[Federal Register: September 30, 2003 (Volume 68, Number 189)]
[Rules and Regulations]
[Page 56466-56470]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30se03-29]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Administration for Children and Families
45 CFR Part 1050
RIN 0970-AC13
Charitable Choice Provisions Applicable to Programs Authorized
Under the Community Services Block Grant Act
AGENCY: Administration for Children and Families (ACF), Department of
Health and Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule implements the Charitable Choice statutory
provisions in the Community Services Block Grant Act (``CSBG Act'').
These provisions apply to programs authorized under the Act, including
the Community Services Block Grant Program, Training, Technical
Assistance and Capacity Building Program, Community Food and Nutrition
Program, National Youth Sports Program, and discretionary grants for
economic development, rural community development, and neighborhood
innovation, which are all administered by the Administration for
Children and Families (ACF). It is ACF's policy that, within the
framework of constitutional church-state guidelines, faith-based
organizations should be able to compete on an equal footing for
funding, and ACF supports the participation of faith-based
organizations in these programs.
EFFECTIVE DATE: October 30, 2003.
FOR FURTHER INFORMATION CONTACT: Clarence Carter, Director, Office of
Community Services (OCS), Administration for Children and Families
(ACF), United States Department of Health and Human Services, at (202)
401-9333.
SUPPLEMENTARY INFORMATION: On December 17, 2002, the Administration for
Children and Families (ACF), Department of Health and Human Services
(HHS), published in the Federal Register (67 FR 77368) a proposed rule
to implement the Charitable Choice statutory provisions of section 679
of the Community Services Block Grant Act (``CSBG Act''). Title 42
U.S.C. Section 9920. Section 679 of the CSBG Act provides for the
participation of religious organizations in programs authorized by the
Act. ACF provided a 60-day comment period on the proposed rule, which
ended on February 18, 2003.
The proposed rule was issued under the authority granted to the
Secretary of Health and Human Services (the Secretary) by Title 42
U.S.C. 9901. Section 9901 authorizes States to provide an opportunity
for active participation by faith-based groups, as well as other
charitable, private, and neighborhood-based organizations, in programs
directed to eliminate poverty.
Title II of the Community Opportunities, Accountability, and
Training and Education Services Act of 1998 (COATS) (Pub. L. 105-285)
sets forth certain ``Charitable Choice'' provisions clarifying Federal,
State, and local authority to use religious organizations to provide
benefits and services that help families achieve self-sufficiency in
programs authorized under the CSBG Act. In addition to giving families
a greater choice of providers, these provisions set forth certain
requirements to ensure that religious organizations are able to compete
on an equal footing for funds without impairing the religious character
of such organizations and without diminishing the religious freedom of
the CSBG Act recipients.
President Bush has made it one of his Administration's top
priorities to ensure that Federal programs are fully open to faith-
based and community groups in a manner that is consistent with the
Constitution. It is the Administration's view that faith-based
organizations are an indispensable part of the social services network
of the United States. Faith-based organizations, including places of
worship, nonprofit organizations, and neighborhood groups, offer
numerous social services to those in need. The Charitable Choice
provisions in the CSBG Act are consistent with the Administration's
belief that there should be an equal opportunity for all organizations,
both faith-based and nonreligious, to participate as partners in
Federal programs to serve Americans in need.
The Charitable Choice provisions in the CSBG Act contain important
protections both for religious organizations that receive funding, and
for the individuals who receive their services. This Final Rule
implements the Charitable Choice provisions applicable to Federal,
State, and local governments when funding public and private
organizations--including religious organizations. This final rule is
intended to ensure that the CSBG Act programs are open to all eligible
organizations, regardless of their religious affiliation or character.
Response to Comments Received on the Proposed Rule
Thirteen organizations submitted comments on the proposed rule. The
majority of the comments were from organizations that focus on civil
liberties and/or separation of church and state. Comments were also
received from major national religious organizations that provide
social services, and also representatives of community action agencies
(CAAs).
While three national religious organizations supported the proposed
rule as drafted, a majority of the comments took issue with major
provisions, including those designed to keep religious activities
separated from social services, safeguard the identity and functional
options of religious organizations, protect the rights and options of
beneficiaries, and assure appropriate accounting of expended funds.
The following is a summary of comments by issue, and the
Department's response to those comments:
[[Page 56467]]
Eligibility of Religious Organizations (Section 1050.3(a)(1) and (2))
Comments: Several comments questioned the constitutionality of
funding what could be ``pervasively'' religious organizations. They
asked that the rule's language be strengthened to assure that religious
programs that receive public funds for secular services ``provide such
services in a completely secular manner and setting.'' Three comments
supported the proposed rule as drafted.
Response: We do not agree with the commenters. Religious
organizations that receive direct CSBG Act funds cannot use such funds
for inherently religious activities. These organizations must ensure
that religious activities are separate in time or location from the
treatment services and they must also ensure that participation in such
religious activities is voluntary. Furthermore, they are prohibited
from discriminating against a program beneficiary on the basis of
religion or a religious belief.
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 set forth reasoning that is inconsistent with its underlying
premises, see id. at 857-858 (O'Connor, J., concurring in judgment,
joined by Breyer, J.) (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. We
therefore believe that when current precedent is applied to a social
service program, or to the CSBG Act Charitable Choice provisions,
government may fund all service providers, without regard to religion
and free of criteria that require the provider to abandon its religious
expression or character.
Separating Religious Activity From Social Services (Section 1050.3(b))
Comments: Most of the comments asked for alternative language to
ensure complete separation of religious activities from secular
activities being provided by religious organizations. Several suggested
changing the phrase ``separated, in time or location,'' to ``time and
location.'' Three comments supported the rule as drafted.
Response: The language in the proposed regulation provides
appropriate safeguards to separate religious activities from secular
activities supported by programs covered by this statute and
regulation. As stated in the explanation of the proposed rule, program
funds that are provided directly to a participating organization may
not be used to support inherently religious activities, such as
worship, religious instruction, or proselytization. If the organization
engages in such activities, the activities must be offered separately,
in time or location, from the programs or services for which it
receives direct funding under the CSBG Act, and participation must be
voluntary for the program participants. This requirement ensures that
program funds provided directly to religious organizations are not used
to support inherently religious activities. Thus, funds provided
directly under the CSBG Act to a participating organization may not be
used, for example, to conduct prayer meetings, studies of sacred texts,
or any other activity that is inherently religious. Additionally,
organizations may not fund these activities with cost sharing or
matching funds, which must be used in a manner consistent with the
federal funds. Moreover, a requirement that participating faith-based
organizations separate their inherently religious activities from HHS-
funded activities in both time and location would impose an
unnecessarily harsh burden on small religious organizations, which may
have access to only one location that is suitable for the provision of
HHS-funded services.
Independence of Religious Organizations (Section 1050.3(c))
Comments: Several comments questioned the ability of religious
organizations to retain their governing structures, which may permit
discrimination on the basis of religious belief, when the current CSBG
statute calls for tripartite governing boards that represent the broad
community to be served. Three comments supported the proposed rule as
drafted.
Response: The Charitable Choice provisions must be implemented
within the context of the authorizing legislation. The Community
Services Block Grant Program under the CSBG Act contains specific
requirements concerning CSBG ``eligible entities.'' The law requires
that all ``eligible entities'' in that program administer CSBG Act
funds ``through a tripartite board * * * that fully participates in the
development, planning, implementation, and evaluation of the program to
serve low-income communities.'' (Title 42 U.S.C. 9910). Section 9910
further requires that the tripartite board include equal representation
from elected public officials, representatives of low-income families
in the neighborhoods served, and officials or members of business,
industry, labor, religious, law enforcement, education or other major
groups interested in the community served. We believe that religious
organizations that become ``eligible entities'' to receive CSBG Act
funding can comply with the board requirements of the CSBG Act so long
as the members of their boards that oversee services and programs
funded by the CSBG Act are truly representative of the these three
constituencies.
Employment Discrimination (Section 1050.3(d))
Comments: A majority of comments: (1) Objected to the proposed rule
interpretation that religious organizations are exempt from Title VII
of the Civil Rights Act that prohibits employment discrimination on the
basis of religious belief; and (2) want applicable State and local
antidiscrimination statutes to apply to religious organizations
receiving social services funding. One comment objected to the ability
of religious organizations to discriminate on the basis of sexual
orientation and gender identity. Three comments support the proposed
rule as drafted.
Response: The receipt of funds from programs authorized in the CSBG
Act does not affect a participating religious organization's exemption
provided under 42 U.S.C. 2000-e regarding employment practices. Title
VII of the Federal Civil Rights Act of 1964 provides that a religious
organization may, without running afoul of Title VII, employ
individuals who share its religious beliefs. This provision helps
enable faith-based groups to promote common values, a sense of
community and unity of purpose, and shared experiences through
service--all of which can contribute to a religious organization's
effectiveness. It thus helps protect the religious liberties of
communities of faith. The CSBG Act's Charitable Choice provisions
expressly preserve a religious organization's exemption from the
religious nondiscrimination provisions of Title VII, 42 U.S.C.
9920(b)(3), and thus reflect the recognition that a religious
organization may determine that, in
[[Page 56468]]
order to define or carry out its mission, it is important that it be
able to take its faith into account in making employment decisions.
Title 42 U.S.C. 9918(c) prohibits persons from being excluded from
participation in CSBG-funded programs or activities or subject to
discrimination based on race, color, national origin, sex, age, or
disability. We decline to impose additional restrictions by regulation.
Protection of Beneficiaries (Section 1050.3(e))
Comments: Most comments asked for alternative language that would
provide stronger protections for beneficiaries of social services from
being exposed to religious ceremonies or practices against their will.
They recommended that the language protect such beneficiaries from both
``passive'' as well as ``active'' non-voluntary religious
participation. Some suggest removing the word ``actively'' while others
suggest adding the word ``passively'' to the rule. Three comments
support the rule as drafted.
Response: We have chosen not to accept the change in response to
these comments. It was not the intent of Congress to permit religious
discrimination in the treatment of beneficiaries, and the CSBG Act
charitable choice provisions adequately protect beneficiaries from
discrimination. Although the statute does not specifically address this
issue, the final rule prohibits discrimination against beneficiaries on
the basis of ``religion or religious belief.'' This phrasing is
slightly different from that in the proposed rule, but is substantively
similar. In addition, no funds provided directly to religious
organizations to provide assistance under any program may be used for
sectarian worship, instruction or proselytization, and inherently
religious activities must be voluntary for program beneficiaries. These
requirements are sufficient to protect the religious freedom of
beneficiaries.
Accounting and Auditing Requirements (Sections 1050.3(f) and (g))
Comments: Several commenters thought the language in the
Supplemental Information section of the proposed rule needs to be moved
to the rule itself, especially descriptions of what constitutes strong
separation of religious from secular social service activities for
purposes of auditing, recordkeeping, and reporting. Also, several
commenters asked for alternative language that would clearly state that
Federal, State and local funding for secular purposes must be separated
and accounted for, and that State and local laws apply in such cases.
Response: The language in the rule is clear and provides for
adequate accounting and auditing of funds. It also provides for
appropriate safeguards for the fiscal accountability of such
organizations. Religious organizations are subject to the same
statutory and regulatory provisions as other non-governmental
organizations to account for Federal funds in accordance with generally
accepted accounting principles. For instance, States administering CSBG
funds are obligated to conduct reviews of grantees as provided in
Section 678B of the CSBG Act. Moreover, each State has an obligation
under Section 678D of the Act to establish fiscal control and
accounting procedures necessary to assure the proper accounting of
funds paid to the State.
Regulations applicable to the CSBG program similarly require that
States manage and monitor grant and sub-grant activities supported by
the award. 45 CFR 74.51(a). Eligible entities are also required to
obtain audits by an independent auditor in accordance with the Single
Audit Act and OMB Circular A-133. 45 CFR 74.26(a). Expenditures must
conform to the same Federal cost principles that are ordinarily
applicable to each award in order to be allowable. 45 CFR 74.27(a).
Moreover we are authorized to conduct site visits as warranted. We
may determine that such audits or reviews are warranted based upon any
information received by the agency which raises an issue concerning the
propriety of expenditures.
Religious organizations are also required to segregate government
funds into a separate account, and those funds are subject to audit by
the government. While the CSBG Act requires a separate account for
government funds we note that non-profit status is not statutorily
required in all programs authorized by the CSBG Act (e.g., training and
technical assistance awards). We have therefore deleted the definition
of religious organization--i.e., ``a non-profit organization''--from
the regulation. We also made this change for consistency with the CSBG
Act which does not define the term.
Religious Organizations as ``Intermediate Organizations'' (Section
1050.3(h))
Comments: Several commenters strongly opposed allowing religious
organizations receiving government funds for social services to
contract with other organizations to provide these services. They
questioned the constitutionality of this subcontracting possibility
arguing that it creates a situation in which religious organizations
are serving a government responsibility of administration and
oversight.
Response: The Department believes that faith-based organizations
that are designated as ``eligible entities'' under the CSBG Act are not
prohibited from operating in a manner consistent with the rights and
responsibilities afforded other community-based organizations under the
Act, including the opportunity to contract with other organizations to
provide services or carry out other responsibilities of the grant.
Religious groups, like any other groups that serve as intermediate
organizations, will be subject to generally applicable requirements
that ensure the fair and lawful administration of the program.
Vouchers
Comments: Discussion of the possible use of vouchers in the
Supplemental Information section of the proposed rule caused several
commenters to contend that the recent Supreme Court decision on
educational vouchers would require several conditions not discussed or
provided for in the proposed rule: (1) Availability of choice through
an alternative service provider that is not a religious organization;
and (2) Clear notification to a beneficiary that they had a choice of
receiving comparable service in a non-religious organization setting.
Comments either suggested that the rule require the availability of
alternative service choices, or objected to the fact that by providing
funds to religious organizations, a situation was created in which
competing services would have to be created at considerable expense, or
wanted stronger language regarding notification to beneficiaries that
they had a choice of service providers.
Response: Mention of vouchers in the Supplemental Information
section of the proposed rule was offered as an example of how a
potential beneficiary might approach a faith-based organization for
services, and was not intended to form the basis for establishing in
this rulemaking criteria for social service voucher programs. Further,
since vouchers are not currently used in programs funded by the CSBG
Act, we anticipate few or no situations in which the issues raised by
commenters would apply.
Regulatory Procedures
Comments: One commenter viewed the proposed rule as a ``major
regulation,'' thereby requiring a
[[Page 56469]]
regulatory flexibility analysis, and subjected to the report
requirements, pre-issuance assessment, and congressional review that
are mandatory by statute.
Response: The Department does not agree that this is a ``major
regulation'' thereby requiring a regulatory flexibility analysis and
subjecting it to reporting requirements, pre-issuance assessment, and
congressional review that are mandated by statute in certain
circumstances. As indicated in the following section, this rule does
not require the collection of new information, nor does it call for the
creation of programs or services beyond those currently being provided.
Rather, it establishes conditions of participation for faith-based
organizations for programs and services already being funded through
the CSBG Act.
Paperwork Reduction Act of 1995
No new information collection requirements are imposed by these
regulations, nor are any existing requirements changed as a result of
their promulgation. Therefore, the requirements of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3507(d)), regarding reporting and
record keeping, do not apply.
Regulatory Flexibility Analysis
The Secretary certifies, under 5 U.S.C. 605(b), as enacted by the
Regulatory Flexibility Act (Pub. L. 96-354), that this rule will not
result in a significant impact on a substantial number of small
entities.
Regulatory Impact Analysis
Executive Order 12866 requires that regulations be reviewed to
ensure that they are consistent with the priorities and principles set
forth in the Executive Order. The Department has determined that this
rule is consistent with these priorities and principles. This rule is
considered a ``significant regulatory action'' under 3(f) of the
Executive Order, and therefore has been reviewed by the Office of
Management and Budget.
Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995 requires
that a covered agency 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 or more in any one
year.
The Department has determined that this rule would not impose a
mandate that will result in the expenditure by State, local, and Tribal
governments, in the aggregate, or by the private sector, of more than
$100 million in any one year.
Congressional Review
This regulation is not a major rule as defined in 5 U.S.C. chapter
8.
Assessment of Federal Regulation and Policies on Families
Section 654 of the Treasury and General Government Appropriations
Act of 1999 requires Federal agencies to determine whether a proposed
policy or regulation may affect family well-being. If the agency's
determination is affirmative, then the agency must prepare an impact
assessment addressing seven criteria specified in the law. These
regulations will not have an impact on family well-being as defined in
the legislation.
Executive Order 13132
Executive Order 13132, Federalism, requires that Federal agencies
consult with State and local government officials in the development of
regulatory policies with federalism implications. Consistent with
Executive Order 13132, we specifically solicited comment from State and
local government officials on this rule.
Executive Order 13175: Consultation and Coordination with Indian Tribal
Governments
Executive Order 13175 (65 FR 67249, November 6, 2000) requires us
to develop an accountable process to ensure ``meaningful and timely
input by tribal officials in the development of regulatory policies
that have tribal implications.'' Although it is not clear that the rule
will have tribal implications, we specifically solicited comments on
this rule from tribal officials.
List of Subjects in 45 CFR Part 1050
Grant programs-social programs.
(Catalog of Federal Domestic Assistance Programs No. 93569 Community
Services Block Grant)
Dated: September 22, 2003.
Wade F. Horn,
Assistant Secretary for Children and Families.
Tommy G. Thompson,
Secretary of Health and Human Services.
0
For the reasons discussed above, we are adding to 45 CFR chapter X a
new part 1050 to read as follows:
PART 1050--CHARITABLE CHOICE UNDER THE COMMUNITY SERVICES BLOCK
GRANT ACT PROGRAMS
Sec.
1050.1 Scope.
1050.2 Definitions.
1050.3 What conditions apply to the Charitable Choice provisions of
the CSBG Act?
Authority: 42 U.S.C. 9901 et seq.
Sec. 1050.1 Scope.
This part applies to programs authorized under the Community
Services Block Grant Act (CSBG Act). Title 42 U.S.C. 9901, 9913, 9920,
9921, 9922, 9923.
Sec. 1050.2 Definitions.
Applicable program means any program authorized under Title II of
the Community Opportunities, Accountability, and Training and Education
Act of 1998, 42 U.S.C. 9901, et seq.
Direct funding, directly funded or funding provided directly means
funding that is provided to an organization directly by a governmental
entity or an intermediate organization that has the same duties as a
governmental entity, as opposed to funding that an organization
receives as a result of the genuine and independent private choice of a
beneficiary.
Intermediate organization means an organization that is authorized
by the terms of a contract, grant or other agreement with the Federal
Government, or a State or local government, to select other non-
governmental organizations to provide assistance under an applicable
program. For example, when a State uses CSBG Act funds to pay for
technical assistance services provided by a private entity and also
authorizes that entity to subcontract for a portion of the technical
assistance effort, the private entity is an intermediate organization.
Program beneficiary or recipient means an individual who receives
services under a program funded in whole or part by an applicable
program.
Program participant means a public or private entity that has
received financial assistance under an applicable program.
Sec. 1050.3 What conditions apply to the Charitable Choice provisions
of the CSBG Act?
These Charitable Choice provisions apply whenever the Federal
government, or a State or local government, uses funds under the CSBG
Act to provide awards, contracts, or other assistance under any program
authorized in the Community Services
[[Page 56470]]
Block Grant, 42 U.S.C. 9901, et seq. Additionally, these provisions
apply whenever an intermediate organization acting under a contract,
grant, or other agreement with a Federal, State, or local government
entity selects nongovernmental organizations to provide assistance
under any of the programs authorized under the Community Services Block
Grant Act.
(a)(1) Religious organizations are eligible, on the same basis as
any other organization, to participate in the applicable programs as
long as they use program funds consistent with the Establishment Clause
and the Free Exercise Clause of the First Amendment to the United
States Constitution.
(2) Neither the Federal government nor a State or local government
receiving funds under an applicable program shall discriminate against
an organization that applies to provide, or provides, services or
benefits on the basis of the organization's religious character or
affiliation.
(b) No program participant that receives direct funding under an
applicable program may expend the program funds for inherently
religious activities, such as worship, religious instruction, or
proselytization. If an organization conducts such activities, it must
offer them separately, in time or location, from the programs or
services directly funded under any applicable program, and
participation must be voluntary for program beneficiaries.
(c) A religious organization that participates in an applicable
program will retain its independence from Federal, State, and local
governments and may continue to carry out its mission, including the
definition, practice and expression of its religious beliefs, provided
that it does not expend any direct funding under the applicable program
to support any inherently religious activities, such as worship,
religious instruction, or proselytization. Among other things,
religious organizations may use space in their facilities to provide
services funded under an applicable program without removing religious
art, icons, scriptures, or other symbols. In addition, such a religious
organization retains the 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) The participation of a religious organization in, or its
receipt of funds from, an applicable program does not affect that
organization's exemption provided under 42 U.S.C. 2000e-1 regarding
employment practices.
(e) A religious organization that receives funds under an
applicable program, shall not, in providing program services or
benefits, discriminate against a program beneficiary or prospective
program beneficiary on the basis of religion or a religious belief.
(f) Religious organizations that receive funds under an applicable
program are subject to the same regulations as other nongovernmental
organizations to account, in accordance with generally accepted
auditing and accounting principles, for the use of such funds. In
addition, religious organizations are required to keep any Federal
funds they receive for services segregated in a separate account from
non-Federal funds. Only the segregated government funds are subject to
audit by the government under the applicable program.
(g) If a State or local government contributes its own funds to
supplement CSBG Act funded activities, the State or local government
has the option to segregate the Federal funds or commingle them.
However, if the funds are commingled, the Charitable Choice provisions
apply to all of the commingled funds.
(h) If a nongovernmental intermediate organization, acting under a
grant, contract, or other agreement with the Federal, State or local
government, is given the authority to select nongovernmental
organizations to provide services under an applicable program, then the
intermediate organization must ensure that there is compliance with
these Charitable Choice provisions. The intermediate organization
retains all other rights of a nongovernmental organization under the
Charitable Choice provisions.
[FR Doc. 03-24290 Filed 9-25-03; 12:15 pm]
BILLING CODE 4184-01-P