d)(2)), section 1553 of the 
Patient Protection and Affordable Care Act (42 U.S.C. 18113), the 
Weldon Amendment (see, e.g., Further Consolidated Appropriations 
Act, 2020, Public Law 116-94, div. A, sec. 507(d), 133 Stat. 2534, 
2607 (Dec. 20, 2019)), or any related or similar Federal laws or 
regulations. Religious accommodations may also be sought under many 
of these religious freedom, nondiscrimination, and conscience 
protection laws.
    (b) A faith-based organization may not use direct financial 
assistance from the Department to engage in any explicitly religious 
activities (including activities that involve overt religious 
content such as worship, religious instruction, or proselytization). 
Such an organization also may not, in providing services funded by 
the Department, discriminate against a program beneficiary or 
prospective program beneficiary on the basis of religion, a 
religious belief, a refusal to hold a religious belief, or a refusal 
to attend or participate in a religious practice.

PART 1050--CHARITABLE CHOICE UNDER THE COMMUNITY SERVICES BLOCK 
GRANT ACT PROGRAMS

0
67. The authority citation for part 1050 continues to read as follows:

    Authority:  42 U.S.C. 9901 et seq.


Sec.  1050.3   [Amended]

0
68. Amend Sec.  1050.3 in paragraph (h) by removing ``87.3(i) through 
(l)'' and adding in its place ``87.3(i) and (j)''.

    Dated: December 3, 2020.
Betsy DeVos,
Secretary, U.S. Department of Education.

    Dated: December 3, 2020.
Chad F. Wolf,
Acting Secretary, U.S. Department of Homeland Security.

    Dated: December 3, 2020.
Sonny Perdue,
Secretary, U.S. Department of Agriculture.

    Dated: December 4, 2020.
Brian Klotz,
Deputy Director, Center for Faith & Opportunity Initiatives, U.S. 
Agency for International Development
Benjamin S. Carson, Sr.,
Secretary, U.S. Department of Housing and Urban Development.

    Dated: December 4, 2020.
William P. Barr,
Attorney General.

    Dated: December 4, 2020.
Eugene Scalia,
Secretary, U.S. Department of Labor.

    Dated: December 4, 2020.
Brooks D. Tucker,
Assistant Secretary for Congressional and Legislative Affairs, 
Performing the Delegable Duties of the Chief of Staff, U.S. Department 
Veterans Affairs.

    Dated: December 4, 2020.
Alex M. Azar II,
Secretary, U.S. Department of Health and Human Services.
[FR Doc. 2020-27084 Filed 12-14-20; 8:45 am]
BILLING CODE 4410-01-P; 9112-FH-P; 3410-14-P; 6116-01-P; 4210-67-P; 
4410-18-P; 4510-45; 8320-01-P; 4150-27-P`