[Federal Register Volume 86, Number 214 (Tuesday, November 9, 2021)]
[Proposed Rules]
[Pages 62115-62122]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-24376]


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DEPARTMENT OF LABOR

Office of Federal Contract Compliance Programs

41 CFR Part 60-1

RIN 1250-AA09


Proposal To Rescind Implementing Legal Requirements Regarding the 
Equal Opportunity Clause's Religious Exemption

AGENCY: Office of Federal Contract Compliance Programs, Labor.

ACTION: Notification of proposed rescission; request for comments.

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SUMMARY: The Office of Federal Contract Compliance Programs (OFCCP) is 
proposing to rescind the regulations established in the final rule 
titled ``Implementing Legal Requirements Regarding the Equal 
Opportunity Clause's Religious Exemption,'' which took effect on 
January 8, 2021.

DATES: Comments must be received on or before December 9, 2021.

ADDRESSES: You may submit comments, identified by RIN 1250-AA09, by any 
of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Fax: (202) 693-1304 (for comments of six pages or less).
     Mail: Tina Williams, Director, Division of Policy and 
Program Development, Office of Federal Contract Compliance Programs, 
Room C-3325, 200 Constitution Avenue NW, Washington, DC 20210.
    Instructions: Please submit only one copy of your comments by only 
one method. Commenters submitting file attachments on http://www.regulations.gov are advised that uploading text-recognized 
documents--i.e., documents in a native file format or documents that 
have undergone optical character recognition (OCR)--enable staff at the 
Department to more easily search and retrieve specific content included 
in your comment for consideration. Please be advised that comments 
received will become a matter of public record and will be posted 
without change to http://www.regulations.gov, including any personal 
information provided. Commenters submitting comments by mail should 
transmit comments early to ensure timely receipt prior to the close of 
the comment period, as the Department continues to experience delays in 
the receipt of mail.
    Docket: For access to the docket to read background documents or 
comments, go to the Federal eRulemaking Portal at http://www.regulations.gov. Copies of this notice of proposed rescission will 
be made available, upon request, in the following formats: Large print, 
Braille, audiotape, and disc. To obtain this notice of proposed 
rescission in an alternate format, contact OFCCP at the telephone 
numbers or address listed below.

FOR FURTHER INFORMATION CONTACT: Tina Williams, Director, Division of 
Policy and Program Development, Office of Federal Contract Compliance 
Programs, 200 Constitution Avenue NW, Room C-3325, Washington, DC 
20210. Telephone: (202) 693-0104 (voice) or (202) 693-1337 (TTY).

SUPPLEMENTARY INFORMATION:

I. Background

    OFCCP enforces Executive Order 11246, which requires federal 
government contractors and subcontractors to provide equal employment 
opportunity. Section 202 of Executive Order 11246, as amended, requires 
that every non-exempt contract and subcontract include an equal 
opportunity clause, which specifies the nondiscrimination and 
affirmative action obligations each contractor or subcontractor assumes 
as a condition of its government contract or subcontract. Among other 
obligations, each contractor agrees, as a condition of its government 
contract, not to discriminate in employment on the basis of race, 
color, religion, sex, sexual orientation, gender identity, or national 
origin. Executive Order 11246, as amended, and its predecessors reflect 
the government's long-standing policy of requiring its contractors to 
prevent discrimination and provide equal employment opportunity. See, 
e.g., Exec. Order 8802, 6 FR 3109 (June 27, 1941) (``reaffirm[ing] the 
policy of the

[[Page 62116]]

United States that there shall be no discrimination in the employment 
of workers in defense industries or government because of race, creed, 
color, or national origin''); Exec. Order 10479, 18 FR 4899 (Aug. 18, 
1953) (reiterating ``the policy of the United States Government to 
promote equal employment opportunity for all qualified persons employed 
or seeking employment on government contracts because such persons are 
entitled to fair and equitable treatment in all aspects of employment 
on work paid for from public funds''); Exec. Order 10925, 26 FR 1977 
(Mar. 8, 1961) (describing it as ``the plain and positive obligation of 
the United States Government to promote and ensure equal opportunity 
for all qualified persons, without regard to race, creed, color, or 
national origin, employed or seeking employment with the Federal 
Government and on government contracts''); Exec. Order 13672, 79 FR 
42971 (July 23, 2014) (amending Executive Order 11246 to include sexual 
orientation and gender identity to ``provide for a uniform policy for 
the Federal Government to prohibit discrimination and take further 
steps to promote economy and efficiency in Federal Government 
procurement''). This policy effectuates the government's interest in 
promoting economy and efficiency in federal procurement. See 40 U.S.C. 
101 (providing for ``an economical and efficient [procurement] 
system''); 40 U.S.C. 121(a) (authorizing the President to prescribe 
policies and directives to carry out that aim); Contractors Ass'n of E. 
Pa. v. Sec'y of Labor, 442 F.2d 159, 170 (3d Cir. 1971) (``[I]t is in 
the interest of the United States in all procurement to see that its 
suppliers are not over the long run increasing its costs and delaying 
its programs by excluding from the labor pool available minority 
work[ers].''). It also ensures that taxpayer funds are not used to 
discriminate, especially in the performance of functions for the 
government itself and, thus, for the public.
    It is OFCCP's long-standing policy and practice, when analyzing 
potential discrimination under Executive Order 11246, to follow the 
principles of Title VII of the Civil Rights Act of 1964, which 
prohibits employers from discriminating against applicants and 
employees on the basis of race, color, religion, sex (including 
pregnancy, sexual orientation, and gender identity), or national 
origin. 42 U.S.C. 2000e-2; OFCCP v. Bank of Am., No. 13-099, Final 
Decision & Order, 2016 WL 2892921, at *7 (ARB Apr. 21, 2016) (``[I]n 
addition to relevant provisions of E.O. 11246, its implementing 
regulations, and Department precedent, we also look to federal 
appellate court decisions addressing similar pattern or practice claims 
of intentional discrimination adjudicated under Title VII . . . .''); 
OFCCP v. Greenwood Mills, Inc., Nos. 00-044, 01-089, Final Decision & 
Order, 2002 WL 31932547, at *4 (ARB Dec. 20, 2002) (``The legal 
standards developed under Title VII of the Civil Rights Act of 1964 
apply to cases brought under [Executive Order 11246]''). As amended in 
1972, Title VII contains an exemption for religious corporations, 
associations, educational institutions, and societies with regard to 
the employment of individuals of a particular religion to perform work 
connected with their activities. Equal Employment Opportunity Act of 
1972, Public Law 92-261, 3, 86 Stat. at 104 (codified at 42 U.S.C. 
2000e-1(a)). In the decades since the enactment of the Title VII 
religious exemption, a robust body of case law interpreting the 
exemption has developed, establishing its scope and application.
    In 2002, President George W. Bush amended Executive Order 11246 to 
include, almost verbatim, Title VII's exemption for religious 
organizations. Sec. 4, Exec. Order 13279, 67 FR 77143 (Dec. 16, 2002) 
(codified at sec. 204(c), Exec. Order 11246). The amendment was 
intended ``to ensure the economical and efficient administration and 
completion of Government contracts.'' Id. The only substantive 
difference between the text of the Title VII religious exemption and 
that of the Executive Order 11246 religious exemption is that the 
latter expressly provides that, although a government contractor or 
subcontractor that is a religious corporation, association, educational 
institution, or society is exempt from having to comply with section 
202 (the equal opportunity clause of Executive Order 11246) ``with 
respect to the employment of individuals of a particular religion,'' it 
is ``not exempted or excused from complying with the other requirements 
contained in this Order.'' Sec. 204(c), Exec. Order 11246. The text of 
the Title VII religious exemption does not contain that express 
proviso. However, the proviso is based on Title VII case law, which has 
consistently held that the Title VII religious exemption permits 
qualifying religious employers to employ individuals of a particular 
religion but requires them to comply with Title VII's prohibitions 
against discrimination on other protected bases. See, e.g., Kennedy v. 
St. Joseph's Ministries, Inc., 657 F.3d 189, 192 (4th Cir. 2011); Cline 
v. Catholic Diocese of Toledo, 206 F.3d 651, 658 (6th Cir. 2000); 
DeMarco v. Holy Cross High Sch., 4 F.3d 166, 173 (2d Cir. 1993).
    Further, the Executive Order 11246 proviso and the Title VII case 
law on which it is based reflect Congress's intent that 
nondiscrimination obligations based on other protected characteristics 
continue to apply to religious employers. See 118 Cong. Rec. 7167 
(1972) (Senate Managers' section-by-section analysis presented by Sen. 
Williams) (``The limited exemption from coverage in this section for 
religious corporations, associations, educational institutions or 
societies has been broadened to allow such entities to employ 
individuals of a particular religion in all their activities. . . . 
Such organizations remain subject to the provisions of Title VII with 
regard to race, color, sex or national origin.'') (emphasis added). 
This limitation on the scope of the Title VII religious exemption has 
long been recognized by the Department of Justice Office of Legal 
Counsel. See Memorandum for William P. Marshall, Deputy Counsel to the 
President, from Randolph D. Moss, Assistant Attorney General, Office of 
Legal Counsel, Re: Application of the Coreligionists Exemption in Title 
VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e-1(a), to Religious 
Organizations that Would Directly Receive Substance Abuse and Mental 
Health Services Administration Funds Pursuant to Section 704 of H.R. 
4923, the ``Community Renewal and New Markets Act of 2000'' at 30-32, 
31 n.62 (Oct. 12, 2000), https://www.justice.gov/olc/page/file/936211/download.
    In 2003, OFCCP published a final rule amending its Executive Order 
11246 regulations to incorporate this religious exemption.\1\ 
Affirmative Action and Nondiscrimination Obligations of Government 
Contractors, Executive Order 11246, as amended; Exemption for Religious 
Entities, Final Rule, 68 FR 56392 (Sept. 30, 2003) (codified at 41 CFR 
60-1.5(a)(5)). In the preamble to that rule, OFCCP explained that the 
religious exemption recently added to Executive Order 11246 was 
``modeled on'' the Title VII religious exemption. Id. In turn, OFCCP 
noted, the new regulation itself ``directly tracks the

[[Page 62117]]

President's amendment to'' Executive Order 11246 and ``simply 
incorporates'' the amendment in the regulation. Id. The preamble and 
regulation did not provide further guidance regarding the scope or 
application of the religious exemption. OFCCP continued its long-
standing policy and practice of applying Title VII principles and case 
law when analyzing claims of discrimination under Executive Order 
11246. OFCCP provided compliance assistance on the interpretation and 
application of the religious exemption through hosting webinars and 
publishing guidance on its website. In doing so, OFCCP abided by 
relevant religious liberty authorities, including the Religious Freedom 
Restoration Act (RFRA) and the ministerial exception mandated by the 
religion clauses of the First Amendment; maintained a policy of 
considering RFRA claims raised by contractors on a case-by-case basis; 
and refrained from applying any regulatory requirement to a case in 
which it would violate RFRA. See, e.g., OFCCP Compliance Webinar (Mar. 
25, 2015), https://www.dol.gov/ofccp/LGBT/FTS_TranscriptEO13672_PublicWebinar_ES_QA_508c.pdf; OFCCP Frequently 
Asked Questions: E.O. 13672 Final Rule (2015), archived at https://web.archive.org/web/20150709220056/ http:/www.dol.gov/ofccp/LGBT/LGBT_FAQs.html. OFCCP recommended that contractors with questions about 
the applicability of the religious exemption to their employment 
practices seek guidance from OFCCP. See, e.g., Discrimination on the 
Basis of Sex, Final Rule, 81 FR 39108, 39120 (June 15, 2016).
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    \1\ Since 1978, OFCCP's regulations implementing Executive Order 
11246 have contained an exemption allowing certain educational 
institutions to hire and employ individuals of a particular 
religion. See Compliance Responsibility for Equal Employment 
Opportunity: Consolidation of Functions Pursuant to Executive Order 
12086, 43 FR 49240, 49243 (Oct. 20, 1978) (codified at 41 CFR 60-
1.5(a)(6)). This exemption is modeled on Title VII's exemption for 
religiously affiliated educational institutions. See 42 U.S.C. 
2000e-2(e).
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    In 2019, OFCCP proposed a rule purporting to clarify the scope and 
application of the Executive Order 11246 religious exemption. 
Implementing Legal Requirements Regarding the Equal Opportunity 
Clause's Religious Exemption, Notice of Proposed Rulemaking, 84 FR 
41677 (Aug. 25, 2019). The rule was finalized with some modifications 
in 2020 and took effect on January 8, 2021.\2\ Implementing Legal 
Requirements Regarding the Equal Opportunity Clause's Religious 
Exemption, Final Rule, 85 FR 79324 (Dec. 9, 2020) (hereinafter ``2020 
rule''). The 2020 rule does not alter the text of the religious 
exemption at 41 CFR 60-1.5(a)(5); instead, it defines the terms 
``particular religion''; ``religion''; ``religious corporation, 
association, educational institution, or society''; and ``sincere.'' 
Id. at 79371-72 (codified at 41 CFR 60-1.3). The 2020 rule further 
provides a rule of construction for all of subpart A of 41 CFR part 60-
1, specifying that the subpart must be construed in favor of the 
broadest protection of religious exercise ``permitted by the U.S. 
Constitution and law.'' Id. at 79372 (codified at 41 CFR 60-1.5(e)).
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    \2\ Shortly after it took effect, the religious exemption rule 
was challenged in two district courts. New York v. U.S. Dep't of 
Labor, No. 21-cv-00536 (S.D.N.Y. filed Jan. 21, 2021); Or. 
Tradeswomen, Inc. v. U.S. Dep't of Labor, No. 21-cv-00089 (D. Or. 
filed Jan. 21. 2021). Both matters have been stayed, and the courts 
have not yet issued any substantive rulings.
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    The preamble to the 2020 rule accurately described section 204(c) 
of Executive Order 11246 as ``expressly importing Title VII's exemption 
for religious organizations'' and as ``spring[ing] directly from the 
Title VII exemption.'' Id. at 79324. The preamble continued that the 
Executive Order 11246 religious exemption should therefore ``be given a 
parallel interpretation.'' Id. (citing Northcross v. Bd. of Educ. of 
Memphis City Sch., 412 U.S. 427, 428 (1973) (per curiam) (``The 
similarity of language in [two statutes] is, of course, a strong 
indication that the two statutes should be interpreted pari passu.''). 
Nevertheless, as discussed below, the 2020 rule departs from OFCCP's 
long-standing reliance on Title VII principles and case law. In so 
doing, the 2020 rule runs contrary to the intent of Executive Order 
13279's amendment of Executive Order 11246 to incorporate the scope and 
application of the Title VII religious exemption. OFCCP believes the 
2020 rule's departures from Title VII principles and case law are 
likely to increase rather than decrease confusion about the application 
of the Executive Order 11246 religious exemption. Furthermore, to the 
extent the 2020 rule reflects the previous Administration's policy 
judgments regarding deviating from Title VII case law and principles, 
the present Administration has evaluated the range of permissible 
policy options and determined that a return to its traditional approach 
of applying Title VII case law and principles will promote clarity and 
consistency in the application of the exemption.

II. Proposal To Rescind

    OFCCP proposes to rescind the regulations established in the 2020 
rule in their entirety. OFCCP believes that the 2020 rule creates a 
lack of clarity regarding the scope and application of the exemption 
because, as explained in more detail below, it misstates the law in key 
respects. In addition, as a threshold matter, OFCCP has reevaluated the 
need for the rule. For the 17 years prior to 2020, OFCCP implemented 
the Executive Order 11246 religious exemption without seeking to codify 
its scope and application in specific regulatory language. Instead, 
OFCCP included the language of the exemption in its regulations at 41 
CFR 60-1.5(a)(5) and adopted a policy of applying Title VII case law as 
it developed, with reference to relevant religious liberty authorities 
where appropriate. Significantly, the agency already recognized that 
the 2020 rule has ``no effect on the overwhelming majority of federal 
contractors.'' 85 FR at 79367. OFCCP therefore believes that the 2020 
rule is unnecessary and, for the same reason, that no affirmative 
rulemaking to modify or replace the 2020 rule is needed at this time. 
With this rescission, OFCCP would return to its traditional approach, 
which recognizes the validity of applying the religious exemption in 
section 204(c) of Executive Order 11246, as codified in OFCCP's 
regulations at 41 CFR 60-1.5(a)(5), where it is supported by Title VII 
principles and applicable law.
    OFCCP also believes that the 2020 rule misstates the law in key 
respects. Most notably, the 2020 rule creates its own religious 
employer test, independent of Title VII case law interpreting the 
identical term. The test adopted in the 2020 rule permits a contractor 
whose purpose and/or character is not primarily religious to qualify 
for the Executive Order 11246 religious exemption. This not only places 
the rule in tension with the President's intent in expressly 
incorporating the Title VII religious exemption into Executive Order 
11246 in 2003 but also undermines the government's long-standing policy 
of requiring that federal contractors provide equal employment 
opportunity, subject to a religious exemption for contractors with 
primarily religious purpose and character. See, e.g., Exec. Order 8802, 
6 FR 3109; Exec. Order 10479, 18 FR 4899; Exec. Order 10925, 26 FR 
1977; Exec. Order 13279, 67 FR 77143; Exec. Order 13672, 79 FR 42971.
    In addition, the 2020 rule retreats from the general principle that 
qualifying religious employers are prohibited from taking employment 
actions that amount to discrimination on the basis of protected 
characteristics other than religion, even if the decisions are made for 
sincerely held religious reasons. In so doing, the 2020 rule disregards 
the text of Executive Order 11246, undermines the government's interest 
in ensuring equal employment opportunity by federal contractors, and 
deviates from Congress's understanding of how the Title VII religious 
exemption should operate--an understanding courts have confirmed in 
Title VII cases.

[[Page 62118]]

    Finally, the preamble to the 2020 rule appeared to promote a 
categorical approach to the analysis of RFRA claims. OFCCP believes 
this categorical approach is inappropriate because it extends 
exemptions more broadly than RFRA requires and fails to allow 
sufficient flexibility to weigh competing governmental and third-party 
interests against the interests of individuals asserting religious 
exemptions. Cf., e.g., Cutter v. Wilkinson, 544 U.S. 709, 720 (2005) 
(``Properly applying [the Religious Land Use and Institutionalized 
Persons Act, to which ``Congress carried over from RFRA the `compelling 
governmental interest''/``least restrictive means' standard,'' id. at 
716], courts must take adequate account of the burdens a requested 
accommodation may impose on nonbeneficiaries . . . .''). As the Court 
recognized in Fulton v. City of Philadelphia, 141 S. Ct. 1868 (2021), 
the government has a ``weighty'' interest in enforcing 
nondiscrimination protections.
    As it did prior to implementation of the 2020 rule, if the rule is 
rescinded, OFCCP would continue to follow Title VII principles and case 
law; would continue to apply the First Amendment and RFRA to the facts 
and circumstances of each case, where applicable; and would offer 
compliance assistance as needed with regard to the proper scope and 
application of the Executive Order 11246 religious exemption.

A. Reasons for Rescission of the Rule

1. Unprecedented Religious Employer Test
    The entities entitled to the religious exemption as codified by 
OFCCP's 2020 rule are the comparatively few contractors and 
subcontractors (and potential contractors and subcontractors) that meet 
the regulatory definition of ``religious corporation, association, 
educational institution, or society.'' See 85 FR at 79371-72 (codified 
at 41 CFR 60-1.3), 79367 (``[T]his rule will have no effect on the 
overwhelming majority of federal contractors.'').\3\ Because that term 
is borrowed directly from the Title VII religious exemption at 42 
U.S.C. 2000e-1(a), there is extensive Title VII case law interpreting 
the term--case law that has historically guided OFCCP (and contractors 
themselves) in determining whether an employer is entitled to the 
Executive Order 11246 religious exemption. Although there is no uniform 
test that all courts use, the ultimate inquiry focuses on whether the 
employer's purpose and character are primarily religious--a 
determination typically made by weighing some or all of the following 
factors:
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    \3\ OFCCP's records indicate that since 2004, the earliest date 
for which it has records, and continuing to the present, no 
contractor has invoked the religious exemption.

    (1) Whether the entity operates for a profit, (2) whether it 
produces a secular product, (3) whether the entity's articles of 
incorporation or other pertinent documents state a religious 
purpose, (4) whether it is owned, affiliated with or financially 
supported by a formally religious entity such as a church or 
synagogue, (5) whether a formally religious entity participates in 
the management, for instance by having representatives on the board 
of trustees, (6) whether the entity holds itself out to the public 
as secular or sectarian, (7) whether the entity regularly includes 
prayer or other forms of worship in its activities, (8) whether it 
includes religious instruction in its curriculum, to the extent it 
is an educational institution, and (9) whether its membership is 
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made up by coreligionists.

LeBoon v. Lancaster Jewish Cmty. Ctr., 503 F.3d 217, 226 (3d Cir. 
2007); see also, e.g., Garcia v. Salvation Army, 918 F.3d 997, 1003 
(9th Cir. 2019); Spencer v. World Vision, Inc., 633 F.3d 723, 724 (9th 
Cir. 2011) (per curiam); Hall v. Baptist Mem'l Health Care Corp., 215 
F.3d 618, 624 (6th Cir. 2000); Killinger v. Samford Univ., 113 F.3d 
196, 198-99 (11th Cir. 1997)).
    OFCCP's 2020 rule, however, adopted a religious employer test that 
largely did not account for these precedents--including the ultimate 
requirement that the employer's purpose and character be primarily 
religious--and instead adopted a test that no court has applied under 
Title VII. 85 FR 79371 (codified at 41 CFR 60-1.3).
    The preamble to the 2020 rule explained that OFCCP was taking this 
approach because it found fault with the federal appellate courts' 
``confusing variety of tests, [which] themselves often involve unclear 
or constitutionally suspect criteria.'' 85 FR at 79331. The agency 
commended two concurring opinions in Spencer v. World Vision for 
recognizing that ``assess[ing] the religiosity of an organization's 
various characteristics[ ] can lead the court into a `constitutional 
minefield.' '' 84 FR at 41681 (quoting Spencer, 633 F.3d at 730 
(O'Scannlain, J., concurring), and citing Spencer, 633 F.3d at 741 
(Kleinfeld, J., concurring)); see also 85 FR at 79361. Yet, as the 
preamble acknowledged, the 2020 rule itself does not even incorporate 
any of the religious employer tests set forth in the World Vision 
opinions. Rather, it adopts a definition of Title VII's term 
``religious corporation, association, educational institution, or 
society'' that does not require an inquiry into whether a contractor is 
``primarily religious'' because that inquiry, the preamble argued, 
requires ``comparison between the amount of religious and secular 
activity at an organization.'' 85 FR at 79336.
    In this respect, the 2020 rule deviates from established Title VII 
interpretations and creates its own new test.\4\ No court has ever 
applied a standard under which a for-profit employer whose purpose and 
character are not primarily religious could be eligible for the Title 
VII religious exemption.\5\ Yet under the 2020 rule, contrary to 
decades of Title VII case law, just such a for-profit contractor may 
qualify for the religious exemption.
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    \4\ Moreover, the 2020 rule departs even from the Title VII 
opinions that it purports to follow, rejecting both the prerequisite 
that the entity be a nonprofit, Spencer, 633 F.3d at 734 
(O'Scannlain, J., concurring), and an alternative requirement that 
the entity ``not engage primarily or substantially in the exchange 
of goods or services for money beyond nominal amounts,'' id. at 748 
(Kleinfeld, J., concurring). See 85 FR at 79331-32. Of course, both 
of these alternatives themselves are outliers from Title VII case 
law, which gives weight to an entity's nonprofit status as one 
factor in the multifactor analysis but does not treat it as an 
absolute prerequisite, and does not consider as a factor at all 
whether the entity engages in exchanges of more than nominal 
amounts. See, e.g., LeBoon, 503 F.3d at 226; Hall, 215 F.3d at 624; 
Killinger, 113 F.3d at 198-99.
    \5\ Significantly, the Supreme Court has considered and upheld 
the Title VII religious exemption against an Establishment Clause 
challenge only as applied ``to the secular nonprofit activities of 
religious organizations.'' Corp. of the Presiding Bishop of the 
Church of Jesus Christ of Latter-day Saints v. Amos, 483 U.S. 327, 
330 (1987) (emphasis added). It remains an open question whether and 
under what circumstances it would be constitutional to apply the 
Title VII exemption to for-profit enterprises. See Spencer, 633 F.3d 
at 734 n. 13 (O'Scannlain, J., concurring) (``In Amos, the Supreme 
Court expressly left open the question of whether a for-profit 
entity could ever qualify for a Title VII exemption.'' (citing 483 
U.S. at 349 (O'Connor, J., concurring))). The vast majority of 
federal contractors are for-profit entities that have never been 
deemed to qualify as religious corporations, associations, 
educational institutions, or societies.
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    With this rescission, OFCCP would return to its previous approach, 
which would preserve the availability of the Executive Order 11246 
religious exemption for employers whose purpose and character are 
primarily religious, and would consider the applicability of the 
religious exemption to the facts of each case in accordance with Title 
VII case law. Recognizing as exempt only those contractors that have a 
primarily religious purpose and character would provide contractors and 
potential contractors with the clarity of a single religious employer 
test under both Executive Order 11246 and Title VII.
    Thus, upon reconsideration, OFCCP views the 2020 rule's departure 
from

[[Page 62119]]

Title VII precedent as both unsupported and confusing due to its 
creation of a religious employer test that has never before been 
applied. The substantial body of case law in which courts--including 
the Ninth Circuit post-World Vision--have applied the traditional Title 
VII test to identify employers with primarily religious purpose and 
character without infringing on employers' religious liberties 
undermines the 2020 rule's assertion that OFCCP needed to abandon a 
``primarily religious'' inquiry to avoid purported constitutional 
minefields. See, e.g., Garcia, 918 F.3d 997; LeBoon, 503 F.3d 217; 
Hall, 215 F.3d 618; Killinger, 113 F.3d 196. Moreover, OFCCP is 
concerned that the 2020 rule's definition of ``religious corporation, 
association, educational institution, or society,'' in departing from 
the interpretation of that term under Title VII, may decrease 
procurement efficiency and increase uncertainty within the contracting 
community about the applicability of the religious exemption. Further, 
OFCCP is concerned that extending the religious exemption to 
contractors whose purpose and character are not primarily religious 
runs contrary to the government's long-standing equal employment 
opportunity policy for federal contractors. Most important, the 
definition adopted by the 2020 rule is inconsistent with the 
President's decision in Executive Order 13279 to incorporate Title VII 
doctrine as the touchstone for the Executive Order 11246 religious 
exemption.
2. Exemption of Unlawful Employment Actions
    Under both Executive Order 11246 section 204(c) and Title VII at 42 
U.S.C. 2000e-1(a), qualifying religious organizations are permitted to 
make decisions ``with respect to the employment of individuals of a 
particular religion.'' The 2020 rule's definition of ``particular 
religion'' authorizes the contractor to require, as a condition of 
employment, the applicant's or employee's ``acceptance of or adherence 
to sincere religious tenets as understood by the employer.'' 85 FR at 
79371 (codified at 41 CFR 60-1.3). The weight of Title VII case law 
reflects that qualifying religious employers generally may make 
decisions about whether to employ individuals based on acceptance of 
and adherence to religious tenets, as long as those decisions do not 
violate the other nondiscrimination provisions of Title VII, apart from 
the prohibition on religious discrimination. See, e.g., Kennedy, 657 
F.3d at 190-92 (stating that Title VII's religious exemption does not 
exempt religious organizations from complying with prohibitions on 
race, sex, or national origin discrimination, but holding that a 
Catholic nursing center's termination of a nursing assistant based on 
her non-Catholic religious attire was permissibly based on religion and 
not other protected bases); Little v. Wuerl, 929 F.2d 944, 946-48 (3d 
Cir. 1991) (stating that Title VII bars, for example, race and sex 
discrimination against non-minister employees, but holding that a 
Catholic school's decision not to rehire a teacher based on her 
remarriage without validation by the Catholic Church was permissibly 
based on religion). However, under the 2020 rule as explained in the 
preamble, the agency would not enforce Executive Order 11246 against a 
contractor for an adverse employment action motivated ``solely'' by its 
sincerely held religious tenets, even when the contractor's actions 
violate another nondiscrimination prohibition of Executive Order 11246 
(other than race, as discussed below). Id. at 79350; cf. id. at 79356 
(``OFCCP will enforce E.O. 11246 against any contractor or 
subcontractor that takes employment actions on the basis of race, even 
if religiously motivated.''). As an example, the preamble noted that a 
religious organization might maintain ``sincerely held religious tenets 
regarding matters such as marriage and intimacy which may implicate 
certain protected classes.'' Id. at 79364.
    Upon reconsideration, OFCCP is concerned that the 2020 rule's 
suggestion that qualifying religious organizations may be broadly 
exempted from Executive Order 11246's nondiscrimination requirements is 
contrary to the text of the religious exemption itself, which permits 
the contractor to discriminate on the basis of religion in favor of 
``individuals of a particular religion'' while expressly not exempting 
or excusing the contractor from the other requirements of Executive 
Order 11246. Sec. 204(c), Exec. Order 11246. It is also contrary to 
well-established Title VII case law. See, e.g., Kennedy, 657 F.3d at 
192 (``Section 2000e-1(a) does not exempt religious organizations from 
Title VII's provisions barring discrimination on the basis of race, 
gender, or national origin.''); Cline, 206 F.3d at 658 (``[W]hile Title 
VII exempts religious organizations for `discrimination based on 
religion,' it does not exempt them `with respect to all discrimination. 
. . . [ ] Title VII still applies . . . to a religious institution 
charged with sex discrimination.'') (quoting Boyd v. Harding Acad. of 
Memphis, Inc., 88 F.3d 410, 413 (6th Cir. 1996)); DeMarco, 4 F.3d at 
173 (``[R]eligious institutions that otherwise qualify as `employer[s]' 
are subject to Title VII provisions relating to discrimination based on 
race, gender and national origin.''). Further, as the Department of 
Justice has explained with regard to Title VII, Congress clearly 
intended for qualifying religious employers to ``remain subject to the 
provisions of Title VII with regard to race, color, sex or national 
origin.'' Memorandum for William P. Marshall, Deputy Counsel to the 
President, from Randolph D. Moss, Assistant Attorney General, Office of 
Legal Counsel, Re: Application of the Coreligionists Exemption in Title 
VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e-1(a), to Religious 
Organizations that Would Directly Receive Substance Abuse and Mental 
Health Services Administration Funds Pursuant to Section 704 of H.R. 
4923, the ``Community Renewal and New Markets Act of 2000'' (Oct. 12, 
2000), https://www.justice.gov/olc/page/file/936211/download (quoting 
Senate managers' analysis, id. at 31, and numerous cases, id. at 30-32 
& n.62).
    Accordingly, courts typically have rejected claims that qualifying 
religious employers are exempt from Title VII's other nondiscrimination 
provisions where the employers claim that their actions were based on 
sincere religious beliefs and tenets. In Herx v. Diocese of Ft. Wayne-
S. Bend, Inc., for example, the Seventh Circuit dismissed a Catholic 
elementary school's appeal of an order denying summary judgment, thus 
requiring adjudication of a language arts teacher's claim that the 
school's application of the church's ban on in vitro fertilization 
discriminated against women because only women undergo the procedure. 
772 F.3d 1085, 1091 (7th Cir. 2014). The Seventh Circuit observed that 
``[t]he district court has not ordered a religious question submitted 
to the jury for decision'' and confirmed that the jury would be 
instructed ``not to weigh or evaluate the Church's doctrine regarding 
in vitro fertilization.'' Id.; see also, e.g., Cline, 206 F.3d at 667 
(reversing the district court's grant of summary judgment to a 
religious school on the sex discrimination claim of a preschool teacher 
allegedly fired for violating the religious school's policy against 
extramarital sex, noting that the plaintiff was entitled to ``pursue 
several avenues of discovery,'' including seeking evidence ``that St. 
Paul enforced its premarital sex policy in a discriminatory manner--
against only pregnant women, or against only

[[Page 62120]]

women''); Maguire v. Marquette Univ., 814 F.2d 1213, 1218 (7th Cir. 
1987) (adjudicating the sex discrimination claim of an associate 
professor of theology not hired by a religious university based on 
``her perceived hostility to the institutional church and its 
teachings,'' particularly with regard to abortion, but affirming 
dismissal because the employer would have rejected a male applicant who 
held similar views about abortion).
    To be sure, the Constitution imposes some constraints on 
nondiscrimination laws such as Title VII, even apart from the statutory 
accommodation for religious organizations. For example, the religion 
clauses of the First Amendment create a ``ministerial exception'' from 
certain nondiscrimination laws, including Title VII, for positions of 
particular religious significance in certain religious organizations. 
See Our Lady of Guadalupe Sch. v. Morrissey-Berru, 140 S. Ct. 2049 
(2020); Hosanna-Tabor Evangelical Lutheran Church & Sch. v. EEOC, 565 
U.S. 171 (2012). Where the ministerial exception applies, ``judicial 
intervention into disputes between the [religious organization] and the 
[employee] threatens the [religious organization's] independence in a 
way that the First Amendment does not allow.'' Our Lady of Guadalupe 
Sch., 140 S. Ct. at 2069.
    And where a religious organization applies a ``religious tenets'' 
requirement under Title VII's religious exemption, courts and agencies 
must be careful not to unduly interrogate the plausibility of the 
religious justification in assessing whether the religious tenets claim 
is a pretext for some other, impermissible form of employment 
discrimination. See, e.g., Curay-Cramer v. Ursuline Acad. of 
Wilmington, Delaware, Inc., 450 F.3d 130, 141 (3d Cir. 2006); 
Mississippi College, 626 F.2d at 485; Little v. Wuerl, 929 F.2d 944, 
948 (3d Cir. 1991).
    As the Supreme Court recognized in Bostock, however, ``how these 
doctrines protecting religious liberty interact with Title VII are 
questions for future cases.'' Bostock v. Clayton Cnty., 140 S. Ct. 
1731, 1754 (2020). In Bostock, the Court explained:

[W]orries about how Title VII may intersect with religious liberties 
are nothing new; they even predate the statute's passage. As a 
result of its deliberations in adopting the law, Congress included 
an express statutory exception for religious organizations. Sec.  
2000e-1(a). This Court has also recognized that the First Amendment 
can bar the application of employment discrimination laws ``to 
claims concerning the employment relationship between a religious 
institution and its ministers.'' And Congress has gone a step 
further yet in [RFRA]. . . . Because RFRA operates as a kind of 
super statute, displacing the normal operation of other federal 
laws, it might supersede Title VII's commands in appropriate cases.

Id. (quoting Hosanna-Tabor, 565 U.S. at 188).
    These possible context-specific constitutional and statutory 
limits, however, do not affect the general rule under both Executive 
Order 11246 and relevant Title VII case law to date: The religious 
exemption does not permit qualifying employers to make employment 
decisions about non-ministerial positions that amount to discrimination 
on the basis of protected characteristics other than religion, even if 
those decisions are based on sincere religious beliefs and tenets.
    Thus, OFCCP now believes that, in purporting to establish a 
categorical exemption for religious organizations from Executive Order 
11246's requirements of nondiscrimination on other protected bases when 
making employment decisions based on sincere religious beliefs, the 
2020 rule conflicts with the text of Executive Order 11246 and does not 
comport with the weight of Title VII case law. OFCCP is also concerned 
that the 2020 rule's definition of ``particular religion,'' together 
with the discussion in the preamble, could decrease procurement 
efficiency by setting forth an unclear standard that purports to exempt 
a broader range of employment actions than is covered by the plain 
language of the religious exemption. Finally, OFCCP is concerned that 
the religious exemption thus broadened by the 2020 rule is inconsistent 
with the government's interest in ensuring equal employment opportunity 
by federal contractors.
3. Inappropriately Categorical Approach to RFRA Analysis
    The rule of construction added in the 2020 rule at 41 CFR 60-1.5(e) 
requires that subpart A of 41 CFR part 60-1 be construed in favor of 
the broadest lawful protection of religious exercise. See 85 FR at 
79372. Applying that rule of construction, the preamble to the 2020 
rule described how RFRA would ``guide the agency's determination if and 
when a particular case presents a situation where a religiously 
motivated employment action implicates a classification protected under 
the Executive Order.'' 85 FR at 79350. In that discussion, the preamble 
expressed certain views about RFRA's application that were both 
questionable and not pertinent to the proper construction of Executive 
Order 11246.
    RFRA provides that when application of a federal government rule or 
other law would substantially burden a person's exercise of religion, 
the government must afford that person an exemption to the rule unless 
it can demonstrate that applying the burden to that person furthers a 
compelling governmental interest and is the least restrictive means of 
doing so. 42 U.S.C. 2000bb-1(b). Prior to the 2020 rule, recognizing 
that ``claims under RFRA are inherently individualized and fact 
specific,'' OFCCP's express policy was to consider RFRA claims, if they 
ever arose, based on the facts of the particular case, and to refrain 
from applying any regulatory requirement that would violate RFRA. 
Discrimination on the Basis of Sex, Final Rule, 81 FR at 39119; see 
also 85 FR at 79353; OFCCP Frequently Asked Questions: Religious 
Employers and Religious Exemption, http://www.dol.gov/agencies/ofccp/faqs/religious-employers-exemption).
    The preamble to the 2020 rule, however, announced that OFCCP ``has 
less than a compelling interest in enforcing E.O. 11246 when a 
religious organization takes employment action solely on the basis of 
sincerely held religious tenets that also implicate a protected 
classification, other than race.'' 85 FR at 79354. The preamble 
repeatedly mentioned marriage and sexual intimacy as likely subjects of 
such religious beliefs requiring accommodation, see id. at 79349, 
79352, 79364, suggesting that protection from discrimination on the 
bases of sex, sexual orientation, and gender identity in particular 
could be compromised under this analysis.\6\ Executive Order 11246, 
however, lists all the protected bases on equal terms, making no 
distinction among them. See, e.g., sec. 202(1), Exec. Order 11246.
---------------------------------------------------------------------------

    \6\ By contrast, the present Administration has committed to a 
policy of fully enforcing laws prohibiting discrimination based on 
sexual orientation and gender identity and protecting religious 
freedom. See, e.g., sec. 1, Exec. Order 14015, 86 FR 10007 (Feb. 14, 
2021); sec. 1, Exec. Order 13988, 86 FR 7023 (Jan. 25, 2021).
---------------------------------------------------------------------------

    Since the 2020 rule's publication, the Court has reemphasized the 
inadequacy of a categorical approach to defining the government's 
compelling interest in the broader context of nondiscrimination 
enforcement: ``The question . . . is not whether the [government] has a 
compelling interest in enforcing its non-discrimination policies 
generally, but whether it has such an interest in denying an exception 
to [the particular religious claimant].'' Fulton, 141 S. Ct. at 1881. 
It is beyond dispute that the government's interests in preventing

[[Page 62121]]

and remedying the harms of discrimination, and in ensuring equal 
employment opportunity, are ``weighty.'' Id. at 1882. But especially in 
light of Fulton, OFCCP believes it is appropriate to ground any 
compelling interest assessment in the specific facts presented by 
particular religious claimants, an individualized analysis that cannot 
properly be conducted in the context of a rulemaking, where it is not 
possible to weigh competing governmental and third-party interests in a 
particular case.
    Therefore, upon reconsideration, OFCCP believes that the correct 
approach is to return to considering any RFRA claims raised by 
contractors on a case-by-case basis, without announcing any categorical 
conclusions about hypothetical RFRA claims related to Executive Order 
11246's nondiscrimination obligations.

B. Effect of Rescission

    OFCCP remains committed to protecting religious freedom in 
accordance with applicable law. If the 2020 rule is rescinded as 
proposed here, OFCCP will return to its policy and practice of 
interpreting and applying the religious exemption in section 204(c) of 
Executive Order 11246, as codified in OFCCP's regulations at 41 CFR 60-
1.5(a)(5), in accordance with Title VII principles and case law. In so 
doing, OFCCP will abide by relevant religious liberty authorities, 
including the ministerial exception mandated by the religion clauses of 
the First Amendment. OFCCP will return to its policy of considering any 
RFRA claims raised by contractors on a case-by-case basis and 
refraining from applying any regulatory requirement to a case in which 
it would violate RFRA. If the 2020 rule is rescinded, nothing in that 
rule or its preamble could be relied on as a statement of OFCCP's 
interpretation or application of the Executive Order 11246 religious 
exemption or relevant religious liberty authorities. OFCCP will 
continue to provide any needed compliance assistance on the religious 
exemption through various means.
    OFCCP invites any interested party to comment on the proposal to 
rescind the 2020 rule.

III. Regulatory Procedures

A. Executive Order 12866 (Regulatory Planning and Review) and Executive 
Order 13563 (Improving Regulation and Regulatory Review)

    Under Executive Order 12866, OMB's Office of Information and 
Regulatory Affairs (OIRA) determines whether a regulatory action is 
significant and, therefore, subject to the requirements of Executive 
Order 12866 and OMB review. Section 3(f) of Executive Order 12866 
defines a ``significant regulatory action'' as an action that is likely 
to result in a rule that: (1) Has an annual effect on the economy of 
$100 million or more, or adversely affects in a material way 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 economically significant); (2) creates 
serious inconsistency or otherwise interferes with an action taken or 
planned by another agency; (3) materially alters the budgetary impacts 
of entitlement grants, user fees, or loan programs, or the rights and 
obligations of recipients thereof; or (4) raises novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in Executive Order 12866. This proposed 
rescission has been designated a ``significant regulatory action,'' 
although not economically significant, under section 3(f) of Executive 
Order 12866. The Office of Management and Budget has reviewed this 
proposed rescission.
    Executive Order 13563 directs agencies to 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 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.
1. The Need for the Rescission
    The proposed rescission of the 2020 rule is needed to enable OFCCP 
to properly apply and enforce Executive Order 11246 by returning to its 
policy and practice of interpreting and applying the religious 
exemption contained in section 204(c) of Executive Order 11246 
consistent with Title VII principles and case law.
2. Discussion of Impacts
    The proposed rescission does not include any costs because it would 
add no new compliance requirements for contractors. The proposal would 
remove the definitions of Particular religion; Religion; Religious 
corporation, association, educational institution, or society; and 
Sincere from 41 CFR 60-1.3; remove paragraphs (a) and (b) from 41 CFR 
60-1.3; and remove paragraphs (e) and (f) from 41 CFR 60-1.5.
    The proposed rescission would not include any cost savings. The 
only quantitative cost assessed in the 2020 rule was for rule 
familiarization. This was a one-time cost assessed on contractors at 
the time of publication of the final rule.
3. Benefits
    Executive Order 13563 recognizes that some rules have benefits that 
are difficult to quantify or monetize but are nevertheless important, 
and states that agencies may consider such benefits. Those benefits 
include equity and fairness. This proposed rescission would promote 
economy and efficiency in federal procurement by preventing the 
arbitrary exclusion of qualified and talented employees on the basis of 
characteristics that have nothing to do with their ability to do work 
on government contracts. It also ensures that taxpayer funds are not 
used to discriminate. It would also ensure that federal contractors 
provide equal employment opportunity on all protected bases. Finally, 
it would provide clarity and consistency for contractors and would-be 
contractors that are religious corporations, associations, educational 
institutions, and societies: Those with a primarily religious purpose 
and character, that are eligible for the Title VII religious exemption, 
are also eligible for the Executive Order 11246 religious exemption.

B. Regulatory Flexibility Act and Executive Order 13272 (Consideration 
of Small Entities)

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., 
establishes ``as a principle of regulatory issuance that agencies shall 
endeavor, consistent with the objectives of the rule and applicable 
statutes, to fit regulatory and informational requirements to the scale 
of the businesses, organizations, and governmental jurisdictions 
subject to regulation.'' Public Law 96-354, section 2(b). The RFA 
requires agencies to consider the impact of a regulatory action on a 
wide range of small entities, including small businesses, nonprofit 
organizations, and small governmental jurisdictions.
    Agencies must review whether a regulatory action would have a 
significant economic impact on a substantial number of small entities. 
See 5 U.S.C. 603. If the regulatory action would, then the agency must 
prepare a regulatory flexibility analysis as

[[Page 62122]]

described in the RFA. See id. However, if the agency determines that 
the regulatory action would not be expected to have a significant 
economic impact on a substantial number of small entities, then the 
head of the agency may so certify and the RFA does not require a 
regulatory flexibility analysis. See 5 U.S.C. 605. The certification 
must provide the factual basis for this determination.
    The proposed rescission will not have a significant economic impact 
on a substantial number of small entities because the proposal will not 
impose any costs. Accordingly, OFCCP certifies that the proposed 
rescission will not have a significant economic impact on a substantial 
number of small entities.

C. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 requires that OFCCP consider 
the impact of paperwork and other information collection burdens 
imposed on the public. See 44 U.S.C. 3507(d). An agency may not collect 
or sponsor the collection of information or impose an information 
collection requirement unless the information collection instrument 
displays a currently valid OMB control number. See 5 CFR 1320.5(b)(1).
    OFCCP has determined that there would be no new requirement for 
information collection associated with this proposed rescission. 
Consequently, this proposal does not require review by OMB under the 
authority of the Paperwork Reduction Act.

D. Unfunded Mandates Reform Act of 1995

    For purposes of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 
1532, this proposed rescission would not include any federal mandate 
that may result in excess of $100 million in expenditures by state, 
local, and tribal governments in the aggregate or by the private 
sector.

E. Executive Order 13132 (Federalism)

    OFCCP has reviewed this proposed rescission in accordance with 
Executive Order 13132 regarding federalism and has determined that it 
would not have ``federalism implications.'' The proposed regulatory 
action would not ``have substantial direct effects on the States, on 
the relationship between the national government and the States, or on 
the distribution of power and responsibilities among the various levels 
of government.''

F. Executive Order 13175 (Consultation and Coordination With Indian 
Tribal Governments)

    This proposed rescission would not have tribal implications under 
Executive Order 13175 that would require a tribal summary impact 
statement. The proposal would not ``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.''

List of Subjects in 41 CFR Part 60-1

    Administrative practice and procedure, Civil rights, Employment, 
Equal employment opportunity, Government contracts, Government 
procurement, Investigations, Labor, Reporting and recordkeeping 
requirements.

Jenny R. Yang,
Director, Office of Federal Contract Compliance Programs.

    For the reasons set forth in the preamble, OFCCP proposes to amend 
41 CFR part 60-1 as follows:

PART 60-1--OBLIGATIONS OF CONTRACTORS AND SUBCONTRACTORS

0
1. The authority citation for part 60-1 continues to read as follows:

    Authority:  Sec. 201, E.O. 11246, 30 FR 12319, 3 CFR, 1964-1965 
Comp., p. 339, as amended by E.O. 11375, 32 FR 14303, 3 CFR, 1966-
1970 Comp., p. 684, E.O. 12086, 43 FR 46501, 3 CFR, 1978 Comp., p. 
230, E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 258 and E.O. 
13672, 79 FR 42971.


Sec.  60-1.3  [Amended]

0
2. Amend Sec.  60-1.3 by removing the following:
0
a. Definitions of ``Particular religion,'' ``Religion,'' ``Religious 
corporation, association, educational institution, or society,'' and 
``Sincere.''
0
b. Paragraphs (a) and (b).


Sec.  60-1.5  [Amended]

0
3. Amend Sec.  60-1.5 by removing paragraphs (e) and (f).

[FR Doc. 2021-24376 Filed 11-8-21; 8:45 am]
BILLING CODE 4510-CM-P