[Federal Register Volume 69, Number 136 (Friday, July 16, 2004)]
[Rules and Regulations]
[Pages 42586-42595]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-16130]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of the Secretary
45 CFR Parts 74, 87, 92, and 96
RIN 0991-AB34
Participation in Department of Health and Human Services Programs
by Religious Organizations; Providing for Equal Treatment of All
Department of Health and Human Services Program Participants
AGENCY: Office of the Secretary, Department of Health and Human
Services (HHS).
ACTION: Final rule.
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SUMMARY: On March 9, 2004, the Department of Health and Human Services
(HHS) published a Notice of Proposed Rulemaking (NPRM) to implement
executive branch policy that, within the framework of constitutional
church-state guidelines, religiously affiliated (or ``faith-based'')
organizations should be able to compete on an equal footing with other
organizations for the Department's funding without impairing the
religious character of such organizations. It creates a new regulation
on Equal Treatment for Faith-Based Organizations, and revises
Department regulations to remove barriers to the participation of
faith-based organizations in Department programs and to ensure that
these programs are implemented in a manner consistent with applicable
statutes and the requirements of the Constitution, including the
Establishment, Free Exercise, and Free Speech Clauses of the First
Amendment. The Secretary requested comments on the NPRM and gave 60
days for individuals to submit their written comments to the
Department. The Secretary has considered the comments received during
the open comment period and is issuing the final regulation in light of
those comments.
EFFECTIVE DATE: This rule is effective August 16, 2004.
FOR FURTHER INFORMATION CONTACT: Bobby Polito, Director, Department of
Health and Human Services Center for Faith-Based and Community
Initiatives, 200 Independence Ave., Room 120F, Washington, DC 20201,
telephone (202) 358-3595.
SUPPLEMENTARY INFORMATION: On March 9, 2004, HHS published a Notice of
Proposed Rulemaking (NPRM) to implement executive branch policy (69 FR
10951). We provided a 60-day comment period that ended on May 10, 2004.
We offered the public the opportunity to submit comments by surface
mail, E-mail, or electronically via our Web site.
Background
This final rule is part of the Department's effort to fulfill its
responsibilities under two Executive Orders issued by President Bush.
The first of these Orders, Executive Order 13198 of January 29, 2001,
published in the Federal Register on January 31, 2001 (66 FR 8497),
created Centers for Faith-Based and Community Initiatives in five
cabinet departments--Housing and Urban Development, Health and Human
Services, Education, Labor, and Justice--and directed these Centers to
identify and eliminate regulatory, contracting, and other programmatic
obstacles to the equal participation of faith-based and community
organizations in the provision of social services by their Departments.
The second of these Executive Orders, Executive Order 13279 of December
12, 2002, published in the Federal Register on December 16, 2002 (67 FR
77141), charged executive branch agencies to give equal treatment to
faith-based and community groups that apply for funds to meet social
needs in America's communities. President Bush thereby called for an
end to discrimination against faith-based organizations and ordered
implementation of these policies throughout the executive branch in a
manner consistent with the First Amendment to the United States
Constitution. He further directed that faith-based organizations be
allowed 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. The Administration
believes that there should be an equal opportunity for all
organizations--both religious and nonreligious--to participate as
partners in Federal programs.
Summary Description of Regulatory Provisions
The following is a summary of the regulatory provisions included in
this final rule which creates a new Part 87 Equal Treatment for Faith-
based Organizations, and revises the Department's uniform
administrative requirements at 45 CFR Parts 74, 92, and 96 to
incorporate the requirements of Part 87. The final rule is applicable
only to those grants, agreements, and other financial assistance
covered by such requirements.
The rule has the following specific objectives:
(1) Participation by faith-based organizations in Department of
Health and Human Services programs. The rule provides that
organizations are eligible to participate in Department programs
without regard to their religious character or affiliation, and that
organizations may not be excluded from the competition for Department
grant funds 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 other organizations.
The Department, as well as State and local governments administering
funds under Department programs or intermediate organizations with the
same duties as a governmental entity under this part, are prohibited
from discriminating for or against organizations on the basis of
religious character or affiliation in the selection of service
providers. Nothing in the rule, however, precludes those administering
Department-funded programs from accommodating religious organizations
in a manner consistent with the Establishment Clause.
(2) Inherently religious activities. The rule describes the
requirements that are applicable to all recipient organizations
regarding the use of Department grant funds for inherently religious
activities. Specifically, a participating organization may not use
direct financial assistance from the Department, as well as from State
and local governments or intermediate organizations administering funds
under Department programs, to support inherently religious activities,
such as worship, religious instruction, or proselytization. If the
organization engages in such activities, it must offer them separately,
in time or location, from the programs or services funded with direct
Department assistance, and participation must be voluntary for the
beneficiaries of the Department-funded programs or services. This
requirement ensures that direct financial assistance from the
Department to participating organizations is not used to support
inherently religious activities. Such assistance may not be used, for
example, to conduct worship services, prayer
[[Page 42587]]
meetings, or any other activity that is inherently religious. The rule
clarifies that this restriction does not mean that an organization that
receives Department grant funds may not engage in inherently religious
activities, but only that such an organization may not fund these
activities with direct financial assistance from the Department.
(3) Independence of faith-based organizations. The rule makes clear
that a religious organization that participates in Department programs
retains 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
the Department 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
Department-funded services without removing religious art, icons,
scriptures, or other religious symbols. In addition, a religious
organization that receives financial assistance from the Department
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 in
accordance with all program requirements, statutes, and other
applicable requirements governing the conduct of Department-funded
activities.
(4) Employment practices. The rule makes clear the Department's
view that religious organizations do not forfeit their 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.
Some Department programs, however, have independent statutory
nondiscrimination requirements related to religious discrimination.
Therefore, organizations should consult with the appropriate grant
program office.
(5) Nondiscrimination in providing assistance. The rule provides
that an organization that receives direct financial assistance from the
Department, as well as from State and local governments or intermediate
organizations administering funds under Department programs may not, in
providing program assistance supported by such funding, discriminate
against a program beneficiary or prospective program beneficiary on the
basis of religion or religious belief.
(6) Assurance requirements. The final rule establishes that all
organizations that participate in Department programs, including
organizations with religious character or affiliations, are required to
carry out eligible activities in accordance with all program
requirements and other applicable requirements governing the conduct of
Department-funded activities, including those prohibiting the use of
direct financial assistance from the Department to support inherently
religious activities. The Department will not require only religious
organizations to provide assurances that they will not use monies or
property for inherently religious activities. Any restrictions on the
use of financial assistance shall apply equally to religious and non-
religious organizations. Thus, the Department, through this regulation,
intends to create a ``level playing field.''
Discussion of Regulatory Provisions and Response to Public Comments
The Department received comments on the proposed rule from four
commenters, three of which were public interest or civil or religious
liberties organizations, and one of which was a State Department of
Human Services. Some of the comments were generally supportive of the
proposed rule; others were critical. The following is a summary of the
comments and the Department's responses.
I. Definition of ``Faith-Based Organization''
One commenter noted that the term ``faith-based'' is not defined
and requested that a comprehensive definition of a ``faith-based''
entity be included in the final regulation consistent with the
Temporary Assistance for Needy Families (TANF) and Substance Abuse and
Mental Health Services Administration (SAMHSA) Charitable Choice
regulations. This commenter also suggested that the definition include
an explanation as to whether the terms ``religious organization'' and
``faith-based organization'' are used interchangeably.
Throughout the proposed rule, we used the term ``religious
organization'' and the term ``faith-based organization''
interchangeably. As we noted in the preamble of the SAMHSA charitable
choice rule, however, neither the U.S. Constitution nor the relevant
Supreme Court precedents contain a comprehensive definition of religion
or a religious organization that must be applied to this rule. See 68
FR 56431 (Sept. 30, 2003). Rather, an extensive body of judicial
precedent has established guidelines advising States and religious
organizations on how to abide by the Establishment and Free Exercise
Clauses of the First Amendment to the United States Constitution. The
Department does not believe it is necessary to further define the term
``faith-based'' in the rule.
II. Religious Activities
A number of comments addressed the extent to which religious
organizations may receive and use public funds, and whether and how
groups that are ``pervasively sectarian'' may use such funds under the
law. One commenter expressed concern that the rule allows public funds
to be given to ``pervasively sectarian'' organizations. One commenter
asked for clarification regarding the mandate that any religious
activity must be separate and apart from the provision of HHS services.
This commenter believed the requirement that ``inherently religious''
activities must be offered ``separately, in time or location'' from
government-funded services fails to meet current constitutional
standards governing aid to religious institutions. Further, a commenter
stated that the rule improperly allows religious art, icons,
scriptures, and other symbols to be displayed in an area where HHS-
funded services are delivered.
One comment commended the Department for emphasizing that secular
as well as religious organizations are subject to the ban on using
direct government funds to underwrite inherently religious activities
and for stating clearly that governments using Department funds may not
apply more extensive requirements to religious organizations than to
their secular counterparts, specifically referring to Sec. Sec.
87.1(e) and 87.2(e).
In addition, several comments supported the mandate in the
regulation that governments that use Department grant funds may not
discriminate either for or against religious organizations and that
religious organizations seeking support should not be discriminated
against either because of their religious character or because of a
religious affiliation.
The Constitution does not require the Department to assess the
overall religiousness of an organization and deny financial assistance
to organizations that are ``pervasively sectarian.'' Rather, religious
(and other) organizations that receive direct funding from the
Department may not use such support for inherently religious activities
and they must ensure that these activities are separate in time or
location from services directly funded by the Department and that
[[Page 42588]]
participation in such activities by program beneficiaries is voluntary.
Furthermore, under the rule, such religious organizations receiving
direct funding are prohibited from discriminating for or against
program beneficiaries on the basis of religion or religious belief and
participating organizations that violate these requirements are subject
to applicable sanctions and penalties. The rule would thus ensure that
direct funding is not used for inherently religious activities, as
required by current precedent.
Moreover, the Supreme Court's ``pervasively sectarian'' doctrine no
longer enjoys the support of a majority of the Court. Four Justices
expressly abandoned the ``pervasively sectarian'' doctrine in Mitchell
v. Helms and Justice O'Connor's opinion in that case, joined by Justice
Breyer, set forth reasoning that is inconsistent with its underlying
premises. 530 U.S. 793, 825-829, 857-858 (2000) (plurality opinion)
(O'Connor, J., concurring in judgment) (requiring proof of ``actual
diversion of public support to religious uses''). Thus, six members of
the Court have rejected the view that aid provided to religious
institutions will invariably advance the institutions' religious
purposes that is the foundation of the ``pervasively sectarian''
doctrine. The Department therefore believes that under current
precedent, the Department may fund programs of all organizations,
without regard to religion and free of criteria that require the
program to abandon its religious expression or character.
Neither does current Supreme Court precedent require or support the
view that government must exclude from its programs those organizations
that convey religious messages or advance religion with their own
funds. Where a religious organization receives direct government
assistance, any inherently religious activities that the organization
offers must simply be offered separately, in time or location, from the
activities supported by direct government funding. The Supreme Court
has held that the Constitution forbids the use of direct government
funds for inherently religious activities, but the Court has rejected
the presumption that religious organizations will inevitably divert
such funds and use them for their own religious purposes.
As to the comment about religious artwork, a number of Federal
statutes affirm the principle embodied in this rule. See, e.g., 42
U.S.C. Sec. 290kk-1(d)(2)(B). Moreover, for no other program
participants do Department regulations prescribe the types of artwork
and symbols that may be placed within the structures or rooms in which
Department-funded services are provided. In addition, a prohibition on
the use of religious icons would make it more difficult for many faith-
based organizations to participate in Department programs than for
other organizations by forcing them to procure additional space. It
would thus be an inappropriate and excessive restriction, typical of
the types of regulatory barriers that this final rule seeks to
eliminate. Consistent with constitutional church-state guidelines, a
faith-based organization that participates in Department programs will
retain its independence and may continue to carry out its mission,
provided that it does not use direct Department funds to support any
inherently religious activities. Accordingly, this final rule continues
to provide that faith-based organizations may use space in their
facilities to provide Department-funded services, without removing
religious art, icons, scriptures, or other religious symbols.
One commenter urged that a clear statement be made as to the
constitutional consequences of indirect as opposed to direct funding.
As used in this final rule, the term ``direct funds'' refers to
direct funding within the meaning of the Establishment Clause of the
First Amendment. For example, under a direct funding method, the
government or an intermediate organization with the same duties as a
governmental entity may purchase the needed services straight from the
provider. Direct Federal funds may not be used for inherently religious
activities. Faith-based organizations that receive direct Federal funds
must take steps to separate, in time or location, their inherently
religious activities from the federally funded services they offer. In
addition, any participation by a program beneficiary in such religious
activities must be voluntary and understood to be voluntary.
On the other hand, these restrictions on inherently religious
activities do not apply where Federal funds are indirectly provided to
religious organizations (for example, as a result of a genuine and
independent private choice of a beneficiary through a voucher,
certificate, coupon, or similar mechanism). Under indirect programs,
religious organizations that receive Federal 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 federally funded services they provide, on the
condition that they otherwise satisfy the requirements of the program.
The Supreme Court has consistently held that governments may fund
programs that place the benefit in the hands of individuals, who in
turn have the freedom to choose the provider to which they take their
benefit and spend it, whether that institution is public or private,
religious or nonreligious. Therefore, any consequential aid to religion
having its origin in such a program is the result of the beneficiary's
own choice. See, e.g., Zelman v. Simmons-Harris, 536 U.S. 639, 652
(2002).
III. Employment Laws
Several commenters maintained that longstanding principles of
constitutional law prohibit the government from funding employee
positions that are filled based on discriminatory criteria. They
believed the rule improperly extends the Title VII exemption, under
which religious organizations are exempt from the general Title VII
prohibition against religious discrimination in employment, to
religious organizations participating in programs directly funded by
HHS.
We do not agree that these comments accurately portray the law.
In 1972, Congress broadened Sec. 702(a) of the Civil Rights Act to
exempt religious organizations from the religious nondiscrimination
provisions of Title VII, regardless of the nature of the job at issue.
The broader, amended provision was unanimously upheld by the Supreme
Court in 1987 and, absent a specific statutory repeal, remains
applicable even when religious organizations are delivering federally
funded social services. Thus, although Sec. 702(a) of the Civil Rights
Act of 1964 is permissive--it does not require religious staffing--
religious organizations may consider their faith in making employment
decisions without running afoul of Title VII. The effect of the
explicit preservation of the Title VII exemption is no different from
the rule that applies in other programs that are simply silent on the
question of the applicability of Title VII in the funding context, and
there are many such programs.
The Department further disagrees with objections to the rule's
recognition that a religious organization does not forfeit its Title
VII exemption when administering Department-funded services. As an
initial matter, applicable statutory nondiscrimination requirements are
not altered by this rule. Congress establishes the conditions under
which religious organizations are exempt from Title VII; this rule
simply recognizes that these requirements, including their limitations,
are fully
[[Page 42589]]
applicable to federally funded organizations unless Congress says
otherwise.
As to the suggestion that the Constitution restricts the government
from providing funding for social services to religious organizations
that consider faith in hiring, that view does not accurately represent
the law. As noted above, the employment decisions of organizations that
receive extensive public funding are not attributable to the State, and
it has been settled for more than 100 years that the Establishment
Clause does not bar the provision of direct Federal grants to
organizations that are controlled and operated exclusively by members
of a single faith. See Bradfield v. Roberts, 175 U.S. 291 (1899); see
also Bowen v. Kendrick, 487 U.S. 589, 609 (1988). Finally, the
Department notes that allowing religious groups to consider faith in
hiring when they receive government funds is much like allowing a
federally funded environmental organization to hire those who share its
views on protecting the environment--both groups are allowed to
consider ideology and mission, which improves their effectiveness and
preserves their integrity. Thus, the Department declines to amend the
final rule to require religious organizations to forfeit their Title
VII rights.
One commenter believed the rule fails to make clear that program
participants must comply with Federal statutory provisions requiring
grantees not to discriminate in employment hiring practices. This
commenter suggested that the rule be amended to make clear to grantees
that they must comply with statutory requirements that prohibit
employment discrimination on the basis of religion in HHS-funded
programs that contain such statutory provisions.
The Department understands that grantees need to be aware of such
provisions and believes such information is most easily obtained and
best explained by the appropriate Department offices. The purpose of
this rulemaking is to eliminate undue administrative barriers that the
Department has imposed to the participation of faith-based
organizations in Department programs; of itself, the rule does not
alter existing statutory requirements, which apply to Department
programs to the same extent that they applied prior to this rule.
IV. Interaction With State and Local Law
One commenter believed the rule disregards local laws pertaining to
diversity requirements for governing boards and they proposed that the
rule be modified to make clear that it does not preempt State and local
diversity requirements that pertain to board membership of
organizations operating publicly funded programs. Several commenters
felt that the rule fails to preserve State and local laws that relate
to discrimination in employment. Another commenter observed that some
States do not allow discrimination in hiring practices based on sexual
orientation and gender identity, although Federal law contains no such
prohibition. To avoid confusion, the commenters believed, the rule
should be clear that State and local governments will continue to be
allowed to enforce provisions that restrict or prohibit the use of
funds by religious organizations who participate in publicly funded
programs.
The commenters requested that additional language be added to Part
87 to clarify that a religious organization using a Department program
or receiving Department grant dollars is subject to all applicable
Federal, State, and local civil rights laws.
The requirements that govern funding under the Department programs
at issue in these regulations do not directly address preemption of
State or local laws. Federal funds, however, carry Federal
requirements. No organization is required to apply for funding under
these programs, but organizations that apply and are selected for
funding must comply with the Federal requirements applicable to the
program funds.
Under this rule, 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 religious organization
receives direct or indirect financial assistance from the Department,
although a Department program may contain independent statutory
provisions governing employment. Thus, this rule will apply when a
State or local government uses Federal funds to provide services under
a Department program and the religious organization will remain free to
make employment choices based on religion under Title VII.
Additionally, if a State or local government contributes its own funds
to the Federal funds and the funds are commingled, the provisions of
this section 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.
V. State Action
One commenter suggested that the rule transforms organizations that
are permitted to consider religion in employment decisions into state
actors.
The Department disagrees with this comment. The receipt of
government funds does not convert the employment decisions of private
institutions into ``state action'' that is subject to constitutional
restrictions regarding religious discrimination in employment. See
Rendell-Baker v. Kohn, 457 U.S. 830 (1982) (holding that the employment
decisions of a private school that receives more than 90% of its
funding from the State are not state action).
VI. Effect on State and Local Funds of Commingling of Funds
One commenter requested that a statement be made that because of
the use of Federal funds, Federal power preempts State and local
procurement restrictions on religious staffing when the funds involved
are Department funds or commingled State or local funds. Another
commenter believed that the regulation impermissibly forces States to
waive enforcement of state constitutional, statutory, and regulatory
requirements that may be more restrictive than the applicable Federal
requirements. Additionally, one commenter objected to the language in
Sec. Sec. 87.1(h) and 87.2(h) that applies the rules to State and
local funds when these funds are commingled with Federal funds,
regardless of whether State or local funds are required as a condition
for the receipt of Federal funds. One commenter noted that State or
local governments cannot draw down particular Department grant funds
without contributing matching funds and suggested that State or local
matching funds should be subject to the rule whether or not the
matching funds are commingled with the Department's funds because they
are inherently a part of the Department-funded program.
We disagree that the rule forces waiver or directly addresses
preemption of State and local laws. When State and local governments,
or other grantees, supplement the non-Federal share of the award, then
the grantees have the option to commingle such supplemental funds with
Federal funds or to separate them (i.e., where no Federal requirement
mandates commingling). Federal rules apply if they choose to commingle
their own supplemental funds with Federal funds. We agree with the last
commenter and have edited the final rule accordingly. In Department
programs Federal rules ordinarily apply to State ``matching'' funds or
``cost sharing'' funds which are required as part of the grant award.
Therefore, these Federal regulations remain applicable to State, local,
or other grantee matching
[[Page 42590]]
funds that are required as part of the grant award.
VII. Assurances of Compliance and Oversight
One commenter suggested that Sec. 87.2 include a requirement that
State and local governments that receive Department funds in the form
of formula or block grants must provide to the Department some kind of
explicit assurance that they will follow, or evidence that they have
followed, the rule.
The Department declines to adopt this suggestion. It is a condition
of any grant to comply with existing rules and each grantee must sign
assurances certifying that the grantee will comply with the various
laws applicable to the receipt of Federal grants. The Department
believes that those signed assurances, plus existing compliance and
auditing standards, provide appropriate oversight.
Another commenter stated that the rule must provide safeguards to
reduce potential constitutional violations and provide adequate
oversight and monitoring of grantees so that, when government grant
funds are given to faith-based institutions, additional safeguards
adequate to prevent religious use of the funds are in place. This
commenter did not feel that the rule outlines any oversight mechanisms
to prevent the religious use of government funds and expressed concern
that a pervasively sectarian entity could intermingle government funds
and funds for ``inherently religious activities'' with no way to
account for the expenditure of government funds.
The Department has not revised the rule in response to these
comments. The Department has a responsibility to monitor all program
participants to ensure that Department grant funds are used in
accordance with the particular Department program and any government-
wide requirements. Inappropriate use of grant funds or failure to
comply with requirements is not a possibility that arises only when
program participants are faith-based organizations. Failure of any
organization receiving Federal funds to ensure that such funding is not
used for prohibited purposes will subject the organization to the
imposition of sanctions or penalties. All Department program
participants must carefully manage their various sources of Federal
funds and abide by OMB cost accounting circulars, where applicable, or
other cost accounting method that may be specified in individual
program regulations. With respect to discretionary grants, the
Department is authorized to conduct any audits or reviews that are
warranted, irrespective of the amount of Federal funds expended by the
grantee annually, in order to ensure compliance with program
requirements, including the restriction against direct funding of
inherently religious activities. See 45 CFR 74.26, 74.51, 74.53, 92.26,
92.40, 92.42. The Department may determine that such audits or reviews
are warranted based upon any information received by the agency that
raises an issue concerning the propriety of expenditures. With respect
to block grants, the Department also has broad oversight authority to
ensure compliance with program requirements including the restriction
against direct funding of inherently religious activities. See 45 CFR
Part 96, Subparts C and E, as well as specific authority provided under
each block grant statute. In sum, the Department believes that signed
assurances applicable to all grantees, plus existing compliance and
auditing standards, provide the needed oversight and ensure that the
States, localities and religious organizations are implementing the
rule properly and that all beneficiaries' rights are being upheld as
required.
VIII. Rights of Beneficiaries
Several commenters stated that the rule fails to adequately protect
the rights of beneficiaries in direct funding programs. They believed
the rule should outline procedures for beneficiaries to file complaints
regarding their treatment and access to services from organizations
that fail to respect the rights of beneficiaries. The commenters argued
that to meet current constitutional standards regarding beneficiaries'
participation in religious activities, beneficiaries should receive a
notice of their rights and how they may address any grievances. One of
these commenters also felt that language prohibiting discrimination
based on religion or religious beliefs should be strengthened to ensure
that Federal monies cannot be used to discriminate on the basis of
sexual orientation or gender identity. This commenter suggested that
the rule fails to provide the necessary constitutional safeguards to
protect the religious liberty of program beneficiaries and felt that
the rule does not provide meaningful ways in which beneficiaries can
secure their rights. The commenter also believed that the rule fails to
provide any protections for beneficiaries of indirect aid programs and
expressed concern that there is no requirement that a beneficiary be
given notice of her rights in redeeming publicly funded, Department-
approved vouchers. The commenter felt that the rule should prohibit the
participation of organizations in voucherized programs that have a
policy of discriminating in the admittance of a beneficiary to a
program or in the provision of services.
One commenter expressed concern that the rule contains no
requirements pertaining to notice, referral and provision of
alternative services for beneficiaries who object to the religious
character of a Department participating organization. This commenter
felt the rule should be modified to require that a non-religious
alternative must be made available to beneficiaries who object to a
religious participating organization. The commenter also believed that
the rule should require that notice of the availability of an
alternative provider be given to all beneficiaries at the outset of
their receipt of services.
The Department declines to adopt these recommendations. It believes
that the existing language prohibiting organizations receiving direct
funds from discriminating against program beneficiaries on the basis of
``religion or religious belief'' is sufficiently explicit. In addition,
the rule provides that religious organizations may not use direct
Federal funding from the Department for inherently religious activities
and that any such activities must be offered separately, in time or
location, and must be voluntary for program beneficiaries. These
requirements further protect the rights of program beneficiaries, for
whom traditional channels of airing grievances are generally available.
While some Department programs (e.g., SAMHSA and TANF Charitable
Choice) contain statutory requirements of notice and referral and
provision of alternative services, we have declined to adopt such
requirements by regulation for all Department programs.
As for indirect programs, the religious freedom of beneficiaries in
an indirect funding program is protected by the guarantee of genuine
and independent private choice. Officials administering public funding
under an indirect funding program have an obligation to ensure that
everyone who is eligible receives services from some provider, and no
client may be required to receive services from a provider to which the
client has a religious objection. In other words, vouchers and services
indirectly funded by the government must be available to all clients
regardless of their religious belief, and those who object to a
religious provider have a right to services from some alternative
provider.
[[Page 42591]]
As to the comment about sexual orientation and gender identity,
although Federal law prohibits persons from being excluded from
participation in Department services or subjected to discrimination
based on race, color, national origin, sex, age, or disability, it does
not prohibit discrimination on the basis of sexual orientation or
gender identity. We decline to impose such additional requirements by
this rule.
One commenter requested clarification of the statements in the
regulation that religious organizations which accept Department grant
funds comply with ``all program requirements and other applicable
requirements governing the conduct of Department-funded activities'' in
Sec. Sec. 87.1(c) and (e) and Sec. Sec. 87.2(c) and (e). The
commenter expressed concern that this statement would subordinate the
protections for the religious character of the grantee provided for in
this regulation to individual Department program requirements.
Some Department programs have independent statutory requirements
that must be met, and thus organizations that receive grant funds
distributed under such a program must comply with these Federal
requirements. Absent such requirements, we reiterate that under this
rule, when a religious organization participates in Department-funded
programs, it retains its independence and may continue to carry out its
mission. This may include the definition, practice, and expression of
its religious beliefs, provided that it does not use direct financial
assistance from the Department to support any inherently religious
activities, such as worship, religious instruction, or proselytization.
Organizations that have further questions should consult with the
appropriate grant office.
One commenter requested that the rule be extended to cover non-
financial assistance such as technical assistance.
This regulation is designed to amend the Department's uniform
administrative requirements at 45 CFR Parts 74, 92, and 96 and is
applicable only to those grants, agreements, and any other assistance
covered by such requirements. Thus, such other assistance offered by
the Department, such as technical assistance provided by the
Department, is not appropriately addressed by this rule. However, when
an organization receives a grant from the Department to provide
technical assistance on behalf of the Department, the provisions of
this rule apply just as they apply to other grants.
Another commenter noted that this regulation does not address the
provision of alternative services as required by the Charitable Choice
regulations and requested clarification as to whether there is to be an
additional burden on the States regarding provision of these services.
At this time, we decline to incorporate alternative service
requirements into this rule, because this rule is a general rule and
does not address other programs already in place. It is designed
primarily to remove barriers to participation in Department funding
opportunities by faith-based organizations and it does not alter other
program-specific regulations.
IX. Interaction With Charitable Choice
One commenter suggested that the rule be made explicitly
inapplicable to preexisting Charitable Choice regulations concerning
participation by religious organizations.
We accept this comment and agree that this regulation shall not be
applicable to the programs governed by the Charitable Choice
regulations found at 42 CFR Parts 54 and 54a and 45 CFR Parts 96, 260,
and 1050. The final rule has been changed accordingly.
X. Religious Freedom Restoration Act (RFRA)
One commenter suggested that the rule, like the SAMHSA Charitable
Choice regulation, rely on Religious Freedom Restoration Act (RFRA)
against program-specific restrictions on religious staffing and asked
that the rule provide specific guidance for how religious organizations
may preserve their religious staffing freedom when participating in
such programs.
The Department declines to adopt this suggestion at this time.
RFRA, which applies to all Federal law and its implementation, is
applicable regardless of whether it is specifically mentioned in this
rule. No explicit recognition or treatment of the application of RFRA
is required in this rule.
XI. Contracts and Vouchers
One commenter requested that the rule be amended to include
contracts as well as grants because State or local governments often
administer human services programs by using contracts rather than
grants.
We decline to accept this suggestion, believing that further
clarification is unnecessary. This rule applies to assistance
distributed by the Department through grants, agreements, and other
financial assistance. States and localities may not circumvent the
requirements of this rule by simply using a different label for the
form in which they distribute the Department funds.
One commenter insisted that redeemable vouchers that give
beneficiaries choices between programs are only as real as the choices
among programs. This commenter believed that the Department must ensure
that secular alternatives are real and viable options for program
beneficiaries. Another commenter believed that the voucher program
authorized by the rule lacks adequate constitutional safeguards. This
commenter believed that a voucher program is not completely neutral
with respect to religion, that use of vouchers at a religious
institution must be the result of wholly genuine and independent
private choice, that the vouchers must pass directly through the hands
of the beneficiaries, that the voucher program must not provide
incentives to choose a religious institution over a non-religious one,
that the program must provide genuine, legitimate secular options, and
that there must be a secular purpose for the program. This commenter
felt that the rule is confusing, as it is unclear whether it applies to
programs attended exclusively by voucher beneficiaries, or extends to
programs in which some but not all beneficiaries are using forms of
redeemable disbursement.
This rule does not create a voucher program. Rather the rule
applies to all grants, including voucher programs, covered by 45 CFR
Parts 74, 92, and 96 which are not governed by pre-existing Charitable
Choice regulations. Moreover, any voucher program that the Department
operates will comply with Federal law, including the Constitution.
XII. Textual Concerns
One commenter observed generally that the text of Sec. Sec. 87.1
and 87.2 did not include language that was in the preamble and remarked
that if the narrative phrases added materially to the proper
understanding of the relevant provisions, the regulation should be
reworded to include such language.
We believe that the preamble and the text of Sec. Sec. 87.1 and
87.2 are clear and unambiguous. Further, the text of these sections
explicitly covers the six objectives of the rule outlined in the
preamble.
XIII. Tax Exempt Organization Status
One commenter commended the Department for making it clear that an
organization can be a nonprofit organization without having Internal
Revenue Code Sec. 501(c)(3) (I.R.C.) status. One commenter expressed
concern, however, that the rule does not require religiously affiliated
providers who contract with the Department to obtain tax-exempt status
under I.R.C.
[[Page 42592]]
Sec. 501(c)(3) in order to be eligible for Federal funds, which the
commenter felt may allow entities claiming religious affiliation and
alternative ``nonprofit'' status, with little documentation, to compete
for these funds.
Under this rule, religious organizations that otherwise are not
required to be recognized as exempt from tax under Sec. 501(c)(3) of
the Internal Revenue Code may, but are not required to, establish a
separate structure, including incorporating or operating the separated
part recognized as exempt from tax under Sec. 501(c)(3) of the I.R.C.
Because religious organizations do not have to incorporate or operate
as a non-profit organization, however, we do not preclude from
participation organizations that do not obtain, and are not required to
obtain, recognition of tax-exempt status under I.R.C. Sec. 501(c)(3).
Regulatory Flexibility Analysis
The Regulatory Flexibility Act (RFA), 5 U.S.C. Sec. 601 et seq.,
requires agencies to consider the potential impact of regulatory
actions on small entities--small businesses, small governmental units,
and small not-profit organizations. We certify that this rule will not
have a significant impact on a substantial number of small entities
within the meaning of the RFA, since the rule involves only a
modification in the Department's grant-management procedures.
Therefore, a regulatory flexibility analysis as provided for by the RFA
is not required.
Executive Order 12866
Executive Order 12866 requires that regulations be reviewed to
ensure that they are consistent with the priorities and principles set
forth in the Executive Order. The Department has determined that this
rule is consistent with these priorities and principles. This rule is
considered a ``significant regulatory action'' under the Executive
Order, and therefore has been reviewed by the Office of Management and
Budget, but is not an economically significant rulemaking. This
rulemaking reflects our response to comments received on the NPRM that
we issued on March 9, 2004.
Unfunded Mandates
Section 202 of the Unfunded Mandates Reform Act of 1995 requires
that a covered agency prepare a budgetary impact statement before
promulgating a rule that includes any Federal mandate that may result
in the expenditure by State, local, and Tribal governments, in the
aggregate, or by the private sector, of $100 million or more in any one
year.
The Department has determined that this rule would not impose a
mandate that will result in the expenditure by State, local, and Tribal
governments, in the aggregate, or by the private sector, of more than
$100 million in any one year, and therefore no such analysis has been
included.
Assessment of Federal Regulations and Policies on Families
We certify that we have made an assessment of this rule's impact on
the well-being of families, as required under Sec. 654 of The Treasury
and General Government Appropriations Act of 1999. The purpose of the
Department's programs and therefore this rule is to strengthen the
economic and social stability of families.
Executive Order 13132
Executive Order 13132, Federalism, requires that Federal agencies
consult with State and local government officials in the development of
regulatory policies with Federalism implications. In the NPRM, we
specifically solicited comments from State and local government
officials and received one comment from a State.
Paperwork Reduction Act
No new information collection requirements are imposed by these
regulations, nor are any existing requirements changed as a result of
their promulgation. Therefore, the requirements of the Paperwork
Reduction Act of 1995 (44 U.S.C. Sec. 3507(d)), regarding reporting
and recordkeeping, do not apply.
List of Subjects
45 CFR Part 74
Administrative practice and procedures, Grants.
45 CFR Part 92
Administrative practice and procedures, Grants.
45 CFR Part 96
Administrative practice and procedures, Block grants.
45 CFR Part 87
Administrative practice and procedures, Grant programs--social
programs, public assistance programs, nonprofit organizations.
0
For the reasons stated in the preamble, the Department is amending
chapter I of Title 45 of the Code of Federal Regulations as follows:
PART 74--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR AWARDS AND
SUBAWARDS TO INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, OTHER
NONPROFIT ORGANIZATIONS, AND COMMERCIAL ORGANIZATIONS
0
1. The authority citation for part 74 continues to read as follows:
Authority: 5 U.S.C. 301.
0
2. In subpart B add Sec. 74.18 to read as follows:
Sec. 74.18 Participation by faith-based organizations.
The funds provided under this part shall be administered in
compliance with the standards set forth in part 87 (Equal Treatment for
Faith-based Organizations) of this chapter.
0
3. In Sec. 74.17, add paragraph (a) and add and reserve (b) to read as
follows:
Sec. 74.17 Certifications and representations.
* * * * *
(a) The funds provided under this part shall be administered in
compliance with the standards set forth in part 87 (Equal Treatment for
Faith-based Organizations) of this chapter.
(b) [Reserved]
PART 92--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND
COOPERATIVE AGREEMENTS TO STATE, LOCAL, AND TRIBAL GOVERNMENTS
0
4. The authority for part 92 continues to read as follows:
Authority: 5 U.S.C. 301.
0
5. In subpart B add Sec. 92.13 and 92.14 to read as follows:
Sec. 92.13 Participation by faith-based organizations.
The funds provided under this part shall be administered in
compliance with the standards set forth in part 87 (Equal Treatment for
Faith-based Organizations) of this chapter.
Sec. 92.14 Compliance with Part 87.
The funds provided under this part shall be administered in
compliance with the standards set forth in part 87 (Equal Treatment for
Faith-based Organizations) of this chapter.
PART 96--BLOCK GRANTS
0
6. The authority citation for part 96 is revised to read as follows:
Authority: 31 U.S.C. 1243 note, 7501-7507; 42 U.S.C. 300w et
seq., Sec. 300x et seq., Sec. 300y et seq., Sec. 701 et seq.,
Sec. 8621 et seq., Sec. 9901 et seq., Sec. 1397 et seq., 5 U.S.C.
Sec. 301.
0
7. In subpart B add Sec. 96.18 to read as follows:
[[Page 42593]]
Sec. 96.18 Participation by faith-based organizations.
The funds provided under this part shall be administered in
compliance with the standards set forth in part 87 (Equal Treatment for
Faith-based Organizations) of this chapter.
0
8. Add Part 87 to read as follows:
PART 87--EQUAL TREATMENT FOR FAITH-BASED ORGANIZATIONS
Sec.
87.1 Discretionary grants
87.2 Formula and block grants
Authority: 5 U.S.C. 301.
Sec. 87.1 Discretionary grants.
(a) This section is not applicable to the programs governed by the
Charitable Choice regulations found at 42 CFR Part 54a.
(b) Religious organizations are eligible, on the same basis as any
other organization, to participate in any Department program for which
they are otherwise eligible. Neither the Department nor any State or
local government and other intermediate organizations receiving funds
under any Department program shall, in the selection of service
providers, discriminate for or against an organization on the basis of
the organization's religious character or affiliation. As used in this
section, ``program'' refers to activities supported by discretionary
grants under which recipients are selected through a competitive
process. As used in this section, the term ``recipient'' means an
organization receiving financial assistance from an HHS awarding agency
to carry out a project or program and includes the term ``grantee'' as
used in 45 CFR Parts 74, 92, and 96.
(c) Organizations that receive direct financial assistance from the
Department under any Department program may not engage in inherently
religious activities, such as worship, religious instruction, or
proselytization, as part of the programs or services funded with direct
financial assistance from the Department. 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 the Department, and participation must be voluntary for
beneficiaries of the programs or services funded with such assistance.
(d) A religious organization that participates in the Department-
funded programs or services will retain its independence from Federal,
State, and local governments, and may continue to carry out its
mission, including the definition, practice, and expression of its
religious beliefs, provided that it does not use direct financial
assistance from the Department 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 programs or services funded with financial
assistance from the Department without removing religious art, icons,
scriptures, or other religious symbols. In addition, a religious
organization that receives financial assistance from the Department
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 in
accordance with all program requirements, statutes, and other
applicable requirements governing the conduct of Department-funded
activities.
(e) An organization that participates in programs funded by direct
financial assistance from the Department shall not, in providing
services, discriminate against a program beneficiary or prospective
program beneficiary on the basis of religion or religious belief.
(f) No grant document, agreement, covenant, memorandum of
understanding, policy, or regulation that is used by the Department or
a State or local government in administering financial assistance from
the Department shall require only religious organizations to provide
assurances that they will not use monies or property for inherently
religious activities. Any restrictions on the use of grant funds shall
apply equally to religious and non-religious organizations. All
organizations that participate in Department programs, including
organizations with religious character or affiliations, must carry out
eligible activities in accordance with all program requirements and
other applicable requirements governing the conduct of Department-
funded activities, including those prohibiting the use of direct
financial assistance from the Department to engage in inherently
religious activities. No grant document, agreement, covenant,
memorandum of understanding, policy, or regulation that is used by the
Department or a State or local government in administering financial
assistance from the Department shall disqualify religious organizations
from participating in the Department'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 section 702(a) of the Civil Rights Act of 1964, 42 U.S.C.
2000e-1, is not forfeited when the organization receives direct or
indirect financial assistance from the Department. Some Department
programs, however, contain independent statutory provisions requiring
that all recipients agree not to discriminate in employment on the
basis of religion. Accordingly, recipients should consult with the
appropriate Department program office if they have questions about the
scope of any applicable requirement.
(h) In general, the Department does not require that a recipient,
including a religious organization, obtain tax-exempt status under
section 501(c)(3) of the Internal Revenue Code to be eligible for
funding under Department programs. Many grant programs, however, do
require an organization to be a ``nonprofit organization'' in order to
be eligible for funding. Funding announcements and other grant
application solicitations that require organizations to have nonprofit
status will specifically so indicate in the eligibility section of the
solicitation. In addition, any solicitation that requires an
organization to maintain tax-exempt status will expressly state the
statutory authority for requiring such status. Recipients should
consult with the appropriate Department program office to determine the
scope of any applicable requirements. In Department programs in which
an applicant must show that it is a nonprofit organization, 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 or other governmental 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 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 (h)(1) through (3) of this
section if that
[[Page 42594]]
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) If a grantee contributes its own funds in excess of those funds
required by a matching or grant agreement to supplement Department-
supported activities, the grantee has the option to segregate those
additional funds or commingle them with the Federal award funds. If the
funds are commingled, the provisions of this section 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. With respect to the matching
funds, the provisions of this section apply irrespective of whether
such funds are commingled with Federal funds or segregated.
(j) To the extent otherwise permitted by Federal law, the
restrictions on inherently religious activities set forth in this
section do not apply where Department funds are provided to religious
organizations as a result of a genuine and independent private choice
of a beneficiary or through other indirect funding mechanisms, provided
the religious organizations otherwise satisfy the requirements of the
program. A religious organization may receive such funds as the result
of a beneficiary's genuine and independent choice if, for example, a
beneficiary redeems a voucher, coupon, or certificate, allowing the
beneficiary to direct where funds are to be paid, or through a similar
funding mechanism provided to that beneficiary and designed to give
that beneficiary a genuine and independent choice among providers.
Sec. 87.2 Formula and block grants.
(a) This section is not applicable to the programs governed by the
Charitable Choice regulations found at 42 CFR Part 54 and 45 CFR Parts
96, 260, and 1050.
(b) Religious organizations are eligible, on the same basis as any
other organization, to participate in any Department program for which
they are otherwise eligible. Neither the Department nor any State or
local government receiving funds under any Department program nor any
intermediate organization with the same duties as a governmental entity
under this part shall, in the selection of service providers,
discriminate for or against an organization on the basis of the
organization's religious character or affiliation. As used in this
section, ``program'' refers to activities supported by formula or block
grants. As used in this section, the term ``recipient'' means an
organization receiving financial assistance from an HHS awarding agency
to carry out a project or program and includes the term ``grantee'' as
used in 45 CFR Parts 74, 92, and 96.
(c) Organizations that receive direct financial assistance from the
Department may not engage in inherently religious activities, such as
worship, religious instruction, or proselytization, as part of the
programs or services funded with direct financial assistance from the
Department. 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 the Department,
and participation must be voluntary for beneficiaries of the programs
or services funded with such assistance.
(d) A religious organization that participates in the Department-
funded programs or services will retain its independence from Federal,
State, and local governments, and may continue to carry out its
mission, including the definition, practice, and expression of its
religious beliefs, provided that it does not use direct financial
assistance from the Department to support any inherently religious
activities, such as worship, religious instruction, or proselytization.
Among other things, a faith-based organization that receives financial
assistance from the Department 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 the Department 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 in accordance with all program requirements,
statutes, and other applicable requirements governing the conduct of
Department-funded activities.
(e) An organization that participates in programs funded by direct
financial assistance from the Department shall not, in providing
services, discriminate against a program beneficiary or prospective
program beneficiary on the basis of religion or religious belief.
(f) No grant document, agreement, covenant, memorandum of
understanding, policy, or regulation that is used by the Department or
a State or local government in administering financial assistance from
the Department shall require only religious organizations to provide
assurances that they will not use monies or property for inherently
religious activities. Any restrictions on the use of grant funds shall
apply equally to religious and non-religious organizations. All
organizations that participate in Department programs, including
organizations with religious character or affiliations, must carry out
eligible activities in accordance with all program requirements and
other applicable requirements governing the conduct of Department-
funded activities, including those prohibiting the use of direct
financial assistance to engage in inherently religious activities. No
grant document, agreement, covenant, memorandum of understanding,
policy, or regulation that is used by the Department or a State or
local government in administering financial assistance from the
Department shall disqualify religious organizations from participating
in the Department'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 section 702(a) of the Civil Rights Act of 1964, 42 U.S.C.
2000e-1, is not forfeited when the religious organization receives
direct or indirect financial assistance from the Department. Some
Department programs, however, contain independent statutory provisions
requiring that all recipients agree not to discriminate in employment
on the basis of religion. Accordingly, grantees should consult with the
appropriate Department program office if they have questions about the
scope of any applicable requirement.
(h) In general, the Department does not require that a recipient,
including a religious organization, obtain tax-exempt status under
section 501(c)(3) of the Internal Revenue Code to be eligible for
funding under Department programs. Many grant programs, however, do
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. In addition, any
solicitation that requires an organization to maintain tax-exempt
status will expressly state the statutory authority for requiring such
status. Grantees should consult with the appropriate Department program
office to determine the scope of any applicable requirements. In
Department programs
[[Page 42595]]
in which an applicant must show that it is a nonprofit organization,
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 or other governmental 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 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 (h)(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) If a State or local government contributes its own funds in
excess of those funds required by a matching or grant agreement to
supplement Department-supported activities, the State or local
government has the option to segregate those additional funds or
commingle them with the Federal award funds. If the funds are
commingled, the provisions of this section 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. With respect to matching funds,
the provisions of this section apply irrespective of whether such funds
are commingled with Federal funds or segregated.
(j) To the extent otherwise permitted by Federal law, the
restrictions on inherently religious activities set forth in this
section do not apply where Department funds are provided to religious
organizations as a result of a genuine and independent private choice
of a beneficiary or through other indirect funding mechanisms, provided
the religious organizations otherwise satisfy the requirements of the
program. A religious organization may receive such funds as the result
of a beneficiary's genuine and independent choice if, for example, a
beneficiary redeems a voucher, coupon, or certificate, allowing the
beneficiary to direct where funds are to be paid, or through a similar
funding mechanism provided to that beneficiary and designed to give
that beneficiary a choice among providers.
Dated: July 9, 2004.
Tommy G. Thompson,
Secretary.
[FR Doc. 04-16130 Filed 7-15-04; 8:45 am]
BILLING CODE 4154-07-P