[Federal Register Volume 80, Number 151 (Thursday, August 6, 2015)]
[Proposed Rules]
[Pages 47340-47347]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-18492]



[[Page 47339]]

Vol. 80

Thursday,

No. 151

August 6, 2015

Part XIII





 Department of Veterans Affairs





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38 CFR Parts 50, 61, and 62





Equal Protection of the Laws for Faith-Based and Community 
Organizations; Proposed Rule

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

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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Parts 50, 61, and 62

RIN 2900-AP05


Equal Protection of the Laws for Faith-Based and Community 
Organizations

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: The Department of Veterans Affairs (VA) proposes to amend its 
existing regulations concerning VA Homeless Providers Grant and Per 
Diem Program (GPD) and Supportive Service for Veterans Families Program 
(SSVF) and to establish a new part. More specifically, VA proposes to 
revise provisions that apply to religious organizations that receive 
financial assistance from VA in order to more clearly distinguish 
between ``direct'' and ``indirect'' financial assistance, amend VA's 
regulations to replace the term ``inherently religious activities'' 
with the term ``explicitly religious activities'', and establish new 
provisions that provide valuable protections for beneficiaries, provide 
guidance to VA employees and faith-based and other neighborhood 
organizations that receive ``direct'' or ``indirect'' VA financial 
assistance, and provide clear and uniform instructions on the 
fundamental principles that apply to their awards.

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

ADDRESSES: Written comments may be submitted through http://www.Regulations.gov; by mail or hand-delivery to: Director, Regulation 
Policy and Management (02REG), Department of Veterans Affairs, 810 
Vermont Ave. NW., Room 1068, Washington, DC 20420; or by fax to (202) 
273-9026. (This is not a toll-free telephone number.) Comments should 
indicate that they are submitted in response to ``RIN 2900-AP05-Equal 
Protection of the Laws for Faith-Based and Community Organizations.'' 
Copies of comments received will be available for public inspection in 
the Office of Regulation Policy and Management, Room 1068, between the 
hours of 8:00 a.m. and 4:30 p.m., Monday through Friday (except 
holidays). Please call (202) 461-4902 for an appointment. (This is not 
a toll-free telephone number.) In addition, during the comment period, 
comments may be viewed online through the Federal Docket Management 
System (FDMS) at http://www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: Stephen B. Dillard, Deputy Director 
Faith-based and Neighborhood Partnership (00FB), Office of the 
Secretary, Department of Veterans Affairs, 810 Vermont Ave. NW., 
Washington, DC 20420, (202) 461-7689. (This is not a toll-free 
telephone number.)

SUPPLEMENTARY INFORMATION: 

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. 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 other 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 asked 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 September 26, 2003, VA codified 38 CFR part 61, governing the 
Homeless Provider Grant and Per Diem Program, as a final rule. Section 
61.64 ensures that VA programs, under this part, are open to all 
qualified organizations, regardless of their religious character and 
establishes instructions for the proper uses of direct Federal 
financial assistance.
    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.
    In March 2010, the Advisory Council issued its recommendations in a 
report entitled, ``A New Era of Partnerships: Report of Recommendations 
to the President'' (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.
    On November 17, 2010, President Obama signed Executive Order 13559, 
``Fundamental Principles and Policymaking Criteria for Partnerships 
with Faith-Based and Other Neighborhood Organizations.'' 75 FR 71319 
(available at http://www.gpo.gov/fdsys/pkg/FR-2010-11-22/pdf/2010-29579.pdf). Executive Order 13559 incorporated the Advisory Council's 
recommendations by amending Executive Order 13279 to:
    (1) Require agencies that administer or award Federal financial 
assistance for social service programs to implement protections for the 
beneficiaries or prospective beneficiaries of those programs (these 
protections include providing referrals to alternative providers if the 
beneficiary objects to the religious character of the organization 
providing services, and ensuring that written notice of these and other 
protections is provided to beneficiaries before they enroll in or 
receive services from the program);
    (2) 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;
    (3) 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;
    (4) Clarify (i) 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, (ii) that participation in any explicit religious activity 
cannot be subsidized with

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direct Federal financial assistance, and (iii) that participation in 
such activities must be voluntary for the beneficiaries of the social 
service program supported with such Federal financial assistance;
    (5) Emphasize that religious providers are welcome to compete for 
government social service funding and maintain a religious identity as 
described in the order;
    (6) Require agencies that provide Federal financial assistance for 
social service programs to post online regulations, guidance documents, 
and policies that have implications for faith-based and neighborhood 
organizations and to post online a list of entities receiving such 
assistance;
    (7) Clarify that the standards in these proposed regulations apply 
to sub-awards as well as prime awards; and
    (8) Direct agencies to adopt regulations and guidance that 
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. 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. On November 10, 
2010, VA published a final rule promulgating 38 CFR part 62, 
regulations implementing 38 U.S.C. 2044 by establishing an SSVF 
Program. 75 FR 68979. Through this program, VA offers grants identified 
in the regulations, that provide supportive services to very low-income 
veterans and families who are at risk for becoming homeless or who, in 
some cases, have recently become homeless. 38 CFR 62.62 describes that 
religious or faith-based organizations are eligible for supportive 
services grants and contains certain conditions on the use of 
supportive services grant funds as it relates to religious activities.

Overview of Proposed Rule

    We propose that the regulation incorporate the provisions of 
Executive Order 13279, as amended by Executive Order 13559, by adding a 
new Part 50 concerning religious and community organizations and 
amending existing Parts 61 and 62. Specifically we propose to amend the 
regulations to replace the term ``inherently religious activities'' 
with the term ``explicitly religious activities'' and define the latter 
term as including activities that involve overt religious content such 
as worship, religious instruction, or proselytization. We would also 
include regulatory language to distinguish between direct and indirect 
Federal financial assistance; clarify the responsibilities of 
intermediaries; provide valuable protections for beneficiaries and 
ensure that beneficiaries are aware of their rights, through 
appropriate notice, when potentially obtaining services from providers 
with a religious affiliation; and provide guidance that decisions about 
awards of Federal financial assistance must be free from political 
interference or even the appearance of such interference.

Proposed Amendments to Title 38 CFR

Prohibited Uses of Direct Federal Financial Assistance

    VA's current regulations, 38 CFR 61.64 and 62.62, 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'' 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 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. Accordingly, we propose 
to replace the term ``inherently religious activities'' with a term 
that will more accurately describe the restriction on direct Federal 
financial assistance.
    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) (Thomas, J., joined by Rehnquist, C.J., Scalia, 
and Kennedy, JJ., plurality); id. at 845 (O'Connor, J., joined by 
Breyer, J., concurring in the 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 would 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 would 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, would not be 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, in situations 
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

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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) (``reasonable opportunities must be afforded to 
all prisoners to exercise the religious freedom guaranteed by the First 
and Fourteenth Amendment without fear of 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 ``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, in proposed Sec.  50.1(a), we would 
provide that services that can be publically funded under the 
Establishment clause, 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 funded 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, the administrator of the government program did not 
orchestrate or encourage such comments.
    The Department, therefore, proposes to amend its regulations to 
replace the term ``inherently religious activities'' with the term 
``explicitly religious activities'' in 38 CFR 61.64 and 62.62. We would 
also provide a parenthetical explanation of ``explicitly religious 
activities'' in 38 CFR 50.1(a) specifically stating that the term 
``includ[es] activities that involve overt religious content such as 
worship, religious instruction, or proselytization.'' These changes in 
language would provide greater clarity and more closely match 
constitutional standards as they have been developed in case law.
    These restrictions would not diminish existing 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. This distinction is confirmed in proposed 
Sec.  50.1(a). To clarify this distinction, proposed Sec.  50.1(b) 
provides definitions of these terms.
    In proposed Sec.  50.1(b)(1), we would define direct Federal 
financial assistance or Federal financial assistance provided directly 
to mean that the government or an intermediary, as identified in 
proposed Sec.  50.1(d), selects the 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. In addition, in proposed Sec.  
50.1(b)(1), we would note that Federal financial assistance shall be 
treated as direct unless it meets the definition of indirect Federal 
financial assistance in Sec.  50.1(b)(2). We would also amend 
Sec. Sec.  61.64(b)(2) and 62.62(b)(2) to conform to the above noted 
proposed definition.
    In proposed Sec.  50.1(b)(2), we would define indirect Federal 
financial assistance or Federal financial assistance provided 
indirectly to mean 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 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 program 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

    We also propose regulatory language that would clarify the 
responsibilities of intermediaries. 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 that assistance to other organizations that, in turn, 
provide government-funded social services. Each intermediary would be 
required to select any providers to receive direct 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

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would have to ensure that any providers to which they disburse Federal 
financial assistance also comply with these rules. We would also 
provide that, 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.
    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 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. 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.
    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 requires faith-based organizations 
administering a program that is supported by direct Federal financial 
assistance to give 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. In proposed Sec.  50.3(a), we would 
provide that, if a beneficiary or prospective beneficiary of a social 
service program supported by VA financial assistance objects to the 
religious character of an organization that provides services under the 
program, the beneficiary must 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 
VA financial assistance 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.
    In proposed Sec.  50.3(b), we would provide that a referral may be 
made to another religiously affiliated provider, if the beneficiary has 
no objection to that provider. We would also provide that 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.
    In proposed Sec.  50.3(c), we would specify that, except for 
services provided by telephone, internet, or similar means, the 
referral must 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. We would also provide that the alternative provider 
also must have the capacity to accept additional clients. If a VA-
funded alternative provider meets these requirements and is acceptable 
to the beneficiary, a referral should be made to that provider. If, 
however, there is no VA-funded 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 VA financial 
assistance but does meet these requirements and is acceptable to the 
beneficiary.
    If the organization is unable to identify an alternative provider, 
the organization is required under the proposed rule to notify VA and 
VA would determine whether there is any other suitable alternative 
provider to which the beneficiary may be referred. Further, the 
executive order requires VA 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, VA may 
also be unable to identify a suitable alternative provider.

Political or Religious Affiliation

    In proposed Sec.  50.4, we provide 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 religion or religious belief. The 
awarding entity would be expected to 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.

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, and other advantages; distributive impacts; 
and equity). Executive Order 13563 (Improving Regulation and Regulatory 
Review) emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
Executive Order 12866 (Regulatory Planning and Review) defines a 
``significant regulatory action,'' requiring review by

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OMB, unless OMB waives such review, as ``any regulatory action that is 
likely to result in a rule that may: (1) Have an annual effect on the 
economy of $100 million or more or adversely affect in a material way 
the economy, a sector of the economy, productivity, competition, jobs, 
the environment, public health or safety, or State, local, or tribal 
governments or communities; (2) Create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) Materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
this Executive Order.''
    The economic, interagency, budgetary, legal, and policy 
implications of this regulatory action have been examined and it has 
been determined not to be a significant regulatory action under 
Executive Order 12866.VA's impact analysis can be found as a supporting 
document at http://www.regulations.gov, usually within 48 hours after 
the rulemaking document is published. Additionally, a copy of the 
rulemaking and its impact analysis are available on VA's Web site at 
http://www.va.gov/orpm by following the link for VA Regulations 
Published from FY 2004 through FYTD.

Paperwork Reduction Act

    This proposed rule includes provisions constituting collections of 
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3521) that require approval by OMB. Accordingly, under 44 U.S.C. 
3507(d), VA has submitted a copy of this rulemaking action to OMB for 
review.
    OMB assigns control numbers to collections of information it 
approves. VA may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number. Proposed Sec.  50.2 contains a 
collection of information under the Paperwork Reduction Act of 1995. If 
OMB does not approve the collection of information as requested, VA 
will immediately remove the provisions containing a collection of 
information or take such other action as is directed by OMB.
    Comments on the collection of information contained in this 
proposed rule should be submitted to the Office of Management and 
Budget, Attention: Desk Officer for the Department of Veterans Affairs, 
Office of Information and Regulatory Affairs, Washington, DC 20503, 
with copies sent by mail or hand delivery to the Director, Regulation 
Policy and Management (02REG), Department of Veterans Affairs, 810 
Vermont Avenue NW., Room 1068, Washington, DC 20420; fax to (202) 273-
9026; email to www.Regulations.gov. Comments should indicate that they 
are submitted in response to ``RIN 2900-AP05-Equal Protection of the 
Laws for Faith-Based and Community Organizations.''
    OMB is required to make a decision concerning the collection of 
information contained in this proposed rule between 30 and 60 days 
after publication of this document in the Federal Register. Therefore, 
a comment to OMB is best assured of having its full effect if OMB 
receives it within 30 days of publication. This does not affect the 
deadline for the public to comment on the proposed rule.
    The Department considers comments by the public on proposed 
collections of information in--
     Evaluating whether the proposed collections of information 
are necessary for the proper performance of the functions of the 
Department, including whether the information will have practical 
utility;
     Evaluating the accuracy of the Department's estimate of 
the burden of the proposed collections of information, including the 
validity of the methodology and assumptions used;
     Enhancing the quality, usefulness, and clarity of the 
information to be collected; and
     Minimizing the burden of the collections of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses.
    The collection of information contained in 38 CFR 50.2 is described 
immediately following this paragraph, under its title.
    Title: Written Notice of Beneficiary Rights.
     Summary of collection of information: The new collection 
of information in proposed 38 CFR 50.2 would require faith-based or 
religious organizations that receive VA financial assistance in 
providing social services to beneficiaries to provide to beneficiaries 
(or prospective beneficiaries) written notice informing them of certain 
protections.
     Description of need for information and proposed use of 
information: The collection(s) of information is necessary to (1) Allow 
beneficiaries to obtain services from non-faith based organizations; 
(2) Allow beneficiaries to report violation of VA procedures regarding 
faith-based organizations.
     Description of likely respondents: Veterans and family 
members.
     Estimated number of respondents: 190,700.
     Estimated frequency of responses: We estimate that 0.1% of 
beneficiaries would request alternative placements: 1,907 
beneficiaries.
     Estimated average burden per response: 2 minutes.
     Estimated total annual reporting and recordkeeping burden: 
64 hours.
    VA plans to use the following form as our notice of beneficiary 
rights:

WRITTEN NOTICE OF BENEFICIARY RIGHTS

U.S. DEPARTMENT OF VETERANS AFFAIRS

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 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;
 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; and
 You may report violations of these protections to the 
[awarding entity].

    We must give you this written notice before you enroll in our 
program or receive services from the program.

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

[[Page 47345]]

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 all that apply:

( ) I want to be referred to another service provider.

( ) Please follow up with me or the service provider to which I was 
referred.

    Name:

    Best way to reach me (phone/address/email):

( ) Please do not follow up.

    This information will be used by VA National Grant & Per Diem 
Program Office, to identify those beneficiaries who object to the 
religious character of the faith-based organization providing services; 
and to provide them with services from another faith-based or community 
organization. Once the beneficiaries complete and submit this form to 
the faith-based organization, then the form will be submitted to VA 
National Grant & Per Diem Program Office, 10770 N. 46th Street, Suite 
C-200 Tampa, FL 33617. The VA National Program Office will notify the 
faith-based organization that the form has been received via email or 
U.S Mail. This form will be kept on internal file at VA for the purpose 
identifying the beneficiaries' treatment location and for data 
collection/metrics.
    The Paperwork Reduction Act: This information collection is in 
accordance with the clearance requirements of section 3507 of the 
Paperwork Reduction Act of 1995. Public reporting burden for this 
collection of information is estimated to average 10 2 minutes per 
response, including the time for reviewing instructions, searching 
existing data sources, gathering and maintaining the data needed, and 
completing and reviewing the collection of information. Respondents 
should be aware that notwithstanding any other provision of law, no 
person shall be subject to any penalty for failing to comply with a 
collection of information if it does not display a currently valid OMB 
control number. The purpose of this data collection is to determine 
eligibility for benefits.
    Beneficiary Name (print):

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    Beneficiary Name (sign)
    Date:

Regulatory Flexibility Act

    The Secretary hereby certifies that this proposed rule would not 
have a significant economic impact on a substantial number of small 
entities as they are defined in the Regulatory Flexibility Act, 5 
U.S.C. 601-612. Although small entities participating in VA's GPD and 
SSVF programs would be affected by this proposed rule, any economic 
impact would be minimal. Therefore, pursuant to 5 U.S.C. 605(b), this 
rulemaking is exempt from the initial and final regulatory flexibility 
analysis requirements of sections 603 and 604.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any 1 year. This proposed rule would have no such effect 
on State, local, and tribal governments, or on the private sector.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers and titles for 
the programs affected by this document are 64.008, Veterans Domiciliary 
Care; 64.009, Veterans Medical Care Benefits; 64.024, VA Homeless 
Providers Grant and Per Diem Program; 64.033, VA Supportive Services 
for Veteran Families Program.

Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this 
document and authorized the undersigned to sign and submit the document 
to the Office of the Federal Register for publication. Jose D. Riojas, 
Chief of Staff, Department of Veterans Affairs, approved this document 
on January 15, 2015, for publication.

List of Subjects

38 CFR Part 50

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

38 CFR Part 61

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

38 CFR Part 62

    Administrative practice and procedure, Day care, Disability 
benefits, Government contracts, Grant programs--health, Grant 
programs--social services, Grant programs--transportation, Grant 
programs--veterans, Grants--housing and community development, Heath 
care, Homeless, Housing, Housing assistance payments, Indian--lands, 
Individuals with disabilities, Low and moderate income housing, 
Manpower training program, Medicare, Medicaid, Public assistance 
programs, Public housing, Relocation assistance, Rent subsidies, 
Reporting and recordkeeping requirements, Rural areas, Social security, 
Supplemental security income (SSI), Travel and transportation expenses, 
Unemployment compensation, Veterans.

    Dated: July 23, 2015.
Michael P. Shores,
Chief Impact Analyst, Office of Regulation and Policy Management, 
Office of General Counsel, Department of Veterans Affairs.

    For the reasons set out in the preamble, the Department of Veterans 
Affairs proposes to add 38 CFR part 50 and to amend Parts 61 and 62 as 
follows:

0
1. Add Part 50 to read as follows:

PART 50--RELIGIOUS AND COMMUNITY ORGANIZATIONS: PROVIDING 
BENEFICIARY PROTECTIONS TO POLITICAL OR RELIGIOUS AFFILIATION

Sec.
50.1 Religious organizations; general provisions.
50.2 Beneficiary protections; written notice.
50.3 Beneficiary protections; referral requirements.
50.4 Political or religious affiliation.

    Authority:  38 U.S.C. 501 and as noted in specific sections.


Sec.  50.1  Religious organizations; general provisions.

    (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 that it receives (including through 
a prime or sub-award) to support or engage in any

[[Page 47346]]

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. Direct 
Federal financial assistance may not be used to pay for equipment or 
supplies to the extent they are allocated to such activities. The use 
of indirect Federal financial assistance is not subject to this 
restriction. Religious activities that can be publicly funded under the 
Establishment Clause, such as chaplaincy services, are not be 
considered explicitly religious activities that are subject to direct 
Federal financial assistance restrictions.
    (b)(1) Direct Federal financial assistance or Federal financial 
assistance provided directly means that the government or an 
intermediary as defined in paragraph (d) of this section 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., via grant or cooperative agreement). Federal financial 
assistance shall be treated as direct, unless it meets the definition 
of indirect Federal financial assistance or Federal financial 
assistance provided indirectly in paragraph (b)(2) of this section.
    (2) 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.
    (3) Federal financial assistance provided to an organization is 
considered indirect when:
    (i) The government program through which the beneficiary receives 
the voucher, certificate, or other similar means of government funded 
payment is neutral toward religion;
    (ii) The organization receives the Federal financial assistance as 
a result of a decision of the beneficiary, not a decision of the 
government; and
    (iii) The beneficiary has at least one adequate secular option for 
the use of the voucher, certificate, or other similar means of 
government-funded payment.
    (c) The recipients of sub-grants that receive Federal financial 
assistance through State-administered programs are not considered 
recipients of indirect Federal financial assistance (or recipients of 
Federal funds provided indirectly) as those terms are used in Executive 
Order 13559.
    (d) 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. In these regulations, the terms intermediary and pass-through 
entity may be used interchangeably.

(Authority: 2 CFR 200.74)

    (e) If an intermediary, acting under a contract, grant, or other 
agreement with VA or with a State or local government that is 
administering a program supported by VA financial assistance, is given 
the authority under the contract, grant, or agreement to select non-
governmental organizations to provide services funded by VA, the 
intermediary must select any providers to receive direct financial 
assistance in a manner that does not favor or disfavor organizations on 
the basis of religion or religious belief and ensure compliance with 
the provisions of Executive Order 13279, as amended by 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.


Sec.  50.2  Beneficiary protections; written notice.

    (a) Faith-based or religious organizations providing social 
services to beneficiaries under a VA program supported by direct VA 
financial assistance must give written notice to beneficiaries and 
prospective beneficiaries of certain protections. Such notice must be 
given in a manner prescribed by VA. The notice will 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 VA 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 VA.
    (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.

(The Office of Management and Budget has approved the information 
collection provisions in this section under control number 2900-
XXXX.)

Sec.  50.3  Beneficiary protections; referral requirements.

    (a) If a beneficiary or prospective beneficiary of a social service 
program supported by VA 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 faith-based organization if 
the beneficiary has no objection to that provider. 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 VA. If 
the organization is unable to identify an alternative provider, VA 
shall determine whether there is any other suitable alternative 
provider to which the beneficiary may be referred. An intermediary that 
receives a request for assistance in identifying an alternative 
provider may request assistance from VA.


Sec.  50.4  Political or religious affiliation.

    Decisions about awards of Federal financial assistance must be free 
from political interference or even the appearance of such interference 
and

[[Page 47347]]

must be made on the basis of merit, not on the basis of religion or 
religious belief.

(Authority: 38 U.S.C. 501)

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

Subpart F--Awards, Monitoring, and Enforcement of Agreements

0
2. The authority citation for part 61 continues to read as follows:

    Authority:  38 U.S.C. 501, 2001, 2002, 2011, 2012, 2061, 2064.

0
3. Amend Sec.  61.64 by:
0
a. In paragraph (b)(1)(i), removing ``Inherently'' and adding, in its 
place, ``Explicitly''.
0
b. In paragraphs (c), (d), and (g), removing all references to 
``inherently'' and adding, in each place, ``explicitly''.
0
c. In paragraph (b)(2), revising the last sentence to read as follows:


Sec.  61.64  Religious organizations.

* * * * *
    (b) * * *
    (2) * * * ``Direct financial assistance'' means that VA or an 
intermediary as defined in 38 CFR 50.1(d) 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., via grant 
or cooperative agreement). Financial assistance shall be treated as 
direct, unless it meets the definition of indirect financial assistance 
in this paragraph.
* * * * *

PART 62--SUPPORTIVE SERVICES FOR VETERAN FAMILIES PROGRAM

0
4. The authority citation for part 62 continues to read as follows:

    Authority:  38 U.S.C. 501, 2044, and as noted in specific 
sections.

0
5. Amend Sec.  62.62 by:
0
a. In paragraph (b)(1)(i), removing ``Inherently'' and adding, in its 
place, ``Explicitly''.
0
b. In paragraphs (c), (d), and (g), removing all references to 
``inherently'' and adding, in each place, ``explicitly''.
0
c. In paragraph (b)(2), revising the last sentence to read as follows:


Sec.  62.62  Religious organizations.

* * * * *
    (b) * * *
    (2) * * * ``Direct financial assistance'' means that VA or an 
intermediary as defined in 38 CFR 50.1(d) 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., via grant 
or cooperative agreement). Financial assistance shall be treated as 
direct, unless it meets the definition of indirect financial assistance 
in this paragraph.
* * * * *
[FR Doc. 2015-18492 Filed 8-5-15; 8:45 am]
BILLING CODE 8320-01-P