[Federal Register Volume 68, Number 189 (Tuesday, September 30, 2003)]
[Proposed Rules]
[Pages 56410-56415]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-24294]



[[Page 56409]]

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Part V





Department of Justice





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28 CFR Parts 31, 33, 38, 90, 91, and 93



Participation in Justice Department Programs by Religious 
Organizations; Providing for Equal Treatment of all Justice Department 
Program Participants; Proposed Rule

  Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / 
Proposed Rules  

[[Page 56410]]


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DEPARTMENT OF JUSTICE

28 CFR Parts 31, 33, 38, 90, 91, and 93

[Docket No. OAG 106; AG Order No. 2687-2003]
RIN 1105-AA83


Participation in Justice Department Programs by Religious 
Organizations; Providing for Equal Treatment of all Justice Department 
Program Participants

AGENCY: Office of the Attorney General, Justice.

ACTION: Proposed rule.

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SUMMARY: This rule proposes to implement executive branch 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 the Department's funding. This proposed rule 
would revise Department regulations pertaining to certain programs to 
bring them into compliance with this policy and to ensure that these 
programs are implemented in a manner consistent with the requirements 
of the Constitution, including the Religion Clauses of the First 
Amendment.

DATES: Comments must be submitted by December 1, 2003.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Task Force for Faith-Based and Community 
Initiatives, Office of the Deputy Attorney General, Room 4413, 
Department of Justice, 950 Pennsylvania Avenue, NW., Washington, DC 
20530. 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 8:30 a.m. and 5:30 p.m. at the above address.

FOR FURTHER INFORMATION CONTACT: Patrick Purtill, Director, Task Force 
for Faith-Based and Community Initiatives, Department of Justice, Room 
4409, 950 Pennsylvania Avenue, NW., Washington, DC 20530; telephone: 
(202) 305-8283 (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: 
Office of Justice Programs--Bureau of Justice Assistance, (202) 307-
0635; Office of Juvenile Justice Delinquency Prevention, (202) 307-
5924; National Institute of Justice, (202) 307-2942; Drug Court 
Programs Office, (202) 616-5001; Office of Victims of Crime, (202) 514-
4696; Office of Violence Against Women, (202) 307-6026; Executive 
Office for Weed and Seed, (202) 616-1152; Bureau of Prisons, 202-307-
3198; National Institute of Corrections, (202) 307-3106; Community 
Oriented Policing Services (COPS), (202) 307-1480 (these are not toll-
free numbers). Hearing or speech-impaired individuals may access these 
telephone numbers via TTY by calling the toll-free Federal Information 
Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    Religious organizations, including religiously affiliated 
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, religious organizations 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. Religious groups everywhere, 
either acting alone or as partners with other service providers and 
government programs, serve the poor, help to reduce crime, addiction, 
and delinquency, and help to strengthen families and rebuild 
communities.
    All too often, however, Federal policy and programs have not 
recognized religious 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 the 
Justice Department, 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 religiously affiliated, or faith-based, groups possess an under-
appreciated ability to meet the needs of disadvantaged Americans, 
including those within the criminal justice system, and to revitalize 
distressed neighborhoods. 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--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 equal 
participation of faith-based and community organizations in the 
provision of social services by their Departments. On December 12, 
2002, President Bush issued Executive Order 13280. That Order, 
published in the Federal Register on December 16, 2002 (66 FR 77145), 
created Centers in two additional agencies--the United States Agency 
for International Development and the Department of Agriculture--and 
charged those Centers with duties similar to those set forth in 
Executive Order 13198. On December 12, 2002, President Bush also issued 
Executive Order 13279, published in the Federal Register on December 
12, 2002 (67 FR 77141). That Executive Order charges executive branch 
agencies to give equal treatment to faith-based and community groups 
that apply for funds to meet social needs in America's communities. 
President Bush called for an end to discrimination against faith-based 
organizations and, consistent with the First Amendment to the United 
States Constitution, ordered implementation of these policies 
throughout the executive branch, including, among other things, 
allowing organizations to retain their religious autonomy over their 
internal governance and composition of boards, and over their display 
of religious art, icons, scriptures, or other religious symbols, when 
participating in government-funded programs. President Bush directed 
each executive branch agency, including the Department of Justice, to 
implement these policies. This proposed rule is part of the 
Department's efforts to fulfill its responsibilities under these 
Executive Orders.

II. This Proposed Rule

A. Purpose of Proposed Rule

    Consistent with the President's initiative, this proposed rule 
would revise the Department's regulations to remove unwarranted 
barriers to the equal participation of faith-based organizations in the 
Department's programs. The objective of this proposed rule is to ensure 
that the Department's programs are open to all qualified organizations, 
regardless of their religious character, and to establish clearly the 
proper uses to

[[Page 56411]]

which funds may be put, and the conditions for receipt of funding. In 
addition, this proposed rule is designed to ensure that the 
implementation of the Department's programs is conducted in a manner 
consistent with the requirements of the Constitution, including the 
Religion Clauses of the First Amendment.

B. Justice Department Program Regulations Amended by Proposed Rule

    This rule proposes to amend the regulations for the following 
Justice Department components or offices:
    1. Office of Justice Programs (OJP)
    2. Bureau of Prisons (BOP)
    3. National Institute of Corrections (NIC)
    4. Community Oriented Policing Services (COPS)
    5. Office for Violence Against Women (OVW)
    6. United States Marshals Service
    7. Asset Forfeiture and Money Laundering Section of the Criminal 
Division
    8. Civil Rights Division

C. Proposed Regulatory Amendments

    This rule proposes to make the following regulations applicable to 
all discretionary grant, formula grant, contract, and cooperative 
agreement programs listed above.
    1. Participation by faith-based organizations in Justice Department 
programs. The proposed rule would make clear that organizations are 
eligible to participate in Department programs without regard to their 
religious character or affiliation, and that organizations may not be 
excluded from the competition for Department 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 Department programs, are prohibited from discriminating against 
organizations on the basis of religion, religious belief, or religious 
character in the administration or distribution of Federal financial 
assistance under social service programs, including grants, contracts, 
and cooperative agreements.
    2. Inherently religious activities. The proposed rule describes the 
requirements applicable to all recipient organizations regarding the 
use of Department funds for inherently religious activities. 
Specifically, a participating organization may not use direct financial 
assistance \1\ from the Department 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 Department assistance, and participation must be 
voluntary for the beneficiaries of the Department-funded programs or 
services. This requirement ensures that direct financial assistance 
from the Department to religious organizations is not used to support 
inherently religious activities. Such assistance may not be used, for 
example, to conduct prayer meetings, studies of sacred texts, or any 
other activity that is inherently religious.
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    \1\ The term ``direct financial assistance'' is used here to 
describe funds that are provided ``directly'' by a governmental 
entity or an intermediate organization with the same 
responsibilities as a governmental entity, as opposed to funds that 
an organization receives as the result of the genuine and 
independent private choice of a beneficiary. In other contexts, the 
term ``direct financial assistance'' may be used to refer to those 
funds that an organization receives directly from the Federal 
government (also known as ``discretionary'' funding), as opposed to 
funding that it receives from a State or local government (also 
known as ``indirect'' or ``block grant'' funding). Again, in these 
proposed regulations, the term ``direct financial assistance'' has 
the former meaning.
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    This restriction does not mean that an organization that receives 
Department funds cannot engage in inherently religious activities. It 
simply means that such an organization cannot fund these activities 
with direct financial assistance from the Department. Thus, faith-based 
organizations that receive direct financial assistance from the 
Department must take steps to separate, in time or location, their 
inherently religious activities from the direct Department-funded 
services that they offer.
    These restrictions on inherently religious activities do not apply 
where Department 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 beneficiary 
using Department funds under a program that is designed to give that 
beneficiary a choice among providers.
    Correctional institutions are heavily regulated, and the degree of 
government control over correctional environments means that prison 
officials must sometimes take affirmative steps, in the form of 
chaplaincies and similar programs, to introduce religion into the 
environment. Without such efforts to make religious accommodations, 
religious freedom would not exist for federal prisoners. Accordingly, 
the proposed rule recognizes that the legal restrictions applied to 
religious programs within correctional facilities will sometimes be 
different from the legal restrictions that are applied to other 
Department programs.
    3. Independence of faith-based organizations. The proposed rule 
clarifies that a religious organization that participates in Department 
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 the Department to support any inherently religious 
activities, such as worship, religious instruction, or proselytization. 
Among other things, a faith-based organization may use space in its 
facilities to provide Department-funded services, without removing 
religious art, icons, scriptures, or other religious symbols. In 
addition, a Department-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. Nondiscrimination in providing assistance. The proposed rule 
clarifies that an organization that receives direct financial 
assistance from the Department 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 directly 
funded in whole or in part by the Department, may not discriminate 
against current or prospective program beneficiaries on the basis of 
religion or religious belief.
    5. Assurance requirements. This rule proposes to direct the removal 
of those provisions of the Department's agreements, covenants, 
memoranda of understanding, policies, or regulations that require only 
Department-funded religious organizations to provide assurances that 
they will not use monies or property for inherently religious 
activities. The Department imposes no comparable assurance requirements 
in any other context, and the Department believes it is unfair to 
require religious

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organizations alone to provide additional assurances, above and beyond 
those any other organization is required to provide, that they will 
comply with Department requirements. All organizations that participate 
in Department programs, including religious ones, must carry out 
eligible activities in accordance with all program requirements and 
other applicable requirements governing the conduct of Department-
funded activities, including those prohibiting the use of direct 
financial assistance from the Department to engage in inherently 
religious activities. In addition, to the extent that provisions of the 
Department's agreements, covenants, policies, or regulations disqualify 
religious organizations from participating in the Department's programs 
because they are motivated or influenced by religious faith to provide 
social services, or because of their religious character or 
affiliation, the proposed rule removes that restriction, which is 
inconsistent with governing law.

III. Findings and Certifications

Executive Order 12866--Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this rule under 
Executive Order 12866, Regulatory Planning and Review. OMB determined 
that this rule is a ``significant regulatory action'' as defined in 
section 3(f) of the Order (although not an economically significant 
regulatory action under the Order) and, accordingly, has reviewed the 
rule. 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 Task Force for Faith-based and Community 
Initiatives, Room 4409, 950 Pennsylvania Ave, NW., Washington, DC 
20530.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments, and on the private sector. This proposed rule does not 
impose any Federal mandates on any State, local, or tribal governments, 
or the private sector, within the meaning of the Unfunded Mandates 
Reform Act of 1995.

Executive Order 13132--Federalism

    Executive Order 13132, Federalism, prohibits an agency from 
publishing any rule that has federalism implications if the rule either 
imposes substantial direct compliance costs on state and local 
governments and is not required by statute, or the rule preempts state 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. Consistent with Executive Order 
13132, the Department specifically solicits comments 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 Department regulations at 28 CFR part 
61, 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 8:30 
a.m. and 5:30 p.m. weekdays in the Task Force for Faith-based and 
Community Initiatives, Office of the Deputy Attorney General, Room 
4413, Department of Justice, 950 Pennsylvania Ave., NW., Washington, DC 
20530.

Regulatory Flexibility Act

    The Attorney General, 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 Department grantees. Rather, the purpose of the proposed 
rule is to remove policy prohibitions that currently restrict the equal 
participation of religious or religiously affiliated organizations 
(large and small) in the Department's programs. Notwithstanding the 
Department's determination that this rule will not have a significant 
economic effect on a substantial number of small entities, the 
Department specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet the Department's objectives as 
described in this preamble.

Catalog of Federal Domestic Assistance Numbers

    The Catalog of Federal Domestic Assistance program numbers for the 
programs affected by this rule are 16.579, 16.592, 16.593, 16.523, 
16.540, 16.548, 16.549, 16.575, 16.588, 16.580, 16.613, 16.202, 16.585, 
16.595, 16.560, 16.563, 16.541, 16.542, 16.728, 16.729, 16.730, 16.731, 
16.732, 16.543, 16.544, 16.547, 16.726, 16.547, 16.582, 16.583, 16.524, 
16.525, 16.587, 16.589, 16.602, 16.005, 16.108, 16.320, 16.526, 16.710, 
16.110.

List of Subjects

28 CFR Part 31

    Grant programs--law, Juvenile delinquency, Reporting and 
recordkeeping requirements.

28 CFR Part 33

    Administrative practice and procedure, Grants.

28 CFR Part 38

    Administrative practice and procedure, Grant programs, Reporting 
and recordkeeping requirements, Nonprofit organizations.

28 CFR Part 90

    Grant programs, Judicial administration--violence against women.

28 CFR Part 91

    Grant Programs--correctional facilities.

28 CFR Part 93

    Grant programs, Judicial administration.

    For the reasons stated in the preamble, the Department proposes to 
amend chapter I of Title 28 of the Code of Federal Regulations as 
follows:

PART 31--OJJDP GRANT PROGRAMS

    1. The authority citation for part 31 is revised to read as 
follows:

    Authority: 42 U.S.C 5601 through 5785; Pub. L. 108-7, 117 Stat. 
11; 5 U.S.C. 301.

    2. Add Sec.  31.404 to subpart A to read as follows:


Sec.  31.404  Participation by faith-based organizations.

    The funds provided under this part shall be administered in 
compliance with the standards set forth in part 38 (Equal Treatment for 
Faith-based Organizations) of this chapter.
    3. In Sec.  31.502, add paragraph (a)(3) to read as follows:


Sec.  31.502  Assurances and plan information.

    (a) * * *
    (3) The funds provided under this part shall be administered in 
compliance with the standards set forth in part 38 (Equal Treatment for 
Faith-based Organizations) of this chapter.
* * * * *

PART 33--BUREAU OF JUSTICE ASSISTANCE GRANT PROGRAMS

    4. The authority section for part 33 is revised to read as follows:


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    Authority: 42 U.S.C. 3701 through 3797y-4; 5 U.S.C. 301.

    5. In suppart A under the heading Additional Requirements, add 
Sec.  33.53 to read as follows:


Sec.  33.53  Participation by faith-based organizations.

    The funds provided under this part shall be administered in 
compliance with the standards set forth in part 38 (Equal Treatment for 
Faith-based Organizations) of this chapter.
    6. Add part 38 to read as follows:

PART 38--EQUAL TREATMENT FOR FAITH-BASED ORGANIZATIONS

Sec.
38.1 Discretionary grants, contracts, and cooperative agreements.
38.2 Formula grants.

    Authority: 28 U.S.C. 509; 5 U.S.C. 301; E.O. 13279, 67 FR 77141, 
3 CFR, 2002 Comp., p. 258; 18 U.S.C. 4001, 4042, 5040; 20 U.S.C. 
1152; 21 U.S.C. 871; 25 U.S.C. 3681; Pub. L. 107-273, 116 Stat. 1758 
(42 U.S.C. 3751, 3753, 3762b, 3782, 3796dd-1, 3796dd-7, 3796gg-1, 
3796gg-0b, 3796gg-3, 3796h, 3796ii-2, 3797u-3, 3797w, 5611, 5672, 
10604, 14071).


Sec.  38.1  Discretionary grants, contracts, and cooperative 
agreements.

    (a) Religious organizations are eligible, on the same basis as any 
other organization, to participate in any Department program for which 
they are otherwise eligible. No State or Local government receiving 
funds under any Department program shall discriminate against an 
organization on the basis of the organization's religious character or 
affiliation. As used in this section, ``program'' refers to a grant, 
contract, or cooperative agreement funded by a discretionary grant from 
the Department. As used in this section, the term ``grantee'' includes 
a recipient of a grant, a signatory to a cooperative agreement, or a 
contracting party.
    (b) (1) Organizations that receive direct financial assistance from 
the Department under any Department program may not engage in 
inherently religious activities, such as worship, religious 
instruction, or proselytization, as part of the programs or services 
funded with direct financial assistance from the Department. If an 
organization conducts such activities, the activities must be offered 
separately, in time or location, from the programs or services funded 
with direct financial assistance from the Department, and participation 
must be voluntary for beneficiaries of the programs or services funded 
with such assistance.
    (2) The restrictions on inherently religious activities set forth 
in paragraph (b)(1) of this section do not apply to programs where 
Department funds are provided to chaplains to work with inmates in 
prisons, detention facilities, or community correction centers, or 
where Department 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 the Department-
funded programs or services will retain its independence from federal, 
state, and local governments, and may continue to carry out its 
mission, including the definition, practice, and expression of its 
religious beliefs, provided that it does not use direct financial 
assistance from the Department to support any inherently religious 
activities, such as worship, religious instruction, or proselytization. 
Among other things, a faith-based organization that receives financial 
assistance from the Department may use space in its facilities, without 
removing religious art, icons, scriptures, or other religious symbols. 
In addition, a religious organization that receives financial 
assistance from the Department retains its authority over its internal 
governance, and it may retain religious terms in its organization's 
name, select its board members on a religious basis, and include 
religious references in its organization's mission statements and other 
governing documents.
    (d) An organization that participates in programs funded by direct 
financial assistance from the Department shall not, in providing 
services, discriminate against a program beneficiary or prospective 
program beneficiary on the basis of religion or religious belief.
    (e) No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by the Department or 
a state or local government in administering financial assistance from 
the Department shall require only religious organizations to provide 
assurances that they will not use monies or property for inherently 
religious activities. Any such restrictions shall apply equally to 
religious and non-religious organizations. All organizations that 
participate in Department programs, including religious ones, must 
carry out eligible activities in accordance with all program 
requirements and other applicable requirements governing the conduct of 
Department-funded activities, including those prohibiting the use of 
direct financial assistance from the Department to engage in inherently 
religious activities. No grant document, agreement, covenant, 
memorandum of understanding, policy, or regulation that is used by the 
Department or a state or local government in administering financial 
assistance from the Department shall disqualify religious organizations 
from participating in the Department's programs because such 
organizations are motivated or influenced by religious faith to provide 
social services, or because of their religious character or 
affiliation.
    (f) Exemption from Title VII Employment Discrimination 
Requirements. A religious organization's exemption from the federal 
prohibition on employment discrimination on the basis of religion, set 
forth in section 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 
2000e-1, is not forfeited when the organization receives direct or 
indirect financial assistance from the Department. Some Department 
programs, however, contain independent statutory provisions requiring 
that all grantees agree not to discriminate in employment on the basis 
of religion. Accordingly, grantees should consult with the appropriate 
Department program office to determine the scope of any applicable 
requirements.
    (g) In general, the Department does not require that a grantee, 
including a religious organization, obtain tax-exempt status under 
section 501(c)(3) of the Internal Revenue Code to be eligible for 
funding under Department programs. Many grant programs, however, do 
require an organization to be a ``nonprofit organization'' in order to 
be eligible for funding. Individual solicitations that require 
organizations to have nonprofit status will specifically so indicate in 
the eligibility section of a solicitation. In addition, any 
solicitation that requires an organization to maintain tax-exempt 
status will expressly state the statutory authority for requiring such 
status. Grantees should consult with the appropriate Department program 
office to determine the scope of any applicable requirements. In 
Department programs in which an applicant must show that it is a 
nonprofit organization, the applicant may do so by any of the following 
means:
    (1) Proof that the Internal Revenue Service currently recognizes 
the applicant as an organization to which contributions are tax 
deductible under section 501(c)(3) of the Internal Revenue Code;
    (2) A statement from a state taxing body or the state secretary of 
state certifying that:

[[Page 56414]]

    (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) Effect on State and local funds. If a State or local government 
voluntarily contributes its own funds to supplement activities carried 
out under the applicable programs, the state or local government has 
the option to separate out the Federal funds or commingle them. If the 
funds are commingled, the provisions of this section shall apply to all 
of the commingled funds in the same manner, and to the same extent, as 
the provisions apply to the Federal funds.
    (h) To the extent otherwise permitted by federal law, the 
restrictions on inherently religious activities set forth in this 
section do not apply where Department funds are provided to religious 
organizations as a result of a genuine and independent private choice 
of a beneficiary, provided the religious organizations otherwise 
satisfy the requirements of the program. A religious organization may 
receive such funds as the result of a beneficiary's genuine and 
independent choice if, for example, a beneficiary redeems a voucher, 
coupon, or certificate, allowing the beneficiary to direct where funds 
are to be paid, or a similar funding mechanism provided to that 
beneficiary and designed to give that beneficiary a choice among 
providers.


Sec.  38.2  Formula grants.

    (a) Religious organizations are eligible, on the same basis as any 
other organization, to participate in any Department program for which 
they are otherwise eligible. No state or local government receiving 
funds under any Department program shall discriminate against an 
organization on the basis of the organization's religious character or 
affiliation. As used in this section, ``program'' refers to a grant, 
contract, or cooperative agreement funded by a formula or block grant 
from the Department. As used in this section, the term ``grantee'' 
includes a recipient of a grant, a signatory to a cooperative 
agreement, or a contracting party.
    (b) (1) Organizations that receive direct financial assistance from 
the Department may not engage in inherently religious activities, such 
as worship, religious instruction, or proselytization, as part of the 
programs or services funded with direct financial assistance from the 
Department. If an organization conducts such activities, the activities 
must be offered separately, in time or location, from the programs or 
services funded with direct financial assistance from the Department, 
and participation must be voluntary for beneficiaries of the programs 
or services funded with such assistance.
    (2) The restrictions on inherently religious activities set forth 
in paragraph (b)(1) of this section do not apply to programs where 
Department funds are provided to chaplains to work with inmates in 
prisons, detention facilities, or community correction centers, or 
where Department 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 the Department-
funded programs or services will retain its independence from federal, 
state, and local governments, and may continue to carry out its 
mission, including the definition, practice, and expression of its 
religious beliefs, provided that it does not use direct financial 
assistance from the Department to support any inherently religious 
activities, such as worship, religious instruction, or proselytization. 
Among other things, a faith-based organization that receives financial 
assistance from the Department may use space in its facilities, without 
removing religious art, icons, scriptures, or other religious symbols. 
In addition, a religious organization that receives financial 
assistance from the Department retains its authority over its internal 
governance, and it may retain religious terms in its organization's 
name, select its board members on a religious basis, and include 
religious references in its organization's mission statements and other 
governing documents.
    (d) An organization that participates in programs funded by direct 
financial assistance from the Department shall not, in providing 
services, discriminate against a program beneficiary or prospective 
program beneficiary on the basis of religion or religious belief.
    (e) No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by the Department or 
a state or local government in administering financial assistance from 
the Department shall require only religious organizations to provide 
assurances that they will not use monies or property for inherently 
religious activities. Any such restrictions shall apply equally to 
religious and non-religious organizations. All organizations that 
participate in Department programs, including religious ones, must 
carry out eligible activities in accordance with all program 
requirements and other applicable requirements governing the conduct of 
Department-funded activities, including those prohibiting the use of 
direct financial assistance to engage in inherently religious 
activities. No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by the Department or 
a state or local government in administering financial assistance from 
the Department shall disqualify religious organizations from 
participating in the Department's programs because such organizations 
are motivated or influenced by religious faith to provide social 
services, or because of their religious character or affiliation.
    (f) Exemption from Title VII Employment Discrimination 
Requirements. A religious organization's exemption from the federal 
prohibition on employment discrimination on the basis of religion, set 
forth in section 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 
2000e-1, is not forfeited when the religious organization receives 
direct or indirect financial assistance from Department. Some 
Department programs, however, contain independent statutory provisions 
requiring that all grantees agree not to discriminate in employment on 
the basis of religion. Accordingly, grantees should consult with the 
appropriate Department program office to determine the scope of any 
applicable requirements.
    (g) In general, the Department does not require that a grantee, 
including a religious organization, obtain tax-exempt status under 
section 501(c)(3) of the Internal Revenue Code to be eligible for 
funding under Department programs. Many grant programs, however, do 
require an organization to be a ``nonprofit organization'' in order to 
be eligible for funding. Individual solicitations that require 
organizations to have nonprofit status will specifically so indicate in 
the eligibility section of a solicitation. In addition, any 
solicitation that requires an organization to maintain tax-exempt 
status will expressly state the statutory authority for requiring such 
status. Grantees should consult with the appropriate

[[Page 56415]]

Department program office to determine the scope of any applicable 
requirements. In Department programs in which an applicant must show 
that it is a nonprofit organization, the applicant may do so by any of 
the following means:
    (1) Proof that the Internal Revenue Service currently recognizes 
the applicant as an organization to which contributions are tax 
deductible under section 501(c)(3) of the Internal Revenue Code;
    (2) A statement from a state 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.
    (h) Effect on State and local funds. If a State or local government 
voluntarily contributes its own funds to supplement activities carried 
out under the applicable programs, the state or local government has 
the option to separate out the federal funds or commingle them. If the 
funds are commingled, the provisions of this section shall apply to all 
of the commingled funds in the same manner, and to the same extent, as 
the provisions apply to the federal funds.
    (i) To the extent otherwise permitted by federal law, the 
restrictions on inherently religious activities set forth in this 
section do not apply where Department funds are provided to religious 
organizations as a result of a genuine and independent private choice 
of a beneficiary, provided the religious organizations otherwise 
satisfy the requirements of the program. A religious organization may 
receive such funds as the result of a beneficiary's genuine and 
independent choice if, for example, a beneficiary redeems a voucher, 
coupon, or certificate, allowing the beneficiary to direct where funds 
are to be paid, or a similar funding mechanism provided to that 
beneficiary and designed to give that beneficiary a choice among 
providers.

PART 90--VIOLENCE AGAINST WOMEN

    7. The authority citation for part 90 is revised to read as 
follows:

    Authority: 42 U.S.C. 3711-3796gg-7; Sec. 826, Part E, Title 
VIII, Pub. L. 105-244, 112 Stat. 1581, 1815.

    8. Add Sec.  90.3 to subpart A to read as follows:


Sec.  90.3  Participation by faith-based organizations.

    The funds provided under this part shall be administered in 
compliance with the standards set forth in part 38 (Equal Treatment for 
Faith-based Organizations) of this chapter.

PART 91--GRANTS FOR CORRECTIONAL FACILITIES

    9. The authority citation for part 91 is revised to read as 
follows:

    Authority: 42 U.S.C. 13701 through 14223.

    10. In Sec.  91.3, add paragraph (g) to read as follows:


Sec.  91.3  General eligibility requirements.

* * * * *
    (g) The funds provided under this part shall be administered in 
compliance with the standards set forth in part 38 (Equal Treatment for 
Faith-based Organizations) of this chapter.
    11. In Sec.  91.23, add paragraph (d) to read as follows:


Sec.  91.23  Grant authority.

* * * * *
    (d) The funds provided under this part shall be administered in 
compliance with the standards set forth in part 38 (Equal Treatment for 
Faith-based Organizations) of this chapter.

PART 93--PROVISIONS IMPLEMENTING THE VIOLENT CRIME CONTROL AND LAW 
ENFORCEMENT ACT OF 1994

    12. The authority citation for part 93 is added to read as follows:

    Authority: 42 U.S.C. 3797u through 3797y-4.

    13. In Sec.  93.4, add paragraph (c) to read as follows:
* * * * *


Sec.  93.4  Grant authority.

    (c) The funds provided under this part shall be administered in 
compliance with the standards set forth in part 38 (Equal Treatment for 
Faith-based Organizations) of this chapter.

    Dated: September 17, 2003.
John Ashcroft,
Attorney General.
[FR Doc. 03-24294 Filed 9-29-03; 8:45 am]
BILLING CODE 4410-18-P