[Federal Register Volume 69, Number 108 (Friday, June 4, 2004)]
[Rules and Regulations]
[Pages 31708-31715]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-12709]



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Part III





Department of Education





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34 CFR Parts 74, 75, 76, and 80



Participation in Education Department Programs by Religious 
Organizations; Providing for Equal Treatment of All Education Program 
Participants; Final Rule

  Federal Register / Vol. 69 , No. 108 / Friday, June 4, 2004 / Rules 
and Regulations  

[[Page 31708]]


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DEPARTMENT OF EDUCATION

34 CFR Parts 74, 75, 76, and 80

RIN 1890-AA11


Participation in Education Department Programs by Religious 
Organizations; Providing for Equal Treatment of All Education Program 
Participants

AGENCY: Center for Faith-Based and Community Initiatives, Office of the 
Secretary, U.S. Department of Education.

ACTION: Final regulations.

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SUMMARY: These final regulations implement Executive branch policy 
that, within the framework of constitutional church-state guidelines, 
religiously affiliated (or ``faith-based'') organizations should be 
able to compete on an equal footing with other organizations for 
funding by the U.S. Department of Education (Department). We are 
revising Department regulations to remove barriers to the participation 
of faith-based organizations in Department programs and to ensure that 
these programs are implemented in a manner consistent with the 
requirements of the U.S. Constitution, including the Establishment, 
Free Exercise, and Free Speech Clauses of the First Amendment.

DATES: These regulations are effective July 6, 2004.

FOR FURTHER INFORMATION CONTACT: John J. Porter, Director, Center for 
Faith-Based and Community Initiatives, Office of the Secretary, U.S. 
Department of Education, 555 New Jersey Avenue, NW., Suite 410, 
Washington, DC 20208-8300. Telephone: (202) 219-1741.
    If you use a telecommunications device for the deaf (TDD), you may 
call the Federal Information Relay Service (FIRS) at 1-800-877-8339.
    Individuals with disabilities may obtain this document in an 
alternative format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person listed under FOR FURTHER 
INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION:

Background

    Faith-based organizations make an important contribution to the 
education of Americans and provide an important part of the social 
services network of the United States. Faith-based organizations acting 
alone or in partnership with public schools, community-based 
organizations, institutions of higher education, and other private 
organizations do much good work to advance the quality of education for 
all Americans. Often this good work of faith-based organizations is 
done despite meager resources, and, in the past, it has generally been 
done without the assistance of the Federal government. The Department 
seeks to facilitate the contribution of faith-based and community 
organizations to increase the effectiveness of its programs and to 
provide equal access to a quality education for all Americans.
    President Bush has directed Federal agencies, including this 
Department, to take steps to ensure that Federal policies and programs 
are fully open to faith-based organizations in a manner that is 
consistent with the U.S. Constitution and statutory requirements. The 
Administration believes that faith-based organizations possess an 
under-appreciated ability to meet the educational needs of 
disadvantaged children and to strengthen our system of education. The 
Administration believes that Federal agencies should ensure that there 
is equal opportunity for all private organizations--faith-based and 
secular--to use Federal resources to meet the needs of their 
communities.
    On September 30, 2003, the Secretary published a notice of proposed 
rulemaking (NPRM) in the Federal Register (68 FR 56417) to amend 
Department regulations that imposed unwarranted barriers to the 
participation of faith-based organizations in Department programs. The 
proposed regulations were part of the Department's effort to fulfill 
its responsibilities under two Executive Orders issued by President 
Bush.
    Executive Order 13198, dated January 29, 2001, directs several 
Departments to identify and eliminate regulatory and other programmatic 
obstacles to the full contribution of faith-based and community 
organizations in order to increase the effectiveness of their programs.
    Executive Order 13279, dated December 12, 2002, directs those 
Departments to review and evaluate existing policies that have 
implications for faith-based and community organizations. The stated 
purpose of the review and evaluation is to assess the consistency of 
those policies with certain fundamental principles and policymaking 
criteria designed to ensure a level playing field for religious and 
nonreligious organizations. The order directs the Departments, to the 
extent permitted by law, (1) to amend all such existing policies to 
ensure that they are consistent with the fundamental principles and 
policymaking criteria; (2) where appropriate, to implement new policies 
that are consistent with and necessary to further the fundamental 
principles and policymaking criteria; and (3) to implement new policies 
that are necessary to ensure that the Departments collect data 
regarding the participation of faith-based and community organizations 
in social service programs that receive Federal financial assistance.
    The NPRM proposed the following changes to the Department's 
regulations:
    1. Participation by faith-based organizations in Education 
Department programs. The proposed regulations specifically provided 
that faith-based organizations are eligible to apply for and to receive 
funding under Department programs on the same basis as any other 
private organization, with respect to programs for which such other 
organizations are eligible. If a faith-based organization meets the 
statutory and regulatory tests for eligibility, the Department 
considers it eligible. The proposed regulations additionally provided 
that the Department and the States shall not discriminate against a 
private organization on the basis of the organization's religious 
character or affiliation.
    2. Inherently religious activities. The NPRM sought to clarify that 
a faith-based organization that receives a grant under a program of the 
Department or a subgrant from a State under a State-administered 
program of the Department is subject to the existing regulatory 
provisions that prohibit grantees and States and subgrantees from using 
their grants and subgrants to pay for inherently religious activities, 
such as religious worship, instruction, or proselytization. In 
addition, the NPRM sought to clarify that such an organization is 
subject to the existing regulatory provisions that prohibit grantees 
and States and subgrantees from using their grants and subgrants to pay 
for equipment or supplies used for religious worship, instruction, or 
proselytization. If an organization engages in these religious 
activities, then it must offer those services separately in time or 
location from any programs or services supported by grants from the 
Department or subgrants from a State under a State-administered program 
of the Department. Additionally, participation in any inherently 
religious activities by beneficiaries of the programs supported by the 
grants or subgrants must be voluntary.
    3. Independence of faith-based organizations. The proposed 
regulations also clarified that a religious organization that 
participated in Department programs would retain its

[[Page 31709]]

independence and could continue to carry out its mission, including the 
definition, practice, and expression of its religious beliefs. Among 
other things, a faith-based organization could 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 could 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 NPRM provided 
that an organization that received a grant from the Department or that 
received a subgrant from a State under a State-administered program of 
the Department would not be allowed to discriminate against a 
beneficiary or prospective beneficiary of that program on the basis of 
religion or religious belief.
    5. Removal of prohibition on use of grants and subgrants to pay for 
an activity of a school or department of divinity. The proposed 
regulations clarified that the most qualified applicants will receive 
funding under the Department's programs, and that the religious 
character or affiliation of the private organizations that apply will 
not be taken into account. For that reason, we proposed to remove the 
regulation prohibiting grantees and subgrantees from using their grants 
and subgrants to pay for an activity of a school or department of 
divinity.
    6. Technical amendment relating to the prohibition on use of grants 
to pay for equipment or supplies to be used for religious worship, 
instruction, or proselytization. In the NPRM, we proposed a technical 
amendment to the Department's regulations, clarifying that grantees 
cannot use their grants to pay for equipment or supplies used for 
religious worship, instruction, or proselytization.
    7. Removal of prohibition on use of grants and subgrants to pay for 
construction, remodeling, repair, operation, or maintenance of any 
facility or part of a facility to be used for religious worship, 
instruction, or proselytization. We proposed to remove Sec. Sec.  
75.532(a)(3) and 76.532(a)(3), which prohibit the use of Department 
funds to pay for construction, remodeling, repair, operation, or 
maintenance of any private educational facility (or part of a private 
educational facility). This regulation is not necessary because there 
is no statutory authority for this use of Department funds. 
Accordingly, the Department has no programs that fund such capital 
improvements.
    8. Eligibility of faith-based organizations to contract with or 
otherwise receive assistance from grantees and subgrantees, including 
States, on the same basis as other private organizations, with respect 
to contracts or assistance for which such organizations are eligible. 
The NPRM proposed to clarify that faith-based organizations are 
eligible to contract with or otherwise receive assistance from grantees 
and subgrantees, including States, on the same basis as other private 
organizations, with respect to contracts or assistance for which such 
organizations are eligible. These faith-based organizations are subject 
to the same limitations to which grantees and subgrantees are subject 
regarding the use of funds for inherently religious activities, unless 
the organization is selected as a result of the genuine and independent 
private choices of individual beneficiaries of the program and provided 
the organization otherwise satisfies the requirements of the program.
    These final regulations contain several significant changes from 
the NPRM. We fully explain these changes in the appendix at the end of 
these final regulations.

Analysis of Comments and Changes

    In response to the Secretary's invitation in the NPRM, 12 parties 
submitted a total of 14 comments on the proposed regulations. An 
analysis of the comments and of the changes in the regulations since 
publication of the NPRM is published as an appendix at the end of these 
final regulations.
    We group major issues according to subject. Generally, we do not 
address technical and other minor changes.

Executive Order 12866--Regulatory Planning and Review

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

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 final 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 (entitled ``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.

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed and approved this final rule and in so 
doing certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. The final rule will 
not impose any new costs, or modify existing costs, applicable to 
Department grantees and subgrantees. Rather, the purpose of the 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.

Paperwork Reduction Act of 1995

    These regulations do not contain any information collection 
requirements.

Intergovernmental Review

    These final regulations affect direct grant programs that are 
subject to Executive Order 12372 and the regulations in 34 CFR part 79. 
The objective of the Executive Order is to foster an intergovernmental 
partnership and to promote federalism by relying on processes developed 
by State and local governments for coordination and review of proposed 
Federal financial assistance.
    In accordance with the order, we intend this document to provide 
early notification of our specific plans and actions for these 
programs.

Assessment of Educational Impact

    In the NPRM we requested comments on whether the proposed 
regulations would require transmission of information that any other 
agency or authority of the United States gathers or makes available.
    Based on the response to the NPRM and on our review, we have 
determined that these final regulations do not require transmission of 
information that any other agency or authority of the

[[Page 31710]]

United States gathers or makes available.

Electronic Access to This Document

    You may view this document, as well as all other Department of 
Education documents published in the Federal Register, in text or Adobe 
Portable Document Format (PDF) on the Internet at the following site: 
http://www.ed.gov/news/fedregister.
    To use PDF you must have Adobe Acrobat Reader, which is available 
free at this site. If you have questions about using PDF, call the U.S. 
Government Printing Office (GPO), toll free, at 1-888-293-6498; or in 
the Washington, DC area at (202) 512-1530.

    Note: The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO Access at: http://www.gpoaccess.gov/nara/index.html. (The Catalog of Federal Domestic Assistance Number 
does not apply.)

List of Subjects

34 CFR Part 74

    Accounting, Grant programs, Reporting and recordkeeping 
requirements.

34 CFR Part 75

    Accounting, Administrative practice and procedure, Education, Grant 
programs-education, Private schools, Reporting and recordkeeping 
requirements.

34 CFR Part 76

    Administrative practice and procedure, Compliance, Eligibility, 
Grant administration, Reporting and recordkeeping requirements.

34 CFR Part 80

    Accounting, Grant programs, Reporting and recordkeeping 
requirements.

    Dated: May 28, 2004.
Rod Paige,
Secretary of Education.

0
For the reasons discussed in the preamble, the Secretary amends parts 
74, 75, 76, and 80 of title 34 of the Code of Federal Regulations as 
follows:

PART 74--ADMINISTRATION OF GRANTS AND AGREEMENTS WITH INSTITUTIONS 
OF HIGHER EDUCATION, HOSPITALS, AND OTHER NON-PROFIT ORGANIZATIONS

0
1. The authority citation for part 74 continues to read as follows:

    Authority: 20 U.S.C. 1221e-3 and 3474; OMB Circular A-110, 
unless otherwise noted.


0
2. Section 74.44 is amended by adding new paragraph (f) to read as 
follows:


Sec.  74.44  Procurement procedures.

* * * * *
    (f)(1)(i) A faith-based organization is eligible to contract with 
recipients on the same basis as any other private organization, with 
respect to contracts for which such other organizations are eligible.
    (ii) In the selection of goods and services providers, recipients 
shall not discriminate for or against a private organization on the 
basis of the organization's religious character or affiliation.
    (2) The provisions of Sec. Sec.  75.532 and 76.532 applicable to 
grantees and subgrantees apply to a faith-based organization that 
contracts with a recipient, unless the faith-based organization is 
selected as a result of the genuine and independent private choices of 
individual beneficiaries of the program and provided the organization 
otherwise satisfies the requirements of the program.
    (3) A private organization that engages in inherently religious 
activities, such as religious worship, instruction, or proselytization, 
must offer those services separately in time or location from any 
programs or services supported by a contract with a recipient, and 
participation in any such inherently religious activities by 
beneficiaries of the programs supported by the contract must be 
voluntary, unless the organization is selected as a result of the 
genuine and independent private choices of individual beneficiaries of 
the program and provided the organization otherwise satisfies the 
requirements of the program.
    (4)(i) A faith-based organization that contracts with a recipient 
may retain its independence, autonomy, right of expression, religious 
character, and authority over its governance.
    (ii) A faith-based organization may, among other things--
    (A) Retain religious terms in its name;
    (B) Continue to carry out its mission, including the definition, 
development, practice, and expression of its religious beliefs;
    (C) Use its facilities to provide services without removing or 
altering religious art, icons, scriptures, or other symbols from these 
facilities;
    (D) Select its board members and otherwise govern itself on a 
religious basis; and
    (E) Include religious references in its mission statement and other 
chartering or governing documents.
    (5) A private organization that contracts with a recipient shall 
not discriminate against a beneficiary or prospective beneficiary in 
the provision of program services on the basis of religion or religious 
belief.
    (6) A religious organization's exemption from the Federal 
prohibition on employment discrimination on the basis of religion, in 
section 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 2000e-1, is 
not forfeited when the organization contracts with a recipient.

PART 75--DIRECT GRANT PROGRAMS

0
3. The authority citation for part 75 continues to read as follows:

    Authority: 20 U.S.C. 1221e-3 and 3474, unless otherwise noted.


0
4. Add Sec.  75.52 to subpart A under the undesignated center heading 
``Eligibility for a Grant'' to read as follows:


Sec.  75.52  Eligibility of faith-based organizations for a grant.

    (a)(1) A faith-based organization is eligible to apply for and to 
receive a grant under a program of the Department on the same basis as 
any other private organization, with respect to programs for which such 
other organizations are eligible.
    (2) In the selection of grantees, the Department shall not 
discriminate for or against a private organization on the basis of the 
organization's religious character or affiliation.
    (b) The provisions of Sec.  75.532 apply to a faith-based 
organization that receives a grant under a program of the Department.
    (c) A private organization that engages in inherently religious 
activities, such as religious worship, instruction, or proselytization, 
must offer those services separately in time or location from any 
programs or services supported by a grant from the Department, and 
participation in any such inherently religious activities by 
beneficiaries of the programs supported by the grant must be voluntary.
    (d)(1) A faith-based organization that applies for or receives a 
grant under a program of the Department may retain its independence, 
autonomy, right of expression, religious character, and authority over 
its governance.
    (2) A faith-based organization may, among other things--
    (i) Retain religious terms in its name;
    (ii) Continue to carry out its mission, including the definition, 
development, practice, and expression of its religious beliefs;
    (iii) Use its facilities to provide services without removing or 
altering religious art, icons, scriptures, or other symbols from these 
facilities;

[[Page 31711]]

    (iv) Select its board members and otherwise govern itself on a 
religious basis; and
    (v) Include religious references in its mission statement and other 
chartering or governing documents.
    (e) A private organization that receives a grant under a program of 
the Department shall not discriminate against a beneficiary or 
prospective beneficiary in the provision of program services on the 
basis of religion or religious belief.
    (f) If a grantee contributes its own funds in excess of those funds 
required by a matching or grant agreement to supplement federally 
funded activities, the grantee has the option to segregate those 
additional funds or commingle them with the funds required by the 
matching requirements or grant agreement. However, if the additional 
funds are commingled, this section applies to all of the commingled 
funds.
    (g) A religious organization's exemption from the Federal 
prohibition on employment discrimination on the basis of religion, in 
section 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 2000e-1, is 
not forfeited when the organization receives financial assistance from 
the Department.

(Authority: 20 U.S.C. 1221e-3 and 3474)



0
5. In Sec.  75.532, revise paragraph (a)(2), remove paragraphs (a)(3) 
and (4), and remove and reserve paragraph (b) to read as follows:


Sec.  75.532  Use of funds for religion prohibited.

    (a) * * *
    (2) Equipment or supplies to be used for any of the activities 
specified in paragraph (a)(1) of this section.
    (b) [Reserved.]

PART 76--STATE-ADMINISTERED PROGRAMS

0
6. The authority citation for part 76 continues to read as follows:

    Authority: 20 U.S.C. 1221e-3, 3474, 6511(a), and 8065a, unless 
otherwise noted.


0
7. Add Sec.  76.52 to subpart A under the undesignated center heading 
``Eligibility for a Grant or Subgrant'' to read as follows:


Sec.  76.52  Eligibility of faith-based organizations for a subgrant.

    (a)(1) A faith-based organization is eligible to apply for and to 
receive a subgrant under a program of the Department on the same basis 
as any other private organization, with respect to programs for which 
such other organizations are eligible.
    (2) In the selection of subgrantees, States shall not discriminate 
for or against a private organization on the basis of the 
organization's religious character or affiliation.
    (b) The provisions of Sec.  76.532 apply to a faith-based 
organization that receives a subgrant from a State under a State-
administered program of the Department.
    (c) A private organization that engages in inherently religious 
activities, such as religious worship, instruction, or proselytization, 
must offer those services separately in time or location from any 
programs or services supported by a subgrant from a State under a 
State-administered program of the Department, and participation in any 
such inherently religious activities by beneficiaries of the programs 
supported by the subgrant must be voluntary.
    (d)(1) A faith-based organization that applies for or receives a 
subgrant from a State under a State-administered program of the 
Department may retain its independence, autonomy, right of expression, 
religious character, and authority over its governance.
    (2) A faith-based organization may, among other things--
    (i) Retain religious terms in its name;
    (ii) Continue to carry out its mission, including the definition, 
development, practice, and expression of its religious beliefs;
    (iii) Use its facilities to provide services without removing or 
altering religious art, icons, scriptures, or other symbols from these 
facilities;
    (iv) Select its board members and otherwise govern itself on a 
religious basis; and
    (v) Include religious references in its mission statement and other 
chartering or governing documents.
    (e) A private organization that receives a subgrant from a State 
under a State-administered program of the Department shall not 
discriminate against a beneficiary or prospective beneficiary in the 
provision of program services on the basis of religion or religious 
belief.
    (f) If a State or subgrantee contributes its own funds in excess of 
those funds required by a matching or grant agreement to supplement 
Federally funded activities, the State or subgrantee has the option to 
segregate those additional funds or commingle them with the funds 
required by the matching requirements or grant agreement. However, if 
the additional funds are commingled, this section applies to all of the 
commingled funds.
    (g) A religious organization's exemption from the Federal 
prohibition on employment discrimination on the basis of religion, in 
section 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 2000e-1, is 
not forfeited when the organization receives financial assistance from 
the Department.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))


Sec.  76.532  [Amended]


0
8. Section 76.532 is amended by removing paragraphs (a)(3) and (a)(4); 
and removing and reserving paragraph (b).

PART 80--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND 
COOPERATIVE AGREEMENTS TO STATE AND LOCAL GOVERNMENTS

0
9. The authority citation for part 80 is revised to read as follows:

    Authority: 20 U.S.C. 1221e-3(a)(1) and 3474, OMB Circular A-102, 
unless otherwise noted.


0
10. Section 80.36 is amended by adding new paragraph (j) to read as 
follows:


Sec.  80.36  Procurement.

* * * * *
    (j) Contracting with faith-based organizations. (1)(i) A faith-
based organization is eligible to contract with grantees and 
subgrantees, including States, on the same basis as any other private 
organization, with respect to contracts for which such other 
organizations are eligible.
    (ii) In the selection of goods and services providers, grantees and 
subgrantees, including States, shall not discriminate for or against a 
private organization on the basis of the organization's religious 
character or affiliation.
    (2) The provisions of Sec. Sec.  75.532 and 76.532 applicable to 
grantees and subgrantees apply to a faith-based organization that 
contracts with a grantee or subgrantee, including a State, unless the 
faith-based organization is selected as a result of the genuine and 
independent private choices of individual beneficiaries of the program 
and provided the organization otherwise satisfies the requirements of 
the program.
    (3) A private organization that engages in inherently religious 
activities, such as religious worship, instruction, or proselytization, 
must offer those services separately in time or location from any 
programs or services supported by a contract with a grantee or 
subgrantee, including a State, and participation in any such inherently 
religious activities by beneficiaries of

[[Page 31712]]

the programs supported by the contract must be voluntary, unless the 
organization is selected as a result of the genuine and independent 
private choices of individual beneficiaries of the program and provided 
the organization otherwise satisfies the requirements of the program.
    (4)(i) A faith-based organization that contracts with a grantee or 
subgrantee, including a State, may retain its independence, autonomy, 
right of expression, religious character, and authority over its 
governance.
    (ii) A faith-based organization may, among other things--
    (A) Retain religious terms in its name;
    (B) Continue to carry out its mission, including the definition, 
development, practice, and expression of its religious beliefs;
    (C) Use its facilities to provide services without removing or 
altering religious art, icons, scriptures, or other symbols from these 
facilities;
    (D) Select its board members and otherwise govern itself on a 
religious basis; and
    (E) Include religious references in its mission statement and other 
chartering or governing documents.
    (5) A private organization that contracts with a grantee or 
subgrantee, including a State, shall not discriminate against a 
beneficiary or prospective beneficiary in the provision of program 
services on the basis of religion or religious belief.
    (6) A religious organization's exemption from the Federal 
prohibition on employment discrimination on the basis of religion, in 
section 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 2000e-1, is 
not forfeited when the organization contracts with a grantee or 
subgrantee.

Appendix--Analysis of Comments and Changes

    Note: The following appendix will not appear in the Code of 
Federal Regulations.

Participation by Faith-Based Organizations in Education Department 
Programs

    Comments: Several commenters expressed appreciation and support 
for the Department's efforts to clarify the regulations governing 
participation of faith-based organizations in its programs. Other 
commenters disagreed with the proposed regulations, asserting that 
they would allow Federal funds to be given to ``pervasively 
sectarian'' organizations in violation of the U.S. Constitution. 
These commenters maintained that the regulation places no 
limitations on the kinds of religious organizations that can receive 
funds, and they requested that ``pervasively sectarian'' 
organizations be barred from receiving Department funds. Similarly, 
other commenters suggested that the proposed regulation improperly 
allows grants of public funds to religious organizations in which 
religious missions overpower secular functions.
    Discussion: We do not agree that the U.S. Constitution requires 
the Department to distinguish between different religious 
organizations in providing funding for Department programs. 
Organizations that receive direct Department funds may not use these 
funds for inherently religious activities. These organizations must 
ensure that such religious activities are separate in time or 
location from services funded by the Department and must also ensure 
that participation in such religious activities is voluntary. 
Furthermore, program participants that violate these requirements 
will be subject to applicable sanctions and penalties. The 
regulations thus ensure, as required by current legal precedent, 
that there is no government funding of inherently religious 
activities.
    In addition, the Supreme Court's ``pervasively sectarian'' 
doctrine--which held that there are certain religious institutions 
in which religion is so pervasive that no government aid may be 
provided to them because their performance of even ``secular'' tasks 
will be infused with religious purpose--no longer enjoys the support 
of a majority of the Court. Four Justices expressly abandoned it in 
Mitchell v. Helms, 530 U.S. 793, 825-829 (2000) (plurality opinion), 
and Justice O'Connor's opinion in that case, joined by Justice 
Breyer, set forth reasoning that is inconsistent with that 
doctrine's underlying premises, see id. at 857 (O'Connor, J., 
concurring in judgment) (requiring proof of ``actual diversion'' of 
public support to religious uses). Thus, six members of the Court 
have rejected the view that aid provided to religious institutions 
will invariably advance the institutions' religious purposes, and 
that view is the foundation of the ``pervasively sectarian'' 
doctrine. The Department therefore believes that, under current 
legal precedent, the Department may fund all service providers, 
without regard to religion and free of criteria that require the 
provider to abandon its religious expression or character.
    To clarify that the final rule bars not only discrimination 
against, but favoritism of, faith-based organizations, we have 
modified it to expressly prohibit discrimination against, and 
favoritism of, faith-based providers in the selection of grantees, 
subgrantees, and goods and services providers. However, nothing in 
the regulation precludes those administering Department-funded 
programs from accommodating religious organizations in a manner 
consistent with the Establishment Clause of the First Amendment to 
the U.S. Constitution.
    Changes: Sections 74.44(f)(1)(ii), 75.52(a)(2), 76.52(a)(2), and 
80.36(j)(ii) are revised to reflect that a private organization 
shall not be subjected to discrimination, either in its favor or to 
its detriment, on the basis of the organization's religious 
character or affiliation.

Inherently Religious Activities

    Comments: Some commenters suggested that the proposed regulation 
does not sufficiently detail the scope of religious content that 
must be omitted from government-funded programs. For example, some 
suggested that the explanation given of ``inherently religious 
activities'' as ``religious worship, instruction, or 
proselytization'' is unclear or incomplete. Relatedly, it was 
suggested that the proposed regulation authorizes conduct that will 
impermissibly convey the message that the government endorses 
religious content. One commenter requested that the proposed 
regulation be changed to make clear that the government may not 
disburse public funds to organizations that convey religious 
messages or in any way advance religion. A few commenters also 
suggested that the Department could not engage in effective grant 
monitoring activities without violating the First Amendment to the 
U.S. Constitution.
    Discussion: The Department disagrees with these comments. As the 
commenters' own submissions suggest, it would be difficult to 
establish an acceptable list of all ``inherently religious'' 
activities. Inevitably, the regulatory definition would exclude some 
inherently religious activities or include certain activities that 
are not inherently religious. Rather than attempt to establish an 
exhaustive regulatory definition, the Department has decided to 
retain the language of the proposed regulation, which provides 
examples of the general types of activities that are considered 
``inherently religious.'' This approach is consistent with Supreme 
Court precedent, which likewise has not comprehensively defined 
inherently religious activities. For example, prayer and worship are 
inherently religious activities, but Department-funded activities do 
not become inherently religious merely because they are conducted by 
individuals who are religiously motivated to undertake them or view 
the activities as a form of ``ministry.''
    As for the suggestion that the regulation indicates that the 
Department endorses religious content, we again emphasize that the 
regulation forbids the use of government assistance for inherently 
religious activities and states that any such activities must be 
voluntary and separated, in time or location, from any programs or 
services supported by a grant from the Department or by a subgrant 
from a State under a State-administered program of the Department. 
The Department believes that the term ``voluntary'' sufficiently 
protects beneficiaries. Conditioning receipt of services funded by 
the Federal Government upon active participation in inherently 
religious activities would be one example of involuntary 
participation in inherently religious activities.
    Finally, there is no constitutional support for the view that 
the government must exclude from its programs those organizations 
that convey religious messages or advance religion with their own 
funds. As noted above, the Supreme Court has held that the U.S. 
Constitution forbids the use of government funds for inherently 
religious activities, absent an element of genuine and

[[Page 31713]]

independent private choice, but the Court has rejected the 
presumption that religious organizations will inevitably divert such 
funds and use them for their own religious purposes. The Department 
rejects the view that organizations with religious commitments 
cannot be trusted to fulfill their written promises to adhere to 
grant requirements. The Department also disagrees with commenters 
that stated that the Department could not monitor faith-based 
organizations without running afoul of the First Amendment to the 
U.S. Constitution. The Department's monitoring of faith-based 
organizations for compliance with Federal requirements will be no 
different from its monitoring of other organizations, which does not 
violate the First Amendment to the U.S. Constitution. We further 
discuss monitoring below under ``Assurance Requirements.''
    Changes: None.

Programs of Choice

    Comments: Some commenters claimed that where the proposed 
regulation addressed the selection of a faith-based organization as 
a result of the genuine and independent private choice of the 
beneficiary of the program, it did not contain sufficient safeguards 
under Zelman v. Simmons-Harris, 536 U.S. 639 (2002). These 
commenters stated that secular alternatives are not available in the 
social services context, eliminating the possibility of real choice 
by program beneficiaries. They requested that the regulation clearly 
state that beneficiaries have the right to object to a religious 
provider assigned to them and to receive a secular provider, and 
that the beneficiaries be given notice of these rights.
    Some commenters also objected to the Department's classification 
of the supplemental educational services program of section 1116 of 
the Elementary and Secondary Education Act of 1965, as amended by 
the No Child Left Behind Act of 2001, as one that involves the 
genuine and independent private choice of the beneficiary of the 
program. Additionally, they objected to this classification because 
payment for the services rendered may be made directly by the 
government to service provider organizations. The commenters also 
believe the application of the proposed regulations violates the 
supplemental educational services program statute, which requires 
that the instruction and content of supplemental educational 
services be secular, neutral, and non-ideological.
    Another commenter stated that programs in which the organization 
is selected as a result of the genuine and independent private 
choice of the beneficiary should be labeled as such in the 
procurement contract and in any public notification regarding that 
program.
    Discussion: The Department declines to adopt the recommendations 
of the commenters. Any programs of choice offered by the Department 
must, of course, comply with Federal law (including current legal 
precedent), and nothing in the proposed regulation provides 
otherwise. The regulation comports with Supreme Court precedent by 
requiring a ``genuine and independent private choice[].'' The 
Department thus believes that the proposed regulation adequately 
addresses the commenters' constitutional concerns.
    With respect to the commenters' objection relating to the 
supplemental educational services program, we believe that this 
regulation must be read together with all applicable statutory 
requirements. For example, the supplemental educational services 
program requires State educational agencies, among other things, to 
promote maximum participation by providers to ensure, to the extent 
practicable, that parents have as many choices as possible and to 
approve providers based upon objective criteria.
    Furthermore, it is not dispositive for constitutional purposes 
that the funds for supplemental educational services may formally 
pass directly from the government to the faith-based organization, 
provided there is genuine and independent private choice for the 
ultimate beneficiaries and the aid follows them to the service 
providers of their choice. The United States Court of Appeals for 
the Seventh Circuit recently addressed this issue:

    The state in effect gives eligible offenders ``vouchers'' that 
they can use to purchase a place in a halfway house, whether the 
halfway house is ``parochial'' or secular. We have put ``vouchers'' 
in scare quotes because the state has dispensed with the 
intermediate step by which the recipient of the publicly funded 
private service hands his voucher to the service provider. But so 
far as the policy of the establishment clause is concerned, there is 
no difference between giving the voucher recipient a piece of paper 
that directs the public agency to pay the service provider and the 
agency's asking the recipient to indicate his preference and paying 
the provider whose service he prefers.
    Nor does it make a difference that the state, rather than 
accrediting halfway houses, enters into contracts with them.

Freedom from Religion Found., Inc. v. McCallum, 324 F.3d 880, 882 
(7th Cir. 2003). The Department finds the reasoning of this decision 
compelling.
    As for whether application of these regulations violates the 
terms of the supplemental educational services program statute, the 
Department does not believe that these regulations alter in any way 
those statutory requirements. The Department's non-regulatory 
guidance on supplemental educational services affirms that the 
instruction and content of these Federally funded services be 
secular, neutral, and non-ideological, and the proposed regulation 
provided that organizations, including faith-based organizations, 
must satisfy the requirements of the applicable programs.
    We note also that the recently enacted DC School Choice 
Incentive Act of 2003 is another example of a program in which 
schools are selected as the result of the genuine and independent 
choices of individual beneficiaries. That Act includes a number of 
provisions similar to those included in these regulations, including 
provisions to preserve the identity and mission of participating 
schools.
    With respect to the comment regarding procurement contracts and 
public notification, the Department does not believe that these 
regulations are the appropriate place to categorize each of its many 
programs.
    Changes: None.

The ``Separately in Time or Location'' Requirement

    Comments: Some commenters maintained that the proposed 
regulation should be amended to clarify the ``separately in time or 
location'' requirement. Specifically, one commenter requested a 
prohibition on conducting inherently religious activities 
immediately prior to or immediately after Federally funded 
activities. Additionally, some suggested that the requirement be 
strengthened to require that inherently religious activities be 
``separate by both time and location.''
    Discussion: The Department declines to adopt these suggestions. 
As an initial matter, the Department does not believe that the 
requirement is ambiguous or necessitates additional regulation for 
proper adherence. If a religious organization receives government 
assistance, any religious activities that the organization offers 
must simply be offered separately--in time or location--from the 
activities supported by government funds. As for the suggestion that 
the rule must require separation in both time and location, the 
Department believes that such a requirement is not legally necessary 
and would impose an unnecessarily harsh burden on small faith-based 
organizations, which may have access to only one location that is 
suitable for the provision of Department-funded services.
    Changes: None.

State and Local Diversity Requirements and Preemption

    Comments: Additional commenters expressed concern that the 
proposed regulations will exempt religious organizations from State 
and local diversity requirements. Further, the commenters suggested 
that the proposed regulations be modified to state that State and 
local laws will not be preempted by the rule.
    Discussion: The requirements that govern funding under the 
Department programs at issue in these regulations do not address 
preemption of State or local laws. Federal funds, however, carry 
Federal requirements. No organization is required to apply for 
funding under these programs, but organizations that apply and are 
selected for funding must comply with the requirements applicable to 
the program. Accordingly, the rule also provides that if a grantee, 
State, or subgrantee contributes its own funds to supplement 
Federally funded activities, these regulations apply to all of the 
commingled funds.
    Changes: None.

Religious Identity and Display of Religious Art or Symbols

    Comments: Several commenters disagreed with the provisions 
allowing religious organizations conducting Department-funded 
programs in their facilities to retain the religious art, icons, 
scriptures, or other religious symbols found in their facilities. 
One commenter voiced a concern that the proposed rule was unclear in 
its mention in

[[Page 31714]]

the preamble of the rule's clarification that a faith-based 
organization does not have to suppress its ``religious identity'' to 
qualify for a grant or subgrant.
    Discussion: The Department disagrees with these comments. A 
number of Federal statutes affirm the principle embodied in this 
rule. See, e.g., 42 U.S.C. 290kk-1(d)(2)(B) (relating to programs of 
the Substance Abuse and Mental Health Services Administration). 
Moreover, the Department does not prescribe for any of the programs 
it funds the types of artwork or symbols that may be placed within 
the structures or rooms in which Department-funded services are 
provided. In addition, a prohibition on the use of religious icons 
would make it more difficult for many faith-based organizations than 
other organizations to participate in Department programs by forcing 
them to procure additional space. It would thus be an inappropriate 
and excessive restriction, typical of the types of regulatory 
barriers that this final regulation seeks to eliminate. Consistent 
with constitutional church-state guidelines, a faith-based 
organization that participates in Department programs will retain 
its independence and may continue to carry out its mission, provided 
that it does not use Department funds to support any inherently 
religious activities. Accordingly, this final regulation continues 
to provide that faith-based organizations may use space in their 
facilities to provide Department-funded services, without removing 
religious art, icons, scriptures, or other religious symbols.
    With respect to the comment regarding the clarity of the rule's 
discussion of ``religious identity,'' the rule gives illustrative 
examples of what is meant by religious identity in Sec. Sec.  
74.44(f)(4), 75.52(d), 76.52(d), and 80.36(j)(4).
    Changes: None.

Religious Freedom Restoration Act

    Comments: Another commenter requested that the Department 
include language in the regulation that the Religious Freedom 
Restoration Act of 1993 (``RFRA''), 42 U.S.C. 2000bb et seq., may 
also provide relief from otherwise applicable provisions prohibiting 
employment discrimination on the basis of religion. The commenter 
noted, for example, that, in the final regulations it promulgated 
governing its substance abuse and mental health programs, the 
Department of Health and Human Services recognized that RFRA may 
provide relief from certain employment nondiscrimination 
requirements.
    Discussion: The Department notes that the RFRA, which applies to 
all Federal law and its implementation, is applicable regardless of 
whether it is specifically mentioned in these regulations. See 42 
U.S.C. 4000bb-3 and 4000bb-2(1). Whether or not a party is entitled 
to an exemption or other relief under the RFRA depends upon whether 
the party satisfies the requirements of that statute. The 
Department, therefore, declines to adopt this recommendation at this 
time.
    Changes: None.

Exemption Under Title VII of the Civil Rights Act of 1964

    Comments: One commenter urged the Department to recognize 
specifically faith-based organizations' right to hire persons who 
support their sense of mission because the Department's proposed 
regulation did not directly address this issue. The commenter 
indicated that the hiring rights of faith-based organizations are a 
matter of serious concern to those organizations and that the lack 
of clarity on this issue may discourage qualified organizations from 
providing services. Other commenters urged the Department to take 
the position that those organizations that accept Federal funding 
should forfeit their Title VII exemption. Still others urged the 
Department to interpret section 9534 of the Elementary and Secondary 
Education Act of 1965 to mean that faith-based organizations must 
forfeit their Title VII exemption.
    Discussion: The Department agrees with the commenter who 
supported the religious hiring autonomy of faith-based 
organizations, and it disagrees with the objections to the principle 
that a religious organization does not forfeit its Title VII 
exemption when administering Department-funded services. Applicable 
statutory nondiscrimination requirements are not altered by this 
regulation. Congress establishes the conditions under which 
religious organizations are exempt from Title VII. These 
requirements, including their limitations, are fully applicable to 
federally funded organizations unless Congress says otherwise.
    Section 9534 of the Elementary and Secondary Education Act of 
1965 preserves the existing state of civil rights law. If Congress 
intended to dramatically alter the status quo, it would have done so 
in unmistakable terms as it has done on other occasions. As for the 
suggestion that the U.S. Constitution prohibits the government from 
providing funding for social services to religious organizations 
that consider faith in hiring, that view does not accurately 
represent the law. The employment decisions of organizations that 
receive extensive public funding are not attributable to the state, 
see Rendell-Baker v. Kohn, 457 U.S. 830 (1982), and it has been 
settled for more than 100 years that the Establishment Clause of the 
First Amendment to the U.S. Constitution does not bar the provision 
of Federal grants to organizations that are controlled and operated 
exclusively by members of a single faith. See Bradfield v. Roberts, 
175 U.S. 291 (1899); see also Bowen v. Kendrick, 487 U.S. 589, 609 
(1988).
    In light of these considerations, the Department believes it 
would be helpful to amend the proposed regulations by adding an 
explicit statement that religious organizations do not forfeit their 
Title VII exemption by receiving funding from the Department, 
contracting with a recipient, or contracting with a grantee or 
subgrantee, as the case may be.
    Changes: We are revising proposed sections 74.44(f), 75.52, 
76.52, and 80.36(j) to include language that a religious 
organization's exemption from the Federal prohibition on employment 
discrimination on the basis of religion, in section 702(a) of the 
Civil Rights Act of 1964, 20 U.S.C. 2000e-1, is not forfeited when 
the organization contracts with a recipient (under part 74), 
receives financial assistance from the Department (under parts 75 
and 76), or contracts with a grantee or subgrantee (under part 80).

Assurance Requirements

    Comments: Some commenters suggested that additional language be 
added to make clear that eligibility determinations must be based on 
existing statutory and regulatory requirements. Several commenters 
also suggested that the proposed regulation contain additional 
safeguards against the diversion of funds by faith-based 
organizations to improper religious purposes.
    Discussion: The Department does not believe that it is necessary 
to add language to make clear that eligibility determinations must 
be based on existing statutory and regulatory requirements. The 
language of the proposed rule that faith-based organizations are 
eligible to apply for and to receive grants and subgrants under 
programs of the Department on the same basis as any other private 
organization, with respect to programs for which such other 
organizations are eligible, sufficiently communicates that 
eligibility determinations must be based on existing statutory and 
regulatory requirements.
    With respect to additional safeguards to prevent a diversion of 
funds, the Department notes that it imposes no comparable 
requirements in any other context. It would be unfair to require 
religious organizations alone to comply with additional 
requirements. Further, the Department finds no basis for requiring 
greater oversight and monitoring of faith-based organizations than 
of other program participants simply because they are faith-based 
organizations. Program participants are monitored for compliance 
with program requirements, and no program participant may use 
Department funds for any ineligible activity, whether that activity 
is an inherently religious activity or a nonreligious activity that 
is outside the scope of the program at issue.
    Many secular organizations participating in Department programs 
also receive funding from several sources (private, state, or local) 
to carry out activities that are ineligible for funding under 
Department programs. In many cases, the non-eligible activities are 
secular activities but not activities eligible for funding under 
Department programs. All program participants receiving funding from 
various sources and carrying out a wide range of activities must 
ensure through proper accounting that each set of funds is applied 
only to the activities for which the funding was provided. 
Applicable policies, guidelines, and regulations prescribe the cost 
accounting procedures that are to be followed in using Department 
funds. This system of monitoring is more than sufficient to address 
the commenters' concerns, and the amount of oversight of religious 
organizations necessary to accomplish these purposes is no different 
than that involved in other publicly funded programs that the 
Supreme Court has upheld.
    Changes: None.

Removal of Construction Provisions

    Comments: The Department received several comments suggesting 
that the Department retain the provisions prohibiting

[[Page 31715]]

grantees and subgrantees from using grants and subgrants to pay for 
construction, remodeling, repair, operation, or maintenance of any 
facility or part of a facility to be used for inherently religious 
activities. The commenters stated that the provisions should be 
retained so that the Department will not have to revisit the issue 
in the future if statutory authority is some day enacted.
    Discussion: The Department disagrees that these provisions 
should be retained. As stated in the preamble to the proposed rule, 
there is currently no statutory authority for grantees and 
subgrantees to use their grants and subgrants for construction, 
remodeling, repair, operation, or maintenance of any private 
educational facility or part of a private educational facility. If 
and when such uses are authorized by statute, the Department will 
issue program-specific regulations in accordance with the statute. 
Furthermore, we believe that the provisions do not accurately convey 
the state of the law in this area, which would allow grantees and 
subgrantees to use their grants and subgrants to pay for 
construction, remodeling, repair, operation, or maintenance of any 
facility or part of a facility to the extent that such facilities 
are used for eligible Department-funded activities (and not for 
inherently religious activities such as religious worship, 
instruction, or proselytization, or any other ineligible purpose). 
Rather than regulate in that manner today, however, the Department 
will simply remove the existing regulatory prohibition.
    Changes: None.

Secular Alternative Providers

    Comments: Some commenters stated that if the Department funds 
faith-based organizations, it must offer secular alternative 
providers in all situations.
    Discussion: The Department does not agree with the commenters. 
The regulations do not permit funding of inherently religious 
activities (except when there is genuine and independent private 
choice among providers), and the civil rights of beneficiaries are 
protected by the prohibition on discriminating against a beneficiary 
or prospective beneficiary in the provision of program services on 
the basis of ``religion or religious belief'' and by the statement 
that participation in inherently religious activities must be 
voluntary for program beneficiaries.
    Changes: None.

Establishment of Separate Legal Entities

    Comments: One commenter suggested that the proposed regulations 
require faith-based organizations to establish separate legal 
entities as ``firewalls'' between their ``pervasively sectarian'' 
organization and the social service provider.
    Discussion: The Department does not agree with this comment. The 
prohibition on using funds for inherently religious activity, the 
requirement that religious activities be offered separately--in time 
or location--from the activities supported by government funds, and 
the prohibition on religious discrimination against beneficiaries in 
the provision of program services provide sufficient protection to 
honor the constitutional boundaries.
    Changes: None.

Adherence to Applicable Federal Civil Rights Laws

    Comments: One commenter suggested that the proposed rule should 
address whether funds should flow to organizations that are racist 
and bigoted.
    Discussion: The Department does not believe that a change to the 
proposed regulations is necessary. Faith-based organizations that 
receive Federal funding must adhere to all of the applicable Federal 
civil rights laws, including, where applicable, Federal civil rights 
laws that prohibit employment discrimination on the basis of race, 
color, national origin, sex, age, and disability.
    Changes: None.

Applicability of Rule to ``Commingled'' Funds

    Comments: Another commenter recommended additional language that 
would clarify operational constraints created by the provisions of 
the proposed rule relating to the commingling of funds.
    Discussion: The Department believes that this provision of the 
rule is sufficiently clear. As the rule states, when grantees, 
States, and subgrantees have the option to commingle their funds 
with Federal funds or to separate their funds from Federal funds, 
Federal rules apply if they choose to commingle their own funds with 
Federal funds. Additionally, some Department programs may explicitly 
require that Federal rules apply to State ``matching'' funds, 
``maintenance of effort'' funds, or other contributions that are 
commingled with Federal funds, i.e., are part of the grant budget. 
In these circumstances, Federal rules, of course, remain applicable 
to both the Federal and State or local funds that implement the 
program.
    Changes: None.

Nondiscrimination in Providing Assistance

    Comments: One commenter suggested that in the proposed 
regulation's nondiscrimination provisions relating to beneficiaries 
or prospective beneficiaries, the phrase ``of that program'' should 
be changed to ``in the provision of program services.'' The 
commenter thought that the Department was inadvertently stating in 
the proposed regulation that faith-based organizations cannot use 
religion as a factor in facets of their operation that are separate 
from programs funded by a grant or subgrant where the same people 
who are beneficiaries or prospective beneficiaries of such programs 
may be affected by the use of religion in those other facets. 
Another commenter suggested that the proposed rule's prohibition 
against discrimination ``on the basis of religion or religious 
belief'' should be extended to include a prohibition against 
discrimination on the basis of ``refusal to participate in a 
religious practice.'' One commenter also suggested that the 
protections against religious discrimination afforded beneficiaries 
and prospective beneficiaries be broadened to include protections 
against other types of discrimination.
    Discussion: We agree that the proposed regulation could have 
been clearer on the use of religion as a factor in facets of an 
organization's operation that are separate from programs funded by a 
grant or subgrant where the same people who are beneficiaries or 
prospective beneficiaries of such programs may be affected by the 
use of religion in those other facets. The rule was not intended to 
preclude a faith-based organization from using religion in facets of 
its operation that are separate from programs funded by a grant or 
subgrant of the Department, even if the same people who are 
beneficiaries or prospective beneficiaries of such programs may be 
affected by the use of religion in those other facets. We have 
therefore modified the language of the final regulation to address 
this issue.
    The Department disagrees with the suggestion to include a 
prohibition against discrimination on the basis of ``refusal to 
participate in a religious practice.'' The regulation already 
requires private organizations that engage in inherently religious 
activities, such as religious worship, instruction, or 
proselytization, to offer those services separately in time or 
location, and also to make participation in such activities by 
beneficiaries of Department-funded programs voluntary. These 
requirements are sufficient to protect program beneficiaries from 
discrimination.
    Finally, the Department disagrees that the protection against 
religious discrimination should be broadened to cover other 
categories. Grantees and subgrantees are still bound by applicable 
Federal civil rights laws. Moreover, the protections afforded in the 
proposed rule are consistent with the protections the President 
directed Federal agencies, including this Department, to provide 
beneficiaries and prospective beneficiaries in taking steps to 
ensure that Federal policies and programs are fully open to faith-
based organizations in a manner that is consistent with the U.S. 
Constitution and statutory requirements.
    Changes: By substituting ``in the provision of program 
services'' for ``of the program'' in Sec. Sec.  74.44(f)(5), 
75.52(e), 76.52(e), and 80.36(j)(5), the final regulation reflects 
that a faith-based organization may use religion in facets of its 
operation that are separate from programs funded by a grant or 
subgrant of the Department, even if the same people who are 
beneficiaries or prospective beneficiaries of such programs may be 
affected by the use of religion in those other facets.

[FR Doc. 04-12709 Filed 6-1-04; 3:04 pm]
BILLING CODE 4000-01-P