[Federal Register Volume 85, Number 12 (Friday, January 17, 2020)]
[Proposed Rules]
[Pages 2921-2929]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-27777]


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DEPARTMENT OF JUSTICE

28 CFR Part 38

[Docket No. OAG 166; AG Order No. 4596-2019]
RIN 1105-AB58


Equal Participation of Faith-Based Organizations in Department of 
Justice's Programs and Activities: Implementation of Executive Order 
13831

AGENCY: Office of the Attorney General, Department of Justice.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The rule proposes to amend Department of Justice 
(``Department'') regulations on equal treatment for faith-based and 
other neighborhood organizations and to implement Executive Order 13831 
(Establishment of a White House Faith and Opportunity Initiative). 
Among other changes, this rule proposes changes to provide clarity 
about the rights and obligations of faith-based organizations 
participating in Department programs, clarify the Department's guidance 
documents for financial assistance in regard to faith-based 
organizations, and eliminate certain requirements for faith-based 
organizations that no longer reflect executive branch guidance. This 
proposed rulemaking is intended to ensure that the Department's social 
service programs are implemented in a manner consistent with the 
requirements of Federal law, including the First Amendment to the 
Constitution and the Religious Freedom Restoration Act.

DATES: Comments must be received by the Department on or before 
February 18, 2020.

ADDRESSES: To ensure proper handling of comments, please reference 
Docket No. OAG 166 on all electronic and written correspondence. The 
Department encourages the electronic submission of all comments through 
http://www.regulations.gov using the electronic comment form provided 
on that site. For easy reference, an electronic copy of this document 
is also available at that website. It is not necessary to submit paper 
comments that duplicate the electronic submission, as all comments 
submitted to http://www.regulations.gov will be posted for public 
review and are part of the official docket record. However, should you 
wish to submit written comments through regular or express mail, they 
should be sent to Robert Davis, Acting Director, Office of 
Communications, Office of Justice Programs, 810 7th St. NW, Washington, 
DC 20531.

FOR FURTHER INFORMATION CONTACT: Robert Davis, Acting Director, Office 
of Communications, Office of Justice Programs, 810 7th St. NW, 
Washington, DC 20531, 202-307-0703.

SUPPLEMENTARY INFORMATION: 

I. Posting of Public Comments

    Please note that all comments received are considered part of the 
public record and made available for public inspection online at http://www.regulations.gov. Information made available for public inspection 
includes personal identifying information (such as your name, address, 
etc.) voluntarily submitted by the commenter.
    If you wish to submit personal identifying information (such as 
your name, address, etc.) as part of your comment, but do not wish it 
to be posted online, you must include the phrase ``PERSONAL IDENTIFYING 
INFORMATION'' in the first paragraph of your comment. You must also 
locate all the personal identifying information that you do not want 
posted online in the first paragraph of your comment and identify what 
information you want the agency to redact. Personal identifying 
information identified and located as set forth above will be placed in 
the agency's public docket file, but not posted online.
    If you wish to submit confidential business information as part of 
your comment but do not wish it to be posted online, you must include 
the phrase ``CONFIDENTIAL BUSINESS INFORMATION'' in the first paragraph 
of your comment. You must also prominently identify confidential 
business information to be redacted within the comment. If a comment 
has so much confidential business information that it cannot be 
effectively redacted, the agency may choose not to post that comment 
(or to post that comment only partially) on http://www.regulations.gov. 
Confidential business information identified and located as set forth 
above will not be placed in the public docket file, nor will it be 
posted online.
    If you wish to inspect the agency's public docket file in person by 
appointment, please see the FOR FURTHER INFORMATION CONTACT paragraph.

II. Background

    Shortly after taking office in 2001, President George W. Bush 
signed Executive Order 13199, Establishment of White House Office of 
Faith-Based and Community Initiatives, 66 FR 8499

[[Page 2922]]

(Jan. 31, 2001). That Executive Order sought to ensure that ``private 
and charitable community groups, including religious ones, . . . have 
the fullest opportunity permitted by law to compete on a level playing 
field'' in the delivery of social services. To do so, it created an 
office within the White House, the White House Office of Faith-Based 
and Community Initiatives, with primary responsibility to ``establish 
policies, priorities, and objectives for the Federal Government's 
comprehensive effort to enlist, equip, enable, empower, and expand the 
work of faith-based and other community organizations to the extent 
permitted by law.'' Id.
    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 set 
forth the principles and policymaking criteria to guide Federal 
agencies in formulating and implementing 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 directed specified agency heads to review and evaluate existing 
policies that had implications for faith-based and community 
organizations relating to their eligibility for Federal financial 
assistance for social service programs and, where appropriate, to 
implement new policies that were consistent with and necessary to 
further the fundamental principles and policymaking criteria 
articulated in the Order. Consistent with Executive Order 13279, the 
Department of Justice promulgated regulations at 28 CFR part 38 (``Part 
38''). See 69 FR 2832 (Jan. 21, 2004).
    President Obama maintained President Bush's program, but modified 
it in certain respects. 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). This Executive 
Order 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 it created an Advisory Council that 
subsequently submitted recommendations regarding the work of the 
Office.
    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 (Nov. 22, 
2010). Executive Order 13559 made various changes to Executive Order 
13279, including making minor and substantive textual changes to the 
fundamental principles; adding a provision requiring that any religious 
social service provider refer potential beneficiaries to an alternative 
provider if the beneficiaries object to the first provider's religious 
character; adding a provision requiring that the faith-based provider 
give notice of potential referral to potential beneficiaries; and 
adding a provision that awards must be free of political interference 
and not be based on religious affiliation or lack thereof. An 
interagency working group was tasked with developing model regulatory 
changes to implement Executive Order 13279 as amended by Executive 
Order 13559, including provisions that clarified the prohibited uses of 
direct financial assistance, allowed religious social service providers 
to maintain their religious identities, and distinguished between 
direct and indirect assistance. These efforts eventually resulted in 
amendments to agency regulations, including the Department's Part 38. 
The revised regulations defined ``indirect federal financial 
assistance'' as government aid to a beneficiary, such as a voucher, 
that flows to a religious provider only through the genuine and 
independent choice of the beneficiary, 28 CFR 38.3(b), and made a 
number of other changes implementing the amended Executive Order and 
other changes for clarity and consistency. The rules required not only 
that faith-based providers give the notice of the right to an 
alternative provider specified in Executive Order 13559, but also 
required faith-based providers, but not other providers, to give 
written notice to beneficiaries and potential beneficiaries of programs 
funded with direct Federal financial assistance of various rights, 
including nondiscrimination based on religion, the requirement that 
participation in any religious activities must be voluntary and that 
they must be provided separately from the federally funded activity, 
and that beneficiaries may report violations. See 81 FR 19355 (April 4, 
2016).
    President Trump has given new direction to the program established 
by President Bush and continued by President Obama. On May 4, 2017, 
President Trump issued Executive Order 13798, Presidential Executive 
Order Promoting Free Speech and Religious Liberty, 82 FR 21675 (May 9, 
2017). Executive Order 13798 states that ``Federal law protects the 
freedom of Americans and their organizations to exercise religion and 
participate fully in civic life without undue interference by the 
Federal Government'' and further provides that the executive branch 
will honor and enforce those protections. It also directed the Attorney 
General to ``issue guidance interpreting religious liberty protections 
in Federal law.'' 82 FR at 21675. Pursuant to this instruction, the 
Attorney General, on October 6, 2017, issued the Memorandum for All 
Executive Departments and Agencies, ``Federal Law Protections for 
Religious Liberty,'' 82 FR 49668 (Oct. 26, 2017) (the ``Attorney 
General's Memorandum on Religious Liberty'').
    The Attorney General's Memorandum on Religious Liberty emphasized 
that individuals and organizations do not give up religious liberty 
protections by providing government-funded social services, and that 
``government may not exclude religious organizations as such from 
secular aid programs . . . when the aid is not being used for 
explicitly religious activities such as worship or proselytization.''
    On May 3, 2018, President Trump signed Executive Order 13831, 
Executive Order on the Establishment of a White House Faith and 
Opportunity Initiative, 83 FR 20715 (May 8, 2018), amending Executive 
Order 13279 as amended by Executive Order 13559, and other related 
Executive Orders. Among other things, Executive Order 13831 changed the 
name of the ``White House Office of Faith-Based and Neighborhood 
Partnerships,'' as established in Executive Order 13498, to the ``White 
House Faith and Opportunity Initiative''; changed the way that the 
Initiative is to operate; directed departments and agencies with 
``Centers for Faith-Based and Neighborhood Partnerships'' to change 
those names to ``Centers for Faith and Opportunity Initiatives''; and 
ordered that departments and agencies without a Center for Faith and 
Opportunity Initiatives designate a ``Liaison for Faith and Opportunity 
Initiatives.'' 83 FR at 20715, 20716. Executive Order 13831 also 
eliminated the alternative provider referral requirement and 
requirement of notice thereof established in Executive Order 13559 
described above. 83 FR at 20715.

[[Page 2923]]

Alternative Provider Referral and Alternative Provider Notice 
Requirement

    Executive Order 13559 imposed notice and referral burdens on faith-
based organizations not imposed on secular organizations. Section 1(b) 
of Executive Order 13559 had amended section 2 of Executive Order 
13279, Fundamental Principles, by, in pertinent part, adding a new 
subsection (h) to section 2. As amended, section 2(h)(i) provided that 
if a beneficiary or a 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, that organization shall, within a reasonable time after the 
date of the objection, refer the beneficiary to an alternative 
provider. Section 2(h)(ii) directed that agencies establish policies 
and procedures to ensure that referrals are timely and follow privacy 
laws and regulations; that providers notify agencies of and track 
referrals; and that each beneficiary ``receive[ ] written notice of the 
protections set forth in this subsection prior to enrolling in or 
receiving services from such program'' (emphasis added). The reference 
to ``this subsection'' rather than to ``this Section'' indicated that 
the notice requirement of section 2(h)(ii) was referring only to the 
alternative provider provisions in subsection (h), not all of the 
protections in section 2. In 2016, the Department of Justice revised 
its regulations to conform to Executive Order 13559. 28 CFR 
38.6(c)(iv), (d).
    In revising its regulations, the Department explained in 2015 that 
the revisions would implement the alternative provider provisions in 
Executive Order 13559. Executive Order 13831, however, has removed the 
alternative provider requirements articulated in Executive Order 13559. 
The Department also explained that the alternative provider provisions 
would protect religious liberty rights of social service beneficiaries. 
But the methods of providing such protections were not required by the 
Constitution or any applicable law. Indeed, the selected methods are in 
tension with more recent Supreme Court precedent regarding 
nondiscrimination against religious organizations, with the Attorney 
General's Memorandum on Religious Liberty, and with the Religious 
Freedom Restoration Act of 1993 (``RFRA''), 42 U.S.C. 2000bb-2000bb-4.
    As the Supreme Court recently clarified in Trinity Lutheran Church 
of Columbia, Inc. v. Comer, 137 S. Ct. 2012, 2019 (2017) (quoting 
Church of the Lukumi Babalu Aye, Inc. v. City of Hialeah, 508 U.S. 520, 
533, 542 (1993) (alteration in original)): ``The Free Exercise Clause 
`protect[s] religious observers against unequal treatment' and subjects 
to the strictest scrutiny laws that target the religious for `special 
disabilities' based on their `religious status.''' The Court in Trinity 
Lutheran added: ``[T]his Court has repeatedly confirmed that denying a 
generally available benefit solely on account of religious identity 
imposes a penalty on the free exercise of religion that can be 
justified only by a state interest `of the highest order.' '' Id. 
(quoting McDaniel v. Paty, 435 U.S. 618, 628 (1978) (plurality 
opinion)); see also Mitchell v. Helms, 530 U.S. 793, 827 (2000) 
(plurality opinion) (``[T]he religious nature of a recipient should not 
matter to the constitutional analysis, so long as the recipient 
adequately furthers the government's secular purpose.''); principle 6 
of the Attorney General's Memorandum on Religious Liberty, 82 FR at 
49669 (``Government may not target religious individuals or entities 
for special disabilities based on their religion.'').
    Applying the alternative provider requirement categorically to all 
faith-based and not to other providers of federally funded social 
services is thus in tension with the nondiscrimination principle 
articulated in Trinity Lutheran and the Attorney General's Memorandum 
on Religious Liberty.
    In addition, the alternative provider requirement could in certain 
circumstances raise concerns under RFRA. Under RFRA, where the 
Government substantially burdens an entity's exercise of religion, the 
Government must prove that the burden is in furtherance of a compelling 
government interest and is the least restrictive means of furthering 
that interest. 42 U.S.C. 2000bb-1(b). When a faith-based grant 
recipient carries out its social service programs, it may engage in an 
exercise of religion protected by RFRA and certain conditions on 
receiving those grants may substantially burden the religious exercise 
of the recipient. See Application of the Religious Freedom Restoration 
Act to the Award of a Grant Pursuant to a Juvenile Justice and 
Delinquency Prevention Act, 31 Op. O.L.C. 162, 169-71, 174-83 (2007) 
(``World Vision Opinion''). Requiring faith-based organizations to 
comply with the alternative provider requirement could impose such a 
burden, such as in a case in which a faith-based organization has a 
religious objection to referring the beneficiary to an alternative 
provider that provides services in a manner that violates the 
organization's religious tenets. See Burwell v. Hobby Lobby Stores, 
Inc., 573 U.S. 682, 720-26 (2014). And it is far from clear that this 
requirement would meet the strict scrutiny that RFRA requires of laws 
that substantially burden religious practice. The Department is not 
aware of any instance in which a beneficiary has actually sought an 
alternative provider, undermining the suggestion that the interests 
this requirement serves are in fact important, much less compelling 
enough to outweigh a substantial burden on religious exercise.
    Executive Order 13831 chose to eliminate the alternative provider 
requirement for good reason. This decision avoids tension with the 
nondiscrimination principle articulated in Trinity Lutheran and the 
Attorney General's Memorandum on Religious Liberty, avoids problems 
with RFRA that may arise, and fits within the Administration's broader 
deregulatory agenda.

Other Notice Requirements

    As noted above, Executive Order 13559 amended Executive Order 13279 
by adding a right to an alternative provider and notice of this right.
    While Executive Order 13559's requirement of notice to 
beneficiaries was limited to notice of alternative providers, Part 38 
as most recently amended goes further than Executive Order 13559 by 
requiring that faith-based social service providers funded with direct 
Federal funds provide a much broader notice to beneficiaries and 
potential beneficiaries. This requirement applies only to faith-based 
providers and not to other providers. In addition to the notice of the 
right to an alternative provider, the rule requires notice of 
nondiscrimination based on religion; that participation in religious 
activities must be voluntary and separate in time or space from 
activities funded with direct Federal funds; and that beneficiaries or 
potential beneficiaries may report violations.
    Separate and apart from these notice requirements, Executive Order 
13279, as amended, clearly set forth the underlying requirements of 
nondiscrimination, voluntariness, and the holding of religious 
activities separate in time or place from any federally funded 
activity. Faith-based providers of social services, like other 
providers of social services, are required to follow the law and the 
requirements of grants and contracts they receive. See, e.g., 28 CFR 
38.7. There is no basis on which to presume that they are less likely 
than other social service providers to follow the law. See

[[Page 2924]]

Mitchell, 530 U.S. at 856-57 (O'Connor, J., concurring in judgment) 
(noting that in Tilton v. Richardson, 403 U.S. 672 (1971), the Court's 
upholding of grants to universities for construction of buildings with 
the limitation that they only be used for secular educational purposes 
``demonstrate[d] our willingness to presume that the university would 
abide by the secular content restriction''). There is thus no need for 
prophylactic protections that create administrative burdens on faith-
based providers and that are not imposed on other providers.

Definition of Indirect Federal Financial Assistance

    Executive Order 13559 directed its Interagency Working Group on 
Faith-Based and Other Neighborhood Partnerships to propose model 
regulations and guidance documents regarding, among other things, ``the 
distinction between `direct' and `indirect' Federal financial 
assistance[.]'' 75 FR at 71321. Following issuance of the Working 
Group's report, the 2016 joint final rule amended existing regulations 
to make that distinction, and to clarify that ``organizations that 
participate in programs funded by indirect financial assistance need 
not modify their program activities to accommodate beneficiaries who 
choose to expend the indirect aid on those organizations' programs,'' 
need not provide notices or referrals to beneficiaries, and need not 
separate their religious activities from supported programs. 81 FR at 
19358. In so doing, the final rule attempted to capture the definition 
of ``indirect'' aid that the U.S. Supreme Court employed in Zelman v. 
Simmons-Harris, 536 U.S. 639 (2002). See 81 FR at 19361-62.
    In Zelman, the Court concluded that a government funding program is 
``one of true private choice''--that is, an indirect-aid program--where 
there is ``no evidence that the State deliberately skewed incentives 
toward religious'' providers. 536 U.S. at 650. The Court upheld the 
challenged school-choice program because it conferred assistance 
``directly to a broad class of individuals defined without reference to 
religion'' (i.e., parents of schoolchildren); it permitted 
participation by both religious and nonreligious educational providers; 
it allocated aid ``on the basis of neutral, secular criteria that 
neither favor nor disfavor religion''; and it made aid available ``to 
both religious and secular beneficiaries on a nondiscriminatory 
basis.'' Id. at 653-54 (quotation marks omitted). While the Court noted 
the availability of secular providers, it specifically declined to make 
its definition of indirect aid hinge on the ``preponderance of 
religiously affiliated private'' providers in the city, as that 
preponderance arose apart from the program; doing otherwise, the Court 
concluded, ``would lead to the absurd result that a neutral school-
choice program might be permissible in some parts of Ohio, . . . but 
not in'' others. Id. at 656-58. In short, the Court concluded that 
``[t]he constitutionality of a neutral . . . aid program simply does 
not turn on whether and why, in a particular area, at a particular 
time, most [providers] are run by religious organizations, or most 
recipients choose to use the aid at a religious [provider].'' Id. at 
658.
    The final rule issued after the Working Group's report included 
among its criteria for indirect Federal financial assistance a 
requirement that beneficiaries have ``at least one adequate secular 
option'' for use of the Federal financial assistance. See 81 FR at 
19407-19426. In other words, the rule amended regulations to make the 
definition of ``indirect'' aid hinge on the availability of secular 
providers. A regulation defining ``indirect Federal financial 
assistance'' to require the availability of secular providers is in 
tension with the Supreme Court's choice not to make the definition of 
indirect aid hinge on the geographically varying availability of 
secular providers. Thus, it is appropriate to amend existing 
regulations to bring the definition of ``indirect'' aid more closely 
into line with the Supreme Court's definition in Zelman.

Overview of the Proposed Rule

    The Department proposes to amend part 38 to implement Executive 
Order 13831 and conform more closely to the Supreme Court's current 
First Amendment jurisprudence; relevant Federal statutes such as RFRA, 
42 U.S.C. 2000bb et seq.; Executive Order 13279, as amended by 
Executive Orders 13559 and 13831; and the Attorney General's Memorandum 
on Religious Liberty.
    Consistent with these authorities, this proposed rule would amend 
part 38 to conform to Executive Order 13279, as amended, by deleting 
the requirement that faith-based social service providers refer 
beneficiaries objecting to receiving services from them to an 
alternative provider and the requirement that faith-based organizations 
provide notices that are not required of secular organizations.
    This proposed rule would also make clear that a faith-based 
organization that participates in Department-funded programs or 
services shall retain its autonomy; right of expression; religious 
character; and independence from Federal, State, and local governments. 
It would further clarify that none of the guidance documents that the 
Department or any State or local government uses in administering the 
Department's financial assistance shall require faith-based 
organizations to provide assurances or notices where similar 
requirements are not imposed on secular organizations, and that any 
restrictions on the use of grant funds shall apply equally to faith-
based and secular organizations.
    This proposed rule would additionally require that the Department's 
notices or announcements of award opportunities and notices of awards 
or contracts include language clarifying the rights and obligations of 
faith-based organizations that apply for and receive Federal funding. 
The language will clarify that, among other things, faith-based 
organizations may apply for awards on the same basis as any other 
organization; that the Department will not, in the selection of 
recipients, discriminate against an organization on the basis of the 
organization's religious exercise or affiliation; and that a faith-
based organization that participates in a federally funded program 
retains its independence from the government and may continue to carry 
out its mission consistent with religious freedom protections in 
Federal law, including the Free Speech and Free Exercise Clauses of the 
First Amendment to the Constitution.
    Finally, the proposed rule would directly reference the definition 
of ``religious exercise'' in RFRA, and would amend the definition of 
``indirect Federal Financial assistance'' to align more closely with 
the Supreme Court's definition in Zelman.

Explanations for the Proposed Amendments to Part 38

Part 38. Partnerships With Faith-Based and Other Neighborhood 
Organizations
Section[thinsp]38.1 Purpose
    Section 38.1 is proposed to be changed in order to include a 
reference to Executive Order 13831.
Section[thinsp]38.2 Applicability and Scope
    Section 38.2(a) is proposed to be changed in order to clarify the 
text by eliminating extraneous language--specifically, the language 
``or religious'' when used in ``faith-based or religious organization'' 
to align with the terminology used in Executive Order 13831.

[[Page 2925]]

Section[thinsp]38.3 Definitions
    Section 38.3(b) is proposed to be changed in order to clarify the 
text by eliminating extraneous language and to align the text more 
closely with the First Amendment by removing the requirement of an 
``adequate secular option'' for each beneficiary as discussed above and 
otherwise clarifying the test for indirect Federal financial 
assistance. See, e.g., Zelman, 536 U.S. 639; Trinity Lutheran, 137 S. 
Ct. 2012.
    Section 38.3(g) is proposed to be added in order to provide a 
definition of ``religious exercise'' that aligns with the definitions 
used in RFRA, 42 U.S.C. 2000bb et seq., and with the Religious Land Use 
and Individualized Persons Act of 2000, 42 U.S.C. 2000cc-5(7)(A). See, 
e.g., principles 10-15 of the Attorney General's Memorandum on 
Religious Liberty, 82 FR 49668 (October 26, 2017).
Section[thinsp]38.4 Policy
    Section 38.4(a) is proposed to be changed in order to clarify the 
text by eliminating extraneous language and to align it more closely 
with RFRA by recognizing both the possibility that a religious 
accommodation for a service provider may be appropriate or required and 
by confirming that government may not discriminate for or against an 
organization, in the selection of service providers, based on an 
organization's religious exercise. See, e.g., principles 6, 10-15, and 
20 of the Attorney General's Memorandum on Religious Liberty, 82 FR 
49668 (October 26, 2017); World Vision Opinion.
Section[thinsp]38.5 Responsibilities
    Section 38.5(b) is proposed to be changed in order to clarify the 
text and to align it more closely with the First Amendment and with 
RFRA by providing more detail about the autonomy that a faith-based 
organization retains while participating in government programming. 
See, e.g., Exec. Order No. 13279, 67 FR 77141 (December 16, 2002), as 
amended by Exec. Order No. 13831, 83 FR 20715 (May 8, 2018); principles 
9-15, 19, and 20 of the Attorney General's Memorandum on Religious 
Liberty, 82 FR 49668 (Oct. 26, 2017).
    Section 38.5(c) is proposed to be changed in order to align the 
text more closely with the First Amendment and with RFRA by making 
clear that an organization receiving indirect financial assistance is 
not required to make the attendance requirements of its program 
optional for a beneficiary who has chosen to expend indirect aid on 
that program. See, e.g., Zelman, 536 U.S. 639; principles 4, 10-15, and 
20 of the Attorney General's Memorandum on Religious Liberty, 82 FR 
49668 (Oct. 26, 2017).
    Section 38.5(d) is proposed to be changed in order to clarify the 
text and align it more closely with the First Amendment and with RFRA 
by making clear that assurances should not be required of faith-based 
organizations when they are not required of non-faith-based 
organizations, by recognizing the possibility of an accommodation for a 
faith-based organization participating in a Department program, and by 
prohibiting disqualification of an eligible faith-based organization 
from such participation because of its religious exercise. See, e.g., 
Trinity Lutheran, 137 S. Ct. 2012; principles 6, 7, and 10-15 of the 
Attorney General's Memorandum on Religious Liberty, 82 FR 49668 (Oct. 
26, 2017).
    Section 38.5(f) is proposed to be changed in order to include a 
reference to Executive Order 13831.
    Section 38.5(g) is proposed to be changed in order to clarify the 
text and align it more closely with RFRA by adding language that would 
not require application for tax-exempt status under section 501(c)(3) 
of the Internal Revenue Code. If an entity has a sincerely held 
religious belief that it cannot apply for status as a 501(c)(3) tax-
exempt entity, it may provide evidence sufficient to establish that the 
entity would otherwise qualify as a nonprofit organization under the 
Department's criteria in 28 CFR 38.5(g)(1)-(4). See, e.g., principles 
10-15 of the Attorney General's Memorandum on Religious Liberty, 82 FR 
49668 (October 26, 2017).
    Section 38.5(i) is proposed to be added in order to align the text 
more closely with the First Amendment by making clear that these 
provisions relating to nondiscrimination toward faith-based 
organizations should not be construed to advantage or disadvantage 
historically recognized religions or sects over other religions or 
sects. See, e.g., Larson v. Valente, 456 U.S. 228 (1982); principle 8 
of the Attorney General's Memorandum on Religious Liberty, 82 FR 49668 
(October 26, 2017).
Section[thinsp]38.6 Procedures
    Section 38.6 is proposed to be changed to align the text more 
closely with the First Amendment and with RFRA by eliminating the 
notice and referral requirements discussed above and replacing them 
with alternative notices discussed below. See, e.g., Zelman, 536 U.S. 
639, Trinity Lutheran, 137 S. Ct. 2012; principles 2, 3, 6-7, 9-17, 19, 
and 20 of the Attorney General's Memorandum on Religious Liberty, 82 FR 
49668 (October 26, 2017); Exec. Order No. 13279, 67 FR 77141 (December 
16, 2002), as amended by Exec. Order No. 13559, 75 FR 71319 (Nov. 22, 
2010), and Exec. Order No. 13831, 83 FR 20715 (May 8, 2018).
Appendix A and Appendix B
    Appendix A and Appendix B are proposed to be changed to align the 
text more closely with the First Amendment and with RFRA by deleting 
the notice and referral requirements that solely burdened faith-based 
organizations and instead requiring notices of the terms on which 
faith-based organizations may generally participate in Department 
funded programs. See, e.g., Zelman, 536 U.S. 639, Trinity Lutheran, 137 
S. Ct. 2012; principles 2, 3, 6-7, 9-17, 19, and 20 of the Attorney 
General's Memorandum on Religious Liberty, 82 FR 49668 (Oct. 26, 2017); 
Exec. Order No. 13279, 67 FR 77141 (Dec. 16, 2002), as amended by Exec. 
Order No. 13559, 75 FR 71319 (Nov. 22, 2010), and Exec. Order No. 
13831, 83 FR 20715 (May 8, 2018).

III. Regulatory Certifications

Executive Order 12866 and 13563--Regulatory Planning and Review

    This NPRM has been drafted in accordance with Executive Order 13563 
of January 18, 2011, 76 FR 3821, Improving Regulation and Regulatory 
Review, and Executive Order 12866 of September 30, 1993, 58 FR 51735, 
Regulatory Planning and Review. Executive Order 13563 directs agencies, 
to the extent permitted by law, to propose or adopt a regulation only 
upon a reasoned determination that its benefits justify its costs; 
tailor the regulation to impose the least burden on society, consistent 
with obtaining the regulatory objectives; and, in choosing among 
alternative regulatory approaches, select those approaches that 
maximize net benefits. Executive Order 13563 recognizes that some 
benefits and costs are difficult to quantify and provides that, where 
appropriate and permitted by law, agencies may consider and discuss 
qualitatively values that are difficult or impossible to quantify, 
including equity, human dignity, fairness, and distributive impacts.
    Under Executive Order 12866, the Office of Information and 
Regulatory Affairs (``OIRA'') must determine whether this regulatory 
action is ``significant'' and, therefore, subject to the requirements 
of the Executive Order and subject to review by the Office of 
Management and Budget (``OMB'').

[[Page 2926]]

Section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action likely to result in a regulation 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 
(also referred to as an ``economically significant'' regulation);
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impacts 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 stated in 
Executive Order 12866.
    OIRA has determined that this proposed rule is a significant, but 
not economically significant, regulatory action subject to review by 
OMB under section 3(f) of Executive Order 12866. Accordingly, OMB has 
reviewed this proposed rule.
    The Department has also reviewed these regulations under Executive 
Order 13563, which supplements and reaffirms the principles, 
structures, and definitions governing regulatory review established in 
Executive Order 12866. To the extent permitted by law, section 1(b) of 
Executive Order 13563 requires that an agency:
    (1) Propose or adopt regulations only upon a reasoned determination 
that their benefits justify their costs (recognizing that some benefits 
and costs can be difficult to quantify);
    (2) Tailor its regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives, and taking into 
account--among other things and to the extent practicable--the costs of 
cumulative regulations;
    (3) In choosing among alternative regulatory approaches, select 
those approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity);
    (4) To the extent feasible, specify performance objectives, rather 
than the behavior or manner of compliance that regulated entities must 
adopt; and
    (5) Identify and assess available alternatives to direct 
regulation, including providing economic incentives--such as user fees 
or marketable permits--to encourage the desired behavior, or providing 
information that enables the public to make choices. 76 FR 3821, 3821 
(Jan. 21, 2011). Section 1(c) of Executive Order 13563 also requires an 
agency ``to use the best available techniques to quantify anticipated 
present and future benefits and costs as accurately as possible.'' Id. 
The Office of Information and Regulatory Affairs of OMB has emphasized 
that these techniques may include ``identifying changing future 
compliance costs that might result from technological innovation or 
anticipated behavioral changes.'' Memorandum for the Heads of Executive 
Departments and Agencies, and of Independent Regulatory Agencies, from 
Cass R. Sunstein, Administrator, Office of Information and Regulatory 
Affairs, Re: Executive Order 13563, ``Improving Regulation and 
Regulatory Review'', at 1 (Feb. 2, 2011), https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2011/m11-10.pdf.
    The Department is issuing these proposed regulations upon a 
reasoned determination that their benefits justify their costs. In 
choosing among alternative regulatory approaches, the Department 
selected the approach that it believes maximizes net benefits. Based on 
the analysis that follows, the Department believes that the proposed 
regulations are consistent with the principles in Executive Order 
13563. It is the reasoned determination of the Department that this 
proposed action would, to a significant degree, eliminate costs that 
have been incurred by faith-based organizations as they complied with 
the requirements of section 2(b) of Executive Order 13559, while not 
adding any other requirements for those organizations. The Department 
has determined in addition that this proposed action would result in 
benefits to beneficiaries, described in more detail below.
    The Department also has determined that this regulatory action does 
not unduly interfere with State, local, or tribal governments in the 
exercise of their governmental functions.
    In accordance with Executive Orders 12866 and 13563, the Department 
has assessed the potential costs and benefits, both quantitative and 
qualitative, of this regulatory action. The potential costs and cost 
savings associated with this regulatory action are those resulting from 
the removal of the notification and referral requirements of Executive 
Order 13279, as amended by Executive Order 13559 and further amended by 
Executive Order 13831, and those determined to be necessary for 
administering the Department's programs and activities. For example, 
the Department recognizes that the removal of the notice and referral 
requirements could impose some costs on beneficiaries who may now need 
to investigate alternative providers on their own if they object to the 
religious character of a potential social service provider. The 
Department invites comment on any information that it could use to 
quantify this potential cost.
    The Department also notes a quantifiable cost savings of the 
removal of the notice requirement, which the Department previously 
estimated as imposing a cost of no more than $200 per faith-based 
organization per year for the notices. 81 FR 19391. That estimate was 
based on an estimate that it would take no more than two hours for 
faith-based organizations to familiarize themselves with the notice and 
referral requirements and print and duplicate an adequate number of 
notice and referral forms for potential beneficiaries, at an upper 
limit of $50/hour for the labor cost to prepare the forms and an upper 
limit of $100 for the annual cost of materials to print multiple copies 
of forms. Id. The Department is not aware of any changed circumstances 
that would counsel a change in this estimated cost. Thus, the 
Department estimates that the proposed rule's elimination of the notice 
requirement will result in a cost savings of up to $200 per faith-based 
organization per year.
    The Department previously estimated that the cost added by the 
recordkeeping requirement associated with the referral requirement was 
so small as to not be measurable. 80 FR 47316, 47322 (Aug. 6, 2015). 
Moreover, the Department was unable to quantify the cost of the 
referral requirement. 81 FR 19391. In particular, while it had 
previously estimated a burden of two hours of labor per referral, 80 FR 
47322, in the 2016 final rule, it was unable to determine the number of 
referrals that will occur in any one year, 81 FR 19391. The Department 
now has the benefit of experience and is not aware of any instance of 
the referral requirement actually being invoked. Because it appears 
that the referral requirement was never invoked, and therefore faith-
based organizations did not expend additional labor or material costs 
to comply with the referral and recordkeeping requirements, the 
Department does not expect the elimination of the referral and 
recordkeeping requirements to result in a cost savings.
    The Department invites comment on any data by which it could better 
assess the actual implementation costs of the notice, referral, and 
recordkeeping

[[Page 2927]]

requirements--including any estimates of staff time spent on compliance 
with the requirements, in addition to the printing costs for the 
notices referenced above--and thereby accurately quantify the cost 
savings of removing these requirements.
    In terms of benefits, the Department recognizes a non-quantified 
benefit to religious liberty that comes from removing requirements 
imposed solely on faith-based organizations, in tension with the 
principles of free exercise articulated in Trinity Lutheran. The 
Department also recognizes a non-quantified benefit to grant recipients 
and beneficiaries alike that comes from increased clarity in the 
regulatory requirements that apply to faith-based organizations 
operating social-service programs funded by the Federal Government. 
Beneficiaries will also benefit from the increased capacity of faith-
based social-service providers to provide services, both because these 
providers will be able to shift resources otherwise spent fulfilling 
the notice and referral requirements to provision of services, and 
because more faith-based social service providers may participate in 
the marketplace once relieved of the concern of excessive governmental 
involvement.

Executive Order 13771--Reducing Regulation and Controlling Regulatory 
Costs

    Executive Order 13771, Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017 (82 FR 9339 (Feb. 3, 
2017)). Section 2(a) of Executive Order 13771 requires an agency, 
unless prohibited by law, to identify at least two existing regulations 
to be repealed when the agency publicly proposes for notice and 
comment, or otherwise promulgates, a new regulation. In furtherance of 
this requirement, section 2(c) of Executive Order 13771 requires that 
the new incremental costs associated with new regulations shall, to the 
extent permitted by law, be offset by the elimination of existing costs 
associated with at least two prior regulations. OMB's interim guidance, 
issued on April 5, 2017, https://www.whitehouse.gov/the-press-office/2017/04/05/memorandum-implementing-executive-order-13771-titled-reducing-regulation, explains that for Fiscal Year 2017 the above 
requirements only apply to each new ``significant regulatory action 
that imposes costs.'' This proposed rule is expected to be an E.O. 
13771 deregulatory action.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996, 
generally requires an agency to prepare a regulatory flexibility 
analysis of any rule subject to the notice and comment rulemaking 
requirements under the Administrative Procedure Act (5 U.S.C. 553) or 
any other statute, unless the agency certifies that the rule will not 
have a significant economic impact on a substantial number of small 
entities.
    The Department has determined that this rule will not have a 
significant economic impact on a substantial number of small entities. 
Consequently, the Department has not prepared a regulatory flexibility 
analysis.

Executive Order 12988--Civil Justice Reform

    This proposed rule has been reviewed in accordance with Executive 
Order 12988, Civil Justice Reform. The provisions of this proposed rule 
will not have preemptive effect with respect to any State or local 
laws, regulations, or policies that conflict with such provision or 
that otherwise impede their full implementation. The rule will not have 
retroactive effect.

Executive Order 13175--Consultation and Coordination With Indian Tribal 
Governments

    This rule has been reviewed in accordance with the requirements of 
Executive Order 13175, Consultation and Coordination with Indian Tribal 
Governments. Executive Order 13175 requires Federal agencies to consult 
and coordinate with tribes on a government-to-government basis on 
policies that have tribal implications, including regulations, 
legislative comments or proposed legislation, and other policy 
statements or actions that have substantial direct effects on one or 
more Indian tribes, on the relationship between the Federal Government 
and Indian tribes or on the distribution of power and responsibilities 
between the Federal Government and Indian tribes.
    The Department has assessed the impact of this rule on Indian 
tribes and determined that this rule does not, to its knowledge, have 
tribal implications that require tribal consultation under Executive 
Order 13175.

Executive Order 13132--Federalism

    Executive Order 13132 directs that, to the extent practicable and 
permitted by law, an agency shall not promulgate any regulation that 
has federalism implications, that imposes substantial direct compliance 
costs on State and local governments, that is not required by statute, 
or that preempts State law, unless the agency meets the consultation 
and funding requirements of section 6 of the Executive Order. Because 
each change proposed by this rule does not have federalism implications 
as defined in the Executive Order, does not impose direct compliance 
costs on State and local governments, is required by statute, or does 
not preempt State law within the meaning of the Executive Order, the 
Department has concluded that compliance with the requirements of 
section 6 is not necessary.

Plain Language Instructions

    The Department makes every effort to promote clarity and 
transparency in its rulemaking. In any regulation, there is a tension 
between drafting language that is simple and straightforward and 
drafting language that gives full effect to issues of legal 
interpretation. The Department is proposing a number of changes to this 
regulation to enhance its clarity and satisfy the plain language 
requirements, including revising the organizational scheme and adding 
headings to make it more user-friendly. If any commenter has 
suggestions for how the regulation could be written more clearly, 
please provide comments using the contact information provided in the 
introductory section of this proposed rule entitled, FOR FURTHER 
INFORMATION CONTACT.

Paperwork Reduction Act

    This proposed rule does not contain any new or revised 
``collection[s] of information'' as defined by the Paperwork Reduction 
Act of 1995. 44 U.S.C. 3501 et seq.

Unfunded Mandates Reform Act

    Section 4(2) of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 
1503(2), excludes from coverage under that Act any proposed or final 
Federal regulation that ``establishes or enforces any statutory rights 
that prohibit discrimination on the basis of race, color, religion, 
sex, national origin, age, handicap, or disability.'' Accordingly, this 
rulemaking is not subject to the provisions of the Unfunded Mandates 
Reform Act.

List of Subjects in 28 CFR Part 38

    Administrative practice and procedure, Grant programs, Reporting 
and recordkeeping requirements, Nonprofit organizations.

    Accordingly, for the reasons set forth in the preamble, part 38 of 
chapter I of Title 28 of the Code of Federal

[[Page 2928]]

Regulations is proposed to be amended as follows:

PART 38--PARTNERSHIPS WITH FAITH-BASED AND OTHER NEIGHBORHOOD 
ORGANIZATIONS

0
1. The authority citation for part 38 is revised to read as follows:

    Authority: 28 U.S.C. 509; 5 U.S.C. 301; E.O. 13279, 67 FR 77141; 
18 U.S.C. 4001, 4042, 5040; 21 U.S.C. 871; 25 U.S.C. 3681; Pub. L. 
107-273, 116 Stat. 1758; Public Law 109-162, 119 Stat. 2960; 34 
U.S.C. 10152, 10154, 10172, 10221, 10382, 10388, 10444, 10446, 
10448, 10473, 10614, 10631, 11111, 11182, 20110, 20125; E.O. 13559, 
75 FR 71319; E.O. 13831, 83 FR 20715.

0
2. Remove ``or religious'' every place it appears except in Sec.  
38.4(b).


Sec.  38.1  [Amended]

0
3. Amend Sec.  38.1 by removing ``13279 and Executive Order 13559'' and 
adding in its place ``13279, Executive Order 13559, and Executive Order 
13831''.
0
4. Amend Sec.  38.3 by:
0
a. In paragraph (b) introductory text, remove ``provided to an 
organization''.
0
b. In paragraph (b)(1), add ``and'' after ``religion''.
0
c. Revise paragraph (b)(2).
0
d. Remove paragraph (b)(3).
0
e. Add paragraph (g).
    The revision and addition reads as follows:


Sec.  38.3  Definitions.

* * * * *
    (b) * * *
    (2) The service provider receives the assistance as a result of an 
independent choice of the beneficiary, not a choice of the Government.
* * * * *
    (g) Religious exercise has the meaning given to the term in 42 
U.S.C. 2000cc-5(7)(A).
0
5. Amend Sec.  38.4 by:
0
a. In paragraph (a), add ``and considering any religious accommodations 
appropriate under the Constitution or other provisions of Federal law, 
including but not limited to 42 U.S.C. 2000bb et seq., 42 U.S.C. 238n, 
42 U.S.C. 18113, 42 U.S.C. 2000e-1(a) and 2000e-2(e), 42 U.S.C. 
12113(d), and the Weldon Amendment'' after ``other organization''.
0
b. In paragraph (a), remove ``character'' and add in its place 
``exercise''.
0
6. Amend Sec.  38.5 as follows:
0
a. Amend paragraph (b).
0
i. Add ``autonomy; right of expression; religious character; and'' 
before ``independence''.
0
ii. Remove ``support'' and add in its place ``fund''.
0
iii. Add ``concealing, altering, or'' before ``removing''.
0
iv. Remove ``a religious basis'' and add in its place ``the basis of 
their acceptance of or adherence to the religious tenets of the 
organization''.
0
b. In paragraph (c), add ``and may require attendance at all activities 
that are fundamental to the program'' after ``organization's program''.
0
c. Revise paragraph (d).
0
d. In paragraph (f), remove ``13559,'' and add in its place ``13559 and 
further amended by Executive Order 13831,''.
0
e. Amend paragraph (g) by:
0
i. In the introductory text, remove ``a religious'' and add in its 
place ``a faith-based''.
0
ii. In paragraph (g)(3), remove ``or'' after ``applicant;''.
0
iii. In paragraph (g)(4), remove ``affiliate.'' and add in its place 
``affiliate; or''.
0
iv. Add paragraph (g)(5).
0
f. Add paragraph (i).
    The revisions and additions read as follows:


Sec.  38.5  Responsibilities.

* * * * *
    (d) No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that the Department or a State or 
local government uses in administering financial assistance from the 
Department shall require faith-based or religious organizations to 
provide assurances or notices where they are not required of non-faith-
based organizations. Any restrictions on the use of grant funds shall 
apply equally to faith-based and non-faith-based organizations. All 
organizations, including religious ones, that participate in Department 
programs must carry out all eligible activities in accordance with all 
program requirements, subject to any religious accommodations 
appropriate under the Constitution or other provisions of Federal law, 
including but not limited to 42 U.S.C. 2000bb et seq., 42 U.S.C. 238n, 
42 U.S.C. 18113, 42 U.S.C. 2000e-1(a) and 2000e-2(e), 42 U.S.C. 
12113(d), and the Weldon Amendment, and other applicable requirements 
governing the conduct of Department-funded activities, including those 
prohibiting the use of direct financial assistance from the Department 
to engage in explicitly religious activities. No grant document, 
agreement, covenant, memorandum of understanding, policy, or regulation 
that is used by the Department or a State or local government in 
administering financial assistance from the Department shall disqualify 
faith-based or religious organizations from participating in the 
Department's programs because such organizations are motivated or 
influenced by religious faith to provide social services, or because of 
their religious exercise or affiliation.
* * * * *
    (g) * * *
    (5) For an entity that holds a sincerely held religious belief that 
it cannot apply for a determination as an entity that is tax-exempt 
under section 501(c)(3) of the Internal Revenue Code, evidence 
sufficient to establish that the entity would otherwise qualify as a 
nonprofit organization under paragraphs (g)(1) through (g)(4) of this 
section.
* * * * *
    (i) Neither the Department awarding agency nor any State or local 
government or other pass-through entity receiving funds under any 
Department program or service shall construe these provisions in such a 
way as to advantage or disadvantage faith-based organizations 
affiliated with historic or well-established religions or sects in 
comparison with other religions or sects.
0
7. Amend Sec.  38.6 as follows:
0
a. Revise paragraph (b) to read as follows:
0
b. Remove paragraphs (c) and (d).


Sec.  38.6  Procedures.

* * * * *
    (b) Notices or announcements of award opportunities and notices of 
award or contracts shall include language substantially similar to that 
in Appendices A and B, respectively, to this part.
0
8. Revise Appendix A and Appendix B to Part 38 to read as follows:

Appendix A to Part 38--Notice or Announcement of Award Opportunities

    Faith-based organizations may apply for this award on the same 
basis as any other organization, as set forth at, and subject to the 
protections and requirements of, part 38 and 42 U.S.C. 2000bb et 
seq. The Department of Justice will not, in the selection of 
recipients, discriminate against an organization on the basis of the 
organization's religious exercise or affiliation.
    A faith-based organization that participates in this program 
will retain its independence from the government and may continue to 
carry out its mission consistent with religious freedom protections 
in Federal law, including the Free Speech and Free Exercise Clauses 
of the First Amendment, 42 U.S.C. 2000bb et seq., 42 U.S.C. 238n, 42 
U.S.C. 18113, 42 U.S.C. 2000e-1(a) and 2000e-2(e), 42 U.S.C. 
12113(d), and the Weldon Amendment, among others. Religious 
accommodations may also be sought under many of these religious 
freedom protection laws.
    A faith-based organization may not use direct financial 
assistance from the

[[Page 2929]]

Department of Justice to support or engage in any explicitly 
religious activities except where consistent with the Establishment 
Clause and any other applicable requirements. Such an organization 
also may not, in providing services funded by the Department of 
Justice, discriminate against a program beneficiary or prospective 
program beneficiary on the basis of religion, a religious belief, a 
refusal to hold a religious belief, or a refusal to attend or 
participate in a religious practice.

Appendix B to Part 38--Notice of Award or Contract

    A faith-based organization that participates in this program 
retains its independence from the government and may continue to 
carry out its mission consistent with religious freedom protections 
in Federal law, including the Free Speech and Free Exercise Clauses 
of the Constitution, 42 U.S.C. 2000bb et seq., 42 U.S.C. 238n, 42 
U.S.C. 18113, 42 U.S.C. 2000e-1(a) and 2000e-2(e), 42 U.S.C. 
12113(d), and the Weldon Amendment, among others. Religious 
accommodations may also be sought under many of these religious 
freedom protection laws.
    A faith-based organization may not use direct financial 
assistance from the Department of Justice to support or engage in 
any explicitly religious activities except when consistent with the 
Establishment Clause of the First Amendment and any other applicable 
requirements. Such an organization also may not, in providing 
services funded by the Department of Justice, discriminate against a 
program beneficiary or prospective program beneficiary on the basis 
of religion, a religious belief, a refusal to hold a religious 
belief, or a refusal to attend or participate in a religious 
practice.

    Dated: December 18, 2019.
William P. Barr,
Attorney General.
[FR Doc. 2019-27777 Filed 1-16-20; 8:45 am]
 BILLING CODE 4410-18-P