[Federal Register Volume 80, Number 151 (Thursday, August 6, 2015)]
[Proposed Rules]
[Pages 47284-47299]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-18257]



[[Page 47283]]

Vol. 80

Thursday,

No. 151

August 6, 2015

Part IX





Department of Homeland Security





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Office of the Secretary





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6 CFR Part 19





Nondiscrimination in Matters Pertaining to Faith-Based Organizations; 
Proposed Rule

  Federal Register / Vol. 80 , No. 151 / Thursday, August 6, 2015 / 
Proposed Rules  

[[Page 47284]]


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DEPARTMENT OF HOMELAND SECURITY

Office of the Secretary

6 CFR Part 19

[Docket No. DHS-2006-0065]
RIN 1601-AA40


Nondiscrimination in Matters Pertaining to Faith-Based 
Organizations

AGENCY: Office of the Secretary, DHS.

ACTION: Supplemental notice of proposed rulemaking.

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SUMMARY: This proposed rule would implement revised Executive Branch 
policy that, consistent with constitutional church-state parameters, 
faith-based organizations compete on an equal footing with other 
organizations for direct Federal financial assistance, and to fully 
participate in Federally supported social service programs, while 
beneficiaries under those programs receive appropriate protections. 
This rulemaking is intended to ensure that the Department of Homeland 
Security's social service programs are implemented in a manner 
consistent with the requirements of the First Amendment to the 
Constitution.

DATES: Written comments must be received on or before October 5, 2015.

ADDRESSES: You may submit comments, identified by agency name and 
docket number DHS-2006-0065, by one of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Facsimile: Federal eRulemaking portal at 866-466-5370. 
Include the docket number on the cover sheet.
     Mail: Scott Shuchart/Mail Stop No. 0190, Office for Civil 
Rights and Civil Liberties, 245 Murray Lane SW., Bldg. 410, Washington, 
DC 20528-0190. To ensure proper handling, please reference DHS Docket 
No. DHS-2006-0065 on your correspondence. This mailing address may also 
be used for paper, disk, or CD-ROM submissions.

FOR FURTHER INFORMATION CONTACT: Scott Shuchart, Department of Homeland 
Security Office for Civil Rights and Civil Liberties, 202-401-1474 
(telephone), 202-357-1196 (facsimile), [email protected] 
(email).

SUPPLEMENTARY INFORMATION: 

I. Public Participation

    Interested persons are invited to participate in this rulemaking by 
submitting written data, views, or arguments on all aspects of the 
proposed rule. The Department of Homeland Security (DHS) also invites 
comments that relate to the potential economic, environmental, or 
federalism effects of this proposed rule. Comments that will provide 
the most assistance to DHS in developing these procedures will 
reference a specific portion of the proposed rule, explain the reason 
for any recommended change, and include data, information, or authority 
that support such recommended change.
    All comments received will be posted without change to http://www.regulations.gov, including any personal information provided. See 
ADDRESSES above for information on how to submit comments.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov.

II. Executive Summary

A. Purpose of the Regulatory Action

    On January 14, 2008, the Department of Homeland Security (DHS) 
proposed regulations to ensure that faith-based organizations be 
equally eligible to participate in certain programs, as directed by 
Executive Order 13279. 73 FR 2187. While DHS's final rule was still 
pending, additional Executive Orders bearing on the same subject matter 
were signed by President Obama: Executive Order 13498, Amendments to 
Executive Order 13199 and Establishment of the President's Advisory 
Council for Faith-Based and Neighborhood Partnerships, 74 FR 6533 (Feb. 
9, 2009), and Executive Order 13559, Fundamental Principles and 
Policymaking Criteria for Partnerships with Faith-Based and Other 
Neighborhood Organizations, 75 FR 71319 (Nov. 17, 2010). Executive 
Order 13559 amended Executive Order 13279 in several important 
respects.
    DHS now again proposes to issue a rule implementing the principles 
of Executive Order 13279, as amended by Executive Order 13559, to 
ensure that faith-based and community organizations are able to 
participate fully in social service programs funded by DHS, consistent 
with the Constitution, and with appropriate protections for the 
beneficiaries and potential beneficiaries of those programs. The 
proposed rule is largely similar to the rule proposed in 2008, with 
changes to address, inter alia, public comments and the changes 
required by Executive Order 13559.

B. Summary of Major Provisions

    The proposed rule would provide for full participation by faith-
based and community groups in social service programs funded by DHS, 
with suitable protections for individual beneficiaries, consistent with 
the U.S. Constitution:
     Equal treatment, nondiscrimination, and independence. 
Faith-based organizations would be eligible to seek and receive direct 
financial assistance from DHS for social service programs; the proposal 
provides that neither DHS, nor states or local governments acting as 
intermediaries distributing DHS funds, may discriminate against an 
organization on the basis of the organization's religious character or 
affiliation. By the same token, the proposal provides that recipients 
of direct financial assistance may not discriminate against 
beneficiaries on the basis of religion or religious belief. Those 
organizations may maintain their independence, including practice of 
their religious beliefs, selection of board members, and use of space 
with religious symbols, so long as explicitly religious activities are 
not supported with direct Federal financial assistance.
     Explicitly religious activities. The proposal provides 
that organizations receiving direct financial assistance (see below) to 
participate in or administer social service programs may not engage in 
explicitly religious activities in programs supported by or 
administered by DHS. Recipients also wishing to offer non-DHS-supported 
explicitly religious activities are free to do so, separately in time 
or location from the DHS-supported programs, and only on a voluntary 
basis for beneficiaries of DHS-supported social service programs.
     Direct and indirect assistance. Most provisions of the 
rule would apply to direct federal financial assistance, meaning that 
the government or an intermediary (such as a State or local government) 
selects the provider of the social service program, funded through 
either a contract or grant. Programs involving indirect financial 
assistance, where government funding is provided through a voucher, 
certificate, or similar means placed in the hands of the beneficiary, 
provide greater scope for explicitly religious content in programs or 
activities, so long as the overall government program is neutral toward 
religion, the choice of provider is the beneficiary's, and there is an 
adequate secular option for use of the funds.
     Notice to beneficiaries. Faith-based or religious 
organizations receiving direct financial assistance for social service 
programs would, in most

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circumstances, be required to provide beneficiaries and prospective 
individual beneficiaries written notice of particular protections 
afforded to them:
    [cir] The faith-based organization's obligation not to discriminate 
against beneficiaries on the basis of religion or religious belief;
    [cir] that the beneficiary cannot be required to attend or 
participate in any explicitly religious activities, but may do so 
voluntarily;
    [cir] that privately funded explicitly religious activities must be 
separate in time or place from the program receiving Federal financial 
assistance;
    [cir] that if the beneficiary objects to the religious character of 
the organization, the organization must attempt to refer the 
beneficiary to an alternative provider to which the beneficiary does 
not object; and
    [cir] that beneficiaries may report violations of these protections 
to DHS.
     Referral requirement. Where a beneficiary objects to the 
religious character of an organization providing social service 
programs supported by DHS financial assistance, the organization would 
be required to undertake reasonable efforts to identify and refer the 
beneficiary to an alternative provider to which the beneficiary does 
not object. Such organizations must notify DHS when such a referral is 
made, or when it is unable to identify an appropriate alternative 
provider to which the beneficiary can be referred. DHS would then also 
attempt to identify an alternative provider.
     Employment discrimination. The exemption from the federal 
prohibition on employment discrimination based on religion (under 
section 702(a) of the Civil Rights Act of 1964 (42 U.S.C. 2000e-1)) 
remains applicable for religious organizations delivering Federally 
supported social services; independent statutory or regulatory 
provisions that impose nondiscrimination requirements on all grantees 
would not be waived or mitigated by this regulation.

III. Background

    On December 12, 2002, President Bush signed Executive Order 13279, 
Equal Protection of the Laws for Faith-Based and Community 
Organizations, 67 FR 77141 (Dec. 16, 2002). Executive Order 13279 sets 
forth the principles and policymaking criteria to guide Federal 
agencies in formulating and developing policies with implications for 
faith-based organizations and other community organizations, to ensure 
equal protection of the laws for faith-based and community 
organizations, and to expand opportunities for, and strengthen the 
capacity of, faith-based and other community organizations to meet 
social needs in America's communities. In addition, Executive Order 
13279 required specified agency heads to review and evaluate existing 
policies relating to Federal financial assistance for social services 
programs and, where appropriate, to implement new policies that were 
consistent with and necessary to further the fundamental principles and 
policymaking criteria that have implications for faith-based and 
community organizations.
    On January 14, 2008, following Executive Order 13403 (which brought 
DHS within the scope of Executive Order 13279), DHS proposed to amend 
its regulations to clarify that faith-based organizations are equally 
eligible to participate in any social or community service programs 
established, administered, or supported by DHS (including any component 
of DHS), and would be equally eligible to seek and receive Federal 
financial assistance from DHS service programs where such assistance is 
available to other organizations. 73 FR 2187. DHS published the 
proposed rule with a thirty-day public comment period from January 14 
to February 13, 2008. During this time, DHS received twenty comments on 
the proposed rule; some expressed support while others expressed 
concerns with certain elements of the proposed rule.
    Shortly after taking office, President Obama signed Executive Order 
13498, Amendments to Executive Order 13199 and Establishment of the 
President's Advisory Council for Faith-Based and Neighborhood 
Partnerships, 74 FR 6533 (Feb. 9, 2009). Executive Order 13498 changed 
the name of the White House Office of Faith-Based and Community 
Initiatives to the White House Office of Faith-Based and Neighborhood 
Partnerships and established the President's Advisory Council for 
Faith-Based and Neighborhood Partnerships (Advisory Council). The 
President created the Advisory Council to bring together experts to, 
among other things, make recommendations to the President for changes 
in policies, programs, and practices that affect the delivery of 
services by faith-based and other neighborhood organizations.
    The Advisory Council issued its recommendations in a report 
entitled A New Era of Partnerships: Report of Recommendations to the 
President in March 2010 (Advisory Council Report) (available at http://www.whitehouse.gov/sites/default/files/microsites/ofbnp-council-final-report.pdf). The Advisory Council Report included recommendations to 
amend Executive Order 13279 in order to clarify the legal foundation of 
partnerships and offered a new set of fundamental principles to guide 
agency decision-making in administering Federal financial assistance 
and support to faith-based and neighborhood organizations.
    President Obama signed Executive Order 13559, Fundamental 
Principles and Policymaking Criteria for Partnerships with Faith-Based 
and Other Neighborhood Organizations, on November 17, 2010. 75 FR 71319 
(Nov. 22, 2010). Executive Order 13559 incorporated the Advisory 
Council's recommendations by amending Executive Order 13279 to:
     Require agencies that administer or award Federal 
financial assistance for social service programs to implement 
protections for the beneficiaries or prospective beneficiaries of such 
programs by providing referrals to alternative providers if the 
beneficiary objects to the religious character of the organization 
providing services written notice of these and other protections to 
beneficiaries before enrolling in or receiving services;
     state that decisions about awards of Federal financial 
assistance must be free from political interference or even the 
appearance of such interference, and must be made on the basis of 
merit, not on the basis of the religious affiliation, or lack of 
affiliation, of the recipient organization;
     state that the Federal government has an obligation to 
monitor and enforce all standards regarding the relationship between 
religion and government in ways that avoid excessive entanglement 
between religious bodies and governmental entities;
     clarify the principle that organizations engaging in 
explicitly religious activity must separate these activities in time or 
location from programs supported with direct Federal financial 
assistance, and that participation in any explicit religious activity 
cannot be subsidized with direct Federal financial assistance and that 
participation in such activities must be voluntary for the 
beneficiaries of the social service program supported with such Federal 
financial assistance;
     emphasize that religious providers are welcome to compete 
for government social service funding and maintain a religious identity 
as described in the order;
     require agencies that provide Federal financial assistance 
for social service programs to post online regulations, guidance 
documents, and

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policies that have implications for faith-based and neighborhood 
organizations and to post online a list of entities receiving such 
assistance;
     clarify that church-state standards and other standards 
apply to sub-awards as well as prime awards; and
     distinguish between ``direct'' and ``indirect'' Federal 
financial assistance.
    In addition, Executive Order 13559 created the Interagency Working 
Group on Faith-Based and Other Neighborhood Partnerships (Working 
Group) to review and evaluate existing regulations, guidance documents, 
and policies.
    The Executive Order also stated that, following receipt of the 
Working Group's report, the Office of Management and Budget (OMB), in 
coordination with the Department of Justice, must issue guidance to 
agencies on the implementation of the order. In August 2013, OMB issued 
such guidance (available at http://www.whitehouse.gov/sites/default/files/omb/memoranda/2013/m-13-19.pdf). In this guidance, OMB instructed 
specified agency heads to adopt regulations and guidance that will 
fulfill the requirements of the Executive Order and to amend 
regulations and guidance to ensure that they are consistent with 
Executive Order 13559.
    Building on the rule first proposed in 2008, DHS hereby proposes a 
rule that incorporates the language and recommendations from Executive 
Order 13559 and the succeeding reports and guidance just described. The 
proposed rule would ensure that DHS social service programs are 
implemented in a manner consistent with the requirements of the U.S. 
Constitution and are open to all qualified organizations, regardless of 
their religious character. To that end, under this proposed rule, 
private, nonprofit faith-based organizations seeking to participate in 
Federally supported social service programs or seeking Federal 
financial assistance for social service programs would be eligible to 
participate fully, with appropriate protections for beneficiaries.

IV. Changes From the Original Proposed Rule

    DHS has made several changes to the previously proposed regulatory 
text from the original notice of proposed rulemaking.

Definition of Social Service Program

    The original proposed rule defined ``social service program'' 
differently than does Executive Order 13279. (The definition in 
Executive Order 13279 is unaffected by the Executive Order 13559 
amendments.) This rule proposes to use the definition in Executive 
Order 13279, instead of the definition in the original proposed rule. 
This approach will better ensure uniformity with the rules of other 
agencies and consistency with the relevant Executive Orders. DHS may 
also issue guidance at a future time with respect to the applicability 
of the Executive Orders and the rule to particular programs. At the 
present time, DHS believes that it administers four programs with 
grantees, subgrantees, and beneficiaries that would be covered by this 
rule.\1\
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    \1\ Within FEMA, the covered programs would be the Emergency 
Food and Shelter Program, the Crisis Counseling Program, and the 
Disaster Case Management Program. The USCIS Citizenship and 
Integration Grant Program would also covered by this rule.
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Explicitly Religious Activities

    The original proposed rule and Executive Order 13279 prohibit 
nongovernmental organizations from using direct Federal financial 
assistance (e.g., government grants, contracts, sub-grants, and 
subcontracts) for ``inherently religious activities, such as worship, 
religious instruction, and proselytization.'' The term ``inherently 
religious,'' which was carried over in several other agencies' 
regulations implementing Executive Order 13279, has proven confusing. 
In 2006, for example, the Government Accountability Office (GAO) found 
that while all 26 of the religious social service providers it 
interviewed said they understood the prohibition on using direct 
Federal financial assistance for ``inherently religious activities,'' 
four of the providers described acting in ways that appeared to violate 
that rule. GAO, Faith-Based and Community Initiative: Improvements in 
Monitoring Grantees and Measuring Performance Could Enhance 
Accountability, GAO-06-616, at 34-35 (June 2006) (available at http://www.gao.gov/new.items/d06616.pdf).
    Further, while the Supreme Court has sometimes used the term 
``inherently religious,'' it has not used it to indicate the boundary 
of what the Federal government may subsidize with direct Federal 
financial assistance. If the term is interpreted narrowly, it could 
permit actions that the Constitution prohibits. On the other hand, one 
could also argue that the term ``inherently religious'' is too broad 
rather than too narrow. For example, some might consider their 
provision of a hot meal to a needy person to be an ``inherently 
religious'' act when it is undertaken from a sense of religious 
motivation or obligation, even though it has no overt religious 
content.
    The Court has determined that the government cannot subsidize ``a 
specifically religious activity in an otherwise substantially secular 
setting.'' Hunt v. McNair, 413 U.S. 734, 743 (1973). It has also said a 
direct aid program impermissibly advances religion when the aid results 
in governmental indoctrination of religion. See Mitchell v. Helms, 530 
U.S. 793, 808 (2000) (plurality opinion); id. at 845 (O'Connor, J., 
concurring in judgment); Agostini v. Felton, 521 U.S. 203, 223 (1997). 
This terminology is fairly interpreted to prohibit the government from 
directly subsidizing any ``explicitly religious activity,'' including 
activities that involve overt religious content. Thus, direct Federal 
financial assistance should not be used to pay for activities such as 
religious instruction, devotional exercises, worship, proselytizing or 
evangelism; production or dissemination of devotional guides or other 
religious materials; or counseling in which counselors introduce 
religious content. Similarly, direct Federal financial assistance may 
not be used to pay for equipment or supplies to the extent they are 
allocated to such activities. Activities that are secular in content, 
such as serving meals to the needy or using a nonreligious text to 
teach someone to read, are not considered ``explicitly religious 
activities'' merely because the provider is religiously motivated to 
provide those services. The study or acknowledgement of religion as a 
historical or cultural reality also would not be considered an 
explicitly religious activity.
    Notwithstanding the general prohibition on the use of direct 
Federal financial assistance to support explicitly religious 
activities, there are times when religious activities may be Federally 
financed under the Establishment Clause and not subject to the direct 
Federal financial assistance restrictions: For instance, where Federal 
financial assistance is provided to chaplains to work with inmates in 
prisons, detention facilities, or community correction centers through 
social service programs. This is because where there is extensive 
government control over the environment of the Federally financed 
social service program, program officials may sometimes need to take 
affirmative steps to provide an opportunity for beneficiaries of the 
social service program to exercise their religion. See Cruz v. Beto, 
405 U.S. 319, 322 n.2 (1972) (per curiam) (``[R]easonable opportunities 
must be afforded to all prisoners to exercise the religious freedom 
guaranteed by the First and Fourteenth Amendment without fear of

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penalty.''); 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 soldiers who have 
been moved by the Army to areas of the world where religion of their 
own denominations is not available to them''). Without such efforts, 
religious freedom might not exist for these beneficiaries. Accordingly, 
services such as chaplaincy services would not be considered explicitly 
religious activities that are subject to direct financial aid 
restrictions.
    Likewise, it is important to emphasize that the restrictions on 
explicit religious content apply to content generated by the 
administrators of the program receiving direct Federal financial 
assistance, not to spontaneous comments made by individual 
beneficiaries about their personal lives in the context of these 
programs. For example, if a person administering a Federally supported 
job skills program asks beneficiaries to describe how they gain the 
motivation necessary for their job searches and some beneficiaries 
refer to their faith or membership in a faith community, these kinds of 
comments do not violate the restrictions and should not be censored. In 
this context, it is clear that the administrators of the government 
program did not orchestrate or encourage such comments.
    DHS, therefore, now proposes that Sec.  19.4 employ the term 
``explicitly religious activities'' (in lieu of ``inherently religious 
activities'' in the initially proposed rule) and define the term as 
``including activities that involve overt religious content such as 
worship, religious instruction, or proselytization.'' This language 
will provide greater clarity and more closely match constitutional 
standards as they have been developed in case law.
    These restrictions would not diminish previously proposed 
regulatory protections for the religious identity of faith-based 
providers. The proposed rule would not affect, for example, 
organizations' ability to use religious terms in their organizational 
names, select board members on a religious basis, include religious 
references in mission statements and other organizational documents, 
and post religious art, messages, scriptures and symbols in buildings 
where Federal financial assistance is delivered.

Direct and Indirect Federal Financial Assistance

    Executive Order 13559 noted that new regulations should distinguish 
between ``direct'' and ``indirect'' Federal financial assistance 
because the limitation on explicitly religious activities applies to 
programs that are supported with ``direct'' Federal financial 
assistance but does not apply to programs supported with ``indirect'' 
Federal financial assistance. DHS proposes to define these terms in 
Sec.  19.2. Programs are supported with direct Federal financial 
assistance when either the Federal government or an intermediary, as 
identified in these proposed rules, selects a service provider and 
either purchases services from that provider (e.g., through a contract) 
or awards funds to that provider to carry out a social service (e.g., 
through a grant or cooperative agreement). Under these circumstances, 
there are no intervening steps in which the beneficiary's choice 
determines the provider's identity.
    Indirect Federal financial assistance is distinguishable because it 
places the choice of service provider in the hands of a beneficiary 
before the Federal government pays for the cost of that service through 
a voucher, certificate, or other similar means. For example, the 
government could choose to allow the beneficiary to secure the needed 
service on his or her own. Alternatively, a governmental agency, 
operating under a neutral program of aid, could present each 
beneficiary or prospective beneficiary with a list of all qualified 
providers from which the beneficiary could obtain services using a 
government-provided certificate. Either way, the government empowers 
the beneficiary to choose for himself or herself whether to receive the 
needed services, including those that contain explicitly religious 
activities, through a faith-based or other neighborhood organization. 
The government could then pay for the beneficiary's choice of provider 
by giving the beneficiary a voucher or similar document. Alternatively, 
the government could choose to pay the provider directly after asking 
the beneficiary to indicate his or her choice. See Freedom From 
Religion Found. v. McCallum, 324 F.3d 880, 882 (7th Cir. 2003).
    The Supreme Court has held that if a program meets certain 
criteria, the government may fund the programs if, among other things, 
it places the benefit in the hands of individuals, who in turn have the 
freedom to choose the provider to which they take their benefit and 
``spend'' it, whether that provider is public or private, non-religious 
or religious. See Zelman v. Simmons-Harris, 536 U.S. 639, 652-53 
(2002). In these instances, the government does not encourage or 
promote any explicitly religious programs that may be among the options 
available to beneficiaries. Notably, the voucher scheme at issue in the 
Zelman decision, which was described by the Court as one of ``true 
private choice,'' id. at 653, was also neutral toward religion and 
offered beneficiaries adequate secular options. Accordingly, these 
criteria also are included in the text of the proposed definition of 
``indirect financial assistance.''

Intermediaries

    The Department also proposes regulatory language in Sec.  19.2 that 
will clarify the responsibilities of intermediaries.\2\ An intermediary 
is an entity, including a non-governmental organization, acting under a 
contract, grant, or other agreement with the Federal government or with 
a State or local government, that accepts Federal financial assistance 
and distributes such assistance to other organizations that, in turn, 
provide government-funded social services. Each intermediary must abide 
by all statutory and regulatory requirements by, for example, providing 
any services supported with direct Federal financial assistance in a 
religiously neutral manner that does not include explicitly religious 
activities. The intermediary also has the same duties as the government 
to comply with these rules by, for example, selecting any providers to 
receive Federal financial assistance in a manner that does not favor or 
disfavor organizations on the basis of religion or religious belief. 
While intermediaries may be used to distribute Federal financial 
assistance to other organizations in some programs, intermediaries 
remain accountable for the Federal financial assistance they disburse. 
Accordingly, intermediaries must ensure that any providers to which 
they disburse Federal financial assistance also comply with these 
rules. If the intermediary is a non-governmental organization, it 
retains all other rights of a non-governmental organization under the 
statutory and regulatory provisions governing the program.
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    \2\ In this document, the terms ``intermediary'' and ``pass-
through entity'' may be used interchangeably. See 2 CFR 200.74.
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    A State's use of intermediaries does not relieve the State of its 
traditional responsibility to effectively monitor the actions of such 
organizations. States are obligated to manage the day-to-day operations 
of grant- and sub-grant- supported activities to ensure compliance with 
applicable Federal requirements and performance goals. Moreover, a 
State's use of intermediaries

[[Page 47288]]

does not relieve the State of its responsibility to ensure that 
providers are selected, and deliver services, in a manner consistent 
with the First Amendment's Establishment Clause.

Protections for Beneficiaries

    Executive Order 13559 indicates a variety of valuable protections 
for the religious liberty rights of social service beneficiaries.\3\ 
These protections are aimed at ensuring that Federal financial 
assistance is not used to coerce or pressure beneficiaries along 
religious lines, and to make beneficiaries aware of their rights, 
through appropriate notice, when potentially obtaining services from 
providers with a religious affiliation.
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    \3\ DHS proposes to define ``beneficiary'' in Sec.  19.2 to mean 
an individual recipient of goods or services provided as part of a 
social service program specifically supported by Federal financial 
assistance. Beneficiary does not mean an individual who may 
incidentally benefit from Federal financial assistance provided to a 
State, local, or Tribal government, or a private nonprofit 
organization.
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    The executive order makes it clear that all organizations that 
receive Federal financial assistance for the purpose of delivering 
social welfare services are prohibited from discriminating against 
beneficiaries or potential beneficiaries of those programs on the basis 
of religion, a religious belief, refusal to hold a religious belief, or 
a refusal to attend or participate in a religious practice. It also 
states that organizations offering explicitly religious activities 
(including activities that involve overt religious content such as 
worship, religious instruction or proselytization) must not use direct 
Federal financial assistance to subsidize or support those activities, 
and that any explicitly religious activities must be offered outside of 
programs that are supported with direct Federal financial assistance 
(including through prime awards or sub-awards). In other words, to the 
extent that an organization provides explicitly religious activities, 
those activities must be offered separately in time or location from 
programs or services supported with direct Federal financial 
assistance. And, as noted above, participation in those religious 
activities must be completely voluntary for beneficiaries of programs 
supported by Federal financial assistance.
    Executive Order 13559 also states that organizations administering 
a program that is supported by Federal financial assistance must 
provide written notice in a manner prescribed by the agency to 
beneficiaries and prospective beneficiaries of their right to be 
referred to an alternative provider when available. When the nature of 
the service provided or exigent circumstances make it impracticable to 
provide such written notice in advance of the actual service, service 
providers must advise beneficiaries of their protections at the 
earliest available opportunity. Where the recipient and beneficiary 
have only a brief, potentially one-time interaction, such as at a soup 
kitchen, individual notice may be impracticable; in those cases, DHS 
anticipates that a conspicuous posted notice would satisfy this 
requirement.
    These requirements are set forth in Sec. Sec.  19.6 and 19.7 of the 
proposed rule. Section 19.7 states that if a beneficiary or prospective 
beneficiary of a social service program supported by Federal financial 
assistance objects to the religious character of an organization that 
provides services under the program, the beneficiary shall be referred 
to an alternative provider. More specifically, the proposed rule 
provides that, if a beneficiary or prospective beneficiary of a social 
service program supported by direct Federal financial assistance 
objects to the religious character of an organization that provides 
services under the program, that organization shall promptly undertake 
reasonable efforts to identify and refer the beneficiary to an 
alternative provider to which the prospective beneficiary has no 
objection.
    Model language for the notice to beneficiaries is provided in the 
proposed Appendix A to the rule.
    A referral may be made to another religiously affiliated provider, 
if the beneficiary has no objection to that provider. But if the 
beneficiary requests a secular provider, and a secular provider that 
offers the needed services is available, then a referral must be made 
to that provider.
    The proposed rule would specify that, except for services provided 
by telephone, internet, or similar means, the referral would be to an 
alternate provider that is in geographic proximity to the organization 
making the referral and that offers services that are similar in 
substance and quality to those offered by the organization. The 
alternative provider also would need to have the capacity to accept 
additional clients. If a Federally supported alternative provider meets 
these requirements and is acceptable to the beneficiary, a referral 
should be made to that provider. If, however, there is no Federally 
supported alternative provider that meets these requirements and is 
acceptable to the beneficiary, a referral should be made to an 
alternative provider that does not receive Federal financial assistance 
but does meet these requirements and is acceptable to the beneficiary.
    If an organization is unable to identify an alternative provider, 
the organization is required under the proposed rule to notify the 
awarding entity and that entity would determine whether there is any 
other suitable alternative provider to which the beneficiary may be 
referred. Further, the executive order and the proposed rule require 
the relevant government agency to ensure that appropriate and timely 
referrals are made to an appropriate provider, and that referrals are 
made in a manner consistent with applicable privacy laws and 
regulations. It must be noted, however, that in some instances, the 
awarding entity may also be unable to identify a suitable alternative 
provider.

Political or Religious Affiliation

    DHS proposes to add proposed Sec.  19.3(c) to clarify that 
decisions about awards of Federal financial assistance must be free 
from political interference or even the appearance of such 
interference. The awarding entity should instruct participants in the 
awarding process to refrain from taking religious affiliations or non-
religious affiliations into account in this process; i.e., an 
organization should not receive favorable or unfavorable marks merely 
because it is affiliated or unaffiliated with a religious body, or 
related or unrelated to a specific religion. When selecting peer 
reviewers, the awarding entity should never ask about religious 
affiliation or take such matters into account. But it should encourage 
religious, political, and professional diversity among peer reviewers 
by advertising for these positions in a wide variety of venues.

Additional Changes Based on Comments on the Notice of Proposed 
Rulemaking

    In addition to the aforementioned changes regarding the scope of 
the rule or based on the new policy guidance in Executive Order 13559, 
this proposed rule includes further revisions to address comments made 
on the initial notice of proposed rulemaking. DHS revised proposed 
Sec.  19.1 to reflect that the purpose of these regulations is to 
ensure equal treatment of faith-based organizations, not to establish 
equal participation rates for faith-based organizations. The term 
``sectarian'' was removed from proposed Sec.  19.2 as a response to a 
comment that suggested the term may be perceived pejoratively. To 
address comments on new reporting and monitoring requirements, a new 
paragraph (c) was added to proposed

[[Page 47289]]

Sec.  19.4 to clarify that all DHS programs apply the same standards to 
faith-based and secular organizations, and that all organizations carry 
out eligible activities in accordance with all program requirements and 
requirements governing the conduct of DHS-supported activities. A new 
paragraph (d) was also added to proposed Sec.  19.4 to clarify that 
restrictions regarding the use of direct DHS financial assistance apply 
only to direct financial assistance; they do not apply to social 
service programs where DHS financial assistance is provided to a 
religious or other non-governmental organization indirectly. The 
proposed changes to FEMA-specific regulations have been removed as 
unnecessary because those changes amended regulations for programs that 
DHS has not presently identified as being covered by this rule.

V. Discussion of the Public Comments Received on the January 14, 2008, 
Proposed Rule

    DHS received 20 comments on the notice of proposed rulemaking from 
civil rights organizations, religious organizations, and interested 
members of the public. Some of the comments were generally supportive 
of the proposed rule; others were critical.

A. Participation by Faith-Based Organizations in DHS Programs

    Some commenters supported the participation of religious 
organizations, noting the widespread contributions of religious 
organizations to civil society, connections to their communities, and 
concern for those in need. Other commenters suggested that DHS should 
prohibit either all faith-based organizations, or a subset of 
``pervasively sectarian'' organizations, from participating in DHS 
programs, to avoid violating the First Amendment's Establishment 
Clause. U.S. Const. Amdt I (1791).
    The Establishment Clause does not bar direct 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). The Constitution does 
require the application of certain safeguards, however, when government 
financial assistance flows to religious organizations, and the proposed 
rule articulated here respects those safeguards. See Sec.  19.2, 
definitions of ``direct'' and ``indirect Federal financial 
assistance,'' and Sec.  19.4(a)-(b). For the reasons described above, 
DHS believes that the proposed rule provides the appropriate approach 
to this matter.

B. Inherently (Explicitly) Religious Activities

    One commenter suggested DHS clarify the definition of inherently 
religious activities, and suggested that DHS provide additional 
examples. As discussed, DHS agrees that the term ``inherently 
religious'' is confusing, and has revised its proposal to remove the 
term and replace it with ``explicitly religious.''
    DHS believes that it would be difficult at best to establish an 
acceptable list of all explicitly religious activities. Inevitably, the 
regulatory definition would fail to include some explicitly religious 
activities or include certain activities that are not explicitly 
religious. Rather than attempt to establish an exhaustive regulatory 
definition, the proposed definition of ``explicitly religious 
activities'' both provides examples of the general types of activities 
that are prohibited by the regulations, and establishes that providing 
services does not become explicitly religious merely because providers 
are religiously motivated to undertake them. This approach is 
consistent with judicial decisions that likewise have not 
comprehensively defined explicitly religious activities. DHS also 
anticipates providing additional guidance to assist recipients in 
identifying explicitly religious activities.
    The commenter also urged DHS to revise the definition of inherently 
religious activities to remove the term ``sectarian,'' noting that the 
term is often used pejoratively and does not add any significant 
clarification. DHS agrees that the term ``sectarian'' may be perceived 
pejoratively, which is not the intent of the rule, and has revised 
proposed Sec.  19.2 accordingly. While, with these revisions, DHS 
believes the definition of explicitly religious activities is 
sufficiently clear, comments on the revised definition are welcome.

C. Separation and Monitoring of Explicitly Religious Activities

    Some commenters asserted that religious organizations are incapable 
of distributing aid without regard to religion or other prohibited 
factors, or incapable of separating their inherently (explicitly) 
religious activities from Federally supported, secular activities. One 
commenter suggested DHS amend the proposed rule to prohibit all 
organizations participating in DHS programs from engaging in inherently 
(explicitly) religious activities, regardless of whether the activities 
are separated from the activities supported with direct Federal 
financial assistance and voluntary for DHS program beneficiaries. The 
commenter asserted that the proposed rule advances religion by giving 
faith-based organizations access to disaster victims who may be 
persuaded to religion when they otherwise may not have been inclined. 
Similarly, one commenter suggested that religious organizations should 
only be permitted to participate in the immediate aftermath of a 
disaster, in order to minimize the role of religious organizations and 
avoid ``entanglement with religion.'' DHS believes such a change would 
be unnecessarily restrictive and not consistent with either the law or 
good government.
    Other commenters suggested that the proposed rule did not specify a 
sufficient means of monitoring the separation of organizations' 
inherently (explicitly) religious activities from activities supported 
with direct Federal financial assistance. One of these commenters 
recommended sanctions for violating this provision. Others suggested 
that an effort to monitor for such separation would require improper 
``excessive entanglement'' between government and religion in violation 
of the Constitution. One commenter recommended DHS revise the proposed 
rule to include ``specific language forbidding officials from applying 
more stringent reporting, certification, or other requirements to 
faith-based organizations than their secular counterparts.''
    DHS proposes substantial revisions to proposed Sec.  19.4, which 
would address concerns over separation requirements for faith-based or 
religious organizations that receive direct Federal financial 
assistance for social service programs. Under Sec.  19.4(b), any 
explicitly religious activities must be separate, distinct, and 
voluntary for beneficiaries or potential beneficiaries of DHS-supported 
social service programs. Faith-based or religious organizations need to 
make this distinction completely clear to beneficiaries or prospective 
beneficiaries. In addition to this notification requirement, faith-
based or religious organizations must also uphold further beneficiary 
protections, as discussed above. DHS also anticipates providing 
additional guidance to assist recipients in abiding by, among other 
things, the separation requirement.
    With regard to monitoring and compliance concerns,\4\ any 
organization

[[Page 47290]]

could violate DHS rules on inappropriate use of direct DHS financial 
assistance or fail to comply with DHS requirements, not just religious 
or faith-based organizations. All organizations therefore must be 
monitored for compliance with program requirements, and no organization 
may use direct DHS financial assistance for any ineligible activity. 
Moreover, the First Amendment requires the Federal government to 
monitor the activities and programs it funds to ensure that they comply 
with church-state requirements, including prohibition against the use 
of direct Federal financial assistance in a manner that results in 
governmental indoctrination on religious matters. See Bowen v. 
Kendrick, 487 U.S. 589, 615 (1988); see also Comm. for Pub. Educ. & 
Religious Liberty v. Nyquist, 413 U.S. 756, 780 (1973).
---------------------------------------------------------------------------

    \4\ DHS has considered, in connection with the monitoring 
question, both the 2006 GAO report discussed above and a 2005 Urban 
Institute report noted by commentators. Fredrica D. Kramer et al., 
Urban Institute, Federal Policy on the Ground: Faith-Based 
Organizations Delivering Local Services (July 2005) (available at 
http://www.urban.org/UploadedPDF/311197_DP05-01.pdf).
---------------------------------------------------------------------------

    Executive Order 13559 amended Executive Order 13279 to describe the 
Federal government's obligation to monitor and enforce constitutional, 
statutory, and regulatory requirements relating to the use of Federal 
financial assistance, including the constitutional obligation to 
monitor and enforce church-state standards in ways that avoid excessive 
entanglement between religion and government. To address this issue and 
the comments received on it, DHS has added proposed Sec.  19.4(c) to 
clarify that all DHS programs must apply the same standards to faith-
based and secular organizations, and that all organizations that 
participate in DHS programs, including religious ones, must carry out 
eligible activities in accordance with all program requirements and 
other applicable requirements governing the conduct of DHS-supported 
activities.
    Any organization receiving direct DHS financial assistance that 
uses the DHS portion of their funding for prohibited purposes will be 
subject to the imposition of sanctions or penalties to the extent 
authorized by the program's statutory authority. Recipients of Federal 
financial assistance must therefore demonstrate, through proper 
accounting principles, that direct DHS financial assistance is only 
being used for the Federally supported program. Applicable policies, 
guidelines, and regulations prescribe the cost accounting procedures 
that are to be followed in using direct DHS financial assistance. For 
example, a faith-based or religious organization may fulfill this 
requirement by keeping separate track of all staff hours charged to the 
Federally supported program or showing cost allocations for all items 
and activities that involve both Federally supported and non-Federally 
supported funded programs, such as staff, time, equipment, and other 
expenses, such as travel to event sites.
    At the same time, the Federal government must respect the 
constitutional command against excessive entanglement between 
government and religion. Lemon v. Kurtzman, 403 U.S. 602, 613 (1971). 
Three commenters suggested that the Federal government's efforts to 
monitor or enforce compliance with the proposed rule would create 
excessive government entanglement with religion. One commenter 
suggested that the proposed rule satisfied Lemon since the protection 
provisions in proposed Sec.  19.6 (now Sec.  19.8) and Sec.  19.7 (now 
Sec.  19.9) ``prevent[] the government from interfering with the day to 
day operations of the religious organization.''
    The Supreme Court has said that excessive entanglement includes 
``comprehensive, discriminating, and continuing state surveillance.'' 
Id. at 619. So, for example, the Federal government need not and should 
not engage in ``pervasive monitoring'' of religious bodies. Id. at 627. 
DHS believes that the monitoring of Federal financial assistance 
provided for in the proposed rule falls far short of the ``pervasive 
monitoring'' of religious bodies that would be prohibited under the 
Constitution. Nonetheless, DHS is interested in further comment 
regarding oversight and entanglement concerns, and anticipates 
providing further guidance regarding appropriate compliance monitoring.

 D. Beneficiary Protections

    Several commenters suggested that the proposed rule did not 
sufficiently require faith-based organizations to explain to 
beneficiaries that all inherently (explicitly) religious activities are 
voluntary and not required for participation in the Federally supported 
program. Some commenters expressed a concern that beneficiaries would 
be unwilling to seek services from a religious organization because of 
the perception that they would be forced into participating in 
inherently (explicitly) religious activities, or that an individual 
receiving an invitation to attend an inherently religious activity 
would feel obligated to attend.
    Another commenter suggested that the proposed rule be revised to 
include a right for beneficiaries to receive services from an alternate 
or non-religious provider, and that beneficiaries be informed of this 
right by the faith-based provider. The commenter suggested that without 
an equivalent secular alternative, beneficiaries might be forced to 
participate in programs provided by faith-based organizations where 
they may be required to participate in religious activity in order to 
receive essential Federally supported benefits.
    In accordance with Executive Order 13559, DHS added Sec. Sec.  19.6 
and 19.7 to this proposal, which address these concerns. As discussed 
above, new proposed Sec.  19.6 includes a written notice requirement. 
New proposed Sec.  19.7 describes the requirements that a faith-based 
organization must follow when referring a beneficiary or prospective 
beneficiary to an alternative provider. DHS is interested in public 
comment on whether new and revised Sec. Sec.  19.5, 19.6, and 19.7 
provide sufficient protection for the interests of program 
beneficiaries with respect to their individual decisions regarding 
religion.

E. The ``Separate in Time or Location'' Requirement

    Three commenters suggested that the proposed rule's requirement 
that inherently (explicitly) religious activities be separate in time 
or location from the Federally supported activities is unclear or does 
not provide constitutionally mandated separation, and should be changed 
to require that inherently (explicitly) religious activities be 
separate by both time and location.
    Under Sec.  19.4 of this proposal, where a religious organization 
receives direct government assistance, any religious activities that 
the organization offers must be offered separately--in time or place--
from the activities supported by direct Federal financial assistance. 
This separation by time or place must be done in such a way that it is 
clear that the two programs are separate and distinct. For example, 
when separating the two programs by time but presenting them in the 
same location, the service provider must ensure that one program 
completely ends before the other program begins. DHS believes that 
requiring separation by both time and place is not legally necessary 
and could impose an unnecessary burden on small faith-based 
organizations. DHS welcomes additional input on the matter. DHS also 
anticipates providing additional guidance to assist recipients in 
abiding by, among other things, the separation requirement.

[[Page 47291]]

F. Faith-based Organizations' Display of Religious Art or Symbols

    Several commenters objected to the proposed rule's clarification 
that faith-based organizations may use space in their facilities to 
provide DHS-supported services ``without removing or concealing 
religious articles, texts, art, or symbols.''
    A number of Federal statutes affirm the principle embodied in this 
rule. See, e.g., 42 U.S.C. 290kk-1(d)(2)(B). Moreover, no other DHS 
regulations prescribe the types of artwork, statues, or icons that must 
be removed by program participants from within the structures or rooms 
in which DHS-supported services are provided. A prohibition on the use 
of religious icons could make it more difficult for many faith-based 
organizations to participate in DHS programs than other organizations. 
It might require them to procure additional space, for example. Such a 
requirement would thus be typical of the types of barriers that the 
proposed rule seeks to eliminate. Furthermore, this prohibition would 
also threaten excessive government entanglement. Accordingly, the 
proposed rule would continue to permit faith-based organizations to use 
space in their facilities to provide DHS-supported services, without 
removing religious art, icons, scriptures, or other religious symbols. 
At the same time, the proposed rule also contains added protections for 
beneficiaries, including the requirement that written notice be 
provided to beneficiaries informing them of their ability to request an 
alternative provider if the religious character of their existing 
provider is objectionable to them. These provisions attempt to strike a 
sensible balance between protecting beneficiaries and faith-based 
institutions.

G. Nondiscrimination in Providing Assistance

    One commenter suggested that the proposed rule's prohibition on 
discrimination against beneficiaries on the basis of ``religion, belief 
or religious practice'' should specifically include ``refusing to 
engage in any religion, belief, or religious practice.'' Federal award 
recipients may not establish selection criteria that have the effect of 
discriminating against beneficiaries based on religion or non-religion. 
Accordingly, Federally supported programs should not limit outreach, 
recruitment efforts, or advertising of the Federal program services 
exclusively to religious or non-religious target populations. The new 
language on nondiscrimination requirements in Sec.  19.5, and on 
beneficiary protections in Sec. Sec.  19.6 and 19.7, is meant to 
prevent discrimination against beneficiaries who do not engage in any 
religion, belief, or religious practice.

H. The Exemption of Chaplains From the Restriction on Direct Financial 
Assistance for Inherently (Explicitly) Religious Activities

    The proposed rule provided an exemption from the restrictions on 
inherently (explicitly) religious activities for chaplains serving 
inmates in detention facilities and organizations assisting those 
chaplains. One commenter noted that chaplains also often provide non-
religious activities such as secular counseling. The commenter proposed 
that DHS revise the rule to limit the exemption for inherently 
(explicitly) religious activity conducted by chaplains and the 
organizations providing assistance to chaplains to ``inherently 
religious activity conducted by chaplains and the organizations 
providing assistance to chaplains in such religious activity,'' and 
urged DHS to set up a monitoring system to ensure chaplains and 
organizations assisting chaplains do not engage in inherently 
(explicitly) religious activities during their secular duties.
    As noted above, the legal restrictions that apply to religious 
programs within detention facilities will sometimes be different from 
legal restrictions that are applied to other DHS programs. This 
difference is because detention facilities are heavily regulated, and 
this extensive government control over the facility environment means 
that officials must sometimes take affirmative steps, in the form of 
chaplaincies and similar programs, to provide an opportunity for 
detainees to exercise their religion.
    Sometimes the activities of chaplains and those assisting them will 
be explicitly religious. For example, a chaplain might provide 
religious counseling, conduct worship services, or administer 
sacraments. Religious activities must be purely voluntary for all 
detainees. The proposed rule would not make any change in the 
professional or legal responsibilities of chaplains or those persons or 
organizations assisting them in detention facilities. Neither would the 
proposed rule diminish the fact that chaplains' duties often include 
the provision of secular counseling. Rather, the chaplaincy exemption 
is intended to clarify that the proposed rule's otherwise-applicable 
restrictions on the use of direct DHS financial assistance for 
explicitly religious activities do not apply to chaplains in detention 
facilities or those functioning in similar roles, as provision of 
explicitly religious activities is part of their duties and necessary 
to accommodate detainees' exercise of religion.

I. Definition of Financial Assistance

    One commenter expressed the view that the proposed rule did not 
sufficiently distinguish between direct and indirect financial 
assistance. The commenter suggested that passages of the rule referring 
to ``direct financial assistance'' may suggest that the freedoms 
secured by the rule do not apply where DHS ``direct financial 
assistance'' is administered by a State or local agency (as opposed to 
``direct financial assistance'' administered by a component of DHS). 
The commenter also urged DHS to revise the proposed rule to make clear 
that the restrictions on inherently (explicitly) religious activities 
do not apply to DHS-supported programs where individual beneficiaries 
are provided a choice among a range of qualified service providers, and 
DHS financial assistance reach the private organization by independent 
choice.
    As discussed above, in light of Executive Order 13559, DHS has 
clarified the distinction between direct and indirect assistance in 
proposed Sec.  19.2 and revised the proposed rule to recognize that, 
where DHS financial assistance reaches an organization indirectly, 
through the genuine and independent choice of the beneficiary (e.g., 
voucher, certificate, or other ``indirect'' financial assistance 
mechanism), the restrictions on explicitly religious activities 
outlined in the proposed rule are not applicable. DHS proposes to add a 
definition of ``intermediary'' to proposed Sec.  19.2 to clarify that 
the restrictions on explicitly religious activities would apply to 
intermediaries that are acting under a contract, grant, or other 
agreement with the Federal government or with a State or local 
government that is administering a program supported by direct Federal 
financial assistance. Thus, direct DHS financial assistance would 
include DHS funds administered by States and local governments as well 
as funds administered by DHS's component organizations and regional 
offices. For example, direct DHS financial assistance includes 
subawards of DHS financial assistance made by a State to nonprofit 
organizations to provide social services to beneficiaries; in this 
example, DHS, the State, and the nonprofit organizations would be 
required to administer DHS financial assistance and the services 
provided by

[[Page 47292]]

that assistance in accordance with this proposed rule.

J. Recognition of Faith-Based Organizations' Title VII Exemption

    A number of commenters expressed views on the proposed rule's 
provision that faith-based organizations do not forfeit their exemption 
under Title VII of the Civil Rights Act of 1964, Public Law 88-352, as 
amended, codified at 42 U.S.C. 2000e-1, to consider religion in hiring 
decisions, if they receive DHS financial assistance, absent statutory 
authority to the contrary. Some commenters supported the rule as 
drafted, noting that a religious organization will retain its 
independence in this regard, while others disagreed with the provision 
retaining the Title VII exemption. Some asserted that it is 
unconstitutional for the government to provide financial assistance for 
the provision of social services to an organization that considers 
religion in its employment decisions.
    With respect to the Title VII exemption, in 1972, Congress 
broadened section 702(a) of the Civil Rights Act to exempt religious 
organizations from the religious nondiscrimination provisions of Title 
VII, regardless of the nature of the job at issue. The broader, amended 
provision was upheld. See Corp. of Presiding Bishop v. Amos, 483 U.S. 
327 (1987). This Title VII exemption is applicable when religious 
organizations are delivering Federally supported social services. As 
the proposed rule also notes, however, where a DHS program contains 
independent statutory or regulatory provisions that impose 
nondiscrimination requirements on all grantees, those provisions are 
not waived or mitigated by this regulation. Accordingly, grantees 
should consult with the appropriate DHS program office to determine the 
scope of any applicable requirements.
    One commenter stated that this provision likely violates the ``no 
religious tests'' clause in Article VI, clause 3 of the Constitution, 
under which ``no religious Test shall ever be required as a 
Qualification to any Office or public Trust under the United States.'' 
This provision has no application in the current regulation. The 
receipt of government financial assistance does not convert the 
employment decisions of private institutions into ``state action'' that 
is subject to the constitutional restrictions such as the ``no 
religious tests'' clause.
    One commenter suggested religious organizations participating in 
DHS programs should be required to hire or deploy staff on a religious 
basis, so that the religious beliefs of the staff reflect the religious 
demographics of the service area. DHS does not believe it would be 
appropriate to direct hiring decisions of recipients in this manner.
    Finally, two commenters sought a statement that where a specific 
statute or regulation contains general prohibitions against a recipient 
considering religion when hiring staff, they may seek, and if they meet 
the qualifications, be granted relief under the Religious Freedom 
Restoration Act (RFRA), Public Law 103-141, sec. 3, 107 Stat. 1488 
(Nov. 16, 1993), found at 42 U.S.C. 2000bb-1 et seq. RFRA applies to 
all Federal law, regardless of whether it is specifically mentioned in 
these regulations. See 42 U.S.C. 2000bb-3. Thus, organizations that 
believe RFRA affords them an exemption from any legal obligation should 
raise that claim with appropriate DHS program offices.

K. Interaction With State and Local Laws

    Several commenters expressed views on the proposed rule's 
interaction with State and local laws. One commenter supported proposed 
Sec.  19.8 (now Sec.  19.10) as supporting the principle ``that federal 
funds should be governed by federal policies and that DHS funded 
programs should be governed by all of its provisions, even when state 
or local funds are commingled with federal funds.'' One commenter also 
expressed support for this section but urged DHS to revise the rule to 
clarify that its provisions override any contrary state or local laws. 
Another commenter suggested that the proposed rule be revised to 
explicitly state that nothing in the rule is intended to modify or 
affect any state law or regulation that relates to discrimination in 
employment.
    The requirements that govern direct Federal financial assistance 
under the DHS programs at issue in these regulations do not directly 
address preemption of State or local laws. Federal funds, or direct 
Federal financial assistance, however, carry Federal requirements. 
Federal requirements continue to be applicable even when Federal 
financial assistance is first awarded to States and localities that are 
then responsible for administering the Federal financial assistance. No 
organization is required to apply for direct Federal financial 
assistance from or to participate in DHS programs, but organizations 
that apply and are selected must comply with the requirements 
applicable to the program funds. As noted in proposed Sec.  19.10, if a 
State or local government voluntarily contributes its own funds to 
supplement Federally supported activities, the State or local 
government has the option to segregate the Federal assistance or 
commingle it. If the Federal assistance is commingled, this regulation 
would apply to all the commingled finances.

L. Tax-Exempt 501(c)(3) Status or Other Separate Corporate Structure

    Two commenters expressed concerns regarding the type of corporate 
structure that should be required of organizations applying to 
participate in DHS programs. One commenter urged DHS to revise the rule 
to require religious organizations to establish a ``separate corporate 
structure'' for its government-supported social welfare activities in 
order to prevent diversion of direct Federal financial assistance to 
``religious activities.''
    An organization may create a separate account for its direct DHS 
financial assistance. All program participants receiving financial 
assistance from various sources and carrying out a wide range of 
activities must ensure through proper accounting principles 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 by all 
recipients of DHS financial assistance, including but not limited to 
the methods described above and the regulation on commingling of 
Federal assistance in Sec.  19.10. This system of monitoring is 
expected to adequately protect against the diversion of direct Federal 
financial assistance for religious activities.
    One commenter suggested DHS clarify whether nonprofit 
organizations, religious or secular, are required to obtain tax-exempt 
status under section 501(c)(3) of the Internal Revenue Code of 1986, 26 
U.S.C. 501(c)(3), to receive DHS financial assistance, particularly 
where the pertinent statute requires only ``nonprofit'' status. This 
commenter noted that requiring nonprofit organizations to obtain tax-
exempt status can pose a barrier to participation in Federally 
supported programs. Requirements for tax exempt status under the 
Internal Revenue Code are unique to each DHS financial assistance 
program and are established in each program's regulations and program 
guidance. Where not otherwise required by statute or regulation, this 
rule does not impose a requirement that an eligible nonprofit 
organization have tax-exempt status.

M. Participation by ``Anti-Semitic, Racist, or Bigoted Organizations''

    One commenter wrote that the proposed rule fails ``to take any 
steps to

[[Page 47293]]

prevent government money from flowing to anti-Semitic, racist, or 
bigoted organizations.'' Another commenter asked how DHS will stop a 
faith-based organization from discriminating against a beneficiary 
based on his or her sexual orientation. Other Federal law prohibits 
beneficiaries from being excluded from participation in DHS-supported 
services or subject to discrimination based on race, color, national 
origin, sex, age, or disability, and this proposed rule does not in any 
way alter those existing prohibitions. See, e.g., Rehabilitation Act of 
1973, 29 U.S.C. 794 (prohibiting discrimination on the basis of 
disability in federal programs and by recipients of financial 
assistance); title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d 
et seq. (prohibiting discrimination on the basis of race, color, or 
national origin by recipients of financial assistance).
    While Federal law does not expressly prohibit recipients of direct 
Federal financial assistance from discriminating against beneficiaries 
because of their sexual orientation or gender identity, Federal law 
does prohibit Federal contractors and subcontractors from 
discriminating against employees and applicants for employment on these 
bases, see Executive Order 13627, Further Amendments to Executive Order 
11478, Equal Employment Opportunity in the Federal Government, and 
Executive Order 11246, Equal Employment Opportunity (July 21, 2014) 
(prohibiting employment discrimination on the bases of sexual 
orientation and gender identity in the Federal government and its 
contracting workforce); Directive 2014-02, Gender Identity and Sex 
Discrimination (Aug. 19, 2014) (clarifying that all Federal contractors 
and subcontractors are protected from gender identity discrimination as 
a form of sex discrimination under Executive Order 11246, as amended); 
and Implementation of Executive Order 13672 Prohibiting Discrimination 
Based on Sexual Orientation and Gender Identity by Contractors and 
Subcontractors, 41 CFR parts 60-1, 60-2, 60-4, and 60-50, (Dec. 9, 
2014) (implementing these principles for contracts entered into on or 
after April 8, 2015).
    Regardless of the organization's own beliefs, it would be required 
under the proposed rule not to discriminate against or among 
beneficiaries on the basis of religion, belief, religious practice, or 
lack thereof, and any beneficiary objecting to the religious character 
of the organization could seek a referral to a different service 
provider pursuant to the beneficiary protections provided by the rule.

N. Participation of Faith-Based Organizations in Disaster Programs

    Several commenters expressed their views on the proposed rule's 
clarification that faith-based nonprofit organizations that are 
otherwise eligible to receive direct Federal financial assistance for 
the repair, restoration, or replacement of damaged facilities, should 
not have the organization's religious status considered in determining 
whether to authorize a grant. Two commenters expressed support for the 
rule; one of these commenters stated that the initial proposal would 
remedy a previous disparity of treatment. Two commenters objected to 
the proposal as unconstitutional; one commenter specified a concern 
that Stafford Act funds might be used to replace religious items such 
as sacred texts.
    Although FEMA's program that provides Federal financial assistance 
for the repair, restoration, or replacement of damaged facilities has 
not been identified by DHS as being covered by this rule, section 406 
of the Robert T. Stafford Disaster Relief and Emergency Assistance Act 
provides disaster assistance on the basis of neutral criteria to an 
unusually broad class of beneficiaries defined without reference to 
religion. Eligible private nonprofit facilities under the Stafford 
Act's Public Assistance program are educational, utility, emergency, 
medical, or custodial care facilities (including a facility for the 
aged or disabled) or other facilities that provide essential 
governmental type services to the general public, and such facilities 
on Indian reservations. 44 CFR 206.221(e). An eligible private 
nonprofit organization is a nongovernmental agency or entity that has 
an IRS tax exemption ruling letter under sections 501(c), (d), or (e) 
of the Internal Revenue Code or satisfactory evidence from the State 
that it is a nonprofit organized or doing business under State law. 44 
CFR 206.221(f). Religious organizations are able to receive these 
generally available government benefits and services, just as other 
organizations that meet the eligibility criteria.

O. Effect of Receipt of Disaster Grant With Regard to Other Federal 
Laws

    One commenter urged DHS to include a specific statement that ``a 
faith-based school receiving a federal grant for the restoration or 
repair of facilities damaged in a disaster is not deemed to be a 
`recipient of federal funds' for the purposes of other statutes.'' DHS 
does not have the legal authority to exempt its programs from such 
statutory requirements, if any. Statutes that restrict Federal grant 
recipients' actions or limit their eligibility to receive additional 
Federal financial assistance, as well as any exemptions from those 
limitations, are established by Congress. The statutes authorizing the 
financial assistance do not contain such an exemption. DHS does not 
have the legal authority to unilaterally create the exemption requested 
by the commenter.

P. Purpose and Applicability of the Regulation

    One commenter noted that proposed Sec.  19.1 uses the term ``equal 
participation'' to characterize the intent of the proposed rule, 
suggested that the term ``wrongly implies that faith-based 
organizations should take part in DHS programs to the same extent as 
secular organizations,'' and recommended DHS consider revising that 
section to better express the intent of the rule. In response to this 
comment, DHS has revised proposed Sec.  19.1 to reference the 
regulation's purpose as ensuring the ``equal ability for faith-based 
organizations to seek and receive financial assistance through DHS 
social service programs''. DHS did not intend to suggest that it would 
establish participation rates for religious organizations in DHS 
programs. As described in the preamble of this proposed rule, the 
purpose of the rule is to ensure all qualified organizations may 
compete for funds offered under DHS social service programs, regardless 
of their religious character.
    One commenter suggested DHS revise the title of the proposed rule 
because several aspects of the proposed rule apply to secular as well 
as faith-based organizations. Although several aspects of the rule 
apply to all organizations seeking to participate in DHS social service 
programs, secular or religious, the title conveys the principal intent 
of the rule and poses little risk of confusion.

VI. Statutory and Regulatory Review

A. Executive Order 12866 and 13563

    Executive Orders 13563 and 12866 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of

[[Page 47294]]

reducing costs, of harmonizing rules, and of promoting flexibility. 
This rule has not been designated a ``significant regulatory action,'' 
under section 3(f) of Executive Order 12866. Accordingly, the rule has 
not been reviewed by the Office of Management and Budget.
    The Department believes that the only provisions of this proposed 
rule likely to impose costs on the regulated community are the 
requirements that:
    (1) Faith-based organizations that receive direct financial 
assistance from DHS to participate in or administer any social service 
program must give beneficiaries a written notice informing them of 
particular protections afforded to them including their ability to 
request an alternative provider if the religious character of their 
existing provider is objectionable to them; and
    (2) where a beneficiary objects to the religious character of an 
organization providing social service programs supported by DHS 
financial assistance, the social service provider make reasonable 
efforts to identify and refer the beneficiary to an alternative 
provider to which the beneficiary does not object.
    The Department considered and adopted alternatives that minimized 
compliance costs on social service providers given the requirements of 
Executive Orders 13279 and 13559. Specifically, the proposed rule 
includes model language for the notice to beneficiaries and for the 
beneficiary referral request form, in Appendix A. Individual advance 
notice forms are not required where it is impracticable to provide 
them. Where individual, advance written notice is impracticable because 
the recipient and beneficiary have only a brief, potentially one-time 
interaction, such as at a soup kitchen, DHS believes a conspicuous 
posted notice would suffice.
    In addition, to minimize compliance costs and allow maximum 
flexibility in implementation, the Department has elected not to 
establish a specific format for the referrals required when 
beneficiaries request an alternative provider. Furthermore, if the 
social service provider is unable to identify an appropriate 
alternative provider after undertaking reasonable efforts, DHS would 
then attempt to identify an alternative provider.
    The Department estimates this rule would impose a maximum cost of 
approximately $500,000 annually. A more detailed estimate of the cost 
of providing these notices to beneficiaries and, if requested, the 
beneficiary referral request form is discussed below in the Regulatory 
Flexibility Act section of this proposed rule. An estimate of the cost 
of the referral provision is also discussed in Regulatory Flexibility 
Act section. In addition, an estimate of the annual total burden hours 
of the referral provision is discussed in the Paperwork Reduction Act 
section of this proposed rule.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) at 5 U.S.C. 603(a) requires 
agencies to consider the impacts of their rules on small entities. The 
RFA defines small entities as small business concerns, small not-for-
profit enterprises, or small governmental jurisdictions.
    Given the lack of specific small entity data, the Department has 
prepared an initial regulatory flexibility analysis even though the 
Department does not believe this rule will impose a significant 
economic impact on a substantial number of small entities. As described 
above, the Department has made every effort to ensure that the 
disclosure and referral requirements of the proposed rule impose 
minimum burden and allow maximum flexibility in implementation by 
providing a model notice to beneficiaries and model beneficiary 
referral request form in Appendix A, and by not requiring the social 
service providers to follow a specific format for the referrals. The 
Department estimates it will take no more than two hours for providers 
to familiarize themselves with the notice requirements and print and 
duplicate an adequate number of disclosure notices and referral request 
forms for potential beneficiaries. Using May 2013 Bureau of Labor 
Statistics information, the hourly mean wage for a Training and 
Development Specialist is $29.22.\5\ In addition to wage costs, 
employers incur costs for employee benefits such as paid vacation and 
insurance. The ``fully loaded'' hourly cost to employers (which 
includes both wage and employee benefit costs) of a Training and 
Development Specialist equates to $42.75.\6\ This results in an 
estimate of the labor cost per service provider of preparing the notice 
and referral form of approximately $85.50 (2 hours x $42.75). In 
addition, the Department estimates an upper limit of $100 for the 
annual cost of materials (paper, ink, toner) to print multiple copies 
of the notices and referral request forms for covered grantees and 
subgrantees, except for certain grantees and subgrantees under the 
Emergency Food and Shelter Program.\7\ Because these costs will be 
borne by every small service provider with a religious affiliation, the 
Department believes that a substantial number of small entities will be 
affected by this provision. However, the Department does not believe 
that a compliance cost of less than $200 per provider per year is 
significant percentage of a provider's total revenue. In addition, we 
note that after the first year, the labor cost associated with 
compliance will likely decrease significantly because small service 
providers will be familiar with the requirements.\8\ Assuming, 
consistent with the Paperwork Reduction Act analysis below, that this 
rule would cover approximately 2,624 faith-based grantees and 
subgrantees, the annual costs associated with the notice requirement 
are unlikely to exceed $487,000 [2,624 entities x ($100 printing + 
$85.50 labor)].
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    \5\ Per BLS SOC 13-1151, the mean hourly wage of a Training and 
Development Specialist is $29.22. http://www.bls.gov/oes/2013/may/oes131151.htm.
    \6\ The fully loaded Training and Development Specialist wage is 
calculated using a load factor of 1.463 (1 + (10.49 / 22.65)) based 
on the Bureau of Labor Statistics Employer Costs for Employee 
Compensation for civilian workers (Table 1) from December 2014 for 
all workers, retrieved from http://www.bls.gov/news.release/ecec.t01.htm. This equates to a fully loaded Training and 
Development Specialist wage of $42.75 ($29.22 x 1.463) when applied 
to the hourly mean wage for a Training and Development Specialist 
($29.22).
    \7\ In this analysis and the Paperwork Reduction Act analysis 
below, the Department assumes that certain grantees and subgrantees 
under the Emergency Food and Shelter Program will not print and 
disseminate a paper notice and referral form to each individual 
beneficiary. Many of the activities supported by that program, such 
as soup kitchens and one-time assistance with rent, mortgage, or 
utility bills, are ones for which individual beneficiary forms would 
not be practicable, and in those cases, a commonly posted notice, 
produced at minimal cost, should suffice. The Department believes 
that requests for referrals will be negligible for activities 
involving these sorts of interactions, such that the overall 
estimated cost and labor burden related to the referral provision is 
conservative enough to encompass the limited number of referral 
requests that may result from these brief interactions.
    \8\ We also note that the costs associated with this rule's 
notice provisions may be an eligible management and administrative 
cost under DHS grant programs. Such costs would count towards the 
administrative cap cost for a program. The cost of the referral to 
an alternate provider may also be grant-eligible.
---------------------------------------------------------------------------

    The rule will require service providers, at the beneficiary's 
request, to make reasonable efforts to identify and refer the 
beneficiary to an alternative provider to which the beneficiary has no 
objection. The Department estimates that each referral request will 
require no more than four hours of a Training and Development 
Specialist's time to process and complete a referral at a ``fully 
loaded'' labor cost of $42.75 per hour. The Department's estimate for 
the total annual cost burden can be summarized as follows.
     Total Estimated Number of Notices: N, where N equals the 
total number of

[[Page 47295]]

beneficiaries under DHS social service programs for whom individual 
written notices can practicably be provided. Faith-based organizations 
covered by this rule would be required to provide a notice to each 
beneficiary of a DHS-supported social service program, except where a 
limited exception for a commonly posted notice applies. Based on 
subject-matter expert best estimates, DHS estimates that the total 
annual number of notices required under this rule equals approximately 
60,000.\9\
---------------------------------------------------------------------------

    \9\ DHS notes that in light of the nature of the grantor-
grantee-subgrantee framework attendant to some of its programs, it 
is very difficult to estimate with accuracy the total number of 
beneficiaries served by faith-based organizations administering DHS-
supported social service programs.
---------------------------------------------------------------------------

     Total Estimated Annual Number of Requests for Referrals: N 
x Z, where Z is the percentage of beneficiaries or potential 
beneficiaries who request referrals. DHS assumes that Z is equal to 
0.0025.\10\ Under these assumptions, DHS estimates approximately 150 
requests for referrals annually.
---------------------------------------------------------------------------

    \10\ In DHS's experience, beneficiaries do not frequently object 
to receiving services from faith-based organizations. DHS assumes a 
referral request rate of 0.25% for purposes of this analysis, 
consistent with the practice of other agencies in this area. DHS 
expects that this rate overestimates the likely referral request 
rate.
---------------------------------------------------------------------------

     Total Time required to complete a referral: T, where T is 
less than or equal to 4 hours.
     Labor cost of a Training and Development Specialist: L, 
where L equals $42.75.
     Total estimated Annual Referral Cost Burden: C, where C is 
equal to the following:

C = (L x T) x (N x Z)
C = ($42.75 x 4) x (60,000 x 0.0025)
C = $25,650

    The Department therefore estimates the total estimated annual cost 
burden to equal $512,650 or less ($487,000 notice requirement cost + 
$25,650 referral cost = $512,650). The cost on a per entity basis 
averages approximately $200 ($512,650 total cost / 2,624 entities = 
$195.37). DHS expects that this estimates likely overestimates the 
actual cost burden associated with this rulemaking. The Department 
invites interested parties to provide comments on this assumption, or 
to provide data on which we can formulate better estimates of the 
compliance costs associated with the disclosure and referral 
requirements of this proposed rule.

C. 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.

D. Federalism

    Pursuant to Executive Order 13132, DHS has determined that this 
action will not have a substantial direct effect on the States, or the 
relationship between the Federal government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government, and, therefore, does not have federalism implications.

E. Paperwork Reduction Act

    Under the Paperwork Reduction Act (PRA) of 1995, Pub. L. 104-13, 
all agencies are required to submit to the OMB, for review and 
approval, any reporting requirements inherent in a rule. See 44 U.S.C. 
3506. Specifically, a Federal agency may not conduct or sponsor a 
collection of information unless OMB approves the collection of 
information under the PRA, and the collection of information must 
display a currently valid OMB control number. Notwithstanding any other 
provisions of law, no person will be subject to penalty for failing to 
comply with a collection of information if the collection of 
information does not display a currently valid OMB control number. 44 
U.S.C. 3512.
    The proposed rule includes new requirements. Section 19.6 would 
require faith-based or religious organizations that provide social 
services to beneficiaries under a DHS program supported by direct 
Federal financial assistance to give beneficiaries (or prospective 
beneficiaries) a notice instructing them of their rights and 
protections under this regulation and to make reasonable efforts to 
identify and refer beneficiaries requesting referrals to alternative 
service providers. The content of the notice and the actions the faith-
based or religious organizations must take if a beneficiary objects to 
the religious character of the organization are described in the 
preamble and in the proposed regulatory text. The burden of providing 
the notice to beneficiaries, and identifying and referring a 
beneficiary to an alternative service provider are estimated in this 
section.
    Pursuant to program guidance and grant agreements, faith-based 
organizations that would be subject to these requirements may have to 
retain records to show that they have met the referral requirements in 
the proposed regulations. Faith-based organizations could meet such a 
retention requirement by maintaining, in the case of paper notices, the 
bottom portion of the notice required under the proposed Appendix. DHS 
does not include an estimate of the burden of records retention.
    The Department has retention requirements included in information 
collection instruments for Department programs. Those collection 
instruments cover burdens imposed under program and administrative 
requirements under current information collection instruments that are 
approved by OMB and each of those collections has an OMB-assigned 
information collection control number.
    The retention burden that would be added to those information 
collection instruments under these proposed regulations is so small as 
to not be measurable in the context of all the program and 
administrative requirements in the existing program collection 
instruments. For example, a grantee or subgrantee that had to provide 
notice under these proposed regulations could meet the record-keeping 
requirement by collecting the tear-off portion of the notice for those 
beneficiaries that request alternative provider and keeping it in a 
designated folder. Therefore, the Department has determined that no 
burden would be added that would require estimates of time and cost 
burden as a result of maintaining records of compliance with these 
proposed regulations.
    The Department must impose the third-party notice requirements to 
implement the requirements of Executive Order 13559.
    The Department will submit an information collection request (ICR) 
to the OMB to obtain PRA approval for the information collection 
formatting requirements contained in this NPRM. Draft control number 
1601-NEW will be used for public comment. The burden for the 
information collection provisions of this NPRM can be summarized as 
follows:
    Agency: U.S. Department of Homeland Security, Office for Civil 
Rights and Civil Liberties.
    Title of Collection: Written Notice of Beneficiary Protections.
    OMB ICR Reference Number Control Number: 201505-1601-001.
    Affected Public: State and local governments, not-for-profit 
organizations.
     Total Estimated Number of Organizations: R, where R 
represents the total number of entities that must give notice. To 
estimate this number, the Department relied upon information

[[Page 47296]]

from two of its grant-making components: FEMA and USCIS. FEMA estimates 
that there are approximately 2,600 grantees and subgrantees that would 
have to provide some form of notice to beneficiaries.\11\ USCIS 
estimates that there are approximately 24 grantees subject to the 
notice requirement.\12\ Accordingly, DHS estimates that R is equal to 
approximately 2,600.
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    \11\ This figure includes known grantees and subgrantees of the 
Emergency Food and Shelter Program, the Crisis Counseling Program 
and the Disaster Case Management Program.
    \12\ This figure includes known grantees and subgrantees of the 
Citizenship and Integration Grant Program.
---------------------------------------------------------------------------

     Total Estimated Number of Notices: N, where N equals the 
total number of beneficiaries under DHS social service programs to whom 
provision of an individual written notice would be practicable. Faith-
based organizations covered by this rule would be required to provide, 
where practicable, a notice to each beneficiary of a DHS-supported 
social service program.\13\ Based on subject-matter expert best 
estimates, DHS estimates that the total annual number of notices 
required under this rule equals approximately 60,000.\14\
---------------------------------------------------------------------------

    \13\ As noted above, in this analysis, the Department assumes 
that certain grantees and subgrantees under the Emergency Food and 
Shelter Program provide services of a brief and potentially one-time 
nature such that individual notice would not be practicable. 
Creation of a common posted notice in those circumstances would be 
comparable in burden to creating a single notice, and so creation of 
such common notices is encompassed within the estimates provided for 
compliance with the beneficiary notice provision.
    \14\ DHS notes that in light of the nature of the grantor-
grantee-subgrantee framework attendant to some of its programs, it 
is very difficult to estimate with accuracy the total number of 
beneficiaries served by faith-based organizations administering DHS-
supported social service programs. In general, to produce the 
estimate described above, for each covered program, DHS calculated 
the percentage of grantees and subgrantees that may qualify as a 
faith-based or religious organization under this rule. DHS then 
multiplied that percentage figure by the estimated total number of 
beneficiaries for each program, producing an estimate of the total 
number of individuals served by faith-based or religious 
organizations under each program.
    Where using this methodology was not feasible due to data 
limitations, DHS relied on subject matter experts in the relevant 
grant program to make an appropriate best estimate.
---------------------------------------------------------------------------

     Total Estimated Annual Burden to Provide Each Notice: 
60,000 minutes, or 1,000 hours (equivalent to 60,000 x T, where T is 
less than or equal to one minute).
     Total Estimated Annual Number of Requests for Referrals: N 
x Z, where Z is the percentage of beneficiaries or potential 
beneficiaries who request referrals. DHS assumes that Z is equal to 
.0025.\15\ Under these assumptions, DHS estimates approximately 150 
requests for referrals annually.
---------------------------------------------------------------------------

    \15\ In DHS's experience, beneficiaries do not frequently object 
to receiving services from faith-based organizations. DHS assumes a 
referral request rate of 0.25% for purposes of this analysis, 
consistent with the practice of other agencies in this area. DHS 
expects that this rate overestimates the likely referral request 
rate.
---------------------------------------------------------------------------

     Total time required to complete a referral T, where T is 
less than or equal to 4 hours.
     Total Estimated Annual Referral Burden Hours: B, where B 
is equal to the following:

B = (N x Z) x T.
B = (60,000 x .0025) x 4
B = 600

    The Department therefore estimates that the Total Estimated Annual 
Burden Hours is 1,600 hours or less. DHS expects that this 
significantly overestimates the actual burden hours associated with 
this rulemaking. DHS requests comments on this assumption, as well as 
the remainder of this PRA analysis and this proposed rule.
    The recipient provider will be required to complete the referral 
form, notify the awarding entity, and maintain information only if a 
beneficiary requests a referral to an alternate provider.

List of Subjects in 6 CFR Part 19

    Civil rights, Religious discrimination.

    For the reasons set forth above, DHS proposes to amend title 6 of 
the Code of Federal Regulations to add a new part 19 as follows:

PART 19--NONDISCRIMINATION IN MATTERS PERTAINING TO FAITH-BASED 
ORGANIZATIONS

Sec.
19.1 Purpose.
19.2 Definitions.
19.3 Equal ability for faith-based organizations to seek and receive 
financial assistance through DHS social service programs.
19.4 Explicitly religious activities.
19.5 Nondiscrimination requirements.
19.6 Beneficiary protections: written notice.
19.7 Beneficiary protections: referral requirements.
19.8 Independence of faith-based organizations.
19.9 Exemption from Title VII employment discrimination 
requirements.
19.10 Commingling of Federal assistance.
Appendix A to Part 19--Model Written Notice to Beneficiaries

    Authority: 5 U.S.C. 301; 6 U.S.C. 111, 112; E.O. 13279, 67 FR 
77141; E.O. 13403, 71 FR 28543; E.O. 13498, 74 FR 6533; and E.O. 
13559, 75 FR 71319.


Sec.  19.1  Purpose.

    It is the policy of Department of Homeland Security (DHS) to ensure 
the equal treatment of faith-based organizations in social service 
programs administered or supported by DHS or its component agencies. 
The equal treatment policies and requirements contained in this part 
are generally applicable to faith-based organizations participating or 
seeking to participate in any such programs. More specific policies and 
requirements regarding the participation of faith-based organizations 
in individual programs may be provided in the statutes, regulations, or 
guidance governing those programs, such as regulations in title 44 of 
the Code of Federal Regulations. DHS or its components may issue 
guidance at a future time with respect to the applicability of this 
policy and this part to particular programs.


Sec.  19.2  Definitions.

    For purposes of this part 19:
    Beneficiary means an individual recipient of goods or services 
provided as part of a social service program specifically supported by 
Federal financial assistance. ``Beneficiary'' does not mean an 
individual who may incidentally benefit from Federal financial 
assistance provided to a State, local, or Tribal government, or a 
private nonprofit organization.
    Direct Federal financial assistance or Federal financial assistance 
provided directly means that the government or an intermediary (e.g., 
State, local, or Tribal government, or nongovernmental organization) 
selects the provider and either purchases services from that provider 
(e.g., via a contract) or awards funds to that provider to carry out a 
service (e.g., through a grant or cooperative agreement). In general, 
Federal financial assistance shall be treated as direct, unless it 
meets the definition of ``indirect Federal financial assistance'' or 
``Federal financial assistance provided indirectly''.
    Explicitly religious activities include activities that involve 
overt religious content such as worship, religious instruction, or 
proselytization. An activity is not explicitly religious merely because 
it is motivated by religious faith.
    Financial assistance means assistance that non-Federal entities 
receive or administer in the form of grants, sub-grants, contracts, 
subcontracts, prime awards, loans, loan guarantees, property, 
cooperative agreements, food, direct appropriations, or other 
assistance, including materiel for emergency response and incident 
management. Financial assistance includes assistance provided by DHS, 
its component organizations, regional offices, and DHS financial 
assistance administered by intermediaries such as

[[Page 47297]]

State, local, and Tribal governments, such as formula or block grants.
    Indirect Federal financial assistance or Federal financial 
assistance provided indirectly means that the choice of the service 
provider is placed in the hands of the beneficiary, and the cost of 
that service is paid through a voucher, certificate, or other similar 
means of government-funded payment. For purposes of this part, sub-
grant recipients that receive Federal financial assistance through 
State-administered programs are not considered recipients of ``indirect 
Federal financial assistance.'' Federal financial assistance provided 
to an organization is considered ``indirect'' within the meaning of the 
Establishment Clause of the First Amendment to the U.S. Constitution 
when:
    (1) The government program through which the beneficiary receives 
the voucher, certificate, or other similar means of government-funded 
payment is neutral toward religion;
    (2) The organization receives the assistance as a result of a 
decision of the beneficiary, not a decision of the government; and
    (3) The beneficiary has at least one adequate secular option for 
the use of the voucher, certificate, or other similar means of 
government-funded payment.
    Intermediary means an entity, including a non-governmental 
organization, acting under a contract, grant, or other agreement with 
the Federal government or with a State or local government, that 
accepts Federal financial assistance and distributes that assistance to 
other organizations that, in turn, provide government-funded social 
services. If an intermediary, acting under a contract, grant, or other 
agreement with the Federal government or with a State or local 
government that is administering a program supported by Federal 
financial assistance, is given the authority under the contract, grant, 
or agreement to select non-governmental organizations to provide 
services supported by the Federal government, the intermediary must 
ensure compliance with the provisions of Executive Order 13559 and any 
implementing rules or guidance by the recipient of a contract, grant or 
agreement. If the intermediary is a non-governmental organization, it 
retains all other rights of a non-governmental organization under the 
program's statutory and regulatory provisions.
    Social service program means a program that is administered 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, protective services for children and 
adults, services for children and adults in foster care, adoption 
services, services related to the management and maintenance of the 
home, day care services for adults, and services to meet the special 
needs of children, older individuals, and individuals with disabilities 
(including physical, mental, or emotional disabilities);
    (2) Transportation services;
    (3) Job training and related services, and employment services;
    (4) Information, referral, and counseling services;
    (5) The preparation and delivery of meals and services related to 
soup kitchens or food banks;
    (6) Health support services;
    (7) Literacy and mentoring programs;
    (8) 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; and
    (9) Services related to the provision of assistance for housing 
under Federal law.


Sec.  19.3  Equal ability for faith-based organizations to seek and 
receive financial assistance through DHS social service programs.

    (a) Faith-based organizations are eligible, on the same basis as 
any other organization, to seek and receive direct financial assistance 
from DHS for social service programs or to participate in social 
service programs administered or financed by DHS.
    (b) Neither DHS, nor a State or local government, nor any other 
entity that administers any social service program supported by direct 
financial assistance from DHS, shall discriminate for or against an 
organization on the basis of the organization's religious character or 
affiliation.
    (c) Decisions about awards of Federal financial assistance must be 
free from political interference or even the appearance of such 
interference and must be made on the basis of merit, not on the basis 
of religion or religious belief.
    (d) Nothing in this part shall be construed to preclude DHS or any 
of its components from accommodating religious organizations and 
persons to the fullest extent consistent with the Constitution and laws 
of the United States.
    (e) All organizations that participate in DHS social service 
programs, including religious organizations, must carry out eligible 
activities in accordance with all program requirements and other 
applicable requirements governing the conduct of DHS-supported 
activities, including those prohibiting the use of direct financial 
assistance from DHS to engage in explicitly religious activities. No 
grant document, agreement, covenant, memorandum of understanding, or 
policy by DHS or an intermediary in administering financial assistance 
from DHS shall disqualify a religious organization from participating 
in DHS's social service programs because such organization is motivated 
or influenced by religious faith to provide social services or because 
of its religious character or affiliation.


Sec.  19.4  Explicitly religious activities.

    (a) Organizations that receive direct financial assistance from DHS 
to participate in or administer any social service program may not use 
direct Federal financial assistance that it receives (including through 
a prime or sub-award) to support or engage in any explicitly religious 
activities (including activities that involve overt religious content 
such as worship, religious instruction, or proselytization) or in any 
other manner prohibited by law.
    (b) Organizations receiving direct financial assistance from DHS 
for social service programs are free to engage in explicitly religious 
activities, but such activities must be
    (1) Clearly distinct from programs specifically supported by direct 
federal assistance:
    (2) Offered separately, in time or location, from the programs, 
activities, or services specifically supported by direct DHS financial 
assistance pursuant to DHS social service programs; and
    (3) Voluntary for the beneficiaries of the programs, activities, or 
services specifically supported by direct DHS financial assistance 
pursuant to DHS social service programs.
    (c) All organizations that participate in DHS social service 
programs, including religious organizations, must carry out eligible 
activities in accordance with all program requirements and other 
applicable requirements governing the conduct of DHS-supported 
activities, including those prohibiting the use of direct financial 
assistance from DHS to engage

[[Page 47298]]

in explicitly religious activities. No grant document, agreement, 
covenant, memorandum of understanding, or policy by DHS or a State or 
local government in administering financial assistance from DHS shall 
disqualify a religious organization from participating in DHS's social 
service programs because such organization is motivated or influenced 
by religious faith to provide social services or because of its 
religious character or affiliation.
    (d) The use of indirect Federal financial assistance is not subject 
to the restriction in paragraphs (a), (b), and (c) of this section.
    (e) Religious activities that can be publicly funded under the 
Establishment Clause, such as chaplaincy services, likewise would not 
be considered ``explicitly religious activities'' that are subject to 
direct Federal financial assistance restrictions.


Sec.  19.5  Nondiscrimination requirements.

    An organization that receives direct financial assistance from DHS 
for a social service program shall not favor or discriminate against a 
beneficiary or prospective beneficiary of said program or activity on 
the basis of religion, belief, religious practice, or lack thereof. 
Organizations that favor or discriminate against a beneficiary will be 
subject to applicable sanctions and penalties, as established by the 
requirements of the particular DHS social service program or activity.


Sec.  19.6  Beneficiary protections: Written notice.

    (a) Faith-based or religious organizations providing social 
services to beneficiaries under a DHS program supported by direct 
Federal financial assistance must give written notice to beneficiaries 
and prospective beneficiaries of certain protections. Such notice may 
be given in the form set forth in Appendix A of this part. This notice 
must state that:
    (1) The organization may not discriminate against beneficiaries on 
the basis of religion or religious belief;
    (2) The organization may not require beneficiaries to attend or 
participate in any explicitly religious activities that are offered by 
the organization, and any participation by beneficiaries in such 
activities must be purely voluntary;
    (3) The organization must separate in time or location any 
privately funded explicitly religious activities from activities 
supported by direct Federal financial assistance;
    (4) If a beneficiary objects to the religious character of the 
organization, the organization will undertake reasonable efforts to 
identify and refer the beneficiary to an alternative provider to which 
the prospective beneficiary has no objection; and
    (5) Beneficiaries may report violations of these protections to DHS 
through the Office for Civil Rights and Civil Liberties.
    (b) This written notice must be given to beneficiaries prior to the 
time they enroll in the program or receive services from such programs. 
When the nature of the service provided or exigent circumstances make 
it impracticable to provide such written notice in advance of the 
actual service, service providers must advise beneficiaries of their 
protections at the earliest available opportunity.


Sec.  19.7  Beneficiary protections: Referral requirements.

    (a) If a beneficiary or prospective beneficiary of a social service 
program covered under Sec.  19.6 objects to the religious character of 
an organization that provides services under the program, that 
organization must promptly undertake reasonable efforts to identify and 
refer the beneficiary to an alternative provider to which the 
prospective beneficiary has no objection.
    (b) A referral may be made to another religiously affiliated 
provider, if the beneficiary has no objection to that provider. But if 
the beneficiary requests a secular provider, and a secular provider is 
available, then a referral must be made to that provider.
    (c) Except for services provided by telephone, internet, or similar 
means, the referral must be to an alternative provider that is in 
reasonable geographic proximity to the organization making the referral 
and that offers services that are similar in substance and quality to 
those offered by the organization. The alternative provider also must 
have the capacity to accept additional clients.
    (d) When the organization makes a referral to an alternative 
provider, or when the organization determines that it is unable to 
identify an alternative provider, the organization shall notify DHS. If 
the organization is unable to identify an alternative provider, DHS 
shall determine whether there is any other suitable alternative 
provider to which the beneficiary may be referred. An intermediate 
organization that receives a request for assistance in identifying an 
alternative provider may request assistance from DHS.


Sec.  19.8  Independence of faith-based organizations.

    (a) A faith-based organization that applies for, or participates 
in, a social service program supported with Federal financial 
assistance may retain its independence and may continue to carry out 
its mission, including the definition, development, practice, and 
expression of its religious beliefs, provided that it does not use 
direct Federal financial assistance contrary to Sec.  19.4.
    (b) Faith-based organizations may use space in their facilities to 
provide social services using financial assistance from DHS without 
removing or concealing religious articles, texts, art, or symbols.
    (c) A faith-based organization using financial assistance from DHS 
for social service programs retains its authority over internal 
governance, and may also retain religious terms in its organization's 
name, select its board members on a religious basis, and include 
religious references in its organization's mission statements and other 
governing documents.


Sec.  19.9  Exemption from Title VII employment discrimination 
requirements.

    (a) A faith-based organization's exemption, set forth in section 
702(a) of the Civil Rights Act of 1964 (42 U.S.C. 2000e-1), from the 
Federal prohibition on employment discrimination on the basis of 
religion is not forfeited when the organization seeks or receives 
financial assistance from DHS for a social service program or otherwise 
participates in a DHS program.
    (b) Where a DHS program contains independent statutory or 
regulatory provisions that impose nondiscrimination requirements on all 
grantees, those provisions are not waived or mitigated by this 
regulation. Accordingly, grantees should consult with the appropriate 
DHS program office to determine the scope of any applicable 
requirements.


Sec.  19.10  Commingling of Federal assistance.

    (a) If a State, local, or Tribal government voluntarily contributes 
its own funds to supplement Federally supported activities, the State, 
local, or Tribal government has the option to segregate the Federal 
assistance or commingle it.
    (b) If the State, local, or Tribal government chooses to commingle 
its own and Federal funds, the requirements of this part apply to all 
of the commingled funds.
    (c) If a State, local, or Tribal government is required to 
contribute matching funds to supplement a Federally supported activity, 
the matching funds are considered commingled with the Federal 
assistance

[[Page 47299]]

and therefore subject to the requirements of this part.

Appendix A to Part 19--Model Written Notice to Beneficiaries

NOTICE OF BENEFICIARY RIGHTS

    Name of Organization:
    Name of Program:
    Contact Information for Program Staff (name, phone number, and 
email address, if appropriate):

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    Because this program is supported in whole or in part by direct 
financial assistance from the Federal government, we are required to 
let you know that--
     We may not discriminate against you on the basis of 
religion or religious belief;
     We may not require you to attend or participate in any 
explicitly religious activities that are offered by us, and any 
participation by you in these activities must be purely voluntary;
     We must separate in time or location any privately 
funded explicitly religious activities from activities supported 
with direct Federal financial assistance under this program;
     If you object to the religious character of our 
organization, we must make reasonable efforts to identify and refer 
you to an alternative provider to which you have no objection; 
however, we cannot guarantee that in every instance, an alternative 
provider will be available; and
     You may report violations of these protections to the 
Department of Homeland Security, Office for Civil Rights and Civil 
Liberties:
    E-mail: [email protected]
    Fax: 202-401-4708
    U.S. Mail: U.S. Department of Homeland Security, Office for 
Civil Rights and Civil Liberties, Compliance Branch, 245 Murray Lane 
SW., Building 410, Mail Stop #0190, Washington, DC 20528
    We must give you this written notice before you enroll in our 
program or receive services from the program.

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BENEFICARY REFERRAL REQUEST

    If you object to receiving services from us based on the 
religious character of our organization, please complete this form 
and return it to the program contact identified above. If you 
object, we will make reasonable efforts to refer you to another 
service provider. With your consent, we will follow up with you or 
the organization to which you were referred to determine whether you 
contacted that organization.
    Please check if applicable:
    ( ) I want to be referred to another service provider.
    If you checked above that you wish to be referred to another 
service provider, please check one of the following:
    ( ) Please follow up with me.
    Name:
    Best way to reach me (phone/address/email):
    ( ) Please follow up with the service provider to which I was 
referred.
    ( ) Please do not follow up.

Jeh Charles Johnson,
Secretary.
[FR Doc. 2015-18257 Filed 8-5-15; 8:45 am]
 BILLING CODE 9110-23-P