Federal Register / Vol. 86, No. 7 / Tuesday, January 12, 2021 / Rules and Regulations 2257 

1Some non-Federal entities and commenters 

argued that the Department lacked the legal 

authority to promulgate existing § 75.300(c) and (d). 

While the Department is concerned about its 

statutory authority for these existing provisions, it 

does not need to resolve the issue definitively 

because the Department believes that amending 

these provisions is warranted in light of the other 

reasons set forth in this preamble. 

2The final rule also does not repromulgate, and 

removes, § 75.101(f); with the amendments to 

§ 75.300(c) and (d), the provision is not necessary. 

Capital Region. Public vessels and 

vessels already at berth at the time the 

security zone is implemented do not 

have to depart the security zone. All 

vessels underway within the security 

zone at the time it is implemented are 

to depart the zone at the time the 

security zone is implemented. To seek 

permission to transit the zone, the 

Captain of the Port Maryland-National 

Capital Region can be contacted at 

telephone number (410) 576–2693 or on 

Marine Band Radio, VHF–FM channel 

16 (156.8 MHz). Coast Guard vessels 

enforcing this zone can be contacted on 

Marine Band Radio, VHF–FM channel 

16 (156.8 MHz). The Coast Guard may 

be assisted by other Federal, state or 

local law enforcement agencies in 

enforcing this regulation. If the Captain 

of the Port or his designated on-scene 

patrol personnel determines the security 

zone need not be enforced for the full 

duration stated in this notice, a 

Broadcast Notice to Mariners may be 

used to suspend enforcement and grant 

general permission to enter the security 

zone. 

This notice of enforcement is issued 

under authority of 33 CFR 165.508 and 

5 U.S.C. 552(a). In addition to this 

notice of enforcement in the Federal 

Register, the Coast Guard will provide 

notification of this enforcement period 

via the Local Notice to Mariners and 

marine information broadcasts. 

Dated: December 28, 2020. 

Joseph B. Loring, 

Captain, U.S. Coast Guard, Captain of the 

Port Maryland-National Capital Region. 

[FR Doc. 2020–28985 Filed 1–11–21; 8:45 am] 

BILLING CODE 9110–04–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Part 75 

RIN 0991–AC16 

Health and Human Services Grants 

Regulation 

AGENCY: Office of the Assistant 

Secretary for Financial Resources, 

Department of Health and Human 

Services. 

ACTION: Final rule. 

SUMMARY: This final rule repromulgates 

and adopts changes to certain 

provisions in the Department’s Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

HHS awards (UAR). This rule 

repromulgates sections of the UAR 

dealing with payments, access to 

records, indirect allowable cost 

requirements, and a portion of the 

provision dealing with shared 

responsibility payments under the 

Affordable Care Act. This rule also 

amends sections dealing with national 

policy requirements to bring them into 

compliance with the authority under 

which the UAR is promulgated and 

OMB guidance, as well as to reflect 

those nondiscrimination requirements 

that have been adopted by Congress. 

DATES: This rule is effective February 

11, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Johanna Nestor at Johanna.Nestor@

hhs.gov or 202–205–5904. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Introduction 

II. Background 

III. Statutory Authority 

IV. Section-by-Section Description of the 

Final Rule and Response to Public 

Comments 

V. Regulatory Impact Analysis 

I. Introduction 

This rule repromulgates provisions of 

Part 75 that were originally published 

late in 2016 in a rulemaking which the 

Department had serious concerns about 

compliance with certain requirements of 

the Regulatory Flexibility Act. This rule 

also finalizes proposed changes to 

§ 75.300, on statutory and national 

policy requirements to bring them into 

alignment with the Department’s 

statutory authorities, including those 

underlying part 75. The Department is 

committed to the principle that every 

person must be treated with dignity and 

respect and afforded all of the 

protections of the Constitution and 

statutes enacted by Congress—and to 

fully enforcing such civil rights 

protections and requirements. The 

Department has determined, however, 

that the public policy requirements it 

imposed in the existing § 75.300(c) and 

(d) disrupted the balance struck by 

Congress with respect to 

nondiscrimination requirements 

applicable to grant recipients and, as 

evidenced by the requests for 

accommodations and lawsuits, will 

violate the Religious Freedom 

Restoration Act, 42 U.S.C. 2000bb– 

2000bb–4 (RFRA), in some 

circumstances.1 The Department also 

believes that these requirements have 

sowed uncertainty that, over time, could 

decrease the effectiveness of 

Department-funded programs by 

deterring participation in them. 

Given the careful balancing of rights, 

obligations, and goals in the publicprivate partnerships in Federal grant 

programs, the Department believes it 

appropriate to impose only those 

nondiscrimination requirements 

required by the Constitution and federal 

statutes applicable to the Department’s 

grantees. But such authorities do not 

support the application of some of the 

requirements in existing § 75.300(c) and 

(d) to all recipients of Departmental 

assistance or to all Department-funded 

programs. Accordingly, the Department 

revises § 75.300(c) to recognize the 

public policy requirement that 

otherwise eligible persons not be 

excluded from participation in, denied 

the benefits of, or subjected to 

discrimination in the administration of 

programs and services where such 

actions are prohibited by federal statute. 

The Department also revises § 75.300(d) 

to state clearly that the Department will 

follow all applicable Supreme Court 

decisions in the administration of the 

Department’s award programs.2

With respect to the other provisions 

in the 2016 rulemaking, the Department 

repromulgates § 75.305(a), which 

addressed the applicability of certain 

payment provisions to states; § 75.365, 

which authorized the grant agency to 

require recipients to permit public 

access to various materials produced 

under a grant, but authorized the agency 

to place restrictions on grantees’ ability 

to make public any personally 

identifiable information or other 

information that would be exempt from 

disclosure under FOIA; § 75.414(c)(1)(i) 

through (iii) and (f), which established 

limits on the amount of indirect costs 

allowable under certain types of grants; 

and § 75.477, which established that 

recipients could not include, in 

allowable costs under HHS grants, any 

tax payment imposed on an employer 

for failure to comply with the 

Affordable Care Act’s employer shared 

responsibility provisions, but does not 

repromulgate the exclusion from 

allowable costs in grants of penalties 

due for failing to comply with the 

individual shared responsibility 

provision because such tax penalty has 

been reduced to zero except for tax 

penalties associated with failure to 

maintain minimum essential coverage 

prior to January 1, 2019. 


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2258 Federal Register / Vol. 86, No. 7 / Tuesday, January 12, 2021 / Rules and Regulations 

II. Background 

The December 2014 Adoption of the 

UAR 

On December 26, 2013, the Office of 

Management and Budget (OMB) issued 

the Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

(Uniform Guidance), 2 CFR part 200, 

that ‘‘set standard requirements for 

financial management of Federal awards 

across the entire federal government.’’ 

78 FR 78590 (Dec. 26, 2013). OMB’s 

purpose in promulgating the Uniform 

Guidance was to (1) streamline guidance 

in making federal awards to ease 

administrative burden and (2) 

strengthen financial oversight over 

federal funds to reduce risks of fraud, 

waste, and abuse. 78 FR 78590 (Dec. 26, 

2013); 85 FR 3766 (Jan. 22, 2020). 

In December of 2014, the Department, 

in conjunction with OMB and two 

dozen other federal departments and 

agencies adopted Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards (UAR). 79 FR 75871 

(Dec. 19, 2014). The Department 

adopted ‘‘OMB’s final guidance with 

certain amendments, based on existing 

HHS regulations, to supplement the 

guidance as needed for the 

Department.’’ 79 FR at 75875. 

As promulgated by OMB, the 

statutory authorities for the cost and 

audit principles in the Uniform 

Guidance and the UAR include the 

Chief Financial Officer’s Act, 31 U.S.C. 

503, the Budget and Accounting Act, 31 

U.S.C. 1101–1125, the Single Audit Act, 

31 U.S.C. 6101–6106, and several 

Executive Orders dictating internal 

government practice. 2 CFR 200.103. 

Similarly, as adopted—and as currently 

in force—these same authorities 

underlie HHS’s UAR regulations. 45 

CFR 75.103. These laws provide broad 

authority for the financial management 

and administration of federal awards 

(grants and cooperative agreements). 

The Chief Financial Officers Act, for 

example, provides that OMB shall 

‘‘oversee, periodically review, and make 

recommendations to heads of agencies 

on the administrative structure of 

agencies with respect to their financial 

management activities.’’ 5 U.S.C. 

503(a)(6). Similarly, the Single Audit 

Act directs each agency, pursuant to 

guidance issued by OMB, to ‘‘(1) 

monitor non-federal entity use of federal 

awards, and (2) assess the quality of 

audits conducted under this chapter.’’ 

31 U.S.C. 7504. These statutes include 

rulemaking delegations, see, e.g., 31 

U.S.C. 7505, and for decades have 

provided unquestioned authority for the 

financial management and oversight of 

federal grants. But that authority is 

limited to requirements associated with 

the financial management and oversight 

of federal grants. 

As initially promulgated, Statutory 

and National Policy Requirements, 2 

CFR 200.300 (and 45 CFR 75.300), was 

a notice provision. It directed the 

Federal awarding agency ‘‘to 

communicate to the non-Federal entity 

all relevant public policy requirements, 

including those in general 

appropriations provisions, and 

incorporate them either directly or by 

reference in the terms and conditions of 

the Federal award.’’ 2 CFR 200.300(a). 

See also Appendix I, F.2 to Part 200— 

Full Text of Notice of Funding 

Opportunity (describing requirement to 

inform applicants of national policy 

requirements: ‘‘Providing this 

information lets a potential applicant 

identify any requirements with which it 

would have difficulty complying if its 

application is successful . . . . Doing so 

will alert applicants that have received 

Federal awards from the Federal 

awarding agency previously and might 

not otherwise expect different terms and 

conditions.’’). The section, Statutory 

and National Policy Requirements, was 

not intended to be an independent basis 

for, or to establish, new substantive 

conditions, nondiscrimination or 

otherwise. 

In adopting the Uniform OMB 

guidance, the Department supplemented 

it with HHS specific amendments to 

account for the Department’s particular 

functions and programs. 79 FR 75871, 

75889 (Dec. 19, 2014). However, the 

Department did not add to the 

authorities beyond § 75.103 and the 

Housekeeping Statute as the basis for 

Part 75. 

In § 75.300, Statutory and National 

Policy Requirements, HHS adopted 

OMB’s Uniform Guidance nearly 

verbatim. Under § 75.300(a), the HHS 

agency awarding a grant is required to 

manage and administer the Federal 

award so as to ensure that Federal 

funding is expended and associated 

programs are implemented in full 

accordance with U.S. statutory and 

public policy requirements. The 

regulation specifically identifies those 

statutory and public policy 

requirements as including those 

protecting public welfare, the 

environment, and prohibiting 

discrimination. Section 75.300(a) also 

requires the HHS awarding agency to 

communicate to recipients all relevant 

public policy requirements, including 

those in general appropriations 

provisions, and incorporate them either 

directly or by reference in the terms and 

conditions of the Federal award. 

The OMB Uniform Guidance and the 

Department’s UAR apply to the 

recipients (and, as provided, 

subrecipients) of Federal financial 

assistance from the Department, 

whether such assistance is provided in 

the form of grants or cooperative 

agreements, with such recipients and 

subrecipients referenced, collectively, as 

‘‘non-Federal entities.’’ In this preamble, 

for ease of reference, the Department 

uses the term ‘‘grant’’ in place of 

‘‘Federal financial assistance’’ or 

‘‘Federal award,’’ the terms used in the 

UAR and defined in § 75.2. Similarly, 

the term ‘‘grantmaking agency’’ is used 

to reference ‘‘Federal awarding agency’’ 

or ‘‘HHS awarding agency,’’ as those 

terms are defined in § 75.2. Finally, in 

this preamble, the Department uses 

‘‘grantee’’ and ‘‘subgrantee’’ 

interchangeably with ‘‘recipient’’ and 

‘‘subrecipient,’’ respectively, as those 

terms are also defined in § 75.2. 

The Department’s Additions to the UAR 

in December 2016 

In July 2016, the Department 

proposed certain amendments to the 

UAR, and in December 2016, the 

Department finalized amendments to 

modify its UAR to incorporate certain 

directives ‘‘not previously codified in 

regulation.’’ 81 FR 89393 (December 12, 

2016) (2016 Rule). These amendments 

included changes to a State payment 

provision, access to records, indirect 

allowable cost requirements, exclusion 

from allowable costs of employer and 

individual shared responsibility 

payments under the Affordable Care 

Act, and policy requirements dealing 

with discrimination and Supreme Court 

decisions on same-sex marriage. 

Specifically, the 2016 Rule adopted: 

• Section 75.300(c) and (d), which 

required recipients not to discriminate 

on the basis of certain specified factors, 

regardless of whether those factors had 

been incorporated into 

nondiscrimination statutes applicable to 

the specific grants and recipients (and 

§ 75.101(f), which exempted the 

Temporary Assistance for Needy 

Families from such requirements), and 

required recipient compliance with two 

specific Supreme Court decisions. 

• Section 75.305(a), which addressed 

the applicability of certain payment 

provisions to states. 

• Section 75.365, which authorized 

the grant agency both to require 

recipients to permit public access to 

various materials produced under a 

grant and to place restrictions on 

recipients’ ability to make public any 

personally identifiable information or 


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3The Department had proposed, but did not 

finalize, a revision to § 75.102, relating to 

requirements related to the Indian Self 

Determination and Education Assistance Act. Apart 

from this provision, which generated a significant 

number of comments, the Department received few 

comments on the proposed rule. 

4 In addition to those specifically mentioned in 

the proposed rule, the Department received 

communications from individuals and 

organizations such as Senators and Members of 

Congress, state legislators, religious leaders 

(including all of the Catholic Bishops of 

Pennsylvania), faith-based charities and charities 

operated by churches and religious orders, and 

public interest groups. 

5The Department received several comments on 

the enforcement discretion notice. These comments 

primarily criticized the Department for ignoring the 

statements of Regulatory Flexibility Act compliance 

within the 2016 rule, and for not engaging in notice 

and comment prior to amending the rule. As this 

notice responds to comments and finalizes the 

proposed rule, those concerns are no longer at 

issue. 

6 In response to a request for information in 2017, 

some members of the public submitted comments 

to the Department citing possible burdens created 

by paragraphs (c) and (d) as they were included in 

the 2016 Rule. See https://www.regulations.gov/

docketBrowser?rpp=25&so=DESC&sb=

commentDueDate&po=0&s=75.300&dct=PS&D=

HHS-OS-2017-0002. 

other information that would be exempt 

from disclosure under FOIA. 

• Section 75.414(c)(1)(i) through (iii) 

and (f), which established limits on the 

amount of indirect costs allowable 

under certain types of grants. 

• Section 75.477, which established 

that recipients could not include, in 

allowable costs under HHS grants, any 

tax penalty/payment imposed on an 

individual or on the employer for failure 

to comply with the individual or 

employer shared responsibility 

provisions, respectively.3

These new requirements became 

effective January 11, 2017. 

The Department’s November 2019 

Notice of Exercise of Enforcement 

Discretion and Proposed Rule 

As States and other recipients and 

subrecipients became aware of these 

new regulatory requirements, some 

began to complain to the Department 

about certain elements of § 75.300(c) 

and (d), contending, among other things, 

that application of some of the 

requirements in those provisions (1) 

unlawfully interfered with certain faithbased organizations’ protected speech 

and religious exercise, in violation of 

the Religious Freedom Restoration Act 

(RFRA), 42 U.S.C. 2000bb, et seq., or the 

U.S. Constitution, (2) exceeded the 

Department’s statutory authority, and 

(3) reduced the effectiveness of 

programs funded by the Department by 

excluding certain entities from 

participating in those programs. These 

communications, requests for 

exemptions or deviations, and 

complaints 4 caused the Department to 

look more closely at the 2016 

rulemaking by which these and other 

provisions in the UAR were adopted. 

The Department’s examination raised 

serious concerns about compliance with 

certain requirements of the Regulatory 

Flexibility Act, and caused the 

Department to decide not to enforce the 

provisions added by the 2016 Rule, 

pending repromulgation. The 

Department issued that Notice of 

Exercise of Enforcement Discretion on 

November 1, 2019. See https://

www.hhs.gov/about/news/2019/11/01/ 

hhs-issues-proposed-rule-to-aligngrants-regulation.html (issuance of 

proposed rule ‘‘follows same-day 

issuance of a Notice of Nonenforcement 

of certain regulatory provisions’’); it was 

published in the Federal Register on 

November 19, 2019. Notice of Exercise 

of Enforcement Discretion, 84 FR 63809 

(Nov. 19, 2019).5

The Notice of Proposed Rulemaking 

The Department simultaneously 

published a proposed rule to 

repromulgate or revise the provisions of 

the UAR that had been adopted through 

the 2016 Rule. It proposed to 

repromulgate, without change, 

§§ 75.305(a), 75.365, and 75.414(c)(1)(i)– 

(iii) and (f). With respect to § 75.477, the 

Department proposed to repromulgate 

only the exclusion from allowable costs 

of any employer payments for failure to 

offer health coverage to employees as 

required by 26 U.S.C. 4980H; it did not 

propose to repromulgate the provision 

with respect to shared responsibility 

payments for individuals because such 

tax penalty had been reduced to zero. 

The Department proposed to amend 

§ 75.300 because it had received 

communication and complaints, 

requests for exceptions (under 45 CFR 

75.102), and lawsuits concerning 

§ 75.300(c) and (d). It noted that it was 

preliminarily enjoined from enforcing 

§ 75.300(c) in the State of Michigan as 

to a particular subgrantee’s protected 

religious exercise. Buck v. Gordon, 429 

F. Supp. 3d 447 (W.D. Mich. 2019). It 

also described concerns expressed by 

some non-federal entities that requiring 

compliance with certain nonstatutory 

requirements of those paragraphs 

violates the Religious Freedom 

Restoration Act (RFRA), 42 U.S.C. 

2000bb, et seq., or the U.S. Constitution, 

exceeds the Department’s statutory 

authority, or reduces the effectiveness of 

programs, for example, by reducing 

foster care placements in the Title IV– 

E program of HHS’s Administration for 

Children and Families. The Department 

explained that these complaints and 

legal actions indicated that § 75.300(c) 

and (d) imposed regulatory burden and 

created a lack of predictability and 

stability for both the Department and 

stakeholders with respect to these 

provisions’ viability and enforcement.6

The Department also noted that some 

federal grantees had stated that they 

would require their subgrantees to 

comply with § 75.300(c) and (d), even if 

it meant some subgrantees with 

religious objections would leave the 

program(s) and cease providing services. 

Such grantees and subgrantees provide 

a substantial percentage of services in 

some Department-funded programs and 

are effective partners of federal and state 

governments in providing such services. 

As noted in the proposed rule, the 

Department believes that the departure 

of such grantees and subgrantees from 

Department-funded programs could 

likely reduce the effectiveness of those 

programs. 

Accordingly, as an exercise of its 

discretion to establish requirements for 

its grant programs and to establish 

enforcement priorities for those 

programs, the Department proposed to 

amend § 75.300(c) and (d). It proposed 

to amend § 75.300(c) to require 

compliance with all applicable statutory 

nondiscrimination requirements. It also 

proposed to amend § 75.300(d) to 

specify its commitment to complying 

with all applicable Supreme Court 

decisions in administering its award 

programs, instead of singling out two 

specific Supreme Court decisions. 

As the Department noted in the 

proposed rule, it had received several 

requests for exceptions from § 75.300(c) 

and (d) under 45 CFR 75.102(b) 

(allowing exceptions to part 75 

requirements on a case-by-case basis). In 

January of 2019, the Department granted 

the State of South Carolina an exception 

from the provision in § 75.300(c) that 

required the State to prohibit 

subgrantees from selecting among 

prospective foster parents on the basis 

of religion, to the extent that such 

prohibition conflicts with a subgrantee’s 

religious exercise, conditioned on the 

referral of potential foster parents who 

do not adhere to the subgrantee’s 

religious beliefs to other subgrantees, or 

to the South Carolina foster care 

program. The State’s request for a 

deviation or waiver from § 75.300(c) and 

(d) noted that the child placing agencies 

working with South Carolina comply 

with the requirements of Social Security 

Act Title IV–E, including the provision 

that they may not deny a person the 

right to become an adoptive or foster 


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2260 Federal Register / Vol. 86, No. 7 / Tuesday, January 12, 2021 / Rules and Regulations 

7The request was subsequently narrowed to a 

request for an exception from the religious 

nondiscrimination provision in § 75.300(c). 

8 In reaching this conclusion, OCR found, among 

other things, that (1) the religious 

nondiscrimination provision in section 75.300(c) 

exceeds the scope of the nondiscrimination 

provisions found in the federal statutes applicable 

to the foster care program, and provides no 

exception for religious organizations (as found in 

other statutes prohibiting religious discrimination, 

(2) the OMB UAR does not include analogous 

provisions to section 75.300(c), and (3) HHS UAR 

permits the awarding agency to grant exceptions to 

applicable provisions on a case-by-case basis. 

9South Carolina had provided information to the 

Department that it needs more child placing 

agencies, that faith-based organizations are essential 

to recruiting more families for child placement, and 

that it would have difficulty continuing to place all 

children in need of foster care without the 

participation of such faith-based organizations. 

10Two lawsuits were filed against the 

Department, challenging the Department’s decision 

to grant an exception to South Carolina. In 

Maddonna v. Department of Health and Human 

Services, 19–cv–448 (D.S.C. 2019), a Catholic 

plaintiff challenged the exception granted to South 

Carolina and its subrecipient bringing claims 

against the Department under the Administrative 

Procedure Act, and the First and Fifth Amendment; 

while the complaint was dismissed without 

prejudice because of lack of standing, the plaintiff 

has filed a further lawsuit. In Rogers v. HHS, 19– 

cv–01567–TMC (D.S.C. 2019), a Unitarian same-sex 

couple challenged the exception as a violation of 

the First and Fifth Amendments as well. 

11On March 5, 2020, the Department’s Office for 

Civil Rights (OCR) issued a letter to the Texas 

Attorney General indicating that OCR has 

concluded that RFRA prohibits the Department 

from applying (i.e., enforcing) section 75.300(c) and 

(d) to Texas with respect to the Archdiocese or 

other similarly situated entities. In analyzing the 

issue, OCR noted. 

• The Archdiocese’s sincerely held religious 

beliefs with respect to marriage. 

• Application of § 75.300(d) and certain 

provisions in § 75.300(c) to require Texas to exclude 

the Archdiocese (or similarly situated entities) from 

its foster care and adoption programs would 

constitute a substantial burden on the 

Archdiocese’s religious exercise by compelling it to 

choose between religious exercise and participation 

in the program. 

• Applying those provisions to Texas with 

respect to the Archdiocese is not the least restrictive 

means of advancing a compelling governmental 

interest because doing so would likely reduce the 

effectiveness of the Title IV–E program and the 

Department’s compelling interest is in increasing 

the number of providers, including faith-based 

providers, who are willing to participate in the 

foster care program; the governmental interest in 

ensuring that potential foster care or adoptive 

parents with whom certain providers cannot 

partner still have opportunities to participate in the 

Title IV–E program can be accomplished through 

other means, such as promoting the availability of 

alternative providers; the OMB UAR does not 

contain provisions analogous to the provisions at 

issue; and part 75 provides a mechanism for 

granting exceptions from the requirements of that 

part. 

12Michigan imposed this requirement 

independent of the requirements imposed by the 

Department in § 75.300(c) and (d). 

parent on the basis of ‘‘race, color, or 

national origin,’’ 42 U.S.C. 671(a)(18), 

and contended that the Department had 

unlawfully expanded such statutory 

provisions through those regulatory 

provisions.7 The State also argued that 

the provisions violated the Constitution 

and RFRA because they require certain 

child placing agencies to abandon their 

religious beliefs or forgo the available 

public licensure and funding. In 

granting the exception, the Department, 

through its Office for Civil Rights (OCR) 

and the Administration for Children and 

Families (ACF), respectively, found that 

requiring the State’s subgrantee to 

comply with the religious 

nondiscrimination provision would 

substantially burden its religious beliefs 

in violation of RFRA 8 and that 

application of the regulatory 

requirement would cause a significant 

programmatic burden for South 

Carolina’s foster care program by 

impeding the placement of children into 

foster care.9 Finding that other foster 

care agencies were available to facilitate 

adoptions for those who did not share 

the particular subrecipient’s religious 

beliefs, the Department granted South 

Carolina’s request for an exception with 

respect to the particular subgrantee and 

other similarly situated subgrantees, in 

order to facilitate the participation of 

faith-based entities in the recruitment of 

families for South Carolina’s foster care 

program. The Department also reviewed 

§ 75.300(c) and concluded that it likely 

exceeded the nondiscrimination 

provisions for the foster care program 

specifically enacted by Congress.10

The State of Texas also expressed 

concerns about the legality of 

§ 75.300(c) and (d). The Texas Attorney 

General first sent a letter to the 

Secretary and to several components of 

the Department from which it received 

grants, notifying them that it considered 

the gender-identity and sexualorientation nondiscrimination 

requirements of § 75.300(c), and the 

treatment of same-sex-marriage 

requirement of § 75.300(d), to be 

contrary to law and that it did not 

intend to comply with such provisions 

in the operation of its programs funded 

with Department grants. In a subsequent 

communication, the Texas Attorney 

General’s Office stated that § 75.300(c) 

and (d) suffer from various legal flaws, 

asked the Department to repeal the 

provisions, and, in the alternative, 

requested that ACF grant an exception 

from the application of those provisions 

for any faith-based, child-welfare 

service provider in Texas’s Title IV–E 

foster care and adoption program. 

Another letter reiterated the arguments 

and requests made in the preceding 

letters. The Department, through ACF 

and OCR, reached out to the State on 

several occasions, but was unable to 

determine whether specific faith-based 

organizations were being affected by the 

provisions. One day before the 

Department posted the proposed rule in 

this rulemaking to its website, see 

https://www.hhs.gov/about/news/2019/ 

11/01/hhs-issues-proposed-rule-toalign-grants-regulation.html, Texas, 

joined by the Archdiocese of GalvestonHouston, instituted a lawsuit 

challenging the regulations under the 

Administrative Procedure Act (APA), 

RFRA, the First Amendment, and the 

Spending Clause. Texas and the 

Archdiocese alleged that the application 

of § 75.300(c) and (d) to the State’s Title 

IV–E Foster Care and Adoption 

Assistance program violates RFRA 

because it requires current and potential 

program participants, including the 

Archdiocese, which seeks to participate 

in Texas’s Title IV–E program, to refrain 

from discriminating on the basis of 

sexual orientation, gender identity, and 

same-sex-marriage status as a condition 

of participation in the program. Texas v. 

Azar, 3:19–cv–0365 (S.D. Tex 2019).11

Pursuant to the Department’s motion to 

dismiss, on August 5, 2020, the district 

court dismissed the complaint as moot 

and entered judgment for the 

Department. Texas v. Azar, 2020 WL 

4499128 (Aug. 5, 2020). 

In addition to the litigation referenced 

above, the Department has also been 

subject to several other lawsuits 

concerning these provisions. As noted, 

in Buck v. Gordon, 429 F.Supp.3d 447 

(W.D. Mich. 2019), a district court 

preliminarily enjoined the Department 

from enforcing § 75.300(c) with respect 

to plaintiffs. One of the plaintiffs in that 

lawsuit, a Catholic charity, was willing 

to place children for adoption with 

same-sex couples once they were 

certified by the State or another agency, 

but could not, consistent with its 

religious beliefs, provide such 

certifications. Michigan had not sought 

an exception, but had required 

subrecipients to comply with 

nondiscrimination conditions as 

adoption placement agencies, even 

though doing so violated the sincerely 

held religious beliefs of the plaintiff 

Catholic charity in the lawsuit.12

Plaintiffs sued both Michigan and the 

Department. As noted, the court entered 

a preliminary injunction against the 

Department, prohibiting it from taking 

any enforcement action against 

Michigan based on the faith-based 

organization’s protected religious 

exercise or Michigan’s obligations under 

the preliminary injunction to 

accommodate that religious exercise. 

Against the backdrop of multiple 

requests for exceptions, 

communications and other complaints 


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13The changes to § 200.300(a) seem to address 

many of the issues that led the Department to 

propose the changes that it did to § 75.300(c) and 

(d). The Department finalizes the amendments to 

§ 75.300(c) and (d) with no substantive changes 

from the proposed rule. However, as the 

Department gains experience in implementing the 

updated provisions, it will consider whether the 

changes made to section 200.300(a) obviate any 

need for the Department’s § 75.300(c) and (d) and, 

thus, whether it should repeal such provisions. 

14The Department is authorized to issue 

regulations for the efficient administration of its 

functions in the Social Security Act programs for 

which it is responsible. See SSA 1102(a), 42 U.S.C. 

1302(a). 

concerning § 75.300(c) and (d), 

continued lawsuits, and a careful 

consideration of its authorities, the 

Department proposed amending these 

provisions in November of 2019. 84 FR 

63831 (Nov. 19, 2019). 

OMB’s January 2020 Proposed Rule 

Updating the Uniform Guidance 

Consistent with 2 CFR 200.109, which 

requires OMB to review the Uniform 

Guidance every five years, on January 

22, 2020, OMB issued a proposed rule 

to update the Uniform Guidance. 85 FR 

3766 (Jan. 27, 2020). With respect to 

OMB’s Statutory and National Policy 

Requirements provision, OMB proposed 

to amend the first sentence of 

§ 200.300(a) to include references to the 

U.S. Constitution and federal law and 

specific references to free speech and 

religious liberty, in addition to the 

specific references currently in 

§ 200.300(a). Thus, under the proposed 

guidance, the Federal awarding agency 

would be required to manage and 

administer the Federal award in a 

manner so as to ensure that Federal 

funding is expended and associated 

programs are implemented ‘‘in full 

accordance with the U.S. Constitution, 

Federal Law, statutory, and public 

policy requirements,’’ including ‘‘those 

protecting free speech, religious liberty, 

public welfare, the environment, and 

prohibiting discrimination.’’ 85 FR at 

3793. According to OMB, the purpose 

for the proposed revisions are ‘‘to align 

with Executive Orders (E.O.) 13798 

‘‘Promoting Free Speech and Religious 

Liberty’’ and E.O. 13864 ‘‘Improving 

Free Inquiry, Transparency, and 

Accountability at Colleges and 

Universities.’’ These Executive Orders 

advise agencies on the requirements of 

religious liberty laws, including those 

laws that apply to grants, and set forth 

a policy of free inquiry at institutions 

receiving Federal grants; the proposed 

revisions would ‘‘underscore[ ] the 

importance of compliance with the First 

Amendment.’’ 85 FR at 3768. The 

comment period closed on March 23, 

2020. On August 13, 2020, OMB issue 

the final Guidance for Grants and 

Agreements, 85 FR 49506 (Aug. 13, 

2020). As amended in the final rule, 

section 200.300(a) provides that the 

federal awarding agency would manage 

and administer federal awards so as to 

ensure that funding and associated 

programs are implemented and 

managed ‘‘in full accordance with the 

U.S. Constitution, Federal Law, and 

public policy requirements,’’ including 

‘‘those protecting free speech, religious 

liberty, public welfare, the environment, 

and prohibiting discrimination.’’ The 

Department anticipates that it will, as 

appropriate, amend its UAR to align 

with any changes adopted to the 

Uniform Guidance.13

III. Statutory Authority 

As discussed above, in promulgating 

the UAR and Part 75, both OMB and the 

Department relied almost exclusively on 

the Housekeeping Statute, 5 U.S.C. 301, 

and the financial management statutes 

in 2 CFR 200.103 (and 45 CFR 75.103). 

These include the Chief Financial 

Officer’s Act, 31 U.S.C. 503, the Budget 

and Accounting Act, 31 U.S.C. 1101– 

1125, the Single Audit Act, 31 U.S.C. 

6101–6106, and several Executive 

Orders dictating internal government 

practice. 

The Department also has statutory 

authority to issue regulations to enforce 

certain government-wide statutory civil 

rights nondiscrimination statutes, such 

as Title VI of the Civil Rights Act of 

1964, 42 U.S.C. 2000d et seq. 

(prohibiting discrimination on the basis 

of race, color, national origin by 

recipients of Federal financial 

assistance); Title IX of the Education 

Amendments of 1972, 20 U.S.C. 1681 

(prohibiting discrimination on the basis 

of sex in federally assisted education 

programs), Section 504 of the 

Rehabilitation Act of 1973, 29 U.S.C. 

794 (prohibiting discrimination on the 

basis of disability in programs and 

activities conducted by, or receiving 

financial assistance from, federal 

agencies), and the Age Discrimination 

Act, 42 U.S.C. 6101 et seq. (prohibiting 

discrimination on the basis of age in 

programs and activities receiving 

financial assistance from federal 

agencies). There are also certain 

program specific nondiscrimination 

provisions where the Department has 

the authority to issue enforcement 

regulations. These include section 

471(a)(18) of the Social Security Act 

(SSA), 42 U.S.C. 671(a)(18) (prohibiting 

discrimination on the basis of race, 

color, or national origin in Title IV–E 

adoption and foster care programs), and 

section 508 of the SSA, 42 U.S.C. 708 

(prohibiting discrimination on the basis 

of age, race, color, national origin, 

disability, sex, or religion in Maternal 

and Child Health Services Block Grant 

programs).14

IV. Section-by-Section Description of 

the Final Rule and Response to Public 

Comments 

The Department provided a 30-day 

comment period, which closed on 

December 19, 2019. The Department 

received well over 100,000 public 

comments. After considering the 

comments, the Department finalizes the 

proposed rule with the changes 

described in this section, in which the 

Department discusses the public 

comment, its responses, and the text of 

the final rules. 

General Comments 

Comment: Several comments stated 

30 days was not sufficient time to 

comment on the proposed rule and 

asked the Department to extend the 

comment period. 

Response: The Department 

appreciates the commenters’ 

suggestions, but respectfully disagrees 

that the 30-day comment period was 

insufficient and declines to extend the 

comment period. The APA does not 

have a minimum time period for 

comments, and 30-day comment periods 

are often provided in rulemakings. The 

comment period closed 30 days after 

publication of the proposed rule in the 

Federal Register on November 19, 2019, 

but the proposed rule went on display 

at the Office of the Federal Register on 

November 18, 2019, and on the 

Department’s website on November 1, 

2019. See https://www.hhs.gov/about/ 

news/2019/11/01/hhs-issues-proposedrule-to-align-grants-regulation.html. 

This is consistent with the 2016 Rule, 

which was also the subject of a 30-day 

comment period. See Health and 

Human Services Grant Regulation, 81 

FR 45270 (July 13, 2016) (establishing a 

comment period that closed on August 

16, 2016). 

The comment period provided ample 

time for the submission of more than 

100,000 comments by a variety of 

interested parties, including extensive 

comments by a number of entities. 

Those comments offer a broad array of 

perspectives on the provisions that the 

Department proposed to modify in its 

repromulgation of the 2016 Rule. The 

number and comprehensiveness of the 

comments received disprove 

commenters’ claim that the 30-day 

comment period was insufficient. 

Accordingly, after reviewing the public 


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15The Department notes that ‘‘federal statute’’ 

encompasses binding case law authoritatively 

interpreting the statute, as well as any regulations 

duly promulgated pursuant to statutory rulemaking 

authority that address discrimination in particular 

programs. This clarification should remove possible 

confusion as to the scope of the provision while 

still ensuring the agency maintains the balance 

established by Congress in adopting statutory 

nondiscrimination provisions in part 75. 

16While several commenters stressed that 

important reliance interests are at stake, the 2016 

amendment had been in place less than three years 

when the Department issued the proposed rule. 

comments and the requests for 

additional time, the Department does 

not believe that extending the comment 

period is or was necessary for the public 

to receive sufficient notice of, and 

opportunity to comment on, the 

proposed rule. Consequently, the 

Department concludes that the comment 

period was legally sufficient and is not 

extending the comment period. 

Section 75.300(c) and (d), Statutory and 

National Policy Requirements, and the 

Related Provision at 75.101(f) 

As noted above, in proposing to 

repromulgate § 75.300(c) and (d) in 

modified form, the Department noted 

non-Federal entities have expressed 

concerns that requiring compliance with 

certain nonstatutory requirements of 

those paragraphs violates RFRA or the 

U.S. Constitution, exceeds the 

Department’s statutory authority, or 

reduces the effectiveness of its 

programs. The Department further noted 

that the existence of complaints and 

legal actions indicates that § 75.300(c) 

and (d) imposed regulatory burden and 

created a lack of predictability and 

stability for the Department and 

stakeholders with respect to these 

provisions’ viability and enforcement. 

The Department also noted that some 

Federal grantees had stated that they 

will require their subgrantees to comply 

with the nonstatutory requirements of 

§ 75.300(c) and (d), even if it means 

some subgrantees with religious 

objections would leave the program(s) 

and cease providing services rather than 

comply. Because certain grantees and 

subgrantees that may cease providing 

services if forced to comply with 

§ 75.300(c) and (d) provide a substantial 

percentage of services pursuant to some 

Department-funded programs and are 

effective partners of federal and state 

governments in providing such services, 

the Department indicated that it 

believes that such an outcome would 

likely reduce the effectiveness of 

Department-funded programs. 

Accordingly, as an exercise of its 

discretion to establish requirements for 

its grant programs and to establish 

enforcement priorities for those 

programs, the Department proposed to 

amend § 75.300(c) and (d). It proposed 

to amend § 75.300(c) to require 

compliance with applicable statutory 

nondiscrimination requirements. It 

proposed to amend § 75.300(d) to 

provide that the Department would 

follow all applicable Supreme Court 

decisions in administering its award 

programs. The Department also 

proposed to remove § 75.101(f), which 

was added by the 2016 rule to clarify 

that the requirements of § 75.300(c) do 

not apply to the Temporary Assistance 

for Needy Families Program (title IV–A 

of the Social Security Act, 42 U.S.C. 

601–619). 

The Department reexamined the 

current § 75.300(c) and (d) and their 

authorities after also receiving 

complaints from recipients and States 

that these provisions exceeded the 

Department’s authority under the laws 

cited in § 75.103 and the Housekeeping 

Statute, 5 U.S.C. 301. Several 

commenters pointed out, for example, 

that the Social Security Act prohibits 

discrimination on the basis of ‘‘race, 

color or national origin’’ in the foster 

care and adoption context, 42 U.S.C. 

671(a)(18); see 42 U.S.C. 608(d) 

(incorporating statutory 

nondiscrimination provisions). And 

several other statutes, such as Title VI, 

42 U.S.C. 2000d et seq, prohibit 

categories of discrimination by grantees 

on a government-wide basis. Upon 

closer scrutiny, the Department has 

determined it was not appropriate to 

stray beyond those statutory categories 

with the 2016 amendments to § 75.300. 

The Department is finalizing 

§ 75.300(c) as proposed, which states: 

‘‘It is a public policy requirement of 

HHS that no person otherwise eligible 

will be excluded from participation in, 

denied the benefits of, or subjected to 

discrimination in the administration of 

HHS programs and services, to the 

extent doing so is prohibited by federal 

statute.’’ 15 This change ensures that 

relevant changes in the law in these 

areas will be most appropriately 

monitored by the relevant program 

offices administering them. The 

Department also finalizes the removal of 

§ 75.101(f). 

As discussed, OMB issued proposed 

guidance amending § 75.300(a) in 

January. OMB’s proposed revision, 

requiring funds to be expended in full 

accordance with the Constitution and 

federal laws, could be seen as mirroring 

the requirements of proposed 

§ 75.300(d). However, the Department is 

adopting paragraph (d) as proposed. 

Comments: Some commenters 

opposed the proposed provisions, 

contending that the Department had the 

authority to promulgate the current 

§ 75.300(c) and (d) in the 2016 

rulemaking. Some said concern about 

the Department’s legal authority is 

inconsistent with the Department’s 

previous legal position as embodied in 

the current rule. 

Other commenters supported the 

proposed provisions, contending that 

the current rule exceeds the 

Department’s authority. Some of these 

commenters focused on specific 

programs. For example, some 

commenters said that the current rule 

exceeds the Department’s authority by 

expanding the nondiscrimination clause 

in Title IV–E (the federal foster care and 

adoption program) to include 

classifications not found in the statute. 

Another commenter said that the 

current rule exceeds the Department’s 

authority and discretion by unilaterally 

expanding civil rights protections to 

persons not protected by existing law or 

Supreme Court decisions. Another 

commenter noted that the Department 

lacks statutory authority to vary the 

nondiscrimination requirements 

established by Congress for funded 

programs. Other commenters labeled the 

current rule executive overreach, 

contended that it grossly exceeded the 

authority of an Executive Branch agency 

to implement the relevant statutory 

scheme, or argued that federal 

discrimination standards should adhere 

to the Constitution, acts of Congress, 

and Supreme Court decisions. 

Response: The Department, like all 

federal agencies, has authority to revisit 

regulations and question the wisdom of 

its policies on a continuing basis. 

Chevron U.S.A. Inc. v. Natural 

Resources Defense Council, Inc., 467 

U.S. 837, 842–843 (1984). The 

Department has, in fact, written into its 

UAR regulations a periodic review 

mechanism. 45 CFR 75.109 (‘‘HHS will 

review 45 part 75 at least every five 

years’’). In reassessing these provisions, 

particularly in light of the receipt of 

letters and complaints,16 ongoing 

lawsuits, and exception requests, 

regarding the lawful and appropriate 

scope of § 75.300(c) and (d), the 

Department is exercising that obligation. 

With respect to § 75.300(c) in 

particular, the Department begins by 

noting that Congress has selectively 

imposed nondiscrimination 

requirements in certain statutes, and 

with respect to certain grant programs, 

and not imposed the same requirements 

in others. For example, Title VI of the 

Civil Rights Act prohibits 

discrimination on the basis of race, 

color and national origin, but not 

religion or sex. Title IX of the Education 


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17The Department recognizes that there are 

current legal challenges as to the use of the 

Housekeeping Statute to issue regulations to 

implement substantive statutory requirements. 

Amendments of 1972 prohibits 

discrimination on the basis of sex, but 

not religion, and only in certain 

programs. While RFRA prohibits the 

federal government from substantially 

burdening a person’s exercise of religion 

unless it demonstrates that the 

application of the burden is the least 

restrictive means of furthering a 

compelling governmental interest and 

discrimination by the federal 

government on the basis of religion 

often will violate RFRA, Congress does 

not specifically prohibit discrimination 

on the basis of religion (as such) in 

many of its statutes. In the statutes 

establishing certain programs and 

grants, Congress has specified the 

protected categories with respect to 

which discrimination is prohibited. 

Congress has not expressly included 

discrimination on the basis of sexual 

orientation, gender identity, or same-sex 

marriage status, in any statute 

applicable to departmental grants. In 

making these decisions, Congress 

balanced a number of competing 

considerations, including ensuring 

protections for beneficiaries and 

avoiding burdens that might discourage 

organizations from participating in 

Department-funded programs. And it 

balanced these considerations with 

respect to, and in the context of, specific 

grant programs. 

Likewise, with respect to § 75.300(d), 

the Supreme Court’s holdings in United 

States v. Windsor, 570 U.S. 744 (2013), 

and Obergefell v. Hodges, 576 U.S. 644 

(2015), have limits. Generally, those 

cases require federal and state 

governments (as state actors) to treat 

same-sex and opposite-sex couples the 

same in licensing and recognizing 

marriage. Those cases do not require 

private individuals to abandon any 

views or beliefs that they have about 

same-sex marriage; nor could they, 

given that the Due Process Clause and 

Equal Protection doctrine do not 

regulate private conduct. 

In promulgating the existing 

§ 75.300(c) and (d), however, the 

Department went beyond the 

nondiscrimination requirements 

imposed by Congress and beyond the 

holdings of Windsor and Obergefell. It 

added additional prohibited bases of 

discrimination, thus disrupting the 

balance struck by Congress for 

nondiscrimination requirements in 

Department-funded grant programs. It 

also inserted a requirement that all grant 

recipients ‘‘[i]n accordance with the 

Supreme Court decisions in United 

States v. Windsor and in Obergefell v. 

Hodges, . . . must treat as valid the 

marriages of same-sex couples,’’ which 

thus extends the holdings in those cases 

to non-state action. Indeed, depending 

on how broadly that provision were 

interpreted, it could raise concerns 

under the unconstitutional conditions 

doctrine. Cf. Agency for Int’l Dev’t v. 

Alliance for Open Society Int’l, Inc., 570 

U.S. 205, 214 (2013) (‘‘[T]he 

Government may not deny a benefit to 

a person on a basis that infringes his 

constitutionally protected . . . freedom 

of speech even if he has no entitlement 

to that benefit.’’ (internal quotation 

marks omitted). 

The Department notes that the 

authority for imposing these 

requirements is not clear. In 

promulgating part 75, it relied on the 

Housekeeping Statute, 5 U.S.C. 301, 

which authorizes ‘‘[t]he head of an 

Executive department . . . [to] 

prescribe[ ] regulations for the 

government of his department, the 

conduct of its employees, the 

distribution and performance of its 

business, and the custody, use, and 

preservation of its records, pages, and 

property.’’ But the Department does not 

interpret that statute as authorizing 

substantive regulations imposing 

nondiscrimination requirements on the 

conduct of federal grant recipients, 

except as necessary or appropriate to 

implement an underlying substantive 

statutory requirement.17 Similarly, the 

Department is not convinced that the 

authority conferred in the financial 

management statutes cited in 45 CFR 

75.103 is appropriately exercised to 

impose nondiscrimination requirements 

of this sort. The Single Audit Act 

Amendments, for example, authorize 

the Department to promulgate rules to 

‘‘(1) monitor non-Federal entity use of 

Federal awards, and (2) assess the 

quality of audits conducted under this 

chapter,’’ 31 U.S.C. 7504, 7505. That 

grant of authority does not appear to 

contemplate imposition of substantive 

nondiscrimination provisions onto all 

Departmental grant programs through 

regulation, especially where the 

substantive requirements were not 

embodied in statute(s) applying the 

requirement to all such grant programs. 

Application of the requirements in 

§ 75.300(c) and (d) is also contrary to 

RFRA in at least some circumstances. 

As explained at length later in this 

preamble, RFRA provides that the 

‘‘Government shall not substantially 

burden a person’s exercise of religion 

even if the burden results from a rule of 

general applicability, except’’ where 

application of such substantial burden 

to a person ‘‘(1) is in furtherance of a 

compelling governmental interest; and 

(2) is the least restrictive means of 

furthering that compelling governmental 

interest.’’ 42 U.S.C. 2000bb–1. The 

Department has already concluded that 

imposition of some of the 

nondiscrimination requirements in 

§ 75.300(c) and (d) would violate the 

rights of certain religious organizations 

interested in providing foster-care 

services as part of Department-funded 

programs. There may be other 

circumstances where these requirements 

create similar problems under RFRA. 

Even assuming that the Department 

had legal authority to impose the 

nondiscrimination requirements in 

circumstances that do not present a 

RFRA problem, however, the 

Department no longer believes it 

appropriate to do so. As explained 

throughout this preamble, those 

nondiscrimination requirements raised 

questions about whether the Department 

was exceeding its authority, disrupted 

the balance of nondiscrimination 

requirements adopted by Congress, and 

sowed uncertainty for grant applicants, 

recipients, and subrecipients that could 

deter participation in Departmentfunded programs and, over time, 

undermine the effectiveness of those 

programs. The Department is under no 

legal obligation to impose such 

requirements and has accordingly 

decided to remove them. In their place, 

the Department adopts a new § 75.300(c) 

to state clearly that all grant recipients 

and subrecipients must comply with the 

nondiscrimination requirements made 

applicable to them by Congress and a 

new § 75.300(d) to state that the 

Department will comply with all 

applicable Supreme Court precedents in 

its administration of grants. These 

provisions fall squarely within the 

Department’s statutory authorities, 

respect the balance struck by Congress 

with respect to nondiscrimination 

requirements applicable to grant 

recipients, and will promote certainty 

for grant applicants and recipients by 

returning to the longstanding 

requirements with which they are 

familiar. 

Comment: A number of commenters, 

both those that supported the proposed 

rule generally and those that opposed 

the proposed rule, suggested that 

proposed § 75.300(d) was unnecessary, 

as a truism or otherwise. 

Response: The Department recognizes 

that proposed § 75.300(d) may seem a 

truism. But it states an important 

principle: The Department will follow 

all applicable Supreme Court decisions 

in administering its award programs. 

And it is not unknown for federal 


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18A cooperative agreement is used when the 

principal purpose of the relationship is to transfer 

something of value to the recipient ‘‘to carry out a 

public purpose of support or stimulation authorized 

by law of the United States’’ and ‘‘substantial 

involve is expected’’ between the agency and the 

recipient when carrying out the contemplated 

activity. 31 U.S.C. 6305. 

19The ‘‘Non-Discrimination in Service Delivery’’ 

clause is applied to ‘‘solicitations, contracts, and 

orders to deliver services under HHS’ programs 

directly to the public.’’ See HHSAR 337.103(e). 

These service contracts are procurement contracts 

where the federal agency provides assistance to 

specified recipients by using an intermediary. They 

are procurement contracts: The agency is acquiring 

the services for the direct benefit or use of the 

United States government because it is buying the 

intermediary’s services for its own purposes, to 

relieve the agency of the need to provide the advice 

or services with its own staff. See S. Rep. No. 97– 

180, 3 (1981) (‘‘What is important is whether the 

federal government’s principal purpose is to acquire 

the intermediary’s services, which may happen to 

take the form of producing a product or carrying out 

a services that is then delivered to an assistance 

recipient, or if the government’s principal purpose 

is to assist the intermediary to do the same thing. 

Where the recipient of the award is not receiving 

assistance from the federal agency but is merely 

used to provide a service to another entity which 

is eligible for assistance, the proper instrument is 

a procurement contract.’’). 

20 In the proposed rule, the Department expressed 

concern that the existence of the referenced 

complaints and legal actions created a lack of 

predictability and stability for the Department and 

stakeholders with respect to the viability and 

enforcement of the current § 75.300(c) and (d). 84 

FR at 638132. The Department recognizes that, 

because Congress has been selective in imposing 

specific nondiscrimination requirements with 

respect to certain grant programs, grantees may see 

even the application of statutory nondiscrimination 

requirements as unpredictable. However, under 

§ 75.300(a), the Department’s awarding agency is 

required to communicate to the non-Federal entity 

all relevant public policy nondiscrimination 

requirements and to incorporate them either 

directly or by reference in the terms and conditions 

of the Federal award. 

regulations to enunciate such principles 

that may seem unnecessary to be set 

forth in regulatory text. The Department, 

accordingly, finalizes § 75.300(d) as 

proposed. 

Comment: Several commenters 

opposed the proposed rule, arguing that 

proposed § 75.300(c) creates an 

inconsistency among the Department’s 

regulations and policies prohibiting 

discrimination. Specifically, 

commenters referred to HHSAR 

352.237–74, which includes a ‘‘NonDiscrimination in Service Delivery’’ 

clause that prohibits discrimination 

based on non-merit factors such as 

‘‘race, color, national origin, religion, 

sex, gender identity, sexual orientation, 

[and] disability (physical or mental).’’ 

Commenters noted that the Department 

cited this provision in promulgating 

current § 75.300(c); one commenter 

noted that the alignment of grant 

programs with contractual requirements 

helped guarantee uniformity in service 

delivery and ensured that 

discrimination had no place in any 

Department-funded program. Another 

commenter said that this codification 

was, according to the Department, 

‘‘based on existing law or HHS policy.’’ 

Commenters asserted that removing this 

consistency goes against the 

Department’s assertion, in its proposed 

rulemaking, that the amendment will 

increase predictability and stability, and 

would subject grants and service 

contracts to different nondiscrimination 

requirements. Furthermore, commenters 

have said that the proposed rule 

amending § 75.300(c) would remove 

explicit protections from certain 

communities, leaving grantees with 

little clarity or guidance. 

Response: The Department 

respectfully disagrees. This final rule 

amending § 75.300(c) expressly 

prohibits discrimination where 

prohibited by federal statute. While the 

Department’s regulations and policies 

applicable to federal contracts can serve 

as persuasive authority for its 

regulations and policies applicable to 

grants and cooperative agreements, they 

do not bind the Department in adopting 

policies that govern its grant programs. 

Furthermore, in basing its decision to 

adopt current § 75.300(c) on the fact that 

the HHSAR contains such a provision 

with respect to service contracts, the 

Department may have failed to give 

sufficient consideration to the difference 

between grants and procurement 

contracts (including service contracts) 

under federal law. Under the Federal 

Grant and Cooperative Agreement Act, a 

grant (or cooperative agreement) is an 

assistance arrangement, where the 

purpose is to encourage the recipient of 

funding to carry out activities in 

furtherance of a public goal: A grant 

agreement is used when the principal 

purpose of the relationship is to transfer 

something of value to the recipient ‘‘to 

carry out a public purpose of support or 

stimulation authorized by a law of the 

United States’’ and ‘‘substantial 

involvement is not expected’’ between 

the agency and the recipient when 

carrying out the contemplated activity. 

31 U.S.C. 6304.18 In contrast, the 

primary purpose of a procurement 

contract is to acquire goods or services 

for the direct benefit or use of the 

government: A procurement contract 

(including for service delivery) is used 

when ‘‘the principal purpose of the 

instrument is to acquire (by purchase, 

lease, or barter) property or services for 

the direct benefit or use of the United 

States government.’’ 31 U.S.C. 6303.19

Procurement contracts ‘‘are subject to a 

variety of statutory and regulatory 

requirements that generally do not 

apply to assistance transactions.’’ GAO– 

06–382SP, Appropriations Law (2006), 

Vol. II, 10–18. And, arguably, because 

the purpose is to acquire goods or 

services for the direct benefit or use of 

the government, the Department may 

have greater latitude to impose 

nondiscrimination and other 

requirements on a contractor than on a 

grantee, when the Department’s purpose 

is to provide assistance through a 

grant.20

Comments: With respect to religious 

liberty issues and RFRA, some 

commenters opposed the proposed rule 

based on their view that religious 

freedom exemptions do not belong in 

healthcare where lives may be at stake, 

or in science and medical procedures. 

Another commenter contended that the 

proposed rule would allow religious 

groups to discriminate, to the detriment 

of children needing foster care services. 

Another disagreed that the 2016 Rule 

violated religious freedom or RFRA, or 

required remediation for that reason. 

Other commenters contended the 

proposed rule would permit religious 

discrimination, including against 

beneficiaries and participants in direct 

federally funded programs, or opposed 

the proposed rule because religious 

freedom should not be pursued with 

discriminatory regulations or policies. 

Another claimed that the proposed rule 

is based on a false premise that 

protecting minorities is inconsistent 

with RFRA. Some commenters opposed 

the proposed rule, asserting that it is 

unconstitutional and violates the 

Establishment Clause (or the separation 

of church and state); another commenter 

contended that it would also violate the 

Equal Protection and Due Process 

components of the Fifth Amendment. 

Conversely, many commenters 

supported the proposed rule because it 

protects the religious freedom of faithbased organizations that provide 

services in federal programs. They 

stated that the proposed rule corrected 

the RFRA violations in the 2016 rule, 

alleviated discrimination against faithbased organizations, and would protect 

against religious discrimination. 

Another commenter supported the 

proposed rule because the current rule 

may violate the Free Speech and Free 

Exercise Clauses of the U.S. 

Constitution. Some commenters 

supported the proposed rule because it 

is a regulation that frees up longstanding faith-based organizations to 

help the public good. A number of 

commenters, specifically addressing 

foster care and adoption or other child 

welfare programs, supported the 

proposed rule to prevent government 

discrimination against religious 


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21 42 U.S.C. 2000bb–3. 

22RFRA expressly incorporates the compelling 

interest tests of Wisconsin v. Yoder, 406 U.S. 205 

(1972) and Sherbert v. Verner, 374 U.S. 398 (1963). 

See 42 U.S.C. 2000bb(b)(1). 

adoption and foster care providers or 

faith-based agencies, which should not 

need to choose between helping 

children and their deeply held beliefs 

and should be free to serve children and 

families according to their beliefs. 

Several noted that prohibiting religious 

groups from providing critical services 

to underserved and at-risk children 

violates the principles of religious 

freedom; others noted that Christianbased foster agencies should not be 

discriminated against because of their 

religious beliefs regarding marriage. 

Some commenters also supported the 

proposed rule because they support the 

inclusion of faith-based organizations 

for consideration in the awarding of 

grants. 

Response: RFRA provides broad 

protection for religious liberty against 

infringement by the federal government. 

Burwell v. Hobby Lobby, 573 U.S. 682 

(2014). RFRA provides that the federal 

government ‘‘shall not substantially 

burden a person’s exercise of religion 

even if the burden results from a rule of 

general applicability,’’ unless ‘‘it 

demonstrates that the application of the 

burden to the person (1) is in 

furtherance of a compelling 

governmental interest; and (2) is the 

least restrictive means of furthering that 

compelling governmental interest.’’ 42 

U.S.C. 2000bb–1. RFRA’s test is the 

‘‘most rigorous’’ form of scrutiny 

identified by the Supreme Court. 

Church of the Lukumi Babalu Aye v. 

City of Hialeah, 508 U.S. 520, 546 

(1993); see also City of Boerne v. Flores, 

521 U.S. 507, 534 (1997) (‘‘Requiring a 

State to demonstrate a compelling 

interest and show that it has adopted 

the least restrictive means of achieving 

that interest is the most demanding test 

known to constitutional law.’’). It 

governs ‘‘all Federal law, and the 

implementation of that law, whether 

statutory or otherwise, and whether 

adopted before or after November 16, 

1993’’: It is applicable to federal 

statutory law adopted after such date 

‘‘unless such law explicitly excludes 

such application by reference to this 

chapter.’’ 21

For purposes of RFRA, ‘‘exercise of 

religion’’ includes ‘‘any exercise of 

religion, whether or not compelled by, 

or central to, a system of religious 

belief.’’ 42 U.S.C. 2000bb–2(2), 2000cc– 

5(7)(A). The term ‘‘substantially 

burden’’ means to ban an aspect of a 

person’s religious observance or 

practice, compel an act inconsistent 

with that observance or practice, or 

substantially pressure the person to 

modify such observance or practice.’’ 

Department of Justice, ‘‘Federal Law 

Protections for Religious Liberty,’’ 82 FR 

49668, 49669–70 (Oct. 26, 2017). 

Whether the financial consequences are 

a fine or the withholding of a benefit, 

such as a grant or license, is irrelevant. 

See Sherbert v. Verner, 374 U.S. 398, 

404 (1963) (‘‘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 

v. Unemployment Appeals Comm’n of 

Fla., 480 U.S. 136, 141 (1987); Thomas 

v. Review Bd. of Ind., 450 U.S. 708, 717– 

18 (1981).22 In 2017, the Supreme Court 

recognized that, under the First 

Amendment, religious institutions 

applying for government grants have ‘‘a 

right to participate in a government 

benefit program without having to 

disavow [their] religious character.’’ 

Trinity Lutheran Church of Columbia, 

Inc. v. Comer, 137 S. Ct. 2012, 2022 

(2017). And RFRA likewise applies to 

government actions in administering 

grant programs. See 82 FR at 49669 

(‘‘RFRA applies to all actions by federal 

administrative agencies, including . . . 

grant or contract distribution and 

administration.’’); see also OLC 

Opinion, ‘‘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. 1, 62 (2007) (RFRA 

requires Office of Justice Programs to 

exempt a religious organization that is a 

grantee from a religious 

nondiscrimination requirement in the 

grant). 

Government bears a heavy burden to 

justify a substantial burden on the 

exercise of religion. ‘‘[O]nly those 

interests of the highest order . . . can 

overbalance legitimate claims to the free 

exercise of religion.’’ Thomas, 450 U.S. 

at 718 (quoting Wisconsin v. Yoder, 406 

U.S. 206, 215 (1972)). ‘‘[B]roadly 

formulated interests justifying the 

general applicability of government 

mandates’’ are insufficient. Gonzales v. 

O Centro Espirita Beneficente Uniao do 

Vegetal, 546 U.S. 418, 431 (2006). The 

government must establish a compelling 

interest to deny an accommodation to 

the particular claimant. Id. at 430, 435– 

38. An asserted compelling interest in 

denying an accommodation to a 

particular claimant is undermined by 

evidence that exemptions or 

accommodations have been granted for 

other interests, id. at 433, 436–37; 

Hobby Lobby, 134 S. Ct. at 2780, that the 

government has in place a system of 

individual exemptions from the 

requirement, Employment Division, 

Department of Human Resources of 

Oregon v. Smith, 494 U.S. 872, 884 

(1994); Fraternal Order of Police v. City 

of Newark, 170 F.3d 359, 366 (3d Cir. 

1999) (Alito, J.), or that similar agencies 

or programs do not impose the 

requirement, Holt v. Hobbs, 135 S. Ct. 

853, 866 (2015). The compelling-interest 

requirement applies even where the 

accommodation sought is ‘‘an 

exemption from a legal obligation 

requiring [the claimant] to confer 

benefits on third parties.’’ Hobby Lobby, 

134 S. Ct. at 2781 n.37. Although ‘‘in 

applying RFRA ‘courts must take 

adequate account of the burdens a 

requested accommodation may impose 

on nonbeneficiaries,’ ’’ the Supreme 

Court has explained that almost any 

governmental regulation could be 

reframed as a legal obligation requiring 

a claimant to confer benefits on third 

parties. Id. (quoting Cutter v. Wilkinson, 

544 U.S. 709, 720 (2005)). As nothing in 

the text of RFRA admits of an exception 

for laws requiring a claimant to confer 

benefits on third parties, 42 U.S.C. 

2000bb–1, and such an exception would 

have the potential to swallow the rule, 

the Supreme Court has rejected the 

proposition that RFRA accommodations 

are categorically unavailable for laws 

requiring claimants to confer benefits on 

third parties. Hobby Lobby, 134 S. Ct. at 

2781 n.37. 

Even if the government can identify a 

compelling interest, the government 

must also show that denial of an 

accommodation is the least restrictive 

means of serving that compelling 

governmental interest. This standard is 

‘‘exceptionally demanding.’’ Id. at 2780. 

It requires the government to show that 

it cannot accommodate the religious 

adherent while achieving its interest 

through a viable alternative, which may 

include, in certain circumstances, 

expenditure of additional funds, 

modification of existing exemptions, or 

creation of a new program. Id. at 2781. 

Indeed, the existence of exemptions for 

other individuals or entities that could 

be expanded to accommodate the 

claimant, while still serving the 

government’s stated interests, will 

generally defeat a RFRA defense, as the 

government bears the burden to 

establish that no accommodation is 

viable. See id. at 2781–82. 

Applying these principles, as noted in 

the proposed rule, and above, the 

Department determined that RFRA’s 

application to § 75.300(c) in the context 

of the South Carolina Title IV–E foster 

care program, and the participation of a 

faith-based provider whose religious 


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23See California v. Azar, No. 19–15974, 2020 WL 

878528, at *24 (9th Cir. Feb. 24, 2020) (en banc) 

(‘‘HHS acted well within its authority in deciding 

how best to avoid conflict with the Federal 

conscience laws’’). 

24The Department is aware that a federal district 

court has recently declined to dismiss a challenge, 

brought by a same-sex couple against South 

Carolina and the Department, challenging the 

exception granted to the State of South Carolina 

with respect to the religious nondiscrimination 

provision in the current § 75.300(c) for Miracle Hill 

and similarly situated entities in South Carolina. 

The court dismissed the plaintiff’s equal protection 

claim for religious discrimination and denied the 

motion to dismiss the plaintiff’s claims for violation 

of the Establishment Clause and equal protection 

based on sexual orientation discrimination. Nothing 

in that decision would preclude the Department 

from finalizing this rule. Rogers v. HHS, 19–cv– 

01567–TMC (D.S.C. 2019). 

beliefs precluded it from complying 

with the religious nondiscrimination 

provision, required the Department to 

issue an exception to South Carolina for 

that faith-based organization and other 

similarly situated faith-based 

participants in South Carolina’s foster 

care program who were willing to refer 

would-be foster parents to other 

providers. A federal district court in 

Michigan likewise concluded that RFRA 

required an exception from § 75.300(c) 

for a Catholic organization that 

participated in Michigan’s foster care 

and adoption program, but could not— 

consistent with its Catholic beliefs— 

review and recommend to the State 

same-sex or unmarried couples 

(although it referred such cases to other 

child placing agencies for review and 

recommendation). The court issued a 

preliminary injunction precluding the 

Secretary from taking ‘‘any enforcement 

action against the State under 45 CFR 

75.300(c) based upon [plaintiff’s] 

protected religious exercise . . . or 

upon the State of Michigan’s obligation 

under this preliminary injunction to 

accommodate such protected religious 

exercise.’’ Buck, 429 F.Supp.3d at 461. 

Finally, as noted above, the 

Department’s OCR notified the Texas 

Attorney General that it had concluded 

that application of § 75.300(d) and 

certain provisions in § 75.300(c) to 

require Texas to exclude the 

Archdiocese of Galveston (or similarly 

situated entities) from its foster care and 

adoption programs would violate RFRA. 

The Department recognized that it 

had a number of options to address the 

burdens imposed on religious exercise 

by § 75.300(c) and (d). As noted above, 

the Department proposed to amend the 

provisions to mirror the balance struck 

by Congress with respect to 

nondiscrimination requirements and to 

reduce confusion for grant applicants 

and recipients. This exercise of the 

Department’s discretion also alleviates 

the substantial burdens on religious 

exercise that the Department had 

identified and others of which it is not 

yet aware. Especially in the absence of 

any statutory requirement to impose 

§ 75.300(c) and (d), the Department 

believes that the best way to avoid such 

burdens on religious exercise is, instead 

of requiring individual objectors to 

assert claims under RFRA or other 

applicable laws, to avoid such 

regulatory requirements.23

Comments: A number of commenters 

opposed the proposed revisions to 

§ 75.300 because they asserted that the 

revisions would lead to spending of 

taxpayer dollars to support 

organizations that discriminate in 

violation of equal rights. Similarly, 

some commenters asserted that the 

proposed revisions to § 75.300 would 

violate the separation of church and 

state. 

Response: The Department 

respectfully disagrees. Under the state 

action doctrine, the First, Fifth, and 

Fourteenth Amendment of the 

Constitution among others, apply only 

to state action, i.e., the action of the 

federal government and, as applicable, 

the state governments. It does not apply 

to private conduct. See United States v. 

Morrison, 529 U.S. 598 (2000); Civil 

Rights Cases, 109 U.S. 3 (1883). Thus, 

only the action of the federal 

government (or state governments) 

could violate the Establishment Clause 

or the Due Process or Equal Protection 

Clauses. The private conduct of Federal 

recipients and subrecipients is not 

considered state action merely by 

receipt of partial funding from the 

government. See Rendell-Baker v. Kohn, 

457 U.S. 830 (1982). And the 

Department’s funding of faith-based and 

other organizations for a wide variety of 

purposes does not constitute sufficient 

involvement or entwinement with the 

government for private recipients to be 

considered state actors. See Shelley v. 

Kraemer, 334 U.S. 1 (1948). 

The government does not violate the 

Establishment Clause where grants are 

awarded to a wide variety of entities, 

including faith-based organizations, and 

for a wide variety of purposes, none of 

which are the promotion of religion. 

Indeed, ‘‘a significant factor in 

upholding governmental programs in 

the face of Establishment Clause attack 

is their neutrality towards religion.’’ 

Rosenberger v. Rector & Visitors of Univ. 

of Va., 515 U.S. 819, 839 (1995). That 

‘‘guarantee of neutrality is respected, 

not offended, when the government, 

following neutral criteria and 

evenhanded policies, extends benefits to 

recipients whose ideologies and 

viewpoints, including religious ones, 

are broad and diverse.’’ Id. Thus, 

religious adherents and organizations 

may, like nonreligious adherents and 

organizations, receive direct financial 

aid through a secular-aid program. 

Indeed, excluding religious adherents 

and organizations from secular-aid 

programs may violate the Free Exercise 

Clause. See, e.g., Trinity Lutheran, 137 

S. Ct. 2012 (scrap tire program). And the 

Department is under an affirmative duty 

to allow faith-based organizations to 

participate equally in federal grant 

programs while maintaining their 

independence, including their 

expression of their religious beliefs. See, 

e.g., 42 U.S.C. 290kk–1 (SAMHSA 

discretionary funds), 300x–65 

(SAMHSA block grants), 604a 

(Temporary Assistance for Needy 

Families); see also 45 CFR 87.3.24

Comment: The Department received 

numerous comments on a variety of 

other laws as well. These included Title 

VII, the Affordable Care Act, the Family 

First Prevention Services Act, and state 

and local laws dealing with 

discrimination and child welfare. Some 

commenters believed these laws 

required keeping the current language of 

§ 75.300(c) and (d), while other 

commenters believed these laws 

required the Department to repeal or 

amend paragraphs (c) and (d). Some also 

thought agency action to be premature 

given the pendency of several cases 

surrounding these laws at the Supreme 

Court. 

Response: This rulemaking does not 

alter a grant applicant or recipient’s 

obligations under the referenced laws or 

any regulations promulgated to 

implement such laws. Thus, grant 

applicants and recipients that are 

subject to nondiscrimination 

requirements in Title VII, the Affordable 

Care Act, and/or state or local laws 

dealing with discrimination, will 

remain subject to those laws to the same 

extent that they were before this 

rulemaking. Conversely, grant 

applicants and recipients who are not 

subject to those requirements will 

continue not to be subject to them. The 

Department will also continue to 

enforce any nondiscrimination 

provisions for which it has enforcement 

authority relating to grant applicants 

and recipients, and it will do so in 

accordance with the terms of the 

statutes. For example, the Department 

will continue to require State foster care 

plans under the Family First Prevention 

Services Act to include the prohibition 

on ‘‘delay[ing] or deny[ing] the 

placement of a child for adoption or into 

foster care, on the basis of the race, 

color, or national origin of the adoptive 

or foster parent, or of the child, 


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involved,’’ 42 U.S.C. 671(a)(18)(b), 

while also ensuring that federal 

payments for foster care are only 

expended for child placements made 

pursuant to the ‘‘best interest of the 

child’’ standard. 42 U.S.C. 672(e). 

Commenters noted the pendency 

before the Supreme Court of several 

cases raising the question whether Title 

VII prohibits an employer from firing 

employees because of their sexual 

orientation or gender identity, 

contending that any action by the 

Department would be premature. As a 

general matter, although the Supreme 

Court’s interpretation of the language of 

Title VII may inform the interpretation 

of similar language in other statutes and 

regulations, like Title IX, the statutes 

differ in certain respects. See, e.g., 

Gebser v. Lago Vista Indep. Sch. Dist., 

524 U.S. 274, 283–90 (1998) (comparing 

the text, context, and structure of Title 

VII and Title IX); Jackson v. 

Birmingham Bd. of Educ., 544 U.S. 167, 

175 (2005) (same). 

The Supreme Court has now decided 

those Title VII cases and nothing in its 

decision in Bostock v. Clayton County, 

590 U.S. ll, 140 S. Ct. 1731 (2020), on 

those consolidated cases precludes the 

Department from issuing this final rule. 

In Bostock v. Clayton County, the 

Supreme Court held that Title VII’s 

prohibition of employment 

discrimination because of sex 

encompasses discrimination because of 

sexual orientation and gender identity. 

The provision at issue in Bostock stated 

that it is ‘‘unlawful . . . for an employer 

to fail or refuse to hire or to discharge 

any individual, or otherwise to 

discriminate against any individual . . . 

because of such individual’s . . . sex.’’ 

42 U.S.C. 2000e–2(a)(1). The Court 

stated that it ‘‘proceed[ed] on the 

assumption that ‘sex’ signified what the 

employers suggest, referring only to 

biological distinctions between male 

and female’’ when Title VII was 

enacted.in 1964 140 S. Ct. at 1739. The 

Court then discussed the statute’s use of 

the words ‘‘because of’’ (‘‘by reason of’’ 

or ‘‘on account of’’), ‘‘discriminate 

against’’ (treating [an] individual worse 

than others who are similarly situated), 

and ‘‘individual,’’ before concluding 

that the statute covered the challenged 

conduct, see 140 S. Ct. at 1739–40, 

1753. The Court reasoned, ‘‘[f]or an 

employer to discriminate against 

employees for being homosexual or 

transgender, the employer must 

intentionally discriminate against 

individual men and women in part 

because of sex.’’ 140 S. Ct. at 1743. The 

Court noted that ‘‘[t]he only question 

before us is whether an employer who 

fires someone simply for being 

homosexual or transgender has 

discharged or otherwise discriminated 

against that individual ‘because of such 

individual’s sex.’ ’’ 140 S. Ct. at 1753 

(‘‘Under Title VII . . . we do not 

purport to address bathrooms, locker 

rooms, or anything else of the kind.’’). 

It noted that ‘‘the employers worry that 

our decision will sweep beyond Title 

VII to other federal or state laws that 

prohibit sex discrimination,’’ but stated 

that ‘‘none of these other laws are before 

us; we have not had the benefit of 

adversarial testing about the meaning of 

their terms, and we do not prejudge any 

such question today.’’). Id. Finally, the 

Court acknowledged the potential 

application of the ‘‘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’’). 

The final rule is consistent with 

Bostock. First, whether a grant recipient 

or applicant is subject to Title VII is 

determined by facts independent of its 

relationship to the Department. 

Receiving a grant from the Department 

does not change a grantee’s obligations 

under that statute. Second, if the Court’s 

reasoning in Bostock is extended to 

other statutory protections prohibiting 

discrimination on the basis of sex— 

statutory provisions that are applicable 

to grants, such as Title IX, section 1557 

of the Affordable Care Act or other 

statutory provisions that incorporate 

Title IX’s prohibition on discrimination 

on the basis of sex into Departmental 

grant programs, or other statutes that 

prohibit sex discrimination in 

Departmental grant programs— 

§ 75.300(c) and (d) would incorporate 

such protections. Third, because the 

final rule applies only applicable 

statutory nondiscrimination 

requirements to its grant programs, the 

Department necessarily acknowledges 

the potential exceptions to such 

requirements under the Constitution 

and federal statute, including in 

nondiscrimination statutes, RFRA, and 

the First Amendment. Accordingly, 

nothing about the Bostock decision 

undermines the Department’s choice in 

this final rule to refer to statutory 

nondiscrimination requirements and 

state that the Department will follow 

applicable Supreme Court decisions in 

administering its award programs, 

rather than delineating the specific 

protected categories from discrimination 

in the rule or applying two specific 

Supreme Court decisions. If anything, 

Bostock shows the utility of the 

Department’s approach in this final rule. 

Comments: Some commenters 

opposed the proposed rule, contending 

that it is an arbitrary and capricious 

exercise of the Department’s rulemaking 

authority and violates the APA; another 

added that it is an abuse of discretion 

and otherwise not in accordance with 

law. Several commenters asserted that 

the Department did not provide 

adequate evidence to support its 

assertions about complaints or the 

proposed revisions, or failed to provide 

a reasoned analysis for the proposed 

changes. 

Response: The Department 

respectfully disagrees. Under the APA, 

agency action may be arbitrary and 

capricious if the agency (1) ‘‘relied on 

factors which Congress has not intended 

it to consider’’; (2) ‘‘entirely failed to 

consider an important aspect of the 

problem’’; (3) ‘‘offered an explanation 

for its decision that runs counter to the 

evidence before the agency’’; or (4) 

offered an explanation ‘‘so implausible 

that it could not be ascribed to a 

difference in view or the product of 

agency expertise.’’ Motor Vehicle Mfrs. 

Ass’n of U.S., Inc. v. State Farm Mut. 

Auto. Ins. Co., 463 U.S. 29, 43 (1983). 

Having identified legal, policy, and 

programmatic issues presented by 

current § 75.300(c) and (d), the 

Department proposed, and now 

finalizes, revisions to the provisions to 

address the issues. As finalized here, the 

amended § 75.300(c) and (d) better align 

with the governing statutes. It is never 

arbitrary and capricious for an agency to 

‘‘justify its policy choice by explaining 

why that policy ‘is more consistent with 

statutory language,’ ’’ so long as the 

agency ‘‘analyze[s] or explain[s] why the 

statute should be interpreted’’ as the 

agency proposes. Encino Motorcars, LLC 

v. Navarro, 136 S. Ct. 2117, 2127 (2016) 

(quoting Long Island Care at Home, Ltd. 

v. Coke, 551 U.S. 158, 175 (2007)). 

The Department respectfully disagrees 

with commenters that contended that 

the Department has not met the 

threshold standard for revising its 

regulations. Agency action that 

‘‘changes prior policy’’ is not subject to 

a heightened justification or standard of 

review: An Agency ‘‘need not 

demonstrate to a court’s satisfaction that 

the reasons for the new policy are better 

than the reasons for the old one; it 

suffices that the new policy is 

permissible under the statute, that there 

are good reasons for it, and that the 

agency believes it to be better, which the 

conscious change of course adequately 


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25A few commenters complained about the 

proposed removal of the express enumeration of the 

required nondiscrimination in § 75.300(c). 

However, § 75.300(a) requires the Department’s 

grantmaking agencies to communicate all of the 

relevant public policy requirements—which 

includes the applicable nondiscrimination 

requirements—to grantees and to incorporate them 

either directly or by reference in the terms and 

conditions of the Federal award. 

26When there are a sufficient number of eligible 

organizations and the issue is which ones should 

be funded, an increase in the number of such 

organizations makes it more likely that the funding 

component (or recipient) would be able to select 

more effective or higher quality recipients/ 

subrecipients. 

27See, e.g., Pain Management Task Force, ‘‘Pain 

Management Best Practices, Fact Sheet on Stigma’’ 

(Aug. 13, 2019), https://www.hhs.gov/sites/default/ 

files/pmtf-fact-sheet-stigma_508-2019-08-13.pdf 

(‘‘Compassionate, empathetic care centered on a 

patient-clinician relationship is necessary to 

counter the suffering of patients. . . . Patients with 

painful conditions and comorbidities, such as 

anxiety, depression or substance use disorder (SUD) 

face additional barriers to treatment because of 

stigma.’’). 

28See 29 U.S.C. 705(20) (incorporating ADA 

definition of disability into Section 504); 42 U.S.C. 

12102(1)–(3); 28 CFR 35.108(d)(2)(iii)(J). 

indicates. This means that the agency 

need not always provide a more detailed 

justification than what would suffice for 

a new policy created on a blank slate.’’ 

FCC v. Fox Television Stations, Inc., 556 

U.S. 502, 515 (2009). Given the limited 

justification for the adoption of 

§ 75.300(c) and (d), and the fact that the 

Department was not statutorily 

obligated to add those provisions in the 

first place, the explanations provided in 

the proposed rule—and in this final 

rule—meet the applicable standards. 

Comments: Many commenters 

opposed the proposed rule, contending 

that it would permit organizations to 

discriminate against members of the 

LGBTQ community, women, and 

religious minorities. One commenter 

claimed that the proposed rule 

eliminates protections for traditionally 

marginalized populations, including 

LGBTQ people, and permits 

discrimination in the administration of 

HHS programs and services based on 

gender identity or sexual orientation. 

Many suggested that LGBTQ individuals 

and other marginalized communities 

could lose access to healthcare through 

discrimination under the proposed rule. 

One commenter claimed that the 

proposed rule lays the foundation for 

possible discrimination against certain 

groups of people; other commenters 

expressed concern that it will set a 

precedent for discrimination in other 

health and human services programs. 

One commenter suggested that the 

proposed changes would increase the 

burdens on the LGBTQ community, 

women, and people of minority faiths, 

violating their civil rights and imposing 

damage far greater than the monetary 

effects on the regulated community. A 

number of State Attorneys General 

opposed the proposed rule, contending 

that it would eliminate explicit 

protections for age, disability, sex, race, 

color, natural origin, religion, gender 

identity, or sexual orientation, and 

replace them with a generic prohibition 

of discrimination to the extent 

prohibited by federal statutes, making 

grantees free to discriminate if they so 

choose. One commenter stated that the 

proposed rule would allow HHS award 

recipients, whether religious or nonreligious, to discriminate based on nonmerit factors unless some other 

prohibition applies explicitly to the 

program or activity. A number of 

commenters argued that discrimination 

has no place in HHS programs and that 

HHS has no authority to hold money or 

discriminate against anyone with their 

tax dollars. Other commenters claimed 

that the proposed rule would permit 

taxpayer dollars to support 

organizations that may discriminate 

against, or violate the rights of, 

vulnerable people who need services, or 

in violation of equal rights. Some 

commenters argued that discrimination 

is against American beliefs and that law 

and government policy should not allow 

it. Another commenter noted that all of 

humankind is created in the image of 

God, and that no form of discrimination 

is defensible. 

In addition to the potential impact on 

foster care and adoption (discussed 

below), commenters asserted that the 

proposed rule would have an adverse 

impact on children and adults served in 

multiple systems of care. Other 

commenters claimed a negative impact 

on various health and human services 

programs supported by HHS funding, 

including housing, homeless shelters, 

child care, education, food assistance, 

health care, cancer screenings, 

immunization programs, reproductive 

care, and STD/STI and HIV/AIDS 

programs, Head Start and other prekindergarten programs, domestic 

violence hotlines, substance abuse 

programs, resettlement efforts for 

refugees and asylees, and community 

support services for seniors and people 

with disabilities. Several commenters 

claimed that the proposed rule could 

restrict access to HIV prevention and 

treatment and would be a setback to the 

administration’s Ending HIV as an 

epidemic initiative. 

Response: The Department believes 

that all people should be treated with 

dignity and respect, especially in the 

Department’s programs, and that they 

should be given every protection 

afforded by the Constitution and the 

laws passed by Congress. The 

Department 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. In 

this final rule, the Department 

reemphasizes this commitment to apply 

and enforce those nondiscrimination 

laws. 

The Department does not agree with 

commenters’ assertion that, should the 

Department limit its nondiscrimination 

regulatory and enforcement activities to 

the nondiscrimination laws passed by 

Congress, grantees will discriminate 

against vulnerable populations or deny 

services to the intended beneficiaries of 

departmental programs, or that 

individuals who are otherwise eligible 

to receive services from programs 

funded by the Department will not 

receive them. Commenters offered little 

evidence that this was the case before 

the current § 75.300(c) and (d) became 

effective in January 2017, and there is 

no reason to believe that this will occur 

as a result of the fact that the regulation 

will only require compliance with 

statutory nondiscrimination 

requirements. This final rule merely 

removes the regulatory requirement to 

comply with nonstatutory 

nondiscrimination requirements; grant 

recipients are still required to comply 

with the statutory nondiscrimination 

requirements that are applicable to the 

programs for which they receive 

Department funding—and they remain 

free, consistent with their other legal 

and regulatory obligations, to observe 

nonstatutory nondiscrimination 

practices.25 To the extent that 

commenters view statutory 

nondiscrimination provisions as 

insufficient, they can address that issue 

with Congress. 

The Department is committed to 

improving the health and wellbeing of 

all Americans.26 Consistent with its 

statutory authority, the Department 

seeks, wherever possible, to remove 

barriers to healthcare. As a matter of 

policy, the Department recognizes and 

works to address barriers to treatment 

caused by stigma about depression, 

anxiety, substance use disorder, and 

other comorbid mental and behavioral 

health conditions.27 For example, this 

final rule does not alter or affect the 

longstanding Federal protections against 

discrimination for individuals with HIV: 

Section 504, and hence also this final 

rule, prohibits discrimination on the 

basis that an individual has HIV.28 OCR 

continues to pursue major enforcement 


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29See, e.g., ‘‘HHS Office for Civil Rights Secures 

Corrective Action and Ensures Florida Orthopedic 

Practice Protects Patients with HIV from 

Discrimination’’ (Oct. 30, 2019), https://

www.hhs.gov/about/news/2019/10/30/hhs-ocrsecures-corrective-action-and-ensures-fl-orthopedicpractice-protects-patients-with-hiv-fromdiscrimination.html; ‘‘HHS Office for Civil Rights 

Enters Into Agreement with Oklahoma Nursing 

Home to Protect Patients with HIV/AIDS from 

Discrimination’’ (Sept. 8, 2017), https://

www.hhs.gov/about/news/2017/09/08/hhs-officefor-civil-rights-enters-into-agreement-withoklahoma-nursing-home.html. 

30See OCR, ‘‘Know the Rights That Protect 

Individuals with HIV and AIDS,’’ https://

www.hhs.gov/sites/default/files/ocr/civilrights/ 

resources/factsheets/hivaids.pdf; OCR, ‘‘Protecting 

the Civil Rights and Health Information Privacy 

Rights of People Living with HIV/AIDS,’’ https://

www.hhs.gov/civil-rights/for-individuals/specialtopics/hiv/index.html. 

31See ‘‘Ending the HIV Epidemic: A Plan for 

America,’’ https://www.hiv.gov/Federal-response/ 

ending-the-hiv-epidemic/overview. 

32While one state indicated that its placement 

rates and time in care did not change significantly 

when ‘‘discriminatory’’ providers leave the field, 

other states provided the Department with different 

perspectives on the issue, given the unique 

dynamics and experiences of their state foster care 

and adoption systems. As noted above, based on its 

experience, the Department believes that when 

faith-based organizations are permitted to 

participate consistent with their religious beliefs, 

there is greater availability of foster care and 

adoption services and placements. 

actions under its authorities 29 and to 

provide the public guidance 30 to protect 

the rights of persons with HIV or AIDS. 

HHS remains committed to ensuring 

that those living with HIV or AIDS 

receive full protection under the law, in 

accordance with full implementation of 

the President’s National HIV/AIDS 

Strategy.31

Comments: Some commenters 

opposed the proposed rule, contending 

that it would license discrimination by 

allowing child welfare agencies to reject 

prospective foster and adoptive families 

on the basis of sexual orientation, 

gender identity or expression, religion, 

and other factors; several suggested that 

such interests would be prioritized 

above the best interests of the child. 

Others were concerned that it would 

permit discrimination against children 

in foster care who are LGBTQ and are 

entitled to loving support and the 

chance of a family. One state noted that 

its experience was that placement rates 

and time in care do not change 

significantly when discriminatory 

providers leave the field. A number of 

commenters thought that the proposed 

rule would have a negative impact on 

the availability of foster care/adoption 

placements; a few claimed that it would 

limit the number of loving parents that 

children can be placed with based on 

sexual preference, which does not serve 

anyone, with one commenter asserting 

that it will increase the number of 

children in foster care permanently. One 

commenter suggested that the 

substantive due process rights of 

children in state-regulated foster care 

will be impaired by the proposed rule 

and that placing the providers of foster 

care and adoption services in a position 

to serve their religious objectives over 

the best interest of the children in their 

care violates federal statute which gives 

the children and youth higher priority. 

Several commenters disagreed that the 

current rule reduces the effectiveness of 

HHS-funded programs, contending that 

there is no evidence validating the 

statement. One commenter faulted HHS 

for not providing empirical data to 

support the contention that the 

nondiscrimination rule is materially 

affecting efforts to find qualified 

providers; another complained that HHS 

did not present evidence that a 

significant number of grantees have 

been unduly burdened under the 

current rule. 

On the other hand, some commenters 

believed that, with the proposed 

changes, more children in the foster care 

system will be able to receive help as 

there will be more organizations 

available to provide services. Other 

commenters supported the proposed 

rule, believing that it keeps faith-based 

adoption agencies viable. Several 

Senators who submitted comments 

argued that the proposed rule would 

encourage a wider array of foster service 

providers. Other commenters noted that 

faith-based organizations have a good 

track record of helping vulnerable 

children through foster care and 

adoption, and providing material 

support and services, and believe the 

proposed rule will have a positive 

impact on the availability of foster care 

and adoption services. Some noted that 

the proposed rule protects the 

beneficiaries of HHS programs by 

ensuring that faith-based organizations 

do not cease to provide services, 

including foster care; several 

commenters noted that the current rule 

jeopardized foster care for thousands of 

children nationwide. 

Response: The Department and its 

Administration for Children and 

Families (ACF) supports the prompt 

placement of children in loving homes 

according to the best interest of the 

children involved. The Department 

recognizes that many states may need 

more foster and adoptive families and 

greater foster care capacity. The 

Department values the work of faithbased organizations in service to 

persons in need and in the protection of 

children. It believes that when both 

faith-based and secular entities 

participate in the foster care and 

adoption placement processes, children, 

families, and providers benefit from 

more, not fewer, placement options.32

All children and youth should be 

treated fairly and with compassion and 

respect for their human dignity. Those 

in foster care need the support of a 

loving family to help them negotiate 

adolescence and grow into healthy 

adults, including those that face special 

or unique challenges. Faith-based child 

placement agencies are critical 

providers and partners in caring for 

vulnerable children and youth. These 

agencies have a long and successful 

history of placing foster children with 

loving families, either in temporary 

foster care or in forever homes through 

adoption. Their participation in these 

programs does not prevent qualified 

individuals, with whom some faithbased agencies cannot work, from 

becoming foster or adoptive parents 

because there are other agencies that 

would welcome their participation. 

Failure to address the objections to 

the nonstatutory nondiscrimination 

requirements could destabilize this 

diverse system of foster care providers. 

Some faith-based subrecipients, 

including some that provide critically 

important child welfare services to 

states and local jurisdictions across the 

child welfare continuum, may not be 

able to provide needed services—and 

indeed, might be compelled to 

withdraw from the provision of child 

welfare services—if they are forced to 

comply with the current nonstatutory 

nondiscrimination requirements. Foster 

care service providers in Michigan, 

South Carolina, and Texas have made 

such claims, supported by the state in 

the case of the providers in South 

Carolina and Texas. Such a result would 

likely reduce the effectiveness of the 

foster care/adoption programs because, 

in many states, it would decrease the 

number of entities available to provide 

foster care/adoption related services. 

The Department further notes that a 

number of states have laws requiring the 

placement of children, when possible, 

with families of the same faith tradition 

as the child, in order to promote and 

protect the child’s free exercise rights. 

Eliminating the ability of faith-based 

providers to participate in Departmentfunded foster care and adoption 

programs—because of their sincerely 

held religious beliefs—could thus make 

it more difficult for children to receive 

services from child placement agencies 

that share their faith traditions and are 

more likely to place such children with 

foster or adoptive parents and families 


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who share their religious beliefs and 

values and faith traditions. 

This final rule removes the federal 

regulatory barriers that would have 

precluded such faith-based organization 

from participating in the federally 

funded Title IV–E foster care and 

adoption programs. 

Removing regulatory barriers to 

participation of faith-based child 

placement agencies thus serves the 

Department’s goals of creating more 

options for children in need of loving 

homes. State child welfare agencies are 

best situated to determine how to serve 

the diversity of children and families 

within their states, but the changes in 

this final rule will ensure that they have 

the flexibility to work with all available 

providers. Such providers include not 

only those child placing agencies that 

operate within the context of their 

sincerely held religious beliefs, but also 

other providers that do not have such 

beliefs, including State agency 

placement services. The Department 

and ACF place the best interests of the 

child first, as participants in 

Department-funded Title IV–E programs 

must; ensuring qualified providers can 

participate allows ACF to continue to 

prioritize the child’s best interest and to 

avoid any violation of RFRA. 

Comments: Several commenters 

(including the Chairs of House 

Committees with jurisdiction) opposed 

the proposed rule, arguing that it would 

create a confusing, uneven patchwork of 

civil rights protections across HHS 

programs, and undermine a uniform 

nondiscrimination standard for HHS 

grant programs. Several commenters 

contended that the proposed rule would 

confuse beneficiaries and recipients of 

HHS services, and inevitably lead to 

extensive litigation; they also claimed 

that it would create conflicts between 

federal, state, and local law and with 

prior Executive Orders. Several 

commenters contended that the 

proposed rule creates greater ambiguity, 

compliance complexity and uncertainty 

for both providers and beneficiaries of 

HHS-funded programs. 

Response: As noted above, Congress 

has been selective in imposing specific 

nondiscrimination criteria in certain 

statutes and programs, and not imposing 

the same criteria in other statutes and 

programs. The Department has elected 

to follow those selections, and leaves for 

Congress the determination whether to 

create a uniform nondiscrimination 

standard for all of the Department’s 

grant programs. 

The Department doubts that the lack 

of a uniform standard will cause 

confusion among grantees, beneficiaries, 

and recipients of Department-funded 

services. These organizations and 

individuals are likely familiar with the 

varying eligibility requirements 

imposed by Congress for various grant 

programs—that there may be varying 

nondiscrimination requirements among 

such programs is unlikely to come as a 

surprise. Moreover, the Department’s 

agencies are required to inform 

recipients of the relevant public policy 

requirements—which includes the 

applicable nondiscrimination 

requirements—and to incorporate them 

either directly or by reference in the 

terms and conditions of the Federal 

award. See 45 CFR 75.300(a). This 

would minimize any potential for 

uncertainty or confusion as to what is 

required. 

The Department respectfully disagrees 

that the proposed rule’s provisions that 

are finalized here will create a conflict 

with state or local laws. A conflict arises 

when an entity cannot comply with two 

different laws. The Department’s action 

here merely removes certain federal 

regulatory requirements. Regulated 

entities may follow such 

nondiscrimination principles 

(voluntarily or as a result of other law), 

consistent with their other legal 

obligations. And consistent with their 

constitutional and legal obligations, 

State and local governments remain free 

to adopt additional nondiscrimination 

requirements. 

The Department also notes that 

commenters appear to have 

misunderstood its expressed concern in 

the proposed rule that the existence of 

the referenced complaints and legal 

actions created a lack of predictability 

and stability for the Department and 

stakeholders with respect to the 

viability and enforcement of the current 

§ 75.300(c) and (d) in the proposed rule. 

84 FR at 63832. In particular, the 

Department was focused on the 

situations that had been brought to its 

attention where under the current rule, 

nonstatutory requirements conflict with 

statutory requirements (e.g., RFRA). It 

was in this context that the Department 

determined that the adoption of this 

regulatory approach would make 

compliance more predictable and 

simple for grant recipients, and, thus, 

control regulatory costs and relieve 

regulatory burden. The final rule is 

consistent with that comment. 

Section 75.305, Payment 

In the proposed rule, the Department 

proposed to repromulgate § 75.305 

without change. As stated in the 

proposed rule, the 2016 Rule modified 

the language in § 75.305 to clarify the 

relation between it, the Treasury-State 

Cash Management Improvement Act, 

and other regulatory provisions. The 

Department is reaffirming this 

clarification so that all states are aware 

of the necessity, for example, to expend 

refunds and rebates prior to drawing 

down additional grant funds. The 

Department repromulgates this 

provision without change. 

As with the 2016 rulemaking, the 

Department received no comments on 

this proposal. 

Section 75.365, Restrictions on Public 

Access to Records 

In the proposed rule, the Department 

proposed to repromulgate this section 

without change. Section 75.365 clarifies 

the limits on the restrictions that can be 

placed on non-federal entities that limit 

public access to records pertinent to 

certain federal awards. As stated in the 

proposed rule, it also implements 

Executive Order 13642 (May 9, 2013), 

and corresponding law. See, e.g., 

https://www.federalregister.gov/ 

documents/2013/05/14/2013-11533/ 

making-open-and-machine-readablethe-new-default-for-governmentinformation/, and Departments of Labor, 

Health, and Human Services, and 

Education Appropriations Act of 2014, 

Public Law 113–76, Div. H, Sec. 527 

(requiring ‘‘each Federal agency, or in 

the case of an agency with multiple 

bureaus, each bureau (or operating 

division) funded under this Act that has 

research and development expenditures 

in excess of $100,000,000 per year [to] 

develop a Federal research public access 

policy’’). The language in this final rule 

codifies permissive authority for the 

Department’s awarding agencies to 

require public access to manuscripts, 

publications, and data produced under 

an award, consistent with applicable 

law. The Department repromulgates this 

provision without change. 

As with the 2016 rulemaking, the 

Department received no comments on 

this proposal. 

Section 75.414, Indirect (Facilities and 

Administration) Costs 

This provision, as published in 2016, 

restricted indirect cost rates for certain 

grants. The Department is 

repromulgating this provision without 

change. As stated in the proposed rule, 

it is long-standing HHS policy to restrict 

training grants to a maximum eight 

percent indirect cost rate. In addition to 

implementing this limit for training 

grants, this section imposes the same 

limitation on foreign organizations and 

foreign public entities, which typically 

do not negotiate indirect cost rates, and 

includes clarifying language to 

§ 75.414(f), which would permit an 

entity that had never received an 


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33OMB has proposed to change this in its current 

rulemaking on 2 CFR part 200. Should OMB 

finalize the rule as proposed, the Department would 

implement as appropriate. 

indirect cost rate to charge a de minimis 

rate of ten percent, in order to ensure 

that the two provisions do not 

conflict.33 Additionally, the American 

University, Beirut, and the World 

Health Organization are exempted 

specifically from the indirect-cost-rate 

limitation because they are eligible for 

negotiated facilities and administration 

(F&A) cost reimbursement. This 

restriction on indirect costs, as 

indicated by 45 CFR 75.101, would flow 

down to subawards and subrecipients. 

The Department received no 

comments on this provision. 

In repromulgating the provision, the 

Department makes several minor 

technical corrections to the language, 

replacing ‘‘training grants’’ with 

‘‘Federal awards for training’’ in 

paragraph (c)(1)(i); replacing ‘‘grants 

awarded’’ with ‘‘Federal awards’’ and 

deleting an ‘‘and’’ in subparagraph 

(c)(1)(ii); and adding ‘‘in this section’’ 

after ‘‘paragraphs (c)(1)(i) and (ii)’’ in 

paragraph (f). 

Section 75.477, Allowability of Costs 

Pursuant to Affordable Care Act 

Provisions 

The Department proposed to 

repromulgate only part of current 

§ 75.477, providing for the exclusion, 

from allowable costs, of any payments 

imposed on employers for failure to 

offer employees and their dependents 

the opportunity to enroll in minimum 

essential coverage. It did not propose to 

repromulgate the exclusion, from 

allowable costs, of any penalties 

imposed on individuals for failure to 

maintain minimum essential coverage 

because Congress reduced to zero the 

penalties imposed on individuals as a 

result of their failure to maintain such 

coverage, effective after December 31, 

2018. The Department has since learned 

that payments of the tax penalties 

assessed for failure to comply with the 

individual shared responsibility prior to 

2019 may continue, whether as the 

result of later filing, IRS administrative 

or appeals processes, or litigation in the 

Tax Court, the Court of Federal Claims, 

or the District Courts. As a result, the 

Department repromulgates § 75.477, 

with changes. As proposed, the 

Department repromulgates, without 

change from the proposed rule, the 

provision addressing tax penalties for 

failure to comply with the employer 

shared responsibility provisions. That 

provision makes clear that employers 

may not claim as allowable costs any 

payments imposed under 26 U.S.C. 

4980H for failure to offer employees 

(and their dependents) the opportunity 

to enroll in minimum essential 

coverage. However, because of the 

possibility that individuals may still be 

responsible for payments of the tax 

penalties assessed for failure to comply 

with the individual shared 

responsibility prior to 2019, the 

Department repromulgates the provision 

excluding such payments from 

allowable costs, but only with respect to 

payments incurred as a result of the 

failure to maintain minimum essential 

coverage prior to January 1, 2019, the 

date on which the individual tax 

penalty was reduced to zero. 

As with the 2016 promulgation of this 

provision, the Department received no 

comments on this section. 

V. Regulatory Impact Analysis 

The Department has examined the 

impacts of this final rule as required by 

Executive Order 12866 on Regulatory 

Planning and Review, 58 FR 51735 (Oct. 

4, 1993); Executive Order 13563 on 

Improving Regulation and Regulatory 

Review, 76 FR 3821 (Jan. 21, 2011); 

Executive Order 13771 on Reducing 

Regulation and Controlling Costs, 82 FR 

9339 (Jan. 30, 2017); the Regulatory 

Flexibility Act (Pub. L. 96–354, 94 Stat. 

1164 (Sept. 19, 1980) and Executive 

Order 13272 on Proper Consideration of 

Small Entities in Agency Rulemaking, 

67 FR 53461 (Aug. 16, 2002); section 

202 of the Unfunded Mandates Reform 

Act of 1995, Public Law 104–4, 109 Stat. 

48 (Mar. 22, 1995); Executive Order 

13132 on Federalism, 64 FR 43255 (Aug. 

4, 1999); Executive Order 13175 on 

Tribal Consultation, 65 FR 67249 (Nov. 

6, 2000); the Congressional Review Act 

(Pub. L. 104–121, sec. 251, 110 Stat. 847 

(Mar. 29, 1996)); section 654 of the 

Treasury and General Government 

Appropriations Act of 1999; and the 

Paperwork Reduction Act of 1995, 44 

U.S.C. 3501, et seq. 

Executive Order 12866 and Related 

Executive Orders on Regulatory Review 

Executive Order 12866 directs 

agencies to assess all costs and benefits 

of available regulatory alternatives and, 

if regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety effects; distributive impacts; 

and equity). Executive Order 13563 is 

supplemental to Executive Order 12866 

and reaffirms the principles, structures, 

and definitions governing regulatory 

review established there. 

As explained in the proposed rule and 

in this final rule, the Office of 

Management and Budget (OMB) has 

determined this rule is not economically 

significant in that it will not have an 

annual effect on the economy of greater 

than $100 million dollars in one year. 

However, because the Department 

determined that this rule is a 

‘‘significant regulatory action’’ under 

Executive Order 12866, § 3(f)(4), in as 

much as it raises novel legal or policy 

issues that arise out of legal mandates, 

the President’s priorities, or the 

principles set forth in an Executive 

Order, the Office of Management and 

Budget has reviewed it. Under 

Executive Order 13563, this rule 

harmonizes and streamlines rules, and 

promotes flexibility by removing 

unnecessary burdens. 

Summary of and Need for Final Rule 

As the Department noted in the 

proposed rule, after promulgation of the 

2016 Rule, non-Federal entities, 

including States and other grant 

recipients and subrecipients raised 

concerns about § 75.300(c) and (d), 

contending that the requiring 

compliance with certain of the 

nonstatutory requirements would 

violate RFRA or the U.S. Constitution, 

exceed the Department’s statutory 

authority, or reduce the effectiveness of 

the Department’s programs. As a result 

of the Department’s consideration of 

these issues, it believes that this final 

rule is needed for a number of reasons, 

including: 

• To restore the Congressionally 

established balance with respect to 

nondiscrimination requirements. 

Congress carefully balanced the rights, 

obligations, and goals involved in 

various Federal grant programs when it 

decided which nondiscrimination 

provisions to make applicable to such 

programs. The 2016 Rule made a 

number of nondiscrimination 

requirements, including certain 

nonstatutory nondiscrimination 

requirements, applicable to all grantees 

in all Departmental grant programs, 

regardless of whether Congress had 

made such requirements applicable to 

the grantees in particular Departmental 

programs. Because Congress carefully 

balanced competing interests, rights, 

and obligation, the Department believes 

that it is appropriate to impose only 

those nondiscrimination requirements 

required by the Constitution and the 

federal statutes that are applicable to the 

grantees. 

• To avoid RFRA issues. The 

imposition of certain nonstatutory 

nondiscrimination requirements on 

certain faith-based organizations as 

recipients or subrecipients in the 

Department’s programs would likely 


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34The final rule would remove the provision 

which exempted the Temporary Assistance for 

Needy Families program from this provision 

because the changes to the provision render the 

exemption unnecessary. 

constitute a substantial burden on their 

exercise of religion that is not the least 

restrictive means of furthering a 

compelling government interest and, 

likely, constitute a violation of RFRA. 

With respect to the Title IV–E foster care 

and adoption program, the Department 

has determined in two contexts that this 

was the case, and a federal district court 

similarly issued a preliminary 

injunction against the Department’s 

enforcement of such provisions in the 

case of a faith-based organization that 

participates in Michigan’s foster care 

and adoption program. The Department 

believes that this final rule constitutes 

the best way to avoid such burdens on 

religious exercise. 

• To appropriately focus on 

compliance with applicable Supreme 

Court decisions. The 2016 Rule made 

two specific Supreme Court decisions 

applicable to all recipients of the 

Department’s grants, although those 

decisions only apply to state actors. The 

Department is committed to complying 

not just with those decisions, but all 

applicable Supreme Court decisions, 

which is what this final rule provides. 

• To limit uncertainty that would 

decrease the effectiveness of the 

Department’s programs. Section 

75.300(c) and (d) have raised questions 

about whether the Department exceeded 

its authority, disrupted the balance of 

nondiscrimination requirements 

adopted by Congress, generated requests 

for deviations or exceptions and 

lawsuits challenging the provisions, and 

sowed uncertainty for grant applicants, 

recipients, and subrecipients that could 

deter participation in Departmentfunded programs and, over time, 

undermine the effectiveness of those 

programs. The Department is under no 

legal obligation to impose such 

requirements and, accordingly, believes 

that it is appropriate to remove them in 

order to avoid such impacts to the 

Department’s programs. 

• To remove an exclusion from 

allowable indirect costs to the extent 

that is no longer necessary. The 2016 

Rule excludes from allowable indirect 

costs any tax penalty imposed on 

individuals for failure to maintain 

minimum essential coverage under the 

ACA. That tax penalty has since been 

reduced to zero, but individuals may 

still be paying such tax penalties. 

Accordingly, the final rule limits the 

exclusion to tax penalties assessed for 

failure to maintain such coverage prior 

to January 1, 2019, when the penalty 

was reduced to zero. 

Thus, as discussed in more detail 

elsewhere in the preamble, this final 

rule would 

• Require recipients to comply with 

applicable federal statutory 

nondiscrimination provisions.34

• Provide that HHS complies with 

applicable Supreme Court decisions in 

administering its award programs. 

• Not repromulgate the exclusion 

from allowable costs of the tax penalty, 

now reduced to zero, imposed on 

individuals for failure to maintain 

minimum essential coverage, except for 

tax penalties associated with failure to 

maintain minimum essential coverage 

prior to January 1, 2019, when the tax 

penalty was reduced to zero. 

• Repromulgate without change a 

provision which established that 

recipients could not include, in 

allowable costs under HHS grants, any 

tax penalty imposed on an employer for 

failure to comply with the employer 

mandate under the ACA. 

• Repromulgate without change a 

provision which addressed the 

applicability of certain payment 

provisions to states. 

• Repromulgate without change a 

provision which authorized the grant 

agency both to require recipients to 

permit public access to various 

materials produced under a grant and to 

place restrictions on recipients’ ability 

to make public any personally 

identifiable information or other 

information that would be exempt from 

disclosure under FOIA. 

• Repromulgate, with certain 

technical changes, a provision which 

established limits on the amount of 

indirect costs allowable under certain 

types of grants. 

Alternatives Considered 

The Department carefully considered 

several alternatives, but rejected the 

potential alternatives for a number of 

reasons: 

• Alternative 1: Not make any 

changes to the previously issued 

regulatory provisions at issue. The 

Department concluded that this 

alternative would likely lead to 

additional legal challenges. Moreover, 

because of the RFRA issues presented 

by application of certain provisions in 

the section to certain faith-based 

organizations that participate in or seek 

to participate in Department-funded 

programs or activities, the Department 

would continue to be faced with either 

litigation over the Department’s 

compliance with RFRA, or additional 

requests for exceptions or deviations 

from the provisions, both of which 

would require the expenditure of 

departmental resources to address, as 

well as the expenditure of resources by 

such faith-based organizations that 

participate in, or seek to participate in, 

Department-funded programs or 

activities consistent with their religious 

beliefs. Finally, the current 

requirements, if enforced, could have 

led to the exclusion of certain faithbased organizations from participating 

in the Department’s programs as 

recipients or subrecipients and would 

likely have a negative impact on the 

effectiveness of such programs. 

• Alternative 2: Not make any 

changes to the regulatory provisions at 

issue, but promulgate a regulatory 

exemption for faith-based organizations 

whose religious exercise would be 

substantially burdened by the 

application of § 75.300(c) and (d) in 

their current form. This would address 

the RFRA issues presented by 

application of certain provisions in the 

section to certain faith-based 

organizations that participate in or seek 

to participate in Department-funded 

programs or activities. However, this 

approach would not adhere to the 

balance struck by Congress on 

nondiscrimination provisions 

applicable to Department grant 

programs and, thus, would raise 

competing concerns that might require 

careful balancing. 

• Alternative 3: Revise § 75.300(c) 

and (d) to enumerate all applicable 

nondiscrimination provisions and the 

programs and recipients/subrecipients 

to which the nondiscrimination 

provisions would apply. This 

alternative would require the 

Department to update the provision 

every time Congress created a new 

program for the Department to 

implement, adopted new 

nondiscrimination provisions, or 

revised existing nondiscrimination 

provisions. Moreover, since § 75.300(a) 

already requires the grantmaking agency 

to communicate to awardees all relevant 

public policy requirements, including 

specifically all nondiscrimination 

requirements (and incorporate them 

either directly or by reference in the 

terms and conditions of the Federal 

award), this alternative would provide 

no new benefits to the recipients of 

grants from the Department’s 

grantmaking agencies. 

Expected Benefits and Costs of the Final 

Rule 

The Department expects several 

benefits from this final rule. The final 

rule will better align the regulation to 

the statutory requirements adopted by 

Congress. This provides covered entities 


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more clarity and stability concerning the 

requirements applicable to them. The 

final rule better ensures compliance 

with RFRA, and allows the Department 

to avoid some situations where a 

substantial burden on religious exercise 

may be applied by requirements that 

flow from the Department but not from 

a statute. The final rule will reduce 

litigation and associated costs, both to 

the government and to covered entities, 

resulting from challenges to 

nonstatutory public policy 

requirements. The final rule relieves 

administrative burdens on covered 

entities by removing certain 

requirements that go beyond those 

mandated by statute. As a result, the 

final rule enables the participation of 

faith-based organizations that 

participate in or seek to participate in 

Department-funded programs or 

activities. In turn, the Department 

expects the final rule will avoid the 

negative impact that the current 

regulations, if fully implemented, may 

have on the effectiveness of the 

Department’s programs. For example, 

the Department expects the final rule 

will avoid reducing participation rates 

in the Department’s programs by entities 

that object to the current regulations. 

The Department believes some of those 

entities have been effective in providing 

a significant number and percentage of 

services in such programs, so the 

Department expects this rule will avoid 

a reduction in the effectiveness of the 

Department’s programs and in the 

number of beneficiaries served overall. 

As the Department noted in the 

regulatory impact analysis in the 

proposed rule and in this final rule, 

with respect to the Regulatory 

Flexibility Act (and as the Department 

reiterates below in response to 

comments), the Department does not 

believe that there will be any direct 

costs or economic impact associated 

with final rule, apart from potential 

administrative costs to grantees to 

become familiar with the requirements 

of the final rule. 

The Department received comments 

on the Department’s compliance with 

Executive Order 12866. 

Comments: Several commenters 

contended that the Department had 

failed to conduct an adequate costbenefit analysis for the proposed rule. 

Several commenters asserted that the 

Department had failed to consider the 

health and financial costs from the 

proposed rule; others alleged that the 

Department had failed to consider the 

impacts and harms that would flow 

from the proposed rule. One commenter 

alleged the proposed rule lacked a 

holistic analysis of risks and benefits of 

the proposed rule to small business or 

the foster care system. Another 

complained that the Department had not 

explained why the proposed rule was a 

significant regulatory action under 

Executive Order 12866, but not 

economically significant. 

Response: The Department 

respectfully disagrees with commenters. 

First, the Department does not believe 

the final rule imposes the costs and 

harms that some commenters allege. 

While commenters opposing the 

revisions argued that the final rule 

would permit grantees and 

subrecipients to discriminate against 

LGBT individuals, women, and other 

vulnerable populations and negatively 

affect the health or well-being of such 

individuals who would be discouraged 

from seeking services from secular 

service providers, the Department does 

not believe that such discrimination is 

widespread in its programs (or would be 

widespread in its programs in the 

absence of the nonstatutory 

nondiscrimination requirements), nor 

that the final rule would lead to a 

reduction in services provided overall— 

or, as explained below, that this final 

rule would necessarily cause a change 

in the composition of participants in 

Department-funded programs. For 

example, as discussed above in cases 

concerning Title IV–E foster care and 

adoption programs, the Department is 

aware that various entities will provide 

services only to persons of their 

religion, or to persons having a certain 

marital status, but the Department is 

also aware that other entities in such 

programs have been available to provide 

services to parents with whom a specific 

provider will not work. On the other 

hand, the entities of which the 

Department is aware that will only work 

with limited categories of parents often 

place many children, and if they were 

forced to leave the program because of 

the current regulations, the overall 

number of children placed would likely 

drop. 

With respect to the requirements 

imposed by current § 75.300(c) and (d) 

to comply with certain nonstatutory 

nondiscrimination requirements, the 

Department notes that these 

requirements of the 2016 rule became 

effective in January 2017, coinciding 

with the change in Administration. As 

a result of changes in compliance and 

enforcement priorities, the Department 

and its grantmaking agencies did not 

make, and have not made, any 

concerted effort to obtain recipient 

compliance with the nonstatutory 

nondiscrimination provisions since the 

2016 rule became effective, and have 

not taken steps to enforce compliance 

with such requirements. In addition, in 

January 2019, the Department issued an 

exception to the State of South Carolina 

with respect to one of the nonstatutory 

nondiscrimination requirements, 

recognizing that requiring the State’s 

compliance with respect to certain faithbased organizations would violate 

RFRA. In September 2019, a federal 

district court preliminarily enjoined the 

Department from enforcing § 75.300(c) 

with respect to the plaintiffs as a 

violation of RFRA. And on November 1, 

2019, the Department announced that it 

would not be enforcing the provisions of 

the 2016 rule, including the 

nonstatutory nondiscrimination 

requirements, pending repromulgation 

of the provisions. In light of this 

sequence of events, the Department 

believes that its recipients fall into one 

of several categories: 

• Recipients that adopted the 

nondiscrimination practices prior to the 

2016 rule, voluntarily or as a result of 

state or local law. These recipients’ 

observance of nonstatutory 

nondiscrimination requirements is, 

thus, not the result of the 2016 rule. 

Because this final rule merely removes 

the regulatory requirement to comply 

with the nonstatutory 

nondiscrimination provisions, 

recipients remain free to observe such 

nondiscrimination practices, consistent 

with their other legal and/or 

constitutional obligations. And the 

Department anticipates that recipients 

in this category are likely to continue to 

observe such practices. 

• Recipients that had not adopted the 

nondiscrimination practices prior to the 

2016 rule and still have not adopted 

such practices, despite the 2016 rule’s 

nonstatutory nondiscrimination 

requirements, in some instances because 

of the concerns outlined in the proposed 

rule and this final rule with respect to 

such requirements. The Department 

knows that there are grantees that are in 

this category. Since this final rule 

removes the requirement to comply 

with such nonstatutory 

nondiscrimination provisions, the 

Department expects that these grantees 

will continue to do what they have been 

doing—and, thus, will not change any 

behavior as a result of the final rule. 

• Recipients that had not adopted the 

nondiscrimination practices prior to the 

2016 rule, but have complied with the 

nonstatutory nondiscrimination 

provisions since then. The Department 

acknowledges that there could be some 

grantees that are in this category, 

although it is not specifically aware of 

any. To the extent that any grantees fall 

into such category, it seems likely that 

many would continue to follow such 


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35Based on unique DUNS numbers, the 

Department had 11,749 recipients in 2017, 12,333 

recipients in 2018, and 12,523 recipients in 2019, 

for an average of 12,202. 

36U.S. Bureau of Labor Statistics, May 2019 

National Occupational Employment and Wage 

Estimates United States, available at https://

www.bls.gov/oes/current/oes_nat.htm. 

37The Department notes that Executive Order 

12866 ‘‘is intended only to improve the internal 

management of the Federal Government and does 

not create any right or benefit, substantive or 

nondiscrimination practices, voluntarily 

or because of new or newly enforced 

state or local laws. The Department 

reaches that conclusion because, to the 

extent that grantees knew about the 

nonstatutory nondiscrimination 

requirements imposed by the 2016 rule 

at the time it was promulgated and had 

any concerns about them, such grantees 

or prospective grantees would most 

likely have taken a ‘‘wait and see’’ 

approach to the Department’s 

interpretation and enforcement of such 

provisions. They would thus have fallen 

within the category described in the 

previous bullet. The same would likely 

be the case with respect to such grantees 

that learned of the 2016 rule only after 

the fact—for example, as a result of 

coverage of the State of South Carolina’s 

February 2018 request for a deviation 

from certain requirements in § 75.300(c) 

and (d). Absent specific concerns about 

complying with those nonstatutory 

requirements, the Department sees little 

reason that grantees would change 

course yet again. 

Thus, apart from the familiarization 

costs, the Department concludes that 

there will be no economic impact 

associated with § 75.300(c) and (d). 

For significant regulatory actions, 

Executive Order 12866 requires ‘‘an 

assessment, including the underlying 

analysis,’’ of benefits and costs 

‘‘anticipated from the regulatory 

action.’’ Executive Order 12866, 

§§ 6(a)(3)(C), 3(f)(1). The Department 

provides such an assessment here and 

provided one in the proposed rule. 

Furthermore, the APA requires agencies 

to base their decisions ‘‘on 

consideration of the relevant factors,’’ 

State Farm, 463 U.S. 29, 42 (1983), but 

it does not require them to ‘‘conduct a 

formal cost-benefit analysis in which 

each advantage and disadvantage is 

assigned a monetary value,’’ Michigan v. 

EPA, 135 S. Ct. 2699, 2711 (2015), or 

assess the relevant factors in 

quantitative terms, Ranchers Cattlemen 

Action Legal Fund v. USDA, 415 F.3d 

1078, 1096–97 (9th Cir. 2005). The 

Department noted in the proposed rule 

that it would harmonize and streamline 

rules and promote flexibility by 

removing unnecessary burdens. It 

similarly noted that most of the 

provisions of the proposed rule have 

been operational since 2016, and that 

where the Department proposed to 

amend the 2016 provisions, grantees 

were already subject to the requirements 

that were proposed, so grantees would 

not need to make any changes to their 

current practice in response to the 

rulemaking. Although the Department 

received comments asserting that 

particular harms—for example, 

discrimination against particular groups 

of beneficiaries—would flow from the 

removal of the provisions, the 

Department did not identify such 

problems prompting its promulgation of 

§ 75.300(c) and (d) in 2016, and the 

commenters did not provide evidence to 

suggest that such problems would occur 

after promulgation of this final rule. 

Finally, the Department believes that 

this final rule will impose only de 

minimis costs, if any, on covered 

entities. This final rule relieves 

regulatory burdens by removing 

requirements on recipients and 

subrecipients in § 75.300(c) that are not 

imposed by statute, and eliminate the 

burden imposed on faith-based 

organizations that participate in the 

Department’s programs to seek an 

exception from certain nonstatutory 

nondiscrimination imposed by the 2016 

rule through litigation or the exception 

process in § 75.102(b), as well as the 

expenses that the Department would 

incur in addressing such litigation or 

exceptions requests. Therefore, as a 

qualitative matter, the final rule could 

be seen as relieving burdens and costs 

rather than imposing them. Because the 

final rule does not impose any new 

regulatory requirements, recipients and 

subrecipients should not incur any new 

or additional compliance costs. Nor 

does the Department believe covered 

entities would necessarily incur any 

more than de minimis costs to review 

this rule. Recipients are already 

required by § 75.300(a) and (b) and other 

regulatory provisions to comply with 

statutory nondiscrimination 

requirements and ensure their 

subrecipients and their programs are in 

compliance. Pursuant to § 75.300(a), the 

Department’s grantmaking agencies are 

required to inform applicants for grants 

and recipients in notices of funding 

opportunities and award notices of 

applicable statutory and regulatory 

requirements, including, specifically, 

the nondiscrimination requirements 

applicable to the grant program. 

Therefore, as a practical matter, grantees 

and recipients may rely on these 

communications to inform them of the 

legal and regulatory requirements 

applicable to the programs in which 

they participate. 

However, as a standard practice, the 

Department considers regulatory 

familiarization costs in its regulatory 

impact analyses. Although the 

Department issues many grants on an 

annual basis, many recipients receive 

multiple grants. Thus, based on 

information in the Department’s 

Tracking Accountability in Government 

Grant Spending (TAGGS) system, the 

Department estimates that it has a total 

of 12,202 grantees.35 Depending on the 

grantee, the task of familiarization could 

potentially fall to the equivalent of (1) 

a lawyer (hourly rate: Median $59.11, 

mean $69.86); (2) a general/operations 

manager (hourly rate: Median $48.45, 

mean $59.15); (3) a medical and health 

services manager (hourly rate: Median 

$48.55, mean $55.37); (4) a compliance 

officer (hourly rate: Median $33.02, 

mean $35.03); or (5) a social and 

community service manager (hourly 

rate: Median $32.28, mean $35.05).36

Averaging these rates leads to a median 

hourly rate of $44.28 and mean hourly 

rate of $50.89. The Department assumes 

that the total dollar value of labor, 

which includes wages, benefits, and 

overhead, is equal to 200% of the wage 

rate, or $88.56 (median) and $101.78 

(mean). The changes made by the final 

rule are straight forward and easy to 

understand—and the Department 

anticipates that professional 

organizations, trade associations and 

other interested groups may prepare 

summaries of the rule. Accordingly, the 

Department estimates that it would take 

a grantee approximately an hour to 

become familiar with the final rule’s 

requirements. The Department, thus, 

concludes that the cost for grantee 

familiarization with the final rule would 

total $1,080,609.12 (median) or 

$1,241,919.56 (mean). 

The Department does not believe that 

covered entities will incur training costs 

under § 75.300(c) and (d) of this rule. 

Section 75.300(c) only applies 

requirements to the extent imposed by 

statute, and recipients and subrecipients 

are already required to comply with 

such statutory requirements under 

§ 75.300(a) and (b) and other statutes 

and regulations. Section 75.300(d) does 

not impose requirements that recipients 

or subrecipients need to review, but 

makes a general statement about the 

Department’s compliance with 

applicable Supreme Court cases in its 

award programs, without requiring 

familiarity with any particular case on 

the part of recipients or subrecipients. 

In both respects, § 75.300(c) and (d) of 

this final rule impose requirements that 

may be simpler and easier to understand 

than the current regulation.37


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procedural, enforceable at law or equity by a party 

against the United States, its agencies or 

instrumentalities, its officers or employees, or any 

other person.’’ Executive Order 12866, § 10, 58 FR 

51735 (Oct. 4, 1993). 

38 In the health care and social assistance sector, 

from which the Department draws most of its 

grantees, SBA considers businesses to be small by 

virtue of having less than between $8.0 million and 

$41.5 million in average annual revenues, 

depending on the particular type of business. See 

U.S. Small Business Administration, Table of Small 

Business Size Standards Matched to North 

American Industry Classification System Codes, 

effective August 19, 2019 (sector 62), available at 

https://www.sba.gov/sites/default/files/2019-08/ 

SBA%20Table%20of%20Size%20Standards_

Effective%20Aug%2019%2C%202019_Rev.pdf. In 

as much as colleges, universities and professional 

schools (e.g., medical schools) and other 

educational institutions may receive Department 

funding, the other sector from which the 

Department may draw grantees is the educational 

services sector, where the relevant small business 

sizes range from $12.0 million to $30.0 million in 

annual revenues. Id. (sector 61). 

Executive Order 13771 

The White House issued Executive 

Order 13771 on Reducing Regulation 

and Controlling Regulatory Costs on 

January 30, 2017. 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, § 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. 

Guidance from OMB indicates this 

offset requirement applies to Executive 

Order 13771 regulatory actions. This 

rulemaking, while significant under 

Executive Order 12866, will impose at 

most de minimis costs and, therefore, is 

not either a regulatory action or 

deregulatory action under Executive 

Order 13771. 

Regulatory Flexibility Act and Executive 

Order 13272 

The Department has examined the 

economic implications of this final rule 

as required by the Regulatory Flexibility 

Act (RFA), 5 U.S.C. 601–612. The RFA 

requires agencies to analyze regulatory 

options that would minimize any 

significant impact of a rule on small 

entities. The RFA generally requires that 

when an agency issues a proposed rule, 

or a final rule that the agency issues 

under 5 U.S.C. 553 after being required 

to publish a general notice of proposed 

rulemaking, the agency must prepare a 

regulatory flexibility analysis that meets 

the requirements of the RFA and 

publish such analysis in the Federal 

Register—unless the agency expects that 

the rule will not have a significant 

impact on a substantial number of small 

entities, provides a factual basis for this 

determination, and certifies the 

statement. 5 U.S.C. 603, 604, 605(b). If 

an agency must provide a regulatory 

flexibility analysis, this analysis must 

address the consideration of regulatory 

options that would lessen the economic 

effect of the rule on small entities. For 

purposes of the RFA, ‘‘small entities’’ 

include proprietary firms meeting the 

size standards of the Small Business 

Administration (SBA); 38 nonprofit 

organizations that are not dominant in 

their fields; and small governmental 

jurisdictions with populations of less 

than 50,000. 5 U.S.C. 601(3)–(6). States 

and individuals are not small entities. 

The Department considers a rule to have 

a significant impact on a substantial 

number of small entities if it has at least 

a three percent impact on revenue on at 

least five percent of small entities. 

Executive Order 13272 on Proper 

Consideration of Small Entities in 

Agency Rulemaking reinforces the 

requirements of the RFA and requires 

the Department to notify the Chief 

Counsel for Advocacy of the Small 

Business Administration if the final rule 

may have a significant economic impact 

on a substantial number of small entities 

under the RFA. Executive Order 13272, 

67 FR 53461 (Aug. 16, 2002). 

As discussed, this final rule would 

• Require recipients to comply with 

applicable federal statutory 

nondiscrimination provisions. 

• Provide that HHS complies with 

applicable Supreme Court decisions in 

administering its award programs. 

• Not repromulgate the exclusion 

from allowable costs of the tax penalty, 

now reduced to zero, imposed on 

individuals for failure to maintain 

minimum essential coverage, except for 

tax penalties associated with failure to 

maintain minimum essential coverage 

prior to January 1, 2019, when the tax 

penalty was reduced to zero. 

• Otherwise re-promulgate the 

provisions of the 2016 rule. 

The Department’s grantees include 

state and local governments; state and 

local health and human services 

agencies; public and private colleges 

and universities; nonprofit 

organizations in the health and social 

services areas, including both secular 

and faith-based organizations; and 

certain health care providers. Because 

this final rule would apply to all 

grantees, affected small entities include 

all small entities that apply for the 

Department’s grants; these small entities 

operate in a wide range of areas 

involved in the delivery of health and 

human services. It is important to note, 

however, that the RFA does not require 

that an entity assess the impact of a rule 

on all small entities that may be affected 

by the rule, but only those directly 

regulated by the rule. See National 

Women, Infants, and Children Grocers 

Ass’n et al. v. Food and Nutrition 

Service, 416 F. Supp. 2d 92, 108–110 

(D.D.C. 2006). 

With respect to the changes that the 

final rule makes to § 75.300(c) and (d): 

The adoption of amendments to 

§ 75.300(c) and (d) do not impose any 

new regulatory requirements on 

recipients. Recipients are currently 

required to comply with applicable 

federal statutory nondiscrimination 

provisions by operation of such laws 

and pursuant to 45 CFR 75.300(a); the 

Department is currently required to 

comply with applicable Supreme Court 

decisions. As discussed above, apart 

from the potential familiarization costs, 

the Department does not believe that 

there will be any economic impact 

associated with these amendments. 

With respect to the repeal of the 

allowable cost exclusion for the tax 

penalty for failure to comply with the 

individual shared responsibility 

provision: When the Department 

imposed this allowable cost exclusion, 

individuals were subject to a tax penalty 

or assessment for failure to maintain 

health insurance that constituted 

minimum essential coverage. Congress 

has since reduced to zero such tax 

penalties or assessments, effective after 

December 31, 2018. While the 

individual tax penalty for failure to 

comply with the individual shared 

responsibility provision has been 

reduced to zero, the Department has 

been informed that individuals may still 

be paying assessed tax penalties for 

failure to maintain minimum essential 

coverage prior to January 1, 2019. The 

Department had proposed to eliminate 

the provision because it seemed 

unnecessary to maintain a provision 

with respect payments of penalties that 

had been reduced to zero. Since some 

individuals may still be paying such 

assessments, the Department is 

repromulgating the provision, but 

limited to tax penalties for failure to 

maintain coverage prior to January 1, 

2019, when the penalty was reduced to 

zero. Because this does not represent a 

change of the requirement imposed 

under the 2016 rule with respect to 

periods for which a non-zero tax penalty 

could be assessed, there should be no 

economic impact associated with reimposing an allowable costs exclusion 

for such payments. 


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39Many commenters disagreed with the 

Department’s decision to exercise enforcement 

discretion with respect to the provisions of the 2016 

rule, pending repromulgation, as a result of its 

concerns about the rule’s compliance with the 

Regulatory Flexibility Act. As such comments are 

beyond the scope of the proposed rule, the 

Department does not respond to them. 

With respect to the provisions being 

repromulgated without change: These 

provisions of the final rule have been 

operational since the publication of the 

2016 rule. As a result, as noted in the 

proposed rule, recipients, including 

small entities, will not need to make any 

changes to their current practice in 

response to this final rule. Accordingly, 

there should be no economic impact 

associated with the repromulgation of 

these provisions. 

In light of the foregoing, the 

Department anticipates that this final 

rule will have no impact beyond 

providing information to the public. The 

Department anticipates that this 

information will allow affected entities 

to better deploy resources in line with 

established requirements for its 

recipients, while reducing 

administrative burdens related to 

litigation and waiver requests. Thus, 

grantees will be able to better prioritize 

resources towards providing services 

consistent with their mission and grant. 

As a result, the Department has 

determined, and the Secretary certifies, 

that this final rule will not have a 

significant impact on the operations of 

a substantial number of small entities. 

The Department asked for comments 

on the impact of the proposed rule on 

small entities under the Regulatory 

Flexibility Act, as well as the 

comparative effects and impacts of the 

situation if the Department were to fully 

enforce the provisions of the 2016 rule 

as compared to the situation if the 

Department were to fully exercise its 

enforcement discretion with respect to 

the 2016 rule. The Department received 

a number of comments on the RFA 

analysis.39

Comments: Several commenters 

opposing the proposed rule contended 

that the Department had failed to 

conduct the required cost-benefit 

analysis necessary to sustain the 

proposed rule. Some commenters 

contended that the Department did not 

properly conduct a cost benefit and risk 

analysis of potential affected entities. 

Several commenters asserted that such a 

cost-benefit analysis would have to 

consider the health and financial costs 

from the proposed rule. One commenter 

alleged the proposed rule lacked a 

holistic analysis of risks and benefits of 

the proposed rule to small business or 

the foster care system. 

Response: The Department 

respectfully disagrees with commenters. 

With respect to the RFA, the 

Department did fully consider whether 

the proposed rule’s changes would have 

a significant impact on a substantial 

number of small entities. It reviewed the 

evidence and concluded that it would 

not—and provided a statement in the 

proposed rule with the factual bases for 

its conclusion. Very few commenters 

addressed the effect of the proposed rule 

on small entities, with most arguing that 

the Department should have considered 

the impact on individuals and entities 

other than the Department’s recipients. 

However, the RFA requires the 

Department to consider the impact only 

on small entities directly regulated by 

the rule; it does not require 

consideration of the rule on all small 

entities potentially indirectly affected 

by it. See National Women, Infants, and 

Children Grocers Ass’n, 416 F. Supp. 2d 

at 108–110 (rule only applied to state 

agencies, not to small businesses, such 

as WIC-only vendors, so federal agency 

properly certified that rule would not 

have a significant impact on a 

substantial number of small entities). 

Nor does the RFA require consideration 

of the impact on individuals since 

individuals do not constitute small 

entities as such term is defined in the 

RFA. 

Unfunded Mandates Reform Act 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 

(Unfunded Mandates Act), 2 U.S.C. 

1532, requires that covered agencies 

prepare a budgetary impact statement 

before promulgating a rule that includes 

any Federal mandate that may result in 

the expenditure by State, local, and 

tribal governments, in the aggregate, or 

by the private sector, of $100 million in 

1995 dollars, updated annually for 

inflation. Currently, that threshold is 

approximately $154 million. If a 

budgetary impact statement is required, 

section 205 also requires covered 

agencies to identify and consider a 

reasonable number of regulatory 

alternatives before promulgating a rule. 

The Department has determined that 

this final rule will not result in 

expenditures by State, local, and tribal 

governments, or by the private sector, of 

$154 million or more in any one year. 

Accordingly, the Department has not 

prepared a budgetary impact statement 

or specifically addressed the regulatory 

alternatives considered. 

Executive Order 13132, Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it issues a rule that 

imposes substantial direct requirement 

costs on State and local governments, 

preempts State law, or otherwise has 

Federalism implications. Executive 

Order 13132, 64 FR 43255 (Aug. 4, 

1999). The Department does not believe 

that this final rule would (1) impose 

substantial direct requirements costs on 

State or local governments; (2) preempt 

State law; or (3) otherwise have 

Federalism implications. 

Executive Order 12866 directs that 

significant regulatory actions avoid 

undue interference with State, local, or 

tribal governments, in the exercise of 

their governmental functions. Executive 

Order 12866 at 6(a)(3)(B). Executive 

Order 13175 further directs that 

Agencies respect Indian tribal selfgovernment and sovereignty, honor 

tribal treaty and other rights, and strive 

to meet the responsibilities that arise 

from the unique legal relationship 

between the Federal Government and 

Indian tribal governments. Executive 

Order 13175 at 2(a). The Department 

does not believe that the final rule 

would implicate the requirements of 

Executive Orders 12866 and 13175 with 

respect to tribal sovereignty. 

The final rule maintains the full force 

of statutory civil rights laws protections 

against discrimination, but does not 

attempt to impose a ceiling on how 

those protections may be observed by 

States. Consistent with their other 

constitutional and legal obligations, 

State and local jurisdictions will 

continue to have the flexibility to 

impose additional civil rights 

protections. Therefore, the Department 

has determined that this final rule does 

not have sufficient Federalism 

implications to warrant the preparation 

of a Federalism summary impact 

statement under Executive Order 13132, 

and that the rule would not implicate 

the requirements of Executive Orders 

12866 and 13175 with respect to tribes. 

The Department received several 

comments on its Executive Order 13132 

analysis. 

Comments: One commenter argued 

that the Department had not complied 

with Executive Order 13132. Other 

commenters claimed that the proposed 

rule creates conflicts between federal, 

state, and local law. 

Response: The Department 

respectfully disagrees. The proposed 

rule, and this final rule, do not impose 

any substantial direct requirements on 

State and local governments that do not 

already exist, nor does it preempt or 

conflict with State or local laws. A 

conflict arises when an entity cannot 

comply with two different laws. The 

Department’s action here merely 

removes certain regulatory requirements 


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Federal Register / Vol. 86, No. 7 / Tuesday, January 12, 2021 / Rules and Regulations 2277 

40Public Law 105–277, Div. A, § 654, 112 Stat. 

2681–480, 2681–528 (Oct. 21, 1998), codified at 5 

U.S.C. 601 note. 

41Before implementing regulations that may 

affect family well-being, an agency is required to 

assess the actions as to whether the action 

(1) strengthens or erodes the stability or safety of 

the family and, particularly, the marital 

commitment; 

(2) strengthens or erodes the authority and rights 

of parents in the education, nurture, and 

supervision of their children; 

(3) helps the family perform its functions, or 

substitutes governmental activity for the function; 

(4) increases or decreases disposable income or 

poverty of families and children; 

(5) action‘s proposed benefits justify the financial 

impact on the family; 

(6) may be carried out by State or local 

government or by the family; and 

(7) establishes an implicit or explicit policy 

concerning the relationship between the behavior 

and personal responsibility of youth, and the norms 

of society. 

5 U.S.C. 601 (note). 

42 If a regulation may affect family well-being, the 

head of the agency is required to submit a written 

certification to the director of OMB and to Congress 

that the regulation has been assessed and to provide 

an adequate rationale for implementation of a 

regulation that may negatively affect family wellbeing. Id. 

for which it lacked legal authority. 

Consistent with their other 

constitutional and legal obligations, 

State and local jurisdictions will 

continue to have the flexibility to 

impose additional civil rights 

protections. And, consistent with their 

other legal obligations, regulated entities 

are free to comply with such additional 

civil rights protections. 

Congressional Review Act 

The Congressional Review Act (CRA) 

defines a ‘‘major rule’’ as ‘‘any rule that 

the Administrator of the Office of 

Information and Regulatory Affairs 

(OIRA) of the Office of Management and 

Budget finds has resulted in or is likely 

to result in—(A) an annual effect on the 

economy of $100,000,000 or more; (B) a 

major increase in costs or prices for 

consumers, individual industries, 

Federal, State, or local government 

agencies, or geographic regions; or (C) 

significant adverse effects on 

competition, employment, investment, 

productivity, innovation, or on the 

ability of United States-based 

enterprises to compete with foreignbased enterprises in domestic and 

export markets.’’ 5 U.S.C. 804(2). Based 

on the analysis of this final rule under 

Executive Order 12866, OMB has 

determined that this final rule is not 

likely to result in an annual effect of 

$100,000,000 or more, and is not 

otherwise a major rule for purposes of 

the Congressional Review Act. 

Assessment of Regulation and Policies 

on Families 

Section 654 of the Treasury and 

General Government Appropriations 

Act of 1999 40 requires Federal 

departments and agencies to determine 

whether a proposed policy or regulation 

could affect family well-being.41 If the 

determination is affirmative, then the 

Department or agency must prepare an 

impact assessment to address criteria 

specified in the law.42 In the proposed 

rule, the Department determined that 

the proposed rule would not have an 

impact on family well-being, as defined 

in section 654. 

The Department received many 

comments on its initial family wellbeing impact analysis, or on the likely 

impact of the proposed rule on the wellbeing of children in need of foster care 

or other services. After considering the 

comments, the Department concludes 

that the final rule will not have an 

impact on family well-being as defined 

in section 654. 

Comment: Several commenters argued 

that, since the proposed rule rolls back 

nondiscrimination protections, it will 

have significant impacts on family wellbeing across a range of the Department’s 

programs because it will affect access to 

programs for which they would 

otherwise be eligible. They suggested 

individual impact assessments were 

necessary for, among others, Head Start 

Programs, Refugee Resettlement, and 

caregiver support programs. 

Commenters also believed the family 

well-being analysis required an 

assessment of the impact for 

populations under the rule, including 

LGBT beneficiaries. At least some of the 

comments seem based on the premise 

that, under the proposed rule, religious 

or faith-based organizations would 

discriminate and, for example, reject 

prospective foster and adoptive families, 

to the detriment of children, including 

LGBTQ children, in need of foster or 

adoptive placements in loving families. 

Other commenters supported the 

proposed rule, arguing that society 

needed as many agencies working on 

behalf of children as possible and that 

the proposed rule would prevent 

discrimination in the Department’s 

programs by permitting religious and 

faith-based organizations to participate 

in Department-funded programs. 

Response: The Department 

respectfully disagrees with commenters 

who argued that the proposed rule (and 

this final rule) would have a negative 

effect on family well-being, as defined 

in section 654. The Department rejects 

commenters’ view that, under the rule, 

vulnerable families or populations will 

experience discrimination, or be denied 

services in Department-funded 

programs for which they are otherwise 

eligible. Commenters offered little 

evidence that this was the case before 

the current § 75.300(c) and (d) became 

effective, and the Department has no 

evidence supporting the belief that this 

will occur as a result of the final rule. 

Many commenters focused on child 

welfare programs and the foster care and 

adoption systems. Based on the 

information before the Department, as 

well as the Department’s experience and 

expertise, the Department believes that 

the final rule will enable faith-based 

child placement agencies—which are 

critical providers and partners in caring 

for vulnerable children and have a long 

and successful history of placing 

children (including older children, 

children with health conditions and 

sibling groups, all of whom are more 

difficult to place) with loving families— 

to continue their service. Based on its 

experience and expertise, the 

Department believes that the result will 

be more, rather than fewer, child 

placement agencies and more, rather 

than fewer, options for children in need 

of loving homes. Furthermore, it is the 

Department’s understanding that the 

participation of faith-based child 

placement organizations will not affect 

the availability of secular child 

placement organizations that are able to 

work with prospective foster and 

adoptive parents and families with 

whom some faith-based organizations 

cannot work. States work with both 

faith-based child placement 

organizations and secular childplacement organizations. 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3506; 

5 CFR part 1320 appendix A.1), the 

Department has reviewed this final rule 

and has determined that there are no 

new collections of information 

contained therein. 

List of Subjects in 45 CFR Part 75 

Administrative Practice and 

Procedure, Federal aid programs, Grants 

Programs, Grants Administration, Cost 

Principles, state and local governments. 

Dated: January 5, 2021. 

Alex M. Azar II, 

Secretary, Department of Health and Human 

Services. 

Therefore, under the authority of 5 

U.S.C. 301 & 2 CFR part 200, and for the 

reasons stated in the preamble, the 

Department of Health and Human 

Services amends 45 CFR part 75 as 

follows: 


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2278 Federal Register / Vol. 86, No. 7 / Tuesday, January 12, 2021 / Rules and Regulations 

PART 75—UNIFORM ADMINISTRATIVE 

REQUIREMENTS, COST PRINCIPLES, 

AND AUDIT REQUIREMENTS FOR HHS 

AWARDS 

■ 1. The authority citation for 45 CFR 

part 75 is revised to read as follows: 

Authority: 5 U.S.C. 301; 2 CFR part 200. 

§ 75.101 [Amended] 

■ 2. Amend § 75.101 by removing 

paragraph (f). 

■ 3. Amend § 75.300 by revising 

paragraphs (c) and (d) to read as follows: 

§ 75.300 Statutory and national policy 

requirements. 

* * * * * 

(c) It is a public policy requirement of 

HHS that no person otherwise eligible 

will be excluded from participation in, 

denied the benefits of, or subjected to 

discrimination in the administration of 

HHS programs and services, to the 

extent doing so is prohibited by federal 

statute. 

(d) HHS will follow all applicable 

Supreme Court decisions in 

administering its award programs. 

■ 5. Amend § 75.305 by revising 

paragraph (a) to read as follows: 

§ 75.305 Payment. 

(a)(1) For States, payments are 

governed by Treasury-State CMIA 

agreements and default procedures 

codified at 31 CFR part 205 and TFM 

4A–2000 Overall Disbursing Rules for 

All Federal Agencies. 

(2) To the extent that Treasury-State 

CMIA agreements and default 

procedures do not address expenditure 

of program income, rebates, refunds, 

contract settlements, audit recoveries 

and interest earned on such funds, such 

funds must be expended before 

requesting additional cash payments. 

* * * * * 

■ 6. Revise § 75.365 to read as follows: 

§ 75.365 Restrictions on public access to 

records. 

Consistent with § 75.322, HHS 

awarding agencies may require 

recipients to permit public access to 

manuscripts, publications, and data 

produced under an award. However, no 

HHS awarding agency may place 

restrictions on the non-Federal entity 

that limits public access to the records 

of the non-Federal entity pertinent to a 

Federal award identified in §§ 75.361 

through 75.364, except for protected 

personally identifiable information (PII) 

or when the HHS awarding agency can 

demonstrate that such records will be 

kept confidential and would have been 

exempted from disclosure pursuant to 

the Freedom of Information Act (5 

U.S.C. 552) (FOIA) or controlled 

unclassified information pursuant to 

Executive Order 13556 if the records 

had belonged to the HHS awarding 

agency. The FOIA does not apply to 

those records that remain under a nonFederal entity’s control except as 

required under § 75.322. Unless 

required by Federal, State, local, or 

tribal statute, non-Federal entities are 

not required to permit public access to 

their records identified in §§ 75.361 

through 75.364. The non-Federal 

entity’s records provided to a Federal 

agency generally will be subject to FOIA 

and applicable exemptions. 

■ 7. Amend § 75.414 by revising 

paragraphs (c)(1)(i) through (iii) and the 

first sentence of paragraph (f) to read as 

follows: 

§ 75.414 Indirect (F&A) costs. 

* * * * * 

(c) * * * 

(1) * * * 

(i) Indirect costs on Federal awards 

for training are limited to a fixed rate of 

eight percent of MTDC exclusive of 

tuition and related fees, direct 

expenditures for equipment, and 

subawards in excess of $25,000; 

(ii) Indirect costs on Federal awards to 

foreign organizations and foreign public 

entities performed fully outside of the 

territorial limits of the U.S. may be paid 

to support the costs of compliance with 

federal requirements at a fixed rate of 

eight percent of MTDC exclusive of 

tuition and related fees, direct 

expenditures for equipment, and 

subawards in excess of $25,000; and 

(iii) Negotiated indirect costs may be 

paid to the American University, Beirut, 

and the World Health Organization. 

* * * * * 

(f) In addition to the procedures 

outlined in the appendices in paragraph 

(e) of this section, any non-Federal 

entity that has never received a 

negotiated indirect cost rate, except for 

those non-Federal entities described in 

paragraphs (c)(1)(i) and (ii) of this 

section and section (D)(1)(b) of 

appendix VII to this part, may elect to 

charge a de minimis rate of 10% of 

modified total direct costs (MTDC) 

which may be used indefinitely. * * * 

* * * * * 

■ 8. Revise § 75.477 to read as follows: 

§ 75.477 Shared responsibility payments. 

(a) Payments for failure to maintain 

minimum essential health coverage. 

Any payments or assessments imposed 

on an individual or individuals 

pursuant to 26 U.S.C. 5000A(b) as a 

result of any failure to maintain 

minimum essential coverage as required 

by 26 U.S.C. 5000A(a) with respect to 

any period prior to January 1, 2019, are 

not allowable expenses under Federal 

awards from an HHS awarding agency. 

(b) Payments for failure to offer health 

coverage to employees. Any payments 

or assessments imposed on an employer 

pursuant to 26 U.S.C. 4980H as a result 

of the employer’s failure to offer to its 

full-time employees (and their 

dependents) the opportunity to enroll in 

minimum essential coverage under an 

eligible employer-sponsored plan are 

not allowable expenses under Federal 

awards from an HHS awarding agency. 

[FR Doc. 2021–00207 Filed 1–7–21; 4:15 pm] 

BILLING CODE 4150–24–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Part 15 

[ET Docket No. 20–36; FCC 20–156; FRS 

17258] 

Unlicensed White Space Device 

Operations in the Television Bands 

AGENCY: Federal Communications 

Commission. 

ACTION: Final rule. 

SUMMARY: In this document, the 

Commission revises its rules to expand 

the ability of unlicensed white space 

devices to deliver wireless broadband 

services in rural areas and areas where 

fewer broadcast television stations are 

on the air. The Commission also 

modifies its rules to facilitate the 

development of new and innovative 

narrowband Internet of Things (IoT) 

devices in TV white spaces. Unlicensed 

white space devices operate in the VHF 

and UHF broadcast TV bands, a spectral 

region that has excellent propagation 

characteristics that are particularly 

attractive for delivering wireless 

communications services over long 

distances, varying terrain, and into and 

within buildings. The Commission 

adopts a number of changes to the white 

space device rules to spur continued 

growth of the white space ecosystem, 

especially for providing affordable 

broadband service to rural and unserved 

communities that can help close the 

digital divide, while at the same time 

protecting broadcast television stations 

in the band from harmful interference. 

DATES: Effective February 11, 2021, 

except for amendatory instruction 4.f. 

for § 15.709(g)(1)(ii), which is delayed. 

The Commission will publish a 

document in the Federal Register 

announcing the effective date. 


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