[Federal Register Volume 68, Number 3 (Monday, January 6, 2003)]
[Proposed Rules]
[Pages 648-654]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-133]



[[Page 647]]

-----------------------------------------------------------------------

Part III





Department of Housing and Urban Development





-----------------------------------------------------------------------



24 CFR Parts 92, 570, 572, et al.



Participation in HUD Programs by Faith Based Organizations; Providing 
for Equal Treatment of All HUD Program Participants; Proposed Rule

  Federal Register / Vol. 68, No. 3 / Monday, January 6, 2003 / 
Proposed Rules  

[[Page 648]]


-----------------------------------------------------------------------

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 92, 570, 572, 574, 576, 582, 583, and 585

[Doc. No. FR-4782-P-01]
RIN 2501-AC89


Participation in HUD Programs by Faith-Based Organizations; 
Providing for Equal Treatment of All HUD Program Participants

AGENCY: Office of the Secretary, HUD.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would revise those HUD regulations that 
impose unwarranted barriers to the participation of faith-based 
organizations in HUD programs and implement HUD's policy that, within 
the framework of constitutional church-state guidelines, faith-based 
organizations should be able to compete on an equal footing with other 
organizations for HUD funding. HUD supports the participation of faith-
based organizations in its programs.

DATES: Comments Due Date: March 7, 2003.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Office of the Rules Docket Clerk, Office of 
General Counsel, Room 10276, Department of Housing and Urban 
Development, 451 Seventh Street, SW., Washington, DC 20410-0500. 
Communications should refer to the above docket number and title. 
Facsimile (FAX) comments are not acceptable. A copy of each 
communication submitted will be available for inspection and copying 
between 7:30 a.m. and 5:30 p.m. at the above address.

FOR FURTHER INFORMATION CONTACT: Steven Wagner, Director, Center for 
Faith-Based and Community Initiatives, Department of Housing and Urban 
Development, Room 10184, 451 Seventh Street, SW., Washington, DC 20410; 
telephone: (202) 708-2404 (this is not a toll-free number). Hearing- or 
speech-impaired individuals may access this telephone number via TTY by 
calling the toll-free Federal Information Relay Service at 1-800-877-
8339. For program specific information, contact the following offices 
in HUD's Office of Community Planning and Development: For the HOME 
Program and the HOPE for Homeownership of Single Family Homes (HOPE 3), 
Virginia Sardone, Director, Program Policy Division, Office of 
Affordable Housing Programs, (202) 708-2864; for the Community 
Development Block Grants Program, Robert Duncan, Office of Block Grant 
Assistance (202) 708-3587: and for the remaining programs, John 
Garrity, Office of Special Needs Assistance Programs, (202) 708-4300. 
(These numbers are not toll-free numbers.) Hearing- or speech-impaired 
individuals may access this telephone number via TTY by calling the 
toll-free Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    Faith-based organizations are an important part of the social 
services network of the United States, offering a multitude of social 
services to those in need. In addition to places of worship, faith-
based organizations may include small nonprofit organizations created 
to provide one program or multiple services, as well as neighborhood 
groups formed to respond to a crisis or to lead community renewal. 
Faith-based groups everywhere, either acting alone or as partners with 
other service providers and government programs, serve the poor, and 
help to strengthen families and rebuild communities.
    All too often, however, federal policy and programs have not 
recognized faith-based groups as resources for providing social 
assistance. Federal, state, and local governments have often imposed 
barriers to the participation of religious organizations in social 
service programs, including unwarranted regulatory barriers.
    President Bush has directed the federal agencies, including HUD, to 
take steps to ensure that federal policy and programs are fully open to 
faith-based community groups in a manner that is consistent with the 
Constitution. The Administration believes that faith-based groups 
possess an under-appreciated ability to meet the needs of poor 
Americans and revitalize distressed neighborhoods. The Administration 
believes that there should be an equal opportunity for all 
organizations--both faith-based 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 was published in the Federal 
Register on January 31, 2001 (66 FR 8499). Executive Order 13198 
created Centers for Faith-Based and Community Initiatives in five 
cabinet departments--HUD, 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 full participation of faith-based and community organizations in 
the provision of social services by their Departments. This proposed 
rule is part of HUD's efforts to fulfill its responsibilities under the 
Executive Order.

II. This Proposed Rule

A. Purpose of Proposed Rule

    Consistent with the President's initiative, this proposed rule 
would revise HUD's regulations to remove unwarranted barriers to the 
equal participation of faith-based organizations in HUD's programs. The 
objective of this proposed rule is to ensure that HUD 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.

B. HUD Program Regulations Amended by Proposed Rule

    The proposed rule would amend the regulations for the following HUD 
programs:

1. HOME Investment Partnerships (24 CFR part 92);
2. Community Development Block Grants (CDBG) (24 CFR part 570);
3. Hope for Homeownership of Single Family Homes (HOPE 3) (24 CFR part 
572);
4. Housing Opportunities for Persons with AIDS (HOPWA) (24 CFR part 
574);
5. Emergency Shelter Grants (ESG) (24 CFR part 576);
6. Shelter Plus Care (24 CFR part 582);
7. Supportive Housing (24 CFR part 583); and
8. Youthbuild (24 CFR part 585).

C. Proposed Regulatory Amendments

    The proposed rule would make the following specific amendments to 
HUD's regulations for the programs listed above.
1. Participation by Faith-Based Organizations in HUD Programs
    The proposed rule would make clear that organizations are eligible 
to participate in HUD programs without regard to their religious 
character or affiliation, and organizations may not be excluded from 
the competition for HUD 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 all other nonprofit organizations. The federal government, as well 
as state and local governments administering funds under

[[Page 649]]

HUD programs, are prohibited from discriminating against organizations 
on the basis of religion or their religious character.
2. Faith-Based Activities
    The proposed rule would describe the requirements applicable to all 
recipient organizations regarding the use of HUD funds for faith-based 
activities. Specifically, a participating organization may not use 
direct HUD funds 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 HUD 
assistance, and participation must be voluntary for the beneficiaries 
of the HUD-funded programs or services. This requirement ensures that 
HUD funds provided directly to religious organizations are not used to 
support inherently religious activities. Thus, HUD funds provided 
directly to a participating organization may not be used, for example, 
to conduct prayer meetings, studies of sacred texts, or any other 
activity that is inherently religious.
    This restriction does not mean that an organization that receives 
HUD funds cannot engage in inherently religious activities. It simply 
means such an organization cannot fund these activities with direct HUD 
funds. Thus, faith-based organizations that receive HUD funds must take 
steps to separate, in time or location, their inherently religious 
activities from the direct HUD-funded services that they offer.
    These restrictions on inherently religious activities do not apply 
where HUD funds are provided to religious organizations as a result of 
a genuine and independent private choice of a beneficiary, provided the 
religious organizations otherwise satisfy the secular 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, certificate, or 
similar funding mechanism that was provided to that individual using 
HUD funds under a program that is designed to give that individual a 
choice among providers.
3. Independence of Faith-Based Organizations
    The proposed rule clarifies that a religious organization that 
participates in HUD 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 
HUD funds to support any inherently religious activities, such as 
worship, religious instruction, or proselytization. Among other things, 
faith-based organizations may use space in their facilities to provide 
HUD-funded services, without removing religious art, icons, scriptures, 
or other religious symbols. In addition, a HUD-funded religious 
organization 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.
4. Nondiscrimination in Providing Assistance
    The proposed rule clarifies that an organization that participates 
in a HUD program shall not, in providing program assistance, 
discriminate against a program beneficiary or prospective program 
beneficiary on the basis of religion or religious belief. Accordingly, 
religious organizations, in providing services funded in whole or in 
part by HUD, may not discriminate against current or prospective 
program beneficiaries on the basis of religion, a religious belief, a 
refusal to hold a religious belief, or a refusal to actively 
participate in a religious practice.
5. Structures Used for Religious Activities
    The proposed rule would also clarify that HUD funds may not be used 
for the acquisition, construction or rehabilitation of structures to 
the extent that those structures are used for inherently religious 
activities, such as worship, religious instruction, or prayer. HUD 
funds may be used for the acquisition, construction, or rehabilitation 
of structures only to the extent that those structures are used for 
conducting eligible activities under the specific HUD program. Where a 
structure is used for both eligible and inherently religious 
activities, HUD funds may not exceed the cost of those portions of the 
acquisition, construction, or rehabilitation that are attributable to 
eligible activities.
6. Assurance Requirements
    The proposed rule would remove those provisions of HUD's 
regulations that require only HUD-funded religious organizations to 
provide assurances that they will conduct eligible program activities 
in a manner that is ``free from religious influences.'' HUD imposes no 
comparable assurance requirements in any other context, and HUD 
believes it is unfair to require religious organizations alone to 
provide additional assurances, above and beyond those any other 
organization is required to provide, that they will comply with HUD 
requirements. All organizations that participate in HUD programs, 
including religious ones, must carry out eligible activities in 
accordance with all program requirements and other applicable 
requirements governing the conduct of HUD-funded activities, including 
those prohibiting the use of direct HUD funds to engage in inherently 
religious activities. In addition, to the extent that provisions of 
HUD's regulations disqualify religious organizations from participating 
in HUD's programs merely because they are motivated or influenced by 
religious faith to provide social services, the proposed rule removes 
that restriction, which is inconsistent with governing law.
7. Inapplicability of Executive Order 11246
    The proposed rule would also amend the CDBG regulations to provide 
that Executive Order 11246, regarding equal employment opportunity, and 
the implementing regulations issued by the Department of Labor at 41 
CFR part 60 do not apply to CDBG grantees. By its own terms, the 
Executive Order applies to government contractors and subcontractors, 
not grantees.

III. Findings and Certifications

Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this rule under 
Executive Order 12866, Regulatory Planning and Review. OMB determined 
that this rule is a ``significant regulatory action'' as defined in 
section 3(f) of the Order (although not an economically significant 
regulatory action under the Order). Any changes made to the rule as a 
result of that review are identified in the docket file, which is 
available for public inspection in the office of the Department's Rules 
Docket Clerk, Room 10276, 451 Seventh Street, SW., Washington, DC 
20410-0500.

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 the private sector. This proposed rule does not impose 
any federal mandates on any state, local, or tribal governments or the 
private sector within the meaning of Unfunded Mandates Reform Act of 
1995.

[[Page 650]]

Executive Order 13132, Federalism

    Executive Order 13132, Federalism, requires that federal agencies 
consult with state and local governments with state and local 
government officials in the development of regulatory policies with 
federalism implications. Consistent with Executive Order 13132, we 
specifically solicit comment from state and local government officials 
on this proposed rule.

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR part 50, 
which implement section 102(2)(C) of the National Environmental Policy 
Act of 1969 (42 U.S.C. 4332). The Finding of No Significant Impact is 
available for public inspection between the hours of 7:30 a.m. and 5:30 
p.m. weekdays in the Office of the Rules Docket Clerk, Office of 
General Counsel, Room 10276, Department of Housing and Urban 
Development, 451 Seventh Street, SW., Washington, DC 20410.

Impact on Small Entities

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)) has reviewed and approved this proposed rule and in so 
doing certifies that this rule will not have a significant economic 
impact on a substantial number of small entities. The proposed rule 
would not impose any new costs, or modify existing costs, applicable to 
HUD grantees. Rather, the purpose of the proposed rule is to remove 
regulatory prohibitions that currently restrict the equal participation 
of faith-based organizations (large and small) in HUD's programs. 
Notwithstanding HUD's determination that this rule will not have a 
significant economic effect on a substantial number of small entities, 
HUD specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in this preamble.

Catalog of Federal Domestic Assistance Numbers

    The Catalog of Federal Domestic Assistance Numbers for the programs 
affected by this rule are 14.218, 14.219, 14.225, 14.227, 14.228, 
14.231, 14.235, 14.237, 14.238, 14.239, 14.241, 14.243, 14.246, 14.248, 
14.512, 14.514, and 14.515.

List of Subjects

24 CFR Part 92

    Administrative practice and procedure, Grant programs--housing and 
community development, Grant programs--Indians, Indians, Low and 
moderate income housing, Manufactured homes, Rent subsidies, Reporting 
and recordkeeping requirements.

24 CFR Part 570

    Administrative practice and procedure, American Samoa, Community 
development block grants, Grant programs--education, Grant programs--
housing and community development, Guam, Indians, Lead poisoning, Loan 
programs--housing and community development, Low and moderate income 
housing, New communities, Northern Mariana Islands, Pacific Islands 
Trust Territory, Pockets of poverty, Puerto Rico, Reporting and 
recordkeeping requirements, Small cities, Student aid, Virgin Islands.

24 CFR Part 572

    Condominiums, Cooperatives, Fair housing, Government property, 
Grant programs--housing and community development, Low and moderate 
income housing, Nonprofit organizations, Reporting and recordkeeping 
requirements.

24 CFR Part 574

    AIDS/HIV, Community facilities, Disabled, Grant programs--health 
programs, Grant programs--housing and community development, Grant 
programs--social programs, Homeless, Housing, Low and moderate income 
housing, Nonprofit organizations, Rent subsidies, Reporting and 
recordkeeping requirements, Technical assistance.

24 CFR Part 576

    Community facilities, Emergency shelter grants, Grant programs--
housing and community development, Grant programs--social programs, 
Homeless, Reporting and recordkeeping requirements.

24 CFR Part 582

    Homeless, Rent subsidies, Reporting and recordkeeping requirements.

24 CFR Part 583

    Homeless, Rent subsidies, Reporting and recordkeeping requirements.

CFR Part 585

    Grant programs--housing and community development, Homeless, Low 
and very low-income families, Reporting and recordkeeping requirements, 
Homeless, Housing, Low and moderate income housing, Nonprofit 
organizations, Rent subsidies, Reporting and recordkeeping 
requirements, Technical assistance.

    For the reasons stated in the preamble, HUD proposes to amend title 
24 of the Code of Federal Regulations to read as follows:

PART 92--HOME INVESTMENT PARTNERSHIPS PROGRAM

    1. The authority citation for 24 CFR part 92 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d) and 12701-12839.

    2. Revise Sec.  92.257 to read as follows:


Sec.  92.257  Faith-based activities.

    (a) Organizations that are religious or faith-based are eligible, 
on the same basis as any other organization, to participate in the HOME 
program. Neither the federal government nor a state or local government 
receiving funds under HOME programs shall discriminate against an 
organization on the basis of the organization's religious character or 
affiliation.
    (b) Organizations that are directly funded under the HOME program 
may not engage in inherently religious activities, such as worship, 
religious instruction, or proselytization, as part of the programs or 
services funded under this part. If an organization conducts such 
activities, the activities must be offered separately, in time or 
location, from the programs or services funded under this part, and 
participation must be voluntary for the HUD-funded programs or 
services.
    (c) A religious organization that participates in the HOME program 
will retain its independence from federal, state, or 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 HOME funds to support any inherently religious 
activities, such as worship, religious instruction, or proselytization. 
Among other things, faith-based organizations may use space in their 
facilities, without removing religious art, icons, scriptures, or other 
religious symbols. In addition, a HOME-funded religious organization 
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) An organization that participates in the HOME program shall 
not, in providing housing or housing assistance, discriminate against a 
program beneficiary or prospective program beneficiary on the basis of 
religion or religious belief.

[[Page 651]]

    (e) HOME 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. HOME 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, HOME funds may not exceed the cost 
of those portions of the acquisition, construction, or rehabilitation 
that are attributable to eligible activities.
    3. In Sec.  92.504, remove paragraph (c)(3)(x) and redesignate 
paragraph (c)(3)(xi) as paragraph (c)(3)(x).

PART 570--COMMUNITY DEVELOPMENT BLOCK GRANTS

    4. The authority citation for 24 CFR part 570 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d) and 5301-5320.
    5. Revise Sec.  570.200(j) to read as follows:


Sec.  570.200  General policies.

* * * * *
    (j) Faith-based activities. (1) Organizations that are religious or 
faith-based are eligible, on the same basis as any other organization, 
to participate in the CDBG program. Neither the federal government nor 
a state or local government receiving funds under CDBG programs shall 
discriminate against an organization on the basis of the organization's 
religious character or affiliation.
    (2) Organizations that are directly funded under the CDBG program 
may not engage in inherently religious activities, such as worship, 
religious instruction, or proselytization, as part of the programs or 
services funded under this part. If an organization conducts such 
activities, the activities must be offered separately, in time or 
location, from the programs or services funded under this part, and 
participation must be voluntary for the beneficiaries of the HUD-funded 
programs or services.
    (3) A religious organization that participates in the CDBG program 
will retain its independence from federal, state, or 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 CDBG funds to support any inherently religious 
activities, such as worship, religious instruction, or proselytization. 
Among other things, faith-based organizations may use space in their 
facilities to provide CDBG-funded services, without removing religious 
art, icons, scriptures, or other religious symbols. In addition, a 
CDBG-funded religious organization 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.
    (4) An organization that participates in the CDBG program shall 
not, in providing program assistance, discriminate against a program 
beneficiary or prospective program beneficiary on the basis of religion 
or religious belief.
    (5) CDBG 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. CDBG 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, CDBG funds may not exceed the cost 
of those portions of the acquisition, construction, or rehabilitation 
that are attributable to eligible activities.
    6. Amend Sec.  570.503 as follows:
    a. Remove paragraph (b)(6);
    b. Redesignate paragraphs (b)(7) and (b)(8) as paragraphs (b)(6) 
and (b)(7), respectively; and
    c. In newly designated paragraph (b)(7)(ii), remove all references 
to ``paragraph (b)(8)(i) of this section'' and in their place add 
``paragraph (b)(7)(i) of this section''.
    7. Revise Sec.  570.607 to read as follows:


Sec.  570.607  Employment and contracting opportunities.

    Grantees shall comply with Section 3 of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701u) and implementing regulations 
at 24 CFR part 135.

PART 572--HOPE FOR HOMEOWNERSHIP OF SINGLE FAMILY HOMES PROGRAM 
(HOPE 3)

    8. The authority citation for 24 CFR part 572 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d) and 12891.

    9. Revise Sec.  572.405(d) to read as follows:


Sec.  572.405  Nondiscrimination and equal opportunity requirements.

* * * * *
    (d) Faith-based activities. (1) Organizations that are religious or 
faith-based are eligible, on the same basis as any other organization, 
to participate in the HOPE 3 program. Neither the federal government 
nor a state or local government receiving funds under HOPE 3 programs 
shall discriminate against an organization on the basis of the 
organization's religious character or affiliation.
    (2) Organizations that are directly funded under the HOPE 3 program 
may not engage in inherently religious activities, such as worship, 
religious instruction, or proselytization, as part of the programs or 
services funded under this part. If an organization conducts such 
activities, the activities must be offered separately, in time or 
location, from the programs or services funded under this part, and 
participation must be voluntary for the beneficiaries of the HUD-funded 
programs or services.
    (3) A religious organization that participates in the HOPE 3 
program will retain its independence from federal, state, or 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 HOPE 3 funds to support any inherently 
religious activities, such as worship, religious instruction, or 
proselytization. Among other things, faith-based organizations may use 
space in their facilities to provide HOPE 3-funded services, without 
removing religious art, icons, scriptures, or other religious symbols. 
In addition, a HOPE 3-funded religious organization 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.
    (4) An organization that participates in the HOPE 3 program shall 
not, in providing program assistance, discriminate against a program 
beneficiary or prospective program beneficiary on the basis of religion 
or religious belief.
    (5) HOPE 3 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. HOPE 3 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, HOPE 3 funds may not exceed the 
cost of those portions of the acquisition,

[[Page 652]]

construction, or rehabilitation that are attributable to eligible 
activities.

PART 574--HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS

    10. The authority citation for 24 CFR parts 574 continues to read 
as follows:

    Authority: 42 U.S.C. 3535(d) and 12901-12912.

    11. Revise Sec.  574.300(c) to read as follows:


Sec.  574.300  Eligible activities.

* * * * *
    (c) Faith-based activities. (1) Organizations that are religious or 
faith-based are eligible, on the same basis as any other organization, 
to participate in the HOPWA program. Neither the federal government nor 
a state or local government receiving funds under HOPWA programs shall 
discriminate against an organization on the basis of the organization's 
religious character or affiliation.
    (2) Organizations that are directly funded under the HOPWA program 
may not engage in inherently religious activities, such as worship, 
religious instruction, or proselytization, as part of the programs or 
services funded under this part. If an organization conducts such 
activities, the activities must be offered separately, in time or 
location, from the programs or services funded under this part, and 
participation must be voluntary for the beneficiaries of the HUD-funded 
programs or services.
    (3) An organization that participates in the HOPWA program will 
retain its independence from federal, state, or 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 HOPWA funds to support any inherently religious 
activities, such as worship, religious instruction, or proselytization. 
Among other things, faith-based organizations may use space in their 
facilities to provide HOPWA-funded services, without removing religious 
art, icons, scriptures, or other religious symbols. In addition, a 
HOPWA-funded religious organization 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.
    (4) An organization that participates in the HOPWA program shall 
not, in providing program assistance, discriminate against a program 
beneficiary or prospective program beneficiary on the basis of religion 
or religious belief.
    (5) HOPWA 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. HOPWA 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, HOPWA funds may not exceed the 
cost of those portions of the acquisition, construction, or 
rehabilitation that are attributable to eligible activities.

PART 576--EMERGENCY SHELTER GRANTS PROGRAM: STEWART B. McKINNEY 
HOMELESS ASSISTANCE ACT

    12. The authority citation for 24 CFR part 576 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d) and 11376.

    13. Revise Sec.  576.23 to read as follows:


Sec.  576.23  Faith-based activities.

    (a) Organizations that are religious or faith-based are eligible, 
on the same basis as any other organization, to participate in the 
Emergency Shelter Grants program. Neither the federal government nor a 
state or local government receiving funds under Emergency Shelter 
Grants programs shall discriminate against an organization on the basis 
of the organization's religious character or affiliation.
    (b) Organizations that are directly funded under the Emergency 
Shelter Grants program may not engage in inherently religious 
activities, such as worship, religious instruction, or proselytization 
as part of the programs or services funded under this part. If an 
organization conducts such activities, the activities must be offered 
separately, in time or location, from the programs or services funded 
under this part, and participation must be voluntary for the 
beneficiaries of the HUD-funded programs or services.
    (c) A religious organization that participates in the Emergency 
Shelter Grants program will retain its independence from federal, 
state, or 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 Emergency Shelter Grants 
funds to support any inherently religious activities, such as worship, 
religious instruction, or proselytization. Among other things, faith-
based organizations may use space in their facilities to provide 
Emergency Shelter Grants-funded services, without removing religious 
art, icons, scriptures, or other religious symbols. In addition, an 
Emergency Shelter Grants-funded religious organization 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) An organization that participates in the Emergency Shelter 
Grants program shall not, in providing program assistance, discriminate 
against a program beneficiary or prospective program beneficiary on the 
basis of religion or religious belief.
    (e) Emergency shelter grants may not be used for the rehabilitation 
of structures to the extent that those structures are used for 
inherently religious activities. Emergency shelter grants may be used 
for the 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, emergency shelter grants may not exceed the cost of those 
portions of the rehabilitation that are attributable to eligible 
activities.

PART 582--SHELTER PLUS CARE

    14. The authority citation for 24 CFR part 582 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d) and 11403-11470b.

    15. Revise Sec.  582.115(c) to read as follows:


Sec.  582.115  Limitations on assistance.

* * * * *
    (c) Faith-based activities. (1) Organizations that are religious or 
faith-based are eligible, on the same basis as any other organization, 
to participate in the S+C program. Neither the federal government nor a 
state or local government receiving funds under S+C programs shall 
discriminate against an organization on the basis of the organization's 
religious character or affiliation.
    (2) Organizations that are directly funded under the S+C program 
may not engage in inherently religious activities, such as worship, 
religious instruction, or proselytization as part of the programs or 
services funded under this part. If an organization conducts such 
activities, the activities must be offered separately, in time or 
location, from the

[[Page 653]]

programs or services funded under this part, and participation must be 
voluntary for the beneficiaries of the HUD-funded programs or services.
    (3) A religious organization that participates in the S+C program 
will retain its independence from federal, state, or 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 S+C funds to support any inherently religious 
activities, such as worship, religious instruction, or proselytization. 
Among other things, faith-based organizations may use space in their 
facilities to provide S+C-funded services, without removing religious 
art, icons, scriptures, or other religious symbols. In addition, an 
S+C-funded religious organization 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.
    (4) An organization that participates in the S+C program shall not, 
in providing program assistance, discriminate against a program 
beneficiary or prospective program beneficiary on the basis of religion 
or religious belief.
* * * * *

PART 583--SUPPORTIVE HOUSING PROGRAM

    16. The authority citation for 24 CFR part 583 continues to read as 
follows:

    Authority: 42 U.S.C. 11389 and 3535(d).

    17. Revise Sec.  583.150(b) to read as follows:


Sec.  583.150  Limitations on use of assistance.

* * * * *
    (b) Faith-based activities. (1) Organizations that are religious or 
faith-based are eligible, on the same basis as any other organization, 
to participate in the Supportive Housing Program. Neither the federal 
government nor a state or local government receiving funds under 
Supportive Housing programs shall discriminate against an organization 
on the basis of the organization's religious character or affiliation.
    (2) Organizations that are directly funded under the Supportive 
Housing Program may not engage in inherently religious activities, such 
as worship, religious instruction, or proselytization as part of the 
programs or services funded under this part. If an organization 
conducts such activities, the activities must be offered separately, in 
time or location, from the programs or services funded under this part, 
and participation must be voluntary for the beneficiaries of the HUD-
funded programs or services.
    (3) A religious organization that participates in the Supportive 
Housing Program will retain its independence from federal, state, or 
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 Supportive Housing Program funds 
to support any inherently religious activities, such as worship, 
religious instruction, or proselytization. Among other things, faith-
based organizations may use space in their facilities to provide 
Supportive Housing Program-funded services, without removing religious 
art, icons, scriptures, or other religious symbols. In addition, a 
Supportive Housing Program-funded religious organization 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.
    (4) An organization that participates in the Supportive Housing 
Program shall not, in providing program assistance, discriminate 
against a program beneficiary or prospective program beneficiary on the 
basis of religion or religious belief.
    (5) Program 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. Program 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, program 
funds may not exceed the cost of those portions of the acquisition, 
construction, or rehabilitation that are attributable to eligible 
activities.
* * * * *

PART 585--YOUTHBUILD PROGRAM

    18. The authority citation for 24 CFR part 585 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d) and 8011.

    19. Revise Sec.  585.406 to read as follows:


Sec.  585.406  Faith-based activities.

    (a) Organizations that are religious or faith-based are eligible, 
on the same basis as any other organization, to participate in the 
Youthbuild program. Neither the federal government nor a state or local 
government receiving funds under Youthbuild programs shall discriminate 
against an organization on the basis of the organization's religious 
character or affiliation.
    (b) Organizations that are directly funded under the Youthbuild 
program may not engage in inherently religious activities, such as 
worship, religious instruction, or proselytization, as part of the 
programs or services funded under this part. If an organization 
conducts such activities, the activities must be offered separately, in 
time or location, from the programs or services funded under this part, 
and participation must be voluntary for the beneficiaries of the HUD-
funded programs or services.
    (c) A religious organization that participates in the Youthbuild 
Program will retain its independence from federal, state, or 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 Youthbuild Program funds to support any 
inherently religious activities, such as worship, religious 
instruction, or proselytization. Among other things, faith-based 
organizations may use space in their facilities to provide Youthbuild 
Program-funded services, without removing religious art, icons, 
scriptures, or other religious symbols. In addition, a Youthbuild 
Program-funded religious organization 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) An organization that participates in the Youthbuild program 
shall not, in providing program assistance, discriminate against a 
program beneficiary or prospective program beneficiary on the basis of 
religion or religious belief.
    (e) Youthbuild 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. Youthbuild 
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

[[Page 654]]

activities, Youthbuild funds may not exceed the cost of those portions 
of the acquisition, construction, or rehabilitation that are 
attributable to secular activities.

    Dated: December 11, 2002.
Mel Martinez,
Secretary.
[FR Doc. 03-133 Filed 1-3-03; 8:45 am]
BILLING CODE 4210-32-P