[Federal Register Volume 69, Number 46 (Tuesday, March 9, 2004)]
[Proposed Rules]
[Pages 11234-11241]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-5133]



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Part V





Department of Labor





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Employment and Training Administration



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20 CFR Parts 667 and 670

29 CFR Parts 2 and 37



Equal Treatment in Department of Labor Programs for Faith-Based and 
Community Organizations; Protection of Religious Liberty of Department 
of Labor Social Service Providers and Beneficiaries; Proposed Rule

  Federal Register / Vol. 69, No. 46 / Tuesday, March 9, 2004 / 
Proposed Rule  

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DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Part 667

20 CFR Part 670

Office of the Secretary

29 CFR Part 2

29 CFR Part 37

RIN 1290-AA21


Equal Treatment in Department of Labor Programs for Faith-Based 
and Community Organizations; Protection of Religious Liberty of 
Department of Labor Social Service Providers and Beneficiaries

AGENCY: Employment and Training Administration and the Office of the 
Secretary, Labor.

ACTION: Proposed rule; request for comments.

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SUMMARY: The United States Department of Labor (DOL or the Department) 
is proposing to revise its general regulations. This proposed rule 
would clarify, within the framework of constitutional guidelines, that 
faith-based and community organizations are able to participate in DOL 
social service programs without regard to their religious character or 
affiliation, and are able to apply for and compete on an equal footing 
with other eligible organizations to receive DOL support. In addition, 
in order to consolidate in one place the Department's regulations on 
religious activities, this proposed rule would revise both the 
Employment and Training Administration (ETA) regulation on religious 
services at Job Corps centers and the Workforce Investment Act of 1998 
(WIA) regulations relating to the use of WIA Title I financial 
assistance to support employment and training in religious activities. 
DOL supports the participation of faith-based and community 
organizations in its programs.

DATES: Comments must be submitted by May 10, 2004.

ADDRESSES: You may submit comments, identified by Regulatory 
Information Number (RIN) 1290-AA21, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
     E-mail: Comments may be submitted by e-mail to 
[email protected]. Include RIN 1290-AA21 in the subject line of the 
message.
     Fax: As a convenience to commenters, comments of 
five pages or less may be submitted by facsimile (``FAX'') machine to 
(202) 693-6146, which is not a toll-free number.
     Mail: Brent Orrell, Director, Center for Faith-
Based and Community Initiatives (CFBCI), U.S. Department of Labor, 
Frances Perkins Building, 200 Constitution Ave., NW., Room S-2235, 
Washington, DC 20210.
    Instructions: All submissions received must include the Regulatory 
Information Number (RIN) 1290-AA21 for this rulemaking. Receipt of 
submissions, whether by U.S. mail, FAX transmittal, or e-mail, will not 
be acknowledged. Because DOL continues to experience delays in 
receiving postal mail in the Washington, DC area, commenters are 
encouraged to submit any comments by mail early, or to transmit them 
electronically through the Agency Web site or by FAX or e-mail.
    Comments will be available for public inspection during normal 
business hours at the CFBCI office, at the address listed above for 
mailed comments. Persons who need assistance to review the comments 
will be provided with appropriate aids such as readers or print 
magnifiers. Copies of this proposed rule will be made available in the 
following formats: large print, electronic file on computer disk, and 
audiotape. To schedule an appointment to review the comments and/or to 
obtain the Proposed Rule in an alternate format, contact CBFCI at (202) 
693-6450.

FOR FURTHER INFORMATION CONTACT: On the proposed revisions to the 
Office of the Secretary's general regulations, 29 CFR part 2, contact: 
Rhett Butler, Associate Director for Policy Development, CFBCI, (202) 
693-6450. On the proposed revisions to 20 CFR part 667, contact Maria 
K. Flynn, Acting Administrator, Office of Policy Development, 
Evaluation and Research, Employment and Training Administration, (202) 
693-3700. On the proposed revisions to 20 CFR 670.555, contact: Richard 
Trigg, Administrator of the National Office of Job Corps, (202) 693-
3000. On the proposed revisions to 29 CFR 37.6, contact Annabelle T. 
Lockhart, Director, Civil Rights Center (CRC), (202) 693-6500. Please 
note these are not toll-free numbers. Individuals with hearing or 
speech impairments 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

    Faith-based (or ``religious'') and community organizations are an 
important part of the social services network of the United States, 
offering a multitude of social services to those in need. Faith-based 
and community 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 policies and programs have not recognized faith-based 
and community organizations as resources for providing social 
assistance. Federal, State and local governments have often imposed 
barriers to the participation of faith-based and community 
organizations in social service programs, including unwarranted 
regulatory barriers. President Bush has directed Federal agencies, 
including DOL, to take steps to ensure that Federal policies and 
programs are fully open to faith-based and community organizations 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 
and to help them enter, succeed, and thrive in the workforce. The 
Administration believes that there should be an equal opportunity for 
all organizations--both faith-based and otherwise--to participate 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 8497), created Centers for 
Faith-Based and Community Initiatives in five cabinet departments--
Labor, Education, Health and Human Services, Housing and Urban 
Development, and Justice. Executive Order 13198 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 (67 FR 
77145), created Centers in two additional agencies--the United States 
Agency for International Development and the Department of 
Agriculture--and charged those Centers with duties similar to those set 
forth in Executive Order 13198. On December 12, 2002, President Bush 
also issued Executive

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Order 13279, published in the Federal Register on December 16, 2002 (67 
FR 77141). Executive Order 13279 charges executive branch agencies to 
give equal treatment to faith-based and community organizations that 
apply to the Government for Federal financial assistance to meet social 
needs in America's communities. President Bush called for an end to 
discrimination against faith-based and community 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 programs supported 
with Federal financial assistance. President Bush directed each 
executive agency, including DOL, to implement these policies. This 
proposed rule is part of DOL's efforts to fulfill its responsibilities 
under both Executive Orders 13198 and 13279.

II. Proposed Rule

A. Purpose of the Proposed Rule

    Consistent with the President's initiative, this proposed rule 
would revise DOL's general regulations to make clear that faith-based 
and community organizations may participate in DOL social service 
programs, including as recipients of Federal financial assistance. The 
objective of this proposed rule is to ensure that DOL-supported social 
service programs are open to all qualified organizations, regardless of 
their religious character. This rule also aims to set forth the 
conditions for seeking or receiving DOL support related to these 
programs and the permissible uses to which such support may be put. In 
addition, this proposed rule is designed to ensure that DOL's social 
service programs are implemented in a manner consistent with the 
requirements of the Constitution, including the Religion Clauses of the 
First Amendment.

B. Proposed Amendments to DOL General Regulations

    DOL proposes to amend its General Regulations at 29 CFR part 2 by 
incorporating a new Subpart D--Equal Treatment in DOL Programs for 
Faith-Based and Community Organizations; Protection of Religious 
Liberty of DOL Social Service Providers and Beneficiaries--to address 
the areas identified below.
1. Participation by Faith-Based and Community Organizations in DOL 
Social Service Programs
    The proposed rule clarifies in Sec.  2.32 that organizations are 
eligible to participate in DOL social service programs without regard 
to the religious character or affiliation of such organizations, and 
that eligible organizations may not be excluded from the competition 
for DOL support related to DOL social service programs simply because 
such organizations are faith-based. Specifically, faith-based 
organizations are eligible to compete for such support on the same 
basis, and under the same eligibility requirements, as all other non-
governmental organizations. DOL, DOL social service intermediary 
providers, and State and local governments administering DOL support 
are prohibited from discriminating for or against organizations on the 
basis of the organizations' religious character or affiliation. This 
rule does not, however, preclude DOL programs from accommodating 
religious organizations in a manner consistent with the Establishment 
Clause. Of course, all DOL programs must be implemented in a manner 
consistent with the Establishment, Free Exercise, and Free Speech 
Clauses of the First Amendment to the Constitution, as well as with 
other applicable constitutional provisions.
2. Inherently Religious Activities
    The proposed rule describes in Sec.  2.33 the requirements related 
to inherently religious activities in DOL-supported social service 
programs. Specifically, as described in Sec.  2.33(b), an organization 
may not use direct DOL support \1\ for 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 social service programs 
receiving direct DOL support, and participation in any such inherently 
religious activities must be voluntary for the beneficiaries of such 
programs. This requirement ensures that DOL support provided directly 
to a faith-based organization is not used for inherently religious 
activities. Thus, direct DOL support may not be used, for example, to 
conduct prayer meetings, worship services, or any other activity that 
is inherently religious.
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    \1\ As used in this proposed rule, the term ``direct DOL 
support'' refers to DOL support provided directly to a religious or 
other non-governmental organization within the meaning of the 
Establishment Clause of the First Amendment. For example, direct DOL 
support may occur where the Federal Government, a State or local 
government administering DOL support, or a DOL social service 
intermediary provider selects an organization and obtains the needed 
services straight from the organization (e.g., via a grant or 
cooperative agreement).
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    This restriction does not mean that a DOL social service provider 
cannot engage in inherently religious activities. Such activities are 
permissible, but DOL social service providers that receive DOL support 
directly must take steps to separate, in time or location, their 
inherently religious activities from services that they offer with 
direct DOL support.
    These restrictions on inherently religious activities do not apply, 
as explained in Sec.  2.33(c), where DOL support is provided indirectly 
to organizations. Indirect DOL support refers to DOL support that is 
indirect within the meaning of the Establishment Clause of the First 
Amendment to the Constitution. An organization may receive such 
indirect DOL support if, for example, a program beneficiary redeems a 
voucher, coupon, certificate, or similar mechanism that was provided to 
that individual using DOL financial assistance under a program that is 
designed to give that individual a genuine and independent private 
choice among providers or program options. See Zelman v. Simmons-
Harris, 536 U.S. 639 (2002). Vouchers might be provided, for example, 
as part of an Individual Training Account (ITA) under the Workforce 
Investment Act (WIA). Accordingly, if a WIA program beneficiary chose 
to redeem an ITA voucher at a seminary that had qualified as an 
eligible training provider, this proposed rule would not prohibit the 
seminary from using such indirect financial assistance to offer a 
program that integrated faith into its training program.
    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. See Cruz v. 
Beto, 405 U.S. 319, 322 n.2 (1972) (explaining that ``reasonable 
opportunities must be afforded to all prisoners to exercise the 
religious freedom guaranteed by the First and Fourteenth Amendment 
without fear of penalty''); Abington School District v. Schempp, 374 
U.S. 203, 299 (1963) (Brennan, J., concurring) (observing that 
``hostility, not neutrality,

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would characterize the refusal to provide chaplains and places of 
worship to prisoners * * * cut off by the State from all civilian 
opportunities for public communion''). Accordingly, the proposed rule 
at Sec.  2.33(b)(3) recognizes that the legal restrictions applied to 
religious activities in DOL social service programs that may be 
implemented in correctional facilities may sometimes be different from 
the legal restrictions that are applied to other DOL-supported social 
service programs.
    In addition, as addressed in Sec.  2.33(b)(3), the legal 
restrictions that apply to religious activities within some DOL-
supported social service programs, e.g. isolated residential Job Corps 
facilities, may sometimes be different from legal restrictions that are 
applied to other DOL programs. This is because where there is extensive 
government control over the environment of a DOL-supported social 
service program, program officials may sometimes need to take 
affirmative steps, in the form of access to ministers and similar 
programs, to provide an opportunity for beneficiaries in such DOL 
programs to exercise their religion. Cf. Katcoff v. Marsh, 755 F.2d 
223, 234 (2d Cir. 1985) (finding it ``readily apparent'' that the 
Government is obligated by the First Amendment to make religion 
available to members of the Army who otherwise would not have access to 
their religion because they are often in isolated areas without access 
to religious opportunities). Without such efforts, religious freedom 
might not exist for these DOL program beneficiaries. Of course, 
religious activities must be voluntary for all beneficiaries of DOL 
programs.
    Finally, as referenced in Sec.  2.33(b)(2), nothing in this 
regulation is intended to restrict the exercise of rights or duties 
guaranteed by the Constitution. For example, program officials must not 
impermissibly restrict program beneficiaries' ability to freely express 
their views and to exercise their right to religious freedom. 
Additionally, subject to reasonable time, place and manner 
restrictions, residential facilities receiving DOL support must permit 
residents opportunities to engage in voluntary religious activities, 
including holding religious services, at these facilities.
3. Independence of Faith-Based and Community Organizations
    The proposed rule clarifies in Sec.  2.32(b) that a faith-based or 
community organization that is a DOL social service provider or 
participates in DOL social service programs retains its independence 
and may continue to carry out its mission, including the definition, 
development, practice, and expressions of its religious beliefs. Such 
an organization, however, must not use direct DOL support for any 
inherently religious activities, such as worship, religious 
instruction, or proselytization. Among other things, a faith-based or 
community organization that is a DOL social service provider or 
participates in DOL social service programs may use space in its 
facilities to provide social services, without removing religious art, 
icons, scriptures, or other religious symbols. In addition, such a 
faith-based or community organization may retain religious terms in the 
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 DOL-Supported Social Service Programs
    The proposed rule clarifies in Sec.  2.33(a) that DOL, DOL social 
service intermediary providers, DOL social service providers in their 
use of direct DOL support, and State and local governments, must not, 
in providing social services (including outreach for such services), 
discriminate for or against a current or prospective program 
beneficiary on the basis of religion or religious belief.
    The proposed rule would not prohibit organizations receiving DOL 
support indirectly (for example, organizations receiving DOL support as 
the result of the genuine and independent private choice of a 
beneficiary of a program offering choice among providers or program 
options) from offering assistance that integrates faith and social 
services and requiring participation in all aspects of the 
organizations' programs and activities, including the religious 
aspects. In such programs, voluntariness is ensured by the provision of 
genuine choice by the beneficiary, consistent with constitutional 
requirements. However, as noted in Section II.B.8 of this preamble, the 
proposed rule would have no effect on existing statutes. Thus, to the 
extent that such statutes restrict the activities of organizations 
receiving indirect DOL support, such restrictions remain in effect. 
Accordingly, the statute that applies to each program should be 
reviewed for the scope of its applicability, along with any regulations 
that implement specific provisions of the statute.
5. Assurance Requirements
    This rule proposes in Sec.  2.32(c) to direct the removal and 
prohibit the institution of any provision in agreements, covenants, 
memoranda of understanding, policies, or regulations used by DOL, or by 
a DOL social service intermediary provider or a State or local 
government administering DOL support, that requires only faith-based 
organizations receiving DOL support to provide assurances that they 
will not use such support for inherently religious activities. It is 
unfair to require faith-based organizations alone to provide additional 
assurances that other organizations are not required to provide. All 
DOL social service providers, as well as State and local governments 
administering DOL support, must carry out DOL-supported activities in 
accordance with all program requirements and other applicable 
requirements governing the conduct of DOL-supported activities, 
including those requirements prohibiting the use of direct DOL support 
for inherently religious activities. In addition, to the extent that 
provisions in agreements, covenants, memoranda of understanding, 
policies, or regulations used by DOL, or by a DOL social service 
intermediary provider or a State or local government administering DOL 
support, disqualify faith-based and community organizations from 
participating in DOL's programs because such organizations are 
motivated or influenced by religious faith to provide social services, 
or because of the organizations' religious character or affiliation, 
the proposed rule would remove such restrictions, which are 
inconsistent with governing law.
6. Definitions
    The proposed definitions included in Sec.  2.31 of subpart D for 
``Federal financial assistance'' and ``social service program'' were 
based on the definitions of the same terms in Executive Order 13279. 
The definitions of the terms ``DOL-supported social service program,'' 
``DOL social service program,'' ``DOL program,'' ``DOL social service 
provider,'' ``DOL social service intermediary provider'' and ``DOL 
support'' were developed to make the rule more reader-friendly.
7. Application to State and Local Funds
    The proposed rule clarifies in Sec.  2.34 that if a State or local 
government contributes its own funds (voluntarily or in accordance with 
a matching funds program) to supplement Federal funds received to 
support DOL social service programs, the State or local government has 
the option to segregate the Federal funds or commingle them. However, 
if the funds are commingled, the proposed

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rule would apply to both the Federal and the State or local funds.
8. Effect on Title VII Employment Nondiscrimination Requirements and on 
Other Existing Statutes
    The proposed rule clarifies in Sec.  2.35 that the receipt of DOL 
support does not cause a religious organization to forfeit its 
exemption from Title VII of the Civil Rights Act of 1964's prohibitions 
on employment discrimination on the basis of religion. In addition, the 
proposed rule does not alter the effect of other statutes, including 
those that include requirements that recipients of certain types of DOL 
support refrain from discriminating on the basis of religion. See, 
e.g., section 188(a)(2) of the Workforce Investment Act of 1998, 29 
U.S.C. 2938(a)(2).
9. Status of Nonprofit Organizations
    The proposed rule also establishes in Sec.  2.36 certain 
alternative mechanisms by which organizations can prove they are 
nonprofit, which is sometimes an eligibility requirement for receiving 
DOL support. The availability of these alternative mechanisms will 
reduce the administrative burden required to prove nonprofit status and 
make it easier to prove eligibility when seeking DOL support, thereby 
allowing more organizations with limited resources to qualify for DOL 
support where nonprofit status is a requirement. Because many faith-
based and community organizations have limited resources, the addition 
of these alternate mechanisms is consistent with the President's policy 
of enlarging eligibility for social services provision to include a 
broader spectrum of providers, including faith-based and community 
organizations. However, such alternative mechanisms would not apply 
where a statute requires a specific method for establishing nonprofit 
status.

C. Proposed Amendments to Job Corps and WIA Regulations

    Consistent with the Administration's policy regarding the 
participation of faith-based organizations in the Government's social 
service programs as reflected in Executive Orders 13198 and 13279, and 
in order to consolidate the Department's regulations regarding 
religious activities and the participation of faith-based organizations 
and equal treatment of such organizations, this proposed rule includes 
changes to the Job Corps regulation on religious services found at 20 
CFR 670.555 and to the WIA regulations on religious activities found at 
29 CFR 37.6, and at 20 CFR 667.266 and 667.275, relating to the use of 
WIA Title I financial assistance to support employment or training in 
otherwise eligible religious activities.
1. Job Corps
    With regard to the Job Corps regulation, the Department proposes to 
delete paragraphs (b) and (c) of 20 CFR 670.555. Currently paragraph 
(b) states that religious services may not be held on the premises of a 
Job Corps center unless the center is so isolated that transportation 
to and from community religious facilities is impracticable. Paragraph 
(c) provides that if religious services are held on center, no Federal 
funds may be paid to those who conduct such services, services may not 
be confined to one denomination, and centers may not require students 
to attend services. The standards for conducting religious activities 
at Job Corps centers would now instead be addressed by 29 CFR part 2, 
subpart D as set forth in this NPRM. Accordingly, the Department 
proposes to delete paragraphs (b) and (c), redesignate existing 
paragraph (d) as paragraph (b), and insert a new paragraph (c) that 
would cross reference 29 CFR part 2, subpart D.
2. WIA
    With regard to the WIA regulations, the Department proposes to 
delete paragraph (1) of 29 CFR 37.6(f). Currently, paragraph (1) bars 
recipients of WIA Title I financial assistance from permitting 
``participants'' ``to be employed or trained in sectarian activities.'' 
(WIA ``participants'' are defined at 29 CFR 37.4 to be individuals who 
have been determined to be eligible to participate in, and who are 
receiving aid, benefits, services or training under, a program or 
activity funded in whole or in part under Title I of WIA.) This broad 
prohibition is inconsistent with current law, which permits the use of 
Federal financial assistance to provide religious training if the 
assistance is provided indirectly within the meaning of the 
Establishment Clause of the First Amendment to the Constitution and the 
providers of training otherwise satisfy the requirements of the program 
(as discussed in Section II.B.2 of this preamble). The conditions under 
which WIA Title I financial assistance may be used for religious 
employment and training would now instead be addressed by 29 CFR part 
2, subpart D, as set forth in this NPRM. Accordingly, the Department 
proposes to revise paragraph (1) by deleting the existing language and 
inserting new language that would cross reference 29 CFR part 2, 
subpart D, as set forth in this NPRM.
    For the same reasons, the Department also proposes to revise 
paragraph (b)(1) of 20 CFR part 667.266. Currently, this paragraph 
refers to and summarizes the restrictions set forth in paragraph (1) of 
29 CFR 37.6(f). The Department proposes to revise paragraph (b)(1) by 
deleting the existing language and inserting new language that would 
cross reference 29 CFR part 2, subpart D, as set forth in this NPRM.
    The Department also proposes to revise paragraph (b) of 20 CFR part 
667.275. Like 20 CFR 667.266(b)(1), this paragraph currently refers to 
and summarizes the restrictions on employment and training in otherwise 
eligible religious activities that are set forth in 29 CFR 37.6(f)(1). 
Therefore, the first sentence of the proposed revision of this 
paragraph would parallel the proposed language for 20 CFR 
667.266(b)(1), discussed above.
    In addition, the existing language of 20 CFR 667.275(b) summarizes 
the restrictions set forth in 29 CFR 37.6(f)(2) regarding the 
employment of WIA participants to carry out the construction, 
operation, or maintenance of religious facilities. To be consistent 
with the revisions to 20 CFR part 667 described in the preceding 
paragraphs of this preamble, the second sentence of the proposed 
revisions to 20 CFR part 667 would simply cross-reference 29 CFR 
37.6(f)(2), and the existing language of 20 CFR 667.275(b) would be 
deleted.
    Finally, the Department proposes to amend 20 CFR 667.266(b)(2). In 
discussing the limitations imposed by section 188(a)(3) regarding the 
employment of WIA participants to carry out the construction, 
operation, or maintenance of religious facilities, the current language 
of the paragraph refers incorrectly to 29 CFR 37.6(f)(1). The correct 
reference is to 29 CFR 37.6(f)(2), as described above. For consistency, 
the proposed revision of this paragraph is identical to the language in 
the proposed revision of 20 CFR 667.275(b) regarding the same issue.

III. Regulatory Procedures

Executive Order 12866

    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). The Office 
of Management and Budget (OMB) reviewed this rule under Executive Order 
12866, Regulatory Planning and Review.

Regulatory Flexibility Act

    The Department has notified the Chief Counsel for Advocacy, Small 
Business

[[Page 11238]]

Administration, and made the certification pursuant to the Regulatory 
Flexibility Act (RFA) at 5 U.S.C. 605(b), that this proposed 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 recipients of DOL support. Rather, the 
purpose of the proposed rule is to clarify that DOL's social service 
programs are open to all qualified organizations, regardless of their 
religious character, and to establish clearly the permissible uses to 
which DOL support may be put. Notwithstanding the Secretary's 
determination that this rule will not have a significant economic 
effect on a substantial number of small entities, DOL specifically 
invites comments regarding any less burdensome alternatives to this 
rule that will meet DOL's objectives as described in this preamble.

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.

Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because this rule does 
not contain any information collection requirements that require the 
approval of the Office of Management and Budget.

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, DOL specifically solicits comments from State and local 
government officials on this proposed rule.

List of Subjects

20 CFR Part 667

    Employment; Grant programs--labor; Reporting and recordkeeping 
requirements.

20 CFR Part 670

    Employment; Grant programs--labor; Job Corps; Religious 
discrimination.

29 CFR Part 2

    Administrative practice and procedure; Claims; Courts; Government 
employees; Religious discrimination.

29 CFR Part 37

    Administrative practice and procedure; Aged; Aliens; Civil rights; 
Discrimination; Equal educational opportunity; Equal employment 
opportunity; Grant programs-labor; Individuals with disabilities; 
Investigations; Manpower training programs; Political affiliation 
discrimination; Religious discrimination; Reporting and recordkeeping 
requirements; Sex discrimination.
    For the reasons set forth in the preamble, the Department of Labor 
proposes to amend 20 CFR part 667; 20 CFR part 670; 29 CFR part 2; and 
29 CFR part 37 as set forth below.

    Signed at Washington, DC, this 3rd day of March 2004.
Elaine L. Chao,
Secretary of Labor.
Emily S. DeRocco,
Assistant Secretary for Employment and Training.

Title 20--Employees' Benefits

Chapter V--Employment and Training Administration, Department of Labor

PART 667--ADMINISTRATIVE PROVISIONS UNDER TITLE I OF THE WORKFORCE 
INVESTMENT ACT

    1. The authority citation for part 667 is revised to read as 
follows:

    Authority: Subtitle C of Title I, Sec. 506(c), Pub. L. 105-220, 
112 Stat. 936 (20 U.S.C. 9276(c)); Executive Order 13198, 66 FR 
8497, 3 CFR 2001 Comp., p. 750; Executive Order 13279, 67 FR 77141, 
3 CFR 2002 Comp., p. 258.

    2. In Sec.  667.266, paragraph (b) is revised to read as follows:


Sec.  667.266  What are the limitations related to religious 
activities?

* * * * *
    (b)(1) The circumstances under which DOL support, including WIA 
Title I financial assistance, may be used to employ or train 
participants in religious activities are described in 29 CFR part 2, 
subpart D, which also contains requirements related to equal treatment 
in Department of Labor programs for religious organizations, and to 
protecting the religious liberty of Department of Labor social service 
providers and beneficiaries.
    (2) Limitations on the use of WIA Title I financial assistance for 
the maintenance of facilities used for religious instruction or worship 
are described in the WIA nondiscrimination regulations at 29 CFR 
37.6(f)(2).
    3. In Sec.  667.275, paragraph (b) is revised to read as follows:


Sec.  667.275  What are a recipient's obligations to ensure 
nondiscrimination and equal opportunity, and what are a recipient's 
obligations with respect to religious activities?

* * * * *
    (b) The circumstances under which recipients may use DOL support, 
including WIA Title I financial assistance, to employ or train 
participants in religious activities are described in 29 CFR part 2, 
subpart D, which also contains requirements related to equal treatment 
of religious organizations in Department of Labor programs, and to 
protection of religious liberty of Department of Labor social service 
providers and beneficiaries. Limitations on the use of WIA Title I 
financial assistance for the maintenance of facilities used for 
religious instruction or worship are described in the WIA 
nondiscrimination regulations at 29 CFR 37.6(f)(2). See section 
188(a)(3) of the Workforce Investment Act of 1998, 29 U.S.C. 
2938(a)(3).

PART 670--THE JOB CORPS UNDER TITLE I OF THE WORKFORCE INVESTMENT 
ACT

    4. The authority citation for part 670 is revised to read as 
follows:

    Authority: Subtitle C of Title I, Sec. 506(c), Pub. L. 105-220, 
112 Stat. 936 (20 U.S.C. 2881 et seq. and 9276(c)); 5 U.S.C. 301; 
Executive Order 13198, 66 FR 8497, 3 CFR 2001 Comp., p. 750); 
Executive Order 13279, 67 FR 77141, 3 CFR 2002 Comp., p. 258.

    5. Section 670.555 is amended by removing paragraph (b), 
redesignating paragraph (d) as paragraph (b), and revising paragraph 
(c) to read as follows:


Sec.  670.555  What are the center's responsibilities in ensuring that 
students' religious rights are respected?

* * * * *
    (c) Requirements related to equal treatment of religious 
organizations in Department of Labor programs, and to protection of 
religious liberty of Department of Labor social service providers and 
beneficiaries, are found at subpart D of 29 CFR part 2. See also 
Sec. Sec.  667.266 and 667.275 of 20 CFR; 29 CFR part 37.

[[Page 11239]]

Title 29--Labor

Chapter I--Office of the Secretary of Labor

PART 2--GENERAL REGULATIONS

    7. The authority citation for part 2 is revised to read as follows:

    Authority: 5 U.S.C. 301; Executive Order 13198, 66 FR 8497, 3 
CFR 2001 Comp., p. 750; Executive Order 13279, 67 FR 77141, 3 CFR 
2002 Comp., p. 258.

    8. Part 2 is amended by adding a new subpart D to read as follows:

PART 2--GENERAL REGULATIONS

* * * * *

Subpart D--Equal Treatment in Department of Labor Programs for 
Religious Organizations; Protection of Religious Liberty of 
Department of Labor Social Service Providers and Beneficiaries

2.30 Purpose.
2.31 Definitions.
2.32 Equal participation of religious organizations.
2.33 Responsibilities of DOL, DOL social service providers and State 
and local governments administering DOL support.
2.34 Application to State and local funds.
2.35 Effect of DOL support on Title VII employment nondiscrimination 
requirements and on other existing statutes.
2.36 Status of nonprofit organizations.


Sec.  2.30  Purpose.

    The purpose of the regulations in this subpart is to ensure that 
DOL-supported social service programs are open to all qualified 
organizations, regardless of the organizations' religious character, 
and to establish clearly the permissible uses to which DOL support for 
social service programs may be put, and the conditions for receipt of 
such support. In addition, this proposed rule is designed to ensure 
that the Department's social service programs are implemented in a 
manner consistent with the requirements of the Constitution, including 
the Religion Clauses of the First Amendment.


Sec.  2.31  Definitions.

    As used in the regulations in this subpart:
    (a) The term Federal financial assistance means assistance that 
non-Federal entities (including State and local governments) receive or 
administer in the form of grants, contracts, loans, loan guarantees, 
property, cooperative agreements, direct appropriations, or other 
direct or indirect assistance, but does not include a tax credit, 
deduction or exemption.
    (b) The term social service program means a program that is 
administered or supported by the Federal Government, or by a State or 
local government using Federal financial assistance, and that provides 
services directed at reducing poverty, improving opportunities for low-
income children, revitalizing low-income communities, empowering low-
income families and low-income individuals to become self-sufficient, 
or otherwise helping people in need. Such programs include, but are not 
limited to, the following:
    (1) Child care services and services to meet the special needs of 
children, older individuals, and individuals with disabilities 
(including physical, mental, or emotional disabilities);
    (2) Job training and related services, and employment services;
    (3) Information, referral, and counseling services;
    (4) Literacy and mentoring programs; and
    (5) Services for the prevention and treatment of juvenile 
delinquency and substance abuse, services for the prevention of crime 
and the provision of assistance to the victims and the families of 
criminal offenders, and services related to intervention in, and 
prevention of domestic violence.
    (c) The term DOL means the U.S. Department of Labor.
    (d) The term DOL-supported social service program, DOL social 
service program, or DOL program means a social service program, as 
defined in paragraph (b) of this section, that is administered by or 
for DOL with DOL support. Such programs include, but are not limited 
to, the One Stop Career Center System, the Job Corps, and other 
programs supported through the Workforce Investment Act.
    (e) The term DOL social service provider means any non-Federal 
organization, other than a State or local government, that seeks or 
receives DOL support as defined in paragraph (g) of this section, or 
participates in DOL programs other than as the ultimate beneficiary of 
such programs.
    (f) The term ``DOL social service intermediary provider'' means any 
DOL social service provider that, as part of its duties, selects 
subgrantees to receive DOL support or subcontractors to provide DOL-
supported services, or has the same duties under this part as a 
governmental entity.
    (g) The term DOL support means Federal financial assistance, as 
well as procurement funding provided to a non-Federal organization, 
including a State or local government, to support the organization's 
administration of or participation in a DOL social service program as 
defined in paragraph (d) of this section.


Sec.  2.32  Equal participation of religious organizations.

    (a) Religious organizations must be eligible, on the same basis as 
any other organization, to seek DOL support or participate in DOL 
programs for which they are otherwise eligible. DOL, DOL social service 
intermediary providers, as well as State and local governments 
administering DOL support, must not discriminate for or against an 
organization on the basis of the organization's religious character or 
affiliation, although this requirement does not preclude DOL, DOL 
social service providers, or State and local governments administering 
DOL support from accommodating religion in a manner consistent with the 
Establishment Clause. In addition, DOL, DOL social service intermediary 
providers, and State and local governments administering DOL support 
must continue to comply with otherwise applicable constitutional 
principles, including, among others, those articulated in the 
Establishment, Free Speech, and Free Exercise Clauses of the First 
Amendment to the Constitution.
    (b) A religious organization that is a DOL social service provider 
retains its independence from Federal, State, and local governments and 
must be permitted to continue to carry out its mission, including the 
definition, practice, and expression of its religious beliefs, subject 
to the provisions of Sec.  2.33 of this subpart. Among other things, 
such a religious organization must be permitted to:
    (1) Use its facilities to provide DOL-supported social services 
without removing or altering religious art, icons, scriptures, or other 
religious symbols from those facilities; and
    (2) Retain its authority over its internal governance, including 
retaining religious terms in its name, selecting its board members on a 
religious basis, and including religious references in its mission 
statements and other governing documents.
    (c) A grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by DOL, a State or 
local government administering DOL support, or a DOL social service 
intermediary provider must not require only religious organizations to 
provide assurances that they will not use direct DOL support for 
inherently religious activities. Any such requirements must apply 
equally to both religious and other organizations. All organizations, 
including religious ones,

[[Page 11240]]

that are DOL social service providers must carry out DOL-supported 
activities in accordance with all applicable legal and programmatic 
requirements, including those prohibiting the use of direct DOL support 
for inherently religious activities. A grant document, agreement, 
covenant, memorandum of understanding, policy, or regulation that is 
used by DOL, a State or local government, or a DOL social service 
intermediary provider in administering a DOL social service program 
must not disqualify religious organizations from receiving DOL support 
or participating in DOL programs on the grounds that such organizations 
are motivated or influenced by religious faith to provide social 
services, or on the grounds that such organizations have a religious 
character or affiliation.


Sec.  2.33  Responsibilities of DOL, DOL social service providers and 
State and local governments administering DOL support.

    (a) DOL, DOL social service intermediary providers, DOL social 
service providers in their use of direct DOL support, and State and 
local governments administering DOL support must not, when providing 
social services, discriminate for or against a current or prospective 
program beneficiary on the basis of religion or religious belief. This 
requirement does not preclude DOL, DOL social service intermediary 
providers, or State or local governments administering DOL support from 
accommodating religion in a manner consistent with the Establishment 
Clause of the First Amendment to the Constitution.
    (b)(1) DOL, DOL social service providers, and State and local 
governments administering DOL support must ensure that they do not use 
direct DOL support for inherently religious activities such as worship, 
religious instruction, or proselytization. DOL social service providers 
must be permitted to offer inherently religious activities so long as 
they offer those activities separately in time or location from social 
services receiving direct DOL support, and participation in the 
inherently religious activities is voluntary for the beneficiaries of 
social service programs receiving direct DOL support. For example, 
participation in an inherently religious activity must not be a 
condition for participating in a directly-supported social service 
program.
    (2) This regulation is not intended to and does not restrict the 
exercise of rights or duties guaranteed by the Constitution. For 
example, program officials must not impermissibly restrict the ability 
of program beneficiaries or DOL social service providers to freely 
express their views and to exercise their right to religious freedom. 
Additionally, subject to reasonable and permissible time, place and 
manner restrictions, residential facilities that receive DOL support 
must permit residents to engage in voluntary religious activities, 
including holding religious services, at these facilities.
    (3) Notwithstanding the requirements of paragraph (b)(1), and to 
the extent otherwise permitted by Federal law (including constitutional 
requirements), direct DOL support may be used to support inherently 
religious activities, and such activities need not be provided 
separately in time or location from other DOL-supported activities, 
under the following circumstances:
    (i) Where DOL support is provided to chaplains to work with inmates 
in prisons, detention facilities, or community correction centers 
through social service programs;
    (ii) Where DOL support is provided to social service programs in 
prisons, detention facilities, or community correction centers, in 
which such organizations assist chaplains in carrying out their duties; 
or
    (iii) Where DOL-supported social service programs involve such a 
degree of government control over the program environment that 
religious exercise would be significantly burdened absent affirmative 
steps by DOL or its social service providers.
    (c) To the extent otherwise permitted by Federal law, the 
restrictions set forth in this section regarding the use of direct DOL 
support do not apply to social service programs where DOL support is 
provided to a religious or other non-governmental organization 
indirectly within the meaning of the Establishment Clause of the First 
Amendment to the Constitution. Religious or other non-governmental 
organizations will be considered to have received support indirectly, 
for example, if as a result of a program beneficiary's genuine and 
independent choice the beneficiary redeems a voucher, coupon, or 
certificate that allows the beneficiary to choose the service provider, 
or some other mechanism is provided to ensure that beneficiaries have a 
genuine and independent choice among providers or program options. All 
organizations must, however, satisfy all applicable legal and 
programmatic requirements.


Sec.  2.34  Application to State and local funds.

    If a State or local government contributes its own funds 
(voluntarily or in accordance with a matching funds program) 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, then the 
provisions of this subpart apply to all of the commingled funds in the 
same manner, and to the same extent, as the provisions apply to the 
Federal assistance.


Sec.  2.35  Effect of DOL support on Title VII employment 
nondiscrimination requirements and on other existing statutes.

    A religious organization's exemption from the Federal prohibition 
on employment discrimination on the basis of religion, set forth in 
Sec.  702(a) of the Civil Rights Act of 1964, 42 U.S.C. 2000e-1, is not 
forfeited when the organization receives direct or indirect DOL 
support. Some DOL programs, however, were established through Federal 
statutes containing independent statutory provisions requiring that 
recipients refrain from discriminating on the basis of religion. 
Accordingly, to determine the scope of any applicable requirements, 
recipients and potential recipients should consult with the appropriate 
DOL program official or with the Civil Rights Center, U.S. Department 
of Labor, 200 Constitution Avenue, NW., Room N4123, Washington, DC 
20210, (202) 693-6500. Individuals with hearing or speech impairments 
may access this telephone number via TTY by calling the toll-free 
Federal Information Relay Service at 1-800-877-8339.


Sec.  2.36  Status of nonprofit organizations.

    (a) In general, DOL does not require that an organization, 
including a religious organization, obtain tax-exempt status under 
section 501(c)(3) of the Internal Revenue Code in order to be eligible 
for Federal financial assistance under DOL social service programs. 
Many such programs, however, do require an organization to be a 
``nonprofit organization'' in order to be eligible for such support. 
Individual solicitations that require organizations to have nonprofit 
status must specifically so indicate in the eligibility section of the 
solicitation. In addition, any solicitation for a program that requires 
an organization to maintain tax-exempt status must expressly state the 
statutory authority for requiring such status. For assistance with 
questions about a particular solicitation, applicants should contact 
the DOL program office that issued the solicitation.
    (b) Unless otherwise provided by statute, in DOL programs in which 
an

[[Page 11241]]

applicant must show that it is a nonprofit organization, the applicant 
must be permitted to do so by any of the following means:
    (1) Proof that the Internal Revenue Service currently recognizes 
the applicant as tax exempt 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 (b)(3) of this 
section, if that item applies to a State or national parent 
organization, together with a statement by the State or national parent 
organization that the applicant is a local nonprofit affiliate of the 
organization.

PART 37--IMPLEMENTATION OF THE NONDISCRIMINATION AND EQUAL 
OPPORTUNITY PROVISIONS OF THE WORKFORCE INVESTMENT ACT OF 1998 
(WIA)

    9. The authority citation for part 37 is revised to read as 
follows:

    Authority: Sections 134(b), 136(d)(2)(F), 136(e), 172(a), 
183(c), 185(d)(1)(E), 186, 187 and 188 of the Workforce Investment 
Act of 1998, 29 U.S.C. 2801, et seq.; Title VI of the Civil Rights 
Act of 1964, as amended, 42 U.S.C. 2000d, et seq.; section 504 of 
the Rehabilitation Act of 1973, as amended, 29 U.S.C. 794; the Age 
Discrimination Act of 1975, as amended, 42 U.S.C. 6101; Title IX of 
the Education Amendments of 1972, as amended, 29 U.S.C. 1681; 
Executive Order 13198, 66 FR 8497, 3 CFR 2001 Comp., p. 750; and 
Executive Order 13279, 67 FR 77141, 3 CFR 2002 Comp., p. 258.

    10. In Sec.  37.6, paragraph (f)(1) is revised to read as follows:


Sec.  37.6  What specific discriminatory actions, based on prohibited 
grounds other than disability, are prohibited by this part?

* * * * *
    (f)(1) The circumstances under which recipients may use DOL 
support, including WIA Title I financial assistance, to employ or train 
participants in religious activities are described in 29 CFR part 2, 
subpart D, which also contains requirements related to equal treatment 
of religious organizations in Department of Labor programs, and to 
protection of religious liberty for Department of Labor social service 
providers and beneficiaries. See also Sec. Sec.  667.266 and 667.275 of 
20 CFR.
* * * * *
[FR Doc. 04-5133 Filed 3-8-04; 8:45 am]
BILLING CODE 4510-23-P