[Federal Register Volume 68, Number 189 (Tuesday, September 30, 2003)]
[Proposed Rules]
[Pages 56426-56428]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-24320]



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Part VII





Department of Veterans Affairs





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38 CFR Part 61



VA Homeless Providers Grant and Per Diem Program; Religious 
Organizations; Proposed Rule

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

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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 61

RIN 2900-AL63


VA Homeless Providers Grant and Per Diem Program; Religious 
Organizations

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: We propose to revise the regulations concerning the VA 
Homeless Providers Grant and Per Diem Program. More specifically, we 
propose to revise provisions that apply to religious organizations that 
receive VA funds under VA's Homeless Providers Grant and Per Diem 
Program to ensure that VA activities under this program are open to all 
qualified organizations, regardless of their religious character, and 
to clearly establish the proper uses to which funds may be put, and the 
conditions for the receipt of such funding.
    Also, consistent with Title VII of the Civil Rights Act of 1964, we 
propose to remove the regulatory prohibition against religious 
organizations making employment decisions on a religious basis. The 
numerous other requirements are more than sufficient to ensure that 
direct government funds are not used for inherently religious 
activities.

DATES: Comments must be received on or before October 30, 2003.

ADDRESSES: Mail or hand-deliver written comments to: Director, 
Regulations Management (00REG1), Department of Veterans Affairs, 810 
Vermont Ave., NW., Room 1068, Washington, DC 20420; or fax comments to 
(202) 273-9026; or e-mail comments to [email protected]. 
Comments should indicate that they are submitted in response to ``RIN 
2900-AL63.'' All comments received will be available for public 
inspection in the Office of Regulation Policy and Management, Room 
1063B, between the hours of 8 a.m. and 4:30 p.m., Monday through Friday 
(except holidays). Please call 202 273-9515 for an appointment.

FOR FURTHER INFORMATION CONTACT: Roger Casey, VA Homeless Providers 
Grant and Per Diem Program, Mental Health Strategic Health Care Group 
(116E), Department of Veterans Affairs, 810 Vermont Avenue, NW., 
Washington, DC 20420; (877) 332-0334. (This is a toll-free number.)

SUPPLEMENTARY INFORMATION: In the interim final rule document published 
in the Federal Register, March 19, 2003, we revised a portion of the 
``VA Homeless Providers Grant and Per Diem Program'' regulations. In 
order to allow the public to easily review the regulatory changes, we 
included the entire rule text for that section, including portions that 
were not changing from the regulation that had already been promulgated 
prior to the interim final rule. The interim final regulation contained 
a Sec.  61.64 concerning religious organizations, which had been 
promulgated previously and was not changed in the interim final rule, 
that reads as follows:

    (a) As a condition for receiving assistance under this part, an 
organization that is primarily a religious organization must agree 
to conduct activities for which the assistance is provided in a 
manner that is free from religious influences and must comply with 
the following:
    (1) It will not discriminate against any employee or applicant 
for employment on the basis of religion and will not limit 
employment or give preference in employment to persons on the basis 
of religion;
    (2) It will not discriminate against any person applying for 
housing or supportive services on the basis of religion and will not 
limit such housing or services or give preference to persons on the 
basis of religion; and
    (3) It will provide no religious instruction or counseling, 
conduct no religious worship or services, engage in no religious 
proselytizing, and exert no other religious influence as a condition 
of the provision of housing and supportive services.

    We propose to revise Sec.  61.64, consistent with Executive Order 
13199 (``Establishment of White House Office of Faith-Based and 
Community Initiatives'') and Executive Order 13279 (``Equal Protection 
of Laws for Faith-Based and Community Organizations''), to ensure that 
VA programs under this part 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 the 
receipt of such funding. Accordingly, we propose to revise Sec.  61.64 
in accordance with the following principles.
    1. Participation by faith based organizations in VA programs. The 
proposed rule would make clear that organizations are eligible to 
participate in VA programs under this part without regard to their 
religious character or affiliation, and that organizations may not be 
excluded from the competition for VA funds under this part because they 
are religious. Specifically, religious organizations would be eligible 
to compete for funding on the same basis, and under the same 
eligibility requirements, as all other nonprofit organizations. Also, 
the Federal Government, as well as State and local governments 
administering funds under VA programs under this part, would be 
prohibited from discriminating against organizations on the basis of 
religion or their religious character.
    2. Faith-based activities. The proposed rule would describe the 
requirement applicable to all recipient organizations regarding the use 
of VA funds under this part for faith-based activities. Specifically, a 
participating organization could not use direct VA funds under this 
part to finance 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 VA assistance, 
and participation must be voluntary for the beneficiaries of the 
directly funded programs or services under this part. This requirement 
would ensure that direct VA funds under this part provided to religious 
organizations are not used to support inherently religious activities. 
Thus, VA funds under this part 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 proposed restriction does not mean that an organization that 
receives VA funds under this part cannot engage in inherently religious 
activities. It simply means such an organization cannot fund these 
activities with direct VA funds under this part. Thus, faith-based 
organizations that receive direct VA funds under this part must take 
steps to separate, in time or location, their inherently religious 
activities from the VA-funded services that they offer under this part.
    The proposed rule defines the meaning of ``direct financial 
assistance'' and ``indirect financial assistance.'' We note, however, 
that VA currently has in place only programs that provide direct 
financial assistance to participating organizations.
    3. Independence of faith-based organizations. The proposed rule 
clarifies that a religious organization that participates in VA 
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 VA under this part to support any inherently religious 
activities, such as worship, religious instruction, or proselytization. 
Among other things, faith-based organizations

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may use space in their facilities to provide VA-funded services under 
this part, without removing religious art, icons, scripture, or other 
religious symbols. In addition, a VA-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 participates in a VA program under 
this part shall not, in providing service funded in whole or in part by 
VA, discriminate against a program beneficiary or prospective program 
beneficiary on the basis of religion or religious belief.
    5. Assurance requirement. The proposed rule would remove those 
provisions of VA's regulation that require only VA-funded religious 
organizations to provide assurance that they will conduct eligible 
program activities in a manner that is ``free from religious 
influences'' as VA imposes no comparable assurance requirements in any 
other context. VA believes it is unfair to require religious 
organizations alone to provide additional assurance, above and beyond 
those any other organization is required to provide, that they will 
comply with VA requirements. All organizations that participate in VA 
programs, including religious ones, must carry out eligible activities 
in accordance with all program requirements and other applicable 
requirements governing the conduct of VA-funded activities, including 
those prohibiting the use of direct financial assistance from VA to 
engage in inherently religious activities. In addition, to the extent 
that provisions of VA's regulation disqualify religious organizations 
from participating in VA's program 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. Such requirements may have a ``chilling effect'' on religious 
organizations, many of which are motivated by their faith to provide 
VA-funded social services or view the provision of such services as a 
``ministry.''
    As noted above, current Sec.  61.64 provides that as a condition 
for receiving assistance an organization that is primarily a religious 
organization must agree not to discriminate against any employee on the 
basis of religion and could not limit employment or give preference on 
the basis of religion. We propose to delete the hiring restriction. 
Section 702 of the Federal Civil Rights Act of 1964 provides that a 
religious organization may, without running afoul of Title VII, employ 
individuals who share its religious beliefs. This provision helps 
enable faith-based groups to promote common values, a sense of 
community and unity of purpose, and shared experiences through 
service--all of which can contribute to a religious organization's 
effectiveness. It thus helps protect the religious liberties of 
communities of faith. The proposed regulation thus reflects the 
recognition that a religious organization may determine that, in order 
to define or carry out its mission, it is important that it be able to 
take its faith into account in making employment decisions.

Comment Period

    As noted above, an interim final rule revising the VA Homeless 
Providers Grant and Per Diem regulations became effective on March 19, 
2003. We will begin working on a final rule relating to the interim 
final rule as soon as the comment period for the interim final rule 
closes. We are providing a 30-day comment period for this proposed rule 
concerning religious organizations so that any resulting changes can be 
included in said final rule.

Paperwork Reduction Act

    This document contains no provisions constituting a collection of 
information under the Paperwork Reduction Act (44 U.S.C. 3501-3521).

Executive Order 12866

    This document has been reviewed by the Office of Management and 
Budget under Executive Order 12866.

Regulatory Flexibility Act

    The Secretary hereby certifies that the proposed rule will not have 
a significant economic impact on a substantial number of small entities 
as they are defined in the Regulatory Flexibility Act (RFA), 5 U.S.C. 
601-602. This proposed rule merely ensures that religious organizations 
are treated the same as other participants in the Homeless Providers 
Grant and Per Diem Program. It creates no new economic impact. 
Therefore, pursuant to 5 U.S.C. 605(b), this proposed rule is exempt 
from the initial and final regulatory flexibility analysis requirement 
of sections 603 and 604.

Unfunded Mandates

    The Unfunded Mandates Reform Act requires, at 2 U.S.C. 1532, that 
agencies prepare an assessment of anticipated costs and benefits before 
developing any rule that may result in an expenditure by State, local, 
or tribal governments, in the aggregate, or by the private sector of 
$100 million or more in any given year. This rule would have no 
consequential effect on State, local, or tribal governments.

Catalog of Federal Domestic Assistance Program

    The Catalog of Federal Domestic Assistance program number is 
64.024.

List of Subjects in 38 CFR Part 61

    Administrative practice and procedure, Alcohol abuse, Alcoholism, 
Day care, Dental health, Drug abuse, Government contracts, Grant 
programs-health, Grant programs-veterans, Health care, Health 
facilities, Health professions, Health records, Homeless, Mental health 
programs, Per-diem program, Reporting and recordkeeping requirements, 
Travel and transportation expenses, Veterans.

    Approved: May 30, 2003.
Anthony J. Principi,
Secretary of Veterans Affairs.
    For the reasons set forth in the preamble, we propose to amend 38 
CFR part 61 as follows:

PART 61--VA HOMELESS PROVIDERS GRANT AND PER DIEM PROGRAM

    1. The authority citation for part 61 continues to read as follows:

    Authority: 38 U.S.C. 501, 2002, 2011, 2012, 2061, 2064, 7721 
note.

    2. Revise Sec.  61.64 to read as follows:


Sec.  61.64  Religious organizations.

    (a) Organizations that are religious or faith-based are eligible, 
on the same basis as any other organization, to participate in VA 
programs under this part. Neither the Federal Government nor a State or 
local government receiving funds under this part shall discriminate 
against an organization on the basis of the organization's religious 
character or affiliation.
    (b)(1) No organization may use direct financial assistance from VA 
under this part to pay for any of the following:
    (i) Religious worship, instruction, or proselytization; or
    (ii) Equipment or supplies to be used for any of those activities.
    (2) For purposes of this section, ``indirect financial assistance'' 
means Federal assistance in which a service provider receives program 
funds through a voucher, certificate, agreement or other form of 
disbursement, as a result of the independent and private choices of 
individual beneficiaries. ``Direct financial assistance,'' means 
Federal aid

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in the form of a grant, contract, or cooperative agreement where the 
independent choices of individual beneficiaries do not determine which 
organizations receive program funds.
    (c) Organizations that engage in inherently religious activities, 
such as worship, religious instruction, or proselytization, must offer 
those services separately in time or location from any programs or 
services funded with direct financial assistance from VA, and 
participation in any of the organization's inherently religious 
activities must be voluntary for the beneficiaries of a program or 
service funded by direct financial assistance from VA.
    (d) A religious organization that participates in VA programs under 
this part 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 financial assistance from VA under this 
part 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 VA-
funded services under this part, without removing religious art, icons, 
scripture, or other religious symbols. In addition, a VA-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 and otherwise govern itself on a 
religious basis, and include religious references in its organization's 
mission statements and other governing documents.
    (e) An organization that participates in a VA program under this 
part shall not, in providing program assistance, discriminate against a 
program beneficiary or prospective program beneficiary regarding 
housing, supportive services, or technical assistance, on the basis of 
religion or religious belief.
    (f) If a State or local government voluntarily contributes its own 
funds to supplement Federally funded activities, the State or local 
government has the option to segregate the Federal funds or commingle 
them. However, if the funds are commingled, this provision applies to 
all of the commingled funds.

(Authority: 38 U.S.C. 501, 2002, 2011, 2012, 2061, 2064, 7721 note)

[FR Doc. 03-24320 Filed 9-29-03; 8:45 am]
BILLING CODE 8320-01-P