[Federal Register: October 20, 2004 (Volume 69, Number 202)]
[Rules and Regulations]
[Page 61715-61724]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20oc04-12]
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Part III
Agency for International Development
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22 CFR Parts 202, 205, 211, and 226
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Participation by Religious Organizations in USAID Programs; Final Rule
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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: Final rule.
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SUMMARY: This final rule implements 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 final rule
revises USAID regulations pertaining to 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.
EFFECTIVE DATE: October 19, 2004.
FOR FURTHER INFORMATION CONTACT: Linda Shovlain, Acting Director,
Center for Faith-Based and Community Initiatives, USAID, Rm. 3.9.031,
1300 Pennsylvania Ave., NW., Washington, DC 20523; telephone: (202)
712-4080 (this is not a toll-free number).
SUPPLEMENTARY INFORMATION: On June 7, 2004, the Agency for
International Development published in the Federal Register (69 FR
31773) notice of a proposed rule to implement, in part, Executive Order
13280, published in the Federal Register on December 16, 2002 (67 FR
77145), and Executive Order 13279, published in the Federal Register on
December 16, 2002 (67 FR 77141). As more fully explained below, these
orders, among other things, directed the Agency for International
Development to end discriminatory treatment of religious or ``faith-
based'' organizations in the administration of Agency grants and
programs. The Agency provided a 60-day comment period on the proposed
rule, which ended on August 6, 2004. The Agency also offered the public
the opportunity to submit comments by surface mail, e-mail or fax.
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, this final rule seeks to further facilitate the
contribution of faith-based and community organizations to increase the
reach and effectiveness of its programs. We believe this rule will
strengthen USAID's overall efforts, 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 (67 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
16, 2002 (67 FR 77141). That Executive Order charges Executive Branch
agencies to ensure equal protection of laws for 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. He further
directed that faith-based organizations be allowed to retain their
religious autonomy over, among other things, 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, in a
manner consistent with the First Amendment to the United States
Constitution. This rule fulfills in part USAID's responsibilities under
these Executive Orders. The rule is similar to rules adopted by other
Executive Branch agencies charged with implementing the Faith-Based and
Community Initiative Executive Orders described above.
II. This Rule
A. Purpose of Rule
Consistent with the President's Initiative, this rule revises
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 the 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
rule is designed to ensure that the implementation of USAID's programs
is conducted in a manner consistent with the requirements of the
Constitution.
B. USAID Regulations Amended by Rule
This rule revises in its entirety 22 CFR part 205, Payments to and
on Behalf of Participants in Nonmilitary Economic Development Training
Programs. The new title is ``Participation by Religious Organizations
in USAID Programs.'' This rule also amends the following USAID
regulations:
1. 22 CFR part 202, Overseas Shipment of Supplies by Voluntary Non-
Profit Relief Agencies.
[[Page 61717]]
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. Regulatory Amendments to Title 22
The revised part 205 applies 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
requirements of part 205, and USAID internal directives will highlight,
explain, and incorporate part 205 by reference. The rule also makes
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
rule makes 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. Nothing in this
rule, however, 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 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 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 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 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 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 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 rule clarifies that USAID funds may not exceed the cost
of those portions of the acquisition, construction, or rehabilitation
that are attributable to eligible activities. Additionally, USAID funds
may not be used for acquisition, construction, or rehabilitation of
sanctuaries, chapels, or any other room that a religious congregation
that is a recipient or sub-recipient of USAID assistance uses as its
principal place of worship.
5. Nondiscrimination in providing assistance. The rule clarifies
that USAID and any organization that receives direct financial
assistance from USAID shall not, in providing program assistance,
discriminate for or 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 for or against current or
prospective program beneficiaries on the basis of religion or religious
belief.
6. Assurance requirements. This rule directs 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
[[Page 61718]]
influenced by religious faith to provide social services, or because of
their religious character or affiliation, the rule removes that
restriction, which is not required by governing law.
7. National Security/Foreign Policy Waiver. The 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. Response to Comments Received on the Proposed Rule
The Agency received comments from a small number of individuals and
non-governmental organizations, including national religious
organizations, some of whom indicated a special interest in church/
state issues. Most of the comments opposed allowing faith-based
organizations to compete for government funds and/or believed greater
restrictions should be placed on their receipt of funds. In contrast,
one comment recommended that the restrictions on inherently religious
activities be removed, in order to permit more effective assistance to
religious organizations that provide social welfare services.
The following is a summary of comments by issue, and the Agency's
responses to those comments.
Participation of Religious Organizations in Government-Funded Programs
Comment: Several commenters questioned whether the rule violates
the Establishment Clause of the First Amendment to the U.S.
Constitution. One commenter declared that the rule ``anticipates the
implementation of a patently unconstitutional grant of government money
to pervasively sectarian institutions.'' Commenters were concerned with
the potential promotion by government of particular religious groups or
of religion in general; the likelihood that religious organizations
would conform their religious practices and activities to the rule's
requirements; and the general prospect of government entanglement with
religion.
USAID Response: We disagree with the commenters. The regulations
ensure that there is no direct USAID funding for inherently religious
activities, consistent with current precedent involving domestic
programs.\2\ Specifically, organizations receiving direct USAID funds
must ensure that inherently religious activities are separate in time
or location from USAID-funded services, and they must also ensure that
participation in such religious activities is voluntary. Furthermore,
in programs supported by direct USAID funds, organizations are
prohibited from discriminating for or against a program beneficiary on
the basis of religion or religious belief.
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\2\ It is possible that a less stringent standard would apply to
foreign assistance. Cf. DK Memorial Fund v. AID, 887 F.2d 275 (D.C.
Cir. 1989). Given that this regulation satisfies the standards that
apply in the domestic context, it follows a fortiori that it would
also satisfy any less stringent standard.
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In addition, the Supreme Court's ``pervasively sectarian''
doctrine--which held in the domestic context that there are certain
religious institutions in which religion is so pervasive that no
government aid may be provided to them, because their performance of
even ``secular'' tasks will be infused with religious purpose--no
longer enjoys the support of a majority of the Court. Four Justices
expressly abandoned it in Mitchell v. Helms, 530 U.S. 793, 825-829
(2000) (plurality opinion), and Justice O'Connor's opinion in that case
set forth reasoning that is inconsistent with its underlying premises,
see id. at 857-858 (O'Connor, J., concurring in judgment, joined by
Breyer, J.) (requiring proof of ``actual diversion of public support to
religious uses''). Thus, six members of the Court have rejected the
view that aid provided to religious institutions will invariably
advance the institutions' religious purposes, and that view is the
foundation of the ``pervasively sectarian'' doctrine. We therefore
believe that USAID may fund all service providers, without regard to
religion and free of criteria that require the provider to abandon its
religious expression or character, in accordance with this rule.
The rule does not endorse religion in general or any particular
religious view. In fact, the rule specifically prohibits discrimination
``for or against an organization on the basis of the organization's
religious character or affiliation.'' (emphasis added). Under the rule,
all organizations, whether religious or non-religious, are eligible to
apply and compete for USAID funding according to the same criteria. And
it again merits emphasis that the rule forbids the use of direct
government assistance for inherently religious activities and states
that any such activity must be voluntary and separated, in time or
location, from activities directly funded by USAID.
The limitation on the use of the direct funds is not meant to put
an organization in the position of having to deny or alter its core
religious perspectives on social issues or reject government funds for
its activities that are otherwise consistent with the purposes of USAID
programs. We recognize that, while the government regards services like
feeding the hungry and housing the poor as social services or secular
work, some organizations may regard these same activities as acts of
mercy, spiritual service, fulfillment of religious duty, good works, or
the like. Nevertheless, as a general matter, an activity such as
providing food for the hungry or shelter for the homeless would
constitute an appropriate use of funds, as long as any inherently
religious activities offered by the provider are separate in time or
location, privately funded, and voluntary.
As to whether religious organizations will conform to the
requirements of the regulations, as mentioned above, the Supreme Court
has rejected the presumption that religious organizations will
inevitably divert government funds and use them for their own religious
purposes. USAID rejects the view that organizations with religious
commitments cannot be trusted to fulfill their written promises to
adhere to grant requirements.
Similarly, we do not agree that the rule poses a danger of
excessive government entanglement with religion. The rule expressly
provides that religious organization grantees will retain their
independence, including with respect to religious symbols, selection of
board members, and internal governance. Religious organizations
receiving USAID funding will be subject to the same program eligibility
and ex-post funding restrictions that apply to non-religious
organization grantees. USAID will apply the same cost-accounting
principles to all organizations. Because inherently religious
activities are non-USAID activities, USAID need not distinguish between
program participants' religious and nonreligious non-USAID activities;
the same mechanism by which USAID polices the line between eligible and
ineligible activities will serve to exclude inherently religious
activities from funding. The amount of oversight of religious
organizations necessary to accomplish these purposes is no greater than
that involved in other publicly-funded programs that the Supreme Court
has sustained.
Some organizations may be unable or unwilling to separate their
inherently religious activities in time or location, as required. Those
organizations would not qualify for direct funding by the Agency, but
might be eligible for indirect funding.
Comment: One commenter advocated less stringent eligibility
requirements for religious organizations' participation in
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USAID programs. This commenter argued that, because many religious
organizations ``integrated'' social and health-related services with
spiritual activities, the prohibition on direct funding of ``inherently
religious activities'' should be removed, waived or at least narrowed.
The commenter advanced numerous arguments for this view, including the
overall magnitude and urgency of the global HIV/AIDS crisis; the
reported effectiveness of combining humanitarian and spiritual
services; the lack of formal church-state separation requirements in
many host countries; the adequacy of ``coercion safeguards'' in place
of a flat prohibition on inherently religious activities; and the
impracticalities of separating humanitarian and spiritual activities
and funds of religious organizations.
USAID Response: The Agency agrees that religious organizations may
contribute significantly to efforts to address global challenges such
as HIV/AIDS. In addition, we recognize that some religious
organizations have unique strengths and skills in providing
comprehensive social and welfare services. For those and other reasons,
this rule makes clear that religious organizations are eligible for
Agency funding according the same criteria as non-religious
organizations. The rule prohibits direct funding of ``inherently
religious activities.'' At the same time, the rule makes clear that a
religious organization receiving USAID funds retains its independence,
including the definition, practice, and expression of its religious
beliefs. The Agency believes that the rule sets up appropriate
parameters for the affected programs in light of current precedent's
interpretation of the constitutional provisions that govern
expenditures of U.S. funds, particularly in light of the judicial
precedents applicable in the domestic context.
USAID-Funded Structures
Comment: One commenter believed that nothing in the rule would
prevent a faith-based organization from converting a USAID-funded
portion of a structure for a prohibited religious use at some future
date. Other commenters suggested that the rule require that the USAID-
funded portions of a structure be used for secular purposes for the
life of the building. It was also suggested that USAID establish
procedures for recapturing the Federal assistance if the USAID-funded
portion of the structure is ever used for a religious purpose. Finally,
one commenter objected to phrasing in the proposed rule that would
allow USAID and religious organizations to split the cost of acquiring,
constructing, or rehabilitating a facility, asserting that the line
between religious and nonreligious activities is not clear and that
this would result in unseemly negotiations about what constituted
religious activity and intrusive USAID monitoring of religious
organizations' activities within dual use facilities.
USAID Response: In a neutral program in which the government
directly funds the capital improvements of institutions that administer
Federal social welfare programs, even in the domestic context the
government need only put in place safeguards to ensure that public
money is not used to finance inherently religious activities. The rule
satisfies this standard by prohibiting the use of USAID funds for the
acquisition, construction, or rehabilitation of structures to the
extent that those structures are used for inherently religious
activities. There is no need for any requirement prohibiting use of
non-USAID-funded portions of buildings for inherently religious
activities.
With respect to concerns about the funding of capital improvements
for religious structures that are later converted to non-USAID uses,
the rule states that the disposition of USAID-improved property after
the term of grants to religious organizations, and changes in the use
of property improved for use by religious organizations, are subject to
government-wide regulations governing real property disposition. The
Agency has promulgated regulations (see 22 CFR Part 226) that address
the terms under which such grantees must use the property for eligible
activities, and the terms under which Federally funded improvements
must be ``bought back'' if such grantees decide to discontinue their
involvement in the program.
We do not agree with comments that preventing the use of direct
USAID capital-improvement funds for inherently religious activities
would necessarily fail or, in the process, excessively entangle the
government in the affairs of recipients or sub-recipients that are
religious organizations. In addition, some monitoring is necessary to
ensure that direct USAID funding is not used to support inherently
religious activities. However, we do agree that the phrasing of the
proposed rule would benefit from further clarification. Therefore, the
final rule clarifies this requirement by stating that 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 subrecipient of USAID assistance uses as its
principal place of worship.
Time or Location Restrictions
Comment: A commenter suggested that the rule's ``time or location''
provision be tightened to require that religious organizations separate
religious and any secular, government funded activities by both time
and location. In a similar vein, other comments suggested that the time
or location requirement be made specific to provide better guidance for
compliance.
USAID Response: We decline to adopt either suggestion. As an
initial matter, USAID does not believe that the requirement is
ambiguous or necessitates additional regulation for proper adherence.
Moreover, USAID believes that separation in both time and location is
legally unnecessary and would impose an unnecessarily harsh burden on
small religious organizations, which may have access to only one
location that is suitable for the provision of the USAID-funded
service(s). The rule is clear that, when an organization receives
direct government assistance, any inherently religious activities that
the organization offers must simply be offered separately--in time or
place--from the activities supported by direct USAID funds. For
example, an organization may receive direct USAID funding to distribute
food in a needy community. This same organization may also host a
privately-funded prayer meeting that it invites participants to attend.
This privately-funded prayer meeting would need to be held either in a
separate location or at a separate time from the food distribution. And
it should be made clear that beneficiaries of the food distribution
program should understand that whether they join the prayer meeting is
up to them, and that their decision will have no bearing on whether
they receive services.
Display of Religious Art, Icons and Images
Comment: One commenter stated that the rule fails to consider that
the display of religious art, icons and images alone may create a
``pervasively sectarian atmosphere'' which could deter intended program
beneficiaries of a different religion. Similarly, another commenter was
concerned with possible tension, stigmatization, or abuse if religious
organization grantees were permitted to use their own or dual-use
facilities to provide social services.
USAID Response: USAID disagrees with these comments. As discussed
above, even in the domestic context the Supreme Court has abandoned the
[[Page 61720]]
``pervasively sectarian'' doctrine. Additionally, with respect to the
display of religious art, icons and images, a number of Federal
statutes affirm the principle embodied in this rule. (See, e.g., 42
U.S.C. 290kk-1(d)(2)(B). For no other program participants do USAID
regulations prescribe the types of artwork, statues, or icons that may
be placed within or without the structures or rooms in which USAID-
funded services are provided. A prohibition on the use of religious
icons would make it more difficult for many faith-based organizations
to participate in the program than 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
guidelines, a faith-based organization that participates in USAID
programs will retain its independence and may continue to carry out its
mission, provided that it does not use direct USAID 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 USAID-funded services, without removing
religious art, icons, scriptures, or other religious symbols.
As to the concern about religious stigma, the rule contains a
number of safeguards for the rights of beneficiaries. It prohibits use
of direct government funding for inherently religious activities and
provides that any participation by beneficiaries of such programs in
privately funded religious activities must be voluntary. In addition,
the rule makes clear that a provider receiving direct USAID funds
cannot discriminate against beneficiaries on the basis of religion or
religious belief. In light of these straightforward provisions, we do
not believe that any additional regulatory changes are required.
Nondiscrimination in Providing Assistance
Comment: One comment concerned the rule's requirement that program
beneficiaries not be denied services based on religion or religious
belief. The commenter noted that this restriction could still permit
passive compulsion, such as being required to hear proselytizing
messages, or observe religious instruction or worship. The commenter
recommended that Section 205.1(e) provide specifically that services
may not be denied to a beneficiary based on a ``refusal to participate
in religious practice[s],'' and another commenter requested
clarification that a provider could not discriminate on the basis of a
lack of religious belief. Additionally, a commenter proposed that the
rule require participating religious organizations to provide notice to
program beneficiaries that their receipt of social services is not
conditioned upon participation in the provider's inherently religious
activities.
USAID Response: We believe that the provision prohibiting faith-
based organizations from requiring program beneficiaries to participate
in religious activities suffices as written. In addition, the
prohibition on discrimination against beneficiaries ``on the basis of
religion or religious belief'' is explicit enough to include
beneficiaries who hold no religious belief. These provisions are
straightforward and require no further elaboration.
We also decline to require that religious organizations provide a
notice to a beneficiary or potential beneficiary that participation in
religious activities would be entirely on a voluntary basis. Grantees
are encouraged to take steps to ensure that clients and prospective
clients have a clear understanding of the services offered by their
organization and the strictly voluntary nature of any inherently
religious activities, and thus the individual's right not to
participate in any such activities, while still accepting or receiving
services. The requirement that participation be voluntary, however, is
sufficient to address concerns about the religious freedom of program
beneficiaries.
Comment: The rule does not prevent government funds flowing to
``anti-Semitic, racist or bigoted organizations.''
USAID Response: USAID disagrees. While it is not the topic of this
rule, Federal law prohibits persons from being excluded from
participation in USAID services or subjected to discrimination based on
race, color, national origin, sex, age, or disability, and this final
rule does not in any way alter those existing prohibitions.
Employment Discrimination
Comment: Another comment argued that the rule's preservation of the
religious organizations exemption contained in Title VII would permit
government-funded employment discrimination based on religion.
USAID Response: We do not agree with these objections to the rule's
recognition that a religious organization does not forfeit its Title
VII exemption when administering USAID-funded services. The rule is
intended to eliminate administrative barriers to religious
organizations that would otherwise be eligible for USAID program
funding. Applicable Federal statutory nondiscrimination requirements
are not altered by this rule.
The Equal Employment Opportunity Act of 1972 expanded the exemption
for religious organizations found in Title VII of the Civil Rights Act
of 1964 to cover all positions offered by a faith-based employer (as
opposed simply to positions directly related to their ministries).
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 applicable to
Federally funded organizations unless Congress says otherwise. In 1987,
the Supreme Court addressed and unanimously upheld the
constitutionality of Title VII's protection for religious
organizations. See Corp. of the Presiding Bishop of the Church of Jesus
Christ of Latter Day Saints v. Amos, 483 U.S. 327 (1987).
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. The employment decisions of organizations that receive
extensive public funding are not attributable to the state, see
Rendell-Baker v. Kohn, 457 U.S. 830 (1982), 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).
Also, we would note that section 702(a) of the Civil Rights Act of
1964 is permissive. It allows religious staffing, but does not require
it. And, religious organizations are subject to Federal civil rights
laws that prohibit employment discrimination on the basis of race,
color, and national origin.
Finally, Title VII recognizes that for a faith-based organization
to define or carry out its mission, it is important that it be able to
choose its employees based on its vision and beliefs. We note that
allowing religious organizations to consider faith in hiring when they
receive Federal government funds is no different than allowing
Federally funded environmental organizations to hire those who share
its views on protecting the environment--both groups are allowed to
consider ideology and mission, which improves their
[[Page 61721]]
effectiveness and preserves their independence and integrity.
For the foregoing reasons, the Agency declines to amend the final
rule to require religious organizations to forfeit their Section 702
exemption from liability under Title VII.
Vouchers
Comment: One commenter stated that the rule contemplated the
``voucherization'' of USAID-funded social services. In the view of this
commenter, voucher programs under the rule would go beyond what is
permitted under the Supreme Court's decision in Zelman v. Simmons-
Harris, 536 U.S. 639 (2002), since many USAID-funded beneficiaries may
not have access to comparable secular alternatives. As a result, said
this commenter, beneficiaries might feel compelled to accept services
from pervasively sectarian institutions and to submit to worship,
religious education or proselytizing.
USAID Response: The Agency respectfully declines to adopt any
changes to the regulation. USAID currently does not operate any
voucher-style programs, so any further regulations in this regard would
be purely hypothetical. In addition, any voucher-style program that
might be offered by the Agency would have to comply with Federal law.
Segregation of Program Funds
Comment: One comment voiced concern that the rule did not ensure
the creation of proper ``firewalls'' between government-funded services
and core religious activities of a grantee recipient. The commenter
suggested that the rule explicitly require that religious organization
grantees establish a separate corporate structure to receive and
segregate government funds and the social services supported thereby.
USAID Response: The Agency disagrees with this suggestion. An
organization is, of course, free to create a separate account for its
USAID funds. However, it would be unfair to require religious
organizations alone to comply with these additional burdens. Further,
USAID finds no basis for requiring greater oversight and monitoring of
faith-based organizations than of other program participants simply
because they are faith-based organizations. All program participants
must be monitored for compliance with program requirements, and no
program participant may use USAID funds for any ineligible activity,
whether that activity is an inherently religious activity or a
nonreligious activity that is outside the scope of the program at
issue. Many secular organizations participating in USAID programs also
receive funding from several sources (private or governmental) to carry
out activities that are ineligible for funding under USAID programs. In
many cases, the non-eligible activities are secular activities but not
activities that are eligible for funding under USAID programs. All
program participants receiving funding from various sources and
carrying out a wide range of activities must ensure through proper
accounting principles that each set of funds is applied only to the
activities for which the funding was provided. Applicable policies,
guidelines, and regulations prescribe the cost accounting procedures
that are to be followed by all recipients in using USAID funds. This
system of monitoring is more than sufficient to address the commenters'
concerns.
Monitoring
Comment: The commenters questioned how USAID would enforce the
separation of government funds from religious-use funds and what
measures would be taken to prevent and remedy violations.
USAID Response: USAID has not revised the regulation in response to
these comments because existing Agency mechanisms and procedures are
sufficient to address these concerns. USAID has a responsibility to
monitor all program participants to ensure that USAID funds are used in
accordance with its program and any other applicable U.S. government
requirements. The risks of inappropriate use of Agency funds or non-
compliance with Agency program requirements exist with all program
participants, not only religious organizations. All USAID program
participants must carefully manage their various sources of funds,
ensure that USAID funds are used only for eligible program activities,
and abide by OMB or other cost accounting methods that may be specified
in individual program regulations. Failure of any organization to
ensure that the USAID portion of their funds is not used for prohibited
purposes will result in the imposition of sanctions or penalties on the
organization, including termination of participation in USAID programs.
Moreover, any inherently religious activities would not be funded
directly by USAID, so the normal monitoring procedures would not
require the Agency to distinguish between religious and nonreligious
ineligible activities. Those procedures also involve the same processes
for the scrutiny and oversight for all grantees.
Finally, as mentioned above, consistent with Supreme Court
precedent in the domestic context, the Agency believes that religious
organizations are no less trustworthy than non-religious grantees in
fulfilling their obligations under USAID grants and programs. In
issuing this rule, USAID's general approach is that faith-based
organizations are not a category of applicants or program participants
that require additional requirements or oversight in order to ensure
compliance with program regulations. Rather, the Agency believes that
faith-based organizations, like other recipients of USAID funds, fully
understand the restrictions on the funding they receive, including the
restriction that inherently religious activities cannot be undertaken
with direct Federal funding and must remain separate from Federally
funded activities. For the foregoing reasons, the Agency does not see
the need for additional requirements or guidance in this area.
Definition of Religious Organization
Comment: The rule does not distinguish or define ``religious
organizations'' and ``faith-based organizations.''
USAID Response: In the preamble, we used the terms ``religious
organization'' and ``faith-based organization'' interchangeably. The
rule itself refers only to ``religious organizations.'' Neither the
U.S. Constitution nor the relevant Supreme Court precedents contain
comprehensive definitions of ``religion'' or ``religious organization''
that must be applied to this rule. Yet, an extensive body of judicial
precedent provides practical guidance for understanding these terms. In
addition, one of the objectives of this rule is to move away from
unnecessary Federal inquiry into the religious nature, or absence of
religious nature, of an applicant for USAID funds. With respect to any
applicant for USAID funds, USAID's focus should always be that (1) the
applicant is an ``eligible applicant'', as that term is defined for
that program; (2) the applicant meets any other participation or
eligibility criteria that the program may require; and (3) the
applicant commits to undertake only eligible activities with USAID
funds and to abide by all program requirements that govern those funds.
Regardless of how an organization labels itself, it will be treated the
same under the rule.
The Exemption for Prison Chaplains
Comment: One commenter suggested a narrowing of the rule's
exemption for direct funding of inherently religious activities
conducted by chaplains and
[[Page 61722]]
religious organizations providing assistance to chaplains in prisons,
detention facilities or community correction centers. This comment
voiced concern that the exemption would allow an otherwise improper
blending of religious doctrine with secular counseling.
USAID Response: We continue to believe the rule's exemption is
appropriate, given the unique nature and circumstances of a penal or
correctional facility. This exception to the rule's prohibition on
direct funding of inherently religious activities contemplates services
provided by prison clergy and individuals and organizations who work
with them. Correctional institutions are heavily regulated, and
extensive government control over the prison environment means that
prison officials must sometimes take affirmative steps, in the form of
chaplaincies and similar programs, to provide an opportunity for
prisoners to practice their religious beliefs. Without such efforts,
religious freedom might not exist for prisoners. Of course, religious
activities must be voluntary for inmates.
Miscellaneous
Comment: One commenter expressed the view that the rule
discriminates against foreign family planning non-governmental
organizations (NGOs) that use other funding sources to perform, promote
or advocate abortions, since those NGOs are ineligible for U.S.
government assistance. The commenter stated that the rule created
``special class'' status for faith-based organizations, relative to at
least those NGOs because, while the rule only required religious
organizations to separate proscribed religious activities from USAID
funded programs and services, abortion advocacy NGOs were wholly
ineligible to receive funds under the Mexico City Policy (66 FR 17303).
The commenter recommended that the Mexico City Policy be rescinded.
USAID Response: The rule seeks to level the playing field generally
between religious organizations and non-religious organization entities
in respect of Agency programming and grant eligibility. The rule is not
intended to alter or rescind other rules or regulations that may
disqualify certain organizations--religious or non-religious--for
reasons other than their status as a religious organization. The Agency
adheres to the Mexico City Policy regarding religious organizations and
other entities that advocate or engage in abortion-related activities.
IV. Findings and Certifications
Paperwork Reduction Act of 1995
No new information collection requirements are imposed by these
regulations, nor are any existing requirements changed as a result of
their promulgation. Therefore, the requirements of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3507(d)), regarding reporting and
record keeping, are not applicable.
Executive Order 12866--Regulatory Planning and Review
Executive Order 12866, Regulatory Planning and Review, requires
that regulations be reviewed to ensure that they are consistent with
the priorities and principles set forth in the Executive Order. The
Agency has determined that this rule is consistent with these
priorities and principles. The Office of Management and Budget (OMB)
reviewed this rule under the Order and 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. This rulemaking
implements statutory authority and reflects our response to comments
received on the proposed rule that we published on June 7, 2004 in the
Federal Register (69 FR 31773).
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 605(b)) requires the
Federal government to anticipate and reduce the impact of rules and
paperwork requirements on small businesses and other small entities. In
accordance with that Act, the USAID Administrator has reviewed and
approved this rule, and in so doing certifies that this rule will not
have a significant economic impact on a substantial number of small
entities.
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 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.
Assessment of Federal Regulation and Policies on Families
Section 654 of the Treasury and General Government Appropriations
Act of 1999 requires Federal agencies to determine whether a proposed
policy or regulation may affect family well-being. If the agency's
determination is affirmative, then the agency must prepare an impact
assessment addressing seven criteria specified in the law. The Agency
has determined that these regulations will not have an impact on family
well-being as defined in the legislation.
Executive Order 13132
Executive Order 13132, Federalism, requires that Federal agencies
consult with State and local government officials in the development of
regulatory policies with federalism implications. The Agency has
determined that this rule does not have federalism implications that
require special consultations with State and local government
officials.
Intergovernmental Review
This final rule affects direct grant programs that are subject to
Executive Order 12372 and the regulations in 34 CFR part 79. The
objective of the Executive Order is to foster an intergovernmental
partnership and to promote Federalism by relying on processes developed
by State and local governments for coordination and review of proposed
Federal financial assistance.
The Agency has concluded that this rule will not create or affect
any Federal financial assistance to States. However, to the extent this
rule falls under the Order, we intend this document to provide early
notification of the Agency's specific plans and actions for the
affected programs.
Congressional Review
This regulation is not a major rule as defined in 5 U.S.C. chapter
8.
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.
Electronic Access to This Document
You may view this document, as well as other Agency for
International Development documents published in the Federal Register,
in text or Adobe Portable Document Format (PDF) on the Internet.
To use PDF you must have Adobe Acrobat Reader, [which is available
free at this site]. If you have questions about using PDF, call the
U.S. Government Printing Office (GPO), toll free, at 1-
[[Page 61723]]
888-293-6498; or in the Washington, DC area at (202) 512-1530.
Note: The official version of this document is the document
published in the Federal Register. Free internet access to the
official edition of the Federal Register and the Code of Federal
Regulations is available on GPO Access at: http://www.gpoaccess.gov/nara/index.html.
(The Catalog of Federal domestic Assistance Number
does not apply.)
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.
0
For the reasons stated above, Chapter II of title 22 of the Code of
Federal Regulations is amended as follows:
PART 202--OVERSEAS SHIPMENT OF SUPPLIES BY VOLUNTARY NON-PROFIT
RELIEF AGENCIES
0
1. The authority citation for part 202 is revised to read as follows:
Authority: 22 U.S.C. 2381(a).
0
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.
0
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 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 uses as its principal 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
[[Page 61724]]
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.
PART 211--TRANSFER OF FOOD COMMODITIES FOR FOOD USE IN DISASTER
RELIEF, ECONOMIC DEVELOPMENT, AND OTHER ASSISTANCE
0
1. The authority citation for part 211 is revised to read as follows:
Authority: 7 U.S.C. 1726a(c).
0
2. 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
0
1. The authority citation for part 226 is revised to read as follows:
Authority: 22 U.S.C. 2381(a).
0
2. 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: October 14, 2004.
Frederick W. Schieck,
Deputy USAID Administrator.
[FR Doc. 04-23566 Filed 10-18-04; 12:25 pm]
BILLING CODE 6116-01-P