[Federal Register: October 22, 2004 (Volume 69, Number 204)]
[Rules and Regulations]
[Page 62163-62170]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22oc04-10]
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Part III
Department of Housing and Urban Development
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24 CFR Parts 954 and 1003
Participation in HUD's Native American Programs by Religious
Organizations; Providing for Equal Treatment of All Program
Participants; Final Rule
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 954 and 1003
[Docket No. FR-4915-F-02]
RIN 2577-AC56
Participation in HUD's Native American Programs by Religious
Organizations; Providing for Equal Treatment of All Program
Participants
AGENCY: Office of the Assistant Secretary for Public and Indian
Housing, HUD.
ACTION: Final rule.
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SUMMARY: This final rule removes barriers to the participation of
religious (also referred to as ``faith-based'') organizations in HUD
regulations implementing the Indian HOME Program, the Indian Community
Development Block Grant Program, the Indian Housing Block Grant
Program, the Title VI Loan Guarantee Assistance Program, and the
Section 184 Loan Guarantees for Indian Housing Program. These changes
are consistent with revisions of program regulations undertaken on a
department-wide basis. In general, no group of applicants competing for
HUD funds or seeking to participate in HUD programs should be subject
to greater or fewer requirements than other organizations solely
because of their religious character or affiliation or absence of
religious character or affiliation. This final rule follows publication
of a June 21, 2004, proposed rule and takes into consideration the one
public comment received on the proposed rule. After careful
consideration of the issues raised by the commenter, HUD has decided to
adopt the June 21, 2004, proposed rule without change.
DATES: Effective Date: November 22, 2004.
FOR FURTHER INFORMATION CONTACT: Ryan Streeter, Director, Center for
Faith-Based and Community Initiatives, Department of Housing and Urban
Development, Room 10184, 451 Seventh Street, SW., Washington, DC 20410-
0001, telephone: (202) 708-2404 (this is not a toll-free number). For
program specific information, contact Deborah Lalancette, Director,
Office of Grants Management, Office of Native American Programs, Office
of Public and Indian Housing, Department of Housing and Urban
Development, Suite 3390, 1919 Broadway, Denver, CO 80202, telephone:
(303) 675-1600, extension 3325 (this is not a toll-free number).
Individuals with speech or hearing impairments may access these
telephone numbers through TTY by calling the toll-free Federal
Information Relay Service at 800-877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
On June 21, 2004 (69 FR 34544), HUD published a proposed rule for
public comment that removes barriers to the participation of religious
(also referred to as ``faith-based'') organizations in HUD regulations
for its Native American programs. The proposed rule was published as
part of HUD's implementation of the Administration's Faith-Based and
Community Initiative. President Bush has directed executive branch
agencies, including HUD, to ensure that federal policy and programs are
fully open to faith-based and community organizations in a manner
consistent with the Constitution. The Administration believes that all
eligible organizations, including faith-based organizations, should be
able to participate in federal programs and activities and compete,
where required, for federal financial assistance on an equal footing.
Consistent with President's Executive Order 13198, ``Agency
Responsibilities With Respect to Faith-Based and Community
Initiatives,'' issued January 31, 2001 (66 FR 8497), HUD undertook a
comprehensive review of its program requirements and regulations,
particularly those that would be expected to attract interest and
participation by nonprofit organizations. As a result of that
comprehensive review, HUD identified regulations that imposed or
appeared to impose barriers to the participation of faith-based
organizations in eight programs administered by the Office of Community
Planning and Development. On January 6, 2003 (68 FR 648), HUD published
a proposed rule to eliminate these barriers and to ensure that these
HUD programs were open to all qualified organizations, regardless of
their religious character. After a period of public comment, HUD
finalized this rule on September 30, 2003 (68 FR 56396).
On March 3, 2004 (69 FR 10126), HUD published a second proposed
rule to amend its general program requirements at 24 CFR part 5 and
extend the equal participation protections to HUD programs and
activities not covered by the September 30, 2003, final rule. The March
3, 2004, proposed rule was followed by a final rule published on July
9, 2004 (69 FR 41712), which adopted the proposed rule without change.
Neither the September 30, 2003, nor the July 9, 2004, final rules,
however, applied to HUD's Native American programs. HUD's Native
American programs were excluded from these earlier rules so that HUD
could first consult with Indian tribal governments in accordance with
Executive Order 13175, ``Consultation and Coordination With Indian
Tribal Governments,'' issued on November 6, 2000.
Executive Order 13175 requires federal departments and agencies, to
the greatest extent practicable and permitted by law, to consult with
tribal governments prior to taking actions that have substantial direct
effects on federally recognized tribal governments. Accordingly, prior
to publication of the June 21, 2004, proposed rule, HUD provided Indian
tribes and Alaska Native Villages with the opportunity to comment on
the substance of the proposed regulatory changes that would extend the
equal participation protections to the Indian HOME Program at 24 CFR
part 954; the Indian Housing Block Grant Program (IHBG) at 24 CFR part
1000; the Title VI Loan Guarantee Assistance (Title VI Loan Guarantee)
program at subpart E of 24 CFR part 1000; the Indian Community
Development Block Grant Program (ICDBG) at 24 CFR part 1003; and the
Section 184 Loan Guarantees for Indian Housing Program (Section 184) at
24 CFR part 1005.
II. This Final Rule
This final rule follows publication of the June 21, 2004, proposed
rule and takes into consideration the one public comment received on
the proposed rule. After careful consideration of the public comment,
HUD has decided to adopt the proposed rule without change. Section IV
of this preamble contains a discussion of the one public comment and
HUD's responses to the significant issues raised by the commenter.
Of the programs listed above, only the Indian HOME and ICDBG
program regulations have sections that specifically address the
participation of faith-based organizations. Although the Indian HOME
Program was terminated by section 505 of the Native American Housing
Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101 et seq.)
(NAHASDA), the regulation at 24 CFR part 954 continues to govern
outstanding funds remaining from that program and part 954 would,
accordingly, be amended by this final rule. Specifically, the
requirements concerning faith-based organizations at Sec. 954.301 are
revised to be parallel to the revision made to Sec. 92.257 of the HOME
program regulation by the September 30, 2003, final rule. Similarly,
Sec. 1003.600 of the ICDBG
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regulation is amended to be parallel to the changes made to Sec.
570.200(j) of the Community Development Block Grant (CDBG) program by
the September 30, 2003, final rule.
The regulations for the IHBG, Title VI Loan Guarantee, and Section
184 programs do not have sections that specifically address the
participation of faith-based organizations. Such organizations could
participate in those programs as subrecipients or contractors, as
appropriate. This final rule makes the equal participation protections
at 24 CFR part 5 established by the July 9, 2004, final rule apply to
these Native American programs, as well as to the other HUD programs
and activities not covered by the September 30, 2003, final rule. These
provisions were originally not made applicable to the IHBG, Title VI
Loan Guarantee, and Section 184 programs so that HUD could consult with
the affected tribes. Now that consultation has been completed, these
provisions of part 5 apply.
III. Policies and Requirements
The specific policies and requirements that are codified by this
final rule, consistent with the September 30, 2003, and July 9, 2004,
final rules are as follows:
1. Equal participation of faith-based organizations in HUD programs
and activities. This final rule clarifies that faith-based
organizations are eligible, on the same basis as any other eligible
organization, to participate in HUD's programs and activities. The
phrase ``participate in HUD's programs and activities'' and its
variants are used in this rule to refer to participation in the full
range of HUD programs and activities, including (1) programs that make
funds available through contracts, grants, cooperative agreements, or
other instruments for eligible goods, services, and activities, and (2)
programs that do not make funds available but involve other forms of
benefit or resources. For example, the Title VI Loan Guarantee program
does not provide funds, but guarantees notes or other obligations
issued by Indian tribes to finance affordable housing activities.
Neither the federal government, nor a state, local, or tribal
government, nor any other entity that administers any HUD program or
activity, shall discriminate against an organization on the basis of
the organization's religious character or affiliation. Nothing in the
rule would preclude those administering HUD-funded programs from
accommodating faith-based organizations in a manner consistent with the
Establishment Clause of the First Amendment.
2. Inherently religious activities. Organizations that receive
direct HUD funds under a HUD program or activity may not engage in
inherently religious activities, such as worship, religious
instruction, or proselytization, as part of the programs or services
directly funded under the HUD program or activity. If an organization
conducts such activities, the activities must be offered separately, in
time or location, from the programs, activities, or services supported
by direct HUD funds, and participation must be voluntary for the
beneficiaries of these programs, activities, or services.
As used in this final rule, the term ``direct HUD funds'' refers to
direct funding within the meaning of the Establishment Clause of the
First Amendment. For example, direct HUD funding may mean that the
government or an intermediate organization with similar duties as a
governmental entity under a particular HUD program selects an
organization and purchases the needed services straight from the
organization (e.g., via a contract or cooperative agreement). In
contrast, indirect funding scenarios may place the choice of service
provider in the hands of a beneficiary, and then pay for the cost of
that service through a voucher, certificate, or other similar means of
payment.
3. Independence of faith-based organizations. A faith-based
organization that participates in a HUD program or activity will retain
its independence from federal, state, local, and tribal governments,
and may continue to carry out its mission, including the definition,
practice, and expression of its religious beliefs, provided that it
does not engage in any inherently religious activities, such as
worship, religious instruction, or proselytization, as part of the
programs or services supported by direct HUD funds. Among other things,
faith-based organizations may use space in their facilities to provide
services under a HUD program, without removing religious art, icons,
scriptures, or other religious symbols. In addition, a faith-based
organization participating in a HUD program retains authority over its
internal governance, and it may retain religious terms in its
organization's name, select its board members and otherwise govern
itself on a religious basis, and include religious references in its
organization's mission statements and other governing documents.
4. Exemption from Title VII employment discrimination requirements.
A faith-based organization's exemption from the federal prohibition on
employment discrimination on the basis of religion, set forth in
section 702(a) of the Civil Rights Act of 1964 (42 U.S.C. 2000e-1), is
not forfeited when the organization participates in a HUD program. Some
HUD programs, however, contain independent statutory provisions that
impose certain nondiscrimination requirements on all grantees.
Accordingly, grantees should consult with the appropriate Department
program office to determine the scope of applicable requirements.
5. Nondiscrimination requirements. This final rule clarifies that
an organization that receives direct HUD funds shall not, in providing
program assistance, discriminate against a program beneficiary or
prospective program beneficiary on the basis of religion or religious
belief. Organizations participating in HUD programs and activities must
also comply with any other applicable fair housing and
nondiscrimination requirements.
6. Acquisition, construction, and rehabilitation of structures. HUD
funds may not be used for the acquisition, construction, or
rehabilitation of structures to the extent that those structures are
used for inherently religious activities. HUD funds may be used for the
acquisition, construction, or rehabilitation of structures only to the
extent that those structures are used for conducting eligible
activities under a HUD program or activity. Where a structure is used
for both eligible and inherently religious activities, HUD funds may
not exceed the cost of those portions of the acquisition, construction,
or rehabilitation that are attributable to eligible activities in
accordance with the cost accounting requirements applicable to the HUD
program or activity. Sanctuaries, chapels, and other rooms that a HUD-
funded religious congregation uses as its principal place of worship,
however, are ineligible for HUD-funded improvements. Disposition of
real property after use for the authorized purpose, or any change in
use of the property from the authorized purpose, is subject to
governmentwide regulations governing real property disposition (e.g.,
24 CFR parts 84 and 85).
7. Commingling of federal and state, local, or tribal funds. If a
state, local, or tribal government voluntarily contributes its own
funds to supplement federally funded activities, the state, local, or
tribal government may segregate the federal funds or commingle them.
However, if the funds are commingled, the policies and requirements of
this rule would apply to all of the commingled funds. If a state,
local, or tribal government is required to
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contribute matching funds to supplement a federally funded activity,
the matching funds are considered commingled with the federal
assistance and subject to the requirements of this proposed rule. Some
HUD program requirements govern any project or activity assisted under
that program. Accordingly, grantees should consult with the appropriate
HUD program office to determine the scope of applicable requirements.
IV. Discussion of the Public Comment on the June 21, 2004, Proposed
Rule
The public comment period on the June 21, 2004, proposed rule
closed on August 20, 2004. HUD received one public comment, which came
from a civil rights organization. This section of the preamble presents
a summary of the significant issues raised by the public commenter and
HUD's responses to these issues.
A. General Comments
Comment: Opposition to rule on constitutional grounds. The
commenter expressed concern that the proposed regulatory changes would
conflict with the Establishment Clause and related Supreme Court
decisions. The commenter wrote that the rule impermissibly would
authorize federal funding for churches and other ``pervasively
sectarian organizations.'' The commenter was concerned that the
regulatory changes ``fail to recognize the unique place that religion
has in our society and our constitutional scheme.''
HUD Response. HUD does not agree with the commenter. While
religious organizations have a unique position in our society and
constitutional scheme, HUD does not agree that the unique nature of
religious organizations should prevent them from receiving an equal
opportunity to participate in federally funded programs, and this rule
does not present any violation of the Establishment Clause or Free
Exercise Clause.
In addition, the Supreme Court's ``pervasively sectarian''
doctrine--which held that there are certain religious institutions in
which religion is so pervasive that no government aid may be provided
to them, because their performance of even ``secular'' tasks will be
infused with religious purpose--no longer enjoys the support of a
majority of the Court. Four Justices expressly abandoned it in Mitchell
v. Helms, 530 U.S. 793, 825-829 (2000) (plurality opinion), and Justice
O'Connor's opinion in that case, joined by Justice Breyer, set forth
reasoning that is inconsistent with its underlying premises. (See id.
at 857-858 (O'Connor, J., concurring in judgment) (requiring proof of
``actual diversion of public support to religious uses'').) Thus, six
members of the Court have rejected the view that aid provided to
religious institutions will invariably advance the institutions'
religious purposes, and that view is the foundation of the
``pervasively sectarian'' doctrine. The Department therefore believes
that under current precedent, the Department may fund all
organizations, without regard to religion and free of criteria that
require the provider to abandon its religious expression or character.
As more fully discussed in the responses to the issues below, HUD
believes that the policies and procedures contained in this final rule
are fully within the bounds of constitutional church-state guidelines
and consistent with recent Supreme Court decisions concerning the
Establishment Clause.
Comment: Rule should provide for stricter monitoring and
enforcement. The commenter wrote that the rule fails to provide for any
oversight mechanisms or ``firewalls'' to prevent the religious use of
government funds. The commenter wrote that such a firewall could best
be accomplished by requiring that faith-based organizations establish a
separate corporate structure to distinguish a sectarian religious
entity from its government-funded social welfare organization.
HUD Response. HUD has not revised the rule in response to this
comment. HUD has a responsibility to monitor all program participants
to ensure that HUD funds are used in accordance with HUD program and
any governmentwide requirements. Inappropriate use of HUD funds or
failure to comply with HUD requirements is not a possibility that
arises only when program participants are faith-based organizations.
Failure of any organization receiving federal funds to ensure that the
federal portion of their funding is not used for prohibited purposes
will subject the organization to the imposition of sanctions or
penalties. All HUD program participants must carefully manage their
various sources of federal funds and abide by Office of Management and
Budget cost accounting circulars, where applicable, or other cost
accounting methods that may be specified in individual program
regulations. These existing procedures, therefore, more than suffice to
address the concerns raised by the commenter.
Comment: Rule fails to establish adequate safeguards for indirect
federal funding of faith-based organizations. The commenter wrote that
the rule lacks regulatory safeguards to ensure that indirect HUD
funding to faith-based organizations is not used inappropriately. The
commenter wrote that the rule, in effect, establishes a mechanism for
the provision of vouchers without meeting the requirements established
by the Supreme Court for such programs (e.g., that the program be
completely neutral with respect to religion, that use of the vouchers
at a religious institution be a wholly genuine and independent private
choice, and that the voucher programs not provide incentives to choose
a religious institution over a non-religious one, etc.).
HUD Response. HUD has not revised the rule in response to this
comment. Any HUD-funded program that involves indirect funding must, of
course, comply with federal law (including current legal precedent),
and nothing in the final regulation provides otherwise. As explained in
the preamble of the proposed rule as well as the preamble of this final
rule, the term ``direct HUD funds'' refers to direct funding within the
meaning of the Establishment Clause of the First Amendment. In other
words, HUD's use of the phrase ``direct funding'' in this rule
incorporates current First Amendment jurisprudence into its definition.
For example, direct HUD funding may mean that the government or an
intermediate organization with similar duties as a governmental entity
under a particular HUD program selects an organization and purchases
the needed services straight from the organization (e.g., via a
contract or cooperative agreement). In contrast, indirect funding
scenarios may place the choice of service provider in the hands of a
beneficiary, and then pay for the cost of that service through a
voucher, certificate, or other similar means of payment.
HUD believes that, under current precedent, faith-based
organizations that receive HUD funds as the result of the genuine and
independent choice of a beneficiary (for example, where the entity
administering HUD funds established a voucher, coupon, certificate, or
similar funding mechanism) are permitted to offer assistance that
integrates religion and social services and requires participation in
all aspects of their programs. The religious freedom of beneficiaries
in an indirect funding program is protected by the guarantee of genuine
and independent private choice. A beneficiary has the right to select
any eligible provider, and no beneficiary may be required to receive
services from a provider to which the beneficiary has a religious
objection. In other words, vouchers for services
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funded by the government must be available to eligible beneficiaries
regardless of their religious belief, and those who object to a
religious provider may select an eligible alternative provider.
Comment: Ensure the availability of secular alternative service
providers. The commenter wrote that HUD should ensure that
beneficiaries have the ability to receive services from a different or
non-religious provider. The commenter wrote that without reasonable
secular alternatives, beneficiaries might be forced to participate in
programs provided by faith-based organizations where they may be
required to participate in religious activity in order to receive
essential government-funded benefits.
HUD Response. HUD has not revised the rule in response to this
comment. Under this final rule, directly funded faith-based
organizations are prohibited from discriminating against program
beneficiaries on the basis of ``religion or religious belief.'' In
addition, the rule provides that faith-based organizations may not use
direct funding from HUD for inherently religious activities, that such
activities must be offered separately, in time or location, from
services directly funded by HUD, and that no beneficiary served by a
HUD-funded provider directly funded by HUD will be required to
participate in inherently religious activities as a condition of
receiving services. These requirements sufficiently protect the rights
of program beneficiaries. Moreover, HUD's general objective is to
eliminate barriers to faith-based organizations, to welcome their
participation in HUD programs and, most important, to ensure they are
treated like other program participants. The commenter's
recommendations run counter to the objectives that HUD is trying to
achieve through this rule. In light of the restrictions on direct
funding outlined above, to prevent a faith-based organization from
providing HUD-funded programs or services unless there is a secular
organization also providing the same programs or services would defeat
the ``neutrality'' objective sought by this rulemaking.
B. Comments Regarding Inherently Religious Activities
Comment: Revise the requirement regarding ``separation in time or
location.'' The commenter wrote that the rule fails to mandate the
sufficient distance between inherently religious activities and the
delivery of programs, activities, or services supported by direct HUD
funds. The commenter suggested that HUD revise the rule to provide that
religious activities must be separated by both time and location. The
commenter also suggested that faith-based organizations be required to
explain that participation in religious activities is voluntary at the
outset of a beneficiary's receipt of services.
HUD Response. HUD declines to adopt the suggestion made by the
commenter. HUD believes that requiring that inherently religious
activities be separated from HUD-funded activities by both time and
location is legally unnecessary. Further, such a requirement would
impose an unnecessarily harsh burden on small faith-based organizations
that may have access to only one suitable location for the provision of
HUD-funded services. HUD does not agree that the separation of time or
location requirement is ambiguous or necessitates the need for
additional regulation for proper adherence. HUD believes that existing
regulations and this rule are clear that faith-based organizations
using direct federal funds for certain activities must separate their
inherently religious activities from the federally funded activities.
Furthermore, HUD declines to require that religious organizations
provide a notice to a beneficiary or potential beneficiary that
participation in religious activities was entirely on a voluntary
basis. However, grantees are encouraged to take steps to ensure that
clients and prospective clients have a clear understanding of the
services offered by their organization by explaining the services
offered, including any inherently religious activities, as well as the
individual's right not to participate in any such activities, while
still accepting or receiving services. The requirement that
participation be voluntary, however, is sufficient to address concerns
about the religious freedom of program beneficiaries.
Comment: Include a more explicit statement prohibiting faith-based
organizations from requiring program beneficiaries to participate in
religious activities. The commenter wrote that HUD should strengthen
the provisions of the rule specifying that participation by a
beneficiary in religious activities offered by a faith-based service
provider be voluntary, and that the faith-based organization may not
discriminate against a prospective beneficiary for refusing to
participate in such activities. Specifically, the commenter suggested
that the regulatory text should be revised to state that a faith-based
organization may not discriminate based on ``refusal to participate in
or attend a religious practice.''
HUD Response. HUD believes that the language in the rule
prohibiting faith-based organizations from requiring program
beneficiaries to participate in religious activities is sufficiently
explicit. A prohibition on discrimination against beneficiaries on the
basis of religion or religious belief is straightforward and requires
no further elaboration.
C. Comments Regarding Other Rule Provisions
Comment: Concern regarding the Title VII exemption. The commenter
questioned whether a faith-based organization retains its Title VII
exemption after receipt of federal funds. The commenters wrote that the
exemption from Title VII was never intended to provide the basis for
government-funded discrimination, and expressed concern that the rule
will result in illegal employment discrimination.
HUD Response. As noted above in this preamble, this final rule
clarifies that a faith-based organization's exemption from the federal
prohibition on employment discrimination on the basis of religion, set
forth in section 702(a) of Title VII of the Civil Rights Act of 1964,
is not forfeited when the organization participates in a HUD program.
HUD believes that faith-based organizations should retain their
fundamental civil rights, including their ability to take faith into
account when they make employment decisions without running afoul of
Title VII, when they participate in HUD programs. Title VII recognizes
that for a faith-based organization to define or carry out its mission,
it is important that it be able to choose its employees based on its
vision and beliefs without incurring liability under Title VII. Some
HUD programs, however, contain independent statutory provisions that
impose certain nondiscrimination requirements on all grantees.
Accordingly, grantees should consult with the appropriate Department
program office to determine the scope of any applicable requirements.
Comment: The proposed rule allows the misuse of HUD funds to build
structures used for religious purposes. The commenter objected to the
use of HUD funds in the acquisition, construction, or rehabilitation of
religious structures. The commenter wrote that the proposed
``attribution'' requirements would be unenforceable by agencies
administering the HUD grant. The commenter offered that, even if the
proposed rule could be effectively enforced, it would require such
excessive monitoring as to constitute
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excessive government entanglement with religious institutions. The
commenter wrote that HUD should establish effective safeguards to avoid
the misuse of HUD funds and prevent the perceived constitutional
pitfalls.
HUD Response. HUD has not revised the rule in response to these
comments. HUD finds no basis for requiring greater oversight and
monitoring of faith-based organizations than other program participants
simply because they are faith-based organizations. All program
participants must be monitored for compliance with program
requirements, and no program participant may use HUD funds for any
ineligible activity, whether that activity is an inherently religious
activity or a nonreligious activity that is outside the scope of the
program at issue. Many nonreligious organizations participating in HUD
programs also receive funding from several sources (private, state, or
local) to carry out activities that are ineligible for funding under
HUD programs. In many cases, the non-eligible activities are secular
activities but not activities eligible for funding under HUD programs.
All program participants receiving funding from various sources and
carrying out a wide range of activities must ensure through proper
accounting principles that each set of funds is applied only to the
activities for which the funding was provided. The regulations for
HUD's programs prescribe the cost accounting procedures that are to be
followed in using HUD funds.
HUD also does not agree that preventing the use of direct HUD
capital-improvement funds for inherently religious activities would
necessarily fail or, in the process, excessively entangle the
government in the affairs of recipients or subrecipients that are
religious organizations. Because inherently religious activities are
non-HUD activities, HUD need not distinguish between program
participants' religious and nonreligious non-HUD activities; the same
mechanism by which HUD polices the line between ineligible and eligible
activities will serve to exclude inherently religious activities from
funding. This system of monitoring is more than sufficient to address
the commenter's concerns, and the amount of oversight of religious
organizations necessary to accomplish these purposes is no greater than
that involved in other publicly funded programs that the Supreme Court
has sustained.
HUD believes that the prorated funding of improvements to a
structure that has a mixed use--both religious and nonreligious-- is
not itself a violation of the Constitution. In a neutral program in
which the government directly funds the capital improvements of
institutions that administer federal social welfare programs, the
government need only put in place safeguards to ensure that public
money is not used to finance inherently religious activities.
Therefore, the final rule's prohibition on the funding of capital
improvements for sanctuaries, chapels, or any other rooms that a HUD-
funded religious congregation uses as its principal place of worship
simply provides extra assurance that HUD-funded capital improvements
will not be used to support inherently religious activities, and HUD's
rule is well within the bounds of the Constitution.
Comment: The rule should prohibit the display of religious art or
iconography. The commenter wrote that the rule fails to recognize that
proselytization, religious instruction, and worship can occur through
art, icons, and images. Further, the commenter was concerned that the
symbols might create a ``pervasively sectarian'' atmosphere in which
members of a different religion may not feel comfortable or welcome.
HUD Response. HUD declines to impose this restriction on HUD
program participants that are faith-based organizations. A number of
federal statutes affirm the principle embodied in this rule (see e.g.,
42 U.S.C. 290kk-1(d)(2)(B)). For no other program participants do HUD
regulations prescribe the type of artwork, statues, or icons that may
be placed within the structures in which HUD-funded services are
provided. A prohibition on the use of religious icons would make it
more difficult for many faith-based organizations to participate in the
program than for other organizations and would thus be an inappropriate
and excessive restriction.
V. Findings and Certifications
Consultation With Indian Tribal Governments
In accordance with Executive Order 13175 (entitled ``Consultation
and Coordination With Indian Tribal Governments''), issued on November
6, 2000, HUD has consulted with representatives of tribal governments
concerning the subject of this rule. HUD, through a letter dated
February 23, 2004, provided Indian tribes and Alaska Native Villages
the opportunity to comment on the substance of the regulatory changes
during the development of the June 21, 2004, proposed rule. HUD
considered their comments on the proposed changes in the preparation of
the June 21, 2004, proposed rule for publication. Additionally, the
June 21, 2004, proposed rule provided Indian tribes with an additional
opportunity to comment on the proposed regulatory changes.
Regulatory Planning and Review
The Office of Management and Budget (OMB) reviewed this rule under
Executive Order 12866 (entitled ``Regulatory Planning and Review'').
OMB determined that this rule is a ``significant regulatory action'' as
defined in section 3(f) of the Order (although not an economically
significant regulatory action under the Order). Any changes made to the
rule as a result of that review are identified in the docket file,
which is available for public inspection in the Regulations Division,
Room 10276, 451 Seventh Street, SW., Washington, DC 20410-0500.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (2
U.S.C. 1531-1538) establishes requirements for federal agencies to
assess the effects of their regulatory actions on state, local, and
tribal governments, and the private sector. This rule does not impose
any federal mandate on any state, local, or tribal governments or the
private sector within the meaning of UMRA.
Environmental Impact
This final rule sets forth nondiscrimination standards.
Accordingly, under 24 CFR 50.19(c)(3), this final rule is categorically
excluded from environmental review under the National Environmental
Policy Act of 1969 (42 U.S.C. 4332).
Impact on Small Entities
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)) has reviewed and approved this rule and in so doing
certifies that this rule will not have a significant economic impact on
a substantial number of small entities. The final rule will not impose
new costs, or modify existing costs, applicable to HUD grantees.
Rather, the purpose of the final rule is to ensure the equal
participation of faith-based organizations (irrespective of size) in
HUD's programs.
Catalog of Federal Domestic Assistance Numbers
The Catalog of Federal Domestic Assistance numbers for the programs
affected by this rule are: Indian Home Program--14.239; ICDBG--14.862;
[[Page 62169]]
Section 184--14.865; IHBG--14.867; Title VI Loan Guarantee--14.869.
List of Subjects
24 CFR Part 954
Administrative practice and procedure, Grant programs--housing and
community development, Grant programs--Indians, Indians, Low and
moderate income housing, Manufactured homes, Rent subsidies, Reporting
and recordkeeping requirements.
24 CFR Part 1003
Alaska, Community development block grants, Grant programs--housing
and community development, Indians, Reporting and recordkeeping
requirements.
0
For the reasons stated in the preamble, HUD amends title 24 of the Code
of Federal Regulations as follows:
PART 954--INDIAN HOME PROGRAM
0
1. The authority citation for 24 CFR part 954 continues to read as
follows:
Authority: 42 U.S.C. 3535(d) and 12701-12839.
0
2. Revise Sec. 954.301 to read as follows:
Sec. 954.301 Faith-based activities.
(a) Religious organizations are eligible, on the same basis as any
other organization, to participate in the Indian HOME program. Neither
the federal government nor a tribal government nor any other entity
that administers any program or activity under this part shall
discriminate against an organization on the basis of the organization's
religious character or affiliation.
(b) Organizations that receive direct HUD funds under the Indian
HOME program may not engage in inherently religious activities, such as
worship, religious instruction, or proselytization, as part of the
program or services funded under this part. If an organization conducts
such inherently religious activities, the inherently religious
activities must be offered separately, in time or location, from the
programs, activities, or services supported by direct HUD funds under
this part, and participation must be voluntary for the beneficiaries of
the programs, activities, or services provided.
(c) A religious organization that participates in the Indian HOME
program will retain its independence from federal, state, local, and
tribal governments, and may continue to carry out its mission,
including the definition, practice, and expression of its religious
beliefs, provided that it does not engage in any inherently religious
activities, such as worship, religious instruction, or proselytization,
as part of the programs or services funded under a program or activity
pursuant to this part. Among other things, religious organizations may
use space in their facilities to provide services under the Indian HOME
program without removing religious art, icons, scriptures, or other
religious symbols. In addition, a religious organization participating
in the Indian HOME program retains its authority over its internal
governance, and it may retain religious terms in its organization's
name, select its board members on a religious basis, and include
religious references in its organization's mission statements and other
governing documents.
(d) A religious organization's exemption from the federal
prohibition on employment discrimination on the basis of religion, set
forth in section 702(a) of the Civil Rights Act of 1964 (42 U.S.C.
2000e-1), is not forfeited when the organization participates in a HUD
program. Some HUD programs, however, contain independent statutory
provisions that impose certain nondiscrimination requirements on all
grantees. Accordingly, grantees should consult with the appropriate HUD
program office to determine the scope of applicable requirements.
(e) An organization that receives direct funds under the Indian
HOME program shall not, in providing program assistance, discriminate
against a program beneficiary or prospective program beneficiary on the
basis of religion or religious belief.
(f) Indian HOME funds may not be used for the acquisition,
construction, or rehabilitation of structures to the extent that those
structures are used for inherently religious activities. Indian HOME
funds may be used for the acquisition, construction, or rehabilitation
of structures only to the extent that those structures are used for
conducting eligible activities under this part. Where a structure is
used for both eligible and inherently religious activities, Indian HOME
funds may not exceed the cost of those portions of the acquisition,
construction, or rehabilitation that are attributable to eligible
activities in accordance with the cost accounting requirements
applicable to Indian HOME funds in this part. Sanctuaries, chapels, or
other rooms that an Indian HOME-funded religious congregation uses as
its principal place of worship, however, are ineligible for Indian
HOME-funded improvements. Disposition of real property after the term
of the grant, or any change in use of the property during the term of
the grant, is subject to governmentwide regulations governing real
property disposition (see 24 CFR parts 84 and 85).
(g) If a tribal government voluntarily contributes its own funds to
supplement federally funded activities, the tribal government has the
option to segregate the federal funds or commingle them. However, if
the funds are commingled, this section applies to all of the commingled
funds. Further, if a state or local government is required to
contribute matching funds to supplement a federally funded activity,
the matching funds are considered commingled with the federal
assistance and therefore subject to the requirements of this section.
Some HUD programs requirements govern any project or activity assisted
under those programs. Accordingly, grantees should consult with the
appropriate HUD program office to determine the scope of applicable
requirements
PART 1003--COMMUNITY DEVELOPMENT BLOCK GRANTS FOR INDIAN TRIBES AND
ALASKA NATIVE VILLAGES
0
3. The authority citation for 24 CFR part 1003 continues to read as
follows:
Authority: 42 U.S.C. 3535(d) and 5301 et seq.
0
4. Revise Sec. 1003.600 to read as follows:
Sec. 1003.600 Faith-based activities.
(a) Religious organizations are eligible, on the same basis as any
other eligible organization, to participate in the ICDBG program.
Neither the federal government nor a tribal government nor any other
entity that administers any program or activity under this part shall
discriminate against an organization on the basis of the organization's
religious character or affiliation.
(b) Organizations that receive direct HUD funds under the ICDBG
program may not engage in inherently religious activities, such as
worship, religious instruction, or proselytization, as part of the
programs or services funded under this part. If an organization
conducts such inherently religious activities, the inherently religious
activities must be offered separately, in time or location, from the
programs, activities or services supported by direct HUD funds under
this part, and participation must be voluntary for the beneficiaries of
the programs, activities, or services provided.
(c) A religious organization that participates in the ICDBG program
will retain its independence from federal, state, local, and tribal
governments, and may continue to carry out its mission,
[[Page 62170]]
including the definition, practice, and expression of its religious
beliefs, provided that it does not engage in any inherently religious
activities, such as worship, religious instruction, or proselytization,
as part of the programs or services funded under a program or activity
pursuant to this part. Among other things, religious organizations may
use space in their facilities to provide ICDBG-funded services, without
removing religious art, icons, scriptures, or other religious symbols.
In addition, a religious organization participating in the ICDBG
program retains its authority over its internal governance, and it may
retain religious terms in its organization's name, select its board
members on a religious basis, and include religious references in its
organization's mission statements and other governing documents.
(d) A religious organization's exemption from the federal
prohibition on employment discrimination on the basis of religion, set
forth in section 702(a) of the Civil Rights Act of 1964 (42 U.S.C.
2000e-1), is not forfeited when the organization participates in a HUD
program. Some HUD programs, however, contain independent statutory
provisions that impose certain nondiscrimination requirements on all
grantees. Accordingly, grantees should consult with the appropriate HUD
program office to determine the scope of applicable requirements.
(e) An organization that receives direct funds under the ICDBG
program shall not, in providing program assistance, discriminate
against a program beneficiary or prospective program beneficiary on the
basis of religion or religious belief.
(f) ICDBG funds may not be used for the acquisition, construction,
or rehabilitation of structures to the extent that those structures are
used for inherently religious activities. ICDBG funds may be used for
the acquisition, construction, or rehabilitation of structures only to
the extent that those structures are used for conducting eligible
activities under this part. Where a structure is used for both eligible
and inherently religious activities, ICDBG funds may not exceed the
cost of those portions of the acquisition, construction, or
rehabilitation that are attributable to eligible activities in
accordance with the cost accounting requirements applicable to ICDBG
funds in this part. Sanctuaries, chapels, or other rooms that an ICDBG-
funded religious congregation uses as its principal place of worship,
however, are ineligible for ICDBG-funded improvements. Disposition of
real property after the term of the grant, or any change in use of the
property during the term of the grant, is subject to governmentwide
regulations governing real property disposition (see 24 CFR parts 84
and 85).
(g) If a tribal government voluntarily contributes its own funds to
supplement federally funded activities, the tribal government has the
option to segregate the federal funds or commingle them. However, if
the funds are commingled, this section applies to all of the commingled
funds. Further, if a state or local government is required to
contribute matching funds to supplement a federally funded activity,
the matching funds are considered commingled with the federal
assistance and therefore subject to the requirements of this section.
Some HUD programs requirements govern any project or activity assisted
under those programs. Accordingly, grantees should consult with the
appropriate HUD program office to determine the scope of applicable
requirements.
Dated: October 18, 2004.
Michael Liu,
Assistant Secretary for Public and Indian Housing.
[FR Doc. 04-23666 Filed 10-19-04; 12:06 pm]
BILLING CODE 4210-33-P