FR Doc 02-31673

[Federal Register: December 17, 2002 (Volume 67, Number 242)]
[Proposed Rules]
[Page 77349-77360]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17de02-21]

[[Page 77349]]

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Part III

Department of Health and Human Services

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42 CFR Parts 54 and 54a

45 CFR Part 96

Charitable Choice Regulations; Proposed Rule

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

42 CFR Parts 54 and 54a

45 CFR Part 96

RIN 0930-AA11

Charitable Choice Regulations Applicable to States Receiving
Substance Abuse Prevention and Treatment Block Grants, Projects for
Assistance in Transition From Homelessness Formula Grants, and to
Public and Private Providers Receiving Discretionary Grant Funding From
SAMHSA for the Provision of Substance Abuse Services Providing for
Equal Treatment of SAMHSA Program Participants

AGENCY: Substance Abuse and Mental Health Services Administration, HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement the Charitable Choice
statutory provisions of section 581-584 and section 1955 of the Public
Health Service Act, applicable to the Substance Abuse Prevention and
Treatment (SAPT) Block Grant program, the Projects for Assistance in
Transition from Homelessness (PATH) formula grant program, insofar as
recipients provide substance abuse services, and to SAMHSA
discretionary grants for substance abuse treatment or prevention
services, which are all administered by the Substance Abuse and Mental
Health Services Administration (SAMHSA) of the U.S. Department of
Health and Human Services. It is SAMHSA's policy that, within the
framework of constitutional church-state guidelines, faith-based
organizations should be able to compete on an equal footing for SAMHSA
funding, and SAMHSA supports the participation of faith-based
organizations in its programs for the provision of substance abuse
services.

DATES: Submit written comments on this proposal by February 18, 2003.
Submit written comments on the information collection provisions by
January 16, 2003.

ADDRESSES: Interested persons are invited to submit comments regarding
this proposed rule to the Office of Policy, Planning and Budget,
SAMHSA, Attn: Winnie Mitchell by fax (301-443-1450) or e-mail
samhsareg@samhsa.gov). Communications should refer to the above docket
number and title. A copy of each communication submitted will be
available for inspection and copying between 9 a.m. and 5 p.m. at the
above address. Submit written comments on the information collection
requirements to the Office of Information and Regulatory Affairs,
OMB,Attn: Lauren Wittenberg by fax (202-395-6974) or e-mail (Lauren--
Wittenberg@omb.eop.gov).

FOR FURTHER INFORMATION CONTACT: Winnie Mitchell of the Office of
Policy, Planning and Budget, SAMHSA by fax (301-443-1450) or e-mail
samhsareg@samhsa.gov).

SUPPLEMENTARY INFORMATION:

Background

Section 1955 of the Public Health Service Act, 42 U.S.C. 300x-65,
as added by the Children's Health Act of 2000 (Pub. L. 106-310), as
well as sections 581-584 of the Public Health Service Act, 42 U.S.C.
290kk, et seq., as added by the Consolidated Appropriations Act (Pub.
L. 106-554),(hereinafter referred to as ``SAMHSA Charitable Choice
provisions'') set forth certain provisions which are designed to give
people in need of substance abuse services a greater choice of SAMHSA-
supported substance abuse prevention and treatment programs. SAMHSA's
Charitable Choice provisions ensure that religious organizations are
able to compete on an equal footing for Federal substance abuse funding
administered by SAMHSA, without impairing the religious character of
such organizations and without diminishing the religious freedom of
SAMHSA beneficiaries. These provisions apply to recipients of the
Substance Abuse Prevention and Treatment (SAPT) Block Grant funds, the
Projects for Assistance in Transition from Homelessness (PATH) formula
grant funds, 42 U.S.C. 290cc-21, et seq., and to SAMHSA discretionary
grants funds for substance abuse prevention and treatment services (42
U.S.C. 290aa, et seq.)
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 scores
of social services to those in need. The SAMHSA Charitable Choice
provisions 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.

Purpose of Proposed Rule

The SAMHSA Charitable Choice provisions contain important
protections both for religious organizations that receive SAMHSA
funding for substance abuse services and for the individuals who
receive services from such programs. The objective of this proposed
rule is to ensure that SAMHSA substance abuse programs are open to all
eligible organizations, regardless of religious character or
affiliation, and to establish clearly the proper uses to which funds
may be put and the conditions for receipt of funding. The proposed
regulations seek to provide maximum flexibility to the States and local
governments, and to religious organizations that are ``program
participants'' in implementing these provisions. In that vein, SAMHSA
proposes that duly-designated officials from the States and applicants
for SAMHSA discretionary funding for applicable programs assure that
they will comply with these provisions.

Proposed Regulations

The Department is proposing to amend the regulations to add 42 CFR
part 54 and part 54a. Part 54 addresses implementation of these
provisions with regard to SAMHSA's Substance Abuse Prevention and
Treatment (SAPT) Block Grant, 42 U.S.C. 300x to 300x-66, and to
SAMHSA's Projects for Assistance in Transition from Homelessness (PATH)
Formula Grants, 42 U.S.C. 290cc-21 to 290cc-35, in which the State has
most of the responsibility for implementation. Part 54a addresses
implementation of these provisions with regard to SAMHSA's
discretionary grant programs, 42 U.S.C. 290aa et seq., in which
implementation responsibility is shared among SAMHSA, and the States
and local governments as recipients of those grants. Some of the main
provisions of the proposed rule are as follows, along with specific
questions regarding the alternative service provision on which SAMHSA
is seeking input during the regulatory comment process.
Equal Treatment for Religious Organizations. Under SAMHSA's
Charitable Choice provisions, organizations are eligible to participate
in SAMHSA programs without regard to their religious character or
affiliation, and organizations may not be excluded from the competition
for Federal funds simply because they are religious. Specifically,
religious organizations are eligible to compete for funding on the

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same basis, and under the same eligibility requirements, as all other
nonprofit organizations. The Federal government, and State and local
governments administering Federal funds under SAMHSA substance abuse
grant programs, are prohibited from discriminating against
organizations on the basis of religion or their religious character.
Restriction on Religious Activities By Organizations That Receive
Funding Directly From SAMHSA. The proposed rule describes limitations
on the use of substance abuse funds provided directly from SAMHSA or
the relevant State or local government to an organization, as opposed
to those funds that an organization receives as the result of the
genuine and independent private choice of a beneficiary.\1\
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\1\ In the Charitable Choice context, the term ``direct''
funding is used to describe funds that are provided ``directly'' by
a governmental entity or an intermediate organization with the same
duties as a governmental entity, as opposed to funds that an
organization receives as the result of the genuine and independent
private choice of a beneficiary. In other contexts, the term
``direct'' funding may be used to refer to those funds that an
organization receives directly from the Federal government (also
known as ``discretionary'' funding), as opposed to funding that it
receives from a State or local government (also known as
``indirect'' or ``block grant'' funding). In these proposed
regulations, the term ``direct'' has the former meaning.
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Specifically, SAMHSA 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 funded with direct SAMHSA assistance, and
participation must be voluntary for the beneficiaries of the SAMHSA-
funded programs or services. This requirement ensures that SAMHSA funds
provided directly to religious organizations are not used to support
inherently religious activities. Thus, SAMHSA funds provided directly
to a participating organization, including formula grant funds, must
not be used by a substance abuse treatment or prevention program, for
example, to conduct prayer meetings, studies of sacred texts, or any
other activity that is inherently religious.
This restriction does not mean a SAMHSA-funded substance abuse
service organization cannot engage in inherently religious activities.
It means simply that such an organization cannot fund these activities
with the funds provided directly by SAMHSA or the relevant State or
local government. Thus, faith-based organizations that receive direct
SAMHSA funds must take steps to separate, in time or location, their
inherently religious activities from the government-funded services
that they offer.
In addition, any participation by a beneficiary in such religious
activities must be voluntary. An invitation to participate in an
organization's religious activities is not in itself inappropriate.
However, participating religious organizations must be careful to
reassure program beneficiaries that they will receive SAMHSA-funded
help even if they do not participate in these activities, and that
their decision will have no bearing on the services they receive. In
short, any participation by recipients of SAMHSA-funded services in
such religious activities must be voluntary and understood to be
voluntary.
These restrictions on inherently religious activities do not apply
where SAMHSA funds are provided to religious organizations as a result
of a genuine and independent private choice of a beneficiary. A
religious organization may receive SAMHSA funds as the result of a
beneficiary's genuine and independent private choice if, for example,
the State has established a voucher, coupon, certificate, or similar
funding mechanism for a beneficiary to redeem using SAMHSA funds under
a program that is designed by a State to give that individual a choice
among providers. Thus, religious organizations that receive SAMHSA
funds to provide services as a result of a beneficiary's genuine and
independent private choice need not separate, in time or location,
their inherently religious activities from the SAMHSA-funded services
they provide, provided they otherwise satisfy the requirements of the
program.
Religious Character and Independence of Religious Organizations.
The proposed rule clarifies that a religious organization that
participates in SAMHSA programs retains its independence from Federal,
State, and local governments. It may continue to carry out its mission,
including the definition, practice and expression of its religious
beliefs, provided that it does not use direct SAMHSA funds to support
any inherently religious activities, such as worship, religious
instruction, or proselytization. Among other things, faith-based
organizations may use their facilities to provide SAMHSA-funded
substance abuse services, without removing religious art, icons,
scriptures, or other symbols. In addition, a religious organization
receiving funds from SAMHSA for substance abuse services may retain
religious terms in its organization's name, may select its board
members on a religious basis, and may include religious references in
its organization's mission statements and other governing documents.
Employment Practices. The proposed rule clarifies that the
participation of a religious organization in, or its receipt of funds
from, a SAMHSA substance abuse services program does not affect that
organization's exemption provided under 42 U.S.C. 2000e-1 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, hire
employees who share its religious beliefs. This provision protects the
religious liberty of communities of faith. It 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. The SAMHSA
Charitable Choice provisions thus reflect the recognition that a
religious organization may determine that, in 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.
To the extent that 42 U.S.C. 300x-57(a)(2) or 42 U.S.C. 290cc-
33(a)(2) imposes religious nondiscrimination requirements on the
employment practices of program participants, the proposed rule
clarifies that such requirements do not apply to program participants
that demonstrate that these requirements would substantially burden
their exercise of religion. In addition to being a reasonable
construction of the SAMHSA Charitable Choice provisions, including 42
U.S.C. 300x-57, 300x-65, 290cc-33, 290kk-1, and 290kk-2, the
inapplicability of section 300x-57(a)(2) and 290cc-33(a)(2) to
religious organizations that can demonstrate a substantial burden on
their exercise of religion arises from the Religious Freedom
Restoration Act, 42 U.S.C. 2000bb et seq. Under this statute, the
government may not impose legal requirements that substantially burden
a grantee's exercise of religion except in defined circumstances. 42
U.S.C. 2000bb-1(a)-(b). As applied here, where a religious entity
establishes that its exercise of religion would be substantially
burdened by the religious nondiscrimination requirements of sections
300x-57(a)(2) or 290cc-33(a)(2), the Religious Freedom Restoration Act
supercedes those statutory requirements, thus exempting the religious
entity therefrom.
This determination is based on several factors: religious entities
are

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provided an exemption, under 42 U.S.C. 2000e-1(a), from the religious
nondiscrimination requirements of the Civil Rights Act of 1964, which
reflects Congress's judgment that employment decisions are an important
component of religious entities' autonomy; many federal funding
programs do not impose a religious nondiscrimination requirement upon
the employment practices of grantees; 42 U.S.C. 300x-57(a)(2) and
290cc-33(a)(2) do not apply to the discretionary grant programs
administered by the Secretary under this title; and secular entities
that administer federally funded social programs generally are not
precluded from considering their ideologies in making employment
decisions. Congress's highly selective application of religious
nondiscrimination requirements in the employment context belies the
notion that there is a compelling governmental interest in applying
such requirements to entities that make decisions to hire individuals
of a particular religion in order to maintain their religious identity,
autonomy, and/or communal religious exercise. A recipient that
demonstrates a substantial burden from the application of the religious
nondiscrimination requirements of sections 300x-57(a)(2) or 290cc-
33(a)(2) is therefore entitled to employ individuals of a particular
religion, notwithstanding the requirements of those provisions, as it
would otherwise be entitled to do under 42 U.S.C. 2000e-1(a).
A religious organization that is a recipient of SAMHSA funds for
the provision of substance abuse services that wishes to establish a
substantial burden from the application of 42 U.S.C. 300x-57(a)(2) or
290cc-33(a)(2) to its organization, for the purpose of obtaining an
exemption under 42 U.S.C. 2000bb, et seq., must certify : (1) That it
sincerely believes that employing individuals of a particular religion
is important to the definition and maintenance of its religious
identity, autonomy, and/or communal religious exercise; (2) that it
makes employment decisions on a religious basis in analogous programs;
(3) that the grant would materially affect its ability to provide the
type of services in question; and (4) that providing the services in
question is expressive of its values or mission. The organization must
maintain documentation to support these determinations and must make
such documentation available to SAMHSA upon request.
Finally, the proposed rule makes clear that nothing in this section
shall be construed to modify or affect any State law or regulation that
relates to discrimination in employment.
Nondiscrimination Against Beneficiaries. The proposed rule also
clarifies provisions of SAMHSA's Charitable Choice provisions that
apply to the individuals who receive SAMHSA-funded services. First, the
proposed rule makes it clear that religious organizations participating
in a SAMHSA-funded substance abuse program are prohibited from
discriminating against beneficiaries or potential beneficiaries on the
basis of religion or religious belief. Accordingly, religious
organizations, in providing substance abuse services funded in whole or
in part by SAMHSA, and in their outreach activities related to such
services, may not discriminate against current or prospective program
beneficiaries on the basis of religion, a religious belief, a refusal
to hold a religious belief, or a refusal to participate actively in a
religious practice.
Notice, Referral, and Provision of Alternative Services. SAMHSA
invites specific comment on sections 54.8 and 54a.8 of the following
regulations, regarding a program beneficiary's right to alternative
services. In general, SAMHSA believes that securing alternative
services for an individual at the local level may ultimately not be a
function best performed by a Federal agency, but is rather best met by
those who know the community best and are most informed about the
availability of services. Because SAMHSA seeks to maximize State and
provider flexibility in implementing these provisions, and because
SAMHSA wants to ensure that the regulations rely on existing State and
local practices for implementation, SAMHSA is seeking comment on the
following general questions:
[sbull] How can State and local flexibility be maximized in
implementing these provisions?
[sbull] How accurate are the paperwork burden estimates and how can
the paperwork burden related to implementing these provisions be
minimized?
[sbull] How should SAMHSA track the effectiveness of the
implementation of these Charitable Choice provisions? What methods
should States and program participants use and report to ensure
implementation of the Charitable Choice provisions?
General Requirements. The proposed rule clarifies SAMHSA's
Charitable Choice provisions stipulating that individuals who are
receiving or may receive substance abuse services from a program
participant funded in whole or in part by SAMHSA may object to the
religious character of that participant, in which case they are
entitled to receive services from an alternative provider. They have a
right to receive a referral to an alternative provider within a
reasonable period of time. That alternative provider must be reasonably
accessible and have the capacity to provide comparable services to the
individual. According to the SAMHSA Charitable Choice provisions, such
services shall have a value that is not less than the value of the
services that the individual would have received from the program
participant to which the individual had such objection. The alternative
provider need not be a secular organization. It must simply be a
provider to which the program beneficiary has no religious objection.
To implement this right, the proposed rule imposes obligations on
both SAMHSA-funded religious organizations and the governmental entity
administering the program with respect to notice, referral, and
provision of services from alternative providers. SAMHSA recognizes
that a range of methods of fulfilling these responsibilities is
possible, and therefore does not seek to prescribe a single, inflexible
referral system that States must adopt. Rather, SAMHSA encourages State
agencies, working in concert with local governments, religious
providers, and other program providers, to develop systems to comply
with the requirements, monitor compliance, identify compliance
problems, and take necessary corrective actions. It is important that
State and local agencies and religious organizations work cooperatively
to develop systems to comply with these provisions, monitor compliance,
identify compliance problems and take necessary corrective actions.
Notice. The SAMHSA Charitable Choice provisions require SAMHSA-
funded religious organizations providing substance abuse services,
public agencies that refer individuals to such SAMHSA-funded programs,
and the appropriate Federal, State, or local governments that
administer these SAMHSA-funded programs to ensure that notice is
provided to beneficiaries and prospective beneficiaries regarding
alternative services. The notice must articulate clearly the program
beneficiary's right to a referral and to services that reasonably meet
the timeliness, capacity, accessibility, and equivalency requirements
discussed above. A model notice, which States and religious
organizations are free to use, is provided at the end of this proposed
rule.

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Referral to Alternative Provider. If an individual objects to the
religious character of the substance abuse treatment or prevention
program from which they are receiving services, the religious
organization must refer the individual, within a reasonable period of
time, to another provider of substance abuse services. SAMHSA invites
specific comment on what constitutes a ``reasonable period of time''
under various circumstances. Should States be given the flexibility to
determine this, given that there are established referral and substance
abuse services systems in each State? Alternatively, should SAMHSA
provide a clearer idea of what is a reasonable period of time (for
example, ``within 48 hours,'' ``within one week,'' etc.)?
In making a referral, the religious organization must consider any
list that the State or local government makes available of other
entities in a reasonably accessible geographic area that provide
substance abuse services. For example, a religious organization could
check SAMHSA's treatment facility locator at http://findtreatment.samhsa.gov
to identify providers in the surrounding area
and consult with the relevant governmental officials about referrals to
programs that are reasonably accessible and of equal value. The locator
includes residential treatment programs, outpatient treatment programs,
and hospital inpatient programs for drug addiction and alcoholism. All
information in the locator is updated each year, based on facility
responses to SAMHSA's National Survey of Substance Abuse Services.
Further updates are made monthly as new information is provided by
facilities.
SAMHSA-funded religious organizations must take reasonable steps to
ensure that the individual makes contact with the alternative provider
to which the individual is referred, and they must notify ``the
appropriate Federal, State, or local government'' of the referral. In
the case of the SAPT and PATH programs, the appropriate government is
the State. In the case of SAMHSA's substance abuse prevention and
treatment discretionary grant funding, it is either SAMHSA or the
recipient State or local government.
For SAPT or PATH programs, if the religious organization cannot
locate an appropriate alternative provider for a referral, it should
contact the State agency that administers the program. The State agency
can then take steps to identify an appropriate alternative. In the
event that the State agency is unable to locate an alternative
provider, the State can contact SAPT block grant or PATH grant
officials in SAMHSA for assistance. For SAMHSA discretionary grants
made directly to religious organizations, the religious organization
can work with SAMHSA to identify an appropriate referral. For SAMHSA
discretionary grants to States and localities, the religious
organization can work with the recipient government to identify an
appropriate referral, using the referral system utilized by the State
or locality as required by the rule.
The religious organization (program participant) shall take
reasonable steps to ensure that the individual makes contact with the
alternative provider to which the individual is referred. All referrals
are to be made in a manner consistent with all applicable
confidentiality laws, including, but not limited to, 42 CFR part 2.
Upon referring a program beneficiary to an alternative provider, the
program participant shall notify the appropriate Federal, State, or
local government agency that administers the program of such referral.
It is the States' responsibility to determine the nature and timing of
such notification under the SAPT block grant and the PATH program.
SAMHSA invites specific comment on how referring organizations can
ensure that individuals make contact with alternative providers, and
whether and how they should document the steps they have taken, in a
manner that is consistent with all applicable confidentiality laws. For
example, should the provider be required to record and call the
alternative provider to notify them of the referral; to provide the
name and address of the alternative provider to the program
beneficiary; and to make a second follow-up call to the alternative
provider? What burdens would such requirements place on providers?
Provision of Alternative Services. Under SAMHSA's Charitable Choice
provisions, the responsibility for providing the alternative services
rests with the ``the appropriate Federal, State, or local government''
that administers the program or is a program participant. Alternative
service providers identified by the Federal, State, or local government
must be reasonably accessible and have the capacity to provide
comparable substance abuse services. The services provided by the
alternative provider must have a value that is not less than the value
of the services that the individual would have received from the
referring organization.
The SAMHSA Charitable Choice provisions require States to provide
and fund alternative services for SAPT-funded and PATH program
beneficiaries who have objected to the religious character of a program
participant. States may use SAPT block grant and PATH grant funding to
provide and fund such services from a provider to which the program
beneficiaries do not have a religious objection, in a manner consistent
with State law and policy.
With respect to SAMHSA discretionary grant funding, when SAMHSA
provides funding directly to another unit of government, such as a
State or local government, that unit of government is responsible for
providing the alternative services. When SAMHSA provides discretionary
grant funding directly to nongovernmental organizations, SAMHSA is the
responsible unit of government.
SAMHSA invites comment on the following questions related to the
implementation of this provision:
[sbull] How can an alternative services system best be implemented
in a system characterized by treatment gaps, shortages and waiting
lists (i.e., how can program beneficiaries best be assured of
alternative services?)
[sbull] Similarly, what constitutes ``reasonably accessible
services,'' given the differences in available services in various
regions of the country?
[sbull] What is the best understanding of the phrase ``services
that * * * have a value that is not less than the value of [services
that would otherwise be provided]''?
[sbull] Under discretionary programs, what are the options for
securing and financing alternative services? Would placing the
responsibility on the grantee for securing alternative services as a
condition of the grant award (including financing of such services, as
necessary) be consistent with the statutory requirement that the
appropriate Federal, State, or local governments ``provide''
alternative services? Or does the statute require these governmental
entities to secure and finance alternative services? What sort of
financial problems would be imposed by placing such responsibilities on
grantees?
Fiscal Accountability. The proposed rule outlines the financial
responsibility incurred through the receipt of SAMHSA funds. Religious
organizations that receive SAMHSA funds for substance abuse services
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 that they receive for substance abuse services segregated in a
separate account from non-Federal funds. Only the segregated Federal
funds are subject to

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audit by the government under the SAMHSA program.
Effect on State and Local Funds. The proposed rule, consistent with
42 U.S.C. 300x-65(d), provides that if a State or local government
contributes its own funds to supplement SAMHSA-funded substance abuse
activities, the State or local government has the option to separate
out the Federal funds or commingle them. However, if the funds are
commingled, the SAMHSA Charitable Choice provisions apply to all of the
commingled funds.
Treatment of intermediate organizations. The proposed rule provides
that, if a nongovernmental organization (referred to here as an
``intermediate organization''), acting under a contract or other
agreement with the Federal Government or a State or local government,
is given the authority under the contract or agreement to select other
nongovernmental organizations to provide services under any substance
abuse program, the intermediate organization has the same duties under
the SAMHSA Charitable Choice provisions and the implementing
regulations as the government and must ensure that there is compliance
with the SAMHSA Charitable Choice provisions. The intermediate
organization retains all other rights of a nongovernmental organization
under SAMHSA's Charitable Choice provisions.
Educational Requirements for Personnel in Drug Treatment Programs.
The proposed rule reiterates the requirement of 42 U.S.C. 290kk-3,
which provides that, in determining whether personnel of a program
participant that has a record of successful drug treatment for the
preceding three years have satisfied State or local requirements for
education and training, a State or local government shall not
discriminate against education and training provided to such personnel
by a religious organization, so long as such education and training is
comparable to the coursework or training provided by nonreligious
organizations or is comparable to education and training that the State
or local government would otherwise credit for purposes of determining
whether the relevant requirements have been satisfied.
Assurances and State Oversight of the Charitable Choice
Requirements. In order to ensure that States receiving grant funding
under the SAPT block grant and PATH formula grant programs abide by the
Charitable Choice provisions and provide oversight of religious
organizations that provide substance abuse services under such
programs, the proposed rule requires States, as part of their
applications for funding under each program, to certify that they will
comply with all of the requirements of the SAMHSA Charitable Choice
provisions and to submit to the Secretary a summary each year of the
steps it has taken to implement this regulation. The Department is
proposing changes to existing regulations for the SAPT block grant to
require such assurance and summary. Similar assurances, to be signed by
applicants for SAMHSA PATH funds and discretionary substance abuse
treatment and prevention grants, will be added to the assurances listed
in PHS Form 5161, Public Health Service Grant Application for State and
Local Government Applicants and Non-governmental Applicants for Health
Services Projects.

Executive Order 12866

Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, when rulemaking is
necessary, to select regulatory approaches that provide the greatest
net benefits (including potential economic, environmental, public
health, safety distributive and equity effects). We have determined
that the rule is a ``significant regulatory action'' under section 3(f)
of the Executive Order, and it has therefore been reviewed by the
Office of Management and Budget under that order.

Regulatory Flexibility

The Regulatory Flexibility Act (5 U.S.C. chapter 6) requires that
regulatory actions be analyzed to determine whether they will have a
significant impact on a substantial number of small entities. We have
determined that this is not a ``major'' rule under the Regulatory
Flexibility Act of 1980, and that it will not have an effect on the
States or on the distribution of power and responsibilities among the
various levels of government.

Unfunded Mandates

The Unfunded Mandates Reform Act requires that agencies prepare an
assessment of anticipated costs and benefits before developing any rule
that may result in an expenditure by State, local or tribal
governments, in the aggregate, or by the private sector of $100 million
or more in any given year. We have determined that this rule will not
result in an aggregate expenditure by State, local or tribal
governments of $100 million or more in any given year.

Executive Order 13132: Federalism Implications

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 solicit comment from State and
local government officials on this proposed rule.

Paperwork Reduction Act of 1995

This proposed rule contains information collections which are
subject to review by the Office of Management and Budget (OMB) under
the Paperwork Reduction Act of 1995 (the PRA) (44 U.S.C. 3507(d)). The
title, description and respondent description of the information
collections are shown in the following paragraphs with an estimate of
the annual reporting and recordkeeping burden. Included in the estimate
is the time for reviewing instructions, searching existing data
sources, gathering and maintaining the data needed, and completing and
reviewing the collection of information.
Title: Regulations to Implement SAMHSA's Charitable Choice
Statutory Provisions--42 CFR Parts 54 and 54a.
Description: Section 1955 of the Public Health Service Act (42
U.S.C. 300x-65), as amended by the Children's Health Act of 2000 (Pub.
L. 106-310) and sections 581-584 of the Public Health Service Act (42
U.S.C. 290kk et seq., as added by the Consolidated Appropriations Act
(Pub. L. 106-554)), set forth various provisions which aim to ensure
that religious organizations are able to compete on an equal footing
for Federal funds to provide substance abuse services. These provisions
allow religious organizations to offer substance abuse services to
individuals without impairing the religious character of the
organizations or the religious freedom of the individuals who receive
the services. The provisions apply to the Substance Abuse Prevention
and Treatment Block Grant (SAPT BG), to the Projects for Assistance in
Transition from Homelessness (PATH) formula grant program, and to
certain Substance Abuse and Mental Health Services Administration
(SAMHSA) discretionary grant programs (programs that pay for substance
abuse treatment and prevention services, not for certain infrastructure
and technical assistance activities). Every effort has been made to
assure that the reporting, recordkeeping and disclosure requirements of
the proposed regulations allow maximum

[[Page 77355]]

flexibility in implementation and impose minimum burden.
Description of Respondents: Not-for-profit institutions; State,
Local or Tribal Government.
Response burden estimate: This proposed rule includes requirements
for disclosure by program participants to program beneficiaries of
their rights to receipt of services from an alternative service
provider, for notification by program participants to the applicable
level of government of referrals made to alternative service providers,
and requirements for reporting of activities to comply with these
regulations. The rule also requires that a program participant under
the Substance Abuse Prevention and Treatment Block Grant (SAPT BG) and
the Projects for Assistance in Transition from Homelessness (PATH)
programs that believes it would be substantially burdened by
application of the requirements of 42 U.S.C. 300x-57(a)(2) or 42 U.S.C.
290cc-33(a)(2) must sign a certification to that effect and must
maintain documentation to support the certification.

Annual Burden Estimates
----------------------------------------------------------------------------------------------------------------
Number of Responses per Hours per
42 CFR citation and purpose responses respondent response Total hours
----------------------------------------------------------------------------------------------------------------
Part 54--States Receiving SAPT Block Grants and/or Projects for Assistance in Transition from Homelessness
Grants
----------------------------------------------------------------------------------------------------------------
Reporting
----------------------------------------------------------------------------------------------------------------
54.8(c)(4) Program 40 4 0.33 53 participant 40 4 0.33 53
notification to responsible unit of government
regarding referrals to alternative service
providers......................................
54.8(e) Annual report 56 1 2.00 112 by PATH 56 1 2.00 112
grantees on activities undertaken to comply
with 42 CFR Part 54............................
Disclosure
----------------------------------------------------------------------------------------------------------------
54.8(b) Program participant notice to program
beneficiaries of rights to referral to an
alternative service provider...................
SAPT BG..................................... 1,000 275 .05 13,750
PATH........................................ 100 170 .05 850
-------------------------------------------------
Recordkeeping
----------------------------------------------------------------------------------------------------------------
54.6(b) Documentation must be maintained to 50 1 1.00 50
demonstrate significant burden for program
participants under 42 U.S.C. 300x-57 or 42
U.S.C. 290cc-33(a)(2)..........................
-----------------
Part 54--Subtotal........................... 1,156 .............. 14,815
-------------------------------------------------
Part 54a--States, local governments and religious organizations receiving funding under Title V of the PHS Act
for substance abuse prevention and treatment services..........................................................
----------------------------------------------------------------------------------------------------------------
Reporting
----------------------------------------------------------------------------------------------------------------
54a.8(c)(1)(iv) Program participant notification 25 4 .083 8
to State or local government of a referral to
an alternative provider........................
54a(8)(d) Program participant notification to 20 2 .25 10
SAMHSA of referrals............................
-------------------------------------------------
Disclosure
----------------------------------------------------------------------------------------------------------------
54a.8(b) Program participant notice to program 100 275 .05 1,375
beneficiaries of rights to referral to an
alternative service provider...................
-----------------
Part 54a--Subtotal.......................... 100 .............. .............. 1,393
=================
Total................................... 1,256 .............. .............. 16,208
----------------------------------------------------------------------------------------------------------------

In addition, the regulations for the Substance Abuse Prevention
andTreatment Block Grant (45 CFR part 96) will be amended to include at
45 CFR 92.122(f)(5) a requirement to include as part of the annual
report a description of the activities the State has undertaken to
comply with 42CFR part 54. This reporting burden is estimated as
follows:

----------------------------------------------------------------------------------------------------------------
Number of Responses per Hours per
45 CFR citation and purpose respondents respondent response Total hours
----------------------------------------------------------------------------------------------------------------
96.122(f)(5) Annual report of activities the 60 1 2 120
State undertook to comply with 42 CFR Part
54.........................................
----------------------------------------------------------------------------------------------------------------

As required by section 3507(d) of the PRA the Secretary has
submitted a copy of this proposed rule to OMB for its review. Comments
on the information collection requirements are specifically solicited
in order to: (1) Evaluate

[[Page 77356]]

whether the proposed collection of information is necessary for the
proper performance of DHHS's functions, including whether the
information will have practical utility; (2) evaluate the accuracy of
DHHS's estimate of the burden of the proposed collection of
information, including the validity of the methodology and assumptions
used; (3) enhance the quality, utility, and clarity of the information
to be collected; and (4) minimize the burden of the collection of
information on those who are to respond, including through the use of
appropriate automated, electronic, mechanical, or other technological
collection techniques or other forms of information technology.
OMB is required to make a decision concerning the collection of
information contained in these proposed regulations between 30 and 60
days after publication of this document in the Federal Register.
Therefore, a comment to OMB is best assured of having its full effect
if OMB receives it within 30 days of publication. This does not affect
the deadline for the public to comment to DHHS on the proposed
regulations.
Organizations and individuals desiring to submit comments on the
information collection requirements should direct them to the Office of
Information and Regulatory Affairs, OMB. (address above).

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
proposed rule will have tribal implications, we specifically solicit
comment on this proposed rule from tribal officials.

Dated: December 12, 2002.
Tommy G. Thompson,
Secretary of Health and Human Services.

List of Subjects

42 CFR Parts 54 and 54a

Grant programs--social programs, Public assistance programs,
Substance abuse treatment.

45 CFR Part 96

Grant programs--social programs

The Department of Health and Human Services proposes to amend 42
CFR chapter I and 45 CFR subtitle A as follows:
1. Add a new part 54 to title 42 of the Code of Federal Regulations
to read as follows:

42 CFR--CHAPTER I

PART 54--CHARITABLE CHOICE REGULATIONS APPLICABLE TO STATES
RECEIVING SUBSTANCE ABUSE PREVENTION AND TREATMENT BLOCK GRANTS
AND/OR PROJECTS FOR ASSISTANCE IN TRANSITION FROM HOMELESSNESS
GRANTS

Sec.
54.1 Scope.
54.2 Definitions.
54.3 Nondiscrimination against religious organizations.
54.4 Religious activities.
54.5 Religious character and independence.
54.6 Employment practices.
54.7 Nondiscrimination requirement.
54.8 Right to services from an alternative provider.
54.9 Assurances and State oversight of the Charitable Choice
requirements.
54.10 Fiscal accountability.
54.11 Effect on State and local funds.
54.12 Treatment of intermediate organizations.
54.13 Educational requirements for personnel in drug treatment
programs.

Authority: 42 U.S.C. 300x-65 et seq., 42 U.S.C. 290kk et seq.,
42 U.S.C. 300x-21, et seq., 42 U.S.C. 290cc-21, et seq., and 42
U.S.C. 2000bb, et seq.

Sec. 54.1 Scope.

These provisions apply only to awards that pay for substance abuse
prevention and treatment services under 42 U.S.C. 300x-21 et seq., and
42 U.S.C. 290cc-21 to 290cc-35. This part does not apply to awards
under any such authorities for activities that do not involve the
direct provision of substance abuse services, such as for
infrastructure activities authorized under section 1971 of the PHS Act,
42 U.S.C. 300y, and for technical assistance activities. This part
implements the SAMHSA Charitable Choice provisions, 42 U.S.C. 300x-65
and 42 U.S.C. 290kk, et seq.

Sec. 54.2 Definitions.

(a) Applicable program means the programs authorized under:
(1) The Substance Abuse Prevention and Treatment (SAPT) Block
Grant, 42 U.S.C. 300x to 300x-66, and
(2) The Projects for Assistance in Transition from Homelessness
(PATH) Formula Grants, 42 U.S.C. 290cc-21 to 290cc-35 insofar as they
fund substance abuse prevention and/or treatment services.
(b) Religious organization means a nonprofit religious
organization.
(c) Program beneficiary means an individual who receives substance
abuse services under a program funded in whole or in part by applicable
programs.
(d) Program participant means a public or private entity that has
received financial assistance, under an applicable program.
(e) SAMHSA means the Substance Abuse and Mental Health Services
Administration.
(f) SAMHSA Charitable Choice provisions means the provisions of 42
U.S.C. 300x-65 and 42 U.S.C. 290kk.
(g) Direct funding or Funds provided directly means funding that is
provided to an organization directly by a governmental entity or
intermediate organization that has the same duties as a governmental
entity, as opposed to funding that an organization receives as the
result of the genuine and independent private choice of a beneficiary
through a voucher, certificate, coupon, or other similar mechanism.

Sec. 54.3 Nondiscrimination against religious organizations.

(a) Religious organizations are eligible, on the same basis as any
other organization, to participate in applicable programs, as long as
their services are provided consistent with the Establishment Clause
and the Free Exercise Clause of the First Amendment to the United
States Constitution. Except as provided herein or in the SAMHSA
Charitable Choice provisions, nothing in these regulations shall
restrict the ability of the Federal government, or a State or local
government, from applying to religious organizations the same
eligibility conditions in applicable programs as are applied to any
other nonprofit private organization.
(b) Neither the Federal government nor a State or local government
receiving funds under these programs shall discriminate against an
organization that is, or applies to be, a program participant on the
basis of the organization's religious character or affiliation.

Sec. 54.4 Religious activities.

No funds provided directly from SAMHSA or the relevant State or
local government to organizations participating in applicable programs
may be expended 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 for which it receives funds directly from
SAMHSA or the relevant State or local government under any

[[Page 77357]]

applicable program, and participation must be voluntary for the program
beneficiaries.

Sec. 54.5 Religious character and independence.

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. The organization may
not expend funds that it receives directly from SAMHSA or the relevant
State or local government, to support any inherently religious
activities, such as worship, religious instruction, or proselytization.
Among other things, faith-based organizations may use space in their
facilities to provide services supported by applicable programs,
without removing religious art, icons, scriptures, or other symbols. In
addition, a SAMHSA-funded 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.

Sec. 54.6 Employment practices.

(a) 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.
(b) To the extent that 42 U.S.C. 300x-57(a)(2) or 42 U.S.C. 290cc-
33(a)(2) precludes a program participant from employing individuals of
a particular religion to perform work connected with the carrying on
its activities, those provisions do not apply if such program
participant is a religious corporation, association, educational
institution, or society and can demonstrate that its religious exercise
would be substantially burdened by application of these religious
nondiscrimination requirements to its employment practices in the
program or activity at issue.
(1) In order to make this demonstration, the program participant
must certify:
(i) That it sincerely believes that employing individuals of a
particular religion is important to the definition and maintenance of
its religious identity, autonomy, and/or communal religious exercise;
(ii) That it makes employment decisions on a religious basis in
analogous programs;
(iii) That the grant would materially affect its ability to provide
the type of services in question; and
(iv) That providing the services in question is expressive of its
values or mission.
(2) The organization must maintain documentation to support the
determinations in paragraph (b)(1) of this section and must make such
documentation available to SAMHSA upon request.
(c) Nothing in this section shall be construed to modify or affect
any State law or regulation that relates to discrimination in
employment.
(d) The phrases ``with respect to the employment,'' ``individuals
of a particular religion,'' and ``religious corporation, association,
educational institution, or society'' shall have the same meaning as
those terms have under section 702 of the Civil Rights Act of 1964, 42
U.S.C. 2000e-1(a).

Sec. 54.7 Nondiscrimination requirement.

A religious organization that is a program participant shall not,
in providing program services or engaging in outreach activities under
applicable programs, discriminate against a program beneficiary or
prospective program beneficiary on the basis of religion, a religious
belief, a refusal to hold a religious belief, or a refusal to actively
participate in a religious practice.

Sec. 54.8 Right to services from an alternative provider.

(a) General requirements. If an otherwise eligible program
beneficiary or prospective program beneficiary objects to the religious
character of a program participant, within a reasonable period of time
after the date of such objection, such program beneficiary shall have
rights to notice, referral, and alternative services, as outlined in
paragraphs (b) through (d) of this section.
(b) Notice. Program participants that refer an individual to
alternative service providers, and the State government that
administers the applicable programs, shall ensure that notice of the
individual's right to services from an alternative provider is provided
to program beneficiaries or prospective beneficiaries. The notice must
clearly articulate the program beneficiary's right to a referral and to
services that reasonably meet the requirements of timeliness, capacity,
accessibility, and equivalency as discussed in this section.
(c) Referral to an alternative provider. If a program beneficiary
or prospective program beneficiary objects to the religious character
of a program participant that is a religious organization, that
participating religious organization shall, within a reasonable time
after the date of such objection, refer such individual to an
alternative provider. The State shall have a system in place to ensure
that referrals are made to an alternative provider. That system shall
ensure that the following occurs:
(1) The religious organization that is a program participant shall,
within a reasonable time after the date of such objection, refer the
beneficiary to an alternative provider.
(2) In making such referral, the program participant shall consider
any list that the State or local government makes available to entities
in the geographic area that provide program services, which may include
utilizing any treatment locator system developed by SAMHSA;
(3) All referrals shall be made in a manner consistent with all
applicable confidentiality laws, including, but not limited to, 42 CFR
part 2 (``Confidentiality of Alcohol and Drug Abuse Patient Records'');
(4) Upon referring a program beneficiary to an alternative
provider, the program participant shall notify the State of such
referral; and
(5) The program participant shall ensure that the program
beneficiary makes contact with the alternative provider to which he or
she is referred.
(d) Provision and Funding of Alternative Services. The State, in
administering the SAPT block grant and PATH programs, shall provide to
an otherwise eligible program beneficiary or prospective program
beneficiary who objects to the religious character of a program
participant and fund services from an alternative provider that is
reasonably accessible and has the capacity to provide comparable
services to the individual. Such services shall have a value that is
not less than the value of the services that the individual would have
received from the program participant to which the individual had such
objection. The alternative provider need not be a secular organization.
It must simply be a provider to which the program beneficiary has no
religious objection.
(e) PATH Annual Report. As part of the annual report to SAMHSA,
PATH grantees shall include a description of the activities the grantee
has taken to comply with 42 CFR part 54.

[[Page 77358]]

Sec. 54.9 Assurances and State oversight of the charitable choice
requirements.

In order to ensure that States receiving grant funding under the
SAPT block grant and PATH formula grant programs comply with the SAMHSA
Charitable Choice provisions and provide oversight of religious
organizations that provide substance abuse services under such
programs, States are required as part of their applications for funding
to certify that they will comply with all of the requirements of such
provisions and the implementing regulations under this part, and that
they will provide such oversight of religious organizations.

Sec. 54.10 Fiscal accountability.

(a) Religious organizations that receive applicable program funds
for substance abuse services 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.
Religious organizations shall segregate Federal funds they receive
under an applicable program into a separate account from non-Federal
funds. Only the Federal funds shall be subject to audit by government
under the SAMHSA program.

Sec. 54.11 Effect on State and local funds.

If a State or local government contributes its own funds to
supplement activities carried out under the applicable programs, the
State or local government has the option to separate out the Federal
funds or commingle them. If the funds are commingled, the provisions of
this part shall apply to all of the commingled funds in the same
manner, and to the same extent, as the provisions apply to the Federal
funds.

Sec. 54.12 Treatment of intermediate organizations.

If a nongovernmental organization (referred to here as an
``intermediate organization''), acting under a contract or other
agreement with the Federal Government or a State or local government,
is given the authority under the contract or agreement to select
nongovernmental organizations to provide services under any applicable
program, the intermediate organization shall have the same duties under
this part as the government. The intermediate organization retains all
other rights of a nongovernmental organization under this part and the
SAMHSA Charitable Choice provisions.

Sec. 54.13 Educational requirements for personnel in drug treatment
programs.

In determining whether personnel of a program participant that has
a record of successful drug treatment for the preceding three years
have satisfied State or local requirements for education and training,
a State or local government shall not discriminate against education
and training provided to such personnel by a religious organization, so
long as such education and training is comparable to that provided by
nonreligious organizations, or is comparable to education and training
that the State or local government would otherwise credit for purposes
of determining whether the relevant requirements have been satisfied.
2. Add a new part 54a to title 42 of the Code of Federal
Regulations to read as follows:

PART 54a--CHARITABLE CHOICE REGULATIONS APPLICABLE TO STATES, LOCAL
GOVERNMENTS AND RELIGIOUS ORGANIZATIONS RECEIVING FUNDING UNDER
TITLE V OF THE PUBLIC HEALTH SERVICE ACT, 42 U.S.C. 290aa, ET SEQ.,
FOR SUBSTANCE ABUSE PREVENTION AND TREATMENT SERVICES

Sec.
54a.1 Scope.
54a.2 Definitions.
54a.3 Nondiscrimination against religious organizations.
54a.4 Religious activities.
54a.5 Religious character and independence.
54a.6 Employment practices.
54a.7 Nondiscrimination requirement.
54a.8 Right to services from an alternative provider.
54a.9 Oversight of the Charitable Choice requirements.
54a.10 Fiscal accountability.
54a.11 Effect on State and local funds.
54a.12 Treatment of intermediate organizations.
54a.13 Educational requirements for personnel in drug treatment
programs.
54a.14 Determination of nonprofit status.

Authority: 42 U.S.C. 300x-65, and 42 U.S.C. 290kk, et seq., 42
U.S.C. 290aa, et seq.

Sec. 54a.1 Scope.

These provisions apply only to awards that pay for substance abuse
prevention and treatment services under Title V of the Public Health
Service Act, 42 U.S.C. 290aa, et seq., which are administered by the
Substance Abuse and Mental Health Services Administration. This part
does not apply to awards under any such authorities for only mental
health services or for certain infrastructure and technical assistance
activities, such as cooperative agreements for technical assistance
centers, that do not provide direct services to clients. This part
implements the provisions of 42 U.S.C. 300x-65 and 42 U.S.C. 290kk, et
seq.

Sec. 54a.2 Definitions.

(a) Applicable program means the programs authorized under Title V
of the PHS ct, 42 U.S.C. 290aa, et seq., for the provision of substance
abuse prevention and or treatment services.
(b) Religious organization means a nonprofit religious
organization.
(c) Program beneficiary means an individual who receives substance
abuse services under a program funded in whole or in part by applicable
programs.
(d) Program participant means a public or private entity that has
received financial assistance under an applicable program.
(e) SAMHSA means the Substance Abuse and Mental Health Services
Administration.
(f) SAMHSA Charitable Choice provisions means the provisions of 42
U.S.C. 300x-65 and 42 U.S.C. 290kk et seq.
(g) Direct funding or Funds provided directly means funding that is
provided to an organization directly by a governmental entity or
intermediate organization that has the same duties as a governmental
entity, as opposed to funding that an organization receives as the
result of the genuine and independent private choice of a beneficiary
through a voucher, certificate, coupon, or other similar mechanism.

Sec. 54a.3 Nondiscrimination against religious organizations.

(a) Religious organizations are eligible, on the same basis as any
other organization, to participate in applicable programs as long as
their services are provided consistent with the Establishment Clause
and the Free Exercise Clause of the First Amendment to the United
States Constitution. Except as provided herein or in the SAMHSA
Charitable Choice provisions, nothing in these regulations shall
restrict the ability of the Federal government, or a State or local
government, from applying to religious organizations the same
eligibility conditions in applicable programs as are applied to any
other nonprofit private organization.
(b) Neither the Federal government nor a State or local government
receiving funds under these programs shall discriminate against an
organization that is, or applies to be, a program participant on the
basis of the

[[Page 77359]]

organization's religious character or affiliation.

Sec. 54a.4 Religious activities.

Sec. 54a.5 Religious character and independence.

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. The organization may
not expend funds that it receives directly from SAMHSA or the relevant
State or local government to support any inherently religious
activities, such as worship, religious instruction, or proselytization.
Among other things, faith-based organizations may use space in their
facilities to provide services supported by applicable programs,
without removing religious art, icons, scriptures, or other symbols. In
addition, a SAMHSA-funded 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.

Sec. 54a.6 Employment practices.

(a) 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.
(b) Nothing in this section shall be construed to modify or affect
any State law or regulation that relates to discrimination in
employment.

Sec. 54a.7 Nondiscrimination requirement.

Sec. 54a.8 Right to services from an alternative provider.

(a) General requirements. If an otherwise eligible program
beneficiary or prospective program beneficiary objects to the religious
character of a program participant, within a reasonable period of time
after the date of such objection, such program beneficiary shall have
rights to notice, referral, and alternative services, as outlined in
subsections 54.8a(b)-(d) of this section. With respect to SAMHSA
discretionary programs, for purposes of determining what is the
appropriate Federal, State, or local government, the following
principle shall apply: When SAMHSA provides funding directly to another
unit of government, such as a State or local government, that unit of
government is responsible for providing the alternative services. When
SAMHSA provides discretionary grant funding directly to a
nongovernmental organization, SAMHSA is the responsible unit of
government.
(a) Notice. Program participants that refer an individual to
alternative providers, and the appropriate Federal, State, or local
governments that administer the applicable programs, shall ensure that
notice of the individual's rights to services from an alternative
provider is provided to program beneficiaries or prospective
beneficiaries. The notice must clearly articulate the program
beneficiary's right to a referral and to services that reasonably meet
the requirements of timeliness, capacity, accessibility, and
equivalency as discussed in this section.
(c) Referral to services from an alternative provider. If a program
beneficiary or a prospective program beneficiary objects to the
religious character of a program participant that is a religious
organization, that participating religious organization shall, within a
reasonable time after the date of such objection, refer such individual
to an alternative provider.
(1) When the State or local government is the responsible unit of
government , the State shall have a system in place to ensure that such
referrals are made. That system shall ensure that the following occurs:
(i) The religious organization that is a program participant shall,
within a reasonable time after the date of such objection, refer the
beneficiary to an alternative provider.
(ii) In making such referral, the program participant shall
consider any list that the State or local government makes available to
entities in the geographic area that provide program services, which
may include utilizing any treatment locator system developed by SAMHSA;
(iii) All referrals are to be made in a manner consistent with all
applicable confidentiality laws, including, but not limited to, 42 CFR
part 2 (``Confidentiality of Alcohol and Drug Abuse Patient Records'');
(iv) Upon referring a program beneficiary to an alternative
provider, the program participant shall notify the responsible unit of
government of such referral;
(2) When SAMHSA is the responsible unit of government, the referral
process is as follows:
(i) When a program beneficiary requests alternative services, the
program participant will seek to make such a referral.
(ii) If the religious organization cannot locate an appropriate
provider of alternative services, the program participant will contact
SAMHSA. They will work together to identify additional alternative
providers, utilizing the SAMHSA Treatment Locator system, if
appropriate.
(iii) The program participant will contact these alternative
providers and seek to make the referral, in a manner consistent with
all applicable confidentiality laws, including, but not limited to, 42
CFR part 2 (``Confidentiality of Alcohol and Drug Abuse Patient
Records'')
(iv) In the event the program participant is still unable to locate
an alternative provider, it may again contact SAMHSA for assistance.
(d) Referral Reporting Procedures. The program participant shall
notify the appropriate Federal, state or local government agency that
administers the program of such referral. If a State or local
government is the responsible unit of government, they may determine
their own reporting procedures. When SAMHSA is the responsible unit of
government, this notification will occur during the course of the
regular reports that may be required under the terms of the funding
award.
(e) Provision and Funding of Alternative Services. The responsible
unit of government, as defined in subsection (a), shall provide to an
otherwise eligible program beneficiary or prospective program
beneficiary who objects to the religious character of a program
participant, services and fund services from an alternative provider
that is reasonably accessible to, and has

[[Page 77360]]

the capacity to provide such services to the individual. Such services
shall have a value that is not less than the value of the services that
the individual would have received from the program participant to
which the individual had such objection. The alternative provider need
not be a secular organization. It must simply be a provider to which
the program beneficiary has no religious objection.

Sec. 54a.9 Oversight of the Charitable Choice requirements.

In order to ensure that program funds are used in compliance with
the SAMHSA Charitable Choice provisions, applicants for funds under
applicable programs are required, as part of their applications for
funding, to certify that they will comply with all of the requirements
of the SAMHSA Charitable Choice provisions and the implementing
regulations under this part.

Sec. 54a.10 Fiscal accountability.

(a) Religious organizations that receive applicable program funds
for substance abuse services 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.
(b) Religious organizations shall segregate Federal funds they
receive under applicable programs into a separate account from non-
Federal funds Only the Federal funds shall be subject to audit by the
government under the SAMHSA program.

Sec. 54a.11 Effect on State and local funds.

If a State or local government contributes its own funds to
supplement activities carried out under the applicable programs, the
State or local government has the option to separate out the Federal
funds or commingle them. If the funds are commingled, the provisions of
this part shall apply to all of the commingled funds, in the same
manner, and to the same extent, as the provisions apply to the Federal
funds.

Sec. 54a.12 Treatment of intermediate organizations.

If a nongovernmental organization (referred to here as an ``
intermediate organization''), acting under a contract or other
agreement with the Federal Government or a State or local government,
is given the authority under the contract or agreement to select
nongovernmental organizations to provide services under any applicable
program, the intermediate organization shall have the same duties under
this part as the government. The intermediate organization retains all
other rights of a nongovernmental organization under this part and the
SAMHSA Charitable Choice provisions.

Sec. 54a.13 Educational requirements for personnel in drug treatment
programs.

Sec. 54a.14 Determination of nonprofit status.

The nonprofit status of any SAMHSA applicant can be determined by
any of the following:
(a) Reference to the organization's listing in the Internal Revenue
Service's (IRS) most recent list of tax-exempt organizations described
in section 501(c)(3) of the IRS code.
(b) A copy of a currently valid IRS Tax exemption certificate.
(c) A statement from a State taxing body, State Attorney General,
or other appropriate State official certifying that the applicant
organization has a nonprofit status and that none of the net earnings
accrue to any private shareholder or individuals.
(d) A certified copy of the organization's certificate of
incorporation or similar document if it clearly establishes the
nonprofit status of the organization.
(e) Any of the above proof for a State or national parent
organization and a statement signed by the parent organization that the
applicant organization is a local nonprofit affiliate.

45 CFR Subtitle A

PART 96--[AMENDED]

3. In 45 CFR subtitle A, amend part 96 as follows:
a. In Sec. 96.122, add paragraph (f)(5)(v) to read as follows:

Sec. 96.122 Application content and procedures

* * * * *
(f) * * *
(5) * * *
(v) A description of the activities the State has undertaken to
comply with 42 CFR part 54.
* * * * *
b. In Sec. 96.123, add paragraph (a)(18) to read as follows:

Sec. 96.123 Assurances

(a) * * *
(18) The State will comply with the requirements of 42 CFR part 54.

[FR Doc. 02-31673 Filed 12-12-02; 4:32 pm]

BILLING CODE 4160-17-P