[Federal Register Volume 85, Number 12 (Friday, January 17, 2020)]
[Proposed Rules]
[Pages 2897-2906]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-28541]


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DEPARTMENT OF AGRICULTURE

Office of the Secretary

7 CFR Part 16

RIN 0510-AA08


Equal Opportunity for Religious Organizations in U.S. Department 
of Agriculture Programs: Implementation of Executive Order 13831

AGENCY: Office of the Secretary, USDA.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The rule proposes to amend the U.S. Department of Agriculture 
(USDA or Department) regulation that covers equal opportunity for 
participation of faith-based organizations in USDA programs 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 U.S. Constitution and the Religious Freedom 
Restoration Act (RFRA) 42 U.S.C. 2000bb et seq.

[[Page 2898]]


DATES: Written comments must be postmarked and electronic comments must 
be submitted on or before February 18, 2020. Comments received by mail 
will be considered timely if they are postmarked on or before that 
date. The electronic Federal Docket Management System will accept 
comments until Midnight Eastern Time at the end of that day.

ADDRESSES: To ensure proper handling of comments, please reference the 
Regulatory Identification Number 0510-AA08 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 Emily Tasman, Attorney-
Advisor, USDA, Office of the General Counsel, Room 107-W, J.L. Whitten 
Federal Building, 1400 Independence Avenue SW, Washington, DC 20250.

FOR FURTHER INFORMATION CONTACT: Emily Tasman, USDA, Office of General 
Counsel, (202) 720-720-3351, [email protected].

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, President George W. Bush signed 
Executive Order 13199, Establishment of White House Office of Faith-
based and Community Initiatives, 66 FR 8499 (January 29, 2001). That 
Executive Order sought to ensure that ``private and charitable 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 that would 
have 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.''
    On December 12, 2002, President Bush signed Executive Order 13279, 
Equal Protection of the Laws for Faith-Based and Community 
Organizations, 67 FR 77141 (December 12, 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 asked 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 services 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 Agriculture promulgated regulations at 7 CFR part 16 
(``Part 16'').
    On March 5, 2004, the Department published a proposed rule, 69 FR 
10354, to adopt Departmental regulations to eliminate unwarranted 
barriers to the participation of faith-based organizations in the 
Department's assistance programs. After receiving 22 different comments 
from both individuals and organizations, the Department subsequently 
published a final rule on July 9, 2004, 69 FR 41375, adding 
Departmental regulations to ensure that faith-based organizations could 
compete on an equal footing with other organizations for Department 
assistance consistent with the requirements of the U.S. Constitution, 
including the First Amendment.
    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 (November 
17, 2010). Executive Order 13559 made various changes to Executive 
Order 13279 including the following: 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

[[Page 2899]]

provision requiring that the first provider give notice of this right 
to the 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 services 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 16, defining ``indirect 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. 7 CFR 16.2(b).
    Accordingly, on August 6, 2015, the Department published a proposed 
rule, 80 FR 47244, to add definitions for ``USDA direct assistance,'' 
``USDA indirect assistance,'' and ``intermediary.'' On April 4, 2016, 
the Department, as part of a multi-agency final rule, 81 FR 19353, 
implemented Executive Order 13559 by adding new protections for 
beneficiaries of federally funded social service programs while also 
requiring decisions about federal financial assistance to be based 
solely on merit, without regard to an organization's religious 
affiliation. Following issuance of the final rule in 2016, the 
Department released detailed guidance providing faith-based and other 
neighborhood organizations receiving assistance from USDA with 
instructions (including a sample USDA beneficiary rights notice) on 
nondiscrimination requirements for recipients of direct and indirect 
USDA financial assistance. The Department prohibited certain uses of 
direct USDA financial assistance. USDA also provided for separation 
requirements for faith based organizations' religious activities after 
receiving an award. Finally, USDA's regulation ensured beneficiaries 
did not face discrimination based on religion, a religious belief, or a 
refusal to participate in a religious practice.
    President Trump enhanced the protections for faith-based providers 
in 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 4, 2017). Executive Order 13798 stated that 
``[f]ederal 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. The executive 
branch will honor and enforce those protections.'' It further directed 
the Attorney General to ``issue guidance interpreting religious liberty 
protections in Federal law.'' 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 (October 26, 2017) (the ``Attorney 
General's Memorandum on Religious Liberty'').
    The Attorney General's Memorandum on Religious Liberty stressed 
that individuals and organizations do not give up religious liberty 
protections by providing 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 3, 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'' in those previous Orders to the ``White House Faith and 
Opportunity Initiative''; changed the way that initiative is to 
operate; directed departments and agencies with ``Centers for Faith-
Based and Community Initiatives'' 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.'' 
Executive Order 13831 also eliminated the alternative provider 
requirement and requirement of notice thereof in Executive Order 13559 
described above.

Alternative Provider and Alternative Provider Notice Requirement

    Executive Order 13831 removed the requirement in Executive Order 
13559 that faith-based social services providers refer beneficiaries 
who object to receiving services from them to an alternative provider. 
Section 1(b) of Executive Order 13559 had amended section 2 of 
Executive Order 13279, entitled ``Fundamental Principles,'' by, in 
pertinent part, adding a new subsection (h) to section 2. As amended, 
section 2(h)(i) provided: ``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 agencies to 
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 ``receives written 
notice of the protections set forth in this subsection prior to 
enrolling on 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 to all of the protections in section 2. The Department of 
Agriculture has revised its regulations to conform to these provisions. 
7 CFR 16.4
    The alternative provider provisions of Executive Order 13559, which 
Executive Order 13831 removed, were not required by the U.S. 
Constitution or any applicable law. Indeed, they are in tension with 
more recent Supreme Court precedent regarding nondiscrimination against 
religious organizations and with the Attorney General's Memorandum on 
Religious Liberty.
    As the Supreme Court recently clarified in Trinity Lutheran Church 
of Columbia, Inc. v. Comer, 137 S. Ct. 2012, 2019 (2017) (Trinity 
Lutheran): ``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.' '' (quoting Church of Lukumi Babalu Aye, Inc. v. 
Hialeah, 508 U.S. 520, 533 (internal quotation marks omitted)). 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. at 2019 (quoting McDaniel v. Paty, 435 U.S. 618 (1978) 
(plurality opinion) (internal citations omitted); see also Mitchell v. 
Helms, 530 U.S. 793, 827 (2000) (plurality opinion) (``The religious 
nature of a recipient

[[Page 2900]]

should not matter to the constitutional analysis, so long as the 
recipient adequately furthers the government's secular purpose.''); 
Attorney General's Memorandum on Religious Liberty, principle 6 
(``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 providers 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 O.L.C. 162, 169-71, 174-83 (June 29, 
2007). 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 provided 
services in a manner that violated 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.
    Although Executive Order 13559's requirement of notice to 
beneficiaries was limited to notice of the alternative provider 
requirement, Part 16 as most recently amended goes further than 
Executive Order 13559 by requiring that faith-based social service 
providers of services 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, the Orders 
clearly set forth the underlying requirements of nondiscrimination, 
voluntariness, the holding of religious activities separate in time or 
place from any federally funded activity, and the right to file 
complaints of violations. Faith-based providers of social services, 
like other providers of social services, are required to sign 
assurances that they will 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 Mitchell v. Helms, 530 U.S. 793, 856-
57 (2000) (O'Connor, J. concurring) (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 additional notice 
procedures 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 71319, 71321 (2010). Following issuance of the 
Working Group's report, a final rule was issued to amend 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 19355, 19358 (2016). 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 19355, 19361-62 (2016).
    In Zelman, the Court concluded that a government funding program is 
``one of true private choice''--i.e., an indirect-aid program--where 
there is ``no evidence that the State deliberately skewed incentives 
toward religious'' providers. Id. 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 (internal quotation marks omitted). Although the 
Court noted the availability of secular providers, it specifically 
declined to make its approval 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,

[[Page 2901]]

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 19355, 
19407 (2016). In other words, the rule amended regulations to make 
approval 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 Proposed Rule

    The Department proposes to amend Part 16 to implement Executive 
Order 13831 and conform more closely to the Supreme Court's current 
First Amendment jurisprudence; relevant federal statutes such as RFRA; 
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 16 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.
    This proposed rule would also clarify 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 non-faith-based organizations, and that 
any restrictions on the use of grant funds shall apply equally to 
faith-based and non-faith based 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 
U.S. Constitution.
    Finally, the proposed rule would directly refer to the definition 
of ``religious exercise'' incorporated 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 7 CFR Part 16

Section[thinsp]16.1
Purpose and Applicability
    Section 16.1(b) is proposed to align the text more closely with the 
First Amendment and with RFRA. See, e.g., Zelman v. Simmons-Harris, 536 
U.S. 639 (2002), Trinity Lutheran Church of Columbia, Inc. v. Comer, 
137 S. Ct. 2012 (2017); Attorney General's Memorandum on Religious 
Liberty, 82 FR 49668 (October 26, 2017).
Section[thinsp]16.2
Definitions
    Section 16.2(a) is proposed to be changed to clarify the text and 
make it more consistent with other federal regulatory definitions. See, 
e.g., 28 CFR. 38.3.
    Section 16.2(b) is proposed to provide clarity.
    Section 16.2(c) is proposed to provide clarity.
    Section 16.2(d) is proposed to be changed to clarify the text and 
make it more consistent with other federal regulatory definitions. See, 
e.g., 28 CFR 38.3. The proposed changes will also align the text more 
closely with the First Amendment. See, e.g., Zelman v. Simmons-Harris, 
536 U.S. 639 (2002); Trinity Lutheran Church of Columbia, Inc. v. 
Comer, 137 S. Ct. 2012 (2017).
    Section 16.2(e) is proposed to provide clarity.
    Section 16.2(f) is proposed to be changed to align the text more 
closely with the definitions used in the Religious Freedom Restoration 
Act of 1993 (RFRA), 42 U.S.C. 2000bb et seq., and with the Religious 
Land Use and Individualized Persons Act of 2000 (RLUIPA), 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]16.3
Faith-Based Organizations and Federal Financial Assistance
    Section 16.3(a) is proposed to be changed to clarify the text by 
eliminating extraneous language and to align it more closely with RFRA. 
See, e.g., principles 6, 10-15, and 20 of the Attorney General's 
Memorandum on Religious Liberty, 82 FR 49668 (October 26, 2017); 
Application of the Religious Freedom Restoration Act to the Award of a 
Grant Pursuant to the Juvenile Justice and Delinquency Prevention Act, 
31 Op. O.L.C. 162 (2007) (World Vision Opinion).
    Section 16.3(b) is proposed to be changed to clarify the text by 
eliminating extraneous language, and to align it more closely with the 
First Amendment and with RFRA. See, e.g., Exec. Order No. 13279, 67 FR 
77141 (December 12, 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 (October 26, 
2017).
    Section 16.3(c) is proposed to be changed to clarify the text.
    Section 16.3(d) is proposed to be changed to clarify the text and 
make it more consistent with other federal regulations. See, e.g., 28 
CFR 38.5. The proposed changes will also clarify the text and align it 
more closely with the First Amendment of the U.S. Constitution and with 
RFRA. See, e.g., Trinity Lutheran Church of Columbia, Inc. v. Comer, 
137 S. Ct. 2012 (2017); principles 6, 7, and 10-15 of the Attorney 
General's Memorandum on Religious Liberty, 82 FR 49668 (October 26, 
2017).
    Section 16.3(e) is proposed to be changed to provide clarity.
    Section 16.3(f) is proposed to be changed to provide clarity.
Section[thinsp]16.4
Responsibilities of Participating Organizations
    Section 16.4(a) is proposed to be changed to align the text more 
closely with the First Amendment and with

[[Page 2902]]

RFRA. See, e.g., Zelman v. Simmons-Harris, 536 U.S. 639 (2002); 
principles 10-15 of the Attorney General's Memorandum on Religious 
Liberty, 82 FR. 49668 (October 26, 2017).
    Section 16.4(b) is proposed to be changed to clarify the text 
reflecting the provisions of Exec. Order No. 13279, 67 FR 77141 
(December 12, 2002).
    Section 16.4(c) is proposed to be changed to clarify the text.
    Section 16.4(d) is proposed to be moved to Faith-Based or Religious 
Organizations and Federal Financial Assistance Section 16.3(f) to 
provide clarity to the text.
    Section 16.4(e) is proposed to be included in Section 16.4(b) and 
to clarify the text by removing extraneous language.
    Section 16.4(f) is proposed to be deleted to align the text more 
closely with the First Amendment of the U.S. Constitution and with 
RFRA. See, e.g., Zelman v. Simmons-Harris, 536 U.S. 639 (2002), Trinity 
Lutheran Church of Columbia, Inc. v. Comer, 137 S. Ct. 2012 (2017); 
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 12, 2002), as amended by Exec. 
Order No. 13559, 75 FR 71319 (November 17, 2010), and Exec. Order No. 
13831, 83 FR 20715 (May 8, 2018).
    Section 16.4(g) is proposed to be deleted to align the text more 
closely with the First Amendment and with RFRA. See, e.g., Zelman v. 
Simmons-Harris, 536 U.S. 639 (2002), Trinity Lutheran Church of 
Columbia, Inc. v. Comer, 137 S. Ct. 2012 (2017); 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 12, 2002), as amended by Exec. Order No. 13559, 75 FR 
71319 (November 17, 2010), and Exec. Order No. 13831, 83 FR 20715 (May 
8, 2018).
    Section 16.4(h) is proposed to be included under Faith-Based or 
Religious Organizations and Federal Financial Assistance Section 16.3 
(d) and (e) to clarify the rights of a faith based or religious 
organization that receives Federal financial assistance in accordance 
with the First Amendment and RFRA.
Section[thinsp]16.5
Effect on State and Local Funds
    Section 16.5 is proposed to be moved to Faith-Based or Religious 
Organizations and Federal Financial Assistance Section 16.3(g) to 
clarify the text.
Section 16.6
Compliance
    Section 16.6 is proposed to be deleted to remove extraneous 
language that is already included in the Department's authorizing laws, 
rules, and regulations.
Appendix A and Appendix B
    Appendix A is proposed to be changed and Appendix B is proposed to 
be added to align more closely with the First Amendment and with RFRA. 
See, e.g., Zelman v. Simmons-Harris, 536 U.S. 639 (2002), Trinity 
Lutheran Church of Columbia, Inc. v. Comer, 137 S. Ct. 2012 (2017); 
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 12, 2002), as amended by Exec. 
Order No. 13559, 75 FR 71319 (November 17, 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 which of each agency's planned 
regulatory actions, indicating those which the agency believes are 
significant regulatory actions within the meaning of the Executive 
Order. 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 
regulatory action subject to review by OMB under section 3(f) of 
Executive Order 12866. This proposed action would impact the costs that 
have been incurred by faith-based organizations as they complied with 
the requirements of section 2(b) of Executive Order 13559 as part of 
participating in the operation of the following USDA programs:

 National Institute for Food and Agriculture: Community Foods 
Projects Competitive Grants Program
 Food and Nutrition Service: The Emergency Food Assistance 
Program (TEFAP)
 Food and Nutrition Service: The Commodity Supplemental Food 
Program (CSFP)
 Rural Development: Community Facilities
 Rural Development: Business Programs
 Rural Development: Housing

    (Please note that the April 4, 2016 final rule included exemptions 
for USDA's Child Nutrition Programs and International Programs.)
    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 are 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;

[[Page 2903]]

    (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), available at: 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 these 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 on those organizations, and imposing only 
limited costs on beneficiaries. 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 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. Specific categories of these 
costs include:
     The cost to service providers of making referrals for 
beneficiaries to service providers in the event that they object to the 
religious character of the provider;
     The cost to service providers of tracking and reporting 
these referrals to USDA or intermediary agencies; and
     The costs to beneficiaries to use their own means to 
investigate alternative providers on their own in lieu of the existing 
referral process.
    The effect of the rule would be to eliminate the first two 
categories of costs, and add the third category.
    The Department recognizes a quantifiable benefit of the removal of 
the notice and referral requirements, which the Department previously 
estimated, as imposing 7,421 burden hours. 80 FR 47250; 81FR 19383. We 
have added one program (CSFP) to the list since the previous estimate, 
and therefore have revised this estimate up to 8,084 burden hours, 
valued at roughly $58,600. The Department invites comment on any data 
by which it could assess the actual implementation costs of the notice 
and referral requirement--including any estimates of staff time spent 
on compliance with the requirement, in addition to the printing costs 
for the notices referenced above--and thereby more precisely quantify 
the benefits of removing these requirements.
    Specific information is not available on these costs to roughly 
3,500 estimated beneficiaries who seek services but then object to the 
religious character of the provider, thus requiring them to seek other 
service providers under the proposal where referrals had previously 
been made by the provider. We assume for the purposes of this analysis 
that up 2 hours may be needed for each beneficiary to find alternative 
services. Valuing that time at the Federal minimum wage rate ($7.25 per 
hour), we estimate that this reflects roughly $50,000 in total annual 
cost for beneficiary time. Here again, the Department invites comment 
on any information that it could use to better quantify these cost 
increases.
    In terms of benefits, the Department recognizes a non-quantifiable 
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-quantifiable 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 
entanglement in their affairs.

Executive Order 13771, Reducing Regulation and Controlling Regulatory 
Costs

    Executive Order 13771, entitled ``Reducing Regulation and 
Controlling Regulatory Costs,'' was issued on January 30, 2017 (82 FR 
9339, February 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.

[[Page 2904]]

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 
(SBREFA), 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 
which 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 our 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 7 CFR Part 16

    Administrative practice and procedure, Grant programs.

    Accordingly, for the reasons set forth in the preamble, part 16 of 
Title 7 of the Code of Federal Regulations is proposed to be amended as 
follows:

PART 16--EQUAL OPPORTUNITY FOR RELIGIOUS ORGANIZATIONS

0
1. The authority citation for part 16 is revised to read as follows:

    Authority: 5 U.S.C. 301; E.O. 13279, 67 FR 77141; E.O. 13280, 67 
FR 77145; E.O. 13559, 75 FR 71319; E.O. 13831, 83 FR 20715.

0
2. Amend Sec.  [thinsp]16.1 by redesignating paragraph (b) as paragraph 
(c) and adding a new paragraph (b) to read as follows:


Sec.  [thinsp]16.1  Purpose and applicability.

* * * * *
    (b) The requirements established in this part do not prevent a USDA 
awarding agency or any State or local government or other intermediary 
from accommodating religion in a manner consistent with federal law and 
the Religion Clauses of the First Amendment to the U.S. Constitution.
0
3. Revise Sec.  [thinsp]16.2 to read as follows:


Sec.  [thinsp]16.2   Definitions.

    As used in this part:
    Direct Federal financial assistance, Federal financial assistance 
provided directly, Direct funding, or Directly funded means financial 
assistance received by an entity selected by the government or 
intermediary (under this part) to carry out a service (e.g., by 
contract, grant, loan agreement, or cooperative agreement). References 
to Federal financial assistance will be deemed to be references to 
direct Federal financial assistance, unless the referenced assistance 
meets the definition of indirect Federal financial assistance or 
Federal financial assistance provided indirectly. Except as otherwise 
provided by USDA regulation, the recipients of sub-grants that receive 
Federal financial assistance through State-administered programs (e.g., 
flow-through programs such as the National School Lunch Program 
authorized under the Richard B. Russell National School Lunch Act, 42 
U.S.C. 1751 et seq.) are not considered recipients of USDA indirect 
assistance. These recipients of sub-awards are considered recipients of 
USDA direct financial assistance.
    Explicitly religious activities include activities that involve 
overt religious content such as worship, religious instruction, or 
proselytization. Any such activities must be offered separately, in 
time or location, from the programs or services funded under the 
agency's grant or cooperative agreement, and participation must be 
voluntary for beneficiaries of the agency grant or cooperative 
agreement-funded programs and services.

[[Page 2905]]

    Federal financial assistance does not include a guarantee or 
insurance, regulated programs, licenses, procurement contracts at 
market value, or programs that provide direct benefits.
    Indirect Federal financial assistance or Federal financial 
assistance provided indirectly refers to situations where 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 in accordance with the First 
Amendment of the U.S. Constitution. 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 USDA direct assistance and distributes 
that assistance to other organizations that, in turn, provide 
government-funded services. If an intermediary, acting under a 
contract, grant, or other agreement with the Federal Government or with 
a State or local government that is administering a program supported 
by Federal financial assistance, is given the authority under the 
contract, grant, or agreement to select non-governmental organizations 
to provide services funded by the Federal Government, the intermediary 
must ensure compliance by the recipient of a contract, grant, or 
agreement with this part and any implementing rules or guidance. 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. Religious exercise has the meaning given to 
the term in 42 U.S.C. 2000cc-75(7)(A).
0
4. Revise Sec.  [thinsp]16.3 to read as follows:


Sec.  [thinsp]16.3  Faith-Based Organizations and Federal Financial 
Assistance.

    (a) A faith based or religious organization is eligible, on the 
same basis as any other organization, and considering a religious 
accommodation, to access and participate in any USDA assistance 
programs for which it is otherwise eligible. Neither the USDA awarding 
agency nor any State or local government or other intermediary 
receiving funds under any USDA awarding agency program or service 
shall, in the selection of service providers, discriminate against an 
organization on the basis of the organization's religious exercise or 
affiliation. Additionally, decisions about awards of USDA direct 
assistance or USDA indirect assistance must be free from political 
interference and must be made on the basis of merit, not on the basis 
of the religious affiliation of a recipient organization or lack 
thereof. Notices or announcements of award opportunities and notices of 
award or contracts shall include language substantially similar to that 
in Appendix A and B to this part.
    (b) A faith based or religious organization that participates in 
USDA assistance programs will retain its autonomy; right of expression; 
religious character; authority over its governance; and independence 
from Federal, State, and local governments, 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 USDA 
direct assistance to support any ineligible purposes, including 
explicitly religious activities that involve overt religious content 
such as worship, religious instruction, or proselytization. A faith 
based or religious organization may:
    (1) Use its facilities to provide services and programs funded with 
financial assistance from USDA awarding agency without concealing, 
altering, or removing religious art, icons, scriptures, or other 
religious symbols,
    (2) Retain religious terms in its organization's name,
    (3) Select its board members and otherwise govern itself on a 
religious basis, and
    (4) Include religious references in its mission statements and 
other governing documents.
    (c) In addition, a religious organization's exemption from the 
Federal prohibition on employment discrimination on the basis of 
religion, set forth in section 702(a) of the Civil Rights Act of 1964, 
42 U.S.C. 2000e-1, is not forfeited when an organization participates 
in a USDA assistance program.
    (d) A faith-based or religious organization is eligible to access 
and participate in USDA assistance programs on the same basis as any 
other organization. No grant document, agreement, covenant, memorandum 
of understanding, policy, or regulation that is used by a USDA awarding 
agency or a State or local government in administering Federal 
financial assistance from the USDA awarding agency shall require faith-
based or religious organizations to provide assurances or notices where 
they are not required of non-religious organizations.
    (1) Any restrictions on the use of grant funds shall apply equally 
to religious and non-religious organizations.
    (2) All organizations that participate in USDA awarding agency 
programs or services, including organizations with religious character 
or affiliations, must carry out eligible activities in accordance with 
all program requirements and other applicable requirements governing 
the conduct of USDA awarding agency-funded activities, including those 
prohibiting the use of direct financial assistance to engage in 
explicitly religious activities.
    (3) No grant or agreement, document, loan agreement, covenant, 
memorandum of understanding, policy or regulation that is used by the 
USDA awarding agency or a State or local government in administering 
financial assistance from the USDA awarding agency shall disqualify 
faith-based or religious organizations from participating in the USDA 
awarding agency's programs or services because such organizations are 
motivated by or influenced by religious faith.
    (e) If an intermediary, acting under a contract, grant, or other 
agreement with the Federal Government or with a State or local 
government that is administering a program supported by Federal 
financial assistance, is delegated the authority under the contract, 
grant, or agreement to select non-governmental organizations to provide 
services funded by the Federal government, the intermediary must ensure 
compliance by the subrecipient with the provisions of this part and any 
implementing regulations or guidance. 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.
    (f)(1) USDA direct financial assistance may be used for the 
acquisition, construction, or rehabilitation of structures to the 
extent authorized by the applicable program statutes and regulations. 
USDA direct assistance may not be used for the acquisition, 
construction, or rehabilitation of structures to the extent that those 
structures are used by the USDA funding recipients for explicitly 
religious activities. Where a structure is used for both eligible and 
ineligible purposes, USDA direct financial assistance may not exceed 
the cost of those portions of the acquisition, construction, or 
rehabilitation that are attributable to eligible activities in 
accordance with the cost accounting requirements applicable to USDA 
funds. Sanctuaries, chapels, or other rooms that an organization 
receiving direct assistance from USDA uses as its principal place of 
worship, however, are ineligible for USDA-funded improvements. 
Disposition of real property after the term of the grant or any change 
in use of the property during

[[Page 2906]]

the term of the grant is subject to government-wide regulations 
governing real property disposition (see 2 CFR part 400).
    (2) Any use of USDA direct financial assistance for equipment, 
supplies, labor, indirect costs, and the like shall be prorated between 
the USDA program or activity and any ineligible purposes by the 
religious organization in accordance with applicable laws, regulations, 
and guidance.
    (3) Nothing in this section shall be construed to prevent the 
residents of housing who are receiving USDA direct assistance funds 
from engaging in religious exercise within such housing.
    (g) If a recipient contributes its own funds in excess of those 
funds required by a matching or grant agreement to supplement USDA 
awarding agency-supported activities, the recipient has the option to 
segregate those additional funds or commingle them with the Federal 
award funds. If the funds are commingled, the provisions of this 
section shall apply to all of the commingled funds in the same manner, 
and to the same extent, as the provisions apply to the Federal funds. 
With respect to the matching funds, the provisions of this section 
apply irrespective of whether such funds are commingled with Federal 
funds or segregated.
0
5. Revise Sec.  [thinsp]16.4 to read as follows:


Sec.  [thinsp]16.4  Responsibilities of participating organizations.

    (a) Any organization that receives direct or indirect Federal 
financial assistance shall not, with respect to services, or, in the 
case of direct Federal financial assistance, outreach activities funded 
by such financial assistance, discriminate against a current or 
prospective program beneficiary on the basis of religion, religious 
belief, a refusal to hold a religious belief, or a refusal to attend or 
participate in a religious practice. However, an organization that 
participates in a program funded by indirect financial assistance need 
not modify its program activities to accommodate a beneficiary who 
chooses to expend the indirect aid on the organization's program and 
may require attendance at all activities that are fundamental to the 
program.
    (b) Organizations that receive USDA direct assistance under any 
USDA program may not engage in explicitly religious activities, 
including activities that involve overt religious content such as 
worship, religious instruction, or proselytization, as part of the 
programs or services funded by USDA direct assistance. If an 
organization conducts such activities, the activities must be offered 
separately, in time or location, from the programs or services 
supported with USDA direct assistance, and participation must be 
voluntary for beneficiaries of the programs or services supported with 
such USDA direct assistance. The use of indirect Federal financial 
assistance is not subject to this restriction. Nothing in this part 
restricts the Department's authority under applicable Federal law to 
fund activities that can be directly funded by the Government 
consistent with the Establishment Clause.
    (c) Nothing in paragraphs (a) or (b) of this section shall be 
construed to prevent faith-based organizations that receive USDA 
assistance under the Richard B. Russell National School Lunch Act, 42 
U.S.C. 1751 et seq., the Child Nutrition Act of 1966, 42 U.S.C. 1771 et 
seq., or USDA international school feeding programs from considering 
religion in their admissions practices or from imposing religious 
attendance or curricular requirements at their schools.


Sec. Sec.  [thinsp]16.5 and 16.6  [Removed]

0
6. Remove Sec. Sec.  [thinsp]16.5 and 16.6.
0
7. Add Appendix A and Appendix B to Part 16 to read as follows:

Appendix A to Part 16--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 16 and 42 U.S.C. 2000bb et 
seq., USDA 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 the U.S. Constitution and federal law, including 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 USDA 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 USDA, 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 16--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 the U.S. Constitution and federal law, including 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 USDA to support or engage in any explicitly 
religious activities except when consistent with the Establishment 
Clause and any other applicable requirements. Such an organization 
also may not, in providing services funded by USDA, 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.

Stephen L. Censky,
Deputy Secretary.
[FR Doc. 2019-28541 Filed 1-16-20; 8:45 am]
 BILLING CODE 3410-14-P