[Federal Register Volume 81, Number 64 (Monday, April 4, 2016)]
[Rules and Regulations]
[Pages 19353-19430]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-07339]



[[Page 19353]]

Vol. 81

Monday,

No. 64

April 4, 2016

Part IV





Department of Education





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2 CFR Part 3474

34 CFR Parts 75 and 76





Department of Homeland Security





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6 CFR Part 19





Department of Agriculture





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7 CFR Part 16





Agency for International Development





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22 CFR Part 205





Department of Housing and Urban Development





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24 CFR Parts 5, 92, 570, et al.





Department of Justice





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28 CFR Part 38

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Department of Labor





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29 CFR Part 2





Department of Veterans Affairs





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38 CFR Parts 50, 61, and 62





Department of Health and Human Services





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45 CFR Parts 87 and 1050





Federal Agency Final Regulations Implementing Executive Order 13559: 
Fundamental Principles and Policymaking Criteria for Partnerships With 
Faith-Based and Other Neighborhood Organizations; Final Rule

Federal Register / Vol. 81 , No. 64 / Monday, April 4, 2016 / Rules 
and Regulations

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DEPARTMENT OF EDUCATION

2 CFR Part 3474

34 CFR Parts 75 and 76

[ED-2014-OS-0131]
RIN 1895-AA01

DEPARTMENT OF HOMELAND SECURITY

6 CFR Part 19

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

DEPARTMENT OF AGRICULTURE

7 CFR Part 16

RIN 0503-AA55

AGENCY FOR INTERNATIONAL DEVELOPMENT

22 CFR Part 205

RIN 0412-AA75

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 5, 92, 570, 574, 576, 578, and 1003

[Docket No. FR-5781-F-02]
RIN 2501-AD65

DEPARTMENT OF JUSTICE

28 CFR Part 38

[Docket No. OAG 149; AG Order No. 3649-2016]
RIN 1105-AB45

DEPARTMENT OF LABOR

29 CFR Part 2

RIN 1290-AA29

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Parts 50, 61, and 62

RIN 2900-AP05

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 87 and 1050

RIN 0991-AB96


Federal Agency Final Regulations Implementing Executive Order 
13559: Fundamental Principles and Policymaking Criteria for 
Partnerships With Faith-Based and Other Neighborhood Organizations

AGENCY:  Department of Education, Department of Homeland Security, 
Department of Agriculture, Agency for International Development, 
Department of Housing and Urban Development, Department of Justice, 
Department of Labor, Department of Veterans Affairs, Department of 
Health and Human Services.

ACTION: Final rule.

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SUMMARY: The Agencies publishing this final rule amend or establish 
their regulations to implement Executive Order 13279, as amended by 
Executive Order 13559. Executive Order 13279 established fundamental 
principles to guide the policies of Federal agencies regarding the 
participation of faith-based and other community organizations in 
programs that the Federal agencies administer. Executive Order 13559 
amended Executive Order 13279 to clarify those principles and add 
certain protections for beneficiaries of Federal social service 
programs.

DATES: Effective Date: These regulations are effective on May 4, 2016.
    Compliance Date: Recipients of Federal financial assistance to 
which these regulations apply must comply with these final regulations 
by July 5, 2016.

FOR FURTHER INFORMATION CONTACT: For general information, please 
contact Melissa Rogers, White House Office of Faith-Based and 
Neighborhood Partnerships, 202-456-3394 or via email at 
[email protected].
    For information regarding each agency's implementation of these 
final regulations, the contact information for that agency follows.
     DEPARTMENT OF EDUCATION: Rev. Brenda Girton-Mitchell, 
Director, Center for Faith-Based and Neighborhood Partnerships, Office 
of the Secretary, U.S. Department of Education, 400 Maryland Avenue 
SW., Room 1E110-A, Washington, DC 20202-6132, Telephone: 202-401-1876. 
If you use a telecommunications device for the deaf (TDD) or a text 
telephone (TTY), call the Federal Relay Service (FRS), toll-free, at 1-
800-877-8339.
     DEPARTMENT OF HOMELAND SECURITY: Scott Shuchart, Office 
for Civil Rights and Civil Liberties, Department of Homeland Security, 
202-401-1474 (telephone), 202-357-1196 (facsimile), 
[email protected] (email). If you use a telecommunications 
device for the deaf (TDD) or a text telephone (TTY), call the Federal 
Relay Service (FRS), toll-free, at 1-800-877-8339.
     DEPARTMENT OF AGRICULTURE: Norah Deluhery, Director, 
Center for Faith-Based and Neighborhood Partnerships, U.S. Department 
of Agriculture, 1400 Independence Avenue SW., Washington, DC 20250; 
telephone number 202-720-2032 (this is not a toll-free number). Persons 
with disabilities or who require alternative means of communication 
(Braille, large print, audio tape, etc.) should contact the USDA Target 
Center at 202-720-2600 (voice and TDD).
     AGENCY FOR INTERNATIONAL DEVELOPMENT: J. Mark 
Brinkmoeller, Director, Center for Faith-Based and Community 
Initiatives, USAID, Room 6.07-023, 1300 Pennsylvania Avenue NW., 
Washington, DC 20523; telephone: 202-712-4080 (this is not a toll-free 
number). If you use a telecommunications device for the deaf (TDD) or a 
text telephone (TTY), call the Federal Relay Service (FRS), toll-free, 
at 1-800-877-8339.
     DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT: Paula 
Lincoln, Director, Center for Faith-Based and Neighborhood 
Partnerships, Department of Housing and Urban Development, 451 7th 
Street SW., Room 10184, Washington, DC 20410-7000; telephone number 
202-708-2404 (this is not a toll-free number). If you use a 
telecommunications device for the deaf (TDD) or a text telephone (TTY), 
call the Federal Relay Service (FRS), toll-free, at 1-800-877-8339.
     DEPARTMENT OF HEALTH AND HUMAN SERVICES: Acacia Bamberg 
Salatti, Director, U.S. Department of Health and Human Services Center 
for Faith-Based and Neighborhood Partnerships, 200 Independence Avenue 
SW., Room 747D, Washington, DC 20201 or via email at 
[email protected], telephone: 202-358-3595, fax: 202-205-2727. If 
you use a telecommunications device for the deaf (TDD) or a text 
telephone (TTY), call the Federal Relay Service (FRS), toll-free, at 1-
800-877-8339.
     DEPARTMENT OF JUSTICE: Theron Pride, Chief of Staff/Senior 
Counsel, Office of the Assistant Attorney General, Office of Justice 
Programs, U.S. Department of Justice, Washington, DC 20531; telephone: 
202-307-5933. If you use a telecommunications device for the deaf (TDD) 
or a text telephone (TTY), call the Federal Relay Service (FRS), toll-
free, at 1-800-877-8339.
     DEPARTMENT OF LABOR: Naomi Barry-P[eacute]rez, Director, 
Civil Rights Center, U.S. Department of Labor, Frances Perkins 
Building, 200 Constitution Ave. NW., Room N-4123, Washington, DC 20210; 
telephone: 202-693-6500. Please note this is not a toll-free number. If 
you use a telecommunications device for the deaf (TDD) or a text 
telephone (TTY), call the Federal Relay Service (FRS), toll-free, at 1-
800-877-8339.

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     DEPARTMENT OF VETERANS AFFAIRS: Stephen B. Dillard, Deputy 
Director, Faith-based and Neighborhood Partnership (00FB), Office of 
the Secretary, Department of Veterans Affairs, 810 Vermont Ave. NW., 
Washington, DC 20420, 202-461-7689. (This is not a toll-free telephone 
number.) If you use a telecommunications device for the deaf (TDD) or a 
text telephone (TTY), call the Federal Relay Service (FRS), toll-free, 
at 1-800-877-8339.

SUPPLEMENTARY INFORMATION: On Thursday, August 6, 2015, the nine 
agencies participating in this joint final rulemaking each published a 
separate notice of proposed rulemaking (NPRM) in volume 80 of the 
Federal Register, as follows:
    1. Agency for International Development (USAID), 80 FR 47237;
    2. Department of Agriculture (USDA), 80 FR 47243;
    3. Department of Education (ED), 80 FR 47253;
    4. Department of Health and Human Services (HHS), 80 FR 47271;
    5. Department of Homeland Security (DHS), 80 FR 47283;
    6. Department of Housing and Urban Development (HUD), 80 FR 47301;
    7. Department of Justice (DOJ), 80 FR 47315;
    8. Department of Labor (DOL), 80 FR 47327;
    9. Department of Veterans Affairs (VA), 80 FR 47339.
    This preamble refers to these agencies as ``the Agencies.'' This 
final rulemaking notice publishes the final regulations of all the 
Agencies in a single document. The Agencies decided to publish a joint 
final rule because most of the comments received by the Agencies 
addressed issues that were relevant to all of the Agencies' proposed 
rules. This final rule addresses cross-cutting issues first, followed 
by separate agency-specific discussions of issues particular to each 
Agency. Following the preamble, each Agency makes final amendments to 
its regulations or establishes new final regulations, in CFR title and 
part order, to implement the requirements in Executive Order 13279, as 
amended by Executive Order 13559.\1\ The final rule is broken up into 
six major parts, organized as follows:
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    \1\ USAID does not fund programs involving indirect Federal 
financial assistance, as that term is used within these final 
regulations, and is not establishing new requirements for written 
notices to be provided to beneficiaries or for referrals to 
alternative providers. Thus, USAID does not join in parts III.B and 
III.D of this preamble.

I. Background
II. These Final Regulations
III. Cross-Cutting Public Comments
    A. Prohibited Use of Direct Federal Financial Assistance
    1. ``Explicitly Religious'' Activities
    2. Chaplaincy
    3. Nondiscrimination and Programs Funded in Part by Federal 
Financial Assistance
    B. Direct and Indirect Federal Financial Assistance
    C. Intermediaries
    1. Compliance
    2. Comprehension of Requirements
    D. Protections for Beneficiaries
    1. Beneficiary Notice
    2. Referrals
    E. Political or Religious Affiliation
    1. Merit-Based Decisions
    2. Access to Federal Funding
    3. Political Influence
    F. Monitoring
    G. Other Issues
    1. Nondiscrimination in Employment Decisions/Religious Freedom 
Restoration Act
    2. Reinforcement of Other Nondiscrimination Protections
    3. Applicability to Sub-Awards, Including Contracts
    4. Definitions for ``Social Service Program'' and ``Federal 
Financial Assistance''
    5. Display of Religious Symbols
    6. Eligibility of Faith-Based Organizations to Receive Federal 
Funding
    7. Training Requirements
IV. Agency-Specific Issues and Certifications
    A. Department of Education
    B. Department of Homeland Security
    C. Department of Agriculture
    D. Agency for International Development
    E. Department of Housing and Urban Development
    F. Department of Justice
    G. Department of Labor
    H. Department of Veterans Affairs
    I. Department of Health and Human Services
V. General Certifications
VI. Final Regulations

I. Background

    On December 12, 2002, President George W. Bush signed Executive 
Order 13279, Equal Protection of the Laws for Faith-Based and Community 
Organizations (67 FR 77141), available at https://www.gpo.gov/fdsys/pkg/FR-2002-12-16/pdf/02-31831.pdf. Executive Order 13279 set forth 
principles and policymaking criteria to guide Federal agencies in 
formulating and developing policies with implications for faith-based 
and other community organizations, to ensure equal protection of the 
laws for these organizations, and to expand opportunities for, and 
strengthen the capacity of, these organizations to meet the need for 
social services in America's communities. In addition, Executive Order 
13279 directed specified agency heads to review and evaluate existing 
policies relating to Federal financial assistance for social service 
programs and, where appropriate, to implement new policies that were 
consistent with, and necessary to further, the fundamental principles 
and policymaking criteria established under Executive Order 13279.
    To comply with this Executive order, most of the Agencies 
participating in this joint final rule amended their regulations to 
clarify that faith-based or religious organizations (faith-based 
organizations) are eligible to participate in programs administered by 
each Agency on the same basis as any other private organization. Some 
of the participating Agencies also had regulations predating the 
regulations implementing Executive Order 13279 that generally 
prohibited organizations from using Federal funds to support religious 
activities. See, e.g., 34 CFR 75.532, 76.532 (ED).
    Shortly after taking office, on February 5, 2009, President Barack 
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), available at https://www.gpo.gov/fdsys/pkg/FR-2009-02-09/pdf/E9-2893.pdf. Executive Order 
13498 changed the name of the White House Office of Faith-Based and 
Community Initiatives to the White House Office of Faith-Based and 
Neighborhood Partnerships and established the President's Advisory 
Council on Faith-Based and Neighborhood Partnerships (Advisory 
Council). The President created the Advisory Council to bring together 
experts to, among other things, make recommendations to the President 
for changes in policies, programs, and practices that affect the 
delivery of services by faith-based and other neighborhood 
organizations.
    The Advisory Council issued its recommendations in a report to the 
President in March 2010 entitled President's Advisory Council on Faith-
Based and Neighborhood Partnerships, A New Era of Partnerships: Report 
of Recommendations to the President (Mar. 2010), available at http://www.whitehouse.gov/sites/default/files/microsites/ofbnp-council-final-report.pdf (``Advisory Council Report''). The Advisory Council Report 
included recommendations to amend Executive Order 13279 in order to 
clarify the legal foundation of partnerships between the Federal 
Government and faith-based and other neighborhood organizations and 
offered a new set of fundamental principles to guide agency 
decisionmaking in administering Federal financial assistance and 
support

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to faith-based and other neighborhood organizations.
    President Obama signed Executive Order 13559, Fundamental 
Principles and Policymaking Criteria for Partnerships With Faith-Based 
and Other Neighborhood Organizations, on November 17, 2010, 75 FR 
71319, available at http://www.gpo.gov/fdsys/pkg/FR-2010-11-22/pdf/2010-29579.pdf. Executive Order 13559 incorporated some of the Advisory 
Council's recommendations by amending Executive Order 13279 to:
     Require agencies that administer or award Federal 
financial assistance for social service programs to implement 
protections for the beneficiaries or prospective beneficiaries of those 
programs. These protections include: (1) Ensuring that written notice 
of the Executive order's provisions \2\ is provided to beneficiaries 
before they enroll in, or receive services under, a program, and (2) 
requiring that organizations providing services under a program provide 
referrals to alternative providers if the beneficiary objects to the 
religious character of the organization providing services;
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    \2\ When this final rulemaking notice refers to ``the Executive 
order'' without distinction, it means Executive Order 13279, as 
amended by Executive Order 13559.
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     Affirm that decisions about awards of Federal financial 
assistance must be free from political interference or even the 
appearance of such interference, and must be made on the basis of 
merit, not on the basis of the religious affiliation, or lack thereof, 
of the recipient organization;
     Affirm that the Federal Government has an obligation to 
monitor and enforce standards regarding the relationship between 
religion and government in ways that avoid excessive entanglement 
between religious bodies and governmental entities;
     Clarify (1) the principle that organizations engaging in 
explicitly religious activities must separate these activities in time 
or location from programs supported with direct Federal financial 
assistance (Executive Order 13279 stated this requirement as applying 
to ``inherently religious'' activities); (2) that such activities 
cannot be subsidized with direct Federal financial assistance; and (3) 
that participation in those activities must be voluntary for the 
beneficiaries of the social service program supported with direct 
Federal financial assistance;
     Emphasize that faith-based providers are eligible to 
compete for assistance under Federal Government social service programs 
and to participate in those programs while maintaining their religious 
identity as described in the Executive order;
     Require agencies that provide Federal financial assistance 
for social service programs to post online the regulations, guidance 
documents, and policies that have implications for faith-based and 
other neighborhood organizations, as well as a list of entities 
receiving that assistance; and
     Clarify that the Executive order principles apply to sub-
awards as well as to prime awards.
    In addition, Executive Order 13559 created the Interagency Working 
Group on Faith-Based and Other Neighborhood Partnerships (Working 
Group) to review and evaluate existing agency regulations, guidance 
documents, and policies for consistency with the Executive order, and 
to submit a report to the President recommending the amendments, 
changes, or additions necessary to ensure that regulations and guidance 
documents associated with the distribution of Federal financial 
assistance for social service programs are consistent with the 
fundamental principles set forth in the Executive order. The Executive 
order mandated that this report include a model set of regulations and 
guidance documents for the Agencies to adopt in a number of areas, 
including, among other things, prohibited uses of direct Federal 
financial assistance and separation requirements, protections for 
religious identity, the distinction between ``direct'' and ``indirect'' 
Federal financial assistance, and protections for beneficiaries of 
social service programs.
    The Executive order required that, following receipt of the Working 
Group's report, the Office of Management and Budget (OMB), in 
coordination with the U.S. Department of Justice, issue guidance to 
agencies on the implementation of the Executive order. In August 2013, 
OMB issued that guidance consistent with the model regulations and 
guidance issued by the Working Group. Memorandum for the Heads of 
Executive Departments and Agencies, from Sylvia M. Burwell, Director, 
Office of Management and Budget, Re: Implementation of Executive Order 
13559, ``Fundamental Principles and Policymaking Criteria for 
Partnerships With Faith-Based and Other Neighborhood Organizations'' 
(Aug. 2, 2013), available at https://www.whitehouse.gov/sites/default/files/omb/memoranda/2013/m-13-19.pdf. The OMB guidance also stated that 
participating agency heads must amend regulations and guidance to 
ensure that such regulations and guidance are consistent with the 
fundamental principles stated in the Executive order. Id. at 2. As 
noted above, on August 6, 2015, the Agencies published proposed 
regulations consistent with this OMB guidance. Following receipt and 
consideration of public comments, the Agencies now issue these final 
regulations. Consistent with the principle of uniformity expressed in 
section 3 of the Executive order, the Agencies agreed that these final 
regulations need to provide uniform direction on matters regarding the 
fundamental principles set forth in section 2 of the Executive order to 
the extent practicable.
    In addition to these final regulations, each Agency will provide 
policy guidance or reference materials to assist recipients \3\ of 
Federal financial assistance in complying with these final regulations. 
While these regulations become effective 30 days after publication in 
the Federal Register, the Agencies have decided to delay the date by 
which recipients of Federal financial assistance must comply with these 
final regulations until July 5, 2016 to ensure that recipients of 
Federal financial assistance fully understand their obligations under 
these final regulations.\4\ Unless otherwise provided, recipients 
subject to these final regulations include recipients of an award of 
Federal financial assistance made on or after May 4, 2016. However, 
applicability of these final regulations to existing awards of Federal 
financial assistance shall be in accordance with the terms and 
conditions of the award.
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    \3\ For the purposes of this preamble, the terms ``recipient'' 
and ``grantee'' and the terms ``subrecipient'' and ``subgrantee'' 
are synonymous. Depending on context, ``recipients'' may also 
include subrecipients.
    \4\ Some of the Agencies have existing regulations that are not 
affected by the delayed compliance date.
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II. These Final Regulations

    These final regulations are effective on May 4, 2016. Recipients 
must comply with these final regulations by July 5, 2016. Note: If a 
recipient receives a new or continuation (renewal) award before the 
effective date, in most cases that award will not be subject to these 
final regulations and, therefore, the recipient will not have to comply 
with the regulations on or after the compliance date. However, some 
awards made before the effective date of these regulations may contain 
conditions that would make these regulations apply. Recipients that 
have awards subject to these conditions would have to comply with the 
final regulations on the compliance date

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despite the fact that their awards were made before the effective date.
    Unless otherwise specified in an agency-specific part of this 
preamble,\5\ these final regulations amend existing regulations or 
establish new regulations to do the following:
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    \5\ Some of the Agencies have special features in their 
regulations or depart from the consensus approach described in the 
joint preamble. To the extent that an Agency departs from the joint 
preamble, the decision is explained in part IV of this preamble, 
which contains the discussion of agency-specific issues.
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     Require the Agencies to ensure that all decisions about 
Federal financial assistance to recipient organizations are free from 
political interference, or even the appearance of such interference, 
and are based on merit, not based on the organization's religious 
affiliation or lack thereof.
     Make clear that faith-based organizations are eligible to 
participate in the Agencies' social service programs on the same basis 
as any other private organization.
     Replace the term ``inherently religious activities'' with 
the term ``explicitly religious activities'' in existing regulations, 
or establish ``explicitly religious'' in new regulations as the basis 
for determining which activities cannot be supported with direct 
Federal financial assistance.
     Make clear that all organizations that receive Federal 
financial assistance are prohibited from discriminating against 
beneficiaries in the provision of program services based on religion, a 
religious belief, a refusal to hold a religious belief, or a refusal to 
attend or participate in a religious practice, while also noting 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.
     Distinguish between ``direct'' and ``indirect'' Federal 
financial assistance.
     Require faith-based organizations that receive direct 
Federal financial assistance under a domestic social service program to 
provide written notice of certain protections to beneficiaries of the 
program. Specifically, an organization that receives direct Federal 
financial assistance, as defined in these final regulations, is 
required to give notice to beneficiaries that--
    (1) The organization may not discriminate against a beneficiary 
based on religion, a religious belief, a refusal to hold a religious 
belief, or a refusal to attend or participate in a religious practice;
    (2) The organization may not require a beneficiary to attend or 
participate in any explicitly religious activities that are offered by 
the organization, and any participation by the beneficiaries in those 
activities must be purely voluntary;
    (3) The organization must separate in time or location any 
privately funded explicitly religious activities from activities 
supported by direct Federal financial assistance;
    (4) If a beneficiary or prospective beneficiary objects to the 
religious character of the organization, the organization will 
undertake reasonable efforts to identify and refer the beneficiary to 
an alternative provider to which the beneficiary does not object; and
    (5) A beneficiary or prospective beneficiary may report violations 
of these protections, including any denials of services or benefits, to 
the Federal agency or intermediary administering the program.\6\
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    \6\ After any such allegations are made, they will be examined 
by the Federal agency or intermediary administering the program.
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     To account for unique circumstances that could arise under 
some programs, provide that, when the nature of the service provided or 
exigent circumstances make it impracticable to provide the written 
notice in advance of the actual service, domestic service providers 
must advise beneficiaries of their protections at the earliest 
available opportunity.
     Require faith-based recipients of domestic direct social 
service program assistance to undertake reasonable efforts to identify 
an alternative provider, if a beneficiary or prospective beneficiary 
objects to the religious character of the faith-based organization, and 
to refer the beneficiary to an identified alternative provider.
     Make clear that a faith-based organization that provides 
services to a beneficiary supported only by ``indirect Federal 
financial assistance'' is not required to (1) provide written notice to 
beneficiaries, (2) make reasonable efforts to refer a beneficiary to an 
alternative provider if the beneficiary objects to the religious 
character of the faith-based provider, or (3) separate explicitly 
religious activities in time or location from programs supported with 
indirect Federal financial assistance.\7\
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    \7\ These clarifications are consistent with Zelman v. Simmons-
Harris, 536 U.S. 639, 652-53 (2002), discussed in part III.B below.
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III. Cross-Cutting Public Comments

    The major cross-cutting issues that were raised in the comments are 
discussed in this part III of the preamble. Many commenters filed 
similar or identical comments with all the Agencies. Thus, unless 
otherwise noted in response to a particular comment, the responses in 
this part are adopted by the Agencies, regardless of whether a 
particular Agency received a particular comment. This preamble does not 
discuss editorial suggestions made by the commenters.
    The Agencies note that, after each discussion of a comment, there 
are two headings: ``Change'' and ``Affected regulations.'' Under the 
``Change'' heading, the Agencies have tried to describe what types of 
changes have been made to the agency's proposed regulations in these 
final regulations as a result of the comment. Under the ``Affected 
regulations'' heading, the Agencies have sought to list only those 
sections of the final regulations that have been changed from the 
language in the NPRM as a result of the comment.
    Some changes have been made to the proposed regulations in order to 
assure greater uniformity across Agencies in the final regulations, 
consistent with the fundamental principles described in section 2 of 
the Executive order. These uniformity changes are described in the 
agency-specific sections of part IV of this preamble. Also, comments 
that raised agency-specific issues or require explanation of how a 
cross-cutting issue affects certain agency-specific programs are 
addressed in part IV of this preamble.

A. Prohibited Use of Direct Federal Financial Assistance

1. ``Explicitly Religious'' Activities
    Summary of comments: Several commenters expressed support for the 
proposal to replace the term ``inherently religious activities,'' which 
appears in some Agencies' current regulations, with the term 
``explicitly religious activities'' and to define that term to include 
activities that involve overt religious content such as worship, 
religious instruction, or proselytization. These commenters also 
suggested that the Agencies add language to the regulations that would 
further clarify which activities cannot be subsidized by direct Federal 
financial assistance or mixed with activities funded by such aid. Some 
commenters suggested that the regulations incorporate the Advisory 
Council's full explanation of the term ``explicitly religious 
activities.'' \8\
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    \8\ In its report, the Advisory Council stated that the 
Government is prohibited from ``directly subsidizing any explicitly 
religious activity, meaning any activities that involve overt 
religious content. Thus, direct Federal aid should not be used to 
pay for activities such as religious instruction, devotional 
exercises, worship, proselytizing or evangelism; production or 
dissemination of devotional guides or other religious materials; or 
counseling in which counselors introduce religious content. 
Similarly, grant or contract funds may not be used to pay for 
equipment or supplies to the extent they are allocated to such 
activities.'' Advisory Council Report at 129-30 (footnotes omitted).

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[[Page 19359]]

    Also, several commenters suggested that more of the Agencies should 
include language in their regulations that is similar to language in 
DOJ's current regulations, which state that faith-based organizations 
should not be disqualified from receiving Federal financial assistance 
due to their religious motivation, influence, character, or 
affiliation. See existing regulations at 28 CFR 38.1(e).
    Response: The Agencies are satisfied that the definition for 
``explicitly religious activities'' set forth in the proposed 
regulations is the most appropriate one for regulatory text. It fairly 
describes the scope of the defined activities, while still being 
concise and uniform across the Agencies. The Agencies note that this 
regulatory definition includes key language from the Advisory Council's 
report and is grounded in relevant Supreme Court precedents such as 
Hunt v. McNair, 413 U.S. 734, 744-45 (1973) (finding no constitutional 
violation where a State project-financing program excluded facilities 
used for sectarian instruction or religious worship, and facilities 
used primarily by a school or department of divinity, from the scope of 
the program), and Locke v. Davey, 540 U.S. 712, 725 (2004) (finding 
that State had ``historic and substantial'' interest in denying funds 
for ``vocational religious instruction,'' even as part of indirect aid 
program).
    The Agencies recognize that the meaning of ``explicitly religious'' 
is central to many provisions of the regulations, but they believe that 
the term's meaning is best conveyed by reference to program-specific 
examples. Accordingly, the Agencies anticipate providing additional 
policy guidance or reference materials to recipients and to the public. 
For example, to the extent that particular direct aid programs involve 
counseling, the Agency will note in policy guidance or reference 
materials that counselors may not encourage beneficiaries to accept 
religious teachings or discourage them from doing so.
    The Agencies also find it unnecessary to include additional 
language stating that faith-based organizations should not be 
disqualified from receiving Federal financial assistance due to their 
religious motivation, influence, character, or affiliation. In its 
proposed regulations, DOJ included language on this issue in the 
context of restating all of its current regulations on partnerships 
with faith-based and other neighborhood organizations in addition to 
the regulations it proposed to add or alter as part of this rulemaking. 
80 FR at 47324 (proposed 28 CFR 38.5(d)). DOJ's current regulations 
state that faith-based organizations should not be disqualified from 
receiving Federal financial assistance due to their religious 
motivation, influence, character, or affiliation. 28 CFR 38.1(e). In 
addition, HHS's proposed regulations combined its existing regulations 
on faith-based and other neighborhood organizations that had been in 
separate sections (one addressing discretionary grants and another 
discussing formula and block grants) into one entirely new part that 
addresses all grants. Thus, HHS's current and proposed regulations 
state that organizations may not be disqualified from participating in 
the HHS awarding agency's programs because the organizations ``are 
motivated or influenced by religious faith to provide social services, 
or because of their religious character or affiliation.'' 28 CFR 
87.1(f) (current); 80 FR at 47280 (proposed 45 CFR 87.3(e)). DHS does 
not have current regulations regarding these partnerships, so DHS 
included this concept in its proposed regulations. 80 FR at 47297 
(proposed 19 CFR 19.3(e)). ED, USDA, USAID, HUD, DOL, and VA have 
similar current regulations, but did not restate those regulations as a 
part of this rulemaking. In sum, Agencies other than DHS already have 
such language in their current regulations, and DHS is making minor 
changes to better align with the other Agencies to ensure that 
religious organizations may seek assistance without discrimination 
based on the organization's religious character, affiliation, 
influence, or motivation. See final regulations at 6 CFR 19.3(e) (DHS); 
7 CFR 16.3(a) (USDA); 22 CFR 205.1(f) (USAID); 24 CFR 5.109(c) (HUD); 
28 CFR 38.5(d) (DOJ); 29 CFR 2.32(c) (DOL); 34 CFR 75.52(a)(2), 
76.52(a)(2) (ED); 38 CFR 62.62(a) (VA); 45 CFR 87.3(a), (e) (HHS).
    Change: DHS has made a minor change to align with the other 
Agencies.
    Affected regulations: 6 CFR 19.3(e) (DHS).
2. Chaplaincy
    Summary of comments: Some commenters supported the proposed 
regulatory language of several Agencies noting that chaplaincy services 
are not ``explicitly religious activities'' subject to direct Federal 
financial assistance restrictions. See, e.g., proposed regulations at 
80 FR at 47323 (28 CFR 38.2(b)) (DOJ). These commenters also urged 
other agencies, such as HUD and ED, to include similar language in 
their final regulations. Another commenter objected to the proposed 
regulatory language--i.e., that ``services that can be publicly funded 
under the Establishment Clause, such as chaplaincy services, . . . 
would not be considered explicitly religious activities that are 
subject to direct financial aid restrictions''--on the ground that this 
language was broad and vague.
    Other commenters objected to regulatory language providing more 
generally that ``[r]eligious activities that can be publicly funded 
under the Establishment Clause'' are also excluded from the definition 
of ``explicitly religious activities.'' See, e.g., proposed regulations 
at 80 FR at 47323 (28 CFR 38.2(b)) (DOJ). These commenters contended 
that this language was too broad and ambiguous. These commenters said 
that ``[t]he instances in which the providers may include explicitly 
religious activities'' in programs funded by direct aid ``are extremely 
rare'' and limited to situations in which ``the government facilitates 
the private and voluntary religious practices of individuals, on a 
denominational-neutral basis, because those individuals lack access to 
their own religious community due to the action of government or being 
in government custody, e.g., the individual is in the military, 
imprisoned, or confined to a government-funded hospital.'' Accordingly, 
these commenters requested that the Agencies ``more accurately explain 
this very limited exception.''
    Response: The Agencies agree that direct Federal funding for 
religious activities is constitutionally permissible and necessary 
under limited circumstances, such as for chaplaincy services. For 
example, chaplaincy services are offered to beneficiaries such as 
students in rural training camps or inmates in prison who may otherwise 
be unable to freely access religious services by virtue of the location 
of their program or a limitation on their freedom of movement. See Cruz 
v. Beto, 405 U.S. 319, 322 n.2 (1972) (per curiam) (all prisoners must 
be given reasonable opportunities to exercise their First and 
Fourteenth Amendment religious freedoms without fear of penalty); 
Katcoff v. Marsh, 755 F.2d 223, 234 (2d Cir. 1985) (First Amendment 
requires government to make religion available to soldiers deployed to 
locations where their own religious denominations are not available to 
them). The Agencies

[[Page 19360]]

agree that not all of the proposed regulations addressed the exclusion 
of services that can be publicly funded consistent with the 
Establishment Clause, such as chaplaincy services. However, the 
Agencies also believe that they should retain whatever discretion is 
afforded them under applicable Federal law to fund, or not to fund, 
other such activities that can be publicly funded consistent with the 
Establishment Clause, while following any prohibitions against funding 
such activities consistent with their funding statutes. The intention 
of this rulemaking is not to disturb this practice. The Agencies agree 
that the proposed regulations did not all provide sufficient clarity in 
this regard.
    Change: The Agencies affected by these comments (DHS, USAID, DOJ, 
VA and HHS) accordingly have made clear that their final regulations do 
not apply to explicitly religious activities that can be publicly 
funded consistent with the Establishment Clause, such as chaplaincy 
services. All the Agencies agree that whether such activities should be 
funded, and if so, whether they should be subject to restrictions such 
as the separation in time and location requirement, is to be left to 
the future determination of the Agencies on a case-by-case basis, based 
on applicable Federal law and the Agencies' discretion under that law 
to determine whether and under what conditions the expenditure is 
appropriate. These regulations do not displace this discretion.
    Some of the Agencies participating in this final rulemaking must 
address these comments differently because they do not have any 
chaplaincy programs or language about chaplaincy in their current rules 
(ED, HUD, USDA) or because they are not changing their current language 
on the subject (DOL). Those Agencies will explain the basis for their 
different approaches in the agency-specific preambles following this 
joint preamble.
    Affected regulations: 6 CFR 19.4(e) (DHS); 22 CFR 205.1(b) (USAID); 
28 CFR 38.2(b)-(c), 38.5(a) (DOJ); 38 CFR 50.1(a) (VA); 45 CFR 87.3(b) 
(HHS).
3. Nondiscrimination and Programs Funded in Part by Federal Financial 
Assistance
    Summary of comments: Some commenters suggested that the Agencies' 
proposed regulations should be amended to clarify that the 
nondiscrimination provisions apply to programs whether they are 
completely or only partially funded by Federal financial assistance.
    Response: This clarification is not necessary as the regulations 
generally state that programs ``supported'' with Federal financial 
assistance are subject to the regulations--language that encompasses 
programs funded partially by Federal financial assistance. In addition, 
the language regarding funding ``in whole or in part'' is already 
contained in the model written notice of beneficiary rights (adopted by 
all of the Agencies except USAID), which begins (with some minor 
variation across Agencies), ``Because this program is supported in 
whole or in part [emphasis added] by financial assistance from the 
[Federal Government or Agency], we are required to let you know that'' 
beneficiaries have the following rights. See final regulations at 6 CFR 
part 19, appendix A (DHS); 7 CFR part 16, appendix A (USDA); 28 CFR 
part 38, appendix A (DOJ); 29 CFR 2.39, appendix A (DOL); 34 CFR part 
75, appendix A (ED). Some agencies have not included the notice in 
their final regulations. Instead, these agencies have included the 
notice as appendices to this final rulemaking. See appendix E (HUD); 
appendix H (VA); appendix I (HHS).\9\
---------------------------------------------------------------------------

    \9\ The appendices at the end of this document appear after the 
signatures of the responsible agency officials and are designated so 
that each appendix designation corresponds to the designation of 
that agency's section of the preamble in part IV. For example, HUD's 
agency-specific preamble appears in part IV.E, and its appendix is 
designated as appendix E.
---------------------------------------------------------------------------

    Change: None.
    Affected regulations: None.

B. Direct and Indirect Federal Financial Assistance \10\
---------------------------------------------------------------------------

    \10\ USAID does not fund programs involving indirect Federal 
financial assistance, as that term is used within these final 
regulations. Therefore ``the Agencies,'' as used in this part III.B 
of the preamble, does not include USAID.
---------------------------------------------------------------------------

    Summary of comments: The Agencies received several comments 
regarding the relationship between indirect financial assistance, 
beneficiary protections, and participation in indirectly funded 
programs that permissibly include religious content. Many commenters 
took the position that faith-based organizations should not be able to 
turn away prospective beneficiaries on the basis of religion. Some 
commenters requested that the regulations make clear that participants 
in programs funded only by indirect Federal financial assistance could 
be required to take part in religious activities related to the program 
as a condition of participation. These commenters suggested that, once 
a beneficiary chooses a religious program from a range of options that 
includes an adequate secular alternative, it would not be 
discriminatory for the organization to require the beneficiary to 
participate in the religious aspects of the program. Additionally, one 
of these commenters requested that several Agencies clarify that 
programs funded by indirect assistance need not be separated in time or 
location from programs or activities with explicit religious content. 
Other commenters requested that the Agencies apply the prohibitions on 
discrimination against beneficiaries equally to indirect and direct aid 
programs, with the consequence that programs funded by indirect aid 
would not be able to impose a requirement of participation in religious 
activities within a program. These commenters stated that applying the 
nondiscrimination prohibitions to indirect as well as direct aid better 
reflected the text and intent of Executive Order 13559.
    Commenters with a variety of perspectives on these issues noted 
opportunities for revising various provisions of the regulations to 
reflect their positions, whether by inserting language more sharply 
differentiating the regulations applicable to direct and indirect 
Federal financial assistance, or by removing language in some current 
and proposed regulations that did differentiate them. Some commenters 
also urged that the definition of ``indirect Federal financial 
assistance'' be revised to better reflect requirements for ``true 
private choice'' as set forth in Zelman v. Simmons-Harris, 536 U.S. 
639, 653-54 (2002).
    Response: As some of the commenters noted, the text of section 2(d) 
of the Executive order does not limit beneficiary nondiscrimination 
obligations to direct aid programs. Most Agencies, in the preambles to 
their individual notices of proposed rulemaking, did not distinguish 
between discrimination against beneficiaries under indirect and direct 
aid programs for purposes of beneficiary admissions. They also included 
language to the effect that the Executive order made it clear that all 
organizations that receive Federal financial assistance for the purpose 
of delivering social welfare services are prohibited from 
discriminating against beneficiaries or potential beneficiaries of 
those programs on the basis of religion, a religious belief, a refusal 
to hold a religious belief, or a refusal to attend or participate in a 
religious practice. See proposed regulations at 80 FR at 47246 (USDA); 
80 FR at 47258 (ED); 80 FR at 47275 (HHS); 80 FR at 47288 (DHS); 80 FR 
at 47319 (DOJ); 80 FR at 47332 (DOL); 80 FR at 47343 (VA). By contrast,

[[Page 19361]]

HUD did not address this matter in its preamble.
    As commenters noted, however, there was considerable variation in 
the way the Agencies addressed this issue in their proposed 
regulations. Some Agencies (DHS and DOJ) would have limited 
nondiscrimination obligations to recipients of direct aid. See proposed 
regulations at 80 FR at 47298 (6 CFR 19.5) (DHS); 80 FR at 47324 (28 
CFR 38.5(c)) (DOJ). Other Agencies (HUD and HHS) would have expressly 
made these nondiscrimination obligations apply to all programs funded 
by Federal financial assistance, which would include both direct and 
any indirect aid programs. See proposed regulations at 80 FR at 47311 
(24 CFR 5.109(h)) (HUD); 80 FR at 47280 (45 CFR 87.3(d)) (HHS). ED's 
proposed regulations did not address this issue because ED has existing 
regulations that prohibit religious discrimination by recipients of 
grants and subgrants awarded under ED programs (see existing 
regulations at 34 CFR 75.52(e), 76.52(e)), and the only indirect aid 
program it manages is subject to specific statutory provisions that 
prohibit religious discrimination against beneficiaries.\11\ Although 
some Agencies (DOL, USDA, and VA) have existing regulations that would 
appear to limit nondiscrimination obligations to recipients of direct 
aid, those Agencies did not describe in their NPRMs how this issue is 
addressed under their current regulations. See existing regulations at 
7 CFR 16.3(a) (USDA); 29 CFR 2.33(a) (DOL); 38 CFR 62.62(e) (VA).
---------------------------------------------------------------------------

    \11\ See Scholarships for Opportunity and Results Act, Public 
Law 112-10, div. C, Sec.  3008, 125 Stat. 38, 204 (2011), which 
prohibits discrimination against beneficiaries on the basis of 
religion.
---------------------------------------------------------------------------

    In responding to the comments and formulating final regulations, 
the Agencies focused on the value of achieving uniformity on this 
issue. Executive Order 13559 established the Interagency Working Group 
with the specific purpose of creating as much uniformity as possible in 
these regulations. Executive Order 13279, Sec.  3, as amended by 
Executive Order 13559, Sec.  1(c). Achieving greater uniformity on this 
issue will better serve providers and beneficiaries, especially those 
who are involved in programs administered by more than one agency, by 
avoiding subjecting them to inconsistent obligations.
    The Agencies also focused on the fact that the text of section 2(d) 
of the Executive order does not limit these nondiscrimination 
obligations to direct aid programs. It states that all organizations 
that receive Federal financial assistance under social service programs 
should be prohibited from discriminating against beneficiaries or 
prospective beneficiaries of the social service programs on the basis 
of religion or religious belief. It also states that, in providing 
services supported in whole or in part with Federal financial 
assistance and in their outreach activities related to such services, 
no organizations should be allowed to discriminate against current or 
prospective program beneficiaries 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.
    Moreover, by ensuring that beneficiaries and potential 
beneficiaries cannot be required to even attend or in any way 
participate in a religious practice, Executive Order 13559 strengthened 
the nondiscrimination requirements previously in place in several 
respects. Compare Executive Order 13279, Sec.  2(d), 67 FR at 77142 
(organizations should not be allowed to discriminate against current or 
prospective beneficiaries on the basis of ``a refusal to actively 
participate in a religious practice''), with Executive Order 13279, 
Sec.  2(d), as amended by Executive Order 13559, 75 FR at 71320 
(organizations should not be allowed to discriminate against current or 
prospective beneficiaries based on ``a refusal to attend or participate 
in a religious practice'').
    Additionally, the Agencies focused on the potential implications of 
the various approaches urged in the comments. In particular, the 
Agencies focused on the potential implications of maintaining the 
current regulations of some of the Agencies, which would seemingly 
allow providers to turn away indirect aid beneficiaries on the basis of 
religion or religious beliefs or lack thereof. Such an outcome seems 
inconsistent with a key policy goal articulated by Executive Order 
13559--strengthening religious liberty protections for beneficiaries. 
It also seems inconsistent with the views of many of the commenters.
    In light of these considerations, the final regulations closely 
track the Executive order and are uniform across the Agencies. 
Specifically, the final regulations of each Agency state that any 
organization that participates in a program funded by Federal financial 
assistance shall not, in providing services or in outreach activities 
related to such services, 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. See final regulations at 6 CFR 
19.5 (DHS); 7 CFR 16.4(a) (USDA); 24 CFR 5.109(h) (HUD); 28 CFR 38.5(c) 
(DOJ); 29 CFR 2.33(a) (DOL); 2 CFR 3474.15(f), 34 CFR 75.52(e), 
76.52(e) (ED); 38 CFR 50.1(f), 61.64(a), 62.62(a) (VA); 45 CFR 87.3(d) 
(HHS). At the same time, the final regulations provide that 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. See final regulations at 2 CFR 3474.15(f), 34 
CFR 75.52(e), 76.52(e) (ED); 6 CFR 19.5 (DHS); 7 CFR 16.4(a) (USDA); 24 
CFR 5.109(h) (HUD); 28 CFR 38.5(c) (DOJ); 29 CFR 2.33(a) (DOL); 38 CFR 
50.1(f) (VA); 45 CFR 87.3(d) (HHS).
    For example, a faith-based organization receiving indirect aid that 
offers a Bible study as part of its programming need not remove that 
study from its program activities or create alternative programming for 
an indirect aid beneficiary who does not wish to participate in the 
Bible study. Faith-based organizations offering for sale food that is 
compliant with a particular religious diet could take a form of 
indirect assistance as payment for that food without also offering food 
that is compliant with some other religious diet. And a substance abuse 
recovery program, like a 12-step program, that includes religious 
content that is integral to the program would not be required to alter 
its program to accommodate an objector who pays for the program with 
indirect aid.
    Finally, the Agencies note that the definition of ``indirect 
financial assistance'' aligns with the constitutional principles 
addressed in Zelman v. Simmons-Harris, 536 U.S. 639 (2002), and believe 
that the framework set out in Zelman further supports the Agencies' 
decision with respect to nondiscrimination against beneficiaries of 
indirect assistance. In Zelman, the Supreme Court reasoned that the 
State school voucher program at issue did not offend the Establishment 
Clause because, among other things, the program placed the benefit in 
the hands of individuals, who in turn had the freedom to choose the 
school to which they took their benefit and ``spent'' it, whether that 
school was public or private, nonreligious or religious. Id. at 652-53. 
In those circumstances, the Court explained, the government cannot be 
understood to advance or endorse any explicitly religious programs that 
may be among the options available to beneficiaries. Id. It bears note 
that the voucher scheme at issue in Zelman, which was described by the 
Court as a

[[Page 19362]]

program of ``true private choice,'' was neutral toward religion and 
offered beneficiaries adequate secular options. Id. at 653, 655-56. 
Accordingly, the Agencies included these criteria in the proposed 
definition of ``indirect financial assistance.'' As also noted in those 
Agencies' final regulations, ``indirect'' Federal financial assistance 
places the choice of service provider in the hands of a beneficiary 
before the Government pays for the cost of that service through a 
voucher, certificate, or other similar means. See final regulations at 
6 CFR 19.2 (DHS); 7 CFR 16.2(b)(1) (USDA); 24 CFR 5.109(b) (HUD); 28 
CFR 38.3(b) (DOJ); 29 CFR 2.31(a)(2) (DOL); 34 CFR 75.52(c)(3)(ii), 
76.52(c)(3)(ii) (ED); 38 CFR 50.1(b)(3) (VA); 45 CFR 87.1(c) (HHS). In 
these cases, the Government empowers beneficiaries to choose for 
themselves whether to receive the needed services from an entity that 
incorporates explicitly religious activities into federally supported 
programs or an entity that does not do so. Notably, the voucher program 
upheld in Zelman required participating private schools to ``agree not 
to discriminate on the basis of race, religion, or ethnic background.'' 
536 U.S. at 645.
    Change: Agencies that had differentiated between direct and 
indirect assistance with respect to nondiscrimination obligations have 
removed that distinction in their final regulations. The Agencies have 
also added language making clear that programs funded by indirect 
financial assistance need not modify those programs to accommodate a 
beneficiary. Where needed, the Agencies have added language making it 
clear that the separation in time or location requirement only applies 
to programs funded by direct assistance.
    Affected regulations: 2 CFR 3474.15(f); 34 CFR 75.52(e), 76.52(e) 
(ED); 6 CFR 19.5 (DHS); 7 CFR 16.4(a) (USDA); 28 CFR 38.5(c), 38.8(a) 
(DOJ); 29 CFR 2.33(a) (DOL); 38 CFR 50.1(f) (VA); 45 CFR 87.3(d) (HHS).

C. Intermediaries

1. Compliance
    Summary of comments: Commenters recommended that the Agencies use 
comprehensive language that requires intermediaries to ensure that the 
recipients they select comply with the Executive order as well as any 
implementing regulations or guidance. Commenters also recommended that 
the Agencies adopt a provision proposed by DOJ that spells out the 
responsibilities of State or local governments or other organizations 
acting as intermediaries or pass-through recipients that provide 
subgrants to service providers (``intermediaries'') by requiring 
intermediaries to ``give reasonable assurance[s] that [they] will 
comply with this [regulation] and effectively monitor the actions of 
[their] recipients.'' See proposed regulations at 80 FR at 47325 (28 
CFR 38.7(b)).
    Response: The Agencies require that intermediaries comply with 
these regulations and effectively monitor the actions of their 
recipients. This preamble and the final regulations of most of the 
Agencies clearly state that intermediaries must ensure that providers 
to which they disburse Federal financial assistance comply with the 
regulations. See final regulations at 6 CFR 19.2 (DHS); 7 CFR 16.2(c) 
(USDA); 24 CFR 5.109(f) (HUD); 28 CFR 38.3(c)(2) (DOJ); 29 CFR 2.33(c) 
(DOL); 34 CFR 75.714, 76.714 (ED); 38 CFR 50.1(e) (VA); 45 CFR 87.3(m), 
1050.3(h) (HHS). As an example, subgrantee compliance could be ensured 
by the conditions included in the notice of the Federal award. However, 
to reflect the variety of programs with different reporting and 
monitoring requirements of each Agency, the Agencies individually will 
determine how the intermediary ensures subgrantee compliance.
    Change: The final regulations of each Agency (excluding USAID) 
provide that an intermediary given authority to select an organization 
to receive Federal financial assistance must ensure that the 
organization complies with these final regulations. Some of the 
Agencies participating in these final regulations will address this 
comment differently. Those Agencies that address this comment 
differently explain the basis for that differentiation in their agency-
specific preambles following this joint preamble.
    Affected regulations: 34 CFR 75.714, 76.52, 76.712-76.714 (ED); 38 
CFR 50.1(e) (VA).
2. Comprehension of Requirements
    Summary of comments: To ensure that subrecipients understand they 
are subject to the same obligations as the non-government organization 
that receives a prime award, commenters recommended that the Agencies 
mirror USAID's explanatory information and regulatory language stating 
that receipt of Federal financial assistance includes a prime award or 
sub-award. See proposed regulations at 80 FR at 47240 (22 CFR 205.1) 
(USAID).
    Response: The Agencies believe that the final regulations are 
sufficiently explicit because the Agencies (other than USAID) first 
designate subgrantees as recipients of ``direct Federal financial 
assistance'' if the award is received through programs administered by 
States or other intermediaries that are themselves recipients of 
Federal financial assistance, and then describe the responsibilities of 
recipients of direct Federal financial assistance. See final 
regulations at 6 CFR 19.2 (DHS); 7 CFR 16.2(b)(2) (USDA); 24 CFR 
5.109(b) (HUD); 28 CFR 38.3(a)(2) (DOJ); 29 CFR 2.31(a)(1), (a)(3) 
(DOL); 34 CFR 75.52(c)(3)(i), 76.52(c)(3)(i) (ED); 38 CFR 50.1(b)(1), 
(c) (VA); 45 CFR 87.1(b), (c)(2) (HHS). The regulations provide that 
these subrecipients are not considered recipients of indirect Federal 
financial assistance for purposes of the Executive order and the 
regulations. For example, ED has regulations governing faith-based and 
other neighborhood organizations that specifically impose requirements 
on both grantees and subgrantees, including the requirements in these 
final regulations. See final regulations at 34 CFR 76.52(c)(3)(i). The 
Agencies also believe that adding a parenthetical phrase such as 
``(including through a prime award or sub-award)'' when referring to 
recipients of direct Federal financial assistance could be 
misinterpreted because not all Agencies use those terms in their 
regulations. Although USAID uses different language to ensure that 
recipients at all levels of assistance are subject to the requirements 
in these regulations, all of the Agency regulations concerning 
recipients of direct Federal financial assistance apply equally to 
recipients, subrecipients, and contractors of those entities that 
provide services under a program of Federal financial assistance. 
USAID's language provides additional clarity for its grantees because 
the term ``direct financial assistance'' is not defined or often used 
in USAID's regulations and standard award provisions. See final 
regulations at 22 CFR 205.1(b), (e), (f) (USAID).
    Change: None.
    Affected regulations: None.

D. Protections for Beneficiaries \12\
---------------------------------------------------------------------------

    \12\ USAID is not establishing requirements for written notices 
to beneficiaries or for referrals to alternative providers, for the 
reasons stated in its agency-specific preamble. Therefore ``the 
Agencies,'' as used in part III.D, does not include USAID.
---------------------------------------------------------------------------

1. Beneficiary Notice
a. Written Notice Requirement for Providers That Receive Indirect 
Federal Financial Assistance
    Summary of comments: Commenters requested that the Agencies change 
their proposed regulations to require that providers that receive 
indirect Federal

[[Page 19363]]

financial assistance provide written notice to beneficiaries in the 
same manner as providers that receive direct Federal financial 
assistance. Commenters asserted that there are protections for 
beneficiaries when accessing programs of providers that receive 
indirect Federal financial assistance, such as nondiscrimination 
against beneficiaries, and those beneficiaries would be unaware of such 
protections without a written notice. Commenters stated that a written 
notice would help protect the religious liberty rights of the clients 
and beneficiaries of all federally funded programs. One commenter noted 
that many lesbian, gay, bisexual, and transgender individuals have 
experienced discrimination and denial of services without being aware 
that they cannot be denied services because of a religious objection to 
their identity. Other commenters asserted the opposing view, i.e., that 
the Agencies' proposed regulations do not clarify that providers in 
receipt of indirect Federal financial assistance are not subject to the 
nondiscrimination requirements set forth in Executive Order 13559 and 
that the Agencies' regulations should clarify that beneficiary 
protections such as nondiscrimination only apply when providers receive 
direct Federal financial assistance.
    Response: The Agencies decline to extend the written notice 
requirement to recipients of indirect Federal financial assistance. The 
Agencies interpret section 2(d) of the Executive order to apply the 
requirement of nondiscrimination in program admission and outreach to 
all Federal financial assistance (both direct and indirect), as 
previously stated in part III.B. However, the Agencies have decided not 
to change their regulations to require providers receiving indirect 
Federal financial assistance to provide a written notice of beneficiary 
protections. The Executive order requires written notice to a 
beneficiary of his or her right to seek a referral to another provider 
because the Government or an intermediary was the one to select the 
provider and award assistance to the provider or purchase services from 
that provider under a grant or subgrant. In contrast, indirect Federal 
financial assistance places the choice of provider in the hands of a 
beneficiary through a voucher, certificate, or other similar means 
before the Government pays for the services. In the case of indirect 
Federal financial assistance, because the beneficiary may use the 
voucher or other means to obtain services from a provider of their 
choice at the outset, providing a written notice to such a beneficiary 
to seek referral to another provider is unnecessary.
    Also, the nature of certain indirect aid programs would make it 
extremely difficult to ensure that all beneficiaries receive a written 
notice. For example, there are more than a quarter million stores, 
farmers' markets, direct marketing farmers, homeless meal providers, 
treatment centers, group homes, and other participants across the 
nation that are authorized Supplemental Nutrition Assistance Program 
(SNAP) retailers. If providers receiving indirect aid were required to 
give written notice to beneficiaries, all of these retailers would have 
to have the notices ready at all times to provide to any person using 
SNAP benefits. While the Agencies decline to impose this requirement, 
they note that, in appropriate cases, they may encourage indirect aid 
recipients to inform beneficiaries of the protections provided under 
these regulations.
    The Agencies also note that, while these regulations do not require 
written notice for indirect recipients of Federal financial assistance, 
there may be other applicable statutory or regulatory obligations that 
require recipients to notify beneficiaries that discrimination on the 
basis of religion is prohibited.
    Change: The response above clarifies that providers of indirect 
Federal financial assistance are not required to provide a written 
notice, and USDA and VA have amended their regulations accordingly. The 
remaining Agencies' final regulations are also clear on this point.
    Affected regulations: 7 CFR 16.4(h) (USDA); 38 CFR 50.2(c) (VA).
b. Written Notice Language
    Summary of comments: Commenters requested that the Agencies change 
their proposed regulations to add language to the written notice 
requirement to clarify that providers may not discriminate against 
beneficiaries or potential beneficiaries based on ``a refusal to hold a 
religious belief, or a refusal to attend or participate in a religious 
practice.'' Commenters also recommended that the notice include a more 
expansive explanation of what constitutes explicitly religious 
activities. In addition, commenters requested that the written notice 
include specific mention of any services or information that providers 
refuse to provide due to religious or moral objections.
    Response: In addition to prohibiting discrimination on the basis of 
religion or religious belief, Executive Order 13559 amends Executive 
Order 13279 to state that providers must not discriminate against 
beneficiaries or prospective beneficiaries on the basis of ``a refusal 
to hold a religious belief, or a refusal to attend or participate in a 
religious practice.'' 75 FR at 71320. Although all relevant Agencies 
recognized in the preambles to their proposed regulations that a 
federally funded provider could not discriminate against a beneficiary 
or prospective beneficiary because of ``a refusal to hold a religious 
belief, or a refusal to attend or participate in a religious 
practice,'' the quoted language did not appear in all of the Agencies' 
proposed regulations.
    The Agencies agree with the commenter that the quoted language 
should be included in Agencies' written notices. Further, the Agencies' 
regulations should similarly include this language. Regarding the 
request to provide a more specific explanation of what constitutes 
explicitly religious activities, the Agencies believe that the notice 
needs to remain more general because it must be provided across a broad 
array of programs. Adding more specificity could lead to confusion in 
the context of some programs. Therefore, the Agencies decline to 
include in the beneficiary notice a more expansive explanation or 
specific list of activities that are considered ``explicitly 
religious.''
    The Agencies also decline to require providers to specifically 
mention any services or information that the provider refuses to 
provide due to religious or moral objections. The Agencies believe that 
such issues are beyond the scope of the Executive order.
    Change: The Agencies' final regulations clarify the rights of 
beneficiaries by requiring that the notice to beneficiaries state 
explicitly that a federally funded provider may not discriminate 
against a beneficiary or prospective beneficiary because of ``a refusal 
to hold a religious belief, or [a] refusal to attend or participate in 
a religious practice.''
    Affected regulations: 6 CFR 19.5, 19.6(a)(1), 6 CFR part 19, 
appendix A (DHS); 7 CFR 16.4(f)(1)(i) (USDA); 24 CFR 5.109(g)(1)(i) 
(HUD); 28 CFR 38.6(c)(1)(i), 28 CFR part 38, appendix A (DOJ); 29 CFR 
2.34(a)(1) (DOL); 34 CFR 75.712(a)(1), 34 CFR part 75, appendix A, 
paragraph (1), 34 CFR 76.712(a)(1) (ED); 38 CFR 50.2(a)(1) (VA); 45 CFR 
87.3(i)(1)(i) (HHS).
c. Reporting Violations of the Protections in the Written Notice
    Summary of comments: Commenters recommended that the Agencies 
include DOJ's proposed reporting language in the required written 
notices; this

[[Page 19364]]

language stated that ``[b]eneficiaries may report an organization's 
violation of these protections or file a written complaint of any 
denials of services or benefits by an organization with the Office for 
Civil Rights or the intermediary that awarded funds to the 
organization.'' See proposed regulations at 80 FR at 47325 (28 CFR 
38.6(c)(1)(v) (DOJ)). Most Agencies' proposed regulations and written 
notices provided that beneficiaries ``may report violations of these 
protections'' to the Agency, intermediary, or appropriate civil rights 
office but did not provide that beneficiaries could specifically file a 
written complaint to report denials of services or benefits. See 
proposed regulations at 80 FR at 47311 (24 CFR 5.109(g)(1)(v)) (HUD); 
80 FR at 47337 (29 CFR 2.34(a)(5)) (DOL); 80 FR at 47251 (7 CFR 
16.4(f)(1)(v)) (USDA); 80 FR at 47267, 47268 (34 CFR 75.712(a)(5), 
76.712(a)(5)) (ED); 80 FR at 47281 (45 CFR 87.3(i)(1)(v)) (HHS); 80 FR 
at 47298 (6 CFR 19.6(a)(5)) (DHS); 80 FR at 47346 (38 CFR 50.2(a)(5)) 
(VA). Commenters also requested that the Agencies allow beneficiaries 
to report violations to more than one office, provide for reporting to 
both the Agency and intermediary, and designate an appropriate civil 
rights office to receive complaints.
    Response: The relevant Agencies agree with a majority of these 
commenters' concerns and provide in their final regulations that the 
written notice must make beneficiaries aware that they can report 
violations of these protections, including reports of any denials of 
services or benefits by organizations. In addition, some of the 
Agencies have chosen to designate their offices of civil rights as the 
proper offices to receive complaints. For instance, in its final 
regulations, DOL directs beneficiaries to file complaints with the 
Agency's Civil Rights Center. 29 CFR 2.34(a)(5). Some of the Agencies 
are not, however, designating their offices of civil rights to accept 
beneficiary complaints because the structure of those Agencies would 
not support such a designation. The Agencies will describe the 
reporting process in the agency-specific sections of this preamble 
based on the nature of each program and Agency.
    Change: All Agencies affected by these comments have amended the 
written notice requirements in their respective final regulations and 
their model written notices to indicate expressly that complaints 
regarding any denials of services or benefits may be filed with the 
relevant offices. DOJ has also made a non-substantive change to its 
written notice requirement for the sake of clarity.
    Affected regulations: 2 CFR 3474.15(c)(1), 34 CFR 75.712(a)(5), 34 
CFR part 75, appendix A, 34 CFR 76.712(a)(5) (ED); 6 CFR 19.6(a)(5), 6 
CFR part 19, appendix A (DHS); 7 CFR 16.4(f)(1)(v) (USDA); 24 CFR 
5.109(g)(1)(v) (HUD); 28 CFR 38.6(c)(1)(v) (DOJ); 29 CFR 2.34(a)(5) 
(DOL); 34 CFR 75.712(a)(5), appendix A to part 75, 76.712(a)(5); 38 CFR 
50.2(a)(5) (VA); 45 CFR 87.3(i)(1)(v) (HHS).
d. Guarantee of Referral in the Written Notice
    Summary of comments: Commenters requested that the Agencies remove 
the phrase ``[w]e cannot guarantee . . . that in every instance, an 
alternative provider will be available'' from the model referral form, 
see, e.g., proposed regulations at 80 FR at 47325 (28 CFR part 38, 
appendix A) (DOJ); 80 FR at 47337 (29 CFR 2.34(a)) (DOL), because 
commenters asserted that such language may deter beneficiaries from 
objecting to the religious character of providers and from seeking 
alternative providers.
    Response: The Agencies disagree with commenters that the phrase 
``we cannot guarantee that in every instance, an alternative provider 
will be available'' should be removed from the referral form. Such a 
disclaimer statement is necessary in cases where, for example, the 
remote location of the services being provided may make such a promise 
impossible. The Agencies also disagree with the commenters' prediction 
that beneficiaries will be deterred from seeking alternative providers 
due to the lack of a guarantee of an alternate provider. Written 
notification of the ability to seek an alternative provider facilitates 
the opportunity to use an alternative provider when available. However, 
failure to acknowledge the potential lack of an alternative provider in 
the written notice could be misleading to a beneficiary. The Agencies 
have not made any changes based on these comments.
    Change: None.
    Affected regulations: None.
e. Accessibility of the Written Notice
    Summary of comments: Commenters suggested that the Agencies change 
their proposed regulations to require providers to translate the 
written notice into languages other than English for individuals with 
limited English proficiency (LEP), and to provide the written notice in 
accessible formats for individuals with disabilities. One commenter 
noted that ED's proposed regulations included language in the preamble 
authorizing ``grantees, subgrantees, and contractors . . . to translate 
the notice into other languages and formats to communicate with the 
entire population of beneficiaries.'' See 80 FR at 47258.
    Response: The Agencies agree that providers that receive Federal 
financial assistance, as defined by the Agencies' final regulations, 
have a responsibility to take reasonable steps to ensure for 
individuals with LEP meaningful access to their programs and activities 
in accordance with Title VI of the Civil Rights Act of 1964, 42 U.S.C. 
2000d through 2000d-7, and Executive Order 13166, Improving Access to 
Services for Persons With Limited English Proficiency, 65 FR 50121, 
Aug. 11, 2000, as applicable.\13\ Providing meaningful access for 
persons with LEP may entail providing language assistance services, 
including oral interpretation and written translation. Furthermore, the 
Agencies agree that providers receiving Federal financial assistance, 
as defined by the Agencies' regulations, have a responsibility to 
prohibit discrimination against individuals with disabilities and to 
ensure effective communication with individuals with disabilities, in 
accordance with section 504 of the Rehabilitation Act of 1973, 29 
U.S.C. 794, and the Americans with Disabilities Act, 42 U.S.C. 12101 et 
seq., as applicable. However, these requirements have not been included 
in these final regulations because other regulations or guidance 
already impose them.
---------------------------------------------------------------------------

    \13\ Note that the definition of Federal financial assistance 
under these final regulations is broader in scope than the 
definition under title VI of the Civil Rights Act of 1964 and 
several other nondiscrimination authorities. Compare Executive Order 
13279, Sec.  1(a), with, e.g., 28 CFR 42.102(c). Accordingly, some 
organizations that will be covered by these regulations will not be 
covered by title VI, most notably recipients of procurement 
contracts from the Agencies. Those organizations that fall outside 
the coverage of title VI may still have obligations to take 
reasonable steps to provide meaningful access to persons with LEP 
through implementation of Executive Order 13166, which imposes 
parallel language access requirements on federal agencies and their 
federally conducted programs and activities. See Executive Order 
13166.
---------------------------------------------------------------------------

    Federal laws prohibiting discrimination on the basis of disability 
require, in pertinent part, provision of program access, necessary 
auxiliary aids and services, physical access, and reasonable 
modification and accommodations to policies, practices, and procedures 
for persons with disabilities. See, e.g., existing regulations at 24 
CFR parts 8 and 9 (HUD); 28 CFR parts 35 and 36 (DOJ); 34 CFR part 104 
(ED). Recipients may contact their awarding Agencies for technical 
assistance on fulfilling their

[[Page 19365]]

obligations to take reasonable steps to provide meaningful access for 
persons with LEP and to ensure effective communication with persons 
with disabilities. In fulfilling these obligations, recipients may be 
required to provide the written notice to beneficiaries in other 
languages and in accessible formats. The Agencies decline, therefore, 
to include in these final regulations the requirements described above 
because existing nondiscrimination authorities already cover those 
requirements.
    Change: None.
    Affected regulations: None.
f. Services Not Provided and Prioritization of the Written Notice
    Summary of comments: One commenter requested that the Agencies 
change their proposed regulations to require providers that receive 
direct Federal financial assistance to provide beneficiaries with a 
list of services that are not being offered if such providers refuse to 
offer those services due to religious or moral objections, as well as 
instructions about how to access the covered services from an 
alternative provider. This commenter also suggested that, ``[i]n 
prioritizing when the highest notice standards should be implemented, 
the Departments should focus on those grantees that do not provide, due 
to religious or moral objection, specific services that beneficiaries 
are entitled to under any given program.''
    Response: The relevant Agencies believe that requiring providers to 
provide a list of the particular services that the provider offers and 
treating providers that do not offer certain services due to religious 
or moral objections differently is beyond the scope of Executive Order 
13559. The Agencies, therefore, have not made any changes to the 
proposed regulations based on these comments.
    Change: None.
    Affected regulations: None.
g. Written Notice and Referral Forms
    Summary of comments: Some of the Agencies' proposed regulations 
included a section that contained model written notice and referral 
forms. Commenters suggested that content appearing in some of the model 
forms, namely, a section designated as ``for staff use only,'' see, 
e.g., proposed regulations at 80 FR at 47312-13 (HUD), should appear on 
a separate page rather than on the form that is given to beneficiaries. 
The commenters' concern was that the ``for staff use only'' language, 
which included a space for staff to indicate whether a referral is or 
is not provided, may suggest to the beneficiaries that their requests 
for an alternative provider may be denied, which could make 
beneficiaries less likely to request an alternative provider. 
Commenters also suggested that the Agencies incorporate the written 
notice and referral forms into the regulatory text.
    Response: The Agencies have set forth in the regulations minimum 
requirements for what must be in the written notice. For some Agencies, 
the written notice and referral forms provided in their proposed 
regulations were merely samples. See, e.g., proposed regulations at 80 
FR at 47247 (USDA); 80 FR at 47279 (HHS). For DOL and ED, the written 
notice and referral forms were required as part of their proposed rules 
and continue to be so required in these final regulations. See final 
regulations at 29 CFR 2.34(a)(5), 29 CFR part 2, subpart D, appendices 
A and B (DOL); 34 CFR 75.712(c), 34 CFR part 75, appendix A, 34 CFR 
76.712(c) (ED). While the other Agencies decline to require specific 
written notice and referral forms as part of their regulations, all 
Agencies include model written notice and referral forms either as 
appendices to their regulations (see final regulations at 6 CFR part 
19, appendix A (DHS); 7 CFR part 16, appendix A (USDA); 28 CFR part 38, 
appendices A and B (DOJ)) or as appendices to this joint final 
rulemaking (HUD, VA, HHS). Those Agencies that have not included a 
model written notice or referral form as part of their regulations have 
determined that such model forms are unnecessary as providers have the 
option of including the notifications required under these regulations 
with other notifications that providers are already required to provide 
under applicable statutes and other regulations. It is important to 
note that any Agency's future changes to its written notice and 
referral forms will have to comply with the regulations and the 
Paperwork Reduction Act.
    The Agencies that have included a ``for staff use only'' section in 
their model forms (USDA and HUD) do not believe that including this 
section on the same page as the notice will impact beneficiaries' 
actions or will deter beneficiaries from requesting an alternative 
provider. Moreover, because those Agencies included the written forms 
only as a model, moving the ``for staff use only'' section is 
unnecessary because providers can include other formats as the 
commenters requested.
    Change: DOL has moved the written notice and referral forms from 
the body of its proposed regulations to the appendices of its final 
regulations, but it has not made substantive changes based on this 
comment.
    Affected regulations: None.
h. Burden of Written Notice
    Summary of comments: Some commenters asserted that the written 
notice requirement is burdensome for religious organizations. For 
example, commenters stated that, ``[t]he ramifications of implementing 
Executive Order 13559 by means of the proposed new rules would be to 
inevitably diminish the ability of the faith-based community and other 
neighborhood organization[s] to carry out their intended purposes of 
providing services to those in need in a timely and efficient manner.''
    Response: The Executive order requires that each beneficiary 
receive ``written notice of the protections set forth'' in the order. 
Executive Order 13559, Sec.  1(b), amending Executive Order 13279, 
Sec.  2(h)(ii)(5), 75 FR at 71321. The Agencies have implemented that 
requirement in a manner designed to limit the burden on recipients of 
direct Federal financial assistance and justified by the value to 
beneficiaries. Agencies are providing language that may simply be 
reproduced as a brief notice that the recipients provide or post \14\ 
(depending on the particular regulatory requirements). This does not 
place an undue burden on recipients of direct Federal financial 
assistance, particularly when balanced against the notice's benefit--
informing beneficiaries of valuable protections of their religious 
liberty. Accordingly, the Agencies decline to make any changes to their 
regulations based on these comments.\15\
---------------------------------------------------------------------------

    \14\ For example, DHS made clear in its NPRM preamble that 
individual written notice will frequently be impractical during 
brief, potentially one-time interactions between a provider and a 
beneficiary, such as at a soup kitchen. See 80 FR at 47294 & n.7. In 
such circumstances, DHS explained, a conspicuous posting rather than 
individual notices should satisfy the requirement.
    \15\ The Agencies note that the burden imposed by these final 
regulations is discussed in each Agency's preamble section 
addressing burdens imposed under the Paperwork Reduction Act of 
1995.
---------------------------------------------------------------------------

    Change: None.
    Affected regulations: None.
i. Phase-in of Written Notice
    Summary of comments: Commenters encouraged the Agencies to phase in 
the new notice and alternative provider referral requirements, and to 
implement these changes in a way that maximizes provider flexibility.
    Response: The Agencies agree with the commenters that a phase-in 
period is appropriate. This period will allow the Agencies time to 
provide policy

[[Page 19366]]

guidance or reference materials and training on these matters, 
including additional examples of the different ways providers can 
comply with these regulations. These regulations will become effective 
30 days after publication in the Federal Register. However, recipients 
subject to these final regulations have until July 5, 2016 to comply 
with these final regulations.
    Change: These final regulations delay the date by which 
organizations will need to comply by 90 days to ensure sufficient time 
for providers to receive policy guidance or reference materials, and 
answers to their questions.
    Affected regulations: None.
j. Clarification of What Triggers the Written Notice Requirement
    Summary of comments: Commenters requested that the Agencies clarify 
the specific types of services that would trigger the notice 
obligation, provide examples of situations in which the notice can be 
posted as opposed to provided individually to each beneficiary, and 
describe when the nature of services provided or exigent circumstances 
would impact a provider's duty to deliver the written notice or the 
timing of the delivery of the notice. These commenters requested more 
specificity regarding possible exceptions to a provider's obligation to 
provide a written notice to a beneficiary in advance of providing the 
services.
    Response: The majority of the Agencies' NPRM preambles were 
specific regarding exceptions and timing for the written notice. See, 
e.g., 80 FR at 47332-33 (DOL); 80 FR at 47288 (DHS). In addition, with 
respect to those Agencies whose NPRM preambles discussed a limited 
exception for when the written notice may be posted (as opposed to 
individually provided to each beneficiary), those Agencies believe that 
the language in their NPRM preambles is adequate to describe those 
exceptions with respect to their specific programs. As for the request 
by commenters to clarify what is meant by ``the earliest available 
opportunity,'' the Agencies now clarify that ``the earliest available 
opportunity'' means the prompt provision of the notice, or provision of 
the notice as soon as reasonably practicable, after the services are 
provided. The Agencies are providing this clarification related to the 
timing of the delivery of the notice in this joint preamble, but the 
Agencies decline to include additional language in their final 
regulations. As noted above, these final regulations delay the date by 
which organizations will need to comply for 90 days to ensure 
sufficient time for providers to receive policy guidance or reference 
materials and answers to their questions.
    Change: None.
    Affected regulations: None.
2. Referrals
a. Burdens, Duties, and Liability of the Referring Organization
    Summary of comments: Commenters were concerned that the beneficiary 
protections in the proposed regulations were inconsistent with the 
Federal Charitable Choice provisions (42 U.S.C. 290kk-1(f)(1); 42 
U.S.C. 604a(e); 42 U.S.C. 300x-65(e)(1)) by requiring that faith-based 
organizations find alternative providers for beneficiaries, as opposed 
to placing this burden on the Government. Commenters asked that the 
Government provide assistance to organizations making referrals. 
Commenters said that the documentation requirement could be quite 
burdensome for providers and intermediaries, and that organizations do 
not have enough staff to facilitate referrals. Commenters also said 
that the estimate most Agencies provided for carrying out the referral 
requirement--no more than two hours of a provider's time--was without 
basis. Other commenters noted that concerns about additional costs and 
other concerns related to the referral requirement were misplaced, 
pointing to the history of the Substance Abuse and Mental Health 
Services Administration (SAMHSA) referral requirements. Commenters also 
said that faith-based organizations should be protected from liability 
for the actions of, or services provided by, alternative providers.
    Response: The Agencies that are imposing beneficiary notice and 
referral requirements are aware of the burden that these requirements 
present. These Agencies believe, however, that the organizations 
required to make the referrals will generally be in the best position 
to identify alternative providers in reasonable geographic proximity 
and to make a successful referral of objecting beneficiaries to those 
alternative providers. In the event that an organization is unable to 
identify an alternative provider after a reasonable effort, the 
intermediary or Federal agency, as specified by agency-specific 
regulations, guidance, or other reference materials, will determine 
whether there is a suitable alternative provider to which the 
beneficiary can be referred. Under this process, the organization makes 
the initial effort, but if it is unable to identify an alternative 
provider, the burden shifts to the intermediary or the Agency (as 
applicable). The Agencies will provide additional directions, as 
needed, to organizations on whether they are responsible for the 
referral and when to contact an intermediary or the Agency in policy 
guidance or other reference materials. The Agencies are taking this 
approach due to the numerous differences among the programs 
administered by the Agencies. Agency-specific instructions will allow 
each Agency to tailor those instructions to the nature of the programs 
it administers.
    The Agencies have sought to minimize the burden of the referral 
requirement to the greatest degree possible--while still fully 
implementing the Executive order--by limiting the referral requirement 
to ``reasonable efforts'' and providing assistance in cases where the 
faith-based organization is unable, on its own, to make a referral. As 
discussed in the Agencies' NPRM preambles or below, the Agencies 
believe that the number of requests for referrals will be minimal and 
that, on average, referrals will take no more than two hours. The 
Agencies' estimate of the number of referral requests faith-based 
organizations are likely to receive is based on SAMHSA's experience 
that its referral requirement has resulted in no requests for referrals 
that the Agencies know of to date. The Agencies now clarify that a 
provider need not spend more than approximately two hours of staff time 
in order to fulfill the ``reasonable efforts'' requirement. To be 
clear, the Agencies expect that much less staff time will be required 
to make a successful referral in most cases. Finally, the Agencies 
acknowledge that, in programs governed by the Charitable Choice 
provisions listed above, the statutes take precedence over these 
regulations, and the Government will continue to bear the full burden 
of making referrals as specified in those statutes.
    As for the commenters' concern about the organizations' potential 
liability for the alternative providers' actions, these regulations are 
in no way intended to open the door to liability for faith-based 
organizations. Executive Order 13559 specifically notes that it ``is 
not intended to, and does not, create any right or benefit, substantive 
or procedural, enforceable at law or in equity by any party against the 
United States, its departments, Agencies, or entities, its officers, 
employees, or agents, or any other person.'' Executive Order 13559, 
Sec.  2(d), 75 FR at 71323; see also Executive Order 13279, Sec.  7, 67 
FR at 77144.
    Change: None.
    Affected regulations: None.

[[Page 19367]]

b. Subjectivity of Beneficiary Objection
    Summary of comments: In reference to the proposed regulations' 
requirement that faith-based organizations make reasonable efforts to 
refer a beneficiary who ``objects to the religious character of the 
organization,'' commenters wrote that the term ``object'' is too 
subjective and open-ended. For example, at least one commenter 
suggested that the regulations may be ambiguous with respect to how 
specific a beneficiary's objection must be to trigger the referral 
requirement. Another commenter questioned why a beneficiary would need 
to object if a recipient of direct Federal financial assistance cannot 
impose a religious requirement on clients.
    Response: The Agencies decline to modify the proposed regulations. 
In order for a beneficiary's objection to trigger the referral 
requirements under this rule, it must be reasonably clear under the 
circumstances that the beneficiary is objecting to the organization 
because of its religious character. While most of the Agencies have not 
required any specific format for a beneficiary objection, they have 
offered model forms that provide a way for beneficiaries to state their 
objections clearly. A faith-based organization concerned about 
misconstruing a beneficiary's objection may use the model forms for 
that purpose or may develop another form that meets the regulations' 
requirements. The Agencies will also provide additional directions to 
organizations in policy guidance or reference materials regarding 
beneficiary objections.
    Regarding the question of why a beneficiary would need to object, a 
beneficiary may, for example, be uncomfortable with receiving services 
in a location with religious symbols or from a faith-based organization 
even when the service being provided is secular in nature. Therefore, 
consistent with the Executive order, the notice of beneficiary rights 
will provide an opportunity for the beneficiary to object to receiving 
services from the faith-based organization on the basis of its 
religious character, even in circumstances where the organization is 
conducting its services in accordance with these final regulations.
    Change: None.
    Affected regulations: None.
c. Referrals to Non-Government-Funded Providers
    Summary of comments: Commenters recommended that if a referral to 
another Government-funded provider is not mandatory, the Agencies 
should clarify in regulations that a referral can be made to a non-
Government-funded provider because such a referral is better than no 
referral at all. Some commenters requested that the final regulations 
make explicit that the organization's responsibility is limited to 
locating a nearby provider that is federally funded to provide the 
service. Some commenters recommended that the regulations should 
require that, when a provider refers a beneficiary to a non-Government-
funded provider, the provider be required to provide a written notice 
to the beneficiary indicating whether the beneficiary foregoes any 
rights by attending the alternate provider.
    Response: The referral requirement in the Agencies' final 
regulations does not specify the nature of the funding of the 
alternative provider; it specifies only that the referral must be made 
to an alternative provider to which the beneficiary or prospective 
beneficiary does not object on the basis of religious character. In 
addition, the referral must be to a provider that offers services 
similar in substance and quality to those offered by the faith-based 
organization, has the capacity to accept the beneficiary, and is in 
reasonable geographic proximity to the location where the beneficiary 
or prospective beneficiary is receiving or would receive services 
(except for services provided by telephone, Internet, or similar 
means). The referral may be to another religiously affiliated provider 
if the beneficiary has no objection to that provider, but if the 
beneficiary requests a secular provider and one is available, the 
referral must be to that provider. While the Agencies anticipate that 
in some geographic areas the only referral option may be to an 
organization that does not receive Federal funds, the Agencies believe 
that if a federally funded alternative provider meets the above 
requirements, a referral should generally be made to that provider.
    The Agencies encourage faith-based organizations to provide 
information to beneficiaries about potential alternative providers. 
However, the Agencies decline to require organizations to provide 
beneficiaries with written information regarding alternative providers, 
because Executive Order 13559 does not require such notice and because 
this could impose an unwarranted burden on faith-based organizations.
    Change: None except DOL, which is revising its referral regulations 
for reasons given in its agency-specific preamble (part IV.G.4.b.ii).
    Affected regulations: 29 CFR 2.35(c) (DOL).
d. Qualifications of Alternative Provider
    Summary of comments: Some commenters supported the requirements in 
the proposed regulations regarding the qualifications of the 
alternative providers, including the requirement that the alternative 
provider have the services or benefits that the beneficiary seeks and 
that are within the range of services of the referring program. Other 
commenters stated that it would be unreasonable to impose a duty on 
faith-based organizations to attest to the quality or to the equivalent 
value or capacity of potential alternative providers as this 
information would rarely be readily available to faith-based 
organizations. One commenter recommended that the awarding entity 
(i.e., the Agency or intermediary) give a list of providers within the 
geographic area of the faith-based organization for the organization's 
use in the referral process.
    Response: The Agencies generally decline to adopt the 
recommendations of the commenters. The Agencies recognize that an 
organization may not always be able to independently determine the 
relative substance and quality of services offered by an alternative 
provider. Nonetheless, if a referral is made, it must be to a provider 
that offers services similar in substance and quality to those offered 
by the organization. Under these final regulations, undertaking 
``reasonable efforts'' to identify an alternative provider includes 
making a reasonable effort to ascertain the availability and services 
of an alternative provider. In its proposed and final regulations, USDA 
states that it may require the awarding entity to give the faith-based 
organization information about alternative providers in some cases. 7 
CFR 16.4(g)(4). The rest of the Agencies, however, decline to adopt 
similar regulations because those Agencies believe that such a referral 
list could become outdated before it is used, and because the Agencies 
estimate that the number of referrals requested will be minimal. Those 
Agencies may address the use of such a referral list on a program-by-
program basis.
    Change: None.
    Affected regulations: None.
e. Conditional Referral and Reasonable Efforts
    Summary of comments: Commenters requested that the Agencies require 
a referral rather than mandating ``reasonable efforts'' in providing a 
referral. Some Agencies also received a

[[Page 19368]]

request to define what constitutes ``reasonable efforts'' in referring 
a beneficiary to an alternative provider.
    Response: The Agencies decline to adopt the recommendations of the 
commenters. The Agencies believe that, in some cases, due to the 
location of the organization, availability of resources, the nature of 
the program, or other factors, a referral option may not be available. 
Therefore, the Agencies are requiring only that the organization make 
``reasonable efforts'' to find an alternative provider. However, the 
Agencies believe that in most cases the organization, alone or with the 
assistance of the intermediary or Agency, will be able to find an 
alternative provider. As for providing a definition of the term, what 
constitutes ``reasonable efforts'' will depend on the circumstances. As 
noted above, the organization should at a minimum attempt to identify 
an alternative provider, determine what services the alternative 
provider offers, and determine whether the alternative provider is 
accepting new referrals. The Agencies will provide further policy 
guidance or reference materials for organizations so they can better 
understand their duties under the regulations.
    Change: None.
    Affected regulations: None.
f. Process for Determining Whether a Beneficiary Has Contacted the 
Alternative Provider
    Summary of comments: Commenters requested that the regulations 
include a process for faith-based organizations to determine whether a 
beneficiary has contacted the alternative provider. Commenters also 
requested that the regulations require organizations and intermediaries 
to maintain records regarding requests for alternative providers, 
including records of where the individual was referred, and provide 
such records to the Agency. Commenters emphasized that completing such 
a process and maintaining relevant records will ensure that faith-based 
organizations comply with the requirement to make reasonable efforts to 
refer beneficiaries to alternative providers. Commenters also 
recommended that the Agencies track how many beneficiaries request 
alternative providers, how many actually use an alternative provider, 
how many do not use any services, how many are not provided an 
alternative provider, and whether there are problems within the 
reporting procedures.
    Response: The Agencies agree that maintaining records of referrals 
is important. Each Agency will ensure that grantees are complying with 
the Executive order and implementing regulations, including maintaining 
records of referrals. However, the Agencies believe that maintaining 
records of referrals is not the only way to ensure compliance; the 
Agencies are also ensuring compliance through training and oversight. 
While maintaining records of referrals will help provide information 
about how many referrals are made and requested, the Agencies are not 
requiring recipients to follow up with each individual to determine if 
the services are used. Agency oversight will also identify any problems 
with the reporting procedures so that Agencies can handle such problems 
when they arise. This issue is covered in more detail under part III.F 
(Monitoring) and in some agency-specific preambles, including in some 
agency-specific Paperwork Reduction Act sections. It will also be 
covered in subsequent policy guidance or reference materials.
    Change: DHS in its proposed regulation required recipients to 
notify DHS of successful and unsuccessful referrals but has edited the 
language in its final regulations to clarify (1) that the recipient 
need only notify DHS (or an intermediate awarding entity) of 
unsuccessful referrals but (2) that the recipient must keep a record of 
both successful and unsuccessful referrals. HUD and HHS did not 
explicitly require grantees to maintain a record when they made a 
referral in their proposed regulations and have added such a 
requirement to their final regulations.
    Affected regulations: 6 CFR 19.7(d) (DHS); 24 CFR 5.109(g)(4) 
(HUD); 24 CFR 87.3(k) (HHS).
g. Notification of Government and Timeframe of Referral
    Summary of comments: Commenters recommended that the regulations 
require organizations to notify both the Agency and any intermediary of 
each referral to an alternative provider. Another commenter suggested 
that, at a minimum, Agencies should require the intermediary to report 
the referral to the Agency upon receiving notice by the organization 
making the referral. One commenter supported the proposal that an 
organization be required to report to its awarding Agency whenever the 
organization cannot identify an alternative provider. The commenter 
suggested that the reporting requirement include a specific timeframe, 
such as promptly notifying the awarding Agency of every referral 
request.
    Response: Pursuant to these final regulations, when an organization 
makes a referral to an alternative provider, the organization must 
maintain a record of the referral. Therefore, requiring the 
organization to report the referral to the Agency or intermediary would 
be redundant given the paperwork that must already be retained by the 
organization, which is subject to review by the Agency or intermediary. 
The Agencies already have processes in place to monitor grantees and 
ensure compliance with regulatory requirements at regular intervals. 
However, prompt reporting to the awarding Agency or intermediary is 
needed in situations where the organization has determined that it is 
unable to identify an alternative provider. Without prompt reporting, 
an awarding Agency or intermediary might be unable to determine whether 
a referral can be made to a suitable provider. Therefore, the Agencies 
have clarified in their regulations, if their regulations did not 
already contain language to this effect, that when an organization is 
unable to identify a referral after reasonable efforts, the 
organization will be required to ``promptly'' report that fact to the 
Agency or intermediary.
    Change: The final regulations make clear that an organization that 
cannot make a referral must report that fact promptly to the 
intermediary or Agency.
    Affected regulations: 6 CFR 19.7(d) (DHS); 7 CFR 16.4(g)(3) (USDA); 
24 CFR 5.109(g) (HUD); 28 CFR 38.6(d)(4) (DOJ); 29 CFR 2.35(d) (DOL); 
34 CFR 75.713(d), 34 CFR 76.713(d) (ED); 38 CFR 50.3(d) (VA); 45 CFR 
87.3(k) (HHS).
h. Clarification of Who Is Responsible for Making the Referral
    Summary of comments: Many of the Agencies' proposed regulations 
stated that if a faith-based organization cannot locate an alternative 
provider, the Agency (or intermediary) ``shall determine whether there 
is any other suitable alternative provider to which the beneficiary may 
be referred.'' See proposed regulations at 80 FR at 47298 (6 CFR 
19.7(d)) (DHS); 80 FR at 47252 (7 CFR 16.4(g)(4)) (USDA); 80 FR at 
47311 (24 CFR 5.109(g)(3)(iv)) (HUD); 80 FR at 47325 (28 CFR 
38.6(d)(4)) (DOJ); 80 FR at 47338 (29 CFR 2.35(d)) (DOL); 80 FR at 
47346 (38 CFR 50.3(d)) (VA). Those proposed regulations also stated 
that ``[a]n intermediary that receives a request for assistance in 
identifying an alternative provider may request assistance'' from the 
Agency. See proposed regulations at 80 FR at 47298 (6 CFR 19.7(d)) 
(DHS); 80 FR at 47252 (7 CFR 16.4(g)(4)) (USDA); 80 FR at 47311 (24 CFR 
5.109(g)(3)(iv)) (HUD); 80 FR at 47325 (28 CFR 38.6(d)(4)) (DOJ);

[[Page 19369]]

80 FR at 47338 (29 CFR 2.35(d)) (DOL); 80 FR at 47346 (38 CFR 50.3(d)) 
(VA). Commenters noted that under some of the Agencies' proposed 
regulations, the process required for responding to a beneficiary's 
request for an alternative provider was not clear. One commenter wrote 
that the language implied that when an intermediary is involved, the 
intermediary--rather than the Agency--is ultimately responsible for 
identifying the alternative provider.
    Response: The role of the intermediary may vary depending upon the 
Agency that made the award to the intermediary and the program under 
which the award was made. Most Agencies have provided that the 
intermediary, the Agency, or both will be available to assist the 
organization in finding an alternative provider. See final regulations 
at 6 CFR 19.7(d) (DHS); 7 CFR 16.4(g)(3) (USDA); 24 CFR 5.109(g)(3)(iv) 
(HUD); 28 CFR 38.6(d)(4) (DOJ); 29 CFR 2.35(d), (e) (DOL); 34 CFR 
75.713(d)(2), 76.713(d)(2) (ED); 38 CFR 50.3(d) (VA). Some Agencies 
have determined that the intermediary should have the primary 
responsibility to help whenever the provider cannot locate an 
alternative provider, consistent with the policy that the intermediary 
is responsible for working directly with subrecipients, but also 
provide in their regulations that the intermediary may ask for 
assistance from the Agency or that the Agency will determine if a 
placement can be made when the intermediary cannot make one. See final 
regulations at 7 CFR 16.4(g)(3) (USDA); 24 CFR 5.109(g)(3)(iv) (HUD); 
28 CFR 38.6(d)(4) (DOJ); 29 CFR 2.35(d), (e) (DOL); 34 CFR 
75.713(d)(2), 76.713(d)(2) (ED). The Agencies believe that these 
regulations are sufficiently clear to delineate Agency and intermediary 
responsibilities, but will consider providing policy guidance or 
reference materials to clarify further.
    Change: None.
    Affected regulations: None.

E. Political or Religious Affiliation

1. Merit-Based Decisions
    Summary of comments: Several commenters requested that Agencies 
provide language in the final regulations to ensure that merit-based 
decisions include considerations of whether an organization will serve 
all beneficiaries and perform all services that are necessary to 
fulfill program objectives. Some commenters urged the Agencies to 
specifically limit funding awards to entities that can accomplish 
program goals. The commenters argued that requiring an organization to 
include a list of services the organization would or would not provide 
would afford the Agency a full understanding of the particular services 
an entity (or its subcontractors) will or will not provide. Commenters 
stated that, as a result, Agencies would make better funding decisions 
and protect beneficiaries from being denied needed services. In 
addition, one commenter recommended that the final regulations be 
revised to clarify that it would not constitute religious 
discrimination for the Government to prioritize contracting with 
entities that are willing to meet the full scope of the contract.
    Response: The Agencies believe that specifically limiting funding 
awards in this way is beyond the scope of Executive Order 13559. 
Therefore, the Agencies do not make any changes to the proposed 
regulations based on these comments.
    Change: None.
    Affected regulations: None.
2. Access to Federal Funding
    Summary of comments: One commenter recommended revising the 
regulations that state that decisions about awards of Federal financial 
assistance must be free from political interference or even the 
appearance of such interference and those decisions must be made on the 
basis of merit, rather than religion or religious belief. The commenter 
noted that certain laws may in fact require an Agency to treat secular 
and faith-based organizations differently when making funding 
decisions. Therefore, the commenter suggested adding language to this 
provision to the effect of ``to the extent permitted by authorizing 
legislation.''
    Response: The Agencies agree that these final regulations may 
require different outcomes than those specified in program- or agency-
specific statutes. However, standard rules of statutory and regulatory 
construction require that when there is a conflict between a Federal 
statute and regulations, the statute determines the outcome of the 
conflict. Thus, there is no need to include the language recommended by 
the commenter. When an Agency has identified that a Federal statute 
applicable to a particular Agency or program conflicts with these 
regulations, the Agency will discuss that issue in that Agency's 
agency-specific section of this preamble.
    Change: None.
    Affected regulations: None.
3. Political Influence
    Summary of comments: Several commenters stated that the proposed 
regulations regarding the selection of non-Federal entities for Federal 
financial assistance are biased against religion because they presume 
that any pressure to influence funding would be done to favor religion 
or religious belief. These commenters asserted that they thought it 
just as likely that any political pressure will be antireligious or 
hostile to a particular religion. The commenters recommended revising 
the proposed regulations to provide that decisions about the award of 
Federal financial assistance must be free from political interference 
or even the appearance of such interference and must be made on the 
basis of merit, not on the basis of prejudice for or against religion 
or religious belief. Alternatively, the commenters proposed adding 
language to make clear that faith-based organizations are eligible, on 
the same basis as any other organization, to participate in any Agency 
program for which they are otherwise eligible. These commenters 
recommended that neither the Agencies nor any State or local government 
receiving Federal financial assistance should be permitted to 
discriminate in favor of or against an organization on the basis of the 
organization's religious character or affiliation.
    Response: Some of the proposed regulations did not completely track 
the language of the Executive order regarding the prohibition against 
considering religion or religious beliefs, and the instruction to guard 
against political influence, in selecting recipients of Federal 
financial assistance. The Agencies agree with the commenters that the 
final regulations should clearly state that political bias or 
appearance of bias, or the consideration of an organization's religious 
affiliation or lack thereof, is prohibited in the selection of non-
Federal entities for Federal financial assistance.
    Change: The final Agency regulations now include language that more 
closely follows the Executive order in this regard, which states that 
``[d]ecisions about awards of Federal financial assistance must be free 
from political interference or even the appearance of such interference 
and must be made on the basis of merit, not on the basis of the 
religious affiliation of a recipient organization or lack thereof.'' 
Executive Order 13279, Sec.  2(j), as amended by Executive Order 13559, 
Sec.  1(b), 75 FR at 71321. Because the context of this requirement is 
different for each Agency, the Agencies that are making changes discuss 
in their agency-specific sections of this preamble how each agency's 
regulations make clear that Agencies are prohibited from considering 
the religious affiliation, or

[[Page 19370]]

lack thereof, of a non-Federal entity in awarding Federal financial 
assistance.
    Affected regulations: 2 CFR 3474.15(b)(2), 34 CFR 75.52(a)(2), 
76.52(a)(2) (ED); 7 CFR 16.3(a) (USDA); 22 CFR 205.1(j) (USAID); 24 CFR 
5.109(c) (HUD); 28 CFR 38.4(b) (DOJ); 29 CFR 2.39 (DOL); 38 CFR 50.4 
(VA).

F. Monitoring

    Summary of comments: Several commenters suggested that the 
regulations be changed to ``[i]mprov[e] monitoring of constitutional, 
statutory, and regulatory requirements that accompany federal social 
service funds.'' Specifically, several commenters asked that the 
proposed regulations be revised to mandate specific assurances of 
compliance, as well as specific monitoring and enforcement 
requirements. One commenter noted that only DOJ had included proposed 
regulations regarding monitoring for compliance, see proposed 
regulations at 80 FR at 47325 (28 CFR 38.8) (DOJ), and asked that other 
Agencies include these provisions, too. A commenter also noted with 
approval that DOJ's proposed regulations would require organizations to 
sign assurances that they would comply with the regulations. See 
proposed regulations at id. (28 CFR 38.7) (DOJ). Several commenters 
recommended that the other Agencies include assurance requirements in 
their regulations as well. One commenter recommended that the Agencies 
include language in the preamble to the final regulations describing 
the process by which Agencies would require affirmative assurances from 
awardees that the awardees will comply with the regulations and the 
ways the regulations would be enforced. These commenters asked that 
each Agency that elected not to require a separate assurance of 
compliance as part of these regulations add in its general assurances a 
citation to these regulations. One commenter also recommended that the 
other Agencies follow DOJ's proposed enforcement procedures by 
designating a specific office to enforce the regulations.
    Response: The Agencies agree that they must guard against 
inappropriate uses of Federal financial assistance by monitoring and 
enforcing all constitutional, statutory, and regulatory standards 
governing such assistance. Executive Order 13559 amended Executive 
Order 13279 to describe Federal agencies' specific obligations to 
monitor and enforce constitutional, statutory, and regulatory 
requirements regarding religion-related issues, requiring that the 
Federal Government implement Federal programs in accordance with the 
Establishment Clause and the Free Exercise Clause of the First 
Amendment to the United States Constitution and other applicable law. 
The Executive order also provided that Federal agencies must monitor 
and enforce standards regarding the relationship between religion and 
government in ways that avoid excessive entanglement between religious 
bodies and governmental entities. Executive Order 13279, Sec.  2(e), as 
amended by Executive Order 13559, Sec.  1(b), 75 FR at 71320.
    The Agencies agree with the commenters that they must vigorously 
monitor and enforce applicable regulations in this regard. However, 
certain Agencies are constrained by statutes, resources, or both from 
establishing a central office to monitor and enforce compliance with 
the requirements in these final regulations. Therefore, the Agencies 
have concluded that each Agency needs to maximize its resources to 
ensure that recipients comply with these final regulations in a manner 
consistent with the Agency's statutes, other regulations, and 
structure. Because each Agency has a unique structure and statutory 
enforcement requirements, each Agency describes in its agency-specific 
preamble, or will describe in its policy guidance or reference 
materials, how its offices will ensure compliance with these final 
regulations.
    As stated in its regulations, DOJ will require specific assurances 
from all organizations that they will comply with the final 
regulations. See proposed regulations at 80 FR at 47325 (28 CFR 
38.7(a)) and final regulations at 28 CFR 38.7(a). Several commenters 
recommended that the other Agencies adopt similar regulations. However, 
many Agencies already collect the information needed to assure that 
their grantees and subgrantees comply with all Federal requirements 
applicable to their grant programs, including the new requirements 
established in these final regulations. For example, many Agencies 
require applicants to provide certain standard assurances in the 
Standard Form 424 (SF-424), see, e.g., 45 CFR 75.206 (HHS), including 
the commenter's proposed assurance that the applicant ``will comply 
with all applicable requirements of all other Federal laws, executive 
orders, regulations[,] and policies governing this program''; SF-424B 
(Assurances for Non-Construction Programs) and SF-424D (Assurances for 
Construction Programs), both available at http://www.grants.gov/web/grants/forms/sf-424-family.html#sortby=1. Agencies that rely on 
existing assurances do not wish to burden organizations, including 
faith-based organizations, with an additional assurance of compliance.
    The Agencies do agree that organizations that receive direct 
Federal financial assistance need to be aware of these new requirements 
and have meaningful guidance from the Agencies to assist them in 
complying with the requirements. As already noted, the Agencies will 
provide training and policy guidance or other reference materials to 
grantees to effectively implement these final regulations. To ensure 
that the Agencies meet this objective, each Agency is devoting 
substantial resources to ensure that its program staff understand their 
responsibilities to ensure that grantees, subgrantees, and contractors 
that provide social services to beneficiaries under programs of direct 
Federal financial assistance comply with these final regulations. Given 
the substantial work needed to make sure that all grantees, 
intermediaries, and subgrantees understand what they must do under 
these final regulations, the Agencies have decided to delay the date by 
which recipients of Federal financial assistance must comply with these 
final regulations beyond the standard 30 days. These final regulations 
will become effective in 30 days. However, the Agencies have decided to 
delay the compliance date for 90 days, as discussed in other parts of 
this preamble.
    Change: None except HUD, which is changing its regulations as 
explained in its agency-specific preamble (part IV.E.6).
    Affected regulations: 24 CFR 5.109(g)(4) (HUD).

G. Other Issues

1. Nondiscrimination in Employment Decisions/Religious Freedom 
Restoration Act
    Summary of comments: Several commenters requested that the proposed 
regulations be modified to expressly prohibit employment discrimination 
on the basis of religion by recipients of Federal financial assistance, 
including faith-based organizations. Commenters also stated that the 
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(a) (Title VII exemption), applies only 
to wholly privately funded faith-based organizations, not religious 
organizations that receive Federal financial assistance. Other 
commenters requested that the final regulations

[[Page 19371]]

make clear that faith-based organizations that receive such assistance 
do not lose the ability to make employment decisions on the basis of 
religion. Some commenters further requested a preclearance process 
whereby a faith-based organization subject to a particular statutory 
employment nondiscrimination requirement could apply to the Agency for 
a decision on whether the Religious Freedom Restoration Act (RFRA), 42 
U.S.C. 2000bb through 2000bb-4, exempts the organization from that 
statutory requirement.
    Response: The Agencies decline to adopt the commenters' 
recommendations. Executive Order 13559 does not address employment 
issues, and thus, in general, the Agencies did not address these issues 
through proposed new regulations or alterations of existing 
regulations.\16\
---------------------------------------------------------------------------

    \16\ As noted in its 2015 Supplemental Notice of Proposed 
Rulemaking (``SNPRM'') and discussed further in its agency-specific 
preamble in part IV.B of this preamble, DHS initially proposed 
regulations in January 2008 to implement Executive Order 13279. 
DHS's 2015 proposed regulations included an employment provision 
that is consistent with its 2008 NPRM and the other Agencies' 
current regulations on these matters. Compare proposed regulations 
at 80 FR at 47298 (6 CFR 19.9) (DHS), with, e.g., existing 
regulations at 28 CFR 38.2(f) (DOJ), and final regulations at 28 CFR 
38.5(e) (DOJ). As noted elsewhere in this preamble, the scope of 
DHS's 2015 proposed regulations was broader than the scope of the 
other Agencies' proposals to amend their existing rules. In 
consideration of the importance of uniformity among Federal agencies 
on these matters, DHS has declined to make further changes related 
to employment.
---------------------------------------------------------------------------

    Change: None.
    Affected regulations: None.
2. Reinforcement of Other Nondiscrimination Protections
    Summary of comments: Commenters recommended that these regulations 
should reinforce that federally funded programs must comply with other 
existing protections that prohibit discrimination on the basis of race, 
color, national origin, sex, disability, or age.
    Response: These final regulations address discrimination against 
beneficiaries 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. The Agencies agree that grantees must comply with 
all other anti-discrimination laws, regulations, and terms and 
conditions that are applicable to their awards. Yet, those existing 
protections are outside the scope of the Executive order, and the 
Agencies therefore decline to adopt this recommended change. These 
regulations only implement Executive Orders 13279 and 13559 and do not 
modify or interpret other applicable statutory or regulatory provisions 
addressing discrimination on the basis of religion.
    Change: None.
    Affected regulations: None.
3. Applicability to Sub-Awards, Including Contracts
    Summary of comments: Commenters argued that the clause in each 
Agency's proposed regulations prohibiting grantees from discriminating 
against beneficiaries on the basis of their religion or religious 
belief should apply to any subrecipient of a grantee, including a 
contractor of a grantee or subrecipient, in addition to the grantee.
    Response: The clause in each Agency's regulations that prohibits 
grantees from discriminating against a program beneficiary or 
prospective 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 applies to any subrecipient in 
addition to the grantee itself. ED included specific proposed 
regulations to reinforce this requirement. See final regulations at 2 
CFR 3474.15(f). However, the other Agencies do not believe that they 
need to revise their final regulations to enforce this requirement 
because recipients of Federal financial assistance are required to 
ensure that their contractors comply with all applicable requirements, 
including the requirements in these final regulations and the Uniform 
Administrative Requirements, Cost Principles, and Audit Requirements 
for Federal Awards (Uniform Guidance) that was adopted by the Agencies 
on December 19, 2014. See 79 FR 75867. Specifically, 2 CFR 200.318(b) 
requires that non-Federal entities maintain oversight to ensure that 
contractors perform in accordance with the terms, conditions, and 
specifications of their contracts or purchase orders. Non-Federal 
entities must include conditions in their contracts with every 
organization that provides services to beneficiaries to ensure that the 
contractor complies with all regulations applicable to the contract, 
including the requirements in these final regulations.
    Change: None.
    Affected regulations: None.
4. Definitions for ``Social Service Program'' and ``Federal Financial 
Assistance''
    Summary of comments: Commenters recommended that the regulations of 
the Agencies, including USAID, should, in some instances, define 
``social service program'' as well as ``Federal financial assistance.'' 
Both definitions first appeared in section 1 of the original Executive 
Order 13279. Commenters felt that the definitions were needed in the 
regulations to determine which Government programs are subject to 
Executive Order 13279 as amended by Executive Order 13559.
    Response: When identifying ``social service programs'' to which 
these regulations apply, the Agencies are guided by the definition in 
section 1 of Executive Order 13279, as well as the relevant case law 
interpreting the Establishment Clause and the Free Exercise Clause of 
the First Amendment to the U.S. Constitution. The Agencies believe it 
is not feasible to develop a definition of ``social service programs'' 
that contemplates and addresses the array of programs to which these 
final regulations apply. For example, HUD generally applies its 
regulations to all programs that it administers, including programs in 
which HUD awards Federal financial assistance through contracts, 
grants, and cooperative agreements. See, e.g., existing regulations at 
24 CFR 5.109(a). Therefore, each Agency has either addressed this 
matter in its agency-specific preamble or will address this matter 
through forthcoming policy guidance or reference materials.
    Change: None.
    Affected regulations: None.
5. Display of Religious Symbols
    Summary of comments: Commenters requested a requirement that 
religious symbols be removed at the time and location where federally 
funded services are offered because beneficiaries of federally funded 
services will otherwise understand the retention of religious symbols 
as government endorsement of religion. Commenters argued that requiring 
or encouraging individuals to encounter religious symbols in order to 
receive government services is unconstitutional. They also stated that 
beneficiaries should not be forced to accept much-needed services in an 
environment that makes them feel unwelcomed or pressured. One commenter 
also cited a study finding that religious symbols can measurably affect 
behavior, even when displayed with no intent to proselytize or 
persuade.
    Response: The Executive order provides that ``faith-based 
organizations that receive Federal financial assistance may use their 
facilities to provide social services supported with Federal financial 
assistance, without removing or altering religious art, icons, 
scriptures, or other symbols from these facilities.'' Executive Order 
13279,

[[Page 19372]]

Sec.  2(g), as amended by Executive Order 13559, Sec.  1(b), 75 FR at 
71320. The Agencies are satisfied that this provision is constitutional 
and believe that it is consistent with Federal statutes that affirm 
this principle (see, e.g., 42 U.S.C. 290kk-1(d)(2)(B)) and the general 
practice of Agencies that do not otherwise limit art or symbols that 
recipients of Federal financial assistance may display in the 
structures where agency-funded activities are conducted. While the 
Agencies decline to adopt the recommendation to depart from the 
Executive order by prohibiting the display of religious symbols in 
buildings where federally funded programs are conducted, these 
regulations introduce a process whereby beneficiaries seeking services 
funded by direct, domestic Federal financial assistance may object to 
an organization's religious character and seek referral to an 
alternative provider.
    Change: None.
    Affected regulations: None.
6. Eligibility of Faith-Based Organizations To Receive Federal Funding
    Summary of comments: Some commenters objected to the Federal 
Government making any financial assistance available to faith-based 
organizations because they believe that such assistance violates the 
Establishment Clause. Other commenters were concerned that making funds 
available to faith-based organizations would involve entanglement 
between church and state. Several of the commenters were concerned that 
the receipt of Federal funds by faith-based organizations would result 
in Federal funds being used to promote religion, coerce beneficiaries, 
or discriminate against beneficiaries who do not hold the same beliefs 
as the faith-based organizations. Other commenters were concerned that 
making funds available to faith-based organizations would divert 
Federal funds toward religion and result in support of religious 
education.
    Response: These final regulations do not violate constitutional 
principles of separation of church and state. The Supreme Court has 
determined that the Establishment Clause does not prohibit faith-based 
organizations from receiving government funds under appropriate 
conditions, see, e.g., Bowen v. Kendrick, 487 U.S. 589 (1988); Zelman 
v. Simmons-Harris, 536 U.S. 639 (2002), but at the same time has 
cautioned that ``[a]id normally may be thought to have a primary effect 
of advancing religion . . . when it funds a specifically religious 
activity in an otherwise substantially secular setting,'' Hunt v. 
McNair, 413 U.S. 734, 743 (1973). The regulations heed both these 
principles by permitting faith-based organizations to receive funds to 
participate in social service programs while providing that direct 
Federal financial assistance may not be used to pay for ``explicitly 
religious activities'' such as religious instruction, devotional 
exercises, worship, or proselytization. Furthermore, replacing 
``inherently religious activities'' with the term ``explicitly 
religious activities'' provides greater clarity about the separation of 
activities funded by direct Federal financial assistance from religious 
activities and more closely matches constitutional standards as they 
have developed in case law. Because the regulations would require that 
grant services be offered separately in time or place from explicitly 
religious activities, no faith-based organization would be allowed to 
use Federal funds to promote religion or coerce beneficiaries, and 
there would be no entanglement of church and state in providing needed 
services to beneficiaries. In these instances, the Government does not 
encourage or promote any explicitly religious activities.
    Finally, under the current regulations established under Executive 
Order 13279 (i.e., those preexisting this rulemaking), organizations 
receiving Federal financial assistance are prohibited from 
discriminating against beneficiaries based on religion or religious 
belief. See final regulations at 7 CFR 16.3(a) (USDA); 22 CFR 205.1(e) 
(USAID); 24 CFR 5.109(h) (HUD); 28 CFR 38.1(d) (DOJ); 29 CFR 2.33(a) 
(DOL); 34 CFR 75.52(e), 76.52(e) (ED); 38 CFR 61.64(e), 62.62(e) (VA); 
45 CFR 87.2(e) (HHS). This regulatory requirement is incorporated into 
the conditions that apply to every Federal award. Thus, an organization 
that receives Federal financial assistance and that discriminates 
against a beneficiary would be violating the terms and conditions of 
its grant and rendering its grant subject to termination by the funding 
Agency. In addition, the final regulations require faith-based 
organizations that receive domestic direct Federal financial assistance 
to notify beneficiaries that those organizations may not discriminate 
against beneficiaries 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. See final regulations at 6 CFR 
19.6(a)(1) (DHS); 7 CFR 16.4(f)(1)(i) (USDA); 24 CFR 5.109(g)(1)(i) 
(HUD); 28 CFR 38.6(c)(1)(i) (DOJ); 29 CFR 2.34(a)(1) (DOL); 34 CFR 
75.712(a)(1), 76.712(a)(1) (ED); 38 CFR 50.2(a)(1) (VA); 45 CFR 
87.3(i)(1)(a) (HHS). Thus, beneficiaries will have the information they 
need to protect themselves from discrimination based on religion or 
religious belief.
    Based on these considerations, the Agencies decline to make any 
changes to the proposed regulations regarding the eligibility of faith-
based organizations to receive grants under Federal social service 
assistance programs.
    Change: None.
    Affected regulations: None.
7. Training Requirements
    Summary of comments: Commenters argued that proper and regular 
training of Agency employees will be necessary to ensure that these 
regulatory requirements are understood and implemented. They 
recommended that the Agencies commit, through these final regulations, 
to provide training at least once every 2 years. The commenters argued 
that without including a commitment to regular training in these 
regulations, there is no assurance that training will continue in the 
future. Similarly, one commenter relayed the commenter's understanding 
that the White House Office of Faith-Based and Neighborhood 
Partnerships would urge the Agencies to hold trainings on the new 
regulations, but the commenter suggested that the written regulations 
should include a commitment by the Agencies to do so on at least a 
biennial basis.
    Response: Executive Order 13559 specifically tasked the Working 
Group with addressing training on these requirements for Government 
employees and employees of recipients of Federal financial assistance. 
See Executive Order 13279, Sec.  3(b)(viii), as amended by Executive 
Order 13559, Sec.  1(c). In the Report to the President: 
Recommendations of the Interagency Working Group on Faith-Based and 
Other Neighborhood Partnerships, dated April 2012, available at https://www.whitehouse.gov/sites/default/files/uploads/finalfaithbasedworkinggroupreport.pdf, the Working Group recommended 
that training be addressed in the non-regulatory guidance. Id. at 6, 
27-29. The Agencies recognize the importance of proper training in 
assuring implementation and ongoing compliance with these requirements 
but do not agree that training requirements must be addressed through 
regulations. Rather, the Agencies intend to issue policy guidance or 
reference materials that will assist recipients, and adopt

[[Page 19373]]

policies that will address the manner and frequency by which each 
Agency will carry out training sessions for Agency staff and external 
stakeholders.
    Change: None.
    Affected regulations: None.

IV. Agency-Specific Issues and Certifications

A. Department of Education

    ED received comments on its proposed regulations from 93 parties. 
As reflected below, unless otherwise specified, all comments received 
by ED are addressed fully in the discussion of cross-cutting issues in 
part III of this preamble, and those responses are adopted by ED. Some 
of the cross-cutting comments addressed in part III of the preamble 
were not received by ED and ED concurs in the part III resolution of 
those comments unless specifically noted either in part III or this 
agency-specific part IV.A of the preamble.
    ED addresses in this part of the preamble the ED-specific comments 
not addressed in part III of the preamble and provide ED-specific 
findings and certifications. ED does not discuss in this part of the 
preamble minor or technical changes that were made to provide greater 
consistency or simplify the language in the regulations.
    This agency-specific discussion has the same organization as part 
III of the preamble, outlined as follows:

1. Prohibited Use of Direct Federal Financial Assistance
2. Direct and Indirect Federal Financial Assistance
3. Intermediaries
4. Protections for Beneficiaries
    a. Beneficiary Notice
    b. Referrals
5. Political or Religious Affiliation
6. Monitoring
7. Other issues
    a. Nondiscrimination in Employment Decisions/RFRA
    b. Reinforcement of Other Non-Discrimination Protections
    c. Existing Anti-Discrimination Laws (e.g., Race, Color And 
National Origin)
    d. Definitions for ``Social Service Program'' and ``Federal 
Financial Assistance''
    e. Display of Religious Symbols
    f. Eligibility of Faith-Based Organizations To Receive Federal 
Funds
    g. Training Requirements
8. ED Findings and Certifications

    If ED does not need to address a comment outlined above, ED notes 
``Covered in part III of this preamble.''
1. Prohibited Use of Direct Federal Financial Assistance
    With the exception of the response to the comments regarding 
chaplaincy and similar services, ED adopts the responses in the cross-
cutting section of the preamble related to prohibited uses of direct 
Federal financial assistance. Regarding chaplaincy and similar 
services, ED agrees that those services should not be subject to direct 
Federal financial assistance restrictions and, therefore, are not 
subject to the requirements in the final regulations regarding 
separation of time or place and the notice and referral requirements. 
ED, however, declines to include language in its final regulations 
regarding chaplaincy and similar services because it has no programs 
that fund such services.
2. Direct and Indirect Federal Financial Assistance
    Consistent with the discussion in part III, the provision in ED's 
final regulations prohibiting discrimination against beneficiaries on 
the basis of religion, religious belief, a refusal to hold a religious 
belief, or refusal to attend or participate in a religious practice 
applies to all private organizations receiving ED funds under program 
of direct Federal financial assistance, regardless of whether they 
received direct or indirect financial assistance. See 2 CFR 3474.15(f), 
34 CFR 75.52(e), 76.52(e).
    ED adopts the response in part III to comments regarding the 
distinction between direct and indirect Federal financial assistance. 
ED notes, however, that since ED published the NPRM there has been one 
significant change related to this topic. Specifically, in the NPRM ED 
stated that ED had two programs that provided ``indirect Federal 
financial assistance,'' as defined in the proposed regulations. One of 
those exceptions involved supplemental educational services (SES). ED 
indicated that in most cases an SES provider that contracts with a 
local educational agency (LEA) pursuant to section 1116 of title I, 
part A of the Elementary and Secondary Education Act of 1965 (ESEA), as 
amended by the No Child Left Behind Act of 2001, would be providing 
services under a program supported only by ``indirect Federal financial 
assistance'' because, by statute, the government program is neutral 
toward religion and it is the parents who choose from among approved 
providers of SES. However, on December 10, 2015, the President signed 
into law the Every Student Succeeds Act (ESSA), Pub. L. 114-95, which 
reauthorizes the ESEA. Among the changes to the ESEA under the ESSA, ED 
notes that LEAs will no longer be required to provide SES, starting in 
Federal fiscal year 2017. The other exception discussed in the NPRM, 
the District of Columbia School Choice Incentive Program (DC Choice 
Program), is unaffected by the ESSA and will continue to provide 
indirect Federal financial assistance. As noted in the NPRM, the DC 
Choice program is subject to statutory nondiscrimination requirements 
not included in these final regulations.
3. Intermediaries
    Except as required in these final regulations, ED does not use the 
term ``intermediaries'' in its regulations, but it does administer 
programs that provide assistance through pass-through entities that act 
as intermediaries. ED's pass-through entities are States that 
administer programs under the regulations that apply only to State-
administered programs. See 34 CFR part 76. A few of ED's discretionary 
grant programs also authorize grantees to award subgrants and those 
programs are subject to ED's grant administration regulations in 34 CFR 
part 75. The regulations in parts 75 and 76 describe the different 
responsibilities that States and other grantees that are authorized to 
award subgrants have regarding the subgrants they award. ED also notes 
that in cases where a subgrantee awards a contract to a faith-based 
organization to provide program services under a program of direct 
Federal financial assistance, the subgrantee acts as an intermediary of 
the faith-based contractor. See 2 CFR 3474.15; 34 CFR 76.52, 76.712-
76.714.
4. Protections for Beneficiaries
a. Beneficiary Notice
i. Written Notice Requirement for Providers That Receive Indirect 
Federal Financial Assistance
    This issue was addressed in part III of the preamble. In addition, 
ED made edits to the regulations requiring faith-based organizations to 
provide the notice specified in appendix A to 24 CFR part 75. These 
changes clarify that a faith-based organization that provides program 
services to beneficiaries under an ED program of direct Federal 
financial assistance may do so under a contract, as well as under a 
grant or subgrant. Regardless of whether the program services are 
provided under a contract, grant, or subgrant, faith-based 
organizations have the same responsibilities to give notice to 
beneficiaries of their rights.
ii. Written Notice Language
    ED's final regulations include changes to the proposed regulations 
regarding the notice that faith-based organizations must provide 
beneficiaries. As described in part III of this preamble, ED

[[Page 19374]]

has amended the prohibition against private organizations 
discriminating against beneficiaries based on their religion or 
religious belief to add a prohibition against discrimination based on a 
refusal to hold a religious belief, or refusal to attend or participate 
in a religious practice. See 2 CFR 3474.15(c)(1), (f); 34 CFR 75.52(e), 
75.712(a)(1); 34 CFR part 75, appendix A, paragraph (1); 34 CFR 
76.52(e), 76.712(a)(1). The Department has also made edits to the form 
in appendix A so the faith-based organization can identify the non-
Federal entity that made the award to the organization.
iii. Reporting Violations of the Protections in the Written Notice
    Consistent with the discussion in part III of this preamble, ED has 
made changes to the language regarding the rights of beneficiaries and 
in the notice that must be provided to beneficiaries under a direct 
Federal financial assistance program. The notice now specifically 
informs beneficiaries that they have a right to file a complaint 
regarding any denials of services or benefits. See 34 CFR 75.712(a)(5), 
appendix A to part 75, paragraph (5), and 76.712(a)(5).
iv. Guarantee of Referral in the Written Notice
    Covered in part III of this preamble.
v. Accessibility of the Written Notice
    Covered in part III of this preamble.
vi. Services Not Provided and Prioritization of the Written Notice
    Covered in part III of this preamble.
vii. Written Notice and Referral Forms
    Covered in part III of this preamble.
viii. Burden of Written Notice
    Covered in part III of this preamble.
ix. Phase-In of Written Notice
    Covered in part III of this preamble.
x. Clarification of What Triggers the Written Notice Requirement
    Covered in part III of this preamble.
b. Referrals
i. Burdens, Duties, and Liability of the Referring Organization
    Covered in part III of this preamble.
ii. Subjectivity of Beneficiary Objection
    As discussed in part III of this preamble, one commenter was 
concerned that at least one agency did not clearly indicate when a 
faith-based organization had a duty to make reasonable efforts to refer 
a beneficiary to an alternative provider. ED notes that its final 
regulations include a notice, specified in appendix A, that faith-based 
organizations are required to use and that notice includes a check box 
for a beneficiary to object to the religious character of the 
organization. When that notice is returned with the objection box 
checked, a faith-based organization's duty to make reasonable efforts 
to refer a beneficiary to an alternative provider will be clear.
iii. Referrals to Non-Government Funded Providers
    Covered in part III of this preamble.
iv. Qualifications of Alternative Provider
    Covered in part III of this preamble.
v. Conditional Referral and Reasonable Efforts
    Covered in part III of this preamble.
vi. Process for Determining Whether a Beneficiary Has Contacted the 
Alternative Provider
    The form included as appendix A to part 75 specifically gives 
beneficiaries three options. The beneficiary can ask the faith-based 
organization to do one of the following: (1) Follow up with the 
beneficiary, providing a name and contact information; (2) follow up 
with the alternative service provider; or (3) not follow up. The policy 
guidance ED is developing to assist faith-based organizations in 
complying with the final regulations will emphasize the organizations' 
responsibility to comply with the wishes stated on the form.
    ED noted in the preamble to its proposed regulations that ED had 
regulations outside its proposed regulations that required its grantees 
and subgrantees to maintain records regarding all activities related to 
the projects and programs they administer. See 2 CFR 200.333, 3474.1; 
34 CFR 75.731, 76.731. Therefore, ED did not include any recordkeeping 
requirements in its proposed regulations. As noted in part III.D.2.f of 
this preamble, the Agencies made changes to clarify the 
responsibilities of faith-based service providers to distinguish 
between their obligations if they made a successful referral or could 
not make a referral. ED decided to add language to its revised 
Sec. Sec.  75.713(d) and 76.713(d) to clarify the types of records that 
a faith-based organization would have to maintain, at a minimum, if it 
made a successful referral. See revised Sec. Sec.  75.713(d)(1), 
76.713(d)(1). These changes were not needed to require recordkeeping 
regarding referrals but to clarify what types of records had to be 
maintained, at a minimum.
vii. Notification of Government and Timeframe of Referral
    Consistent with the discussion in part III, ED has made changes to 
the proposed regulations to distinguish between the responsibilities of 
faith based organizations when they make a successful referral and when 
they are unable to refer a beneficiary to an alternative provider. If a 
faith-based organization makes a successful referral, the final 
regulations specify the content of the record that the organization 
must maintain, requiring a record of the name of the alternative 
provider and its address and contact information. However, when an 
organization cannot make a referral, the organization must promptly 
notify the entity that made the award under which the referral could 
not be made. For example, a grantee that could not make a referral 
would have to promptly notify ED and a subgrantee that could not make a 
referral would notify the State or other pass-through entity. See final 
regulations at 34 CFR 75.713(d), 76.713(d). If the entity that made the 
award cannot identify an alternative provider to which a referral can 
be made on behalf of the faith-based organization, it must promptly 
notify the entity that awarded it financial assistance. For example, if 
a faith-based subgrantee can't make a referral and promptly reports 
that fact to its pass-through entity and the pass-through entity also 
cannot identify and make a referral, the pass-through entity must 
promptly notify ED, which would then be responsible for determining 
whether a referral can be made. All grantees and subgrantees of ED must 
maintain financial records and records regarding compliance with grant 
requirements, including those in these final regulations. See final 
regulations at 2 CFR 200.333; 34 CFR 75.730-75.732, 76.730, 76.731. 
Those records must include documentation of the efforts made by the 
faith-based organization to make a referral and its prompt reporting to 
its awarding agency if it can't make a referral to an alternative 
provider.
viii. Clarification of Who Is Responsible for Making the Referral
    ED has made changes to the proposed regulations so that, in these 
final regulations, grantees, including States, and subgrantees must 
make the initial effort to determine whether a referral can be made 
when a faith-based organization cannot make a referral to an 
alternative provider. Under the proposed regulations, the order in 
which intermediaries and ED must

[[Page 19375]]

make such a determination was not clear, especially in cases where a 
grantee or subgrantee awarded a contract to provide program services. 
These final regulations clearly require a faith-based contractor that 
cannot make a referral to promptly report that fact to the agency that 
made the award to the organization, which has the responsibility to 
determine if a suitable referral can be made. If that agency is a 
subgrantee and it cannot make a referral, it must promptly report that 
fact to the grantee that awarded the subgrant, which then has the 
responsibility to determine if a suitable referral can be made.
    ED notes that in the case of subgrants awarded by States, the 
States are much more aware of the resources in their States and are 
better equipped to identify potential alternative providers than ED. 
Therefore, ED has changed the language in 34 CFR 75.713(d) and 
76.713(d) to make clear that the subgrantee or grantee, including a 
State, that made the award under which the referral could not be made 
must determine whether a referral to an alternative can be made. 
Ultimately, if neither the subgrantee nor grantee, including a State, 
can identify an alternative service provider, the grantee must notify 
ED, which would then have to determine whether a referral can be made. 
ED is developing policy guidance to assist subgrantees and grantees, 
including States, in developing procedures to determine whether an 
alternative placement can be made.
5. Political or Religious Affiliation
a. Merit-Based Decisions
    Covered in part III of this preamble.
b. Access to Federal Funding
    Summary of comments: ED received one agency-specific comment 
regarding the perceived conflict between these final regulations and 
statutory requirements that may require faith-based organizations to be 
treated differently from other organizations. Specifically, the 
commenter indicated that in programs under ESEA that require an LEA to 
provide equitable services to children enrolled in a private school, 
those services may be provided through a contract. See 20 U.S.C. 
6320(a)(5), 7881(a)(5). The commenter further noted, however, that 
under those programs a contractor ``shall be independent of such 
private school and of any religious organization.'' See 20 U.S.C. 
6320(d)(2)(B)), 7881(d)(2)(B). The commenter recommended that the 
proposed regulations be modified to reflect such statutory 
restrictions.
    Response: ED does not believe that a change to the proposed 
regulations is necessary to address this issue. Although the proposed 
regulations provide that a faith-based organization is eligible to 
contract with grantees and subgrantees on the same basis as other 
private organizations, where a statutory provision provides otherwise, 
that provision controls.
    Changes: None.
c. Political Influence
    Consistent with the discussion of this comment in part III, ED has 
made changes to the proposed regulations to more closely track the 
language in Executive Order 13559, which provides that decisions 
``about awards of Federal financial assistance must be free from 
political interference or even the appearance of such interference and 
must be made on the basis of merit, not on the basis of the religious 
affiliation of a recipient organization or lack thereof.'' The proposed 
regulations did not include the phrase ``or lack thereof.'' These final 
regulations now include that phrase. See final regulations at 2 CFR 
3474.15(b)(2); 34 CFR 75.52(a)(2), 76.52(b)(2).
6. Monitoring
    ED is developing policy guidance to ensure that its grantees, 
subgrantees, and contractors of those recipients are fully informed of 
their responsibilities regarding the treatment of private organizations 
and that these organizations understand their responsibilities toward 
the beneficiaries they serve under programs funded by ED. Within 90 
days after this final rule is published, ED intends to provide training 
to its employees regarding their responsibility to ensure that faith-
based organizations are treated fairly in competitions administered by 
ED. ED will also train its employees so they can provide policy 
guidance to applicants and grantees, ensuring that they are aware of 
their responsibilities under these final regulations.
7. Other Issues
a. Nondiscrimination in Employment Decisions/Religious Freedom 
Restoration Act
    Covered in part III of this preamble.
b. Reinforcement of Other Non-Discrimination Protections
    Covered in part III of this preamble.
c. Existing Anti-Discrimination Laws (e.g., Race, Color and National 
Origin)
    Covered in part III of this preamble.
d. Definitions for ``Social Service Program'' and ``Federal Financial 
Assistance''
    As noted in part III of this preamble, ED proposed regulations that 
would apply to all of its discretionary grant programs because most of 
its programs are social service programs. There was no need to 
delineate which ED programs are social service programs because these 
final regulations do not apply to the student financial assistance 
programs of ED. Those programs are not subject to the grant regulations 
in 34 CFR parts 75 and 76, which apply only to discretionary and State-
administered programs of ED. These regulations also do not apply to 
ED's research programs because, even though those programs are subject 
to these final regulations in 34 CFR parts 75 and 76, they do not serve 
beneficiaries. Given that these regulations do not apply to student 
financial assistance or research programs, they also do not address 
whether a particular program was considered a ``social service'' 
program.
e. Display of Religious Symbols
    Covered in part III of this preamble.
f. Eligibility of Faith-Based Organizations To Receive Federal Funding
    Covered in part III of this preamble.
g. Training Requirements
    As noted in the discussion of the monitoring issues in this ED-
specific part of the final rule notice, ED is developing training for 
its employees and policy guidance and resource materials to ensure 
compliance with these final regulations.
8. ED Findings & Certifications
    The following reflect ED findings and certifications that are not 
otherwise addressed in Part V.
Paperwork Reduction Act of 1995
    The Paperwork Reduction Act of 1995 (PRA) does not require you to 
respond to a collection of information unless it displays a valid OMB 
control number. ED displays the valid OMB control number assigned to 
the collection of information and notice requirements in these final 
regulations at the end of each affected section of the regulations. The 
preamble to ED's NPRM assessed the burden imposed under the following 
proposed regulations: 2 CFR 3474.15; 34 CFR 75.712, 75.713, appendix A 
to part 75, 76.712, and 76.713. See 80 FR 47253 at 47261-47265. These 
final regulations make minor changes to these proposed regulations to 
clarify the information that faith-based organizations must

[[Page 19376]]

maintain when they make successful referrals and no longer require 
faith-based organizations to notify ED or any intermediary when 
successful referrals are made. These changes do not affect the burden 
analysis included in ED's NPRM.
Assessment of Educational Impact
    In accordance with section 411 of the General Education Provisions 
Act, 20 U.S.C. 1221e-4, ED requested comments in the NPRM on whether 
the proposed regulations would require transmission of information that 
any other agency or authority of the United States gathers or makes 
available.

B. Department of Homeland Security

    Unlike most of the other Agencies, DHS has not previously issued 
final regulations related to the participation of faith-based 
organizations in DHS programs. In 2008, DHS issued a notice of proposed 
rulemaking on this subject. Nondiscrimination in Matters Pertaining to 
Faith-Based Organizations, 73 FR 2187 (Jan. 14, 2008). In 2015, DHS 
issued a supplemental notice of proposed rulemaking (``SNPRM'') in 
concert with the other Agencies. The SNPRM addressed comments received 
in response to the 2008 notice of proposed rulemaking and proposed 
additional changes to address Executive Order 13559. Except as directly 
relevant to additional comments received on the supplemental notice, 
DHS does not further address those earlier comments here. DHS 
incorporates by reference the preambles to the 2008 and 2015 proposals, 
except where the 2008 proposed regulations were superseded by the 
discussion in the SNPRM, or either proposal is superseded by the 
discussion here.
    DHS received a total of 86 comments on its SNPRM by October 7, 
2015, and did not consider one comment received substantially after 
that date. Many of the comments were identical or nearly identical to 
comments provided to the other Agencies and addressed above in part 
III, although some of these cross-cutting comments did not directly 
apply, or did not apply in the same way, to DHS. Some of those cross-
cutting comments included additional remarks related to DHS's SNPRM; in 
addition, DHS received several other comments specific to its SNPRM. 
Approximately half of the comments DHS received were identical, or 
nearly identical, to one another. Many comments expressed general 
support for the regulations, while other comments flatly opposed any 
Federal financial assistance being provided to faith-based 
organizations. Those general issues were addressed in part III above.
    In the following discussion, we address DHS-specific issues related 
to each of the comment areas addressed in part III. Except where 
specifically noted, to the extent that a comment addressed in part III 
pertained to the DHS SNPRM, DHS adopts the analysis provided therein. 
In addition to the changes noted here, DHS has made small editorial 
changes to improve the readability of the final regulations.
    The following responds to additional comments received in response 
to the SNPRM.
1. Prohibited Use of Direct Federal Financial Assistance
a. ``Explicitly Religious'' Activities
    DHS concurs with the discussion of this subject in part III. DHS's 
SNPRM included language that faith-based organizations may not be 
disqualified from receiving grant funds due to their religious 
motivation, character or affiliation. This revised language appears in 
final 6 CFR 19.3(b).
b. Chaplaincy
    As explained in part III, DHS has made changes to 6 CFR 19.3(e) to 
harmonize language with the Agencies and further clarify that the 
regulations do not affect DHS's ability to fund services that can 
permissibly be funded under the Establishment Clause, notably 
chaplaincy services. All of the comments DHS received on this subject 
are addressed in part III.
2. Direct and Indirect Federal Financial Assistance
    As explained in part III, DHS's SNPRM had differentiated more 
sharply than some other Agencies with respect to the application of 
nondiscrimination requirements to beneficiaries of indirect assistance. 
For the reasons explained above, the final DHS regulations are now 
consistent with those of other Agencies; the beneficiary protection 
against nondiscrimination now also applies to programs in which faith-
based organizations receive indirect assistance. Although recipients of 
indirect assistance must comply with the nondiscrimination requirement, 
such recipients need not modify their program activities to accommodate 
beneficiaries. These changes appear in final 6 CFR 19.5.
3. Intermediaries
a. Role of Intermediary Organizations
    Summary of comments: DHS received specific comments regarding this 
issue, addressed generally in part III, recommending that the 
responsibilities of intermediary entities to ensure compliance with the 
regulations be spelled out more clearly. These commenters urged that 
some of the language in the preamble to the SNPRM be more clearly 
articulated in regulatory text.
    Response: The fundamental requirement that an intermediary ensure 
compliance by sub-recipients is included in the definition of 
``intermediary'' in 6 CFR 19.2. As explained in part III, however, DHS 
agrees that the SNPRM did not fully specify intermediary entities' 
roles in receiving complaints or making referrals where a recipient 
organization was unable to do so. Accordingly, the final regulations 
clarify that complaints may go to either DHS or an intermediary entity, 
and that when a recipient is unable to make a referral despite 
reasonable efforts, it may report that failure to either DHS or the 
intermediary. The intermediary in turn will report the need for 
referral assistance to DHS, and will either help to make the referral 
itself or seek further assistance from DHS. These changes appear in 
final 6 CFR 19.6(a)(5) and 19.7(d), respectively. The model beneficiary 
notice form in appendix A has also been revised to provide an 
opportunity for recipients or intermediaries to include contact 
information for an intermediary.
    Change: None.
4. Protections for Beneficiaries
    DHS concurs in the discussion of this subject in part III. DHS's 
SNPRM made clear that the individual beneficiary notice is only 
required for recipients of direct assistance. Accordingly, no change is 
made in response to that issue. However, DHS has revised the 
requirements related to the content of beneficiary notices to specify 
that providers cannot discriminate based on a refusal to hold a 
religious belief or to attend or participate in a religious practice. 
See 6 CFR 19.6(a)(1) and appendix A. DHS is also adding, in final 6 CFR 
19.7(d), the requirement that, when a provider has been unable to make 
a referral, it report that failure promptly, as explained in part III.
    With respect to determining which entity is responsible for making 
a referral in programs with both an intermediary and a sub-recipient 
provider, DHS has added clarifying language to 6 CFR 19.7(d). Under the 
final regulations, an organization unable to make a referral after 
reasonable efforts may notify either DHS or the intermediary, and then 
either DHS or the intermediary will determine

[[Page 19377]]

whether an appropriate referral provider is available. When the sub-
recipient chooses to contact the intermediary, the intermediary must 
notify, and may seek additional assistance, from DHS. For clarity, DHS 
has also revised the definition of ``beneficiary'' to make clear that, 
except where expressly noted or inapplicable, the term also encompasses 
prospective beneficiaries, and has correspondingly removed the term 
``prospective beneficiary'' from a number of places throughout the 
regulations.
a. Beneficiary Notice
i. Written Notice, Including for Vulnerable Populations
    Summary of comments: One commenter expressed concern that the SNPRM 
was not sufficiently specific about providing the written notice to 
beneficiaries who are members of vulnerable populations, such as child 
victims of human trafficking. The commenter suggested additional 
guidance to recipients on explaining beneficiary protections to 
vulnerable populations, and a requirement that where the recipient is 
concerned the written notice may be insufficient, the recipient should 
provide verbal notice to the beneficiary. Another commenter suggested 
that in addition to individual written notices, a large notice board 
should be displayed wherever social services are provided by faith-
based providers to inform beneficiaries of their rights. That commenter 
also noted the need for language access for beneficiary communities 
containing LEP individuals.
    Response: DHS agrees that effective notice to beneficiaries is 
important, and that additional steps may be appropriate to ensure 
effective communication with particular vulnerable populations, such as 
individuals with limited English proficiency or individuals with 
certain disabilities. As noted above in the part III, recipients of DHS 
financial assistance, as defined by these regulations, are already 
obligated to provide meaningful access to individuals with limited 
English proficiency and not to discriminate on the basis of disability, 
pursuant to Executive Order 13166, Title VI of the Civil Rights Act of 
1964, and the Rehabilitation Act, among other obligations. See also 
DHS, Guidance to Federal Financial Assistance Recipients Regarding 
Title VI Prohibition Against National Origin Discrimination Affecting 
Limited English Proficient Persons, 76 FR 21755 (April 18, 2011). While 
further policy guidance and reference materials, or program-specific 
documents, might recommend additional verbal notice for particular 
populations, including where children are beneficiaries, DHS declines 
to add additional complexity to the general notice requirement in light 
of the protections already in place to require appropriate and 
effective communication with many vulnerable populations.
    While a central notice board, used in addition to individual 
beneficiary notices, would be consistent with the regulations if an 
organization chose to erect one, DHS declines to require such a board. 
Some covered social service programs may not offer their services in a 
location where a large board would be feasible or meaningful. As 
explained in the supplemental notice, DHS anticipates that in cases 
where individual notices are impracticable, such as during a brief, 
potentially one-time interaction (e.g., a soup kitchen), a conspicuous 
posted notice would satisfy the written notice requirement.
    Change: None.
b. Referrals
i. Religious Character of an Organization
    Summary of comments: One commenter expressed concern that 
beneficiaries may not understand what constitutes the ``religious 
character of an organization'' when making an objection and, as a 
result, when confronted with prohibited behavior, such as including 
expressly religious content in a program receiving direct assistance, 
may request a referral as opposed to reporting the violation to DHS or 
to an intermediary awarding entity. The commenter also expressed 
concern that this potential misunderstanding would make the referral 
provision difficult to enforce.
    Response: As described in part III, DHS has revised the proposed 
regulatory text and model beneficiary notice and referral form, at 6 
CFR 19.6(a)(5), to clarify that complaints can be filed on a violation 
of any beneficiary protection, including any denial of service or 
benefits. DHS believes that, with these changes, the regulations and 
model form are sufficiently clear that any program violation can be 
subject to a written complaint to the Office for Civil Rights and Civil 
Liberties (CRCL), which has broad authority to receive and investigate 
such complaints. See 6 U.S.C. 345; www.dhs.gov/crcl. Because the 
referral form will generally be part of the notice to beneficiaries, as 
in the model notice presented in DHS's appendix A, the form will remind 
beneficiaries that a complaint arising from a denial of services or 
benefits is also appropriate. DHS believes that the referral procedures 
and complaint function described in the regulations will enable 
appropriate enforcement of the referral requirement.
    Conversely, DHS believes that basing referrals on a beneficiary's 
objection to the ``religious character'' of the organization is 
sufficiently clear to beneficiaries and recipients. While additional 
policy guidance or reference materials may be provided at a later time, 
DHS expects the term will be understood broadly without further 
interpretation. DHS does not intend, and does not expect of its 
recipients, to scrutinize the religious nature of a beneficiary's 
objection. Rather, recipients should take reasonable steps to identify 
a suitable referral, as required in the regulations, whenever a 
beneficiary asserts such an objection. The beneficiary notice form, for 
this same reason, does not seek any detail on the specific nature of a 
beneficiary's objection.
    Change: Language regarding complaints of denials of services or 
benefits has been added to 6 CFR 19.6(a)(5) and the model notice in 
appendix A.
ii. Nondiscrimination and Beneficiaries
    Summary of comments: One commenter expressed the concern that some 
faith-based organizations may be unable to provide all of the social 
services facilitated through a DHS financial assistance program due to 
the organization's religious mission or charter. The commenter noted 
concern that some organizations may be so constituted as to be unable 
to distribute programming without regard to beneficiaries' religion, or 
could be unable to separate expressly religious content from a DHS-
funded program.
    Response: DHS believes that the regulations include appropriate 
protections to ensure that faith-based organizations do not use their 
Federal financial assistance for prohibited purposes or in a prohibited 
manner. 6 CFR 19.4(c) provides that all participating organizations 
must comply with all program requirements, including those prohibiting 
the use of direct financial assistance from DHS to engage in explicitly 
religious activities. An organization unable or unwilling to comply 
with those terms would be ineligible to serve as a recipient--not 
because of the organization's religious mission or charter, but because 
the organization would not be able to comply with the program 
requirements.
    Change: None.

[[Page 19378]]

iii. Support in Finding Referral Organizations
    Summary of comments: One commenter suggested that the requirement 
under 6 CFR 19.7(a) that ``organizations must promptly undertake 
reasonable efforts'' to make a referral is vague. The commenter 
suggested that it is unclear what constitutes ``reasonable efforts'' 
and therefore recommended that DHS provide recipients with resources or 
guidance on how to fulfill this requirement. In particular, the 
commenter noted that placing a voucher in the hands of the beneficiary 
and expecting the beneficiary to locate an alternative provider may not 
be adequate.
    Response: The referral requirement, which is applicable to programs 
receiving direct assistance (not vouchers), requires referrals to 
alternative providers to which the beneficiary has no objection, not 
issuance of a voucher that the beneficiary would need to take to find 
an alternative provider him or herself. The regulations do not 
anticipate that a program funded directly would provide a mechanism for 
a recipient to convert that assistance into a voucher that would be 
given to a beneficiary seeking a referral. DHS therefore does not 
believe that the referral situation the commenter is concerned about 
would be consistent with the regulation. Furthermore, 6 CFR 19.7(d) 
requires that if an organization determines that it is unable to 
identify an alternative provider, it must promptly notify DHS or an 
intermediary, which will determine whether there is any other suitable 
provider. While DHS does not believe the commenter's concern about 
vagueness requires changes to the proposed regulations, DHS may 
consider providing additional policy guidance or reference materials at 
a future time on what constitutes ``reasonable efforts.'' As explained 
both in part III and below, DHS believes that approximately two hours 
of staff time will satisfy the reasonable effort requirement, and DHS 
also expects that many successful referrals will require far less time.
    Change: No change, beyond the changes to 6 CFR 19.7(d) already 
noted.
5. Political or Religious Motivation
    DHS concurs in the discussion in part III. Accordingly, DHS has 
added language in 6 CFR 19.3(c) clarifying that award decisions must be 
free of the appearance of political interference, and may not be on the 
basis of religion or religious belief or lack thereof, or on the basis 
of religious or political affiliation.
6. Monitoring
    In addition to the discussion in part III, with which DHS concurs, 
DHS received the following comment:
a. Monitoring Compliance Through an Oversight Board and Express 
Conditions
    Summary of comments: One commenter recommended that Federal 
agencies create an independent board to monitor faith-based recipients. 
The same commenter also recommended that DHS condition program funds on 
compliance with, in particular, the requirements for separation in time 
or place of programs supported by direct assistance from other programs 
that contain express religious content.
    Response: DHS agrees with the commenter that ensuring ongoing 
compliance with these regulations and other terms and conditions 
applicable to DHS financial assistance is critical. However, DHS 
believes that internal monitoring and oversight by DHS and 
intermediaries, including through ongoing compliance monitoring of 
grantees and investigation of complaints directed to the DHS Office for 
Civil Rights and Civil Liberties by beneficiaries, will provide an 
appropriate form of ongoing monitoring. An additional outside oversight 
body would create substantial expense for DHS and potentially a 
significant burden on recipients and DHS does not anticipate compliance 
problems of a scale that would justify those burdens.
    With respect to conditioning funds on compliance, 6 CFR 19.4(c) 
requires all DHS programs to apply the same standards to faith-based 
and other organizations, and requires recipient organizations to comply 
with all program requirements. This is tantamount to expressly 
conditioning the funding on compliance with program requirements, as 
the commenter suggests. 6 CFR 19.5 notes that recipients may be subject 
to sanctions and penalties for failure to abide by the 
nondiscrimination requirements. DHS already has in place monitoring 
protocols to review recipients of DHS assistance, including 
intermediaries, for compliance with the terms and conditions of awards 
of Federal financial assistance. These terms and conditions include 
applicable statutory and regulatory requirements. DHS will revise those 
protocols as necessary to ensure that compliance with these regulations 
is monitored along with the other terms and conditions that apply to 
covered financial assistance.
    Change: None.
7. Other Issues
    DHS concurs in the discussion in part III. While DHS received 
comments addressing discrimination on the basis of religion in 
employment, that issue was addressed in the response to comments on the 
initial proposed rulemaking, and no new issues were raised. DHS 
received comments on two additional issues that were within the scope 
of the supplemental notice:
a. Ambiguity in the Purpose of the Proposed Regulations
    Summary of comments: One commenter suggested that DHS revise the 
statement of purpose at proposed 6 CFR 19.1. The commenter stated that, 
as proposed, the statement of purpose focused solely on the benefits to 
faith-based organizations from expanded opportunities to participate in 
Federal social service programs. The commenter suggested that the 
statement of purpose should also reference the benefits described in 
Executive Order 13498, namely that the faith-based organizations are 
well-positioned to deliver services and address vital social needs. The 
commenter suggested that these changes would highlight the value to 
beneficiaries of facilitating faith-based organizations' involvement in 
Federal social service programs.
    Response: DHS is committed to the aims of the relevant Executive 
Orders, including the statement of purpose and policy noted by the 
commenter in Executive Order 13498. Accordingly, DHS has revised the 
language of 6 CFR 19.1 to more clearly articulate that the regulations 
will strengthen the ability of faith-based organizations to provide 
vital services for beneficiaries.
    Change: Additional language has been added to 6 CFR 19.1.
b. Employee Preference and Understaffing
    Summary of comments: One commenter expressed concern that faith-
based organizations that limited their hiring based on religious 
affiliation might be unable to fill positions in rural or remote areas, 
and that beneficiaries requiring immediate assistance in the aftermath 
of a disaster may therefore go unserved by the organization.
    Response: DHS appreciates the concern for adequate provision of 
social services in a range of locations. An organization that cannot 
effectively deliver a social service, whether because its workforce is 
limited to members of one religion or for some other reason, would be a 
poor choice as a recipient in the covered DHS social service program.

[[Page 19379]]

DHS is satisfied that such concerns can be addressed through the 
relevant grant and contract processes by ensuring that recipients are 
able to fulfill all program requirements, including staffing levels.
    Change: None.
8. DHS Findings and Certifications
Regulatory Flexibility Act
    Under the Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-
612, as amended, DHS has considered whether these regulations would 
have a significant economic impact on a substantial number of small 
entities. The term ``small entities'' comprises small businesses, not-
for-profit organizations that are independently owned and operated and 
are not dominant in their fields, and governmental jurisdictions with 
populations of less than 50,000.
    Given the lack of specific small entity data, DHS included an 
initial regulatory flexibility analysis in the SNPRM even though DHS 
does not believe these regulations will impose a significant economic 
impact on a substantial number of small entities. See 80 FR 47294-95. 
Commenters on the SNPRM did not provide significant additional specific 
small entity data. Accordingly, DHS incorporates by reference the 
SNRPM's initial regulatory flexibility analysis into this rule's final 
regulatory flexibility analysis. Except as specifically stated below, 
DHS continues to use the total estimate of approximately 2,600 faith-
based recipient organizations for purposes of this regulatory analysis, 
as well as the other components of the cost estimates that DHS used in 
its SNPRM.
    As described above, DHS has made every effort to ensure that the 
disclosure and referral requirements of the regulations impose minimum 
burden and allow maximum flexibility in implementation by providing a 
model notice to beneficiaries and model beneficiary referral request 
form in appendix A, and by not requiring the social service providers 
to follow a specific procedure for the referrals. In addition, 
individual advance notice forms are not required where it is 
impracticable to provide them. Where individual, advance written notice 
is impracticable because the recipient and beneficiary have only a 
brief, potentially one-time interaction, such as at a soup kitchen, DHS 
believes a conspicuous posted notice would suffice.
    DHS estimates it will take no more than two hours for providers to 
familiarize themselves with the notice requirements and print and 
duplicate an adequate number of disclosure notices and referral request 
forms for potential beneficiaries, and a cost in paper and toner of no 
more than approximately $100.
    DHS further estimates a total cost of making referrals of 
approximately $13,000, spread out over the approximately 2,600 faith-
based recipient organizations.\17\ In its SNPRM, DHS provided an 
estimate of approximately $26,000, based on an estimate that completing 
a referral would take no more than four hours of staff time. 80 FR 
47296-97. One commenter noted that other Agencies' estimates of two 
hours to complete the referral was ``without basis.'' As explained 
further in part III in response to that comment, the Agencies have 
stated that approximately two hours of staff time should suffice to 
establish that reasonable efforts have been expended to attempt to make 
a referral. That is, while many successful referrals will take far less 
time, two hours of unsuccessful should be enough to establish that 
reasonable efforts were taken. As many referrals can successfully be 
made in less than two hours, and two hours will generally constitute a 
reasonable effort when unsuccessful, the average burden will likely be 
far under two hours, but to provide a conservative estimate, DHS is 
using two hours as its estimate of the average burden.
---------------------------------------------------------------------------

    \17\ In this analysis and the Paperwork Reduction Act analysis 
below, DHS assumes that certain grantees and subgrantees under the 
Emergency Food and Shelter Program will not print and disseminate a 
paper notice and referral form to each individual beneficiary. Many 
of the activities supported by that program, such as soup kitchens 
and one-time assistance with rent, mortgage, or utility bills, are 
ones for which individual beneficiary forms would not be 
practicable, and in those cases, a commonly posted notice, produced 
at minimal cost, should suffice. DHS believes that requests for 
referrals will be negligible for activities involving these sorts of 
interactions, such that the overall estimated cost and labor burden 
related to the referral provision is conservative enough to 
encompass the limited number of referral requests that may result 
from these brief interactions.
---------------------------------------------------------------------------

    This estimate yields a total estimate of approximately $13,000--one 
half of what the SNPRM estimated based on a four-hour period of 
reasonable effort.\18\
---------------------------------------------------------------------------

    \18\ As a result of these changes, DHS slightly revises down its 
earlier estimate of the aggregate cost potentially imposed by the 
regulations. The SNPRM estimated a cost of $512,650 or less, but 
with the reduction in estimated staff time to make referrals from 
four hours to two, DHS now estimates that these regulations would 
impose, in the aggregate, a cost of approximately $500,000 annually 
for all affected organizations. The difference in estimated burden 
per recipient organization therefore declines from approximately 
$195 to approximately $191.
---------------------------------------------------------------------------

    Hence DHS estimates a total burden of less than $200 per year for 
each of approximately 2,600 faith-based recipient organizations. This 
is an impact to a substantial number of small entities. However, DHS 
does not believe that a compliance cost of less than $200 per provider 
per year is significant percentage of a provider's total revenue. In 
addition, after the first year, DHS expects the labor cost associated 
with compliance will likely decrease significantly because small 
service providers will be familiar with the requirements.\19\
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    \19\ DHS also notes that the costs associated with these 
regulations' notice provisions generally would be an eligible 
management and administrative cost under DHS grant programs. Such 
costs would count towards the administrative cap cost, if any, for a 
program. The cost of the referral to an alternate provider may also 
be grant-eligible.
---------------------------------------------------------------------------

    DHS expects that this estimate likely overestimates the actual cost 
burden associated with this rulemaking. Consequently, DHS believes 
these final regulations would not impose a significant economic impact 
on a substantial number of small entities.
Paperwork Reduction Act
    Under the Paperwork Reduction Act (PRA) of 1995, Public Law 104-13, 
all agencies are required to submit to the OMB, for review and 
approval, any reporting requirements inherent in a rule. See 44 U.S.C. 
3506. Specifically, a Federal agency may not conduct or sponsor a 
collection of information unless OMB approves the collection of 
information under the PRA, and the collection of information must 
display a currently valid OMB control number. Notwithstanding any other 
provisions of law, no person will be subject to penalty for failing to 
comply with a collection of information if the collection of 
information does not display a currently valid OMB control number. 44 
U.S.C. 3512; 5 CFR part 1320.
    The regulations include new requirements. Section 19.6 requires 
faith-based or religious organizations that provide social services to 
beneficiaries under a DHS program supported by direct Federal financial 
assistance to give beneficiaries (or prospective beneficiaries) a 
notice instructing them of their rights and protections under this 
regulation and to make reasonable efforts to identify and refer 
beneficiaries requesting referrals to alternative service providers. 
The content of the notice and the actions the faith-based or religious 
organizations must take if a beneficiary objects to the religious 
character of the organization are described in the preamble and in the 
regulatory text; an optional model form is provided as appendix A. The 
burden of providing the notice to beneficiaries and identifying and 
referring a

[[Page 19380]]

beneficiary to an alternative service provider are estimated in this 
section.
    Pursuant to program guidance and grant agreements, faith-based 
organizations that would be subject to these requirements would have to 
retain records to show that they have made referrals or sought 
assistance from an intermediary or DHS. Faith-based organizations could 
meet such a retention requirement by maintaining, in the case of paper 
notices, the bottom portion of a notice that takes the form of the 
model provided in the appendix. DHS does not include an estimate of the 
burden of records retention.
    DHS has retention requirements included in information collection 
instruments for DHS programs. Those collection instruments cover 
burdens imposed under program and administrative requirements under 
current information collection instruments that are approved by OMB and 
each of those collections has an OMB-assigned information collection 
control number.
    The retention burden that will be added to those information 
collection instruments under these regulations is so small as to not be 
measurable in the context of all the program and administrative 
requirements in the existing program collection instruments. For 
example, a grantee or subgrantee that has to provide notice under these 
regulations could meet the record-keeping requirement by collecting the 
tear-off portion of the notice for those beneficiaries that request 
alternative provider and keeping it in a designated folder. Therefore, 
DHS has determined that no burden would be added that would require 
estimates of time and cost burden as a result of maintaining records of 
compliance with the regulations.
    DHS must impose the third-party notice requirements to implement 
the requirements of Executive Order 13559.
    DHS has submitted an information collection request (ICR) to OMB to 
obtain PRA approval for the information collection formatting 
requirements contained in this rule. Control number 1601-NEW has been 
assigned to the instrument. The burden for the information collection 
provisions of this rule can be summarized as follows:
    Agency: U.S. Department of Homeland Security, Office for Civil 
Rights and Civil Liberties.
    Title of Collection: Written Notice of Beneficiary Protections.
    OMB ICR Reference Number Control Number: 201505-1601-001.
    Affected Public: State and local governments, not-for-profit 
organizations.
     Total Estimated Number of Organizations: R, where R 
represents the total number of entities that must give notice. To 
estimate this number, DHS relied upon information from two of its 
grant-making components: FEMA and USCIS. FEMA estimates that there are 
approximately 2,600 grantees and subgrantees that would have to provide 
some form of notice to beneficiaries.\20\ USCIS estimates that there 
are approximately 24 grantees subject to the notice requirement.\21\ 
Accordingly, DHS estimates that R is equal to approximately 2,600.
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    \20\ This figure includes known grantees and subgrantees of the 
Emergency Food and Shelter Program, the Crisis Counseling Program, 
and the Disaster Case Management Program.
    \21\ This figure includes known grantees and subgrantees of the 
Citizenship and Integration Grant Program.
---------------------------------------------------------------------------

     Total Estimated Number of Notices: N, where N equals the 
total number of beneficiaries under DHS social service programs to whom 
provision of an individual written notice would be practicable. Faith-
based organizations covered by these regulations are required to 
provide, where practicable, a notice to each beneficiary of DHS-
supported social service programs.\22\ Based on subject-matter expert 
best estimates, DHS estimates that the total annual number of notices 
required under these regulations equals approximately 60,000.\23\
---------------------------------------------------------------------------

    \22\ As noted above, in this analysis, DHS assumes that certain 
grantees and subgrantees under the Emergency Food and Shelter 
Program provide services of a brief and potentially one-time nature 
such that individual notice would not be practicable. Creation of a 
common posted notice in those circumstances would be comparable in 
burden to creating a single notice, and so creation of such common 
notices is encompassed within the estimates provided for compliance 
with the beneficiary notice provision.
    \23\ DHS notes that in light of the nature of the grantor-
grantee-subgrantee framework attendant to some of its programs, it 
is very difficult to estimate with accuracy the total number of 
beneficiaries served by faith-based organizations administering DHS-
supported social service programs. In general, to produce the 
estimate described above, for each covered program, DHS calculated 
the percentage of grantees and subgrantees that may qualify as a 
faith-based or religious organization under these regulations. DHS 
then multiplied that percentage figure by the estimated total number 
of beneficiaries for each program, producing an estimate of the 
total number of individuals served by faith-based or religious 
organizations under each program.
    Where using this methodology was not feasible due to data 
limitations, DHS relied on subject matter experts in the relevant 
grant program to make an appropriate best estimate.
---------------------------------------------------------------------------

     Total Estimated Annual Burden to Provide Each Notice: 
60,000 minutes, or 1,000 hours (equivalent to 60,000 x T, where T is 
less than or equal to one minute).
     Total Estimated Annual Number of Requests for Referrals: N 
x Z, where Z is the percentage of beneficiaries or potential 
beneficiaries who request referrals. DHS assumes that Z is equal to 
.0025.\24\ Under these assumptions, DHS estimates approximately 150 
requests for referrals annually.
---------------------------------------------------------------------------

    \24\ In DHS's experience, beneficiaries do not frequently object 
to receiving services from faith-based organizations. DHS assumes a 
referral request rate of 0.25% for purposes of this analysis, 
consistent with the practice of other agencies in this area. DHS 
expects that this rate overestimates the likely referral request 
rate.
---------------------------------------------------------------------------

     Total time required to complete a referral T, where T is 
less than or equal to 2 hours.
     Total Estimated Annual Referral Burden Hours: B, where B 
is equal to the following:

B = (N x Z) x T.
B = (60,000 x .0025) x 2
B = 300

DHS therefore estimates that the Total Estimated Annual Burden Hours is 
1,300 hours (1,000 for notices, 300 for referrals) or less. DHS expects 
that this significantly overestimates the actual burden hours 
associated with this rulemaking. As noted above, the Agencies received 
one comment about the burden involved, noting that several agencies 
estimated fewer burden hours than did DHS, and DHS now shares the other 
Agencies' approach, on which the two hour estimate is based on an 
understanding of what, on average, would establish that reasonable 
efforts were undertaken. DHS believes that these estimates fairly 
estimate, or over-estimate, the average burden required to discharge a 
recipient's obligation to make reasonable efforts to identify an 
appropriate referral, once successful referrals completed in less time 
are factored in.
    The recipient provider will be required to complete the referral 
form, notify the awarding entity, and maintain information only if a 
beneficiary requests a referral to an alternate provider.
National Environmental Policy Act
    U.S. Department of Homeland Security Management Directive (MD) 023-
01 establishes procedures that the Department and its components use to 
comply with the National Environmental Policy Act of 1969 (NEPA), 42 
U.S.C. 4321-4375, and the Council on Environmental Quality (CEQ) 
regulations for implementing NEPA, 40 CFR parts 1500-1508. CEQ 
regulations allow Federal agencies to establish categories of actions 
which do not individually or cumulatively have a significant effect on 
the human environment and, therefore, do not require an Environmental 
Assessment or Environmental Impact Statement. 40

[[Page 19381]]

CFR 1508.4. DHS MD 023-01 lists the Categorical Exclusions that the 
Department has found to have no such effect. MD 023-01 app. A, tbl.1.
    DHS has analyzed these regulations under MD 023-01 and has 
determined that this action is one of a category of actions which does 
not individually or cumulatively have a significant effect on the human 
environment. These regulations clearly fit within the two Categorical 
Exclusions found in MD 023-01: A3(a): ``Promulgation of rules . . . of 
a strictly administrative and procedural nature''; and A5: ``Awarding 
of contracts for technical support services, ongoing management and 
operation of government facilities, and professional services that do 
not involve unresolved conflicts concerning alternative uses of 
available resources.'' These regulations are not part of a larger 
action. They present no extraordinary circumstances creating the 
potential for significant environmental effects. Therefore, these 
regulations are categorically excluded from further NEPA review.

C. Department of Agriculture

    On August 6, 2015, the Department of Agriculture (USDA) published a 
proposed rule at to amend its ``Equal Treatment'' regulations at 7 CFR 
part 16 consistent with Executive Order 13559. USDA received comments 
from 97 parties. The overwhelming majority of comments received by USDA 
are addressed in the cross-cutting section at part III of this 
preamble. USDA adopts all of those responses that apply to all of the 
Agencies that are publishing final regulations, unless otherwise noted 
in the following discussion. Those responses also indicate that 
Agencies will issue policy guidance or reference materials that will 
further clarify various issues, such as the prohibition against 
``explicitly religious'' activities. USDA will issue non-regulatory 
guidance that will address all of those issues. USDA believes such 
guidance will be the most effective way to address a variety of more 
detailed matters in the contexts in which they typically apply to USDA 
programs. USDA will also continue to provide training for USDA 
employees and grantees involved in those programs to which these rules 
are most typically involved.
    We concur in the resolution of the issues in part III of the 
preamble. Specifically;
     USDA adopts the Executive order's exact language that 
decisions about awards of Federal financial assistance must be made on 
the basis of merit and not an organization's religious character or 
affiliation, or lack thereof; and language prohibiting discrimination 
against beneficiaries based on religion, a religious belief, a refusal 
to hold a religious belief, or a refusal to attend or participate in a 
religious practice.
     USDA has revised 7 CFR 16.4(g)(3) consistent with the 
cross-cutting section of this preamble in part III.D.2, entitled 
``Referrals.'' As indicated therein, the obligation that religious 
organizations will have to notify their awarding entities of any 
alternative provider referrals is more limited in this final 
regulation. This final regulation only requires religious organizations 
to notify their awarding Agencies when they are unable to identify an 
alternative provider, rather than also requiring them to provide such 
notice any time they make a referral. It also now requires that such 
reports be made ``promptly.'' USDA agrees with the commenters that 
recommended these changes.
    USDA addresses below the USDA-specific comments that are not 
addressed in part III of the joint preamble, using the same subheadings 
to which these comments would apply in that section. After those 
comments USDA-specific regulatory findings and certifications are 
indicated.
1. Prohibited Use of Direct Federal Financial Assistance
    Summary of comments: One commenter stated that the USDA proposed 
rule needed clarification as to whether the requirement that explicitly 
religious activities must be separate in time or location from 
federally funded programs applied to indirect funded programs.
    Response: USDA believes the commenter erroneously read 7 CFR 
16.4(b), which clearly refers to direct assistance only when describing 
separation requirements. The final regulation now explicitly states 
that the separation requirements do not apply when funds are provided 
through indirect programs.
    Change: USDA's final regulation clarifies in its own part that 
separation requirements do not apply when funds are provided through 
indirect programs.
    Affected regulations: 7 CFR 16.4(h).
4. Protections for Beneficiaries
a. Beneficiary Notice
i. Child Nutrition Programs
    Summary of comments: A comment representing several faith-based 
organizations expressed concern with the USDA proposed regulation, at 
redesignated 7 CFR 16.4(f), on the notice and referral requirement of 
beneficiary protections. The commenter believed that the proposed 
language in part would require faith-based schools, which provide 
direct Federal assistance through participation in the USDA Food and 
Nutrition Service (FNS) Child Nutrition Programs (CNP), including the 
National School Lunch Program and the School Breakfast Program, to 
provide students enrolled in those schools daily notice of their 
opportunity to be referred to an alternate provider for their school 
meal benefits. The commenter pointed out that the practical but 
unacceptable result could be that, once notified, students could 
potentially choose to leave the school campus to receive school meal 
benefits at an alternate school site.
    Response: USDA shares the commenters concerns and agrees that 
allowing students to leave the school campus to receive USDA FNS school 
meal benefits from an alternate provider would be impractical, create a 
hardship for both the faith based schools as well as alternate provider 
schools, and would represent a potentially hazardous situation for 
students. In response to the comments, USDA has concluded that, with 
respect to the notice and referral requirement, the Child Nutrition 
Programs should be treated in the same manner as an indirect assistance 
program under these rules. As with an indirect assistance program, the 
benefits under these programs are provided as a result of a ``genuine 
and independent choice'' on the part of parents or guardians who chose 
to enroll children in a faith-based school as an alternative to a 
public school--and there is broad awareness at the time of enrollment 
that the benefits are not dependent on the choice of a faith-based 
school.
    Change: USDA's final rule amends the new 7 CFR 16.4 to extend the 
exemptions currently contained in 7 CFR 16.3(b) to also include 
exemptions for the notice and referral requirements for programs such 
as the USDA Child Nutrition Programs.
    Affected regulations: 7 CFR 16.4(h).
ii. International Programs
    Summary of comments: One commenter requested clarification that the 
notice and referral obligations in USDA's proposed 7 CFR 16.4(f) and 
(g) applied only to domestic social services programs. The commenter 
noted that the IWG report, which the Agencies used to develop these 
regulations, acknowledge that the model regulations and guidance for 
Agencies focus on domestic considerations and that the Agencies must 
consider additional implications when applying the guidance to programs 
operating in foreign countries.

[[Page 19382]]

    Response: USDA agrees with the commenter's request that the 
beneficiary rights provisions in the final regulations should apply 
only to domestic Federal assistance programs. The commenter accurately 
describes the recommendations of the IWG report with respect to the 
applicability of the guidance to programs in foreign countries. In 
addition, note that, as explained in the joint preamble, the notice and 
referral requirements for recipients of direct financial assistance 
apply only to domestic programs.
    Change: USDA's final regulations include language stating that the 
notice and referral obligations contained in its regulations apply only 
to those recipients administering domestic programs.
    Affected regulations: 7 CFR 16.4(f), (g).
iii. Brief Interactions With Beneficiaries
    Summary of comments: A number of commenters, including national 
coalitions of food banks and soup kitchens, as well as individual local 
and regional food banks and soup kitchens, expressed concerns that the 
regulations did not include the language set forth in the original 
preamble, that allows certain service providers to post a general 
notice to beneficiaries if the provider has only a brief interaction 
with the beneficiary, rather than provide individual notice to each 
beneficiary. Additionally, the commenters noted that there were 
additional scenarios in which a general notice to beneficiaries is 
appropriate.
    Response: USDA shares the commenters concerns and agrees that there 
are circumstances when a posting of a notice (rather providing than an 
individual notice) is appropriate. Additionally, there are more 
circumstances than those listed in the original preamble, and set forth 
below, when such posted notice would be appropriate. As noted in USDA's 
proposed regulations preamble, when the service provided to the 
beneficiary involves only a brief interaction between the provider and 
the beneficiary, and the beneficiary is receiving what may be a one-
time service from the provider (such as a meal at an emergency kitchen, 
or one-time assistance with rent, mortgage payments, or utility bills), 
the service provider may post the written notice of beneficiary 
protections in a prominent place, in lieu of providing individual 
written notice to each beneficiary. USDA agrees with the commenters 
that this circumstance would also extend to a circumstance when a 
beneficiary is receiving food for home consumption at a food pantry. 
There is nothing in the regulation itself that requires more than this, 
only that the notice be ``given in a manner prescribed by USDA.'' 
Retaining the proposed regulatory text will allow each agency the 
discretion to assess the proper circumstances for the notice and to 
adjust those requirements as experience dictates. To further clarify 
this requirement, FNS will provide guidance on the manner of the 
beneficiary notice consistent with this response, following publication 
of this final regulation.
    USDA agrees that record-keeping of referrals is important. USDA 
will continue to conduct oversight according to its program activities, 
and will provide program specific guidance on record-keeping because 
smaller program record-keeping requirements may be ill-suited for 
larger programs. For instance, USDA has estimated that The Emergency 
Food Assistance Program (TEFAP) would likely serve nearly 3.5 million 
people affected by this rule, and may issue nearly 3,500 referrals. 
Applying the same record-keeping requirements for smaller programs to 
TEFAP, which is largely made-up of volunteer-based organizations, may 
prove to be too burdensome. Thus, FNS will provide program specific 
guidance on record-keeping requirements consistent with redesignated 7 
CFR 16.1.
    Change: None
b. Referrals
i. Recordkeeping Requirements and Exemption for Faith-Based 
Organization When There Are No Alternative Providers in the Geographic 
Area
    Summary of comments: A number of commenters, including national 
coalitions of food banks and soup kitchens, as well as individual local 
and regional food banks and soup kitchens, expressed concerns that the 
record-keeping requirements might impose too great a burden on 
volunteer-based organizations. Additionally, the commenters expressed 
concern that in certain, particularly rural parts of the country, a 
faith-based organization might be the only provider of the certain USDA 
services.
    Response: USDA agrees with both of these concerns. Because many of 
USDA programs include services provided by volunteer organizations, the 
regulation provides that ``[i]n some cases, USDA may require that the 
awarding entity provide the organization with information regarding 
alternate providers'' and that ``[a]n organization which relies on such 
information provided by the awarding entity shall be considered to have 
undertaken reasonable efforts to identify an alternate provider.'' As 
an example of these types of cases, FNS will provide guidance to State 
agencies on when they must provide information regarding alternative 
providers following publication of this final regulation. In these 
cases, it will relieve the burden on volunteer-based organizations 
while also providing consistent guidance to beneficiaries, developed 
and provided by professionals with the most knowledge of alternative 
providers in the region. USDA anticipates that this may include 
referral to Web sites, hotlines, or other service providers funded by 
the State agency.
    Additionally, as stated in the preamble to the proposed rule, 
``[i]t must be noted that in some instances, the awarding entity may 
also be unable to identify a suitable alternate provider within a 
reasonable geographic proximity.'' Thus, the regulation requires only 
that the service provider ``refer the beneficiary to an alternate 
provider, within reasonable geographic proximity to the provider, if 
available'' (emphasis added).
    Change: None.
8. USDA Findings & Certifications
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. USDA has determined that this rule will not 
have a significant impact on a substantial number of small entities. 
Consequently, USDA has not prepared a regulatory flexibility analysis.
Executive Order 12988: Civil Justice Reform
    This final rule has been reviewed in accordance with Executive 
Order 12988, ``Civil Justice Reform.'' The provisions of this final 
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.

[[Page 19383]]

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.
    USDA's Center for Faith-Based and Neighborhood Partnerships 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. If a Tribe 
requests consultation, the Center for Faith-Based and Neighborhood 
Partnerships will work with the USDA Office of Tribal Relations to 
ensure meaningful consultation is provided where changes, additions and 
modifications identified herein are not expressly mandated by Congress.
Paperwork Reduction Act (PRA)
    In accordance with the Paperwork Reduction Act (PRA) of 1995 (44 
U.S.C. chapter 35, as amended), an agency may not conduct or sponsor a 
collection of information, and a person is not required to respond to a 
collection of information, unless the collection displays a currently 
valid OMB control number. The preamble to the USDA's proposed 
regulations assessed the burden imposed under this final regulation. 
This final regulation makes no changes to the proposed regulations and, 
therefore, do not affect USDA's burden analysis.

D. Agency for International Development

    USAID received a total of 237 comments on its August 6, 2015 NPRM, 
and did not consider any comments received after that comment end date 
of October 7, 2015. Many of the comments were identical to comments 
provided to the other Agencies and addressed above in part III, 
although many of these cross-cutting comments did not directly apply, 
or did not apply in the same way, to USAID. Some of those cross-cutting 
comments included additional remarks specific to USAID's proposed 
regulations; in addition, USAID received several other comments only 
directed to its proposed regulations. Approximately 90% of the comments 
USAID received were identical or nearly identical to one another.
    As reflected below, unless otherwise specified, for those comments 
received by USAID that are addressed fully in the cross-cutting section 
in part III, USAID adopts those responses. We address in this part IV.D 
of the preamble the USAID-specific comments not addressed in part III 
of the preamble and provide the USAID-specific findings and 
certifications.
    Some of the cross-cutting comments addressed in part III of the 
preamble were not received by USAID, but are nevertheless applicable to 
the USAID regulations. Unless noted either in part III or this agency-
specific part IV.D of the preamble, we concur in the resolution of the 
issues in that part of the preamble.
    As noted in the August 6, 2015 NPRM, on March 25, 2011, USAID 
issued an NPRM proposing amendments to 22 CFR 205.1(d) of the final 
rule on participation by religious organizations in USAID programs 
originally published on October 20, 2004 (69 FR 61716, codified at 22 
CFR parts 202, 205, 211, and 226 (22 CFR part 226 is now codified at 2 
CFR part 700)). That process is ongoing. USAID is not making any 
amendments to 22 CFR 205.1(d) under this rulemaking.
1. Prohibited Use of Direct Federal Financial Assistance
    In addition to the applicable cross-cutting comments on the issue 
of prohibited use of direct Federal financial assistance that are 
summarized in part III of this preamble, USAID provides the following 
additional discussion.
a. Chaplaincy
    Summary of comments: USAID did not receive any comments on the 
issue of chaplaincy that were different from or more specific than the 
applicable cross-cutting comments that are summarized in part III of 
this preamble.
    Response: USAID makes the regulatory changes noted below, 
consistent with the explanation provided in the applicable cross-
cutting comments that are summarized in part III of this preamble.
    Change: Revise 22 CFR 205.1(b) to clarify that that the regulations 
do not restrict USAID's authority under applicable Federal law to fund 
activities, such as the provision of chaplaincy services that can be 
directly funded by the Government consistent with the Establishment 
Clause.
    Affected regulations: 22 CFR 205.1(b).
b. Nondiscrimination and Programs Funded in Part by Federal Financial 
Assistance
    Summary of comments: In addition to the applicable cross-cutting 
comments on the issue of nondiscrimination and programs funded in part 
by Federal financial assistance that are summarized in part III of this 
preamble, one commenter specifically noted that given the centrality of 
USAID's international operations to achieving its goal of promoting 
economic development and distributing humanitarian aid, it should adopt 
specific language stating that these regulations apply to beneficiaries 
that are both U.S. and non-U.S. citizens, as well as to federally 
subsidized providers that are both U.S. and non-U.S. based.
    Response: USAID declines to adopt such a statement. USAID has been 
implementing a nondiscrimination provision pursuant to its original 
regulations since 2004 without such a statement. Virtually all 
beneficiaries of USAID-funded programs are non-U.S. citizens; the 
language of these regulations is clear that it applies to all 
beneficiaries of USAID-funded programs. The existing language is also 
clear that this requirement applies to all organizations that receive 
funding from USAID. USAID further implements the requirements of the 
existing regulations by means of a mandatory standard provision 
included in award documents. That standard provision is already 
included in the list of standard provisions that apply to non-U.S. 
NGOs, and the standard provision updated as a result of this rulemaking 
will similarly be so included.
    Change: None.
    Affected regulations: None.
2. Direct and Indirect Federal Financial Assistance
    USAID does not fund indirect Federal financial assistance programs 
as that term is used within Executive Order 13559. Thus, USAID did not 
include a discussion of indirect Federal financial assistance in its 
NPRM and does not adopt the discussion of the issue in part III B of 
this preamble.
3. Intermediaries
    Summary of comments: In addition to the applicable cross-cutting 
comments on the issue of intermediaries that are summarized in part III 
of this preamble, commenters supported USAID's decision to clarify that 
the regulations'

[[Page 19384]]

requirements are binding on intermediaries. Some commenters encouraged 
USAID to go even further in adopting provisions that explicitly 
articulate intermediary responsibilities. For example, some commenters 
encouraged USAID to take a more active role in establishing the 
``responsibilities of intermediaries'' and the ``applicability of 
requirements to sub-awardees.''
    Response: USAID declines to specify further the responsibilities of 
intermediaries. The regulations in their current form make clear that 
requirements relating to protections for beneficiaries and restrictions 
on prohibited uses of Federal financial assistance apply to all 
organizations that receive USAID financial assistance, regardless of 
whether that assistance is received through a prime award or sub-award. 
Further, the international nature of USAID's work requires that USAID 
frequently enter into grants and cooperative agreements with non-
governmental organizations (NGOs), and these agreements regularly 
implicate sub-awardees. It is already articulated and understood that 
the legal and policy restrictions that attach to prime awardees flow 
down to sub-awardees, and that prime awardees have the responsibility 
to ensure that sub-awardees understand these requirements, including 
those related to the Establishment Clause. For example, a mandatory 
standard provision included in assistance agreements to U.S. NGOs 
provides that restrictions imposed on primary recipients apply to 
subrecipients unless subrecipients are specifically excluded from 
coverage. Thus, to articulate additional intermediary responsibilities 
would unnecessarily muddle an otherwise established and cogent regime 
of intermediary requirements. Finally, USAID will continue to offer 
training in this area.
    Change: None.
    Affected regulations: None.
4. Protections for Beneficiaries
    USAID does not adopt the discussion of the cross-cutting comments 
related to protections for beneficiaries discussed in part III of this 
preamble. Instead, USAID addresses the comments it received on that 
topic in the following discussion.
a. Beneficiary Notice
    Summary of comments: USAID received comments both criticizing and 
supporting its decision not to require service providers to provide 
written notice of beneficiary protections. Those in favor of written 
notice argued that Executive Order 13559 explicitly contemplates such a 
requirement. These commenters further noted that USAID is the only 
agency not to require notice. One commenter added that ``the value of 
the beneficiary protections required by the Executive order is greatly 
reduced if beneficiaries are not made aware that they have such 
protections,'' particularly in international scenarios where 
beneficiaries may be ``unfamiliar with our concepts of religious 
freedom and equality.'' Some commenters further recommended that USAID 
not only require written notice, but that such notice be translated 
into the languages of host countries.
    Other commenters agreed with USAID's decision not to require 
written notice of beneficiary rights. These commenters highlighted the 
administrative concerns inherent in providing a written notice. 
Commenters forecasted that additional regulatory burdens would 
``diminish the ability of the faith-based community and other 
neighborhood organization[s] to carry out their intended purposes of 
providing services to those in need in a timely and efficient manner.'' 
Other commenters opposed the notice requirement as a matter of 
fairness, arguing that ``the secular agency should have a similar 
burden to refer to a religious organization'' so that ``the government 
is neither favoring nor discriminating against a religious or a 
secular'' organization.
    Response: USAID declines to adopt a written notice requirement. The 
Working Group, in its April 2012 report, set forth model regulations 
that include a requirement for faith-based organizations to provide 
beneficiaries with a written notice that informs these beneficiaries 
that, among other things, they may request an alternative provider if 
they object to the religious character of the organization.
    This report also, however, emphasized that it focused mostly on 
domestic programs. The report states: ``When applying [the guidance 
contained in this report] to the special circumstances of programs 
operating in foreign countries, additional considerations may be 
implicated. Guidance for these programs should be provided, as 
appropriate, by departments and agencies operating them in consultation 
with the Department of Justice, rather than by this report, which 
focuses largely on domestic considerations.'' These final regulations 
reflect these consultations.
    USAID operates in more than 100 countries, many of which are home 
to multiple, varied national languages. In many of these countries, all 
of the beneficiaries of USAID programs speak languages other than 
English. Also, many of the countries in which USAID operates support an 
official state religion or incorporate religion into government 
apparatuses. Accordingly, in a large number of cases, there simply 
would be no alternative provider that would meet the criteria 
contemplated by the Executive order and the Working Group report. In 
the international context, therefore, the notice and referral 
requirements are unworkable and could place an excessive burden on 
faith-based organizations. Thus, USAID declines to place such a 
requirement on these providers. Of course, USAID will continue to 
update and enhance its training, including its training on beneficiary 
protections, in accordance with the non-regulatory changes required by 
Executive Order 13559. USAID also notes that it communicates and 
promotes important religious freedom messages through separate, 
targeted programs, such as its democracy, human rights, and vulnerable 
populations initiatives.
    Change: None.
    Affected regulations: None.
b. Referrals
    Summary of comments: USAID received comments both criticizing and 
supporting its decision not to require referrals to alternative 
providers for beneficiaries who object to the religious character of a 
service provider. Many commenters who supported a referral requirement 
contended that Executive Order 13559 explicitly contemplates referrals. 
These commenters further noted that of all the agencies under the 
purview of Executive Order 13599, ``USAID is the only agency that made 
no effort to fulfill this Executive order mandate.'' Although these 
commenters acknowledged the unique challenges of providing referrals in 
an international context, they nevertheless maintained that these 
challenges do not ``excuse the agency from compliance with the 
principles of the Establishment Clause, nor with the terms of the 
Executive order.''
    Other commenters supported USAID's decision not to require 
referrals to alternative providers. These commenters highlighted the 
practical difficulties inherent in the referral process. Specifically, 
these commenters argued that many faith-based organizations lack the 
personnel and finances necessary to comply with a complex referral 
regime. These commenters further highlighted the ``extreme and 
difficult circumstances'' unique to international service work, as well 
as the reality that ``there are no

[[Page 19385]]

alternative providers'' in many international settings.
    Response: USAID declines to adopt a referral requirement. As noted 
above, in its April 2012 report, the Working Group emphasized that its 
model regulations, which encourage referrals to alternative providers, 
focused mostly on domestic programs. The report states: ``When applying 
[the guidance contained in this report] to the special circumstances of 
programs operating in foreign countries, additional considerations may 
be implicated. Guidance for these programs should be provided, as 
appropriate, by departments and agencies operating them in consultation 
with the Department of Justice, rather than by this report, which 
focuses largely on domestic considerations.'' These final regulations 
reflect these consultations.
    As also noted above, USAID specifically considered the fact that 
many of the countries in which it operates support an official state 
religion or incorporate religion into government apparatuses. 
Accordingly, in a large number of cases, there simply would be no 
alternative provider that would meet the criteria contemplated by the 
Executive order and the Working Group report. In the international 
context, therefore, the notice and referral requirements are unworkable 
and could place an excessive burden on faith-based organizations. Thus, 
USAID declines to place such a requirement on these providers.
    Change: None.
    Affected regulations: None.
5. Political or Religious Affiliation
    Summary of comments: USAID did not receive any comments on the 
issue of political or religious affiliation that were different from or 
more specific than the applicable cross-cutting comments that are 
summarized in part III of this preamble.
    Response: USAID makes the regulatory changes noted below, 
consistent with the explanation provided in the applicable cross-
cutting comments that are summarized in part III of this preamble.
    Change: Revise 22 CFR 205.1(j) to clarify that decisions about 
awards of Federal financial assistance must be free from political 
interference or even the appearance of such interference and must be 
made on the basis of merit, not on the basis of religious affiliation 
of a recipient organization or lack thereof.
    Affected regulations: 22 CFR 205.1(j).
6. Monitoring
    Summary of comments: USAID did not receive any comments on the 
issue of monitoring that were different from or more specific than the 
applicable cross-cutting comments that are summarized in part III.F of 
this preamble.
    Response: USAID takes compliance with applicable statutes and 
regulations seriously and performs a number of steps to ensure 
compliance with these requirements. Such steps can include the 
following: Training for USAID and implementing partner staff on the 
requirements, including those relating to the Establishment Clause; 
post-award conferences with implementing partners to discuss the terms 
and requirements of their new awards; and regular oversight of 
compliance with award terms during the life of the award. Finally, 
USAID's Office of the Inspector General provides independent oversight 
of all of USAID's programs.
    USAID's existing regulations on this topic are already subject to 
the above processes. While USAID is making changes to its regulations 
pursuant to this rulemaking, those changes do not increase the burden 
of ensuring compliance with the regulations. Because USAID is not 
adopting the requirements for written notice to beneficiaries or 
referrals to alternative providers, both of which could require the 
addition of new monitoring processes, USAID believes its existing 
processes are sufficient to monitor and ensure compliance with USAID's 
regulations, including these final regulations. USAID will nevertheless 
continue to enhance its training on compliance with the requirements of 
the Establishment Clause.
    Change: None.
    Affected regulations: None.
7. Other Issues
    USAID adopts the discussion of Other Issues found in part III.G of 
this preamble, and provides the additional information on definitions 
below.
a. Definitions for ``Social Service Program'' and ``Federal Financial 
Assistance''
    USAID does not provide a definition of ``social service program'' 
or ``Federal financial assistance'' because such definitions are not 
necessary for its regulations. USAID has already included the 
definitions appropriate for its programs in its existing regulations, 
found at 22 CFR 205.1(a).
8. USAID Findings & Certifications
Regulatory Flexibility Act
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601 et seq.), USAID has considered the economic 
impact of the regulations. USAID certifies that the regulations will 
not have a significant economic impact on a substantial number of small 
entities.
Paperwork Burden
    These regulations do not impose any new recordkeeping requirements 
nor do they change or modify an existing information collection 
activity. Thus, the Paperwork Reduction Act does not apply to these 
final regulations.

E. Department of Housing and Urban Development

    This joint final regulation updates all existing HUD regulations 
governing the equal participation of faith-based organizations in HUD 
programs to reflect the new fundamental principles and policymaking 
criteria in Executive Order 13559. HUD's proposed regulations included 
amendments to 24 CFR 5.109 to reflect the Executive Order 13559 
changes, and amendments to 24 CFR parts 92, 570, 574, 576, 578, 582, 
583, and 1003 to replace duplicate faith-based regulations with cross-
references to 24 CFR 5.109. The proposed rule also included a sample 
written notice for beneficiaries. Consistent with the discussion of the 
final regulation in part II, the cross-cutting responses to public 
comments in part III, and HUD's agency-specific section in part IV.E, 
HUD makes the following minor changes:
     HUD adopts the Executive order's approach that decisions 
about awards of Federal financial assistance must be made on the basis 
of merit and not an organization's religious character or affiliation, 
or lack thereof; and language prohibiting discrimination against 
beneficiaries based on religion, a religious belief, a refusal to hold 
a religious belief, or a refusal to attend or participate in a 
religious practice.
     HUD clarifies (1) that beneficiaries may report any 
suspected violation of these protections, to include any denial of 
services or benefits by an organization, by contacting or filing a 
written complaint to HUD or an intermediary, if applicable; (2) which 
party is responsible for seeking an alternative provider after the 
faith-based organization has undertaken a reasonable effort to locate 
an alternative provider; and (3) the recordkeeping requirements for 
referring organizations.

In addition, in HUD's final regulation, HUD uses the term ``programs 
and activities'' (and its variants, such as, ``programs or 
activities'') which is used in HUD's 2004 final regulation at 69 FR 
41712 in place of language in its August 6, 2015, proposed regulation. 
HUD returns to this language in its final regulation to clarify that 
the scope of

[[Page 19386]]

applicability of HUD's regulations governing the equal participation of 
faith-based organizations is not changing. HUD also makes edits to the 
last sentence in 24 CFR 5.109(j) to clarify that a faith-based 
organization that disposes of real property acquired or improved with 
Federal financial assistance from HUD, or changes the use of such real 
property, is subject to the real property use and disposition 
requirements of 2 CFR part 200, subpart D, and program-specific 
requirements, as directed by HUD. Lastly, HUD is not amending 24 CFR 
parts 582 and 583 because these regulations apply only to new or 
renewing grants under these programs and all grants under these 
programs will be renewed under the Continuum of Care program at 24 CFR 
part 578, which is being amended by this final regulation.
    HUD at the final rule includes a sample written notice which 
follows this regulation in the Federal Register as appendix E.
    Unless otherwise specified, all comments received by HUD are 
addressed fully in the cross-cutting comment summary section in part 
III of this preamble and the responses to those comments are adopted by 
HUD. HUD addresses here the HUD-specific comments not addressed in part 
III of the preamble, provides agency-specific responses called for in 
part III, and provides the HUD-specific findings and certifications. 
This agency-specific discussion is organized in the same manner as part 
III of the preamble.
    In response to HUD's proposed regulation, HUD received 84 public 
comments. HUD received an additional comment after the deadline and 
while the comment will not be part of the rule's official docket, HUD 
has reviewed the comment to determine if issues were raised that were 
not addressed in comments submitted by the deadline. HUD received 
comments from providers, religious associations, nonprofit 
organizations and interested individuals. HUD received many comments in 
support of the proposed regulation's inclusion of new definitions, the 
beneficiary protections, and clarification of explicitly religious 
activities. Commenters also wrote in support of the changes provided to 
strengthen religious protection for both faith-based providers and 
beneficiaries. HUD appreciates those comments in support of its rule.
1. Prohibited Use of Direct Federal Financial Assistance
a. Chaplaincy
    Response: In response to comments received on the proposed 
chaplaincy language (see part III.A), HUD is not including chaplaincy 
language in its final regulation. While HUD agrees that some explicitly 
religious activities are eligible for certain Federal financial 
assistance and permitted under the Establishment Clause (and, 
therefore, not subject to the direct Federal financial assistance 
restrictions under this final regulation), the subject matter of 
chaplaincy services has not arisen and is unlikely to arise in HUD-
funded programs. None of HUD's financial assistance programs currently 
provide for the funding of chaplaincy. Therefore, HUD has no need to 
address chaplaincy in this regulation.
    Change: None.
    Affected regulations: None.
b. Scope of HUD's Regulations
    Summary of comments: A commenter requested clarification from HUD 
on why ``programs, activities, or services'' was replaced with 
``activities'' in 24 CFR 5.109(e) of the proposed rule when discussing 
explicitly religious activities. The commenter wrote that the change is 
inconsistent with the Executive order and seems to relax restrictions 
on directly funded organizations.
    Response: Except as provided in this final regulation, HUD is not 
changing the scope of the activities and programs covered by this 
regulation. HUD is restoring the regulatory language on ``programs and 
activities'' (and its variants, such as ``programs or activities''), as 
appropriate, to remove possible confusion about changes to the scope of 
covered programs and activities. HUD understands the term 
``activities'' to include ``services.'' When the term ``service'' is 
used in this regulation, it refers to an activity provided under a HUD 
program or with Federal financial assistance from HUD.
    Change: None. Although the final regulation uses different language 
than HUD's proposed regulation, the final regulation language is 
consistent with HUD's 2004 final regulation.
    Affected regulations: 24 CFR 5.109(a), (c), (e), (g), (h) and (j).
2. Direct and Indirect Federal Financial Assistance
    Response: Consistent with the discussion in part III.B above, HUD 
maintains the language in 24 CFR 5.109(h) of the proposed rule which 
applies nondiscrimination requirements to all recipients of Federal 
financial assistance under HUD programs. This final regulation expands 
the scope of the nondiscrimination provision in HUD's 2004 final 
regulation, which applied only to recipients of direct HUD Federal 
financial assistance. Under this final regulation, recipients of 
indirect HUD assistance--for example, an owner of a housing unit that 
receives HUD assistance because of the true private choice of an 
individual or family to reside at the owner's housing unit, such as 
under the Housing Choice Voucher Program or other tenant-based rental 
assistance activities funded under HUD programs (e.g., HOME, HOPWA)--
become subject to the nondiscrimination requirements of 24 CFR 5.109(h) 
at the time the recipient agrees to receive the HUD assistance in 
accordance with program regulations. Other requirements in this final 
regulation that apply only to direct Federal financial assistance do 
not apply to a recipient whose only participation in a Federally funded 
program or activity is as a recipient of indirect Federal financial 
assistance.
    The following scenario provides an example: The local public 
housing authority (PHA) accepts an eligible family to the Housing 
Choice Voucher program in accordance with 24 CFR part 982. Under 
program regulations, the family may select a private-market housing 
unit of its choosing and benefit from rental subsidy payments paid to 
the owner of the unit on the family's behalf. When the family selects a 
unit and the PHA determines that the unit meets the housing quality 
standards and other program requirements, the owner of the unit enters 
into a housing assistance payments (HAP) contract with the PHA to 
receive the rental subsidy payments. The owner of the unit in this 
example only becomes subject to the nondiscrimination requirements of 
24 CFR 5.109(h) upon execution of the HAP contract. Under this 
scenario, the owner of the unit, if not otherwise receiving direct 
Federal financial assistance for the housing, is not subject to other 
provisions of this regulation. HUD will provide additional guidance on 
how this regulation applies to indirect Federal financial assistance 
programs.
    Change: None.
    Affected regulations: None.
3. Intermediaries
a. Intermediaries
    Response: In response to the comments in part III.C on 
intermediaries, HUD believes its definition of ``intermediary'' and the 
provision on intermediary

[[Page 19387]]

responsibilities at 24 CFR 5.109(f) make clear that an intermediary is 
responsible for ensuring that all organizations, including faith-based 
organizations, may participate equally in HUD programs and that all 
organizations must comply with this regulation. Additionally, under HUD 
regulations, intermediaries in HUD programs are already responsible for 
ensuring that subrecipients comply with HUD's requirements, including 
civil rights related program requirements. Assurance of such compliance 
is received through the mechanism (e.g., contract, grant, sub-grant, 
sub-award, or cooperative agreement) whereby HUD funds the 
intermediary.
    Change: None.
    Affected regulations: None.
b. State Responsibilities
    Summary of comments: Commenters recommended that HUD apply the 
language it uses to discuss a State's requirement to all entities, 
i.e., that a State has the ``responsibility to ensure that providers 
are selected, and deliver services, in a manner consistent with the 
First Amendment's Establishment Clause.''
    Response: HUD declines to make the suggested edit. The language 
referenced in this comment is a reminder that State action is bound by 
constitutional requirements, which cannot be discharged by a State's 
use of intermediaries.
    Change: None.
    Affected regulations: None.
4. Protections for Beneficiaries
a. Beneficiary Notice
i. Reporting Violations of the Protections in the Written Notice
    Response: In response to comments under part III.D.1 on reporting 
violations of the protections in the written notice discussion above, 
HUD is requiring that the written notice also include a statement that 
beneficiaries may report, which may include reporting by filing a 
written complaint, suspected violations of the protections of this 
regulation to either HUD or the intermediary. When the beneficiary 
reports a violation to HUD, the beneficiary should report the violation 
to the appropriate HUD office that administers the program (e.g., the 
Office of Public and Indian Housing, the Office of Community Planning 
and Development). HUD encourages housing providers to include in their 
written notice the name of the HUD office that funds the relevant 
program, and the telephone number for the local HUD office.
    If HUD or an intermediary is notified of a suspected violation of 
the requirements, the information will be handled in the same manner 
that complaints of possible violations of other program requirements 
are handled, which may include HUD undertaking some form of 
investigation and seeking a response from a recipient before making a 
determination on a complaint that HUD receives. Whenever a recipient of 
HUD Federal financial assistance fails or refuses to comply with the 
requirements of this regulation, such failure or refusal constitutes a 
violation of the requirements under the program in which the recipient 
is operating, and the recipient will be subject to the remedies 
available to correct the violation, as provided for under the 
applicable program, which may include the withholding of HUD 
assistance.
    Furthermore, if a suspected violation of the requirements under 
this rule concerns possible housing discrimination, then an individual 
may file a complaint under the Fair Housing Act. A complaint of 
discrimination based on religion or any other protected characteristic 
may be investigated and enforced under the Fair Housing Act. Such 
complaints can be filed through HUD's Office of Fair Housing and Equal 
Opportunity at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp/online-complaint or 1-800-669-
9777. Hearing- and speech-impaired persons may access this number 
through TTY by calling the Federal Relay Service at 1-800-877-8339 
(this is a toll-free number). A housing provider who is found to have 
violated the Fair Housing Act may be liable for actual damages, 
injunctive and other equitable relief, civil penalties, and attorney's 
fees. HUD encourages housing providers to include these phone numbers 
in their written notice.
    Change: None.
    Affected regulations: 24 CFR 5.109(g)(1)(v).
b. Referrals
i. Clarification of Who Is Responsible for Making the Referral
    Response: In follow-up to the comments in part III.D.2 asking for 
clarity regarding who is responsible for making referrals to 
alternative providers, HUD clarifies in this final regulation that the 
faith-based organization in receipt of direct Federal financial 
assistance is responsible for undertaking a reasonable effort to refer 
a beneficiary that objects to the religious character of a provider to 
an alternative provider. HUD believes that the recipient or 
intermediary is in the best situation to know of other providers in the 
geographic area. If, after a faith-based organization undertakes 
reasonable efforts to locate an alternative provider, the faith-based 
organization cannot find an alternative provider then the faith-based 
organization shall promptly contact either the intermediary or, if 
there is no intermediary, HUD. If both the faith-based organization and 
the intermediary are unable to locate an alternative provider, the 
intermediary must contact HUD for assistance.
    Change: None.
    Affected regulations: 24 CFR 5.109(g)(3).
ii. Coordinated Entry System and Referral
    Summary of comments: One commenter wrote that the referrals 
required under this rule could complicate the Continuums of Care's 
(CoC's) coordinated entry systems. The commenter recommended HUD 
provide guidance on this but not dictate procedures that may hinder 
effective local coordinated entry efforts or unduly increase the cost 
burden of service documentation imposed on providers.
    Response: By definition, the CoC's centralized or coordinated entry 
system is designed to coordinate the provision of referrals. See 24 CFR 
578.3. HUD believes that CoCs will be able to establish and operate a 
centralized or coordinated entry system that helps faith-based 
organizations comply with the requirements of 24 CFR 5.109. HUD 
recommends that if a CoC program applicant or participant objects to 
the religious character of a provider within the CoC, and seeks a 
referral to an alternative provider under 24 CFR 5.109, the faith-based 
organization should use the coordinated entry system to locate an 
alternate provider acceptable to the program participant. This may 
facilitate a quick placement into a project to which the program 
participant does not object. Coordinated entry processes are developed 
to facilitate quick and appropriate placements, as well as quickly 
refer households to another project in instances when the program 
participant is unable to live in the initial project. In this way, the 
project is not subjected to an increased burden, the objection and 
referral will not circumvent the coordinated entry process, and the 
program participant is prioritized and placed in the next most 
appropriate setting that meets their needs. HUD plans to provide 
additional guidance on

[[Page 19388]]

how the beneficiary referral operates in a coordinated entry system.
    Change: None.
    Affected regulations: None.
5. Political or Religious Affiliation
    Summary of comments: In addition to the comments addressed in part 
III.E on political influence, HUD also received a comment that said 
that the terms ``interference'' and ``appearance'' are vague and could 
result in challenges for local governments in awarding grant funds. The 
commenter wrote that the regulations for creating an action plan under 
the Housing and Community Development Act contemplate city elected 
officials holding a hearing with public participation, and given that 
elected officials are sometimes political, such a meeting would not 
normally be free of the ``appearance'' of ``political interference.''
    Response: In response to the part III.E comments, HUD amends its 
regulatory language at 24 CFR 5.109(c) to align with the Executive 
order language and to clarify that lack of political or religious 
affiliation must not be the basis for an awarding decision. As to the 
request from the commenter that HUD clarify the language on political 
interference, where a statute or HUD regulation provides a role for 
elected government officials in the grant process, such as creating an 
action plan, HUD does not view the elected officials' participation in 
the process as interference. HUD will provide examples in additional 
policy guidance or reference materials to clarify ``free from political 
interference or even the appearance of such interference.''
    Change: HUD is amending 24 CFR 5.109(c) to align with the language 
in the Executive order.
    Affected regulations: 24 CFR 5.109(c).
6. Monitoring
    Response: Regarding the comments and response in part III.F about 
monitoring, HUD is amending its regulations to assist intermediaries 
and HUD in monitoring referrals. In HUD's sample beneficiary referral 
request form, HUD included a section for entities to ensure that 
records are kept when referrals are made to alternative providers. In 
addition, in HUD's proposed regulation, HUD required that providers 
notify HUD when referrals are made. The requirement to notify HUD would 
be burdensome on intermediaries, recipients and subrecipients. HUD 
believes the use of the sample form complies with the Executive order 
requirement that HUD have a mechanism to ensure that providers are 
making the necessary referrals and that beneficiaries are finding 
alternative providers without the notifying HUD or an intermediary of 
every referral. For clarity, HUD is adding paragraph (g)(4) in 24 CFR 
5.109, consistent with the sample notice, which provides that referring 
entities must maintain a record of referrals and HUD is removing the 
requirement that entities notify HUD or the intermediary upon making a 
successful referral from paragraph (g)(3)(iv) in 24 CFR 5.109. This 
will make it easier for entities to ensure they are complying with the 
referral requirement, and make review of records easier for HUD (and 
intermediaries, as applicable) to monitor for compliance.
    Change: HUD is amending 24 CFR 5.109(g)(3)(iv) to remove the 
requirement to notify HUD or the intermediary if a successful referral 
is made, and adding 24 CFR 5.109(g)(4).
    Affected regulations: 24 CFR 5.109(g)(3)(iv) and (g)(4).
a. Accountability and Transparency
    Summary of comments: One commenter wrote that HUD should adopt 
stronger accountability provisions concerning faith-based organizations 
to maintain separation of church and state. Commenters also wrote that 
HUD should ensure faith-based programs do not use HUD programs as an 
outlet to promote their religion. Another commenter requested that 
faith-based organizations receiving Federal funds should be required to 
abide by the same transparency and other requirements as non-faith-
based organizations, and requested additional oversight of faith-based 
organizations.
    Response: HUD notes that faith-based organizations must comply with 
the same transparency requirements as other non-profit recipients. HUD 
will continue to monitor faith-based and other nonprofit organizations 
according to the standards of transparency and accountability 
established by statute, regulation, and other applicable authorities. 
Establishing the additional requirements requested by the commenters 
would be beyond the scope of this rulemaking.
    Change: None.
    Affected regulations: None.
7. Other Issues
a. Definitions for ``Social Service Programs'' and ``Federal Financial 
Assistance''
    Response: Regarding the comments and response in part III.G about 
the definitions for ``social service programs'' and ``Federal financial 
assistance,'' HUD included in its definitions section the ``Federal 
financial assistance'' definition from Executive Order 13559 and 
maintains that definition in this final regulation. HUD does not 
incorporate a ``social service programs'' definition, but instead 
maintains that the scope of the requirements in 24 CFR 5.109 apply to 
HUD programs and activities consistent with how they applied when HUD 
first implemented Executive Order 13279.
    Change: None.
    Affected regulations: None.
b. Definitions of ``Faith-Based'' and ``Religious''
    Summary of comments: One commenter requested clarification as to 
how HUD intends to define ``faith-based'' and ``religious,'' and 
whether the terms are synonymous.
    Response: HUD, in the proposed rule, replaced references to 
``religious organization'' with ``faith-based organization'' to remain 
consistent with language in Executive Orders 13279 and 13559. In 
keeping with the longstanding approach of the Federal Government, HUD 
declines to define these terms.
    Change: None.
    Affected regulations: None.
c. Property Disposition
    Summary of comments: One commenter wrote that there is a lack of 
clarity around disposition of property and buildings assisted with HUD 
funds, specifically with Community Development Block Grant (CDBG) 
funds. The commenter also asked whether Government-wide regulations 
governing real property disposition apply to all assisted properties, 
or only to properties owned by faith-based organizations, and whether 
program-specific exceptions, such as those in 24 CFR 570.502(b), apply 
to all properties and facilities regardless of the status of the owner.
    Response: Federal funding of the acquisition or improvement of real 
property owned by a faith-based organization and the disposition of 
such property, or a change in use of such property, must be carried out 
consistent with the Establishment Clause and Free Exercise Clause of 
the First Amendment. In order to ensure consistency with applicable 
constitutional standards, the disposition of HUD-funded real property 
owned by a faith-based organization, or change in use of such real 
property, is subject to the Government-wide real property disposition 
requirements at 2 CFR part 200 as well as applicable program-specific 
requirements. 24 CFR 5.109(j) provides that HUD will provide direction 
(i.e., guidance on compliance

[[Page 19389]]

responsibilities of recipients and subrecipients) to faith-based 
organizations that are subject to both the real property disposition 
requirements at 2 CFR part 200, subpart D, and HUD program regulations 
when the real property disposition requirements at 2 CFR part 200, 
subpart D, and HUD program regulations conflict. A faith-based 
organization seeking to dispose of such real property or change the use 
of such real property must seek instructions from HUD regarding its 
compliance responsibilities because the constitutional standards apply 
beyond any specified period during which HUD program requirements 
apply.
    Disposition or change in use of real property by an entity that is 
not a faith-based organization is subject to the requirements that 
apply to the HUD program that funded acquisition or improvement of the 
real property. In some HUD programs, the 2 CFR part 200, subpart D, 
requirements apply to disposition and change in use of such real 
property. In other programs, however, program-specific requirements 
replace the real property requirements at 2 CFR part 200, subpart D. 
When program-specific requirements replace the Government-wide 
regulations at 2 CFR part 200, subpart D, for real property 
disposition, 24 CFR 5.109(j) does not change that with respect to 
entities that are not faith-based organizations. For example, 
disposition of CDBG-funded real property owned by an entity that is not 
a faith-based organization is subject to the real property requirements 
in 24 CFR part 570, but not 2 CFR 200.311.
    Change: HUD edits the property disposition paragraph at 24 CFR 
5.109(j) to clarify the application of the requirements to disposition 
of real property owned by faith-based organizations.
    Affected regulations: 24 CFR 5.109(j).
d. Assistance by Faith-Based Organizations
    Summary of comments: A commenter asked that HUD explain whether a 
faith-based organization is required to provide assistance that is 
inconsistent with its religious beliefs if it is the only available 
provider.
    Response: Executive Order 13559 did not address this issue, so this 
matter is beyond the scope of this regulation.
    Change: None.
    Affected regulations: None.
8. HUD Findings & Certifications
Consultation With Indian Tribal Governments
    In accordance with Executive Order 13175 entitled ``Consultation 
and Coordination With Indian Tribal Governments'', issued on November 
6, 2000, HUD has consulted with representatives of tribal governments 
concerning the subject of this rule. HUD, through a letter dated 
November 19, 2014, provided Indian tribes and Alaska Native Villages 
the opportunity to comment on the substance of the regulatory changes 
during the development of the August 6, 2015, proposed rule. HUD 
received no comments in response to those letters. Additionally, the 
August 6, 2015, proposed rule provided Indian tribes with an additional 
opportunity to comment on the proposed regulatory changes.
Regulatory Flexibility Act
    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) generally 
requires an agency to conduct a regulatory flexibility analysis of any 
regulation subject to notice and comment rulemaking requirements, 
unless the agency certifies that the regulation will not have a 
significant economic impact on a substantial number of small entities.
    This final regulation provides more access for entities to 
participate in HUD programs by clarifying requirements for 
participation in HUD programs. In addition, the final regulation 
requires that faith-based organizations that carry out activities under 
a HUD program with direct Federal financial assistance must give 
beneficiaries and prospective beneficiaries written notice of the 
protections listed at 24 CFR 5.109(g). This includes notification that 
the organization must undertake reasonable efforts to identify and 
refer the beneficiary to an alternative provider to which the 
beneficiary has no objection, if the beneficiary objects to the 
religious character of the organization. The organization must inform 
the beneficiary or prospective beneficiary in writing and the 
organization would be required to maintain records of the referral.
    In HUD's implementation of Executive Order 13559, HUD has made 
every effort to ensure that the beneficiary protections requirements of 
the final regulation, including providing written notice and a 
referral, impose minimum burden and allow maximum flexibility in 
implementation by providing a sample notice that organizations may 
provide to beneficiaries informing them of the protections and by not 
prescribing a specific format for making referrals. HUD estimates it 
will take no more than 2 hours for providers to familiarize themselves 
with the notice requirements of this final regulation and print and 
duplicate an adequate number of written notices for prospective 
beneficiaries. In addition, HUD estimates an upper limit of $100 for 
the annual cost of materials (paper, ink, toner) to print multiple 
copies of the notices. HUD notes that, after the first year, the labor 
costs associated with compliance will likely decrease significantly 
because providers will be familiar with the requirements. Because these 
costs will be borne by every faith-based organization that carries out 
an activity under a HUD program with direct Federal financial 
assistance, HUD believes that a substantial number of small entities 
will be affected by this provision. However, HUD does not believe that 
the compliance cost estimated per provider per year is significant.
    The final regulation will also require faith-based organizations, 
upon a beneficiary's objection, to make reasonable efforts to identify 
and refer the beneficiary to an alternative provider to which the 
beneficiary has no objection. HUD estimates that each referral will 
require no more than 2 hours of a provider's time. Although HUD does 
not have any way to determine the number of referrals that will occur 
in any 1 year, HUD does not believe that referral costs will be 
significant for small providers.
Paperwork Reduction Act
    This final regulation includes a new information collection 
section, at 24 CFR 5.109(g), which would impose requirements on faith-
based organizations that carry out activities under a HUD program with 
direct Federal financial assistance to give beneficiaries (or 
prospective beneficiaries) written notice of certain protections 
described in this final regulation; beneficiaries can provide a written 
response that may impose a burden under the Paperwork Reduction Act 
(PRA); and faith-based organizations, or intermediary, must provide a 
referral if a beneficiary or prospective beneficiary objects to the 
religious character of the organization. This regulation also requires 
the retention of records to show that the referral requirements in this 
rulemaking have been met.
    The information collection requirements in the proposed regulations 
were submitted to OMB under the Paperwork Reduction Act of 1995 (44 
U.S.C. 3501-3520). In accordance with the PRA, an agency may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information, unless the

[[Page 19390]]

collection displays a currently valid OMB control number. The 
information collection requirements of this regulation were assigned 
OMB Control Number 2535-0122.
Environmental Impact
    This final regulation sets forth nondiscrimination standards. 
Accordingly, under 24 CFR 50.19(c)(3), this final regulation is 
categorically excluded from environmental review under the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321).
Catalog of Federal Domestic Assistance
    The regulatory amendments contained in this final regulation apply 
to all HUD assistance programs for which faith-based organizations are 
eligible to participate. The Catalog of Federal Domestic Assistance 
(CFDA) number for a particular HUD program may be found on the CFDA Web 
site at http://www.cfda.gov.
F. Department of Justice
    Unless otherwise specified, all comments received by DOJ are 
addressed fully in part III of the preamble. Here, DOJ addresses the 
DOJ-specific comments not addressed in part III, and provides DOJ-
specific findings and certifications. This agency-specific discussion 
is organized in the same manner as part III. Sections for which DOJ 
received no agency-specific comments have been omitted.
6. Monitoring
    Summary of comments: One commenter strongly supported DOJ's 
inclusion of sections in the proposed regulations that (1) required 
recipients of direct Federal financial assistance to sign assurances 
that they would comply with the regulations, including the 
nondiscrimination provisions (proposed regulations at 80 FR at 47325 
(28 CFR 38.7(a))), and (2) established procedures for monitoring and 
enforcement (id. (proposed 28 CFR 38.8)). The commenter noted that 
other Federal agencies did not include similar provisions in their 
proposed rules and recommended that they consider including sections 
similar to the ones that DOJ proposed. The commenter further suggested 
that DOJ change the ``may'' that appeared in 28 CFR 38.8(a) and (b) of 
DOJ's proposed regulations to ``shall'' so that it would be clear that 
DOJ must squarely fulfill the Executive order's requirements reflecting 
constitutional obligations to monitor providers.
    Response: The significance of 28 CFR 38.8 is that it identifies the 
particular office within DOJ that has jurisdiction to enforce 
compliance with the regulation (the Office for Civil Rights (OCR) in 
DOJ's Office of Justice Programs) and informs beneficiaries, potential 
beneficiaries, and members of the public where they may file complaints 
alleging that a recipient of direct Federal financial assistance has 
failed to abide by the terms of the regulations, and in particular 
complaints alleging religious discrimination in the delivery of 
services or benefits. Providing an avenue for filing complaints and 
specifying which entity is tasked with conducting investigations of 
noncompliance with the regulations is particularly important because 
some DOJ programs that receive Federal financial assistance are not 
subject to program statutes containing provisions that explicitly 
prohibit recipients from discriminating in the delivery of services or 
benefits based on religion.
    DOJ used ``may'' in its proposed 28 CFR 38.8 to indicate that the 
office within DOJ designated to enforce the regulations would have 
discretion in opening investigations and conducting compliance reviews. 
The drafters' intention in using ``may'' was not to absolve DOJ from 
its responsibility to enforce the regulations but to indicate that the 
enforcement office was not bound to investigate all complaints, as some 
complaints on their face may not have merit or the enforcement office 
may not have the capacity to investigate all complaints based on its 
staffing and budget. DOJ has resolved this concern in these final 
regulations by clarifying which office has that responsibility.
    Change: DOJ is amending 28 CFR 38.8 to replace each instance of the 
phrase ``The Office for Civil Rights may'' with ``The Office for Civil 
Rights is responsible for.''
    Affected regulations: 28 CFR 38.8(a)-(b).
7. Other Issues
    Summary of comments: Some commenters stated that they appreciated 
DOJ's inclusion of a provision requiring a written notice that informs 
beneficiaries that they may report ``any denials of services or 
benefits by an organization'' (proposed regulations at 80 FR at 47325 
(28 CFR 38.6(c)(1)(v))). The commenters expressed concern that the 
proposed regulations only allow for ``written complaint[s]'' because 
that could deter reporting for beneficiaries who are illiterate. The 
commenters also complained that beneficiaries are directed to report 
violations to OCR, and recommended instead that beneficiaries have the 
option of reporting violations to either OCR or the intermediary, so 
long as the intermediary is required to promptly forward the report to 
OCR.
    Response: 28 CFR 38.6(c)(1)(v) and the model Written Notice of 
Beneficiary Protections in appendix A of these regulations provide for 
beneficiaries to report violations to OCR, which is authorized by 28 
CFR 38.8 to review practices of recipients of Federal financial 
assistance and investigate allegations of noncompliance by recipients 
of Federal financial assistance. Under 28 CFR 38.6(c)(1)(v), and as 
stated on the model Written Notice of Beneficiary Protections, 
beneficiaries also have the option of filing a complaint with the 
intermediary. DOJ's regulations do not require the intermediary to 
forward any reports filed with the intermediary to OCR. However, as 
part of its authority to review a recipient's practices, OCR will 
consider issuing further guidance regarding recipients' administration 
of complaints.
    OCR prefers the complaint to be in writing so as to collect as much 
information as possible about an allegation of noncompliance and 
provides accommodations to any individual requiring special assistance 
for completing a complaint form. These accommodations will be available 
to assist any beneficiary who wishes to make a report under this 
regulation. However, OCR agrees that beneficiaries should not always be 
required to report a violation in writing and will accept other forms 
of complaint, including oral complaints.
    Change: DOJ is amending its regulations to state that beneficiaries 
may report ``an organization's violation of these protections, 
including any denials of services or benefits,'' by ``contacting or 
filing a written complaint'' with OCR or the intermediary (emphasis 
added).
    Affected regulations: 28 CFR 38.6(c)(1)(v).
8. DOJ Findings & Certifications
    The following reflect DOJ findings and certifications that are not 
addressed in part V.
Regulatory Flexibility Act
    The Regulatory Flexibility Act (RFA) at 5 U.S.C. 603(a) requires 
agencies to prepare and make available for public comment an initial 
regulatory flexibility analysis that describes the impact of the 
proposed rule on small entities. The RFA at 5 U.S.C. 605(b) allows an 
agency not to prepare an analysis if it certifies that the rulemaking 
will not have a significant economic impact on a substantial number of 
small entities. Furthermore, under the Small Business

[[Page 19391]]

Regulatory Enforcement Fairness Act of 1996 at section 212(a) (5 U.S.C. 
601 note), an agency is required to produce compliance guidance for 
small entities if a final rule will have a significant economic impact 
on a substantial number of small entities. The RFA defines small 
entities as small business concerns, small nonprofit enterprises, or 
small governmental jurisdictions. 5 U.S.C. 601(6).
    Except when the nature of the service provided or exigent 
circumstances make it impracticable, the regulation requires a faith-
based or religious organization administering a program that is 
supported by direct Federal financial assistance to give written notice 
to beneficiaries and prospective beneficiaries of their rights under 
these regulations. These include the right of the beneficiary to object 
to the religious character of the organization and the obligation of 
the organization in those circumstances to undertake reasonable efforts 
to refer the beneficiary to an alternative provider. The organization 
must inform the beneficiary or prospective beneficiary of those rights 
in writing and maintain a record of where the beneficiary is referred 
if a referral is made. If the organization is unable to identify an 
alternative provider, it must notify the awarding entity of that fact 
and also maintain a record for review.
    DOJ has made every effort to ensure that the notice and referral 
requirements of the regulations impose minimum burden and allow maximum 
flexibility in implementation. These regulations include a model 
Written Notice of Beneficiary Protections in appendix A with the 
required language that organizations must give to beneficiaries to 
inform them of their rights and protections, along with a model 
Beneficiary Referral Request form in appendix B. DOJ estimates it will 
take no more than two hours for organizations to familiarize themselves 
with the notice and referral requirements and print and duplicate an 
adequate number of notice and referral forms for potential 
beneficiaries. DOJ estimates an upper limit of $50/hour for the labor 
cost to prepare the forms (or $100 per service provider per year) \25\ 
and an upper limit of $100 for the annual cost of materials (paper, 
ink, and toner) to print multiple copies of the forms. No commenters 
objected to DOJ's cost estimates in the NPRM. Although these costs will 
be borne by faith-based or religious organizations, some of which may 
be small entities under the RFA, DOJ does not believe that a 
substantial number of small entities will be affected by this 
provision. Further, DOJ does not believe that a compliance cost of no 
more than $200 per organization per year is a significant percentage of 
an organization's total revenue. In addition, DOJ notes that, after the 
first year, the labor cost associated with compliance will likely 
decrease significantly because the organizations will be familiar with 
the requirements. Accordingly, the Attorney General has reviewed these 
regulations and by approving them certifies that they will not have a 
significant economic impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \25\ This estimate is confirmed by the most recent Bureau of 
Labor Statistics (BLS) data for occupational categories that seem 
likely to encompass the employees of faith-based and religious 
organizations who will have the responsibility to create and 
distribute the written notice: ``Secretaries and Administrative 
Assistants, Except Legal, Medical, and Executive'' (category 43-
6014, mean hourly wage of $16.59 in May 2014, http://www.bls.gov/oes/current/oes436014.htm); and ``Community and Social Service 
Occupations'' (category 21-0000, including occupational categories 
with mean hourly wages ranging from $15.32 to $28.08 for May 2014,  
http://www.bls.gov/oes/current/oes_stru.htm#21-0000). Even using the 
highest possible wage from all these categories ($28.08), along with 
a ``load factor'' of 1.458 (to account for the cost of employee 
benefits), the maximum likely labor cost per annum for complying 
with the written notice requirements would be $28.08/hour x 1.458 x 
2.0 hours/year = $81.88/year, well under the estimate of $100/year.
    The ``load factor'' is the wage multiplier used to estimate the 
total cost to the employer of compensating the employee for both 
wages and benefits (e.g., paid leave, insurance, retirement). 
According to BLS data as of December 2015 (http://www.bls.gov/news.release/ecec.t01.htm), the average benefits for all workers was 
$10.48/hour, and the average wages and salaries for all workers was 
$22.88/hour, yielding a total cost to the employer of $33.36/hour. 
The load factor is thus 33.36 / 22.88 = 1.458.
---------------------------------------------------------------------------

    The regulations require faith-based or religious organizations that 
provide social services, at the beneficiary's request, to make 
reasonable efforts to identify and refer the beneficiary to an 
alternative provider to which the beneficiary has no objection based on 
the provider's religious character. DOJ has provided a model 
Beneficiary Referral Request form for organizations to use in appendix 
B. Although DOJ does not have any way to determine the number of 
referrals that will occur in any one year, DOJ does not believe that 
referral costs will be appreciable for small faith-based organizations.
Executive Order 12988--Civil Justice Reform
    Executive Order 12988 provides that agencies shall draft 
regulations to avoid drafting errors and ambiguity, minimize 
litigation, provide clear legal standards for affected conduct, and 
promote simplification and burden reduction. These regulations meet the 
applicable standards set forth in sections 3(a) and 3(b)(2) of 
Executive Order 12988.
Paperwork Reduction Act
    These final regulations include a new information collection 
section, at 28 CFR 38.6(c)(1), which would impose requirements on 
faith-based organizations that carry out activities under a program 
supported with direct Federal financial assistance from DOJ to give 
beneficiaries (or prospective beneficiaries) written notice of certain 
protections described in these final regulations. A beneficiary who 
objects to the religious character of the organization may make a 
written request for a referral to an alternative provider, and faith-
based organizations (or, under certain circumstances, an intermediary) 
must undertake reasonable efforts to provide the referral if the 
beneficiary makes the request. The regulations also require that the 
organization retain records to show that it has met the referral 
requirements. The regulations thus may impose a burden under the 
Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq.
    The information collection requirements in the proposed regulations 
were submitted to OMB under the PRA. In accordance with the PRA, an 
agency may not conduct or sponsor, and a person is not required to 
respond to, a collection of information, unless the collection displays 
a currently valid OMB control number. 44 U.S.C. 3507(a), 3512. The 
information collection requirements of these regulations were assigned 
OMB Control Number 1121-0353.
    No comments were received that specifically addressed the paperwork 
burden analysis of the information collections at the proposed rule 
stage. As a result, DOJ has not revised the paperwork burden analysis 
and has not changed these final regulations in connection with the 
administrative burden.

G. Department of Labor

    On August 6, 2015, DOL published proposed regulations (80 FR 47327) 
as part of its effort to fulfill its responsibilities under Executive 
Order 13559. The proposal sought to revise DOL's existing regulations 
on the subject, codified at 29 CFR part 2 subpart D, that were 
promulgated following the issuance of Executive Order 13279 in 2002.
    DOL has amended the final regulations in response to comments 
relevant to all of the Agencies' proposed regulations for the reasons 
discussed in part III of the joint preamble, as well as

[[Page 19392]]

for reasons stated below in this DOL-specific portion of the preamble. 
DOL endorses part III, and this introduction to the DOL-specific 
preamble is meant only to elaborate on how part III is reflected in the 
DOL-specific regulations. Where no comments specific to DOL were 
received, DOL has excluded those topics from its agency-specific 
preamble and endorses the discussion of those topics in part III. For 
ease of reference, this DOL-specific preamble is organized in the same 
manner as part III.
    The significant changes from DOL's proposed regulations are as 
follows, and are discussed in more detail as necessary in the issue-by-
issue discussion and are designed to achieve the following:
     Clarify that the nondiscrimination obligations set forth 
in 29 CFR 2.33(a) apply to programs funded directly or indirectly by 
Federal financial assistance consistent with the approach discussed in 
part III, and deleting the existing 29 CFR 2.33(c) consistent with this 
clarification.
     Include among the beneficiary protections the requirement 
that a religious organization may not discriminate against a 
beneficiary for refusing to hold a religious belief or refusing to 
attend or participate in religious practices. However, further 
clarification is added to state that programs funded by indirect 
financial assistance need not modify those programs to accommodate a 
beneficiary. These changes are made to maintain greater uniformity with 
the other Agencies administering Executive Order 13559.
     Consistent with part III, DOL's final regulations limit 
religious organizations' mandatory reporting to occasions where the 
organization is unable to identify an alternative provider, instead of 
mandating reporting any time a referral is made as was proposed in the 
NPRM, and requires that such reports be made promptly.
     Move the text of the required notice and referral request 
from within the regulations at 29 CFR 2.35(a) to separate appendices to 
the regulation.
    DOL departs slightly with the regulatory approach of at least some 
of the other Agencies on some issues due to organizational and 
programmatic differences, as well as DOL's existing regulations on 
religious liberty protections and the equal treatment of faith-based 
organizations. A summary of these, expanded upon in the issue-by-issue 
discussion below, are as follows:
     Maintaining the language in DOL's existing regulations on 
chaplaincy.
     Maintaining a proposed regulation detailing the 
obligations of intermediaries to ensure compliance of non-governmental 
organizations it selects to provide services with Federal financial 
assistance.
     Maintaining the proposed ``Notice of Beneficiary Religious 
Liberty Protections'' and ``Beneficiary Referral Request'' form in the 
regulation, but moving the contents to a new appendix A and B, 
respectively.
     Consistent with other Agencies who administer Federal 
financial assistance outside of the United States, the final 
regulations limit applicability of the notice and referral obligations 
to social service programs within the United States.
    Finally, consistent with the Executive order, part III, and as 
further detailed below, DOL will also promulgate guidance for DOL-
supported social service programs and intermediaries to effectively 
implement these final regulations, including, but not limited to, 
monitoring of recipients by intermediaries, reporting on the 
alternative provider referral system, and posting of the ``Notice of 
Beneficiary Religious Liberty Protections.''
1. Prohibited Use of Direct Federal Financial Assistance
    Summary of comments: As discussed in part III.A.2, the Agencies 
received conflicting comments on whether Federal financial assistance 
for chaplaincy services is constitutionally permissible and, if 
permissible, whether such services should be subject to direct Federal 
financial assistance restrictions.
    Response: The Agencies agreed in part III.A.2 that that direct 
Federal funding for religious activities is constitutionally 
permissible and necessary under limited circumstances, such as for 
chaplaincy services. DOL's existing regulations at 29 CFR 2.33(b)(3) 
provide that direct DOL Federal financial assistance may be used for 
religious activities in limited circumstances, including chaplaincy 
services, at prisons, detention facilities, and community correction 
centers and at locations where social service programs involve such a 
degree of government control over a beneficiary's environment that it 
would significantly burden the beneficiary's free exercise of religious 
liberty if DOL or its social service providers do not take affirmative 
steps. Further, DOL's existing regulations at 29 CFR 2.33(b)(3) already 
provide that such services may be provided in the same time or location 
as other DOL-funded activities. DOL declines to amend its chaplaincy 
provisions because they are sufficiently detailed to explain that 
chaplaincy services may be constitutionally funded by direct DOL 
financial assistance and should not be subject to direct Federal 
financial assistance restrictions because the services are necessary to 
effectuate beneficiaries' constitutional rights.
    Change: None.
    Affected regulations: None.
2. Direct and Indirect Federal Financial Assistance
    Summary of comments: As discussed in part III, some commenters 
asked that the regulations clarify that programs funded only by 
indirect Federal financial assistance may require beneficiaries to 
participate in explicitly religious activities related to the program, 
and that such religious activities need not be separated in time or 
location from the federally funded program. Other commenters took the 
opposite position--that programs funded by indirect aid should not 
require participation in religious activities--while also requesting 
that the prohibitions on discrimination against beneficiaries apply 
equally to indirect and direct aid programs.
    Response: Consistent with both Executive Order 13279 and 13559, the 
Agencies uniformly agree that: (a) Programs funded by either direct or 
indirect Federal financial assistance are prohibited from 
discriminating against beneficiaries because of their religion, 
religious belief, refusal to hold a religious belief, or refusal to 
attend or participate in a religious practice, and (b) programs funded 
by indirect financial assistance need not modify those programs to 
accommodate a beneficiary's religion. Consistent with the preamble to 
this final regulation, DOL's existing regulations at 29 CFR 2.33(a) 
state that social services that are directly funded with Federal 
financial assistance may not discriminate against applicants or 
beneficiaries because of their religion or religious belief. DOL's 
existing regulations at 29 CFR 2.33(b)(1) already state that the 
separation in time or location requirement for programmatic religious 
activities only applies to programs funded by direct aid.

[[Page 19393]]

    Change: DOL removes the qualifier from 29 CFR 2.33(a) that only 
programs funded by direct Federal financial assistance are subject to 
the beneficiary nondiscrimination requirement. DOL also adds language 
clarifying that programs funded by indirect financial assistance need 
not modify those programs to accommodate a beneficiary's religion. DOL 
retains its existing language at 29 CFR 2.33(a) providing that the 
beneficiary nondiscrimination requirement does not preclude parties 
from using Federal financial assistance from providing religious 
accommodations in a way that does not violate the Constitution's 
Establishment Clause. This means that otherwise valid religious 
accommodations do not violate the religious nondiscrimination 
requirement in this regulation. DOL also deletes the existing 29 CFR 
2.33(c), which was relevant only to the extent that a distinction 
remained in the nondiscrimination obligations of recipients of direct 
and indirect Federal financial assistance. Given the reasoning in part 
III that no such distinction exists, DOL removes this provision from 
its regulations. It is replaced by a new 29 CFR 2.33(c) regarding 
intermediaries, discussed in the next section.
    Affected regulations: 29 CFR 2.33(a), (c).
3. Intermediaries
    Summary of comments: Some commenters recommended that the Agencies' 
regulations should clarify that intermediaries must ensure recipients' 
compliance with the Executive order and its implementing regulations or 
guidance, and urged Agencies to adopt DOJ's proposed regulations 
requiring intermediaries to ``give reasonable assurances that [it] will 
comply with this [regulation] and effectively monitor the actions of 
its recipients.'' See proposed regulations at 80 FR 47325 (28 CFR 
38.7(a)).
    Response: Like DOJ, DOL sought to clarify the role of 
intermediaries in ensuring recipients' compliance with the Executive 
order. Proposed 29 CFR 2.33(d) stated that if an intermediary has 
authority under a federally-supported contract, grant or agreement to 
select non-governmental organizations to provide services with Federal 
financial assistance, the intermediary must ensure that the recipient 
of the contract, grant or agreement complies with the Executive orders 
and any implementing regulations or guidance. DOL will maintain the 
proposed provision in the final regulations because, in addition to the 
reasons delineated in the DOL proposed regulations for the adoption of 
the provision, it adequately addresses these commenters' concerns. DOL 
will also promulgate guidance to intermediaries to assist them in 
effectively monitoring recipients.
    Change: None from DOL's proposed regulations, aside from moving the 
provision from 29 CFR 2.33(d) as proposed to 29 CFR 2.33(c), given the 
deletion of the existing Sec.  2.33(c) for reasons previously 
discussed.
    DOL does make additional technical changes, replacing the term 
``intermediary'' as used in the proposed regulatory text with ``DOL 
social service intermediary provider,'' which is the term that is 
defined in the regulation at 29 CFR 2.31(f).
    Affected regulations: 29 CFR 2.33(c), 2.34(a)(5), 2.35(e).
4. Protections for Beneficiaries
a. Beneficiary Notice
i. Incorporation of Beneficiary Notice and Referral Request Form Into 
Regulation
    Summary of comments: Some commenters recommended that the Agencies 
incorporate the written notice and beneficiary referral request form 
into the regulatory text.
    Response: DOL included the beneficiary notice in its proposed 
regulatory text at 29 CFR 2.34(a). As stated in the NPRM, DOL believes 
that providing a standardized notice on beneficiary rights with 
contents specified in the regulatory text will lessen DOL social 
service providers' burden and compliance costs under the Paperwork 
Reduction Act and provide greater clarity for those charged with 
compliance as to the precise language required. DOL will also 
promulgate guidance and additional information on the notice posting 
requirements, including additional examples of when exigent 
circumstances would impact a provider's duty to deliver the written 
notice and when posting the notice would be appropriate.
    Change: DOL notes that the placement of the required notice 
language at the end of 29 CFR 2.34(a) may make it difficult to find, 
although it did not receive any comments to that effect. Therefore, DOL 
will amend 29 CFR 2.34(a) by removing the contents of the ``Notice of 
Beneficiary Religious Liberty Protections'' to a new appendix A to part 
2 and the ``Beneficiary Referral Request'' form to a new appendix B to 
part 2. Because the notice states that complaints may be filed with the 
DOL's Civil Rights Center, the final rule was modified to include that 
the notice will be made available online at the Civil Rights Center's 
Web site in addition to DOL's Center for Faith-Based and Neighborhood 
Partnerships' Web site.
    Affected regulations: 29 CFR part 2, subpart D, appendices A and B.
ii. Beneficiary Reporting of Violations
    Change: In the proposed regulation, DOL proposed that beneficiaries 
or prospective beneficiaries would be permitted to report violations to 
or file written complaints with DOL's Civil Rights Center or a DOL 
social service intermediary provider. The final regulation differs from 
the proposed in that for the final regulation, beneficiaries or 
prospective beneficiaries are directed to report violations or file 
written complaints with DOL only, not an intermediary. This change was 
made to simplify the complaint process for beneficiaries and 
prospective beneficiaries by providing a single, specific point of 
contact that will be well-equipped to handle any such complaints.
    Affected regulations: 29 CFR 2.34(a)(5).
b. Referrals
i. Follow-Up
    Summary of comments: Some commenters noted that the Executive order 
requires each agency to establish a process for determining whether a 
beneficiary contacted the alternative provider and that DOL's proposed 
model referral form conflated three distinct follow-up options into 
two: (1) Follow up with the beneficiary or alternative provider and (2) 
no follow up. The commenters recommended that DOL follow the approach 
of other Agencies that presented three distinct options for follow-up: 
(1) Follow up with the beneficiary; (2) follow up with the alternative 
provider; and (3) no follow up.
    Response: DOL agrees with the commenter that the proposed follow-up 
options should be treated as three distinct options for greater 
clarity.
    Change: DOL will amend the model referral form by including three 
distinct options for follow-up: (1) Follow-up with the beneficiary; (2) 
follow-up with the alternative provider; and (3) no follow-up.
    Affected regulations: 29 CFR part 2, subpart D, appendix B.
ii. Referral to Non-Government Funded Provider
    Change: DOL's proposed 29 CFR 2.35(c) provided that a referral must 
be made to a Federally-financed provider in close geographic proximity 
that offers similar services to the organization making the referral 
and that if no Federally-financed alternative provider

[[Page 19394]]

meeting these criteria was available, then a referral should be made to 
an alternative provider that does not receive Federal financial 
assistance. To maintain uniformity with the other Federal agencies 
administering this Executive order, this provision has been revised to 
eliminate the reference to the alternative provider's nature of 
funding. The final regulation provides that a referral should be made 
to an alternative provider that is in close geographic proximity to the 
organization making the referral, that offers services similar in 
substance and quality, and that has the capacity to accept additional 
clients. As the joint preamble states, if a federally-funded 
alternative provider meets the criteria outlined, then a referral 
should be made to that provider. However, DOL recognizes that in some 
geographic areas the only referral available may be to an organization 
that does not receive Federal financial assistance.
    Affected regulations: 29 CFR 2.35(c).
iii. Recordkeeping
    Change: DOL's proposed 29 CFR 2.35(d) required an organization to 
notify the awarding entity any time a referral was made pursuant to the 
Executive order or when an alternative provider could not be 
identified. To achieve uniformity with the other federal agencies 
administering this Executive order, DOL has revised this provision to 
state that prompt notification is required only when the organization 
cannot locate an alternative provider. In that case, the organization 
must promptly notify the awarding entity and maintain a record for 
review by the awarding entity. When the organization is able to 
successfully provide a referral, the organization need only maintain a 
record of the referral for review by the awarding entity.
    Affected regulations: 29 CFR 2.35(d).
c. Obligations Related to International Social Service Programs
    Summary of comments: One commenter requested clarification that the 
notice and referral obligations in DOL's proposed 29 CFR 2.34 and 2.35 
applied only to domestic social service programs. The commenter noted 
that the report of the interagency working group tasked with 
implementing the Executive order, which the Agencies used to develop 
these regulations, acknowledges that the model regulations and guidance 
for Agencies focuses on domestic considerations and that the Agencies 
must consider additional implications when applying the guidance to 
programs operating in foreign countries.
    Response: The grants administered by DOL Agencies are largely 
domestic, but not entirely so. DOL's Bureau of International Labor 
Affairs (ILAB), for instance, partners with international 
organizations, non-governmental organizations, universities, research 
institutions, and others to advance workers' rights and livelihoods 
through technical assistance projects, research, and project 
evaluations. These activities are funded through grants, cooperative 
agreements, and contracts, and are exclusively international in nature; 
ILAB has no authority to issue domestic grants.
    DOL agrees with the issues raised by the commenter. In the 2012 
report issued by the interagency working group tasked with promulgating 
this regulation, the group stated that ``When applying [the guidance 
contained in this report] to the special circumstances of programs 
operating in foreign countries, additional considerations may be 
implicated. Guidance for these programs should be provided, as 
appropriate, by departments and agencies operating them in consultation 
with the Department of Justice, rather than by this report, which 
focuses largely on domestic considerations.''
    Change: DOL's final regulations includes language stating that the 
notice and referral obligations contained in its regulations apply only 
to those recipients administering social service programs administered 
within the United States.
    Affected regulations: 29 CFR 2.34(c), 2.35(f).
5. Political or Religious Affiliation
    Summary of comments: DOL received no comments different from or 
more specific than those summarized in part III of this preamble. The 
issue raised by commenters generally was whether the proposed 
regulations were consistent with the relevant provisions of the 
*COM007*Executive order on this issue.
    Response: Proposed 29 CFR 2.39 stated that ``Decisions about awards 
of Federal financial assistance must be free from political 
interference or even the appearance of such interference and must be 
made on the basis of merit, not on the basis of religion or religious 
belief.'' DOL will amend the final regulations in order to comport with 
the Executive order language and clarify that the prohibited bias 
includes prohibition against considering the lack of political or 
religious affiliation of a non-Federal entity.
    Change: The last clause of 29 CFR 2.39 in the final regulation will 
be modified from ``not on the basis of religion or religious belief'' 
to ``not on the basis of the religious affiliation of a recipient 
organization or lack thereof.''
    Affected regulations: 29 CFR 2.39.
6. Monitoring
    Summary of comments and response: Commenters advised the Agencies 
that they must vigorously monitor and enforce these regulations. DOL 
will ensure compliance with these final regulations by providing 
beneficiaries a central office, the Civil Rights Center, to report 
violations of their rights as explained in the ``Notice of Beneficiary 
Religious Liberty Protections.'' DOL will also promulgate guidance and 
develop training for DOL-supported social service programs and 
intermediaries to effectively implement these final regulations.
    Change: None.
    Affected regulations: None.
7. Other Issues
a. Definitions
i. ``Social Service Program'' and ``Federal Financial Assistance''
    Summary of comments: Some commenters stated that the Agencies 
should define the terms ``social service program'' and ``Federal 
financial assistance.'' Part III opted against a required definition 
for all Agencies.
    Response: As discussed in the proposed regulations, consistent with 
the Executive order's mandate to adopt regulations on ``the distinction 
between `direct' and `indirect' Federal financial assistance,'' DOL 
supplemented its existing definition of ``Federal financial 
assistance'' in 29 CFR 2.31(a) by adding a sentence to indicate that 
Federal financial assistance may be direct or indirect and by adding 
sub-paragraphs (a)(1)-(a)(3) to define the terms ``direct Federal 
financial assistance,'' ``Federal financial assistance provided 
directly,'' ``indirect Federal financial assistance,'' and ``Federal 
financial assistance provided indirectly.'' DOL's existing regulations 
at 29 CFR 2.31(b) already define the term ``social service programs'' 
in a manner that complies with the Executive order, and it thereby 
maintains this definition.
    Change: None.
    Affected regulations: None.
8. DOL Findings & Certifications
Executive Orders 12866 and 13563
    The Agencies' joint submission relevant to Executive Orders 12866 
and 13563 is set forth in part V, General Certifications. DOL joins 
that portion of the preamble in full. What follows below is a 
discussion of issues relevant

[[Page 19395]]

to these Orders specific to DOL's final regulation.
    The only provisions of these final regulations likely to impose 
costs on the regulated community are the requirements that DOL social 
service providers with a religious affiliation: (1) Give beneficiaries 
a written notice informing them of their religious liberty rights when 
seeking or obtaining services supported by direct DOL financial 
assistance, (2) at the beneficiary's request, make reasonable efforts 
to identify and refer the beneficiary to an alternative provider to 
which the beneficiary has no objection, and (3) document such action. 
To minimize compliance costs on DOL social service providers, DOL 
provides the exact text of the notice to providers in appendices to its 
regulations at 29 CFR part 2, subpart D, and will also make the text 
available through its agency Web site.
    An estimate of the cost of providing this notice and referring 
beneficiaries is discussed in the Paperwork Reduction Act agency-
specific section of these final regulations. To minimize compliance 
costs and allow maximum flexibility in implementation, DOL has elected 
not to establish a specific format for the referrals required when 
beneficiaries request an alternative provider. To estimate the cost of 
the referral provision, DOL would need to know the number of religious 
direct social service providers funded by DOL annually, the number of 
beneficiaries who would ask for a referral, and the costs of making the 
referral and notifying relevant parties of the referral.
    Because the notice and referral obligations are new requirements 
for DOL-funded social service programs, there is no known source of 
information to quantify precisely the numbers or proportions of program 
beneficiaries who will request referral to alternative providers. We 
are not aware of any instances in which a beneficiary of a program of 
DOL has objected to receiving services from a faith-based organization. 
There is a possibility that because of these regulations, when 
beneficiaries start receiving notices of their right to request 
referral to an alternative service provider, more of them may raise 
objections. However, our estimate of the number of referrals is also 
informed by the experience of SAMHSA, which administers beneficiary 
substance abuse service programs under titles V and XIX of the Public 
Health Service Act, 42 U.S.C. 290aa et seq. and 42 U.S.C. 300x-21 et 
seq. Specifically, 42 U.S.C. 290kk-1 and 300x-65 require faith-based 
organizations that receive assistance under the Act to provide notice 
to beneficiaries of their right under the statute to request an 
alternative service provider. Recipients of assistance must also report 
all referrals to the appropriate Federal, State, or local government 
agency that administers the SAMHSA program. To date, SAMHSA has not 
received any reports of referral by recipients or subrecipients. During 
the proposed regulation stage, DOL invited interested parties to 
provide data on which to base estimates of the number of beneficiaries 
who will request referral to an alternative service provider and the 
attendant compliance cost service providers may face. No comments 
addressing this issue were received.
    Notwithstanding the absence of concrete data, DOL believes that 
these regulations are not significant within the meaning of the 
Executive order because the annual costs associated with complying with 
the written notice and referral requirements will not approach $100 
million.
Regulatory Flexibility Act
    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes 
certain requirements with respect to Federal regulations that are 
subject to the notice and comment requirements of section 553(b) of the 
Administrative Procedure Act (5 U.S.C. 551 et seq.) and which are 
likely to have a significant economic impact on a substantial number of 
small entities. Unless an agency determines that a proposal is not 
likely to have such an impact, section 604 of the RFA requires that the 
agency present a final regulatory flexibility analysis (FRFA) 
describing the regulation's impact on small entities and explaining how 
the agency made its decisions with respect to the application of the 
regulation to small entities. As described in the Paperwork Reduction 
Act section of this analysis, during the proposed regulations stage, 
DOL solicited comment on the compliance costs associated with the 
notice and referral requirements of this regulation. DOL received no 
comments that specifically addressed the expected number of referrals 
or cost of compliance.
    As described in regulatory impact analysis section of the proposed 
regulation, DOL has made every effort to ensure that the disclosure and 
referral requirements of the proposed regulations impose minimum burden 
and allow maximum flexibility in implementation by providing the notice 
for providers to give beneficiaries informing them of their rights and 
by not proscribing a specific format for making referrals. DOL 
estimates it will take no more than two minutes for providers to print, 
duplicate, and distribute an adequate number of disclosure notices for 
potential beneficiaries. Using the May 2013 Bureau of Labor Statistics 
hourly mean wage for a Training and Development Specialist of $29.22 
results in an estimate of the labor cost per service provider of 
preparing the notice of approximately $0.97. In addition, DOL estimates 
an upper limit of $100 for the annual cost of materials (paper, ink, 
toner) to print multiple copies of the notices. Because these costs 
will be borne by every small service provider with a religious 
affiliation, DOL believes that a substantial number of these small 
entities may be affected by this provision. However, DOL does not 
believe that a compliance cost of less than $200 per provider per year 
is a significant percentage of a provider's total revenue. In addition, 
we note that after the first year, the labor cost associated with 
compliance will likely decrease significantly because small service 
providers will be familiar with the requirements.
    The final regulations will also require religious social service 
providers, at the beneficiary's request, to make reasonable efforts to 
identify and refer the beneficiary to an alternative provider to which 
the beneficiary has no objection. If an organization is unable to 
identify an alternative provider, the organization is required to 
notify the awarding entity and that entity is to determine whether 
there is any other suitable alternative provider to which the 
beneficiary may be referred. A DOL social service intermediary may 
request assistance from DOL in identifying an alternative service 
provider. DOL estimates that each referral request will require no more 
than two hours of a Training and Development Specialist's time to 
process at a labor cost of $29.22 per hour. Although DOL does not have 
any way to determine the number of referrals that will occur in any one 
year, based on available data on the SAMHSA program, DOL has no 
evidence to suggest either this number will be significant or that 
referral costs will be appreciable for small service providers.
Paperwork Reduction Act
    In accordance with the requirements of the Paperwork Reduction Act 
of 1995 (PRA) (44 U.S.C. 3506(c)(2)), DOL submitted a new information 
collection request (ICR) to OMB in accordance with 44 U.S.C. 3507(d), 
contemporaneously with the publication of the notice of proposed 
rulemaking for OMB's review. OMB

[[Page 19396]]

assigned the ICR OMB Control Number 1291-0006 on October 15, 2015. An 
agency may not conduct or sponsor, and a person is not required to 
respond to, a collection of information unless it displays a currently 
valid OMB control number.
    In addition to requesting comments on the ICR during the proposed 
regulations stage (pre-clearance), the OMB and DOL specifically 
requested comments on the ICR that:
     Evaluate whether the collections of information are 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
     Evaluate the accuracy of the agency's estimate of the 
burden of the collection of information, including the validity of the 
methodology and assumptions used;
     Enhance the quality, utility, and clarity of the 
information to be collected, and
     Minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of IT (e.g., permitting electronic submission 
of responses).
    As instructed by OMB, prior to publication of the final 
regulations, DOL submitted to OMB a summary of the comments received on 
the proposed information collections and any changes made in the final 
regulations in response to the comments. No public comments were 
received that specifically addressed the paperwork burden analysis of 
the information collections at the proposed regulations stage. Three 
comments were submitted, as described elsewhere in this preamble, 
generally disagreeing with the administrative burden developed by DOL 
without any attendant data or alternative analysis. As a result, DOL 
has not revised the paperwork burden analysis and no changes have been 
made in the final regulations in connection with the administrative 
burden. One comment was received concerning the appropriate follow-up 
procedure when a referral is made to an alternative provider. DOL has 
made a minor revision to the model notice and referral form in response 
to this comment that does not change the burden estimate.
    A copy of this ICR with applicable supporting documentation 
including a description of the likely respondents, proposed frequency 
of response, and estimated total burden may be obtained by contacting 
Michel Smyth by telephone at 202-693-4129, TTY 202-693-8064, (these are 
not toll-free numbers) or sending an email to [email protected].
    DOL's new information collections are contained in 29 CFR 2.34 and 
2.35 of these final regulations. DOL's final regulation at 29 CFR 2.34 
imposes requirements on religious social service providers to give 
beneficiaries and potential beneficiaries a standardized notice 
instructing them of their rights and requiring a written response only 
in those few cases where a beneficiary requests a referral. DOL 
determined this notice is not a collection of information subject to 
OMB clearance under the PRA because the Federal Government has provided 
the exact text that a provider must use. See 5 CFR 1320.3(c)(2). The 
beneficiary's response, however, is subject to OMB clearance under the 
PRA. Care has been taken to obtaining minimal identifying information 
and providing check boxes for material responses.
    DOL's final regulation at 29 CFR 2.35 requires that when a 
beneficiary or prospective beneficiary of a social service program 
supported by direct DOL financial assistance objects to the religious 
character of an organization that provides services under the program, 
that organization must promptly undertake reasonable efforts to 
identify and refer the beneficiary to an alternative provider. The 
referral process entails a collection of information subject to PRA 
clearance, specifically, informing the beneficiary of a referral to an 
alternative provider. Under 29 CFR 2.35(d), the organization is 
required to maintain a record of referrals to alternative providers as 
well as to notify the awarding entity and maintain a record for review 
if the organization is unable to identify an alternative provider. That 
awarding entity is to determine whether there is any other suitable 
alternative provider to which the beneficiary may be referred. The 
final regulation at 29 CFR 2.35(e) specifically notes that a DOL social 
service intermediary provider may request assistance from DOL in 
identifying an alternative service provider. Further, the Executive 
order and the final regulations require the relevant government agency 
to ensure that appropriate and timely referrals are made to an 
appropriate provider, and that referrals are made in a manner 
consistent with applicable privacy laws and regulations.
    Religious social service providers subject to these requirements 
must keep records to show they have met the referral requirements. In 
the case of paper notices, religious social service providers may meet 
the record-keeping requirements by keeping the bottom portion of the 
notice. For those religious social service providers that provide 
notice electronically, the notices must include a means for 
beneficiaries to request an alternative placement--and follow-up, if 
desired--that is recorded so that the religious social service 
providers may retain evidence of compliance with this final regulation. 
DOL does not estimate the burden of maintaining the records needed to 
demonstrate compliance with the requirements imposed on the religious 
social service providers. The record-keeping burden that this 
regulation adds is so small that, under most programs, it does not 
measurably increase the burden that already exists under current 
program and administrative requirements. If, due to the unique nature 
of a particular program, the record-keeping burden associated with this 
regulation is large enough to be measurable, that burden will be 
calculated under the record-keeping and reporting requirements of the 
affected program and identified in information collection requests that 
are submitted to OMB for PRA approval. Therefore, DOL does not include 
any estimate of record-keeping burden in this PRA analysis.
    The burden for the information collection provisions of these final 
regulations can be summarized as follows:
    Agency: DOL-OS.
    Title of Collection: Grant Beneficiary Referrals.
    OMB ICR Reference Number Control Number: 1291-0006.
    Affected Public: State and local governments; Private Sector-not-
for-profit institutions; and Individuals or Households.
    Frequency of Response: On occasion.
    Total Estimated Number of Respondents: 38.
    Total Estimated Number of Responses: 38.
    Total Estimated Annual Burden Hours: 9.
    Total Estimated Other Costs: $0.
Effect on Family Life
    DOL certifies that these regulations have been assessed according 
to section 654 of the Treasury and General Government Appropriations 
Act, enacted as part of the Omnibus Consolidated and Emergency 
Supplemental Appropriations Act of 1999 (Pub. L. 105-227, 112 Stat. 
2681), for its effect on family well-being. It will not adversely 
affect the well-being of the nation's families. Therefore, DOL 
certifies that these proposed regulations do not adversely impact 
family well-being.

[[Page 19397]]

H. Department of Veterans Affairs

    On August 6, 2015, VA published a proposed regulation (80 FR 
47340). VA received 87 comments in response to its proposed regulation. 
Unless otherwise specified, all comments received by VA are addressed 
fully in the cross-cutting section in part III and those responses are 
adopted by VA. VA addresses in this part the VA-specific comments not 
addressed in part III of the preamble, provides agency-specific 
response called for in part III, and provides the VA-specific findings 
and certifications. This agency-specific discussion is organized in the 
same manner as part III of the preamble. VA does not discuss minor or 
technical changes that were made to provide greater consistency or 
simplify the language in the regulations.
1. Prohibited Use of Direct Federal Financial Assistance
    Summary of comments: In addition to the applicable cross-cutting 
comments on the issue of prohibited use of direct Federal financial 
assistance that are summarized in part III.A of this preamble, VA 
received the following different or more specific comments. VA received 
one comment which asserted that taxpayer dollars should not be used to 
employ religious clergy of any kind within the VA system, or any 
publicly funded system, and that individuals receiving VA services who 
desire to participate in religious services may do so at a private 
location of their choice. VA received one comment regarding the 
language in proposed 38 CFR 50.1(a) that excluded services ``such as 
chaplaincy services'' from the scope of the regulation. The commenter 
asserted that the language was not specific enough with regard to what 
services other than chaplaincy might also be excluded.
    Response: Regarding the comments asserting that VA should cease the 
Federal funding of VA chaplaincy services, such comment is outside the 
scope of this rulemaking. Regarding the comment asking VA to revise 38 
CFR 50.1(a) to provide language that is more specific than ``such as 
chaplaincy services,'' such a change could unnecessarily circumscribe 
funding permissible under the Establishment Clause. We reiterate the 
response from part III of this preamble that direct Federal funding for 
religious activities is constitutionally permissible and necessary 
under limited circumstances, such as for chaplaincy services; and that 
the Agencies also believe that they should retain whatever discretion 
is afforded them by applicable federal law to fund, or not to fund, 
other such activities that can be publicly funded consistent with the 
Establishment Clause. The intention of this rulemaking is not to 
disturb this practice and inclusion of language specifically exempting 
such services from these rules accomplishes this intent. Therefore, VA 
does not make any changes based on these comments. VA does, however, 
revise the language in 38 CFR 50.1(a) to be consistent with such 
language where it appears in the rules of the Agencies, as indicated in 
part III.A.2 of the joint preamble.
    Change: Revise the last sentence of 38 CFR 50.1(a) to state that 
``Nothing in this part restricts the VA's authority under applicable 
Federal law to fund activities, such as the provision of chaplaincy 
services, that can be directly funded by the Government consistent with 
the Establishment Clause.''
    Affected regulations: 38 CFR 50.1(a).
2. Direct and Indirect Federal Financial Assistance
    Summary of comments: VA did not receive any comments on the issue 
of direct and indirect Federal financial assistance that were different 
from or more specific than the applicable cross-cutting comments that 
are summarized in part III.B of this preamble.
    Response: VA makes the changes noted below consistent with the 
explanation provided with respect to the applicable cross-cutting 
comments that are summarized in part III of this preamble.
    Change: Revise 38 CFR 50.1 to add paragraph (f) to clarify that any 
organization that participates in a program funded by Federal financial 
assistance shall not, in providing services or in outreach activities 
related to such services, discriminate against a program beneficiary 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. 
Revise 38 CFR 50.2 to add paragraph (c) to clarify that providers of 
``indirect'' Federal financial assistance are not required to provide a 
written notice.
    Affected regulations: 38 CFR 50.1(f) and 50.2(c).
3. Intermediaries
    Summary of comments: VA did not receive any comments on the issue 
of intermediaries that were different from or more specific than the 
applicable cross-cutting comments that are summarized in part III.C of 
this preamble.
    Response: VA does not make any regulatory changes, consistent with 
the explanation provided in the applicable cross-cutting comments that 
are summarized in part III of this preamble.
    Change: None.
    Affected regulations: None.
4. Protections for Beneficiaries
    Summary of comments: VA did not receive any comments on the issue 
of protections for beneficiaries that were different from or more 
specific than the applicable cross-cutting comments that are summarized 
in part III.D of this preamble.
    Response: VA makes the regulatory changes noted below, consistent 
with the explanation provided in the applicable cross-cutting comments 
that are summarized in part III of this preamble. Consistent with the 
discussion in part III.D.2.f of the preamble, where VA requires 
individual written notice of beneficiary rights to be provided, 
grantees and any subgrantees will be required to maintain records of 
any referrals made, consistent with existing recordkeeping 
requirements. In circumstances where VA does not require individual 
written notice of beneficiary rights to be provided, grantees and any 
subgrantees are not required to maintain a record of any referrals 
made.
    Change: Revise 38 CFR 50.2 to add paragraph (c) to clarify that 
faith-based or religious organizations providing social services to 
beneficiaries under a VA program supported by indirect VA financial 
assistance are not subject to the notice requirements in 38 CFR 50.2. 
Revise 38 CFR 50.2(a)(1) to clarify that refusal to hold a religious 
belief, or refusal to attend or participate in a religious practice 
cannot be a basis for discrimination. Revise 38 CFR 50.2(a)(5) to 
clarify that beneficiaries may report violations of these protections 
to, or file a written complaint of any denials of services or benefits 
with, VA or an intermediary. Revise 38 CFR 50.3(d) to clarify that, 
when an organization is unable to identify a referral after reasonable 
efforts, the organization will be required to promptly notify the 
agency or intermediary. VA anticipates that either the VA program 
office or the intermediary will provide policy guidance or reference 
materials so organizations will know who to contact for assistance.
    Affected regulations: 38 CFR 50.2(a)(1) and (a)(5), 50.2(c), 
50.3(d).

[[Page 19398]]

5. Political or Religious Affiliation
    Summary of comments: VA did not receive any comments on the issue 
of political or religious affiliation that were different from or more 
specific than the applicable cross-cutting comments that are summarized 
in part III.E of this preamble.
    Response: VA does not make any regulatory changes, consistent with 
the explanation provided in the applicable cross-cutting comments that 
are summarized in part III of this preamble. However, VA does make 
changes for purposes of consistency among 38 CFR 54.1, 38 CFR 61.64(a), 
and 38 CFR 62.62(a).
    Change: VA revises the language in 38 CFR 61.64(a) and 38 CFR 
62.62(a) to make the language consistent with 38 CFR 51.4, as revised 
per the discussion in part III.E.3 of this preamble. Specifically, VA 
removes the last sentences of 38 CFR 61.64(a) and 38 CFR 62.62(a) and 
replaces them with ``Decisions about awards of Federal financial 
assistance must be free from political interference or even the 
appearance of such interference and must be made on the basis of merit, 
not on the basis of religion or religious belief or lack thereof.''
    Affected regulations: 38 CFR 61.64(a), 62.62(a) (VA).
6. Monitoring
    Summary of comments: VA did not receive any comments on the issue 
of monitoring that were different from or more specific than the 
applicable cross-cutting comments that are summarized in part III.F of 
this preamble.
    Response: Consistent with the cross-cutting comments in part III of 
this preamble on the issue of tracking and monitoring compliance with 
the general requirements of EO 13559, VA does not make any regulatory 
changes, but will use its resources to develop training and provide 
policy guidance or reference materials to grantees to ensure that 
grantees and any subgrantees are aware of the requirements in EO 13559.
    Change: None.
    Affected regulations: None.
7. Other Issues
    Summary of comments: VA did not receive any comments regarding 
other issues that were different from or more specific than the 
applicable cross-cutting comments that are summarized in part III.G of 
this preamble.
    Response: Consistent with the applicable cross-cutting comments 
that are summarized in part III of this preamble, VA revises its 
regulations to reference the definitions of ``Federal financial 
assistance'' and ``social service programs'' as those terms are defined 
in EO 13279.
    Change: Revise 38 CFR 50.1(a) to reference EO 13279 to define the 
terms ``Federal financial assistance'' and ``social service programs.''
    Affected regulations: 38 CFR 50.1(a).
8. VA Findings & Certifications
Effect of Rulemaking
    Title 38 of the Code of Federal Regulations, as revised by this 
final rulemaking, represents VA's implementation of its legal authority 
on this subject. Other than future amendments to this regulation or 
governing statutes, no contrary guidance or procedures are authorized. 
All existing or subsequent VA guidance must be read to conform with 
this rulemaking if possible or, if not possible, such guidance is 
superseded by this rulemaking.
Paperwork Reduction Act
    The Paperwork Reduction Act of 1995 (44 U.S.C. 3507) requires that 
VA consider the impact of paperwork and other information collection 
burdens imposed on the public. Under 44 U.S.C. 3507(a), an agency may 
not collect or sponsor the collection of information, nor may it impose 
an information collection requirement unless it displays a currently 
valid Office of Management and Budget (OMB) control number. See also 5 
CFR 1320.8(b)(3)(vi).
    This final rule will impose the following new information 
collection requirements. 38 CFR 50.2 will require faith-based or 
religious organizations that receive direct VA financial assistance in 
providing social services to beneficiaries to provide to beneficiaries 
(or prospective beneficiaries) written notice informing them of certain 
protections. As required by the 44 U.S.C. 3507(d), VA submitted these 
information collections to OMB for its review, and the information 
collection is pending OMB approval. Consistent with the applicable 
cross-cutting comments in part III of this preamble related to the 
written notice, VA revises its written notice to indicate that an 
organization receiving direct financial assistance from VA may not 
discriminate against a beneficiary on the basis of religion, religious 
belief, refusal to hold a religious belief, or a refusal to attend or 
participate in a religious practice. In addition, VA revises its 
written notice to state that ``we cannot guarantee that in every 
instance an alternate provider will be available.''
    Notice of OMB approval for this information collection will be 
published in a future Federal Register document. Until VA receives 
approval from OMB for the information collection, VA will not collect 
information associated with this rulemaking.
Regulatory Flexibility Act
    The Secretary hereby certifies that this final rule will not have a 
significant economic impact on a substantial number of small entities 
as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-
612. Although small entities participating in VA's Grant and Per Diem 
and and Supportive Services for Veteran Families programs will be 
affected by this final rule, any economic impact will be minimal. 
Therefore, pursuant to 5 U.S.C. 605(b), this rulemaking is exempt from 
the initial and final regulatory flexibility analysis requirements of 
sections 603 and 604.
Catalog of Federal Domestic Assistance
    The Catalog of Federal Domestic Assistance numbers and titles for 
the programs affected by this document are 64.008, Veterans Domiciliary 
Care; 64.009, Veterans Medical Care Benefits; 64.024, VA Homeless 
Providers Grant and Per Diem Program; 64.033, VA Supportive Services 
for Veteran Families Program.

I. Department of Health and Human Services

    On August 6, 2015, HHS published a proposed rule at 80 FR 47272 to 
amend its ``Equal Treatment'' regulations at 45 CFR part 87 consistent 
with Executive Order 13559. The proposed rule also changed the format 
of the initial rule, which was published in 2004, so that it no longer 
separates applicable clauses based on grant type (i.e., discretionary 
grants or formula and block grants). In order to draw out distinctions 
based on the grant type, the new rule includes an applicability 
section. This final rule includes those format changes and others that 
ensure HHS's regulations implement all of the requirements of Executive 
Order 13279 as amended by Executive Order 13559. HHS received comments 
from 138 parties. The overwhelming majority of comments received by HHS 
are addressed in the cross-cutting section in part III of this 
preamble. HHS adopts all of those responses, unless otherwise noted 
below. The responses in part III of this preamble also indicate that 
the Agencies plan to issue non-regulatory policy guidance or reference 
materials to clarify various issues, such as the prohibition against 
``explicitly religious'' activities. HHS will issue such a non-
regulatory guidance that will address that and other issues. We

[[Page 19399]]

believe such guidance will be the most effective way to address a 
variety of more detailed matters in the contexts of HHS programs. We 
will also continue to provide trainings for HHS employees and grantees 
involved in those programs to which these rules are most typically 
involved.
    While some of the cross-cutting comments addressed in part III of 
the preamble were not received by HHS, we concur in the resolution of 
the issues in that part of the preamble. Further, the cross-cutting 
section of the preamble indicates that the Agencies have agreed to make 
certain changes to their regulations that were already reflected in 
HHS's NPRM, and it is therefore not necessary for HHS to make such 
changes. For example, while some agencies are making changes to the 
sections of their regulations that address anti-discrimination against 
beneficiaries, HHS does not need to make those changes because HHS's 
proposed regulations already included the desired language. An overview 
of each section of the final regulation text, and the rationale for 
most of the amendments to the 2004 ``Equal Treatment'' rules, can be 
found in the preamble to the proposed rule. Given the preamble to the 
HHS proposed regulation, and the limited changes to that regulation, 
this final regulation is limited to discussing the following eight 
substantive changes to the proposed regulation that was in the NPRM:
    First, HHS has revised 45 CFR 87.2, entitled ``Applicability,'' to 
exempt Child Care and Development Fund (CCDF) grants from the 
provisions that the NPRM had proposed to make applicable to that 
program, because beneficiaries in that program already have the option 
to obtain certificates or vouchers that enable them to choose among 
available providers. Consequently, it is not necessary to apply the new 
rules to CCDF grants in order to make alternative providers available 
to persons with religious objections to faith-based providers. Thus, 
this final regulation will not apply to CCDF, which is consistent with 
our past practice.
    CCDF programs are governed by an authorizing statute (42 U.S.C. 
9858-9858q) and regulation (45 CFR part 98) each of which includes six 
clauses addressing religious issues, such as participation of religious 
organizations, nondiscrimination against beneficiaries on the basis of 
religion and a bar against directly funding religious activity. Since 
the time that the Equal Treatment rules were initially published in 
2004, they have not been applicable to CCDF. Rather, the Administration 
of Children and Families, Office of Child Care, issued a policy that 
grantees should follow the rules as a matter of good practice, to the 
extent that doing so does not conflict with the Child Care and 
Development Block Grant Act and implementing regulations. See http://www.acf.hhs.gov/programs/occ/resource/equal-treatment-regulations-for-faith-based-organizations. Instead of making the Equal Treatment rules 
apply to CCDF at this point, we believe that continuing to exempt CCDF 
is more consistent with our prior NPRM proposals to exempt both the 
Temporary Assistance for Needy Families (TANF) and Substance Abuse and 
Mental Health Services Administration (SAMHSA) programs. Our NPRM 
indicated that TANF and SAMHSA would be exempt from these regulations 
in light of the fact that those two programs already have statutory and 
regulatory alternative provider requirements, and we are mindful of our 
goal to minimize the number of new regulations in programs that already 
comply with new fundamental principles of Executive Order 13559. In 
this case, CCDF services are primarily funded through certificates and 
vouchers that already afford beneficiaries a choice of alternative 
service providers, and all CCDF beneficiaries have the option to 
receive certificates or vouchers. Consequently, we believe the 
alternative provider principle would not significantly impact CCDF in 
addition to the SAMHSA and TANF programs.
    Change: 45 CFR 87.2 is amended to exempt CCDF grants from these 
regulations.
    Second, HHS has broadened the religious nondiscrimination clause in 
45 CFR 87.3(d) to prohibit not only religious discrimination in the 
delivery of services, but also the outreach for such services. The new 
rule states that an organization that participates in any programs 
funded by financial assistance from an HHS awarding agency shall not 
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, not only when providing services but also when 
conducting outreach activities related to those services. HHS agrees 
with the Agencies' rationale for this change, as described in part 
III.B of the preamble, subtitled ``Direct and Indirect Federal 
Financial Assistance.'' The change is also consistent with HHS's 
practice since the inception of the Equal Treatment rules in 2004.
    Change: 45 CFR 87.3(d) is amended to state that an organization 
that participates in any programs funded by financial assistance from 
an HHS awarding agency shall not, in providing services or in outreach 
activities related to such services, 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.
    Third, HHS has also revised 45 CFR 87.3(d) to state that 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 
that organization's program. This change is described in part III.B of 
the preamble, subtitled ``Direct and Indirect Federal Financial 
Assistance,'' and we agree with the Agencies' rationale for the change.
    Change: 45 CFR 87.3(d) is amended to state that 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.
    Fourth, HHS has revised the notice, nondiscrimination and 
alternative provider requirements at 45 CFR 87.3(i)(1), 87.3(i)(1)(i), 
87.3(i)(1)(iv)-(v), and 87.3(j) to encompass not only beneficiaries but 
also prospective beneficiaries. This is consistent with the approach 
taken by the other agencies. This way, faith-based or religious 
organizations must provide the notice of beneficiary protections to 
both beneficiaries and prospective beneficiaries. Further, an HHS-
funded social service provider may not discriminate against either a 
beneficiary or prospective 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. Finally, either a 
beneficiary or prospective beneficiary may object to the religious 
character of an HHS-funded social service provider and request an 
alternative one.
    Change: The notice, nondiscrimination and alternative provider 
requirements at 45 CFR 87.3(i)(1), 87.3(i)(1)(i), 87.3(i)(1)(iv)-(v) 
and 87.3(j) are amended to address not only beneficiaries but also 
prospective beneficiaries.
    Fifth, HHS has revised the notice requirement in 45 CFR 
87.3(i)(1)(iv) to explicitly state that when a beneficiary or 
prospective beneficiary objects to the religious character of a faith-
based or religious organization that provides

[[Page 19400]]

social services that entity cannot guarantee that an alternative 
provider will be available. This is because a faith-based or religious 
organization that has made a reasonable effort to identify an 
alternative provider might find that there is no alternative available.
    Change: 45 CFR 87.3(i)(1)(iv) is amended to provide that if a 
beneficiary or prospective beneficiary objects to the religious 
character of the organization the organization will undertake 
reasonable efforts to identify and refer the beneficiary to an 
alternative provider to which the beneficiary has no objection; 
however, the organization cannot guarantee that in every instance an 
alternative provider will be available.
    Sixth, HHS has revised both the regulations at 45 CFR 87.3(i)(1)(v) 
and the sample ``Written Notice of Beneficiary Protections'' in 
appendix I consistent with the discussion in part III.D.1, entitled 
``Beneficiary Notice.'' We and the other agencies agree with the 
commenter's concern that the final regulations should make clear that 
each beneficiary's right to report a violation of these protections 
includes the right to file a complaint of any denials of services or 
benefits that violates these final regulations. As indicated in the 
text of the final regulations, such reports and complaints may be made 
to the HHS office that awarded the grant at issue. In addition, 
complaints of religious discrimination in some particular programs may 
also be reported in writing to the HHS Office for Civil Rights (OCR). 
Those programs and the bases of such complaints are more specifically 
identified on the OCR Web site at http://www.hhs.gov/ocr/civilrights/understanding/religion/index.html.
    Change: 45 CFR 87.3(i)(1)(v) and appendix I are amended to state 
that beneficiaries may file a complaint of any denials of services or 
benefits that violate these regulations.
    Seventh, HHS has revised 45 CFR 87.3(k) consistent with the cross-
cutting section of this preamble in part III.D.2 entitled 
``Referrals.'' As indicated therein, the obligation that faith-based 
and religious organizations have under these final regulations to 
notify their awarding entities of any alternative provider referrals is 
now more limited than it was in the proposed rule. The final 
regulations only require faith-based or religious organizations to 
notify their awarding agencies when they are unable to identify an 
alternative provider, rather than also requiring them to provide such 
notice any time they make a referral. The final regulations also now 
require that these reports be made ``promptly.'' HHS agrees with the 
commenters who recommended these changes.
    Change: 45 CFR 87.3(k) is amended to limit notification to awarding 
agencies to cases where a referral cannot be made, and to require that 
such notifications be made promptly.
    Eighth, 45 CFR 87.3(k) is also amended to require any organization 
that is successful in making a referral to an alternative provider, 
under 45 CFR 87.3(j), to then maintain a record of that referral. As 
indicated in part III.D.2 of the preamble, subtitled ``Notification of 
Government and timeframe of referral,'' this requirement is consistent 
with that which all of the Agencies have adopted. The requirement will 
enable HHS and intermediary organizations to monitor grantees and 
subgrantees, respectively, to ensure that they comply with the 
alterative provider requirement, and is also consistent with HHS cost 
and accounting regulations at 45 CFR 75.302(a).
    Change: 45 CFR 87.3(k) is amended to require that any organization 
that is successful in making a referral to an alternative provider must 
maintain a record of the referral.
    The remainder of this final regulation is identical to HHS's 
proposed rule text, with the exception of some additional clarifying 
changes. HHS addresses below the HHS-specific comments that are not 
addressed in part III of the joint preamble, using the same subheadings 
to which these comments would apply in that section. After those 
comments, HHS-specific regulatory findings and certifications are 
indicated.
1. Prohibited Use of Direct Federal Financial Assistance
    Summary of comments: One commenter requested that further guidance 
be provided about how ``explicitly religious'' activity should be 
interpreted in the context of counseling. The commenter was concerned 
that a strict interpretation of this provision would ``virtually 
preclude'' any religious organization from providing counseling with 
direct funding from the Federal Government. The commenter stated that 
it is possible to provide spiritual or religious-based counseling 
without getting into specific areas of doctrine, and was particularly 
concerned about the potential for an inadvertent violation of these 
regulations if a beneficiary asks a federally-funded counselor a 
question concerning religion. Finally, the commenter was concerned as 
to whether these rules would prohibit a grace before a meal, 
particularly in the context of a federally-funded soup kitchen.
    Response: HHS intends to issue additional non-regulatory guidance 
regarding ``explicitly religious activities'' to address these 
concerns. We believe that non-regulatory guidance is the more 
appropriate way to address the wide variety of specific factual 
contexts in which the bar against explicitly religious activities 
applies. In general, HHS will note in the guidance that counselors may 
not encourage or discourage beneficiaries from accepting religious 
teachings because doing so would constitute an ``explicitly religious'' 
activity. Yet, that standard does not prohibit a counselor from making 
any reference to religion, or responding neutrally to a question that 
concerns religion.
    As to prayer, HHS will note in guidance that attending a federally-
supported program does not affect an individual's right to pray. 
Program beneficiaries may engage in prayer, generally, subject to the 
same rules designed to prevent material disruption of the program that 
are applied to any other privately-initiated speech. This is because 
the bar against use of Federal financial assistance for explicitly 
religious activities applies to activities, speech, and materials that 
are generated or controlled by the administrators, instructors, or 
officials of the federally-financed program. The requirement generally 
does not apply to the activities of beneficiaries whose speech is not 
controlled, encouraged, or approved after the fact by program 
administrators, instructors, or officials.
    Change: None.
    Affected regulations: None.
2. Direct and Indirect Federal Financial Assistance
    Summary of comments: One commenter stated that if child care 
assistance were not considered ``indirect'' assistance, it would be 
difficult to implement the requirements of the NPRM. The commenter 
stated that some child care providers include religious activities in 
their programs and it would be difficult to explain and monitor a 
requirement that such activities be done separately. The commenter was 
also concerned about whether Federal child care funding reserved for 
quality improvement activities would be subject to the NPRM.
    Response: As HHS has indicated in its first explanation of the 
changes from the NPRM, HHS has amended 45 CFR 87.2 to exempt Child Care 
and Development Fund (CCDF) grants from these regulations. CCDF grants 
are governed by the Child Care and Development Block Grant Act at 42 
U.S.C. 9858-9858q and implementing regulation at

[[Page 19401]]

45 CFR part 98, each of which includes six provisions that address 
religious issues. Those implementing regulations at 45 CFR 98.54(d) 
provide that any funds that a service provider receives through 
certificates, which is defined to include vouchers, may be spent on 
sectarian purposes or activities, including sectarian worship or 
instruction when provided as part of the child care services. Most 
child care providers serving families who participate in the CCDF 
program receive their funding through certificates or vouchers, which 
may therefore be spent on sectarian purposes or activities, and such 
activities may be part of the Federally-funded program. On the other 
hand, if a child care service provider receives CCDF funding through 
grants or contracts, then 45 CFR 98.54(d) prohibits that service 
provider from spending the funds on any sectarian purpose or activity, 
including sectarian worship or instruction. While neither the Child 
Care and Development Block Grant Act nor its implementing regulations 
at 45 CFR part 98 prohibit grant or contract-funded service providers 
from incorporating privately-funded religious activity into their 
Federally-funded programs, the policy of the Administration for 
Children and Families, Office of Child Care, to which HHS referred in 
the first explanation of the changes, is that grantees should follow 
the Equal Treatment regulations at 45 CFR part 87 as a matter of good 
practice. Section 87.3(b) of these regulations prohibits grant or 
contract supported service providers from supporting or engaging in any 
explicitly religious activities (including activities that involve 
overt religious content such as worship, religious instruction, or 
proselytization), as part of their Federally-funded child care 
programs. As the same regulation also states, if an organization 
conducts such activities, the activities must be offered separately, in 
time or location, from the programs or services funded with direct 
financial assistance from the HHS awarding agency, and participation 
must be voluntary for beneficiaries of the programs or services funded 
with such assistance. Grant or contract-funded child care providers 
should follow these same principles as a matter of good practice.
    CCDF quality improvement grants are awarded directly to grant 
recipients, rather than through certificates or vouchers, and therefore 
religious activities may not be part of the quality improvement 
services funded by the grants. When the recipient of a quality 
improvement grant provides secular technical assistance to a faith-
based child care provider that provider may still continue to accept 
certificates or vouchers to administer a program that includes 
explicitly religious content.
    Change: None.
    Affected regulations: None.
7. Other Issues
a. Definitions of ``Social Service Program'' and ``Federal Financial 
Assistance''
    Summary of comments: One commenter requested that HHS make clear 
whether the requirements in the NPRM apply to Medicare and Medicaid. 
The commenter also asked HHS to explicitly identify all of the HHS 
programs, grants, and reimbursement structures to which the proposed 
regulations and alternative provider requirements would apply.
    Response: As provided in 45 CFR 87.2, the final regulations will 
apply to ``grants awarded in HHS social service programs governed by 
the Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements at 45 CFR part 75.'' Executive Order 13279 clarifies that 
the term ``social service program'' includes ``health support 
services.'' Because Medicaid entails funding for health support 
services through grants governed by 45 CFR part 75, these final 
regulations will apply to the Medicaid program. Yet, Medicaid-funded 
service providers generally receive payments through ``indirect Federal 
financial assistance'' as defined in 45 CFR 87.1(c). Consequently, both 
the limitation on explicitly religious activities in 45 CFR 87.3(b), 
and the notice requirement in 45 CFR 87.3(i), would not ordinarily 
apply to Medicaid-funded service providers. In contrast to Medicaid, 
these final regulations will not apply to Medicare because it is not a 
``grant'' program.
    HHS will ordinarily inform prospective applicants as to whether 
available grants are governed by these rules in our HHS notices 
announcing the availability of grant awards. Given the large volume and 
wide array of grant programs administered by HHS, we believe this is a 
more practical approach to identifying applicable programs rather than 
listing all of them in this rule. Consequently, HHS declines the 
recommendation to do so.
    Change: None.
    Affected regulations: None.
b. Other Comments
    Summary of comments: One commenter noted that the proposed HHS 
regulations would not amend regulations that currently apply to the 
Temporary Assistance for Needy Families (TANF), Substance Abuse and 
Mental Health Services Administration (SAMHSA) or Community Services 
Block Grant (CSBG) programs. The commenter recommended that the 
amendments be revised to apply to these programs to the greatest extent 
possible without creating inconsistencies with their Charitable Choice 
statutes. The commenter maintained that such a change would further the 
Executive order's goals of promoting greater clarity and enhancing 
protections for beneficiaries, and would promote uniformity. For 
example, the commenter recommended that the regulations governing these 
three programs be revised to replace the term ``inherently religious'' 
with ``explicitly religious,'' and to incorporate the new definitions 
of ``direct'' and ``indirect.'' In contrast, the commenter recommended 
that the beneficiary protections for SAMHSA be kept intact insofar as 
the Advisory Council recommended they serve as the model for these 
proposed regulations.
    Response: Since 2004, HHS's Equal Treatment regulations have 
exempted grants governed by the SAMHSA Charitable Choice rule (42 CFR 
parts 54 and 54a), TANF Charitable Choice rule (45 CFR part 260) and 
CSBG Charitable Choice rule (45 CFR part 1050). As we indicated in the 
proposed rule preamble, the SAMHSA and TANF Charitable Choice rules 
already provide their program beneficiaries with an option to request 
an alternative provider if they object to the religious character of an 
HHS-supported social service provider, and that under our proposed 
rule, programs governed by those two Charitable Choice rules will 
continue to remain exempt from these regulations. The commenter is 
correct as to those two exemptions. Yet, the commenter is incorrect 
that these regulations do not amend CSBG funded programs. CSBG funded 
programs do not have an alternative provider provision, a fundamental 
principle in these amendments, and in both the proposed regulation's 
preamble and the ``Applicability'' section of the regulation at 45 CFR 
87.2 we identified new provisions that make the alternative provider 
and related requirements applicable to CSBG grants. Additionally, the 
new definitions of ``direct'' and ``indirect'' are among the sections 
of these regulations that apply to CSBG. In short, HHS has ensured that 
each of the three programs governed by Charitable Choice rules has an 
alternative provider option, and kept the SAMHSA beneficiary 
protections intact without

[[Page 19402]]

applying these rules to them consistent with the commenter's 
recommendation.
    When making the decisions as to whether other provisions in these 
regulations should apply to these three Charitable Choice programs, HHS 
was mindful of the need to avoid conflicts between this regulation and 
the statutory Charitable Choice provisions that apply to SAMHSA, TANF 
and CSBG. HHS was also mindful of the need to balance the goals of 
promoting uniformity and clarity while enhancing beneficiary 
protections, with the goal of minimizing the number of new regulations 
in programs that already comply with the fundamental elements of these 
Executive Order 13559 amendments. We believe that the approach to those 
three programs in the HHS proposed rule was a reasonable balance 
between these goals; and as explained earlier in this preamble, Child 
Care and Development Fund (CCDF) grants should be exempt in the final 
rule for these reasons. Thus, while we understand and appreciate the 
commenter's recommendation, we decline the recommendation to apply 
these regulatory provisions to TANF, SAMHSA and CCDF or apply more of 
the new provisions to CSBG.
    The TANF and SAMHSA programs all remain governed by the Charitable 
Choice statutes and rules cited above, and CCDF grants remain governed 
by the Child Care and Development Block Grant Act and its implementing 
regulations cited at the beginning of the HHS overview of its proposed 
changes. We intend to state in upcoming sub-regulatory guidance, which 
will aid grantees in identifying ``explicitly religious'' activities, 
that the terms ``inherently religious'' or ``sectarian activities'' are 
used in the three Charitable Choice rules and the CCDF regulations each 
has the same meaning as the term ``explicitly religious'' activities as 
used in these regulations. We also intend to state in our guidance that 
the distinctions between ``direct'' and ``indirect'' forms of funding 
as used in the TANF and SAMHSA Charitable Choice statutes, and CCDF 
program regulations, should be defined consistent with the definitions 
in these regulations.
    Change: None.
    Affected regulations: None.
8. HHS Findings and Certifications
Executive Orders 12866 and 13563
    The Agencies' joint submission relevant to Executive Orders 12866 
and 13563 is set forth in part V. HHS joins that portion of the 
preamble in full, and what follows below is a discussion of issues 
relevant to HHS's final regulation. As HHS indicated in the NPRM, 
Executive Orders 12866 and 13563 direct agencies to assess all costs 
and benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects; distributive impacts; and equity). Executive Order 13563 
emphasizes the importance of quantifying both costs and benefits, 
reducing costs, harmonizing rules, and promoting flexibility. 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 
and materially affects 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.
    HHS believes that the only provisions of this rule likely to impose 
costs on the regulated community are the requirements that HHS faith-
based or religious social service providers: (1) Give beneficiaries a 
written notice informing them of their religious liberty protections 
when seeking or obtaining services supported by direct HHS financial 
assistance, (2) at the beneficiary's request, make reasonable efforts 
to identify and refer the beneficiary to an alternative provider to 
which the beneficiary has no objection, and (3) document such action. 
To minimize compliance costs and allow maximum flexibility in 
implementation, the final regulations provide the language to be 
included in the notice directly within the regulations. Additionally, 
the preamble includes an example of the notice in appendix I to the 
preamble. An estimate of the burden, in term of the number of hours 
involved in referring beneficiaries, is discussed in the Paperwork 
Reduction Act section of this preamble, which cross-references the NPRM 
preamble.
    At this time, there is no known source of information to quantify 
precisely the numbers or proportions of program beneficiaries who will 
request referral to alternative providers. HHS is not aware of any 
instances in which a beneficiary of a program of HHS has objected to 
receiving services from a faith-based organization. There is however a 
possibility that HHS will begin to see objections when, as a result of 
the implementation of these final regulations, beneficiaries begin to 
receive notices of their option to request referral to an alternative 
service provider. HHS must therefore estimate that the number of 
requests for referrals will be one per year for each faith-based or 
religious organization that receives HHS funding through prime or sub-
awards. While a precise estimate is not available, HHS believes that 
this estimate is reasonable, though it likely errs on the higher end in 
view of HHS's experience. The Substance Abuse and Mental Health 
Services Administration (SAMHSA), which administers beneficiary 
substance abuse service programs under titles V and XIX of the Public 
Health Service Act, 42 U.S.C. 290aa et seq. and 42 U.S.C. 300x-21 et 
seq. Specifically, 42 U.S.C. 290kk-1 and 300x-65, requires faith-based 
organizations that receive assistance under the Act to provide notice 
to beneficiaries of their ability under statute to request an 
alternative service provider. Recipients of assistance must also report 
all referrals to the appropriate Federal, State, or local government 
agency that administers the SAMHSA program. To date, SAMHSA has not 
received any reports of referral by recipients or subrecipients. HHS 
invites interested parties to provide data on which to base estimates 
of the number of beneficiaries who will request referral to an 
alternative service provider and the attendant compliance cost service 
providers may face.
    Notwithstanding the absence of concrete data, HHS believes that 
this rule is not significant within the meaning of the Executive order 
because the annual costs associated with complying with the written 
notice and referral requirements will not approach $100 million.
Regulatory Flexibility Act Analysis
    The Regulatory Flexibility Act (RFA) at 5 U.S.C. 603(a) requires 
agencies to prepare and make available for public comment an initial 
regulatory flexibility analysis which will describe the impact of the 
proposed rule on small entities. Section 605 of the RFA allows an 
agency to certify a rule, in lieu of preparing an analysis, if the 
rulemaking is not expected to have a significant economic impact on a 
substantial number of small entities. Furthermore,

[[Page 19403]]

under the Small Business Regulatory Enforcement Fairness Act of 1996, 5 
U.S.C. 801 (SBREFA), an agency is required to produce compliance 
guidance for small entities if the rule has a significant economic 
impact on a substantial number of small entities. The RFA defines small 
entities as small business concerns, small not-for-profit enterprises, 
or small governmental jurisdictions.
    As HHS indicated in the preamble to the proposed rule, under the 
Initial Regulatory Flexibility Analysis, HHS has made every effort to 
ensure that the disclosure and referral requirements of the rule impose 
minimum burden and allow maximum flexibility in implementation by 
providing in the rule the notice for providers to give beneficiaries 
informing them of their protections and by not proscribing a specific 
format for making referrals. HHS believes the conclusions that we 
provided in the preamble remain accurate, and refer persons to our 
analysis in that preamble.
Paperwork Reduction Act
    The purposes of the Paperwork Reduction Act of 1995 (PRA), 44 
U.S.C. 3501 et seq., include minimizing the paperwork burden on 
affected entities. The PRA requires certain actions before an agency 
can adopt or revise a collection of information, including publishing a 
summary of the collection of information and a brief description of the 
need for and proposed use of the information.
    A Federal agency may not conduct or sponsor a collection of 
information unless it is approved by OMB under the PRA, and displays a 
currently valid OMB control number, and the public is not required to 
respond to a collection of information unless it displays a currently 
valid OMB control number. Also, notwithstanding any other provisions of 
law, no person shall be subject to penalty for failing to comply with a 
collection of information if the collection of information does not 
display a currently valid OMB control number (44 U.S.C. 3512). As we 
indicated in the NPRM, this rule may require the collection of 
additional information from beneficiaries should a request for referral 
to an alternative service provider be received. Consequently, HHS 
submitted a new information collection request (ICR) to OMB 
contemporaneously with the publication of the NPRM. OMB assigned 
Control Number 201507-0990-011 on November 27, 2015.
    In the NPRM preamble, HHS provided an assessment of the collection 
burden that we continue to believe to be accurate. HHS refers to that 
NPRM preamble for our PRA analysis because it also remains applicable 
to these final regulations. HHS did not receive any comments concerning 
the PRA analysis in our preamble to the proposed rule, with the 
exception of one comment that was sent to the Agencies. That comment 
maintained that the Agencies' estimate that the referral option will 
take no more than two hours was without basis, and is among those 
addressed in the preamble at part III.D.2, under ``Referrals,'' beneath 
the subheading ``Burdens, duties and liability of the referring 
organization.'' HHS agrees with the Agencies' conclusion that the two 
hour referral time estimate, which was indicated in our NPRM preamble, 
was reasonable and HHS has not changed it.
Effect on Family Life
    HHS certifies that these regulations have been assessed according 
to section 654 of the Treasury and General Government Appropriations 
Act, enacted as part of the Omnibus Consolidated and Emergency 
Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat. 
2681), for its effect on family well-being. The regulations will not 
adversely affect the well-being of the nation's families. Therefore, 
HHS certifies that this rule does not adversely impact family well-
being.

V. General Certifications

Executive Order 12866 and 13563--Regulatory Impact Analysis and 
Regulatory Review
    Under Executive Order 12866, the head of each agency must determine 
whether this regulatory action is ``significant'' and, therefore, 
subject to the requirements of the Executive order and subject to 
review by OMB. 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.
    58 FR 51735, 51738 (Oct. 4, 1993).
    The heads of the Agencies have determined that this final 
regulatory action is not a significant regulatory action subject to 
review by OMB under section 3(f) of Executive Order 12866.
    The Agencies have 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;
    (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

[[Page 19404]]

(Feb. 2, 2011), available at https://www.whitehouse.gov/sites/default/files/omb/memoranda/2011/m11-10.pdf.
    The Agencies are issuing these final regulations upon a reasoned 
determination that their benefits justify their costs. In choosing 
among alternative regulatory approaches, the Agencies selected those 
approaches that maximize net benefits. Based on the analysis that 
follows, the Agencies believe that these final regulations are 
consistent with the principles in Executive Order 13563.
    The Agencies also have 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 Agencies 
have 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 requirements 
of Executive Order 13279, as amended by Executive Order 13559, and 
those determined to be necessary for administering the Agencies' 
programs and activities.
Small Business Regulatory Enforcement Fairness Act of 1996
    These regulations are not a ``major rule'' as defined by section 
251 of the Small Business Regulatory Enforcement Fairness Act of 1996, 
5 U.S.C. 804(2). These regulations will not result in an annual effect 
on the economy of $100 million or more; a major increase in costs or 
prices for consumers, individual industries, Federal, State, or local 
government agencies, or geographic regions; or significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or on the ability of United States-based enterprises to 
compete with foreign-based enterprises in domestic and export markets.
Unfunded Mandates Reform Act
    Section 202(a) of the Unfunded Mandates Reform Act of 1995 (UMRA), 
2 U.S.C. 1532(a), requires that a Federal agency determine whether a 
regulation proposes a Federal mandate that would result in increased 
expenditures by State, local, or tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any single year. 
If a regulation would result in increased expenditures in excess of 
$100 million, UMRA requires the agency to prepare a written statement 
containing, among other things, a qualitative and quantitative 
assessment of the anticipated costs and benefits of the Federal 
mandate. The Agencies have reviewed these regulations in accordance 
with UMRA and determined that the total cost to implement the 
regulations in any one year will not meet or exceed $100 million. The 
regulations do not include any Federal mandate that may result in 
increased expenditure by State, local, and tribal governments in the 
aggregate of more than $100 million, or increased expenditures by the 
private sector of more than $100 million. Accordingly, the Agencies 
certify that UMRA does not require any further action.
Executive Order 13132--Federalism
    Section 6 of Executive Order 13132 requires Federal agencies to 
consult with State entities when a regulation or policy will have 
substantial direct effects on the States, the relationship between the 
National Government and the States, or the distribution of power and 
responsibilities among the various levels of government within the 
meaning of Executive Order 13132. 64 FR 43255, 43257 (Aug. 10, 1999). 
Section 3(b) of Executive Order 13132 further provides that Federal 
agencies may implement a regulation limiting the policymaking 
discretion of the States only where there is constitutional and 
statutory authority for the regulation and the regulation is 
appropriate in light of the presence of a problem of national 
significance. 64 FR at 43256.
    These final regulations do not have a substantial direct effect on 
the States or the relationship between the National Government and the 
States, or the distribution of power and responsibilities among the 
various levels of government, within the meaning of Executive Order 
13132. Furthermore, constitutional and statutory authority supports the 
regulations, and they are appropriate in light of the presence of a 
problem of national significance.
Executive Order 12372--Intergovernmental Review
    These regulations affect programs that are subject to the 
requirements of Executive Order 12372, 47 FR 30959 (July 16, 1982), and 
the Agency regulations implementing that order. One of the objectives 
of Executive Order 12372 is to foster an intergovernmental partnership 
and a strengthened federalism. Id. at 30959. Executive Order 12372 
relies on processes developed by State and local governments for 
coordination and review of proposed Federal financial assistance. Id.
    This document provides early notification of the Agencies' specific 
plans and actions for the programs affected by these final regulations.

VI. Final Regulations

List of Subjects

2 CFR Part 3474

    Accounting, Administrative practice and procedure, Adult education, 
Aged, Agriculture, American Samoa, Bilingual education, Blind, Business 
and industry, Civil rights, Colleges and universities, Communications, 
Community development, Community facilities, Copyright, Credit, 
Cultural exchange programs, Educational facilities, Educational 
research, Education, Education of disadvantaged, Education of 
individuals with disabilities, Educational study programs, Electric 
power, Electric power rates, Electric utilities, Elementary and 
secondary education, Energy conservation, Equal educational 
opportunity, Federally affected areas, Government contracts, Grant 
programs, Grant programs--agriculture, Grant programs--business and 
industry, Grant programs--communications, Grant programs--education, 
Grant programs--energy, Grant programs--health, Grant programs--housing 
and community development, Grant programs--social programs, Grant 
administration, Guam, Home improvement, Homeless, Hospitals, Housing, 
Human research subjects, Indians, Indians--education, Infants and 
children, Insurance, Intergovernmental relations, International 
organizations, Inventions and patents, Loan programs, Loan programs 
social programs, Loan programs--agriculture, Loan programs--business 
and industry, Loan programs--communications, Loan programs--energy, 
Loan programs--health, Loan programs--housing and community 
development, Manpower training programs, Migrant labor, Mortgage 
insurance, Nonprofit organizations, Northern Mariana Islands, Pacific 
Islands Trust Territories, Privacy, Renewable Energy, Reporting and 
recordkeeping requirements, Rural areas, Scholarships and fellowships, 
School construction, Schools, Science and technology, Securities, Small 
businesses, State and local governments, Student aid, Teachers, 
Telecommunications, Telephone, Urban areas, Veterans, Virgin Islands, 
Vocational education, Vocational rehabilitation, Waste treatment and 
disposal, Water pollution control, Water resources, Water supply, 
Watersheds, Women.

[[Page 19405]]

6 CFR Part 19

    Civil rights, Government contracts, Grant programs, Nonprofit 
organizations, Reporting and recordkeeping requirements.

7 CFR Part 16

    Administrative practice and procedure, Grant programs.

22 CFR Part 205

    Foreign aid, Grant programs, Nonprofit organizations.

24 CFR Part 5

    Administrative practice and procedure, Aged, Claims, Crime, 
Government contracts, Grant programs--housing and community 
development, Individuals with disabilities, Intergovernmental 
relations, Loan programs--housing and community development, Low and 
moderate income housing, Mortgage insurance, Penalties, Pets, Public 
housing, Rent subsidies, Reporting and recordkeeping requirements, 
Social security, Unemployment compensation, Wages.

24 CFR Part 92

    Administrative practice and procedure, Aged, Claims, Crime, 
Government contracts, Grant programs--housing and community 
development, Individuals with disabilities, Intergovernmental 
relations, Loan programs--housing and community development, Low and 
moderate income housing, Mortgage insurance, Penalties, Pets, Public 
housing, Rent subsidies, Reporting and recordkeeping requirements, 
Social security, Unemployment compensation, Wages.

24 CFR Part 570

    Administrative practice and procedure, American Samoa, Community 
development block grants, Grant programs--education, Grant programs--
housing and community development, Guam, Indians, Loan programs--
housing and community development, Low and moderate income housing, 
Northern Mariana Islands, Pacific Island Trust Territory, Puerto Rico, 
Reporting and recordkeeping requirements, Student aid, Virgin Islands.

24 CFR Part 574

    Administrative practice and procedure, American Samoa, Community 
development block grants, Grant programs--education, Grant programs--
housing and community development, Guam, Indians, Loan programs--
housing and community development, Low and moderate income housing, 
Northern Mariana Islands, Pacific Island Trust Territory, Puerto Rico, 
Reporting and recordkeeping requirements, Student aid, Virgin Islands.

24 CFR Part 576

    Community facilities, Grant programs--housing and community 
development, Grant programs--social programs, Homeless, Reporting and 
recordkeeping requirements.

24 CFR Part 578

    Community facilities, Continuum of Care, Emergency solutions 
grants, Grant programs--housing and community development, Grant 
programs--social programs, Homeless, Rural housing, Reporting and 
recordkeeping requirements, Supportive housing programs--housing and 
community development, Supportive services.

24 CFR Part 1003

    Alaska, Community development block grants, Grant programs--housing 
and community development, Grant programs-- Indians, Indians, Reporting 
and recordkeeping requirements.

28 CFR Part 38

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

29 CFR Part 2

    Administrative practice and procedure, Claims, Courts, Government 
employees, Religious Discrimination.

34 CFR Part 75

    Accounting, Copyright, Education, Grant programs--education, 
Inventions and patents, Private schools, Reporting and recordkeeping 
requirements.

34 CFR Part 76

    Accounting, Administrative practice and procedure, American Samoa, 
Education, Grant programs--education, Guam, Northern Mariana Islands, 
Pacific Islands Trust Territory, Prisons, Private schools, Reporting 
and recordkeeping requirements, Virgin Islands.

38 CFR Part 50

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

38 CFR Part 61

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

38 CFR Part 62

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

45 CFR Part 87

    Administrative practice and procedure, Grant programs--social 
programs, Nonprofit organizations, Public assistance programs.

45 CFR Part 1050

    Grant programs--social programs.

Department of Education

    For the reasons discussed in the preamble, the Department of 
Education amends part 3474 of title 2 of the Code of Federal 
Regulations (CFR) and parts 75 and 76 of title 34 of the CFR as 
follows:

Title 2--Grants and Agreements

Chapter XXXIV--Department of Education

PART 3474--UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, 
AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS

0
1. The authority citation for part 3474 continues to read as follows:

    Authority:  20 U.S.C. 1221e-3, 3474, and 2 CFR part 200, unless 
otherwise noted.


0
2. Add Sec.  3474.15 to read as follows:

[[Page 19406]]

Sec.  3474.15  Contracting with faith-based organizations and 
nondiscrimination.

    (a) This section establishes responsibilities that grantees and 
subgrantees have in selecting contractors to provide direct Federal 
services under a program of the Department. Paragraphs (c)(1), (d)(1), 
and (f) of this section establish requirements that supplement the 
procurement requirements in 2 CFR 200.313 through 200.326. Every 
contract between a grantee or subgrantee and a faith-based organization 
under a program of direct Federal financial assistance must include 
conditions to implement the requirements in paragraphs (c)(1), (d)(1), 
and (f) of this section.
    (b)(1) A faith-based organization is eligible to contract with 
grantees and subgrantees, including States, on the same basis as any 
other private organization, with respect to contracts for which such 
other organizations are eligible.
    (2) In selecting providers of goods and services, grantees and 
subgrantees, including States, must not discriminate for or against a 
private organization on the basis of the organization's religious 
character or affiliation and must ensure that the award of contracts is 
free from political interference, or even the appearance of such 
interference, and is done on the basis of merit, not on the basis of 
religion or religious belief, or lack thereof.
    (c)(1) The provisions of 34 CFR 75.532 and 76.532 (Use of funds for 
religion prohibited), 75.712 and 76.712 (Beneficiary protections: 
Written notice), and 75.713 and 76.713 (Beneficiary protections: 
Referral requirements) that apply to a faith-based organization that is 
a grantee or subgrantee also apply to a faith-based organization that 
contracts with a grantee or subgrantee, including a State.
    (2) The requirements referenced under paragraph (c)(1) of this 
section do not apply to a faith-based organization that provides goods 
or services to a beneficiary under a program supported only by indirect 
Federal financial assistance, as defined in 34 CFR 75.52(c)(3) and 
76.52(c)(3).
    (d)(1) A private organization that engages in explicitly religious 
activities, such as religious worship, instruction, or proselytization, 
must offer those activities separately in time or location from any 
programs or services supported by a contract with a grantee or 
subgrantee, including a State, and attendance or participation in any 
such explicitly religious activities by beneficiaries of the programs 
and services supported by the contract must be voluntary.
    (2) The limitations on explicitly religious activities under 
paragraph (d)(1) of this section do not apply to a faith-based 
organization that provides services to a beneficiary under a program 
supported only by indirect Federal financial assistance, as defined in 
34 CFR 75.52(c)(3) and 76.52(c)(3).
    (e)(1) A faith-based organization that contracts with a grantee or 
subgrantee, including a State, may retain its independence, autonomy, 
right of expression, religious character, and authority over its 
governance.
    (2) A faith-based organization may, among other things--
    (i) Retain religious terms in its name;
    (ii) Continue to carry out its mission, including the definition, 
development, practice, and expression of its religious beliefs;
    (iii) Use its facilities to provide services without removing or 
altering religious art, icons, scriptures, or other symbols from these 
facilities;
    (iv) Select its board members and otherwise govern itself on a 
religious basis; and
    (v) Include religious references in its mission statement and other 
chartering or governing documents.
    (f) A private organization that contracts with a grantee or 
subgrantee, including a State, may not discriminate against a 
beneficiary or prospective beneficiary in the provision of program 
goods or services on the basis of religion or religious belief, a 
refusal to hold a religious belief, or 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.
    (g) A religious organization's exemption from the Federal 
prohibition on employment discrimination on the basis of religion, in 
section 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 2000e-1(a), 
is not forfeited when the organization contracts with a grantee or 
subgrantee.

(Authority: 20 U.S.C. 1221e-3 and 3474; 2 CFR Part 200, E.O. 13559)

Title 34--Education

Subtitle A--Office of the Secretary, Department of Education

PART 75--DIRECT GRANT PROGRAMS

0
3. The authority citation for part 75 continues to read as follows:

    Authority:  20 U.S.C. 1221e-3 and 3474, unless otherwise noted.


0
4. In Sec.  75.52, revise the heading and paragraphs (a)(2), (c), and 
(e) to read as follows:


Sec.  75.52  Eligibility of faith-based organizations for a grant and 
nondiscrimination against those organizations.

    (a) * * *
    (2) In the selection of grantees, the Department may not 
discriminate for or against a private organization on the basis of the 
organization's religious character or affiliation and must ensure that 
all decisions about grant awards are free from political interference, 
or even the appearance of such interference, and are made on the basis 
of merit, not on the basis of religion or religious belief, or the lack 
thereof.
* * * * *
    (c)(1) A private organization that engages in explicitly religious 
activities, such as religious worship, instruction, or proselytization, 
must offer those activities separately in time or location from any 
programs or services supported by a grant from the Department, and 
attendance or participation in any such explicitly religious activities 
by beneficiaries of the programs and services supported by the grant 
must be voluntary.
    (2) The limitations on explicitly religious activities under 
paragraph (c)(1) of this section do not apply to a faith-based 
organization that provides services to a beneficiary under a program 
supported only by ``indirect Federal financial assistance.''
    (3) For purposes of 2 CFR 3474.15, 34 CFR 75.52, 75.712, 75.713, 
75.714, and appendix A to this part, the following definitions apply:
    (i) Direct Federal financial assistance means that the Department, 
a grantee, or a subgrantee selects a provider and either purchases 
goods or services from that provider (such as through a contract) or 
awards funds to that provider (such as through a grant, subgrant, or 
cooperative agreement) to carry out services under a program of the 
Department. Federal financial assistance shall be treated as direct 
unless it meets the definition of ``indirect Federal financial 
assistance.''
    (ii) Indirect Federal financial assistance means that the choice of 
a service provider under a program of the Department 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. Federal financial assistance provided to an organization is 
``indirect'' under this definition if--

[[Page 19407]]

    (A) The government program through which the beneficiary receives 
the voucher, certificate, or other similar means of government-funded 
payment is neutral toward religion;
    (B) The organization receives the assistance as the result of the 
decision of the beneficiary, not a decision of the government; and
    (C) The beneficiary has at least one adequate secular option for 
use of the voucher, certificate, or other similar means of government-
funded payment.
    Note to paragraph (c)(3): The definitions of ``direct Federal 
financial assistance'' and ``indirect Federal financial assistance'' do 
not change the extent to which an organization is considered a 
``recipient'' of ``Federal financial assistance'' as those terms are 
defined under 34 CFR parts 100, 104, 106, and 110.
* * * * *
    (e) A private organization that receives any Federal financial 
assistance under a program of the Department shall not discriminate 
against a beneficiary or prospective beneficiary in the provision of 
program services or in outreach activities on the basis of religion or 
religious belief, a refusal to hold a religious belief, or 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.
* * * * *

(Authority: 20 U.S.C. 1221e-3 and 3474, E.O. 13559)



0
5. Add Sec. Sec.  75.712, 75.713, and 75.714 to subpart F before the 
undesignated center heading ``Reports'' to read as follows:


Sec.  75.712  Beneficiary protections: Written notice.

    (a) A faith-based organization that receives a grant, subgrant, or 
contract under a program of the Department supported in whole or in 
part by direct Federal financial assistance must give written notice to 
a beneficiary or prospective beneficiary of certain protections. This 
notice must state that:
    (1) The organization may not discriminate against a beneficiary or 
prospective beneficiary on the basis of religion or religious belief, a 
refusal to hold a religious belief, or refusal to attend or participate 
in a religious practice;
    (2) The organization may not require a beneficiary to attend or 
participate in any explicitly religious activities that are offered by 
the organization, and any participation by the beneficiaries in such 
activities must be purely voluntary;
    (3) The organization must separate in time or location any 
privately funded explicitly religious activities from activities 
supported by direct Federal financial assistance;
    (4) If a beneficiary or prospective beneficiary objects to the 
religious character of the organization, the organization will 
undertake reasonable efforts to identify and refer the beneficiary to 
an alternative provider to which the beneficiary has no objection; and
    (5) A beneficiary or prospective beneficiary may report a violation 
of these protections to, or file a written complaint regarding a denial 
of services or benefits with, the subgrantee, grantee, or Department 
that made the award under which the violation or denial occurred.
    (b)(1) A faith-based organization that receives a grant, subgrant, 
or contract under a program of the Department must provide 
beneficiaries or prospective beneficiaries with the written notice 
required under paragraph (a) of this section prior to the time they 
enroll in or receive services from the organization.
    (2) When the nature of the services provided or exigent 
circumstances make it impracticable to provide the written notice in 
advance of the actual services, the organization must advise 
beneficiaries of their protections at the earliest available 
opportunity.
    (c) The notice that a faith-based organization must use to notify 
beneficiaries or prospective beneficiaries of their rights under 
paragraph (a) of this section is specified in appendix A to this part.

(Authority: 20 U.S.C. 1221e-3 and 3474, E.O. 13559)



[Approved by the Office of Management and Budget under control number 
1895-0001]


Sec.  75.713  Beneficiary protections: Referral requirements.

    (a) If a beneficiary or prospective beneficiary of a program of the 
Department supported in whole or in part by direct Federal financial 
assistance objects to the religious character of a faith-based 
organization that provides services under the program, that 
organization must promptly undertake reasonable efforts to identify and 
refer the beneficiary or prospective beneficiary to an alternative 
provider to which the beneficiary or prospective beneficiary has no 
objection.
    (b)(1) A faith-based organization may satisfy the requirement in 
paragraph (a) of this section by referring a beneficiary or prospective 
beneficiary to another faith-based organization if the beneficiary or 
prospective beneficiary does not object to that provider.
    (2) If the beneficiary or prospective beneficiary requests a 
secular provider, and one is available, the faith-based organization 
must make a referral to that provider.
    (c) The faith-based organization must make a referral to an 
alternative provider that--
    (1) Is in reasonable geographic proximity to the location where the 
beneficiary or prospective beneficiary is receiving or would receive 
services (except for services provided by telephone, internet, or 
similar means);
    (2) Offers services that are similar in substance and quality to 
those offered by the organization; and
    (3) Has the capacity to accept additional beneficiaries.
    (d)(1) When a faith-based organization makes a referral to an 
alternative provider, the organization must maintain a record of the 
referral in its grant records, including the date of the referral, the 
name of the alternative provider, its address, and contact information 
for the alternative provider;
    (2) When a faith-based organization determines that it is unable to 
identify an alternative provider, the organization must promptly notify 
the subgrantee, grantee, or Department that made the award under which 
the referral could not be made. If the organization is unable to 
identify an alternative provider, the subgrantee, grantee, or 
Department that made the award under which the referral could not be 
made must determine whether there is any other suitable alternative 
provider to which the beneficiary or prospective beneficiary may be 
referred. If the entity that made the award under which the referral 
could not be made cannot make a referral, that entity must promptly 
notify the grantee or the Department, as appropriate, and the grantee 
or the Department must determine whether a suitable referral can be 
made.

(Authority: 20 U.S.C. 1221e-3 and 3474, E.O. 13559)



[Approved by the Office of Management and Budget under control number 
1895-0001]


Sec.  75.714  Subgrants, contracts, and other agreements with faith-
based organizations.

    If a grantee under a discretionary grant program of the Department 
has the

[[Page 19408]]

authority under the grant to select a private organization to provide 
services supported by direct Federal financial assistance under the 
program by subgrant, contract, or other agreement, the grantee must 
ensure compliance with applicable Federal requirements governing 
contracts, grants, and other agreements with faith-based organizations, 
including, as applicable, Sec. Sec.  75.52, 75.532, and 75.712-75.713, 
appendix A to this part, and 2 CFR 3474.15. If the intermediary is a 
nongovernmental organization, it retains all other rights of a 
nongovernmental organization under the program's statutory and 
regulatory provisions.

(Authority: 20 U.S.C. 1221e-3 and 3474, E.O. 13559)



0
6. Appendix A to Part 75 is added to read as follows:

Appendix A to Part 75--Form of Required Notice to Beneficiaries

    A faith-based organization that serves beneficiaries under a 
program funded in whole or in part by direct Federal financial 
assistance from the U.S. Department of Education must provide the 
following notice, or an accurate translation of this notice, to a 
beneficiary or prospective beneficiary of the program.

(Approved by the Office of Management and Budget under control number 
1895-0001)
NOTICE OF BENEFICIARY RIGHTS
Name of Organization:
Name of Program:
Contact Information for Program Staff: (name, phone number, and email 
address, if appropriate):
    Because this program is supported in whole or in part by direct 
Federal financial assistance from the U.S. Department of Education, we 
are required to let you know that--
    (1) We may not discriminate against you on the basis of religion or 
religious belief, a refusal to hold a religious belief, or refusal to 
attend or participate in a religious practice;
    (2) We may not require you to attend or participate in any 
explicitly religious activities that are offered by us, and any 
participation by you in such activities must be purely voluntary;
    (3) We must separate in time or location any privately funded 
explicitly religious activities from activities supported under this 
[insert the grant, subgrant, or contract name and identifying number of 
this award to the faith-based organization] by direct Federal financial 
assistance under this program;
    (4) If you object to the religious character of our organization, 
we will undertake reasonable efforts to identify and refer you to an 
alternative provider to which you have no objection; however, we cannot 
guarantee that, in every instance, an alternative provider will be 
available; and
    (5) You may report violations of these protections to, or file a 
written complaint regarding a denial of services or benefits under this 
award with, [Insert the name of the entity that awarded the grant, 
subgrant, or contract under which the violation occurred].
    We must give you this written notice before you enroll in our 
program or receive services from the program.
-----------------------------------------------------------------------
BENEFICIARY REFERRAL REQUEST
    If you object to receiving services from us based on the religious 
character of our organization, please complete this form and return it 
to the program contact identified above. If you object, we will make 
reasonable efforts to refer you to another service provider. With your 
consent, we will follow up with you or the organization to which you 
were referred to determine whether you contacted that organization.
Please check if applicable:
( ) I want to be referred to another service provider.
If you checked above that you wish to be referred to another service 
provider, please check one of the following:
( ) Please follow up with me.
    Name:
    Best way to reach me: (phone/address/email):
( ) Please follow up with the service provider to which I was referred.
( ) Please do not follow up.
--End of Form--

(Authority: 20 U.S.C. 1221e-3 and 3474, E.O. 13559)

PART 76--STATE-ADMINISTERED PROGRAMS

0
7. The authority citation for part 76 continues to read as follows:

    Authority:  20 U.S.C. 1221e-3 and 3474, unless otherwise noted.


0
8. In Sec.  76.52, revise the section heading, and paragraphs (a)(2), 
(c), and (e) to read as follows:


Sec.  76.52  Eligibility of faith-based organizations for a subgrant 
and nondiscrimination against those organizations.

    (a) * * *
    (2) In the selection of subgrantees and contractors, States may not 
discriminate for or against a private organization on the basis of the 
organization's religious character or affiliation and must ensure that 
all decisions about subgrants are free from political interference, or 
even the appearance of such interference, and are made on the basis of 
merit, not on the basis of religion or religious belief or a lack 
thereof.
* * * * *
    (c)(1) A private organization that engages in explicitly religious 
activities, such as religious worship, instruction, or proselytization, 
must offer those activities separately in time or location from any 
programs or services supported by a subgrant from a State under a 
State-administered program of the Department, and attendance or 
participation in any such explicitly religious activities by 
beneficiaries of the programs and services supported by the subgrant 
must be voluntary.
    (2) The limitations on explicitly religious activities under 
paragraph (c)(1) of this section do not apply to a faith-based 
organization that provides services to a beneficiary under a program 
supported only by ``indirect Federal financial assistance.''
    (3) For purposes of 2 CFR 3474.15, 34 CFR 76.52, 76.712, 76.713, 
and 76.714, the following definitions apply:
    (i) Direct Federal financial assistance means that the Department, 
grantee, or subgrantee selects a provider and either purchases services 
from that provider (such as through a contract) or awards funds to that 
provider (such as through a grant, subgrant, or cooperative agreement) 
to carry out services under a program of the Department. Federal 
financial assistance shall be treated as direct unless it meets the 
definition of ``indirect Federal financial assistance.''
    (ii) Indirect Federal financial assistance means that the choice of 
a service provider under a program of the Department 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. Federal financial assistance provided to an organization is 
``indirect'' under this definition if--
    (A) The government program through which the beneficiary receives 
the voucher, certificate, or other similar means of government-funded 
payment is neutral toward religion;
    (B) The organization receives the assistance as the result of the 
decision of the beneficiary, not a decision of the government; and
    (C) The beneficiary has at least one adequate secular option for 
use of the voucher, certificate, or other similar means of government-
funded payment.
    Note to paragraph (c)(3): The definitions of ``direct Federal 
financial assistance'' and ``indirect Federal financial assistance'' do 
not change the extent to which an organization is

[[Page 19409]]

considered a ``recipient'' of ``Federal financial assistance'' as those 
terms are defined under 34 CFR parts 100, 104, 106, and 110.
* * * * *
    (e) A private organization that receives any Federal financial 
assistance under a program of the Department shall not discriminate 
against a beneficiary or prospective beneficiary in the provision of 
program services or in outreach activities on the basis of religion or 
religious belief, a refusal to hold a religious belief, or 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.
* * * * *

(Authority: 20 U.S.C. 1221e-3 and 3474, E.O. 13559)



0
9. Add Sec. Sec.  76.712, 76.713, and 76.714 to subpart G before the 
undesignated center heading ``Reports'' to read as follows:


Sec.  76.712  Beneficiary protections: Written notice.

    (a) A faith-based organization that receives a grant, subgrant, or 
contract under a State-administered program of the Department supported 
in whole or in part by direct Federal financial assistance must give 
written notice to a beneficiary or prospective beneficiary of certain 
protections. This notice must state that:
    (1) The organization may not discriminate against a beneficiary or 
prospective beneficiary on the basis of religion, or religious belief, 
a refusal to hold a religious belief, or refusal to attend or 
participate in a religious practice;
    (2) The organization may not require a beneficiary to attend or 
participate in any explicitly religious activities that are offered by 
the organization, and any participation by the beneficiaries in such 
activities must be purely voluntary;
    (3) The organization must separate in time or location any 
privately funded explicitly religious activities from activities 
supported by direct Federal financial assistance;
    (4) If a beneficiary or prospective beneficiary objects to the 
religious character of the organization, the organization will 
undertake reasonable efforts to identify and refer the beneficiary to 
an alternative provider to which the beneficiary has no objection; and
    (5) A beneficiary or prospective beneficiary may report violations 
of these protections to, or may file a written complaint regarding a 
denial of services or benefits, with the State agency administering the 
program or subgrantee that made the award under which the violation 
occurred.
    (b)(1) A faith-based organization that receives a subgrant or 
contract under a State-administered program of the Department must 
provide beneficiaries with the written notice required under paragraph 
(a) of this section prior to the time they enroll in or receive 
services from the organization.
    (2) When the nature of the services provided or exigent 
circumstances make it impracticable to provide the written notice in 
advance of the actual services, the organization must advise 
beneficiaries of their protections at the earliest available 
opportunity.
    (c) The notice that a faith-based organization must use to notify 
beneficiaries or prospective beneficiaries of their rights under 
paragraph (a) of this section is specified in appendix A to part 75.

(Authority: 20 U.S.C. 1221e-3 and 3474, E.O. 13559)



[Approved by the Office of Management and Budget under control number 
1895-0001]


Sec.  76.713  Beneficiary protections: Referral requirements.

    (a) If a beneficiary or prospective beneficiary of a State-
administered program of the Department supported in whole or in part by 
direct Federal financial assistance objects to the religious character 
of a faith-based organization that provides services under the program, 
that organization must promptly undertake reasonable efforts to 
identify and refer the beneficiary to an alternative provider to which 
the beneficiary or prospective beneficiary has no objection.
    (b)(1) A faith-based organization may satisfy the requirement in 
paragraph (a) of this section by referring a beneficiary or prospective 
beneficiary to another faith-based organization if the beneficiary or 
prospective beneficiary does not object to that provider.
    (2) If the beneficiary or prospective beneficiary requests a 
secular provider, and one is available, the faith-based organization 
must make a referral to that provider.
    (c) The faith-based organization must make a referral to an 
alternative provider that--
    (1) Is in reasonable geographic proximity to the location where the 
beneficiary or prospective beneficiary is receiving or would receive 
services (except for services provided by telephone, internet, or 
similar means);
    (2) Offers services that are similar in substance and quality to 
those offered by the organization; and
    (3) Has the capacity to accept additional beneficiaries.
    (d)(1) When a faith-based organization makes a referral to an 
alternative provider, the organization must maintain a record of the 
referral in its grant records, including the date of the referral, the 
name of the alternative provider, its address, and contact information 
for the alternative provider.
    (2) When the organization determines that it is unable to identify 
an alternative provider, the organization must promptly notify the 
State or subgrantee that made the award under which the referral could 
not be made. If the organization is unable to identify an alternative 
provider, the State agency or subgrantee that made the award under 
which the referral could not be made must determine whether there is 
any other suitable alternative provider to which the beneficiary or 
prospective beneficiary may be referred. If the entity that made the 
award under which the referral could not be made cannot make a 
referral, that entity must promptly notify the grantee or the 
Department, as appropriate, and the grantee or the Department must 
determine whether a suitable referral can be made.

(Authority: 20 U.S.C. 1221e-3 and 3474, E.O. 13559)

[Approved by the Office of Management and Budget under control number 
1895-0001]

Sec.  76.714  Subgrants, contracts, and other agreements with faith-
based organizations.

    If a grantee under a State-administered program of the Department 
has the authority under the grant or subgrant to select a private 
organization to provide services supported by direct Federal financial 
assistance under the program by subgrant, contract, or other agreement, 
the grantee must ensure compliance with applicable Federal requirements 
governing contracts, grants, and other agreements with faith-based 
organizations, including, as applicable, Sec. Sec.  76.52, 76.532, and 
76.712-76.713 and 2 CFR 3474.15. If the intermediary (pass-through) is 
a nongovernmental organization, it retains all other rights of a 
nongovernmental organization under the program's statutory and 
regulatory provisions.

(Authority: 20 U.S.C. 1221e-3 and 3474, E.O. 13559)


[[Page 19410]]



DEPARTMENT OF HOMELAND SECURITY

0
10. For the reasons set forth above, 6 CFR chapter I is amended by 
adding part 19 to read as follows:

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

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


    Authority:  5 U.S.C. 301; Pub. L. 107-296; E.O. 13279, 67 FR 
77141; E.O. 13403, 71 FR 28543; E.O. 13498, 74 FR 6533; and E.O. 
13559, 75 FR 71319.


Sec.  19.1  Purpose.

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


Sec.  19.2  Definitions.

    For purposes of this part:
    Beneficiary means an individual recipient of goods or services 
provided as part of a social service program specifically supported by 
Federal financial assistance. ``Beneficiary'' does not mean an 
individual who may incidentally benefit from Federal financial 
assistance provided to a State, local, or Tribal government, or a 
private nonprofit organization. Except where expressly noted or where 
inapplicable, ``beneficiary'' includes a prospective beneficiary.
    Direct Federal financial assistance or Federal financial assistance 
provided directly means that the government or an intermediary (e.g., 
State, local, or Tribal government, or nongovernmental organization) 
selects the provider and either purchases services from that provider 
(e.g., via a contract) or awards funds to that provider to carry out a 
service (e.g., through a grant or cooperative agreement). In general, 
Federal financial assistance shall be treated as direct, unless it 
meets the definition of ``indirect Federal financial assistance'' or 
``Federal financial assistance provided indirectly''.
    Explicitly religious activities include activities that involve 
overt religious content such as worship, religious instruction, or 
proselytization. An activity is not explicitly religious merely because 
it is motivated by religious faith.
    Financial assistance means assistance that non-Federal entities 
receive or administer in the form of grants, sub-grants, contracts, 
subcontracts, prime awards, loans, loan guarantees, property, 
cooperative agreements, food, direct appropriations, or other 
assistance, including materiel for emergency response and incident 
management. Financial assistance includes assistance provided by DHS, 
its component organizations, regional offices, and DHS financial 
assistance administered by intermediaries such as State, local, and 
Tribal governments, such as formula or block grants.
    Indirect Federal financial assistance or Federal financial 
assistance provided indirectly means that the choice of the service 
provider is placed in the hands of the beneficiary, and the cost of 
that service is paid through a voucher, certificate, or other similar 
means of government-funded payment. For purposes of this part, sub-
grant recipients that receive Federal financial assistance through 
State-administered programs are not considered recipients of ``indirect 
Federal financial assistance.'' Federal financial assistance provided 
to an organization is considered ``indirect'' within the meaning of the 
Establishment Clause of the First Amendment to the U.S. Constitution 
when:
    (1) The government program through which the beneficiary receives 
the voucher, certificate, or other similar means of government-funded 
payment is neutral toward religion;
    (2) The organization receives the assistance as a result of a 
decision of the beneficiary, not a decision of the government; and
    (3) The beneficiary has at least one adequate secular option for 
the use of the voucher, certificate, or other similar means of 
government-funded payment.
    Intermediary means an entity, including a non-governmental 
organization, acting under a contract, grant, or other agreement with 
the Federal government or with a State or local government, that 
accepts Federal financial assistance and distributes that assistance to 
other organizations that, in turn, provide government-funded social 
services. If an intermediary, acting under a contract, grant, or other 
agreement with the Federal government or with a State or local 
government that is administering a program supported by Federal 
financial assistance, is given the authority under the contract, grant, 
or agreement to select non-governmental organizations to provide 
services supported by the Federal government, the intermediary must 
ensure compliance with the provisions of Executive Order 13559 and any 
implementing rules or guidance by the recipient of a contract, grant or 
agreement. If the intermediary is a non-governmental organization, it 
retains all other rights of a non-governmental organization under the 
program's statutory and regulatory provisions.
    Social service program means a program that is administered by the 
Federal government, or by a State or local government using Federal 
financial assistance, and that provides services directed at reducing 
poverty, improving opportunities for low-income children, revitalizing 
low-income communities, empowering low-income families and low-income 
individuals to become self-sufficient, or otherwise helping people in 
need. Such programs include, but are not limited to, the following:
    (1) Child care services, protective services for children and 
adults, services for children and adults in foster care, adoption 
services, services related to the management and maintenance of the 
home, day care services for adults, and services to meet the special 
needs of children, older individuals, and individuals with disabilities 
(including physical, mental, or emotional disabilities);
    (2) Transportation services;
    (3) Job training and related services, and employment services;
    (4) Information, referral, and counseling services;

[[Page 19411]]

    (5) The preparation and delivery of meals and services related to 
soup kitchens or food banks;
    (6) Health support services;
    (7) Literacy and mentoring programs;
    (8) Services for the prevention and treatment of juvenile 
delinquency and substance abuse, services for the prevention of crime 
and the provision of assistance to the victims and the families of 
criminal offenders, and services related to intervention in, and 
prevention of, domestic violence; and
    (9) Services related to the provision of assistance for housing 
under Federal law.


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

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


Sec.  19.4  Explicitly religious activities.

    (a) Organizations that receive direct financial assistance from DHS 
to participate in or administer any social service program may not use 
direct Federal financial assistance that it receives (including through 
a prime or sub-award) to support or engage in any explicitly religious 
activities (including activities that involve overt religious content 
such as worship, religious instruction, or proselytization) or in any 
other manner prohibited by law.
    (b) Organizations receiving direct financial assistance from DHS 
for social service programs are free to engage in explicitly religious 
activities, but such activities must be
    (1) Clearly distinct from programs specifically supported by direct 
federal assistance;
    (2) Offered separately, in time or location, from the programs, 
activities, or services specifically supported by direct DHS financial 
assistance pursuant to DHS social service programs; and
    (3) Voluntary for the beneficiaries of the programs, activities, or 
services specifically supported by direct DHS financial assistance 
pursuant to DHS social service programs.
    (c) All organizations that participate in DHS social service 
programs, including religious organizations, must carry out eligible 
activities in accordance with all program requirements and other 
applicable requirements governing the conduct of DHS-supported 
activities, including those prohibiting the use of direct financial 
assistance from DHS to engage in explicitly religious activities. No 
grant document, agreement, covenant, memorandum of understanding, or 
policy issued by DHS or a State or local government in administering 
financial assistance from DHS shall disqualify a religious organization 
from participating in DHS's social service programs because such 
organization is motivated or influenced by religious faith to provide 
social services or because of its religious character or affiliation.
    (d) The use of indirect Federal financial assistance is not subject 
to the restriction in paragraphs (a), (b), and (c) of this section.
    (e) Nothing in this part restricts DHS's authority under applicable 
federal law to fund activities, such as the provision of chaplaincy 
services, that can be directly funded by the Government consistent with 
the Establishment Clause.


Sec.  19.5  Nondiscrimination requirements.

    An organization that receives financial assistance from DHS for a 
social service program shall not, in providing services or in outreach 
activities related to such services, favor or discriminate against a 
beneficiary of said program or activity on the basis of religion or 
religious belief, a refusal to hold a religious belief, or a refusal to 
attend or participate in a religious practice. Organizations that favor 
or discriminate against a beneficiary will be subject to applicable 
sanctions and penalties, as established by the requirements of the 
particular DHS social service program or activity. 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.


Sec.  19.6  Beneficiary protections: Written notice.

    (a) Faith-based or religious organizations providing social 
services to beneficiaries under a DHS program supported by direct 
Federal financial assistance must give written notice to beneficiaries 
of certain protections. Such notice may be given in the form set forth 
in appendix A of this part. This notice must state that:
    (1) The organization may not discriminate against beneficiaries on 
the basis of religion or religious belief, a refusal to hold a 
religious belief, or a refusal to attend or participate in a religious 
practice;
    (2) The organization may not require beneficiaries to attend or 
participate in any explicitly religious activities that are offered by 
the organization, and any participation by beneficiaries in such 
activities must be purely voluntary;
    (3) The organization must separate in time or location any 
privately funded explicitly religious activities from activities 
supported by direct Federal financial assistance;
    (4) If a beneficiary objects to the religious character of the 
organization, the organization will undertake reasonable efforts to 
identify and refer the beneficiary to an alternative provider to which 
the beneficiary has no objection; and
    (5) Beneficiaries may report an organization's violations of these 
protections, including any denials of services or benefits by an 
organization, by contacting or filing a complaint with the DHS Office 
for Civil Rights and Civil Liberties, or to any intermediary awarding 
entity.

[[Page 19412]]

    (b) This written notice must be given to beneficiaries prior to the 
time they enroll in the program or receive services from such programs. 
When the nature of the service provided or exigent circumstances make 
it impracticable to provide such written notice in advance of the 
actual service, service providers must advise beneficiaries of their 
protections at the earliest available opportunity.


Sec.  19.7  Beneficiary protections: Referral requirements.

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


Sec.  19.8  Independence of faith-based organizations.

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


Sec.  19.9  Exemption from Title VII employment discrimination 
requirements.

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


Sec.  19.10  Commingling of Federal assistance.

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

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

NOTICE OF BENEFICIARY RIGHTS

    Name of Organization:
    Name of Program:
    Contact Information for Program Staff (name, phone number, and 
email address, if appropriate):
-----------------------------------------------------------------------
    Because this program is supported in whole or in part by direct 
financial assistance from the Federal Government, we are required to 
let you know that--
     We may not discriminate against you on the basis of 
religion or religious belief, your refusal to hold a religious belief, 
or your refusal to attend or participate in a religious practice;
     We may not require you to attend or participate in any 
explicitly religious activities that are offered by us, and any 
participation by you in these activities must be purely voluntary;
     We must separate in time or location any privately funded 
explicitly religious activities from activities supported with direct 
Federal financial assistance under this program;
     If you object to the religious character of our 
organization, we must make reasonable efforts to identify and refer you 
to an alternative provider to which you have no objection; however, we 
cannot guarantee that in every instance, an alternative provider will 
be available; and
     You may report violations of these protections, including 
any denials of services or benefits, by contacting or filing a written 
complaint with the Department of Homeland Security, Office for Civil 
Rights and Civil Liberties:
    E-mail: [email protected].
    Fax: 202-401-4708.
    U.S. Mail: U.S. Department of Homeland Security Office for Civil 
Rights and Civil Liberties, Compliance Branch, 245 Murray Lane SW., 
Building 410, Mail Stop #0190, Washington, DC 20528.
    {Where the program involves an intermediary, the recipient or 
intermediary should add where feasible:
    You may also report violations of these protections, including any 
denials of services or benefits, to:
    [Name and contact information for the intermediary]{time} 
    We must give you this written notice before you enroll in our 
program or receive services from the program.
-----------------------------------------------------------------------

BENEFICIARY REFERRAL REQUEST

    If you object to receiving services from us based on the religious 
character

[[Page 19413]]

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

--End of Form--

DEPARTMENT OF AGRICULTURE

    Accordingly, for the reasons described in the preamble, USDA amends 
7 CFR part 16 as follows:

PART 16--EQUAL OPPORTUNITY FOR RELIGIOUS ORGANIZATIONS

0
11. 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.


0
12. In Sec.  16.1, revise paragraph (b) to read as follows:


Sec.  16.1  Purpose and applicability.

* * * * *
    (b) Except as otherwise specifically provided in this part, the 
policy outlined in this part applies to all recipients and 
subrecipients of USDA assistance to which 2 CFR part 400 applies, and 
to recipients and subrecipients of Commodity Credit Corporation 
assistance that is administered by agencies of USDA.


Sec. Sec.  16.2 through 16.5  [redesignated as Sec. Sec.  16.3 through 
16.6]

0
13. Redesignate Sec. Sec.  16.2 through 16.5 as Sec. Sec.  16.3 through 
16.6, respectively.
0
14. Add a new Sec.  16.2 to read as follows:


Sec.  16.2  Definitions.

    As used in this part:
    (a) USDA direct assistance is Federal financial assistance provided 
by USDA and means that the Federal Government or an intermediary (under 
this part) selects the provider and either purchases services from that 
provider (e.g., via a contract) or awards funds to that provider to 
carry out a service (e.g., via grant or cooperative agreement). In 
general, USDA assistance shall be treated as direct, unless it meets 
the definition of ``USDA indirect assistance.''
    (b)(1) USDA indirect assistance is Federal financial assistance 
provided indirectly by USDA and means that the choice of the service 
provider is placed in the hands of the beneficiary, and the cost of 
that service is paid through a voucher, certificate, or other similar 
means of government-funded payment. Federal financial assistance 
provided to an organization is considered ``indirect'' within the 
meaning of the Establishment Clause of the First Amendment to the U.S. 
Constitution when
    (i) The government program through which the beneficiary receives 
the voucher, certificate, or other similar means of government-funded 
payment is neutral toward religion;
    (ii) The organization receives the assistance as a result of a 
decision of the beneficiary, not a decision of the government; and
    (iii) The beneficiary has at least one adequate secular option for 
the use of the voucher, certificate, or other similar means of 
government-funded payment.
    (2) 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,'' as those 
terms are used in Executive Order 13559. These recipients of sub-awards 
are considered recipients of USDA direct assistance.
    (c) 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 with the 
provisions of Executive Order 13559 and any implementing rules or 
guidance by the recipient of a contract, grant, or agreement. If the 
intermediary is a non-governmental organization, it retains all other 
rights of a non-governmental organization under the program's statutory 
and regulatory provisions.

0
15. In newly redesignated Sec.  16.3, revise paragraphs (a) and (b), 
introductory text, to read as follows:


Sec.  16.3  Rights of religious organizations.

    (a) A religious organization is eligible, on the same basis as any 
other eligible private organization, to access and participate in USDA 
assistance programs. Neither the Federal Government nor a State or 
local government receiving USDA assistance shall, in the selection of 
service providers, discriminate for or against a religious organization 
on the basis of the organization's religious character or affiliation. 
Additionally, decisions about awards of USDA direct assistance or USDA 
indirect assistance must be free from political interference or even 
the appearance of such interference and must be made on the basis of 
merit, not on the basis of the religious affiliation of a recipient 
organization or lack thereof.
    (b) A religious organization that participates in USDA assistance 
programs will retain its independence and may continue to carry out its 
mission, including the definition, practice, and expression of its 
religious beliefs, provided that it does not use USDA direct assistance 
to support any explicitly religious activities, including activities 
that involve overt religious content such as worship, religious 
instruction, or proselytization. Among other things, a religious 
organization may:
* * * * *

0
16. Amend newly redesignated Sec.  16.4 as follows:
0
a. Revise paragraphs (a), (b) and (d); and
0
b. Add new paragraphs (e), (f), (g), and (h).


Sec.  16.4  Responsibilities of participating organizations.

    (a) Any organization that participates in a program funded by USDA 
financial assistance shall not, in providing services, 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.

[[Page 19414]]

    (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 supported with 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.
* * * * *
    (d)(1) USDA direct assistance may be used for the acquisition, 
construction, or rehabilitation of structures only to the extent that 
those structures are used for conducting USDA programs and activities 
and only 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 explicitly religious activities, USDA direct 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 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 assistance funds for equipment, 
supplies, labor, indirect costs, and the like shall be prorated between 
the USDA program or activity and any use for other 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.
    (e) USDA direct assistance under any USDA program may not be used 
for explicitly religious activities, speech, and materials generated or 
controlled by the administrators, instructors, or officials of the 
organization receiving USDA direct assistance.
    (f) Beneficiary protections: Written notice. (1) Faith-based 
organizations that receive USDA direct assistance under any domestic 
USDA program must give written notice in a manner prescribed by USDA to 
all beneficiaries and prospective beneficiaries of their right to be 
referred to an alternate provider when available. The written notice 
must be given in a manner prescribed by USDA, and state that:
    (i) The organization may not discriminate against beneficiaries on 
the basis of religion or religious belief, a refusal to hold a 
religious belief, or a refusal to attend or participate in a religious 
practice;
    (ii) The organization may not require beneficiaries to attend or 
participate in any explicitly religious activities that are offered by 
the organization, and any participation by beneficiaries in such 
activities must be purely voluntary;
    (iii) The organization must separate in time or location any 
privately funded explicitly religious activities from activities 
supported by direct Federal financial assistance;
    (iv) If a beneficiary objects to the religious character of the 
organization, the organization will undertake reasonable efforts to 
identify and refer the beneficiary to an alternate provider to which 
the prospective beneficiary has no objection; the organization may not 
be able to guarantee, however, that in every instance, an alternate 
provider will be available; and
    (v) Beneficiaries may report violations of these protections 
(including denials of services or benefits) by an organization to, USDA 
(or, the intermediary, if applicable).
    (2) This written notice must be given to beneficiaries prior to the 
time they enroll in the program or receive services from such programs. 
When the nature of the service provided or exigent circumstances make 
it impracticable to provide such written notice in advance of the 
actual service, service providers must advise beneficiaries of their 
protections at the earliest available opportunity.
    (g) Beneficiary protections: Referral requirements. If a 
beneficiary or prospective beneficiary of a domestic social services 
program supported by USDA objects to the religious character of an 
organization that provides services under the program, that 
organization must promptly undertake reasonable efforts to identify and 
refer the beneficiary to an alternate provider, within reasonable 
geographic proximity to the provider, if available, to which the 
prospective beneficiary has no objection. In making the referral, the 
organization shall comply with all applicable privacy laws and 
regulations.
    (1) A referral may be made to another faith-based organization, if 
the beneficiary has no objection to that provider. But if the 
beneficiary requests a secular provider, and a secular provider is 
available, then a referral must be made to that provider.
    (2) Except for services provided by telephone, Internet, or similar 
means, the referral must be to an alternate provider that is in 
reasonable geographic proximity to the organization making the referral 
and that offers services that are similar in substance and quality to 
those offered by the organization, if one is available. The alternate 
provider also should have the capacity to accept additional clients, if 
one with capacity to accept additional clients is available.
    (3) If the organization determines that it is unable to identify an 
alternate provider, the organization shall promptly notify the awarding 
entity, and the awarding entity shall determine whether there is any 
other suitable alternate provider to which the beneficiary may be 
referred. An intermediary that receives a request for assistance in 
identifying an alternate provider may request assistance from USDA or a 
State or local government receiving USDA direct assistance.
    (4) In some cases, USDA may require that the awarding entity 
provide the organization with information regarding alternate 
providers. Such information regarding alternative providers should 
include providers (including secular organizations) within a reasonable 
geographic proximity that offer services that are similar in substance 
and quality and that would reasonably be expected to have the capacity 
to accept additional clients, provided any such organizations exist. An 
organization which relies on such information provided by the awarding 
entity shall be considered to have undertaken reasonable efforts to 
identify an alternate provider under this subpart.
    (h) The requirements in paragraphs (b) through (g) of this section 
do not apply where USDA funds or benefits are provided to religious 
organizations as a result of a genuine and independent private choice 
of a beneficiary or through other indirect funding mechanisms, provided 
the religious organizations otherwise satisfy the requirements of the 
program.

0
17. Revise newly redesignated Sec.  16.5 to read as follows:

[[Page 19415]]

Sec.  16.5  Effect on State and local funds.

    If a State or local government voluntarily contributes its own 
funds to supplement activities carried out under programs governed by 
this part, the State or local government has the option to separate out 
the USDA direct assistance funds or comingle them. If the funds are 
comingled, the provisions of this part shall apply to all of the 
comingled funds in the same manner, and to the same extent, as the 
provisions apply to the USDA direct assistance.

0
18. Add appendix A to part 16 to read as follows:

Appendix A to Part 16--Written Notice of Beneficiary Rights

    Name of Organization:
    Name of Program:
    Contact Information for Program Staff (name, phone number, and 
email address, if appropriate): Because this program is supported in 
whole or in part by financial assistance from the Federal Government, 
we are required to let you know that--
     We may not discriminate against you on the basis of 
religion or religious belief, a refusal to hold a religious belief, or 
a refusal to attend or participate in a religious practice;
     We may not require you to attend or participate in any 
explicitly religious activities that are offered by us, and any 
participation by you in these activities must be purely voluntary;
     We must separate in time or location any privately funded 
explicitly religious activities from activities supported with USDA 
direct assistance;
     If you object to the religious character of our 
organization, we must make reasonable efforts to identify and refer you 
to an alternate provider to which you have no objection. We cannot 
guarantee, however, that in every instance, an alternate provider will 
be available; and
     You may report violations of these protections (including 
denials of services or benefits) to _____.

We must provide you with this written notice before you enroll in our 
program or receive services from the program, as required by 7 CFR part 
16.
BENEFICIARY REFERRAL REQUEST
    If you object to receiving services from us based on the religious 
character of our organization, please complete this form and return it 
to the program contact identified above. Your use of this form is 
voluntary.
    If you object to the religious character of our organization, we 
must make reasonable efforts to identify and refer you to an alternate 
provider to which you have no objection. We cannot guarantee, however, 
that in every instance, an alternate provider will be available. With 
your consent, we will follow up with you or the organization to which 
you are referred to determine whether you have contacted that 
organization.
( ) Please check if you want to be referred to another service 
provider.
    Please provide the following information if you want us to follow 
up with you:
    Your Name:
    Best way to reach me (phone/address/email):
    Please provide the following information if you want us to follow 
up with the service provider only.
    Your Name:
    You are permitted to withhold your name, though if you choose to do 
so, we will be unable to follow up with you or the service provider 
about your referral.
( ) Please check if you do not want follow up.
FOR STAFF USE ONLY
    1. Date of Objection: _/_/_
    2. Referral (check one):
( ) Individual was referred to (name of alternate provider and contact 
information):
( ) Individual left without a referral
( ) No alternate service provider is available--summarize below what 
efforts you made to identify an alternate provider (including reaching 
out to USDA or the intermediary, if applicable):
    3. Follow-up date: _/_/_
( ) Individual contacted alternate provider
( ) Individual did not contact alternate provider
    4. Staff name and initials:
--End of Form--

AGENCY FOR INTERNATIONAL DEVELOPMENT

    For the reasons stated in the preamble, USAID amends chapter II of 
title 22 of the Code of Federal Regulations as follows:

PART 205--PARTICIPATION BY RELIGIOUS ORGANIZATIONS IN USAID 
PROGRAMS

0
19. The authority citation for part 205 continues to read as follows:

    Authority:  22 U.S.C. 2381(a).


0
20. In Sec.  205.1:
0
a. Paragraphs (b), (c), (e), and (f) are revised; and
0
b. New paragraph (j) is added, to read as follows:


Sec.  205.1  Grants and cooperative agreements.

* * * * *
    (b) Organizations that receive direct financial assistance from 
USAID under any USAID program (including through a prime award or sub-
award) 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 directly funded with direct financial assistance from USAID. 
If an organization conducts such activities, the activities must be 
offered separately, in time or location, from the programs or services 
funded with direct financial assistance from USAID, and participation 
must be voluntary for beneficiaries of the programs or services funded 
with such assistance. Nothing in this part restricts USAID's authority 
under applicable federal law to fund activities, such as the provision 
of chaplaincy services, that can be directly funded by the Government 
consistent with the Establishment Clause.
    (c) A religious organization that applies for, or participates in, 
USAID-funded programs or services (including through a prime award or 
sub-award) may retain its independence and may continue to carry out 
its mission, including the definition, development, practice, and 
expression of its religious beliefs, provided that it does not use 
direct financial assistance from USAID (including through a prime award 
or sub-award) to support or engage in any explicitly religious 
activities (including activities that involve overt religious content 
such as worship, religious instruction, or proselytization), or in any 
other manner prohibited by law. Among other things, a religious 
organization that receives financial assistance from USAID may use 
space in its facilities, without removing religious art, icons, 
scriptures, or other religious symbols. In addition, a religious 
organization that receives financial assistance from USAID retains its 
authority over its internal governance, and it may retain religious 
terms in its organization's name, select its board members on a 
religious basis, and include religious references in its organization's 
mission statements and other governing documents.
* * * * *
    (e) An organization that participates in programs funded by 
financial assistance from USAID (including through a prime award or 
sub-award) shall not, in providing services, discriminate against a 
program beneficiary or potential program

[[Page 19416]]

beneficiary on the basis of religion or religious belief, refusal to 
hold a religious belief, or a refusal to attend or participate in a 
religious practice.
    (f) No grant document, contract, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by USAID shall 
require only religious organizations to provide assurances that they 
will not use monies or property for explicitly religious activities 
(including activities that involve overt religious content such as 
worship, religious instruction, or proselytization). Any such 
restrictions shall apply equally to religious and secular 
organizations. All organizations that participate in USAID programs 
(including through a prime award or subaward), including religious 
ones, must carry out eligible activities in accordance with all program 
requirements and other applicable requirements governing the conduct of 
USAID-funded activities, including those prohibiting the use of direct 
financial assistance from USAID to engage in explicitly religious 
activities. No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by USAID shall 
disqualify religious organizations from participating in USAID's 
programs because such organizations are motivated or influenced by 
religious faith to provide social services, or because of their 
religious character or affiliation.
* * * * *
    (j) Decisions about awards of USAID financial assistance must be 
free from political interference or even the appearance of such 
interference and must be made on the basis of merit, not on the basis 
of the religious affiliation of a recipient organization, or lack 
thereof.

Department of Housing and Urban Development

    Accordingly, for the reasons described in the preamble, HUD amends 
24 CFR parts 5, 92, 570, 574, 576, 578, and 1003 as follows:

PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

0
21. The authority citation for 24 CFR part 5 is revised to read as 
follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437f, 1437n, 3535(d), Sec. 
327, Pub. L. 109-115, 119 Stat. 2936, Sec. 607, Pub. L. 109-162, 119 
Stat. 3051, E.O. 13279, and E.O. 13559.


0
22. In Sec.  5.109:
0
a. The section heading is revised;
0
b. Paragraphs (a), (b), (c), (d), (f), (g), and (h) are revised;
0
c. Paragraph (e) is redesignated as paragraph (i);
0
d. New paragraph (e) is added; and
0
e. New paragraphs (j) and (k) are added, to read as follows:


Sec.  5.109  Equal participation of faith-based organizations in HUD 
programs and activities.

    (a) Purpose. Consistent with Executive Order 13279 (issued on 
December 12, 2002, 67 FR 77141), entitled ``Equal Protection of the 
Laws for Faith-Based and Community Organizations,'' as amended by 
Executive Order 13559 (issued on November 17, 2010, 75 FR 71319), 
entitled ``Fundamental Principles and Policymaking Criteria for 
Partnerships With Faith-Based and Other Neighborhood Organizations,'' 
this section describes requirements for ensuring the equal 
participation of faith-based organizations in HUD programs and 
activities. These requirements apply to all HUD programs and 
activities, including all of HUD's Native American Programs, except as 
may be otherwise noted in the respective program regulations in title 
24 of the Code of Federal Regulations (CFR), or unless inconsistent 
with certain HUD program authorizing statutes.
    (b) Definitions. The following definitions apply to this section:
    Direct Federal financial assistance means Federal financial 
assistance provided when a Federal Government agency or an 
intermediary, as defined in this section, selects the provider and 
either purchases services from that provider (i.e., via a contract) or 
awards funds to that provider to carry out an activity (e.g., via 
grant, sub-grant, sub-award, or cooperative agreement). The recipients 
of sub-grants or sub-awards that receive Federal financial assistance 
through State-administered programs (e.g., flow-through programs) are 
considered recipients of direct Federal financial assistance. In 
general, Federal financial assistance shall be treated as direct, 
unless it meets the definition of indirect Federal financial 
assistance.
    Federal financial assistance means assistance that non-Federal 
entities receive or administer in the forms of grants, contracts, 
loans, loan guarantees, property, cooperative agreements, food 
commodities, direct appropriations, or other assistance, but does not 
include a tax credit, deduction, or exemption.
    Indirect Federal financial assistance means Federal financial 
assistance provided when the choice of the 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. Federal financial assistance provided to an organization is 
considered indirect when the Government program through which the 
beneficiary receives the voucher, certificate, or other similar means 
of Government-funded payment is neutral toward religion; the 
organization receives the assistance as a result of a decision of the 
beneficiary, not a decision of the Government; and the beneficiary has 
at least one adequate secular option for the use of the voucher, 
certificate, or other similar means of Government-funded payment.
    Intermediary means an entity, including a nongovernmental 
organization, acting under a contract, grant, or other agreement with 
the Federal Government or with a State, tribal or local government that 
accepts Federal financial assistance and distributes that assistance to 
other entities that, in turn, carry out activities under HUD programs.
    (c) Equal participation of faith-based organizations in HUD 
programs and activities. Faith-based organizations are eligible, on the 
same basis as any other organization, to participate in HUD programs 
and activities. Neither the Federal Government, nor a State, tribal or 
local government, nor any other entity that administers any HUD program 
or activity, shall discriminate against an organization on the basis of 
the organization's religious character or affiliation, or lack thereof. 
In addition, decisions about awards of Federal financial assistance 
must be free from political interference or even the appearance of such 
interference and must be made on the basis of merit, not based on the 
religious character or affiliation, or lack thereof, of an 
organization.
    (d) Separation of explicitly religious activities from direct 
Federal financial assistance.
    (1) A faith-based organization that applies for, or participates 
in, a HUD program or activity supported with Federal financial 
assistance retains its independence and may continue to carry out its 
mission, including the definition, development, practice, and 
expression of its religious beliefs, provided that it does not use 
direct Federal financial assistance that it receives (e.g., via 
contract, grant, sub-grant, sub-award or cooperative agreement) to 
support or engage in any explicitly religious activities (including 
activities that involve overt religious content such as worship, 
religious instruction, or proselytization), or in any other manner 
prohibited by law.
    (2) A faith-based organization that receives direct Federal 
financial

[[Page 19417]]

assistance may use space (including a sanctuary, chapel, prayer hall, 
or other space) in its facilities (including a temple, synagogue, 
church, mosque, or other place of worship) to carry out activities 
under a HUD program without removing religious art, icons, scriptures, 
or other religious symbols. In addition, a faith-based organization 
participating in a HUD program or activity retains its authority over 
its internal governance, and may retain religious terms in its 
organization's name, select its board members on a religious basis, and 
include religious references in its organization's mission statements 
and other governing documents.
    (e) Explicitly religious activities. If an organization engages in 
explicitly religious activities (including activities that involve 
overt religious content such as worship, religious instruction, or 
proselytization), the explicitly religious activities must be offered 
separately, in time or location, from the programs or activities 
supported by direct Federal financial assistance and participation must 
be voluntary for the beneficiaries of the programs or activities that 
receive direct Federal financial assistance.
    (f) Intermediary responsibilities to ensure equal participation of 
faith-based organizations in HUD programs. If an intermediary--acting 
under a contract, grant, or other agreement with the Federal Government 
or with a State, tribal or local government that is administering a 
program supported by Federal financial assistance--is given the 
authority to select a nongovernmental organization to receive Federal 
financial assistance under a contract, grant, sub-grant, sub-award, or 
cooperative agreement, the intermediary must ensure that such 
organization complies with the requirements of this section. If the 
intermediary is a nongovernmental organization, it retains all other 
rights of a nongovernmental organization under the program's statutory 
and regulatory provisions.
    (g) Beneficiary protections. Faith-based organizations that carry 
out programs or activities with direct Federal financial assistance 
from HUD must give written notice to beneficiaries and prospective 
beneficiaries of the programs or activities describing certain 
protections available to them, as provided in this subsection. In 
addition, if a beneficiary or prospective beneficiary objects to the 
religious character of the organization carrying out the programs or 
activities, that organization must promptly undertake reasonable 
efforts to identify and refer the beneficiary or prospective 
beneficiary to an alternative provider to which the beneficiary or 
prospective beneficiary has no such objection.
    (1) Written notice. The written notice must state that:
    (i) The organization may not discriminate against a beneficiary or 
prospective 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;
    (ii) The organization may not require beneficiaries to attend or 
participate in any explicitly religious activities that are offered by 
the organization, and any participation by beneficiaries in such 
activities must be purely voluntary;
    (iii) The organization must separate, in time or location, any 
privately funded explicitly religious activities from activities 
supported by direct Federal financial assistance;
    (iv) If a beneficiary objects to the religious character of the 
organization, the organization must undertake reasonable efforts to 
identify and refer the beneficiary to an alternative provider to which 
the beneficiary has no such objection; and
    (v) Beneficiaries or prospective beneficiaries may report an 
organization's violation of these protections, including any denial of 
services or benefits by an organization, by contacting or filing a 
written complaint to HUD or the intermediary, if applicable.
    (2) Timing of notice. The written notice must be given to 
prospective beneficiaries before they enroll in any HUD program or 
activity. When the nature of the program or activity or exigent 
circumstances make it impracticable to provide the written notice in 
advance, the organization must provide written notice to beneficiaries 
of their protections at the earliest available opportunity.
    (3) Referral requirements. (i) If a beneficiary or prospective 
beneficiary of a program or activity that receives direct Federal 
financial assistance from HUD objects to the religious character of an 
organization that carries out the program or activity, that 
organization must promptly undertake reasonable efforts to identify and 
refer the beneficiary or prospective beneficiary to an alternative 
provider to which the beneficiary or prospective beneficiary has no 
such objection.
    (ii) A referral may be made to another faith-based organization, if 
the beneficiary or prospective beneficiary has no objection to that 
provider based on the provider's religious character. But if the 
beneficiary or prospective beneficiary requests a secular provider, and 
a secular provider is available, then a referral must be made to that 
provider.
    (iii) Except for activities carried out by telephone, Internet, or 
similar means, the referral must be to an alternative provider that is 
in reasonable geographic proximity to the organization making the 
referral and that carries out activities that are similar in substance 
and quality to those offered by the organization. The alternative 
provider also must have the capacity to accept additional 
beneficiaries.
    (iv) If the organization determines that it is unable to identify 
an alternative provider, the organization shall promptly notify the 
intermediary or, if there is no intermediary, HUD. If HUD or an 
intermediary is notified that an organization is unable to identify an 
alternative provider, HUD or the intermediary, as appropriate, shall 
promptly determine whether there is any other suitable alternative 
provider to which the beneficiary or prospective beneficiary may be 
referred. An intermediary that receives a request for assistance in 
identifying an alternative provider may request assistance from HUD.
    (4) Recordkeeping. A faith-based organization providing a referral 
under paragraph (g)(3) of this section must document a beneficiary or 
prospective beneficiary's request for a referral, whether the 
beneficiary or prospective beneficiary was referred to another 
provider, to which provider the beneficiary or prospective beneficiary 
was referred, and if the beneficiary or prospective beneficiary 
contacted the alternative provider, unless the beneficiary or 
prospective beneficiary requests no follow up.
    (h) Nondiscrimination requirements. Any organization that receives 
Federal financial assistance under a HUD program or activity shall not, 
in providing services or carrying out activities with such assistance, 
discriminate against a beneficiary or prospective 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, this section does not require any organization that only 
receives indirect Federal financial assistance to modify its program or 
activities to accommodate a beneficiary that selects the organization 
to receive indirect aid.
* * * * *
    (j) Acquisition, construction, and rehabilitation of structures. 
Direct Federal financial assistance may be used for the acquisition, 
construction, or rehabilitation of structures only to the

[[Page 19418]]

extent that those structures are used for conducting eligible 
activities under a HUD program or activity. Where a structure is used 
for both eligible and explicitly religious activities (including 
activities that involve overt religious content such as worship, 
religious instruction, or proselytization), direct Federal financial 
assistance may not exceed the cost of the share of acquisition, 
construction, or rehabilitation attributable to eligible activities in 
accordance with the cost accounting requirements applicable to the HUD 
program or activity. However, acquisition, construction, or 
rehabilitation of sanctuaries, chapels, or other rooms that a HUD-
funded faith-based organization uses as its principal place of worship, 
may not be paid with direct Federal financial assistance. Disposition 
of real property by a faith-based organization after its use for an 
authorized purpose, or any change in use of the property from an 
authorized purpose, is subject to Government-wide regulations governing 
real property disposition (2 CFR part 200, subpart D) and the HUD 
program regulations, as directed by HUD.
    (k) Commingling of Federal and State, tribal, and local funds. If a 
State, tribal, or local government voluntarily contributes its own 
funds to supplement direct Federal financial assistance for an 
activity, the State, tribal or local government has the option to 
segregate those funds or commingle them with the direct Federal 
financial assistance. However, if the funds are commingled, the 
requirements of this section apply to all of the commingled funds. 
Further, if a State, tribal, or local government is required to 
contribute matching funds to supplement direct Federal financial 
assistance for an activity, the matching funds are considered 
commingled with the direct Federal financial assistance and, therefore, 
subject to the requirements of this section. Some HUD programs' 
requirements govern any activity assisted under those programs. 
Accordingly, recipients should consult with the appropriate HUD program 
office to determine the scope of applicable requirements.

PART 92--HOME INVESTMENT PARTNERSHIPS PROGRAM

0
23. The authority citation for 24 CFR part 92 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d) and 12701-12839.


0
24. Revise Sec.  92.257 to read as follows:


Sec.  92.257  Equal participation of faith-based organizations.

    The HUD program requirements in Sec.  5.109 apply to the HOME 
program, including the requirements regarding disposition and change in 
use of real property by a faith-based organization.

PART 570--COMMUNITY DEVELOPMENT BLOCK GRANTS

0
25. The authority citation for 24 CFR part 570 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d) and 5301-5320.


0
26. In Sec.  570.200 revise paragraph (j) to read as follows:


Sec.  570.200  General policies.

* * * * *
    (j) Equal participation of faith-based organizations. The HUD 
program requirements in Sec.  5.109 of this title apply to the CDBG 
program, including the requirements regarding disposition and change in 
use of real property by a faith-based organization.

PART 574--HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS

0
27. The authority citation for 24 CFR part 574 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d) and 12901-12912.


0
28. In Sec.  574.300, revise paragraph (c) to read as follows:


Sec.  574.300  Eligible activities.

* * * * *
    (c) Equal participation of faith-based organizations. The HUD 
program requirements in Sec.  5.109 of this title apply to the HOPWA 
program, including the requirements regarding disposition and change in 
use of real property by a faith-based organization.

PART 576--EMERGENCY SOLUTIONS GRANTS PROGRAM

0
29. The authority citation for 24 CFR part 576 continues to read as 
follows:

    Authority: 42 U.S.C. 11371 et seq., 42 U.S.C. 3535(d).


0
30. Revise Sec.  576.406 to read as follows:


Sec.  576.406  Equal participation of faith-based organizations.

    The HUD program requirements in Sec.  5.109 of this title apply to 
the ESG program, including the requirements regarding disposition and 
change in use of real property by a faith-based organization.

PART 578--CONTINUUM OF CARE PROGRAM

0
31. The authority citation for 24 CFR part 578 continues to read as 
follows:

    Authority: 42 U.S.C. 11371 et seq., 42 U.S.C. 3535(d).


0
32. In Sec.  578.87, revise paragraph (b) to read as follows:


Sec.  578.87  Limitation on use of funds.

* * * * *
    (b) Equal participation of faith-based organizations. The HUD 
program requirements in Sec.  5.109 apply to the Continuum of Care 
program, including the requirements regarding disposition and change in 
use of real property by a faith-based organization.
* * * * *

PART 1003--COMMUNITY DEVELOPMENT BLOCK GRANTS FOR INDIAN TRIBES AND 
ALASKA NATIVE VILLAGES

0
33. The authority citation for 24 CFR part 1003 continues to read as 
follows:

    Authority:  42 U.S.C. 3535(d) and 5301 et seq.


0
34. Revise Sec.  1003.600 to read as follows:


Sec.  1003.600  Equal participation of faith-based organizations.

    The HUD program requirements in Sec.  5.109 of this title apply to 
the ICDBG program, including the requirements regarding disposition and 
change in use of real property by a faith-based organization.

Department of Justice

0
35. For the reasons stated in the joint preamble, the Department of 
Justice revises part 38 of title 28 of the Code of Federal Regulations 
to read as follows:

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

Sec.
38.1 Purpose.
38.2 Applicability and scope.
38.3 Definitions.
38.4 Policy.
38.5 Responsibilities.
38.6 Procedures.
38.7 Assurances.
38.8 Enforcement.
Appendix A to Part 38--Written Notice of Beneficiary Protections
Appendix B to Part 38--Beneficiary Referral Request

    Authority:  28 U.S.C. 509; 5 U.S.C. 301; E.O. 13279, 67 FR 
77141, 3 CFR, 2002 Comp., p. 258, Dec. 12. 2002; 18 U.S.C. 4001, 
4042, 5040; 42 U.S.C. 14045b; 21 U.S.C. 871; 25 U.S.C. 3681; Pub. L. 
107-273, 116 Stat. 1758, Nov. 2, 2002; Pub. L. 109-162, 119 Stat.

[[Page 19419]]

2960, Jan. 6, 2006; 42 U.S.C. 3751, 3753, 3762b, 3782, 3796dd-1, 
3796dd-7, 3796gg-1, 3796gg-0b, 3796gg-3, 3796h, 3796ii-2, 3797u-3, 
3797w, 5611, 5672, 10604; E.O. 13559, 75 FR 71319, 3 CFR, 2010 
Comp., p. 273, Nov. 17, 2010.


Sec.  38.1  Purpose.

    The purpose of this part is to implement Executive Order 13279 and 
Executive Order 13559.


Sec.  38.2  Applicability and scope.

    (a) A faith-based or religious organization that applies for, or 
participates in, a social service program supported with Federal 
financial assistance may retain its independence and may continue to 
carry out its mission, including the definition, development, practice, 
and expression of its religious beliefs, provided that it does not use 
direct Federal financial assistance, whether received through a prime 
award or sub-award, to support or engage in any explicitly religious 
activities, including activities that involve overt religious content 
such as worship, religious instruction, or proselytization.
    (b) The use of indirect Federal financial assistance is not subject 
to this restriction.
    (c) Nothing in this part restricts the Department's authority under 
applicable Federal law to fund activities, such as the provision of 
chaplaincy services, that can be directly funded by the Government 
consistent with the Establishment Clause.


Sec.  38.3  Definitions.

    As used in this part:
    (a)(1) ``Direct Federal financial assistance'' or ``Federal 
financial assistance provided directly'' refers to situations where the 
Government or an intermediary (under this part) selects the provider 
and either purchases services from that provider (e.g., via a contract) 
or awards funds to that provider to carry out a service (e.g., via a 
grant or cooperative agreement). In general, and except as provided in 
paragraph (a)(2) of this section, Federal financial assistance shall be 
treated as direct, unless it meets the definition of ``indirect Federal 
financial assistance'' or ``Federal financial assistance provided 
indirectly.''
    (2) Recipients of sub-grants that receive Federal financial 
assistance through State administering agencies or State-administered 
programs are recipients of ``direct Federal financial assistance'' (or 
recipients of ``Federal financial assistance provided directly'').
    (b) ``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. 
Federal financial assistance provided to an organization is considered 
``indirect'' when
    (1) The government program through which the beneficiary receives 
the voucher, certificate, or other similar means of government-funded 
payment is neutral toward religion;
    (2) The organization receives the assistance as a result of a 
decision of the beneficiary, not a decision of the Government; and
    (3) The beneficiary has at least one adequate secular option for 
the use of the voucher, certificate, or other similar means of 
government-funded payment.
    (c)(1) ``Intermediary'' or ``pass-through entity'' means an entity, 
including a nonprofit or nongovernmental organization, acting under a 
contract, grant, or other agreement with the Federal Government or with 
a State or local government, such as a State administering agency, that 
accepts Federal financial assistance as a primary recipient or grantee 
and distributes that assistance to other organizations that, in turn, 
provide government-funded social services.
    (2) When an intermediary, such as a State administering agency, 
distributes Federal financial assistance to other organizations, it 
replaces the Department as the awarding entity. The intermediary 
remains accountable for the Federal financial assistance it disburses 
and, accordingly, must ensure that any providers to which it disburses 
Federal financial assistance also comply with this part.
    (d) ``Department program'' refers to a grant, contract, or 
cooperative agreement funded by a discretionary, formula, or block 
grant program administered by or from the Department.
    (e) ``Grantee'' includes a recipient of a grant, a signatory to a 
cooperative agreement, or a contracting party.
    (f) The ``Office for Civil Rights'' refers to the Office for Civil 
Rights in the Department's Office of Justice Programs.


Sec.  38.4  Policy.

    (a) Grants (formula and discretionary), contracts, and cooperative 
agreements. Faith-based or religious organizations are eligible, on the 
same basis as any other organization, to participate in any Department 
program for which they are otherwise eligible. Neither the Department 
nor any State or local government receiving funds under any Department 
program shall, in the selection of service providers, discriminate for 
or against an organization on the basis of the organization's religious 
character or affiliation, or lack thereof.
    (b) Political or religious affiliation. Decisions about awards of 
Federal financial assistance must be free from political interference 
or even the appearance of such interference and must be made on the 
basis of merit, not on the basis of religion, religious belief, or lack 
thereof.


Sec.  38.5  Responsibilities.

    (a) Organizations that receive direct financial assistance from the 
Department 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 with direct financial assistance from the Department. 
If an organization conducts such explicitly religious activities, the 
activities must be offered separately, in time or location, from the 
programs or services funded with direct financial assistance from the 
Department, and participation must be voluntary for beneficiaries of 
the programs or services funded with such assistance.
    (b) A faith-based or religious organization that participates in 
the Department-funded programs or services shall retain its 
independence from Federal, State, and local governments, and may 
continue to carry out its mission, including the definition, practice, 
and expression of its religious beliefs, provided that it does not use 
direct financial assistance from the Department to support any 
explicitly religious activities, including activities that involve 
overt religious content such as worship, religious instruction, or 
proselytization. Among other things, a faith-based or religious 
organization that receives financial assistance from the Department may 
use space in its facilities without removing religious art, icons, 
messages, scriptures, or symbols. In addition, a faith-based or 
religious organization that receives financial assistance from the 
Department retains its authority over its internal governance, and it 
may retain religious terms in its organization's name, select its board 
members on a religious basis, and include religious references in its 
mission statements and other governing documents.
    (c) Any organization that participates in programs funded by 
Federal financial assistance from the Department shall not, in 
providing services, discriminate

[[Page 19420]]

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. 
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.
    (d) No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that the Department or a State or 
local government uses in administering financial assistance from the 
Department shall require only faith-based or religious organizations to 
provide assurances that they will not use monies or property for 
explicitly religious activities. All organizations, including religious 
ones, that participate in Department programs must carry out eligible 
activities in accordance with all program requirements and other 
applicable requirements governing the conduct of Department-funded 
activities, including those prohibiting the use of direct financial 
assistance from the Department to engage in explicitly religious 
activities. No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by the Department or 
a State or local government in administering financial assistance from 
the Department shall disqualify faith-based or religious organizations 
from participating in the Department's programs because such 
organizations are motivated or influenced by religious faith to provide 
social services, or because of their religious character or 
affiliation.
    (e) Exemption from Title VII employment discrimination 
requirements. A faith-based or 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(a), is not forfeited when the organization receives 
direct or indirect Federal financial assistance from the Department. 
Some Department programs, however, contain independent statutory 
provisions requiring that all grantees agree not to discriminate in 
employment on the basis of religion. Accordingly, grantees should 
consult with the appropriate Department program office to determine the 
scope of any applicable requirements.
    (f) 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 organizations to provide services funded by the 
Federal Government, the intermediary must ensure the compliance of the 
recipient of a contract, grant, or agreement with the provisions of 
Executive Order 13279, as amended by Executive Order 13559, and any 
implementing rules or guidance. If the intermediary is a 
nongovernmental organization, it retains all other rights of a 
nongovernmental organization under the program's statutory and 
regulatory provisions.
    (g) In general, the Department does not require that a grantee, 
including a religious organization, obtain tax-exempt status under 
section 501(c)(3) of the Internal Revenue Code to be eligible for 
funding under Department programs. Many grant programs, however, do 
require an organization to be a ``nonprofit organization'' in order to 
be eligible for funding. Individual solicitations that require 
organizations to have nonprofit status will specifically so indicate in 
the eligibility sections of the solicitations. In addition, any 
solicitation that requires an organization to maintain tax-exempt 
status shall expressly state the statutory authority for requiring such 
status. Grantees should consult with the appropriate Department program 
office to determine the scope of any applicable requirements. In 
Department programs in which an applicant must show that it is a 
nonprofit organization, the applicant may do so by any of the following 
means:
    (1) Proof that the Internal Revenue Service currently recognizes 
the applicant as an organization to which contributions are tax 
deductible under section 501(c)(3) of the Internal Revenue Code;
    (2) A statement from a State taxing body or the State secretary of 
state certifying that:
    (i) The organization is a nonprofit organization operating within 
the State; and
    (ii) No part of its net earnings may lawfully benefit any private 
shareholder or individual;
    (3) A certified copy of the applicant's certificate of 
incorporation or similar document that clearly establishes the 
nonprofit status of the applicant; or
    (4) Any item described in paragraphs (g)(1) through (g)(3) of this 
section if that item applies to a State or national parent 
organization, together with a statement by the State or parent 
organization that the applicant is a local nonprofit affiliate.
    (h) Grantees should consult with the appropriate Department program 
office to determine the applicability of this part in foreign countries 
or sovereign lands.


Sec.  38.6  Procedures.

    (a) Effect on State and local funds. If a State or local government 
voluntarily contributes its own funds to supplement activities carried 
out under the applicable programs, the State or local government has 
the option to separate out the Federal funds or commingle them. 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.
    (b) To the extent otherwise permitted by Federal law, the 
restrictions on explicitly religious activities set forth in this 
section do not apply to indirect Federal financial assistance.
    (c) Beneficiary protections: written notice. (1) Faith-based or 
religious organizations providing social services to beneficiaries 
under a program supported by direct Federal financial assistance from 
the Department must give written notice to beneficiaries and 
prospective beneficiaries of certain protections. Such notice must be 
given in a manner prescribed by the Office for Civil Rights. This 
notice must state the following:
    (i) The organization may not discriminate against beneficiaries or 
prospective beneficiaries 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;
    (ii) The organization may not require beneficiaries or prospective 
beneficiaries to attend or participate in any explicitly religious 
activities that are offered by the organization, and any participation 
by beneficiaries in such activities must be purely voluntary;
    (iii) The organization must separate in time or location any 
privately funded explicitly religious activities from activities 
supported by direct Federal financial assistance;
    (iv) If a beneficiary or prospective beneficiary objects to the 
religious character of the organization, the organization will 
undertake reasonable efforts to identify and refer the beneficiary or 
prospective beneficiary to an alternative provider to which the 
beneficiary or prospective beneficiary has no objection; and
    (v) Beneficiaries or prospective beneficiaries may report an 
organization's violation of these

[[Page 19421]]

protections, including any denials of services or benefits by an 
organization, by contacting or filing a written complaint with the 
Office for Civil Rights or the intermediary that awarded funds to the 
organization.
    (2) This written notice must be given to prospective beneficiaries 
prior to the time they enroll in the program or receive services from 
the program. When the nature of the service provided or exigent 
circumstances make it impracticable to provide such written notice in 
advance of the actual service, organizations must advise beneficiaries 
of their protections at the earliest available opportunity.
    (3) The notice that a faith-based or religious organization may use 
to notify beneficiaries or prospective beneficiaries of their 
protections under paragraph (g)(1) of this section is specified in 
appendix A to this part.
    (d) Beneficiary protections: referral requirements. (1) If a 
beneficiary or prospective beneficiary of a social service program 
supported by direct Federal financial assistance from the Department 
objects to the religious character of an organization that provides 
services under the program, that organization must promptly undertake 
reasonable efforts to identify and refer the beneficiary or prospective 
beneficiary to an alternative provider to which the beneficiary or 
prospective beneficiary has no objection based on the organization's 
religious character. See appendix B to this part.
    (2) An organization may refer a beneficiary or prospective 
beneficiary to another faith-based or religious organization that 
provides comparable services, if the beneficiary or prospective 
beneficiary has no objection to that provider based on the 
organization's religious character. But if the beneficiary or 
prospective beneficiary requests a secular provider, and a secular 
provider is available, then a referral must be made to that provider.
    (3) Except for services provided by telephone, Internet, or similar 
means, the referral must be to an alternative provider that is in 
reasonable geographic proximity to the organization making the referral 
and that offers services that are similar in substance and quality to 
those offered by the organization. The alternative provider also must 
have the capacity to accept additional clients.
    (4) When the organization makes a referral to an alternative 
provider, the organization shall maintain a record of that referral for 
review by the awarding entity. When the organization determines that it 
is unable to identify an alternative provider, the organization shall 
promptly notify and maintain a record for review by the awarding 
entity. If the organization is unable to identify an alternative 
provider, the awarding entity shall determine whether there is any 
other suitable alternative provider to which the beneficiary may be 
referred. An intermediary that receives a request for assistance in 
identifying an alternative provider may request assistance from the 
Department.


Sec.  38.7  Assurances.

    (a) Every application submitted to the Department for direct 
Federal financial assistance subject to this part must contain, as a 
condition of its approval and the extension of any such assistance, or 
be accompanied by, an assurance or statement that the program is or 
will be conducted in compliance with this part.
    (b) Every intermediary must provide for such methods of 
administration as are required by the Office for Civil Rights to give 
reasonable assurance that the intermediary will comply with this part 
and effectively monitor the actions of its recipients.


Sec.  38.8  Enforcement.

    (a) The Office for Civil Rights is responsible for reviewing the 
practices of recipients of Federal financial assistance to determine 
whether they are in compliance with this part.
    (b) The Office for Civil Rights is responsible for investigating 
any allegations of noncompliance with this part.
    (c) Recipients of Federal financial assistance determined to be in 
violation of any provisions of this part are subject to the enforcement 
procedures and sanctions, up to and including suspension and 
termination of funds, authorized by applicable laws.
    (d) An allegation of any violation or discrimination by an 
organization, based on this regulation, may be filed with the Office 
for Civil Rights or the intermediary that awarded the funds to the 
organization.

Appendix A to Part 38--Written Notice of Beneficiary Protections

    Name of Organization:
    Name of Program:
    Contact Information for Program Staff (name, phone number, and 
email address, if appropriate):
    Because this program is supported in whole or in part by financial 
assistance from the Federal Government, we are required to let you know 
that--
     We may not discriminate against you on the basis of 
religion, a religious belief, a refusal to hold a religious belief, or 
a refusal to attend or participate in a religious practice;
     We may not require you to attend or participate in any 
explicitly religious activities that we offer, and your participation 
in these activities must be purely voluntary;
     We must separate in time or location any privately funded 
explicitly religious activities from activities supported with direct 
Federal financial assistance;
     If you object to the religious character of our 
organization, we must make reasonable efforts to identify and refer you 
to an alternative provider to which you have no objection; and
     You may report violations of these protections to the U.S. 
Department of Justice, Office of Justice Programs, Office for Civil 
Rights or to [name of intermediary that awarded funds to the 
organization].
    We must give you this written notice before you enroll in our 
program or receive services from the program.
    Appendix B to Part 38--Beneficiary Referral Request
    If you object to receiving services from us based on the religious 
character of our organization, please complete this form and return it 
to the program contact identified above. If you object, we will make 
reasonable efforts to refer you to another service provider. We cannot 
guarantee, however, that in every instance, an alternative provider 
will be available. With your consent, we will follow up with you or the 
organization to which you were referred to determine whether you 
contacted that organization.
    Please check if applicable:
( ) I want to be referred to another service provider.
    If you checked above that you wish to be referred to another 
service provider, please check one of the following:
( ) Please follow up with me or the service provider to which I was 
referred.
    Name:
    Best way to reach me (phone/address/email):
( ) Please do not follow up.

--End of Form--

DEPARTMENT OF LABOR

    For the reasons discussed in the preamble, the Department of Labor 
amends 29 CFR part 2 as follows:

PART 2--GENERAL REGULATIONS

0
36. The authority citation for part 2 is revised to read as follows:

    Authority:  5 U.S.C. 301; Executive Order 13198, 66 FR 8497, 3 
CFR 2001 Comp., p. 750; Executive Order 13279, 67 FR 77141, 3

[[Page 19422]]

CFR 2002 Comp., p. 258; Executive Order 13559, 75 FR 71319, 3 CFR 
2011 Comp., p. 273.

Subpart D--Equal Treatment in Department of Labor Programs for 
Religious Organizations; Protection of Religious Liberty of 
Department of Labor Social Service Providers and Beneficiaries

0
37. Amend Sec.  2.31 by revising paragraphs (a) and (f) to read as 
follows:


Sec.  2.31  Definitions.

* * * * *
    (a) The term Federal financial assistance means assistance that 
non-Federal entities (including State and local governments) receive or 
administer in the form of grants, contracts, loans, loan guarantees, 
property, cooperative agreements, direct appropriations, or other 
direct or indirect assistance, but does not include a tax credit, 
deduction or exemption. Federal financial assistance may be direct or 
indirect.
    (1) The term direct Federal financial assistance or Federal 
financial assistance provided directly means that the Government or a 
DOL social service intermediary provider under this part selects the 
provider and either purchases services from that provider (e.g., via a 
contract) or awards funds to that provider to carry out a service 
(e.g., via grant or cooperative agreement). In general, Federal 
financial assistance shall be treated as direct, unless it meets the 
definition of indirect Federal financial assistance or Federal 
financial assistance provided indirectly.
    (2) The term indirect Federal financial assistance or Federal 
financial assistance provided indirectly means that the choice of the 
service provider is placed in the hands of the beneficiary, and the 
cost of that service is paid through a voucher, certificate, or other 
similar means of government-funded payment. Federal financial 
assistance provided to an organization is considered indirect when:
    (i) The Government program through which the beneficiary receives 
the voucher, certificate, or other similar means of Government-funded 
payment is neutral toward religion;
    (ii) The organization receives the assistance as a result of a 
decision of the beneficiary, not a decision of the government; and
    (iii) The beneficiary has at least one adequate secular option for 
the use of the voucher, certificate, or other similar means of 
Government-funded payment.
    (3) The recipient of sub-awards received through programs 
administered by States or other intermediaries that are themselves 
recipients of Federal financial assistance (e.g., local areas that 
receive within-state allocations to provide workforce services under 
title I of the Workforce Innovation and Opportunity Act) are not 
considered recipients of indirect Federal financial assistance or 
recipients of Federal financial assistance provided indirectly as those 
terms are used in Executive Order 13559. These recipients of sub-awards 
are considered recipients of direct Federal financial assistance.
* * * * *
    (f) The term DOL social service intermediary provider means any DOL 
social service provider, including a non-governmental organization, 
that, as part of its duties, selects subgrantees to receive DOL support 
or subcontractors to provide DOL-supported services, or has the same 
duties under this part as a governmental entity.
* * * * *

0
38. Amend Sec.  2.32 by revising paragraph (b) introductory text and 
paragraph (c) to read as follows:


Sec.  2.32  Equal participation of religious organizations.

* * * * *
    (b) A religious organization that is a DOL social service provider 
retains its independence from Federal, State, and local governments and 
must be permitted to continue to carry out its mission, including the 
definition, development, practice, and expression of its religious 
beliefs, subject to the provisions of Sec.  2.33. Among other things, 
such a religious organization must be permitted to:
* * * * *
    (c) A grant document, contract or other agreement, covenant, 
memorandum of understanding, policy, or regulation that is used by DOL, 
a State or local government administering DOL support, or a DOL social 
service intermediary provider must not require only religious 
organizations to provide assurances that they will not use direct DOL 
support for explicitly religious activities (including activities that 
involve overt religious content, such as worship, religious 
instruction, or proselytization). Any such requirements must apply 
equally to both religious and other organizations. All organizations, 
including religious ones, that are DOL social service providers must 
carry out DOL-supported activities in accordance with all applicable 
legal and programmatic requirements, including those prohibiting the 
use of direct DOL support for explicitly religious activities 
(including activities that involve overt religious content, such as 
worship, religious instruction, or proselytization). A grant document, 
contract or other agreement, covenant, memorandum of understanding, 
policy, or regulation that is used by DOL, a State or local government, 
or a DOL social service intermediary provider in administering a DOL 
social service program must not disqualify organizations from receiving 
DOL support or participating in DOL programs on the grounds that such 
organizations are motivated or influenced by religious faith to provide 
social services, have a religious character or affiliation, or lack a 
religious component.

0
39. Amend Sec.  2.33 by revising paragraph (a), paragraph (b)(1), the 
introductory text of paragraph (b)(3), and paragraph (c) to read as 
follows:


Sec.  2.33  Responsibilities of DOL, DOL social service providers and 
State and local governments administering DOL support.

    (a) Any organization that participates in a program funded by 
federal financial assistance shall not, in providing services or in 
outreach activities related to such services, 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. This 
requirement does not preclude DOL, DOL social service intermediary 
providers, or State or local governments administering DOL support from 
accommodating religion in a manner consistent with the Establishment 
Clause of the First Amendment to the Constitution.
    (b)(1) DOL, DOL social service intermediary providers, DOL social 
service providers, and State and local governments administering DOL 
support must ensure that they do not use direct DOL support for 
explicitly religious activities (including activities that involve 
overt religious content such as worship, religious instruction, or 
proselytization). DOL social service providers must be permitted to 
offer explicitly religious activities so long as they offer those 
activities separately in time or location from social services 
receiving direct DOL support, and participation in the explicitly 
religious activities is voluntary for the beneficiaries of social 
service programs receiving direct DOL support. For example, 
participation in an explicitly

[[Page 19423]]

religious activity must not be a condition for participating in a 
directly-supported social service program.
* * * * *
    (3) Notwithstanding the requirements of paragraph (b)(1) of this 
section, and to the extent otherwise permitted by Federal law 
(including constitutional requirements), direct DOL support may be used 
to support explicitly religious activities (including activities that 
involve overt religious content such as worship, religious instruction, 
or proselytization), and such activities need not be provided 
separately in time or location from other DOL-supported activities, 
under the following circumstances:
* * * * *
    (c) If a DOL social service intermediary provider, 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 DOL social 
service intermediary provider must ensure compliance with the 
provisions of Executive Order 13279, as amended by Executive Order 
13559, and any implementing rules or guidance, by the recipient of a 
contract, grant or agreement. If the DOL social service intermediary 
provider is a non-governmental organization, it retains all other 
rights of a non-governmental organization under the program's statutory 
and regulatory provisions.


Sec. Sec.  2.34, 2.35, and 2.36   [Redesignated as Sec. Sec.  2.36, 
2.37, and 2.38]

0
40. Redesignate Sec. Sec.  2.34, 2.35, and 2.36 as Sec.  2.36, Sec.  
2.37, and Sec.  2.38, respectively.
0
41. Add new Sec.  2.34 and Sec.  2.35 to subpart D to read as follows:


Sec.  2.34  Beneficiary protections: written notice.

    (a) Contents. Religious organizations providing social services to 
beneficiaries under a DOL program supported by direct Federal financial 
assistance must give written notice to beneficiaries and prospective 
beneficiaries of certain protections. Such notice must be given in a 
manner prescribed by DOL, and state that:
    (1) The organization may not discriminate against a beneficiary or 
prospective beneficiary on the basis of religion or religious belief, a 
refusal to hold a religious belief, or a refusal to attend or 
participate in a religious practice;
    (2) The organization may not require beneficiaries to attend or 
participate in any explicitly religious activities (including 
activities that involve overt religious content such as worship, 
religious instruction, or proselytization) that are offered by our 
organization, and any participation by beneficiaries in such activities 
must be purely voluntary;
    (3) The organization must separate out in time or location any 
privately-funded explicitly religious activities (including activities 
that involve overt religious content such as worship, religious 
instruction, or proselytization) from activities supported with direct 
Federal financial assistance;
    (4) If a beneficiary objects to the religious character of the 
organization, the organization must make reasonable efforts to identify 
and refer the beneficiary to an alternative provider to which the 
beneficiary has no objection. The organization cannot guarantee, 
however, that in every instance, an alternative provider will be 
available; and
    (5) Beneficiaries or prospective beneficiaries may report 
violations of these protections to, or file a written complaint of any 
denials of services or benefits by an organization with, the U.S. 
Department of Labor's Civil Rights Center. The required language of the 
notice is set forth in appendix A to these regulations and may be 
downloaded from the Civil Rights Center's Web site at http://www.dol.gov/oasam/programs/crc or at the Center for Faith-Based and 
Neighborhood Partnerships' Web site at http://www.dol.gov/cfbnp. DOL 
social service providers may post and distribute exact duplicate copies 
of the notice, including through electronic means.
    (b) Timing of notice. This written notice must be given to 
beneficiaries prior to the time they enroll in the program or receive 
services from such programs. When the nature of the service provided or 
exigent circumstances make it impracticable to provide such written 
notice in advance of the actual service, DOL social service providers 
must advise beneficiaries of their protections at the earliest 
available opportunity.
    (c) Applicability. The obligations in this subsection apply only to 
religious organizations providing services under social service 
programs administered in the United States.


Sec.  2.35  Beneficiary protections: referral requirements.

    (a) If a beneficiary or prospective beneficiary of a social service 
program supported by direct DOL financial assistance objects to the 
religious character of an organization that provides services under the 
program, that organization must promptly undertake reasonable efforts 
to identify and refer the beneficiary or prospective beneficiary to an 
alternative provider to which the beneficiary or the prospective 
beneficiary has no objection.
    (b) A referral may be made to another religious organization, if 
the beneficiary has no objection to that provider. But if the 
beneficiary requests a secular provider, and a secular provider is 
available, then a referral must be made to that provider.
    (c) Except for services provided by telephone, internet, or similar 
means, the referral must be to an alternative provider that is in 
reasonable geographic proximity to the organization making the referral 
and that offers services that are similar in substance and quality to 
those offered by that organization. The alternative provider also must 
have the capacity to accept additional clients.
    (d) When the organization makes a referral to an alternative 
provider, the organization shall maintain a record of that referral for 
review by the awarding entity. When the organization determines that it 
is unable to identify an alternative provider, the organization shall 
promptly notify and maintain a record for review by the awarding 
entity. If the organization is unable to identify an alternative 
provider, the awarding entity shall determine whether there is any 
other suitable alternative provider to which the beneficiary may be 
referred.
    (e) A DOL social service intermediary provider that receives a 
request for assistance in identifying an alternative provider may 
request assistance from DOL.
    (f) The obligations in this section apply only to religious 
organizations providing services under social service programs 
administered in the United States.

0
42. Add new Sec.  2.39 to subpart D to read as follows:


Sec.  2.39  Political or religious affiliation.

    Decisions about awards of Federal financial assistance must be free 
from political interference or even the appearance of such interference 
and must be made on the basis of merit, not on the basis of religion or 
religious belief or lack thereof.

0
43. Add a new appendix A to part 2 and appendix B to part 2 to read as 
follows:

[[Page 19424]]

Appendix A to Part 2--Notice of Beneficiary Religious Liberty 
Protections

    [Insert Name of Organization]:
    [Insert Name of Program]:
    [Insert Contact information for Program Staff (name, phone number, 
and email address, if appropriate)]:
-----------------------------------------------------------------------
    Because this program is supported in whole or in part by financial 
assistance from the Federal Government, we are required to let you know 
that:
    (1) We may not discriminate against you on the basis of religion or 
religious belief, a refusal to hold a religious belief, or a refusal to 
attend or participate in a religious practice;
    (2) We may not require you to attend or participate in any 
explicitly religious activities (including activities that involve 
overt religious content such as worship, religious instruction, or 
proselytization) that are offered by our organization, and any 
participation by beneficiaries in such activities must be purely 
voluntary;
    (3) We must separate out in time or location any privately-funded 
explicitly religious activities (including activities that involve 
overt religious content such as worship, religious instruction, or 
proselytization) from activities supported with direct Federal 
financial assistance;
    (4) If you object to the religious character of an organization, we 
must make reasonable efforts to identify and refer you to an 
alternative provider to which you have no objection. We cannot 
guarantee, however, that in every instance, an alternative provider 
will be available; and
    (5) You may report violations of these protections to, or file a 
written complaint of any denials of services or benefits by an 
organization, with the U.S. Department of Labor's Civil Rights Center, 
200 Constitution Ave. NW., Room N-4123, Washington, DC 20210, or by 
email to [email protected].
    This written notice must be given to you prior to the time you 
enroll in the program or receive services from such programs, unless 
the nature of the service provided or urgent circumstances makes it 
impracticable to provide such notice in advance of the actual service. 
In such an instance, this notice must be given to you at the earliest 
available opportunity.
--End of Form --

Appendix B to Part 2--Beneficiary Referral Request

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

DEPARTMENT OF VETERANS AFFAIRS

    For the reasons set out in the preamble, the Department of Veterans 
Affairs adds 38 CFR part 50 and amends parts 61 and 62 as follows:

0
44. Add part 50 to read as follows:

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

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

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


Sec.  50.1  Religious organizations; general provisions.

    (a) A faith-based organization that applies for, or participates 
in, a social service program (as defined in Executive Order 13279) 
supported with Federal financial assistance (as defined in Executive 
Order 13279) may retain its independence and may continue to carry out 
its mission, including the definition, development, practice, and 
expression of its religious beliefs, provided that it does not use 
direct Federal financial assistance that it receives (including through 
a prime or sub-award) to support or engage in any explicitly religious 
activities (including activities that involve overt religious content 
such as worship, religious instruction, or proselytization), or in any 
other manner prohibited by law. Direct Federal financial assistance may 
not be used to pay for equipment or supplies to the extent they are 
allocated to such activities. The use of indirect Federal financial 
assistance is not subject to this restriction. Nothing in this part 
restricts the VA's authority under applicable Federal law to fund 
activities, such as the provision of chaplaincy services, that can be 
directly funded by the Government consistent with the Establishment 
Clause.
    (b)(1) Direct Federal financial assistance or Federal financial 
assistance provided directly means that the government or an 
intermediary as defined in paragraph (d) of this section selects the 
provider and either purchases services from that provider (e.g., via a 
contract) or awards funds to that provider to carry out a service 
(e.g., via grant or cooperative agreement). Federal financial 
assistance shall be treated as direct, unless it meets the definition 
of indirect Federal financial assistance or Federal financial 
assistance provided indirectly in paragraph (b)(2) of this section.
    (2) Indirect Federal financial assistance or Federal financial 
assistance provided indirectly means that the choice of the service 
provider is placed in the hands of the beneficiary, and the cost of 
that service is paid through a voucher, certificate, or other similar 
means of government-funded payment.
    (3) Federal financial assistance provided to an organization is 
considered indirect when:
    (i) The government program through which the beneficiary receives 
the voucher, certificate, or other similar means of government funded 
payment is neutral toward religion;
    (ii) The organization receives the Federal financial assistance as 
a result of a decision of the beneficiary, not a decision of the 
government; and
    (iii) The beneficiary has at least one adequate secular option for 
the use of the voucher, certificate, or other similar means of 
government-funded payment.
    (c) The recipients of sub-grants that receive Federal financial 
assistance through State-administered programs are not considered 
recipients of indirect Federal financial assistance (or recipients of 
Federal funds provided indirectly) as those terms are used in Executive 
Order 13559.
    (d) Intermediary means an entity, including a non-governmental 
organization, acting under a contract, grant, or other agreement with 
the Federal Government or with a State or local government, that 
accepts Federal financial assistance and distributes that assistance to 
other organizations that, in turn, provide government-funded social

[[Page 19425]]

services. In these regulations, the terms intermediary and pass-through 
entity may be used interchangeably.


(Authority: 2 CFR 200.74)


    (e) If an intermediary, acting under a contract, grant, or other 
agreement with VA or with a State or local government that is 
administering a program supported by VA financial assistance, is given 
the authority under the contract, grant, or agreement to select non-
governmental organizations to provide services funded by VA, the 
intermediary must select any providers to receive direct financial 
assistance in a manner that does not favor or disfavor organizations on 
the basis of religion or religious belief and ensure compliance with 
the provisions of Executive Order 13279, as amended by Executive Order 
13559, and any implementing rules or guidance by the recipient of a 
contract, grant or agreement. If the intermediary is a non-governmental 
organization, it retains all other rights of a non-governmental 
organization under the program's statutory and regulatory provisions.
    (f) Any organization that participates in a program funded by 
Federal financial assistance shall not, in providing services or in 
outreach activities related to such services, discriminate against a 
program beneficiary 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.


Sec.  50.2  Beneficiary protections; written notice.

    (a) Faith-based or religious organizations providing social 
services to beneficiaries under a VA program supported by direct VA 
financial assistance must give written notice to beneficiaries and 
prospective beneficiaries of certain protections. Such notice must be 
given in a manner prescribed by VA. The notice will state that:
    (1) The organization may not discriminate against beneficiaries on 
the basis of religion or religious belief, a refusal to hold a 
religious belief, or a refusal to attend or participate in a religious 
practice;
    (2) The organization may not require beneficiaries to attend or 
participate in any explicitly religious activities that are offered by 
the organization, and any participation by beneficiaries in such 
activities must be purely voluntary;
    (3) The organization must separate in time or location any 
privately funded explicitly religious activities from activities 
supported by direct VA financial assistance;
    (4) If a beneficiary objects to the religious character of the 
organization, the organization will undertake reasonable efforts to 
identify and refer the beneficiary to an alternative provider to which 
the prospective beneficiary has no objection; and
    (5) Beneficiaries or perspective beneficiaries may report an 
organization's violations of these protections, including any denials 
of services or benefits by an organization, by contacting or filing a 
written complaint with, VA or an intermediary that awarded funds to the 
organization.
    (b) This written notice must be given to beneficiaries prior to the 
time they enroll in the program or receive services from such program. 
When the nature of the service provided or exigent circumstances make 
it impracticable to provide such written notice in advance of the 
actual service, service providers must advise beneficiaries of their 
protections at the earliest available opportunity.
    (c) Faith-based or religious organizations providing social 
services to beneficiaries under a VA program supported by indirect VA 
financial assistance are not required to give written notice to 
beneficiaries and prospective beneficiaries of the protections 
specified in subsection (a).


(The Office of Management and Budget has approved the information 
collection provisions in this section under control number 2900-0828.)


Sec.  50.3  Beneficiary protections; referral requirements.

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


Sec.  50.4  Political or religious affiliation.

    Decisions about awards of Federal financial assistance must be free 
from political interference or even the appearance of such interference 
and must be made on the basis of merit, not on the basis of religion or 
religious belief or lack thereof.

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

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

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

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

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

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


Sec.  61.64  Religious organizations.

    (a) * * * Decisions about awards of Federal financial assistance 
must be free from political interference or even the appearance of such 
interference and must be made on the basis of merit, not on the basis 
of religion or religious belief or lack thereof.
    (b) * * *
    (2) * * * ``Direct financial assistance'' means that VA or an 
intermediary as defined in 38 CFR 50.1(d) selects the

[[Page 19426]]

provider and either purchases services from that provider (e.g., via a 
contract) or awards funds to that provider to carry out a service 
(e.g., via grant or cooperative agreement). Financial assistance shall 
be treated as direct, unless it meets the definition of indirect 
financial assistance in this paragraph.
* * * * *

PART 62--SUPPORTIVE SERVICES FOR VETERAN FAMILIES PROGRAM

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

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


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


Sec.  62.62  Religious organizations.

    (a) * * * Decisions about awards of Federal financial assistance 
must be free from political interference or even the appearance of such 
interference and must be made on the basis of merit, not on the basis 
of religion or religious belief or lack thereof.
    (b) * * *
    (2) * * * ``Direct financial assistance'' means that VA or an 
intermediary as defined in 38 CFR 50.1(d) selects the provider and 
either purchases services from that provider (e.g., via a contract) or 
awards funds to that provider to carry out a service (e.g., via grant 
or cooperative agreement). Financial assistance shall be treated as 
direct, unless it meets the definition of indirect financial assistance 
in this paragraph.
* * * * *

DEPARTMENT OF HEALTH AND HUMAN SERVICES

    For the reasons stated in the preamble, under the authority of 5 
U.S.C. 301, the Department of Health and Human Services and the 
Administration for Children and Families, respectively, propose to 
amend 45 CFR parts 87 and 1050 as set forth below:

0
49. Revise part 87 to read as follows:

PART 87--EQUAL TREATMENT FOR FAITH-BASED ORGANIZATIONS

Sec.
87.1 Definitions.
87.2 Applicability.
87.3 Grants.

    Authority: 5 U.S.C. 301.


Sec.  87.1  Definitions.

    (a) These are the definitions for terms used in this part. 
Different definitions may be found in Federal statutes or regulations 
that apply more specifically to particular program or activities.
    (b) The terms direct Federal financial assistance, Federal 
financial assistance provided directly, direct funding, and directly 
funded mean that the government or a pass-through entity (under this 
part) selects the provider and either purchases services from that 
provider (e.g., via a contract) or awards funds to that provider to 
carry out a service (e.g., via grant or cooperative agreement). In 
general, Federal financial assistance shall be treated as direct, 
unless it meets the definition of ``indirect Federal financial 
assistance'' or ``Federal financial assistance provided indirectly.''
    (c) The term indirect Federal financial assistance or Federal 
financial assistance provided indirectly means that the choice of the 
service provider is placed in the hands of the beneficiary, and the 
cost of that service is paid through a voucher, certificate, or other 
similar means of government-funded payment.
    (1) Federal financial assistance provided to an organization is 
considered indirect when:
    (i) The Government program through which the beneficiary receives 
the voucher, certificate, or other similar means of Government-funded 
payment is neutral toward religion;
    (ii) The organization receives the assistance as a result of a 
decision of the beneficiary, not a decision of the government; and
    (iii) The beneficiary has at least one adequate secular option for 
the use of the voucher, certificate, or other similar means of 
Government-funded payment.
    (2) The recipients of sub-grants that receive Federal financial 
assistance through State-administered programs are not considered 
recipients of ``indirect Federal financial assistance'' [or recipients 
of ``Federal funds provided indirectly''] as those terms are used in 
this part.
    (d) Pass-through entity means a non-Federal entity that provides a 
subaward to a subrecipient to carry out part of a Federal program.
    (e) Recipient means a non-Federal entity that receives a Federal 
award directly from a Federal awarding agency to carry out an activity 
under a Federal program. The term recipient does not include 
subrecipients.


Sec.  87.2  Applicability.

    This part applies to grants awarded in HHS social service programs 
governed by either the Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements at 45 CFR part 75 or Block Grant 
regulations at 45 CFR part 96, except as provided in paragraphs (a) and 
(b) of this section.
    (a) Discretionary grants. This part is not applicable to the 
discretionary grant programs that are governed Substance Abuse and 
Mental Health Services Administration (SAMHSA) Charitable Choice 
regulations found at 42 CFR part 54a. This part is also not applicable 
to discretionary grant programs that are governed by the Community 
Services Block Grant (CSBG) Charitable Choice regulations at 45 CFR 
part 1050, with the exception of Sec.  87.1 and Sec.  87.3(i) through 
(l) which do apply to such CSBG discretionary grants. Discretionary 
grants authorized by the Child Care and Development Block Grant Act are 
also not governed by this part.
    (b) Formula and block grants. This part does not apply to non-
discretionary and block grant programs governed by the SAMHSA 
Charitable Choice regulations found at 42 CFR part 54, or the Temporary 
Assistance for Needy Families (TANF) Charitable Choice regulations at 
45 CFR part 260. Block grants governed by the CSBG Charitable Choice 
regulations at 45 CFR part 1050 are not subject to this part, with the 
exception that Sec.  87.1 and Sec.  87.3(i) through (l) do apply to 
such CSBG block grants. This part is not applicable to Child Care and 
Development Block Grants governed by 45 CFR part 98.


Sec.  87.3  Grants.

    (a) Faith-based or religious organizations are eligible, on the 
same basis as any other organization, to participate in any HHS 
awarding agency program for which they are otherwise eligible. Neither 
the HHS awarding agency, nor any State or local government and other 
pass-through entity receiving funds under any HHS awarding agency 
program shall, in the selection of service providers, discriminate for 
or against an organization on the basis of the organization's religious 
character or affiliation. As used in this section, ``program'' refers 
to activities supported by discretionary, formula or block grants.
    (b) Organizations that apply for or receive direct financial 
assistance from an HHS awarding agency may not support or engage in any 
explicitly religious activities (including activities that involve 
overt religious content such

[[Page 19427]]

as worship, religious instruction, or proselytization), as part of the 
programs or services funded with direct financial assistance from the 
HHS awarding agency, or in any other manner prohibited by law. If an 
organization conducts such activities, the activities must be offered 
separately, in time or location, from the programs or services funded 
with direct financial assistance from the HHS awarding agency, and 
participation must be voluntary for beneficiaries of the programs or 
services funded with such assistance. The use of indirect Federal 
financial assistance is not subject to this restriction. Nothing in 
this part restricts HHS's authority under applicable Federal law to 
fund activities, such as the provision of chaplaincy services, that can 
be directly funded by the Government consistent with the Establishment 
Clause.
    (c) A faith-based or religious organization that participates in 
HHS awarding agency-funded programs or services will retain its 
independence from Federal, State, and local governments, and may 
continue to carry out its mission, including the definition, practice, 
and expression of its religious beliefs, provided that it does not use 
direct financial assistance from an HHS awarding agency (including 
through a prime or sub-award) to support or engage in any explicitly 
religious activities (including activities that involve overt religious 
content such as worship, religious instruction, or proselytization). A 
faith-based or religious organization may use space in its facilities 
to provide programs or services funded with financial assistance from 
the HHS awarding agency without removing religious art, icons, 
scriptures, or other religious symbols. In addition, a faith-based or 
religious organization that receives financial assistance from the HHS 
awarding agency retains its authority over its internal governance, and 
it may retain religious terms in its organization's name, select its 
board members on a religious basis, and include religious references in 
its organization's mission statements and other governing documents in 
accordance with all program requirements, statutes, and other 
applicable requirements governing the conduct of HHS funded activities.
    (d) An organization that participates in any programs funded by 
financial assistance from an HHS awarding agency shall not, in 
providing services or in outreach activities related to such services, 
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. 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.
    (e) No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation that is used by an HHS awarding 
agency or a State or local government in administering financial 
assistance from the HHS awarding agency shall require only faith-based 
or religious organizations to provide assurances that they will not use 
monies or property for explicitly religious activities. Any 
restrictions on the use of grant funds shall apply equally to religious 
and non-religious organizations. All organizations that participate in 
HHS awarding agency programs, 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 HHS awarding agency-funded 
activities, including those prohibiting the use of direct financial 
assistance to engage in explicitly religious activities. No grant 
document, agreement, covenant, memorandum of understanding, policy, or 
regulation that is used by the HHS awarding agency or a State or local 
government in administering financial assistance from the HHS awarding 
agency shall disqualify faith-based or religious organizations from 
participating in the HHS awarding agency's programs because such 
organizations are motivated or influenced by religious faith to provide 
social services, or because of their religious character or 
affiliation.
    (f) A faith-based or 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 the faith-based or religious 
organization receives direct or indirect financial assistance from an 
HHS awarding agency. Some HHS awarding agency programs, however, 
contain independent statutory provisions requiring that all recipients 
agree not to discriminate in employment on the basis of religion. 
Accordingly, recipients should consult with the appropriate HHS 
awarding agency program office if they have questions about the scope 
of any applicable requirement.
    (g) In general, the HHS awarding agency does not require that a 
recipient, including a faith-based or religious organization, obtain 
tax-exempt status under section 501(c)(3) of the Internal Revenue Code 
to be eligible for funding under HHS awarding agency programs. Many 
grant programs, however, do require an organization to be a ``nonprofit 
organization'' in order to be eligible for funding. Funding 
announcements and other grant application solicitations that require 
organizations to have nonprofit status will specifically so indicate in 
the eligibility section of the solicitation. In addition, any 
solicitation that requires an organization to maintain tax-exempt 
status will expressly state the statutory authority for requiring such 
status. Recipients should consult with the appropriate HHS awarding 
agency program office to determine the scope of any applicable 
requirements. In HHS awarding agency programs in which an applicant 
must show that it is a nonprofit organization, the applicant may do so 
by any of the following means:
    (1) Proof that the Internal Revenue Service currently recognizes 
the applicant as an organization to which contributions are tax 
deductible under section 501(c)(3) of the Internal Revenue Code;
    (2) A statement from a State or other governmental taxing body or 
the State secretary of State certifying that:
    (i) The organization is a nonprofit organization operating within 
the State; and
    (ii) No part of its net earnings may benefit any private 
shareholder or individual;
    (3) A certified copy of the applicant's certificate of 
incorporation or similar document that clearly establishes the 
nonprofit status of the applicant; or
    (4) Any item described in paragraphs (g)(1) through (3) of this 
section, if that item applies to a State or national parent 
organization, together with a statement by the State or parent 
organization that the applicant is a local nonprofit affiliate.
    (h) If a recipient contributes its own funds in excess of those 
funds required by a matching or grant agreement to supplement HHS 
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

[[Page 19428]]

this section apply irrespective of whether such funds are commingled 
with Federal funds or segregated.
    (i)(1) Faith-based or religious organizations providing social 
services in the United States to beneficiaries under an HHS program 
that is supported by direct Federal financial assistance must give 
written notice to beneficiaries or prospective beneficiaries of certain 
protections. This written notice must be given to beneficiaries prior 
to the time they enroll in the program or receive services from such 
programs. Notice must be given in a manner prescribed by the HHS 
awarding agency. This notice must state that:
    (i) The organization may not discriminate against beneficiaries or 
prospective beneficiaries 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;
    (ii) The organization may not require beneficiaries to attend or 
participate in any explicitly religious activities that are offered by 
the organization, and any participation by beneficiaries in such 
activities must be purely voluntary;
    (iii) The organization must separate in time or location any 
privately funded explicitly religious activities from activities 
supported by direct Federal financial assistance;
    (iv) If a beneficiary or prospective beneficiary objects to the 
religious character of the organization, the organization will 
undertake reasonable efforts to identify and refer the beneficiary to 
an alternative provider to which the beneficiary has no objection; 
however, the organization cannot guarantee that in every instance an 
alternative provider will be available; and
    (v) Beneficiaries or prospective beneficiaries may report 
violations of these protections, including any denials of services or 
benefits that violate these regulations, by contacting or filing a 
written complaint with the HHS awarding entity.
    (2) When the nature of the service provided or exigent 
circumstances make it impracticable to provide such written notice in 
advance of the actual service, service providers must advise 
beneficiaries of their protections at the earliest available 
opportunity.
    (j) If a beneficiary or prospective beneficiary of a social service 
program supported by the HHS awarding agency objects to the religious 
character of an organization that provides services in the United 
States under the program, that organization must promptly undertake 
reasonable efforts to identify and refer the beneficiary to an 
alternative provider to which the beneficiary has no objection. A 
referral may be made to another faith-based or religious organization, 
if the beneficiary has no objection to that provider. But if the 
beneficiary requests a secular provider, and a secular provider is 
available, then a referral must be made to that provider. Except for 
services provided by telephone, internet, or similar means, the 
referral must be to an alternative provider that is in reasonable 
geographic proximity to the organization making the referral and that 
offers services that are similar in substance and quality to those 
offered by the organization. The alternative provider also must have 
the capacity to accept additional beneficiaries.
    (k) When the organization determines that it is unable to identify 
an alternative provider, the organization must promptly notify the 
prime recipient entity from which it has received funds. The prime 
recipient of Federal financial assistance must notify the HHS awarding 
agency when a sub-recipient is unable to identify an alternative 
provider. If the organization is successful in making a referral, it 
shall maintain a record of the referral.
    (l) Decisions about awards of Federal financial assistance must be 
free from political interference or even the appearance of such 
interference and must be made on the basis of merit, not on the basis 
of the religious affiliation, or lack thereof, of a recipient 
organization.
    (m) If a pass-through entity, 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 pass-through entity must 
ensure compliance with the provisions of this part and any implementing 
regulations or guidance by the sub-recipient. If the pass-through 
entity is a non-governmental organization, it retains all other rights 
of a non-governmental organization under the program's statutory and 
regulatory provisions.

PART 1050--CHARITABLE CHOICE UNDER THE COMMUNITY SERVICES BLOCK 
GRANT ACT PROGRAMS

0
50. The authority citation for part 1050 continues to read as follows:

    Authority: 42 U.S.C. 9901 et seq.


0
51. Amend Sec.  1050.3 by revising paragraph (h) to read as follows:


Sec.  1050.3  What conditions apply to the Charitable Choice provisions 
of the CSBG Act?

* * * * *
    (h) If a nongovernmental pass-through entity, acting under a grant, 
contract, or other agreement with the Federal, State or local 
government, is given the authority to select nongovernmental 
organizations to provide services under an applicable program, then the 
intermediate organization must ensure that the service provider 
complies with these Charitable Choice provisions and 45 CFR 87.1 and 
87.3(i) through (l). The pass-through entity retains all other rights 
of a nongovernmental organization under the Charitable Choice 
provisions.

John B. King, Jr.,
Secretary of Education.
    Dated: March 23, 2016.
Jeh Charles Johnson,
Secretary, U.S. Department of Homeland Security.
    Dated: March 25, 2016.
Thomas J. Vilsack,
Secretary, Department of Agriculture.
    Dated: March 22, 2016.
J. Mark Brinkmoeller,
Director, Center for Faith-Based and Community Initiatives, USAID.
Juli[aacute]n Castro,
Secretary, Department of Housing and Urban Development.
    Dated: March 28, 2016.
Loretta E. Lynch,
Attorney General.
Thomas E. Perez,
Secretary of Labor, Department of Labor.
    Dated: March 21, 2016.
Robert D. Snyder,
Chief of Staff, U.S. Department of Veterans Affairs.
    Dated: March 21, 2016.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
    Note: The following appendices will not appear in the Code of 
Federal Regulations.

APPENDIX E--DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT MODEL WRITTEN 
NOTICE OF BENEFICIARY RIGHTS

    Name of Organization:
    Name of Program:
    Contact Information for Program Staff (name, phone number, and 
email address, if appropriate):
    Because this program is supported in whole or in part by direct 
Federal financial assistance from the Federal Government, we are 
required to let you know that:

[[Page 19429]]

     We may not discriminate against you 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;
     We may not require you to attend or participate in any 
explicitly religious activities that are offered by us, and any 
participation by you in these activities must be purely voluntary;
     We must separate, in time or location, any privately 
funded explicitly religious activities from activities supported by 
direct Federal financial assistance;
     If you object to the religious character of our 
organization, we must make reasonable efforts to identify and refer you 
to an alternative provider to which you have no such objection; and
     You may report an organization's violations of these 
protections, including any denial of services or benefits, by 
contacting or filing a written complaint to HUD [or the intermediary, 
if applicable].
    We must give you this written notice before you enroll in our 
program or activity, as required by 24 CFR 5.109.

BENEFICIARY REFERRAL REQUEST

    If you object to receiving services from us based on the religious 
character of our organization, please complete this form and return it 
to the program contact identified above. Your use of this form is 
voluntary.
    If you object to the religious character of our organization, we 
must make reasonable efforts to identify and refer you to an 
alternative provider to which you have no such objection. We cannot 
guarantee, however, that in every instance, an alternative provider 
will be available. With your consent, we will follow up with you or the 
organization to which you are referred to determine whether you have 
contacted that organization.
( ) Please check if you want to be referred to another provider.
    Please provide the following information if you want us to follow 
up with you:
    Your Name:
    Best way to reach you (phone/address/email):
    Please provide the following information if you want us to follow 
up with the provider only.
    Your Name:
    You are permitted to withhold your name, though if you choose to do 
so, we will be unable to follow up with you or the provider about your 
referral.
( ) Please check if you do not want follow-up.

FOR STAFF USE ONLY

    Date of Objection:
    Referral (check one):
( ) Individual was referred to (name of alternative provider and 
contact information):
( ) Individual left without a referral
( ) No alternative provider is available--summarize below what efforts 
you made to identify an alternative (including reaching out to HUD or 
the intermediary, if applicable):
    1. Follow-up date:
( ) Individual contacted alternative provider
( ) Individual did not contact alternative provider
    2. Staff name and initials:
-End of Form-

APPENDIX H--DEPARTMENT OF VETERANS AFFAIRS

OMB No. 2900-0828

Burden Hours: 3840 minutes

Expiration Date: XX/XX/XXXX

MODEL WRITTEN NOTICE OF BENEFICIARY RIGHTS

U.S. DEPARTMENT OF VETERANS AFFAIRS

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

-----------------------------------------------------------------------

    Because this program is supported in whole or in part by financial 
assistance from the Federal Government, we are required to let you know 
that--
     We may not discriminate against you on the basis of 
religion, religious belief, refusal to hold a religious belief, or a 
refusal to attend or participate in a religious practice;
     We may not require you to attend or participate in any 
explicitly religious activities that are offered by us, and any 
participation by you in these activities must be purely voluntary;
     We must separate in time or location any privately funded 
explicitly religious activities from activities supported with direct 
Federal financial assistance;
     If you object to the religious character of our 
organization, we must make reasonable efforts to identify and refer you 
to an alternative provider to which you have no objection, we cannot 
guarantee, however, that in every instance an alternate provider will 
be available; and
     You may report violations of these protections including 
any denials of services or benefits to VA or the [awarding entity].
    We must give you this written notice before you enroll in our 
program or receive services from the program.

-----------------------------------------------------------------------

BENEFICIARY REFERRAL REQUEST

    If you object to receiving services from us based on the religious 
character of our organization, please complete this form and return it 
to the program contact identified above. If you object, we will make 
reasonable efforts to refer you to another service provider. With your 
consent, we will follow up with you or the organization to which you 
were referred to determine whether you contacted that organization.
    Please check all that apply:
( ) I want to be referred to another service provider.
( ) Please follow up with me or the service provider to which I was 
referred.
    Name:
    Best way to reach me (phone/address/email):
( ) Please do not follow up.
    This information will be used by VA National Grant & Per Diem 
Program Office to identify those beneficiaries who object to the 
religious character of the faith-based organization providing services; 
and to provide them with services from another faith-based or community 
organization. Once the beneficiaries complete and submit this form to 
the faith-based organization, then the form will be submitted to VA 
National Grant & Per Diem Program Office, 10770 N. 46th Street, Suite 
C-200 Tampa, FL 33617. The VA National Program Office will notify the 
faith-based organization that the form has been received via email or 
U.S. Mail. This form will be kept on internal file at VA for the 
purpose identifying the beneficiaries' treatment location and for data 
collection/metrics.
    The Paperwork Reduction Act: This information collection is in 
accordance with the clearance requirements of section 3507 of the 
Paperwork Reduction Act of 1995. Public reporting burden for this 
collection of information is estimated to average 2 minutes per 
response, including the time for reviewing instructions, searching 
existing data sources, gathering and maintaining the data needed, and 
completing and reviewing the collection of information. Respondents 
should be aware that notwithstanding any other provision of law, no 
person shall be subject to any penalty for failing to comply with a 
collection of information if it does not display a currently valid

[[Page 19430]]

OMB control number. The purpose of this data collection is to determine 
eligibility for benefits.

    Beneficiary Name (print):
-----------------------------------------------------------------------
Beneficiary Name (sign)
    Date:

APPENDIX I--DEPARTMENT OF HEALTH AND HUMAN SERVICES

Appendix A to the HHS Preamble--Example Notice

Written Notice of Beneficiary Protections

    Name of Organization:
    Name of Program:
    Contact Information for Program Staff (name, phone number, and 
email address, if appropriate): Because this program is supported in 
whole or in part by direct financial assistance from the Federal 
Government, we are required to let you know that--
     We may not discriminate against you on the basis of 
religion, a religious belief, a refusal to hold a religious belief, or 
a refusal to attend or participate in a religious practice;
     We may not require you to attend or participate in any 
explicitly religious activities that are offered by us, and any 
participation by you in these activities must be purely voluntary;
     We must separate in time or location any privately funded 
explicitly religious activities from activities supported with direct 
Federal financial assistance;
     If you object to the religious character of our 
organization, we must make reasonable efforts to identify and refer you 
to an alternative provider to which you have no objection; however, we 
cannot guarantee that in every instance an alternative provider will be 
available; and
     You may report violations of these protections, including 
any denials of services or benefits that violates these rules, by 
contacting or filing a written complaint with [fill in name of awarding 
agency/entity].
    We must give you this notice before you enroll in our program or 
receive services from the program.

Beneficiary Referral Request

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

[FR Doc. 2016-07339 Filed 3-31-16; 8:45 am]
 BILLING CODE 4000-01-P