[Federal Register: June 7, 2004 (Volume 69, Number 109)]
[Proposed Rules]
[Page 31773-31777]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07jn04-19]
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AGENCY FOR INTERNATIONAL DEVELOPMENT
22 CFR Parts 202, 205, 211, and 226
RIN 0412-AA52
Participation by Religious Organizations in USAID Programs
AGENCY: Agency for International Development (USAID).
ACTION: Proposed rule.
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SUMMARY: This rule proposes to implement Executive Branch policy that,
within the framework of constitutional guidelines, religious (or
``faith-based'') organizations should be able to compete on an equal
footing with other organizations for USAID funding. This proposed rule
would revise USAID regulations pertaining to the award of grants,
cooperative agreements and contracts awarded for the purpose of
administering grant programs to ensure their compliance with this
policy and to clarify that faith-based organizations are eligible to
participate in programs on the same basis as any other organization,
with respect to programs for which such other organizations are
eligible.
DATES: Comments must be submitted by August 6, 2004.
ADDRESSES: Interested persons are invited to submit comments regarding
this proposed rule to the: Center for Faith-Based and Community
Initiatives, U.S. Agency for International Development, Room 3.09-22,
1300 Pennsylvania Avenue, NW., Washington, DC 20523. Communications
should refer to the ``proposed rule.'' You may submit your comments by
fax to 202-216-3351 or by e-mail to fbci@usaid.gov. A copy of each
communication submitted will be available for inspection and copying
between 8:30 a.m. and 5:30 p.m. at the above address.
FOR FURTHER INFORMATION CONTACT: Michael Magan, Director, Center for
Faith-Based and Community Initiatives, USAID, Rm. 3.3.30, 1300
Pennsylvania Ave., NW., Washington, DC 20523; telephone: (202) 712-4080
(this is not a toll-free number).
SUPPLEMENTARY INFORMATION:
I. Background
Religious (or ``faith-based'') organizations make an important
contribution to the delivery of humanitarian and economic assistance in
much of the world. Faith-based organizations acting alone or in
partnership with local and national governments, community-based
organizations, institutions of higher education, and other private
organizations do much good work to meet the pressing needs of countries
and their citizens, consistent with the objectives of the U.S. foreign
assistance program.
Faith-based non-profit organizations have been implementing
humanitarian and development activities for USAID for decades.
Nevertheless, USAID seeks to further facilitate the contribution of
faith-based and community organizations to increase the reach and
effectiveness of its programs. We believe this will strengthen the
effort, given priority in the national security strategy of the United
States, to respond to the humanitarian and economic development needs
of countries world-wide.
President Bush has directed Federal agencies, including USAID, to
take steps to ensure that Federal policy and programs are fully open to
faith-based and community groups in a manner that is consistent with
the Constitution. The Administration believes that such groups possess
an under-appreciated ability to meet the needs of disadvantaged people
overseas struggling to make a better life, recover from a disaster or
live in a free and democratic country. The Administration believes that
there should be an equal opportunity for all organizations--both
religious and nonreligious--to participate as partners in Federal
programs.
As part of these efforts, President Bush issued Executive Order
13198 on January 29, 2001. The Order, which was published in the
Federal Register on January 31, 2001 (66 FR 8499), created Centers for
Faith-Based and Community Initiatives in five Cabinet departments--
Housing and Urban Development, Health and Human Services, Education,
Labor, and Justice. The Executive Order charged the Centers to identify
and eliminate regulatory, contracting, and other programmatic obstacles
to the participation of faith-based and community organizations in the
provision of social services by their Departments. On December 12,
2002, President Bush issued Executive Order 13280. That Order,
published in the Federal Register on December 16, 2002 (66 FR 77145),
created Centers in two additional agencies--the United States Agency
for International Development and the Department of Agriculture--and
charged those Centers with duties similar to those set forth in
Executive Order 13198. On December 12, 2002, President Bush also issued
Executive Order 13279, published in the Federal Register on December
12, 2002 (67 FR
[[Page 31774]]
77141). That Executive Order charges Executive Branch agencies to
ensure equal protection of laws to faith-based and community groups
that apply for funds to meet and administer social service programs
domestically and abroad. President Bush called for an end to
discrimination against faith-based organizations and, consistent with
the First Amendment to the United States Constitution, ordered
implementation of these policies throughout the Executive Branch,
including, among other things, allowing organizations to retain their
religious autonomy over their internal governance and composition of
boards, and over their display of religious art, icons, scriptures, or
other religious symbols, when participating in government-funded
programs. President Bush directed each Executive Branch agency,
including USAID, to implement these policies. This proposed rule is
part of USAID's efforts to fulfill its responsibilities under these
Executive Orders.
II. This Proposed Rule
A. Purpose of Proposed Rule
Consistent with the President's initiative, this proposed rule
would revise USAID's regulations to ensure that there are no
unwarranted barriers to the equal participation of faith-based
organizations in USAID's programs. The objective of this proposed rule
is to ensure that USAID's programs are open to all qualified
organizations, regardless of their religious character, and to
establish clearly the proper uses to which funds may be put, and the
conditions for receipt of funding. In addition, this proposed rule is
designed to ensure that the implementation of USAID's programs is
conducted in a manner consistent with the requirements of the
Constitution, including the President's Article II responsibilities to
conduct the foreign affairs of the nation and to act as its sole
representative in international relations.
B. USAID Regulations Amended by Proposed Rule
This rule proposes to revise in its entirely 22 CFR part 205,
Payments to and on Behalf of Participants in Nonmilitary Economic
Development Training Programs. It's new title would be ``Participation
by Religious Organizations in USAID Programs.''
This rule also proposes to amend the following USAID regulations:
1. 22 CFR part 202, Overseas Shipment of Supplies by Voluntary Non-
Profit Relief Agencies.
2. 22 CFR part 211, Transfer of Commodities for Food Use in
Disaster Relief, Economic Development, and Other Assistance.
3. 22 CFR part 226, Administration of Assistance Awards to U.S.
Non-Government Organizations.
C. Proposed Regulatory Amendments to Title 22
The revised part 205 will apply to all Federal financial assistance
(including grants, cooperative agreements and contracts that administer
grant programs) awarded by USAID. Award documentation for such Federal
financial assistance will include standard clauses that incorporate the
standards of part 205 and USAID internal directives will highlight,
explain, and incorporate part 205 by reference. The rule also proposes
to make corresponding changes to existing parts 202, 211 and 226 of 22
CFR that relate to aspects of Federal financial assistance programs
administered by USAID.
1. Participation by religious organizations in USAID programs. The
proposed rule would make clear that organizations are eligible to
participate in USAID programs without regard to their religious
character or affiliation, and that organizations may not be excluded
from the competition for USAID assistance awards or sub-awards simply
because they are religious. Specifically, religious organizations are
eligible to compete for funding on the same basis, and under the same
eligibility requirements, as all other nonprofit organizations. The
Federal government and intermediary organizations administering USAID
funds are prohibited from discriminating for or against organizations
on the basis of religious character or affiliation in the selection of
service providers. Nothing in this rule precludes those administering
USAID funded programs from accommodating religious organizations in a
manner consistent with the Religion Clauses of the First Amendment to
the Constitution, as they have been interpreted to apply in the
domestic context.
2. Inherently religious activities. The proposed rule describes the
requirements applicable to all recipient and sub-recipient
organizations regarding the use of USAID funds for inherently religious
activities. Specifically, a participating organization may not use
direct financial assistance \1\ from USAID 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 USAID assistance, and
participation must be voluntary for the beneficiaries of the USAID-
funded programs or services. This requirement ensures that direct
financial assistance from USAID to religious organizations is not used
to support inherently religious activities. Such assistance may not be
used, for example, to conduct worship services, prayer meetings or any
other activity that is inherently religious.
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\1\ As used in this proposed rule, the terms ``direct USAID
assistance'' or ``direct financial assistance from USAID'' refers to
direct funding within the meaning of the Establishment Clause of the
First Amendment as it has been interpreted to apply in the domestic
context. For example, direct USAID assistance may mean that the
government or an intermediate organization with similar duties as a
governmental entity under a particular USAID program selects an
organization and enters a grant relationship with the organization
for provision of needed services. In contrast, many indirect funding
scenarios 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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This restriction does not mean that an organization that receives
USAID funds cannot engage in inherently religious activities. It simply
means that such an organization cannot fund these activities with
direct financial assistance from USAID. Thus, faith-based organizations
that receive direct financial assistance from USAID must take steps to
separate, in time or location, their inherently religious activities
from the direct USAID-funded services that they offer.
In addition, the proposed rule clarifies that the legal
restrictions applicable to religious programs within correctional
facilities will sometimes be different from the legal restrictions that
apply to other USAID programs, on account of the fact that the degree
of government control over correctional environments sometimes warrants
affirmative steps by prison officials, in the form of chaplaincies and
similar programs, to ensure that prisoners have access to opportunities
to exercise their religion in the prison.
3. Independence of religious organizations. The proposed rule
clarifies that a religious organization that participates in USAID
programs will retain its independence and may continue to carry out its
mission, including the definition, practice, and expression of its
religious beliefs, provided that it does not use direct financial
assistance from USAID to support any inherently religious activities,
such as worship, religious instruction, or proselytization. Among other
things, a faith-based organization may use space in its facilities to
provide USAID-funded services, without
[[Page 31775]]
removing religious art, icons, scriptures, or other religious symbols.
In addition, a USAID-funded religious organization 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. Use of USAID funds for acquisition, construction, or
rehabilitation of structures. The proposed rule clarifies that USAID
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 the specific USAID program. Where
a structure is used for both eligible and inherently religious
activities, the proposed rule clarified that USAID funds may not exceed
the cost of those portions of the acquisition, construction, or
rehabilitation that are attributable to eligible activities. USAID
funds may not be used for acquisition, construction, or rehabilitation
of sanctuaries, chapels, or any other rooms that a religious
congregation that is a recipient or sub-recipient of USAID assistance
primarily uses as a place of worship.
5. Nondiscrimination in providing assistance. The proposed rule
clarifies that an organization that receives direct financial
assistance from USAID shall not, in providing program assistance,
discriminate against a program beneficiary or potential program
beneficiary on the basis of religion or religious belief. Accordingly,
religious organizations, in providing services directly funded in whole
or in part by USAID, may not discriminate against current or
prospective program beneficiaries on the basis of religion or religious
belief.
6. Assurance requirements. This rule proposes to direct the removal
of those provisions of USAID's agreements, covenants, memoranda of
understanding, policies, or regulations that require only USAID-funded
religious organizations to provide assurances that they will not use
monies or property for inherently religious activities. All
organizations that participate in USAID programs, including religious
ones, must carry out eligible activities in accordance with all program
requirements and other applicable requirements governing the conduct of
USAID-funded activities, including those prohibiting the use of direct
financial assistance from USAID to engage in inherently religious
activities. In addition, to the extent that provisions of USAID's
agreements, covenants, policies, or regulations disqualify religious
organizations from participating in USAID's programs because they are
motivated or influenced by religious faith to provide social services,
or because of their religious character or affiliation, the proposed
rule removes that restriction, which is not required by governing law.
7. National Security Waiver. The proposed rule also permits the
Secretary of State to waive all or any part of the rule, on a case-by-
case basis, where the Secretary determines that such waiver is
necessary to further the national security or foreign policy interests
of the United States.
III. Findings and Certifications
Executive Order 12866--Regulatory Planning and Review
The Office of Management and Budget (OMB) reviewed this rule under
Executive Order 12866, Regulatory Planning and Review. OMB determined
that this rule is a ``significant regulatory action'' as defined in
section 3(f) of the Order (although not an economically significant
regulatory action under the Order) and, accordingly, has reviewed the
rule.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (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 on the private sector. This proposed rule does not
impose any Federal mandates on any State, local, or tribal governments,
or the private sector, within the meaning of the Unfunded Mandates
Reform Act of 1995.
Regulatory Flexibility Act
The USAID Administrator, 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 USAID grantees. Rather, the purpose of the
proposed rule is to remove prohibitions that currently restrict the
equal participation of religious or religiously affiliated
organizations (large and small) in USAID programs. Notwithstanding
USAID's determination that this rule will not have a significant
economic effect on a substantial number of small entities, USAID
specifically invites comments regarding any less burdensome
alternatives to this rule that will meet USAID's objectives as
described in this preamble.
Catalog of Federal Domestic Assistance Numbers
The Catalog of Federal Domestic Assistance program numbers for the
programs affected by this rule are 98.001, 98.002, 98.003, 98.004,
98.005, 98.006, 98.007, 98.008, 98.009.
List of Subjects
22 CFR Part 202
Foreign aid, Grant programs, Nonprofit organizations.
22 CFR Part 205
Foreign aid, Grant programs, Nonprofit organizations.
22 CFR Part 211
Agricultural commodities, Disaster assistance, Food assistance
programs, Foreign aid, Grant programs, Nonprofit organizations,
Reporting and recordkeeping requirements.
22 CFR Part 226
Accounting, Colleges and universities, Foreign aid, Grant programs,
Hospitals, Nonprofit organizations, Reporting and recordkeeping
requirements.
For the reasons stated in the preamble, USAID proposes to amend
chapter II of title 22 of the Code of Federal Regulations as follows:
PART 202--OVERSEAS SHIPMENT OF SUPPLIES BY VOLUNTARY NON-PROFIT
RELIEF AGENCIES
1. The authority citation for part 202 revised to read as follows:
Authority: 22 U.S.C. 2381(a).
2. Add Sec. 202.10 to read as follows:
Sec. 202.10 Participation by faith-based organizations.
The procedures established under this part shall be administered in
compliance with the standards set forth in part 205, Participation by
Religious Organizations in USAID Programs, of this chapter.
3. Revise part 205 to read as follows:
PART 205--PARTICIPATION BY RELIGIOUS ORGANIZATIONS IN USAID
PROGRAMS
Authority: 22 U.S.C. 2381(a).
Sec. 205.1 Grants and cooperative agreements.
(a) Religious organizations are eligible, on the same basis as any
other Organization to participate in any
[[Page 31776]]
USAID program for which they are otherwise eligible. In the selection
of service providers, neither USAID nor entities that make and
administer sub-awards of USAID funds shall discriminate for or against
an organization on the basis of the organization's religious character
or affiliation. As used in this section, the term ``program'' refers to
federally funded USAID grants and cooperative agreements, including
sub-grants and sub-agreements. The term also includes grants awarded
under contracts that have been awarded by USAID for the purpose of
administering grant programs. As used in this section, the term
``grantee'' includes a recipient of a grant or a signatory to a
cooperative agreement, as well as sub-recipients of USAID assistance
under grants, cooperative agreements and contracts.
(b) Organizations that receive direct financial assistance from
USAID under any USAID program may not engage in inherently religious
activities, such as worship, religious instruction, or proselytization,
as part of the programs or services directly funded with direct
financial assistance from USAID. If an organization conducts such
activities, the activities must be offered separately, in time or
location, from the programs or services funded with direct financial
assistance from USAID, and participation must be voluntary for
beneficiaries of the programs or services funded with such assistance.
These restrictions on inherently religious activities do not apply to
programs where USAID funds are provided to chaplains to work with
inmates in prisons, detention facilities, or community correction
centers, or where USAID funds are provided to religious or other
organizations for programs in prisons, detention facilities, or
community correction centers, in which such organizations assist
chaplains in carrying out their duties.
(c) A religious organization that participates in USAID-funded
programs or services will retain its independence and may continue to
carry out its mission, including the definition, practice, and
expression of its religious beliefs, provided that it does not use
direct financial assistance from USAID to support any inherently
religious activities, such as worship, religious instruction, or
proselytization. Among other things, a religious organization that
receives financial assistance from USAID may use space in its
facilities, without removing religious art, icons, scriptures, or other
religious symbols. In addition, a religious organization that receives
financial assistance from USAID retains its authority over its internal
governance, and it may retain religious terms in its organization's
name, select its board members on a religious basis, and include
religious references in its organization's mission statements and other
governing documents.
(d) USAID 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. USAID funds may be used for
the acquisition, construction, or rehabilitation of structures only to
the extent that those structures are used for conducting eligible
activities under this part. Where a structure is used for both eligible
and inherently religious activities, USAID 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 USAID
funds in this part. Sanctuaries, chapels, or other rooms that a USAID-
funded religious congregation primarily uses as a place of worship,
however, are ineligible for USAID-funded improvements. Disposition of
real property after the term of the grant, or any change in use of the
property during the term of the grant, is subject to government-wide
regulations governing real property disposition. (See 22 CFR Part 226).
(e) An organization that participates in programs funded by
financial assistance from USAID shall not, in providing services,
discriminate against a program beneficiary or potential program
beneficiary on the basis of religion or religious belief.
(f) No grant document, contract, agreement, covenant, memorandum of
understanding, policy, or regulation that is used by USAID shall
require only religious organizations to provide assurances that they
will not use monies or property for inherently religious activities.
Any such restrictions shall apply equally to religious and secular
organizations. All organizations that participate in USAID programs,
including religious ones, must carry out eligible activities in
accordance with all program requirements and other applicable
requirements governing the conduct of USAID-funded activities,
including those prohibiting the use of direct financial assistance from
USAID to engage in inherently religious activities. No grant document,
agreement, covenant, memorandum of understanding, policy, or regulation
that is used by USAID shall disqualify religious organizations from
participating in USAID's programs because such organizations are
motivated or influenced by religious faith to provide social services,
or because of their religious character or affiliation.
(g) A religious organization's exemption from the Federal
prohibition on employment discrimination on the basis of religion, set
forth in Sec. 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 2000e-
1, is not forfeited when the organization receives financial assistance
from USAID.
(h) Many USAID grant programs require an organization to be a
``nonprofit organization'' in order to be eligible for funding.
Individual solicitations that require organizations to have nonprofit
status will specifically so indicate in the eligibility section of a
solicitation. Grantees should consult with the appropriate USAID
program office to determine the scope of any applicable requirements.
In USAID programs in which an applicant must show that it is a
nonprofit organization, other than programs which are limited to
registered Private and Voluntary Organizations, the applicant may do so
by any of the following means:
(1) Proof that the Internal Revenue Service currently recognizes
the applicant as an organization to which contributions are tax
deductible under section 501(c)(3) of the Internal Revenue Code;
(2) A statement from a state taxing body or the state secretary of
state certifying that:
(i) The organization is a nonprofit organization operating within
the State; and
(ii) No part of its net earnings may lawfully benefit any private
shareholder or individual;
(3) A certified copy of the applicant's certificate of
incorporation or similar document that clearly establishes the
nonprofit status of the applicant; or
(4) Any item described in paragraphs (b)(1) through (3) of this
section if that item applies to a state or national parent
organization, together with a statement by the State or parent
organization that the applicant is a local nonprofit affiliate.
(i) The Secretary of State may waive the requirements of this
section in whole or in part, on a case-by-case basis, where the
Secretary determines that such waiver is necessary to further the
national security or foreign policy interests of the United States.
[[Page 31777]]
PART 211--TRANSFER OF FOOD COMMODITIES FOR FOOD USE IN DISASTER
RELIEF, ECONOMIC DEVELOPMENT, AND OTHER ASSISTANCE
4. The authority citation for part 211 is revised to read as
follows:
Authority: 7 U.S.C. 1726a(c).
5. Add Sec. 211.13 to read as follows:
Sec. 211.13 Participation by religious organizations.
The funds provided under this part shall be administered in
compliance with the standards set forth in part 205, Participation by
Religious Organizations in USAID Programs, of this chapter.
PART 226--ADMINISTRATION OF ASSISTANCE AWARDS TO U.S. NON-
GOVERNMENTAL ORGANIZATIONS
6. The authority citation for part 226 is revised to read as
follows:
Authority: 22 U.S.C. 2381(a).
7. Amend Sec. 226.1 to add the following text at the end of the
section:
Sec. 226.1 Purpose and applicability.
* * * This part shall be administered in compliance with the
standards set forth in part 205, Participation by Religious
Organizations in USAID Programs, of this chapter.
Dated: May 28, 2004.
Andrew S. Natsios,
USAID Administrator.
[FR Doc. 04-12654 Filed 6-4-04; 8:45 am]
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