[Federal Register: March 3, 2004 (Volume 69, Number 42)]
[Proposed Rules]
[Page 10125-10129]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03mr04-30]
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Part V
Department of Housing and Urban Development
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24 CFR Parts 5 and 570
Equal Participation of Faith-Based Organizations; Proposed Rule
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 5 and 570
[Docket No. FR-4881-P-01]
RIN 2501-AD03
Equal Participation of Faith-Based Organizations
AGENCY: Office of the Secretary, HUD.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would implement executive branch policy
that, within the framework of constitutional church-state guidelines,
faith-based organizations should be able to compete on an equal footing
with other organizations for Federal funding. Executive Order 13279,
entitled ``Equal Protection of the Laws for Faith-Based and Community
Organizations,'' establishes fundamental principles and policymaking
criteria to guide Federal agencies in formulating and developing
policies that have implications for faith-based and community
organizations to ensure the equal protection of the laws for these
organizations in federally-assisted social service programs. Consistent
with the Executive Order, this proposed rule describes HUD's policy for
the participation of faith-based organizations in HUD programs and
activities. In addition, this proposed rule would amend the regulations
for the State Community Development Block Grant (CDBG) program to
clarify that the requirements contained in HUD's September 30, 2003,
final rule regarding the equal participation of faith-based
organizations in certain HUD programs apply to the State CDBG program.
HUD supports the participation of faith-based organizations in its
programs.
DATES: Comment Due Date: May 3, 2004.
ADDRESSES: Interested persons are invited to submit comments regarding
this rule to the Regulations Division, Office of General Counsel, Room
10276, Department of Housing and Urban Development, 451 Seventh Street,
SW., Washington, DC 20410-0500. Communications should refer to the
above docket number and title. Facsimile (FAX) comments are not
acceptable. A copy of each communication submitted will be available
for public inspection and copying between 8 a.m. and 5 p.m. weekdays at
the above address.
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).
Hearing-or speech-impaired individuals may access this number through
TTY by calling the toll-free Federal Information Relay Service at (800)
877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
On December 12, 2002, President George W. Bush signed Executive
Order 13279, entitled ``Equal Protection of the Laws for Faith-Based
and Community Organizations,'' published in the Federal Register on
December 16, 2002, at 67 FR 77141. The Executive Order establishes
fundamental principles and policymaking criteria to guide executive
branch agencies in formulating and developing policies that have
implications for faith-based and community organizations to ensure the
equal protection of the laws for these organizations in programs
receiving Federal financial assistance.
Executive Order 13279 is part of the Administration's broader
faith-based and community initiative. President Bush has directed the
executive branch agencies, including HUD, to take steps to ensure that
Federal policy and programs are fully open to faith-based and community
organizations in a manner that is 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.
HUD recognizes that faith-based organizations are important
contributors to HUD's mission of assisting low-income families to
obtain housing and revitalizing distressed communities. These
organizations frequently have the necessary experience to administer
assistance to beneficiaries under HUD programs. Consistent with the
President's Executive Order 13198 (Agency Responsibilities with Respect
to Faith-Based and Community Initiatives), issued January 31, 2001, at
66 FR 8497, HUD undertook a comprehensive review of its program
requirements and regulations, particularly those that would be expected
to attract the interest and participation of nonprofit organizations.
In response to the directive of Executive Order 13198, HUD
identified regulations for eight programs administered by HUD's Office
of Community Planning and Development (CPD) that imposed (or appeared
to impose) barriers to participation of faith-based organizations in
these programs. On January 6, 2003 (68 FR 648), HUD published a
proposed rule to eliminate these barriers and to ensure that these HUD
programs are 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).
II. This Proposed Rule
Consistent with Executive Order 13279, this proposed rule describes
HUD's policy for the equal participation of faith-based organizations
in HUD's programs and activities. The proposed rule would add a new
Sec. 5.109 to HUD's regulations in 24 CFR part 5, subpart A. The
regulations in subpart A of part 5 contain the definitions and Federal
requirements generally applicable to all of HUD's programs. By placing
the requirements of the Executive Order in those HUD regulations that
contain across-the-board requirements, HUD is ensuring the broadest
application of the faith-based requirements of Executive Order 13279.
The equal participation policies and requirements contained in
Sec. 5.109 would be generally applicable to faith-based organizations,
which are referred to in the rule text as ``religious organizations,''
in all HUD programs and activities. More specific policies and
requirements regarding the participation of faith-based organizations
in individual HUD programs may be provided in the regulations for those
programs. The policies and requirements contained in proposed Sec.
5.109 are similar, and in many cases identical, to those contained in
HUD's September 30, 2003, rule for several of its Community Planning
and Development programs.
Two of the HUD programs that will be affected by the proposed
regulatory changes are the Section 202 Supportive Housing for the
Elderly Program and the Section 811 Supportive Housing for Persons with
Disabilities Program. The regulations for these programs are located in
24 CFR part 891. Specifically, the equal participation requirements
contained in this proposed rule would permit faith-based organizations
to take part in these programs as project owners. This is a change from
the existing procedures governing these two programs, which prohibit a
project owner from having a religious purpose in its articles of
incorporation.
This proposed rule would not apply to HUD's Native American housing
programs. HUD has determined that making the policies and procedures
[[Page 10127]]
contained in this proposed rule applicable to its Native American
programs requires prior consultation with Indian tribal governments in
accordance with Executive Order 13175 (entitled ``Consultation and
Coordination with Indian Tribal Governments''). The Executive Order
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. HUD will consult with Indian
tribal governments regarding the applicability of this proposed rule to
its Native American housing programs and may initiate additional
rulemaking addressing the equal participation of faith-based
organizations in these programs based on the outcome of the
consultation.
The specific policies and requirements that would be codified by
this proposed rule are as follows:
1. Equal participation of faith-based organizations in HUD programs
and activities. This proposed rule clarifies that faith-based
organizations are eligible, on the same basis as any other
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 mean the full range of HUD programs
and activities, including programs that make funds available through
contracts, grants, cooperative agreements, or other instruments for
eligible goods, services, and activities, and programs that do not make
funds available, but involve other forms of benefit or resources. For
example, certain Federal Housing Administration (FHA) programs do not
provide funds, but make mortgage insurance or foreclosed properties
available to qualifying organizations. Neither the Federal Government,
nor a State or local government, nor any other entity that administers
any HUD program or activity shall discriminate against an organization
on the basis of the organization's religious character or affiliation.
Nothing in the rule would preclude those administering Department-
funded programs from accommodating religious organizations in a manner
consistent with the Establishment Clause.
2. Inherently religious activities. Organizations that receive
direct HUD funds \1\ 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
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.
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\1\ As used in this proposed 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.
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3. Independence of faith-based organizations. Proposed Sec. 5.109
would clarify that a faith-based organization that participates in a
HUD program or activity 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 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 its authority over its internal governance, and it may
retain religious terms in its organization's name, select its board
members, and otherwise govern itself on a religious basis and include
religious references in its organization's mission statements and other
governing documents.
4. Exemption from Title VII employment discrimination requirements.
This proposed 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 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 any
applicable requirements.
5. Nondiscrimination requirements. This proposed 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 for the authorized purpose, is subject to
government-wide regulations governing real property disposition (see,
e.g., 24 CFR parts 84 and 85).
7. Commingling of Federal and State and local funds. This proposed
rule clarifies that if a State or local government voluntarily
contributes its own funds to supplement federally funded activities,
the State or local government has the option to segregate the Federal
funds or commingle them. However, if the funds are commingled, the
requirements of proposed Sec. 5.109 will apply to all of the
commingled funds. 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 proposed Sec.
5.109. Some HUD program requirements govern any project or activity
assisted under those programs. Accordingly, grantees should consult
with the appropriate HUD
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program office to determine the scope of applicable requirements.
III. Conforming Change to State CDBG Program Regulations
As noted above in this preamble, on September 30, 2003, HUD
published a final rule revising the regulations for eight of its CPD
programs to remove barriers to the participation of faith-based
organizations in these programs. Among the regulations amended by the
final rule were those for the Community Development Block Grants (CDBG)
Program at 24 CFR part 570 (see Sec. 570.200(j)). Since publication of
the September 30, 2003, final rule, however, questions have arisen
regarding the applicability of the regulatory amendments to the State
CDBG Program codified in subpart I of the part 570 regulations
(Sec. Sec. 570.480-570.497). Section 570.480 of those regulations
provides that ``[o]ther subparts of part 570 are not applicable to the
State CDBG Program, except as expressly provided otherwise.'' The
September 30, 2003, final rule did not revise the subpart I regulations
to reference the applicability of amended Sec. 570.200(j). This
proposed rule would clarify that the amendments made by HUD's September
30, 2003, final rule apply to the State CDBG Program by adding a new
Sec. 570.480(e) expressly providing that faith-based organizations are
eligible to participate under the program as provided in Sec.
570.200(j).
IV. Findings and Certifications
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 action, as provided under section 3(f)(1) of the Order).
Any changes made to the rule subsequent to its submission to OMB are
identified in the docket file, which is available for public inspection
in the Regulations Division, Room 10276, Office of General Counsel,
Department of Housing and Urban Development, 451 Seventh Street, SW.,
Washington, DC 20410-0500.
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)) has reviewed and approved this proposed rule and in so
doing certifies that this rule will not have a significant economic
impact on a substantial number of small entities. The proposed rule
would not impose any new costs, or modify existing costs, applicable to
HUD grantees. Rather, the purpose of the proposed rule is to ensure the
equal participation of faith-based organizations (irrespective of size)
in HUD's programs. Notwithstanding HUD's determination that this rule
will not have a significant economic effect on a substantial number of
small entities, HUD specifically invites comments regarding less
burdensome alternatives to this rule that will meet HUD's objectives as
described in this preamble.
Environmental Impact
This proposed rule sets forth nondiscrimination standards.
Accordingly, under 24 CFR 50.19(c)(3), this proposed rule is
categorically excluded from environmental review under the National
Environmental Policy Act of 1969 (42 U.S.C. 4332).
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 proposed rule does not
impose any Federal mandate on State, local, or tribal government or the
private sector within the meaning of UMRA.
Executive Order 13132, Federalism
Executive Order 13132, Federalism, requires that Federal agencies
consult with State and local governments in the development of
regulatory policies with federalism implications. Consistent with
Executive Order 13132, HUD specifically solicits comment from State and
local government officials on this proposed rule.
Catalog of Federal Domestic Assistance Numbers
The proposed regulatory amendments contained in this proposed rule
would apply to all HUD assistance programs for which faith-based
organizations are eligible to participate. The Catalog of Federal
Domestic Assistance number for a particular HUD program may be found on
the CFDA Web site at http://www.cfda.gov.
List of Subjects
24 CFR Part 5
Administrative practice and procedure, Aged, Claims, Drug abuse,
Drug traffic control, Grant programs--housing and community
development, Grant programs--Indians, Individuals with disabilities,
Loan programs--housing and community development, Low and moderate
income housing, Mortgage insurance, Pets, Public housing, Rent
subsidies, Reporting and recordkeeping requirements.
24 CFR Part 570
Administrative practice and procedure, American Samoa, Community
development block grants, Grant programs-education, Grant programs-
housing and community development, Guam, Indians, Loan programs-housing
and community development, Low and moderate income housing, Northern
Mariana Islands, Pacific Islands Trust Territory, Puerto Rico,
Reporting and recordkeeping requirements, Student aid, Virgin Islands.
Accordingly, for the reasons described in the preamble, HUD
proposes to amend 24 CFR parts 5 and 570 as follows:
PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS
1. The authority citation for 24 CFR part 5 continues to read as
follows:
Authority: 42 U.S.C. 3535(d), unless otherwise noted.
2. Add Sec. 5.109 to read as follows:
Sec. 5.109 Equal participation of religious organizations in HUD
programs and activities.
(a) Purpose. Consistent with Executive Order 13279 (issued on
December 12, 2002), entitled ``Equal Protection of the Laws for Faith-
Based and Community Organizations,'' this section describes HUD's
policy for the equal participation of religious organizations in HUD's
programs and activities. The equal participation policies and
requirements contained in this section are generally applicable to
religious organizations in all HUD programs and activities. More
specific policies and requirements regarding the participation of
religious organizations in individual HUD programs may be provided in
the regulations for those programs.
(b) Equal participation of religious organizations in HUD programs
and activities. Religious organizations are eligible, on the same basis
as any other organization, to participate in HUD's programs and
activities. Neither the Federal Government, nor a State or local
government, nor any other entity that administers any HUD program or
activity shall discriminate against an organization on the basis of the
organization's religious character or affiliation.
(c) Inherently religious activities. Organizations that receive
direct HUD
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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 funded under a HUD
program or activity. 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 and participation must be
voluntary for the beneficiaries of the programs, activities or services
provided under the HUD program.
(d) Independence of religious organizations. A religious
organization that participates in a HUD program or activity 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
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, religious
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 religious organization
participating in a HUD 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.
(e) Exemption from Title VII employment discrimination
requirements. 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.
(f) Nondiscrimination requirements. 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.
(g) 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
government-wide regulations governing real property disposition (see,
e.g., 24 CFR parts 84 and 85).
(h) Commingling of Federal and State and local funds. If a State or
local government voluntarily contributes its own funds to supplement
federally funded activities, the State or local government has the
option to segregate the Federal funds or commingle them. However, if
the funds are commingled, the requirements of this section apply 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 570--COMMUNITY DEVELOPMENT BLOCK GRANTS
3. The authority citation for 24 CFR part 570 continues to read as
follows:
Authority: 42 U.S.C. 3535(d) and 5301-5320.
4. Add Sec. 570.480(e) to read as follows:
Sec. 570.480 General.
* * * * *
(e) Religious organizations are eligible to participate under the
State CDBG Program as provided in Sec. 570.200(j).
Dated: February 13, 2004.
Alphonso Jackson,
Acting Secretary.
[FR Doc. 04-4811 Filed 3-2-04; 8:45 am]
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