Charitable Choice Regulations

Tuesday,
September 30, 2003

Part VIII

Department of
Health and Human
Services
42 CFR Parts 54 and 54a
45 CFR Parts 96, 260 and 1050
Charitable Choice Provisions and
Regulations; Final Rules

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

PO 00000

Frm 00001

Fmt 4717

Sfmt 4717

E:\FR\FM\30SER4.SGM

30SER4

56430

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations

DEPARTMENT OF HEALTH AND
HUMAN SERVICES
42 CFR Parts 54 and 54a
45 CFR Part 96
RIN 0930–AA11

Charitable Choice Regulations
Applicable to States Receiving
Substance Abuse Prevention and
Treatment Block Grants, Projects for
Assistance in Transition From
Homelessness Formula Grants, and to
Public and Private Providers Receiving
Discretionary Grant Funding From
SAMHSA for the Provision of
Substance Abuse Services Providing
for Equal Treatment of SAMHSA
Program Participants
AGENCY: Substance Abuse and Mental
Health Services Administration, HHS.
ACTION: Final rule.
SUMMARY: On December 17, 2002, the
Department of Health and Human
Services (HHS) published a Notice of
Proposed Rulemaking (NPRM) to
implement the Charitable Choice
statutory provisions of the Public Health
Service Act, applicable to the Substance
Abuse Prevention and Treatment
(SAPT) Block Grant program, the
Projects for Assistance in Transition
from Homelessness (PATH) formula
grant program, insofar as recipients
provide substance abuse services, and to
SAMHSA discretionary grants for
substance abuse treatment or prevention
services, which are all administered by
the Substance Abuse and Mental Health
Services Administration (SAMHSA) of
the U.S. Department of Health and
Human Services. The Secretary
requested comments on the NPRM and
gave 60 days for individuals to submit
their written comments to the
Department. The Secretary has
considered the comments received
during the open comment period and is
issuing the final regulation in light of
those comments.
EFFECTIVE DATE: October 30, 2003.
FOR FURTHER INFORMATION CONTACT:
Daryl Kade, Associate Administrator for
Planning and Budget, 12C–06 Parklawn
Building, 5600 Fishers Lane, Rockville,
Maryland 20857, telephone (301) 443–
4111.

Background
Section 1955 of the Public Health
Service Act, 42 U.S.C. 300x–65, as
added by the Children’s Health Act of
2000 (Pub. L. 106–310), as well as
sections 581–584 of the Public Health
Service Act, 42 U.S.C. 290kk, et seq., as
added by the Consolidated

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

Appropriations Act (Pub. L. 106–554),
(hereinafter referred to as ‘‘SAMHSA
Charitable Choice provisions’’) set forth
certain provisions which are designed to
give people in need of substance abuse
services a greater choice of SAMHSAsupported substance abuse prevention
and treatment programs. SAMHSA’s
Charitable Choice provisions ensure that
religious organizations are able to
compete on an equal footing for Federal
substance abuse funding administered
by SAMHSA, without impairing the
religious character of such organizations
and without diminishing the religious
freedom of SAMHSA beneficiaries.
These provisions apply to recipients of
the Substance Abuse Prevention and
Treatment (SAPT) Block Grant funds,
the Projects for Assistance in Transition
from Homelessness (PATH) formula
grant funds, and to SAMHSA
discretionary grant funds for substance
abuse prevention and treatment
services.
President Bush has made it one of his
Administration’s top priorities to ensure
that Federal programs are fully open to
faith-based and community groups in a
manner that is consistent with the
Constitution. It is the Administration’s
view that faith-based organizations are
an indispensable part of the social
services network of the United States.
Faith-based organizations, including
places of worship, nonprofit
organizations, and neighborhood
groups, offer myriad social services to
those in need. The SAMHSA Charitable
Choice provisions are consistent with
the Administration’s belief that there
should be an equal opportunity for all
organizations—both faith-based and
nonreligious—to participate as partners
in Federal programs to serve Americans
in need. SAMHSA’s Charitable Choice
statutory provisions were enacted
within the constitutional framework of
government interaction with religious
organizations. The goal of Charitable
Choice is not to support or sponsor
religion, but to ensure fair competition
among providers of services whether
they are public or private, secular or
faith-based.
Purpose of Rule
The SAMHSA Charitable Choice
provisions contain important
protections both for religious
organizations that receive SAMHSA
funding for substance abuse services
and for the individuals who receive
services from such programs. The rule
will work to ensure that SAMHSA
substance abuse programs are open to
all eligible organizations, regardless of
religious character or affiliation, and to
establish clearly the proper uses to

PO 00000

Frm 00002

Fmt 4701

Sfmt 4700

which funds may be put and the
conditions for receipt of funding. The
regulations provide maximum flexibility
to the States and local governments, and
to religious organizations that are
‘‘program participants’’ in implementing
these provisions. In that vein, the final
rules provide that, as part of the
application package they submit for
funding, duly-designated officials from
the States, local governments, and
applicants for SAMHSA discretionary
funding for applicable programs will
assure that they will comply with these
provisions.
Brief Overview of the Rule
The Department is amending the
regulations to add 42 CFR part 54 and
part 54a. Part 54 addresses
implementation of these provisions with
regard to SAMHSA’s Substance Abuse
Prevention and Treatment (SAPT) Block
Grant, 42 U.S.C. 300x–21 to 300x–66,
and to SAMHSA’s Projects for
Assistance in Transition from
Homelessness (PATH) Formula Grants,
42 U.S.C. 290cc–21 to 290cc–35, in
which the State has most of the
responsibility for implementation. Part
54a addresses implementation of these
provisions with regard to SAMHSA’s
discretionary grant programs, 42 U.S.C.
290aa, et seq., in which implementation
responsibility is shared among
SAMHSA, and the States and local
governments as recipients of those
grants.
Response to Comments Received on the
Proposed Rule
The Department received comments
about the Charitable Choice proposed
rule from 62 commenters, as follows:
• 15 comments from 13 States
• 13 comments from faith-based
organizations
• 11 comments from substance abuse
associations and providers
• 10 comments from individuals not
representing particular groups or
organizations
• 8 comments from advocacy groups
and civil rights organizations
• 2 comments from public and State/
local interest groups
• 2 from law firms
• 1 from a Federal agency
In general, comments from the States
and providers centered on the
implementation of Section 54.8 and
Section 54a.8, the alternative services
provisions. Comments from faith-based
organizations, advocacy groups, and
interest groups centered on how to keep
religious activities separated from social
services, and how to safeguard the rights
of both the religious organization and
the program beneficiary.

E:\FR\FM\30SER4.SGM

30SER4

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations
The following is a summary of
comments by issue, and the
Department’s response to those
comments.
Scope. (Secs. 54.1 and 54.1a)
This section of the rules clarifies that
they apply, according to SAMHSA’s
Charitable Choice provisions, only to
awards that pay for substance abuse
prevention and treatment services under
42 U.S.C. 300x–21, et seq., 42 U.S.C.
290cc–21 to 290cc–35, and 42 U.S.C
290aa, et seq. These rules do not apply
to awards under any such authorities for
activities that do not involve the direct
provision of substance abuse services.
Comment: One commenter was
concerned ‘‘about the singling out of
substance abuse services from mental
health services, [perpetuating] the
damaging myth that substance abuse
service are not truly health care
services.’’
Response: SAMHSA’s mental health
programs are not covered by the
Charitable Choice statutory provisions.
However, all of SAMHSA’s programs
are covered by Executive Order 13279,
Equal Protection of the Laws for FaithBased and Community Organizations,
which establishes that all eligible
organizations, including faith-based and
other community organizations are able
to compete on an equal footing for
Federal financial assistance. The
Department is working to ensure that all
its programs, whether substance abuse
or mental health, comply with the
principles set out in this Executive
Order.
Comment: Several commenters
opined that the proposed rule was an
unconstitutional breach of the principle
of separation of church and state,
because it would allow public funds to
be given to ‘‘pervasively sectarian
organizations,’’ contrary to longstanding
judicial precedent.
Response: We do not agree with the
commenters. Religious organizations
that receive direct SAMHSA funds for
substance abuse treatment cannot use
such funds for inherently religious
activities. These organizations must
ensure that religious activities are
separate in time or location from the
treatment services and they must also
ensure that participation in such
religious activities is voluntary.
Furthermore, they are prohibited from
discriminating against a program
beneficiary on the basis of religion, a
religious belief, a refusal to hold a
religious belief, or a refusal to actively
participate in a religious practice.
The Supreme Court’s ‘‘pervasively
sectarian’’ doctrine—which held that
there are certain religious institutions in

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

which religion is so pervasive that no
government aid may be provided to
them, because their performance of even
‘‘secular’’ tasks will be infused with
religious purpose—no longer enjoys the
support of a majority of the Court. Four
Justices expressly abandoned it in
Mitchell v. Helms, 530 U.S. 793, 825–
829 (2000) (plurality opinion), and
Justice O’Connor’s opinion in that case
set forth reasoning that is inconsistent
with its underlying premises, see id. at
857–858 (O’Connor, J., concurring in
judgment, joined by Breyer, J.)
(requiring proof of ‘‘actual diversion of
public support to religious uses’’). Thus,
six members of the Court have rejected
the view that aid provided to
institutions will invariably advance the
institutions’ religious purposes, and that
view is the foundation of the
‘‘pervasively sectarian’’ doctrine. We
therefore believe that when current
precedent is applied to a substance
abuse program, or to the SAMHSA
Charitable Choice provisions,
government may fund all service
providers, without regard to religion
and free of criteria that require the
provider to abandon its religious
expression or character.
Definition of Religious Organization.
(Secs. 54.2 and 54.2a)
In the NPRM, the Department defined
‘‘religious organization’’ as a ‘‘non-profit
religious organization,’’ consistent with
42 U.S.C. 290kk(c)(6). This definition
covers the breadth of organizations that
could potentially apply for federal
funding under the Charitable Choice
Regulations.
Comments: Six commenters requested
a more detailed definition of ‘‘religious
organizations’’ and some offered
suggestions including using the tax code
definition of ‘‘religious organization.’’
The commenters felt it was important to
know to which organizations the
Charitable Choice regulations applied.
Response: Throughout the proposed
rule, we used the term ‘‘religious
organization’’ and the term ‘‘faith-based
organization’’ interchangeably. Neither
the U.S. Constitution nor the relevant
Supreme Court precedents contain a
comprehensive definition of religion or
a religious organization that must be
applied to this rule. Yet, an extensive
body of judicial precedent provides the
practical guidelines that States and
religious organizations need to conform
to the Establishment and the Free
Exercise Clauses of the First
Amendment to the U.S. Constitution. In
addition, following investigation into
the definition provided by the tax code,
the Department determined that the
definition did not serve to provide more

PO 00000

Frm 00003

Fmt 4701

Sfmt 4700

56431

clarity to the definition in the preamble.
Therefore, the Department, in the final
rule, has not further defined that term.
Please note that the Department is
planning to ask organizations to identify
whether they are religious organizations
as part of a survey entitled Survey on
Ensuring Equal Opportunity for
Applicants.
Comment: Several commenters asked
that the final rule provide additional
guidance on how to comply with the
Establishment Clause and that it detail
the scope of religious content that must
be excluded from public funding.
Response: In enacting the Charitable
Choice provisions, Congress did not
include specific statutory provisions
with guidance on how to meet
constitutional requirements. Like
Congress, we do not believe it is
appropriate in this rule to provide either
States or religious organizations with
detailed guidance on how to comply
with the Establishment or Free Exercise
Clauses of the Constitution. States and
faith-based organizations have years of
experience and extensive practice in
following case law and adhering to
judicial precedent to conform to these
provisions. In enacting the SAMHSA
Charitable Choice provision, Congress
sought to conform the law to this
precedent while providing maximum
flexibility to the States in carrying out
statutory requirements. The requirement
in the proposed rule closely mirrors the
statutory provision and we have
retained the identical language of the
proposal in the final rule.
Restriction on Religious Activities by
Organizations that Receive Funding
Directly from SAMHSA. (Secs. 54.2 and
54a.2)
In the NPRM, the Department defined
‘‘inherently religious’’ as including
‘‘worship, proselytization, or
instruction.’’ Faith-based organizations
cannot use Federal funds to support
such activities.
Comment: Many commenters
addressed the issue of what constitutes
‘‘inherently religious activities.’’ Some
groups stated that the definition
provided in the NPRM, of ‘‘worship,
proselytization, or instruction,’’ did not
clarify sufficiently what activities could
be funded by federal funds. They noted
that questions of what constitutes
religious content and the religious
nature of program must be addressed.
Without this clarification, the provision
opens the door to other activities—
including desirable ones such as
providing food and shelter—that may be
undertaken for religiously informed
reasons being ruled ineligible for
SAMHSA funding support.

E:\FR\FM\30SER4.SGM

30SER4

56432

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations

Response: The Charitable Choice
regulation maintains that the
organization’s inherently religious
activities must be kept separate—i.e., in
time or location—in order to prevent the
organization from using some or all of
the SAMHSA funds provided to it to
further its inherently religious activities.
The inherently religious activities must
be funded privately in their entirety.
For example, a church has a contract
with SAMHSA to provide a substance
abuse prevention class. The class is held
in the finished basement of the church,
the same place where the pastor of the
church holds a Bible study group at the
end of the day, when all other classes
have ended. The pastor has extended an
open invitation for anyone who wishes,
to attend the study group. The church
must use private funds to pay for this
Bible study activity. Thus, faith-based
organizations that receive direct
SAMHSA funds must take steps to
separate, in time or location, their
inherently religious activities from the
SAMHSA-funded services that they
offer.
In addition, any participation by a
program beneficiary in inherently
religious activities must be voluntary.
An invitation to participate in an
organization’s religious activities is not
in itself inappropriate. However,
directly funded religious organizations
must be careful to reassure program
beneficiaries that they will receive
services or benefits even if they do not
participate in these activities, and that
their decision will have no bearing on
the services they receive. In short, any
participation by recipients of services in
such religious activities must be
voluntary and understood to be
voluntary.
As some of the commenters noted, it
would be difficult to establish an
acceptable list of all inherently religious
activities. Inevitably, the definition
would fail to include some inherently
religious activities or include certain
activities that are not inherently
religious. Our approach is consistent
with Supreme Court precedent, which
likewise has not comprehensively
defined inherently religious activities.
The Court has explained, however, that
prayer and worship are inherently
religious, but that social services do not
become inherently religious merely
because they are conducted by
individuals who are religiously
motivated to undertake them or view
the activities as a form of ‘‘ministry.’’
Comment: Other commenters were
concerned because the potential for
violating the requirement to separate
religious and non-religious components
of a program is heightened in the area

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

of substance abuse services, which is
sometimes viewed as a spiritual
problem.
Response: The restrictions on
inherently religious activities by
organizations that receive funding
directly from SAMHSA 1 remain the
same as those described in the proposed
rule. The Department agrees that these
activities include worship, religious
instruction, and proselytization. (Other
basic examples include prayer meetings
and devotional studies of sacred texts.)
The right to maintain a group’s religious
character does not include the right to
use government funds to pay for
inherently religious activities or
materials.
Comment: Questions were also raised
about whether 12-step programs or,
specifically, AA programs, are religious
programs.
Response: With regard to the 12-step
and AA meetings, we note that any
inherently religious activities must be
voluntary and must be offered
separately in time or location from the
program that receives direct SAMHSA
funding.
Comment: A commenter stated that
the exclusion of all ‘‘inherently
religious’’ activities from government
funding is flawed, and puts many faithbased organizations in the position of
having to choose either to deny their
core religious perspectives on social
issues or to reject government funds for
their programs that accomplish the
government’s objectives.
Response: This limitation on the use
of the direct funds, which tracks the
SAMHSA Charitable Choice statute, is
not meant to put an organization in the
position of having to deny its religious
perspectives on social issues, or in the
position of having to reject government
funds for its programs that are
consistent with the purposes of the
SAMHSA program. We recognize that
while the government regards services
like feeding the hungry or helping
substance abusers return to their
communities as social services or
secular work, some organizations may
regard these same activities as acts of
mercy, spiritual service, fulfillment of
1 In the Charitable Choice context, the term
‘‘direct’’ funding is used to describe funds that are
provided ‘‘directly’’ by a governmental entity or an
intermediate organization with the same duties as
a governmental entity, as opposed to funds that an
organization receives as the result of the genuine
and independent private choice of a beneficiary. In
other contexts, the term ‘‘direct’’ funding may be
used to refer to those funds that an organization
receives directly from the Federal government (also
known as ‘‘discretionary’’ funding), as opposed to
funding that it receives from a State or local
government (also known as ‘‘indirect’’ or ‘‘block
grant’’ funding). In these proposed regulations, the
term ‘‘direct’’ has the former meaning.

PO 00000

Frm 00004

Fmt 4701

Sfmt 4700

religious duty, good works, or the like.
Therefore, providing social services that
otherwise satisfy the requirements for
funding under a government program—
e.g., providing food for the hungry or
helping substance abusers rejoin their
communities—would constitute an
appropriate use of funds, as long as
government funds are not used to pay
for inherently religious activities such
as prayer and worship.
Comment: Several commenters
recommended that the phrase ‘‘separate
in time or location’’ be changed to
‘‘separate in time and location.’’
According to the commenter, this would
‘‘prevent a religious provider from
completing a service component, and
then moving directly into a prayer
service without notice or a break.’’
Response: The Department has
decided to leave the final regulation as
it was stated in the NPRM. Changing the
regulation in the suggested way would
place an undue burden on the providers
and is not legally necessary. For
example, such a rule would impose an
unnecessarily harsh burden on small
religious organizations, which may have
access to only one location that is
suitable for the provision of SAMHSAfunded services. As to the commenter’s
fear that a provider may move directly
from the service component into a
prayer service without notice or taking
a break, it should be noted that the rule
makes it clear that religious activity
must be separated in time or location
from the SAMHSA-funded services and
participation by a beneficiary must be
voluntary. We believe the rule
adequately addresses this situation.
Equal Treatment for Religious
Organizations. (Sec. 54.3 and 54a.3)
Under SAMHSA’s Charitable Choice
provisions, organizations are eligible to
participate in SAMHSA programs
without regard to their religious
character or affiliation, and
organizations may not be excluded from
the competition for Federal funds
because they are religious. Specifically,
religious organizations are eligible to
compete for funding on the same basis,
and under the same eligibility
requirements, as all other nonprofit
organizations.
Comments: Eleven commenters said
that faith-based providers should be
held to the same program standards that
are applicable to other providers.
Commenters felt that without such a
standard, faith-based organizations
would have an unfair advantage in
providing services, and that the overall
effect would be lower standards of care.
Response: These regulations are
established in accordance with the law

E:\FR\FM\30SER4.SGM

30SER4

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations
to provide evenhanded treatment of
SAMHSA program participants—that is,
to ensure that religious organizations are
not discriminated against on the basis
that the religious organization has a
religious character. These regulations do
not establish a preference for faith-based
organizations and, much like the
Charitable Choice laws, in fact, provide
that ‘‘nothing in these regulations shall
restrict the ability of the Federal
government, or a State or local
government, from applying to religious
organizations the same eligibility
conditions in applicable programs as are
applied to any other nonprofit private
organization.’’
Comment: One commenter felt that
the NPRM failed to distinguish between
‘‘discrimination and the application of
special rules required to protect the
character of religious organizations.’’
Another commenter suggested that the
final rule should also prohibit
discrimination ‘‘in favor of’’ faith-based
organizations. In selecting contractors, a
government entity should not allow a
provider’s religious character to
influence its selection.
Response: According to other
comments received from faith-based
organizations, most groups recognize
that the regulations and the Charitable
Choice laws serve to protect program
recipients and are consistent with the
Establishment Clause. These regulations
do not establish a form of
discrimination or preferential treatment,
but rather deal with the special situation
involved in the funding of religious
organizations. Nothing in the
regulations is intended to preclude
those administering the program from
accommodating religious organizations
in a manner consistent with the
Establishment Clause.
Comment: A couple of commenters,
noting the importance of the equal
treatment provisions, observed that the
proposed rule is consistent with the
statute and strongly supported retention
in the final rule.
Response: We agree with these
comments and have retained similar
language in the final rule.
Comment: One commenter noted that
the provisions equate religious and nonreligious providers and seek to treat
them as equals, thereby failing to
recognize the unique place that religion
has in our society. This commenter
believed that religion should be above
the fray of government funding,
regulation and auditing, not reduced to
it.
Response: This rule does not present
any violation of constitutional churchstate principles. Rather, this rule
governs the conscious decision of a

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

religious organization to administer
regulated activities, by accepting public
funds to do so. Therefore, consistent
with the SAMHSA Charitable Choice
laws, we have retained language that
enables faith-based organizations to
compete on an equal footing for
funding, within the framework of
constitutional church-state guidelines.
This does not in any way denigrate the
special place of religion in the
Constitution or its unique role in
society. As the Supreme Court has
recognized, respect for religious
freedom at times permits (and at times
requires) treating religion on an equal
basis.
Nondiscrimination Against
Beneficiaries. (Sec. 54.7 and 54a.7)
This provision of the NPRM restated
the statutory requirement that programs
receiving federal funding may not
discriminate against program recipients
on the basis of their religion or religious
beliefs or a refusal to actively participate
in a religious practice.
Comment: Many of the commenters
expressed concern over the use of the
word ‘‘active’’ in setting forth the
prohibition from discriminating against
beneficiaries or potential beneficiaries
on the basis of religion, a religious
belief, a refusal to hold a religious
belief, or a refusal to actively participate
in a religious practice. They believed
that the word ‘‘actively’’ implies that
beneficiaries are not protected if they
refuse to passively participate in
religious practices. They also believed
that faith-based organizations could
compel beneficiaries to attend activities
like sermons, prayers, and religious
lectures, or force beneficiaries to bow
their heads or remain standing during
the delivery of proselytizing messages,
religious instruction or worship.
Further, they interpreted the word
‘‘active’’ to allow the delivery of such
messages using facilities and equipment
funded by the government. They
believed this word opens the door
wherein vulnerable clients may be
exposed to inappropriate ‘‘passive’’
religious practices. The commenters
recommended removing the word
‘‘actively’’ from the final regulations.
Response: In enacting the SAMHSA
Charitable Choice provisions, Congress
provided that program participants may
not discriminate against program
beneficiaries ‘‘on the basis of religion, a
religious belief, or a refusal to actively
participate in a religious practice.’’ 42
U.S.C. 300x–65(f). Further, Congress
stipulated that the religious freedom of
beneficiaries may not be diminished
and provided that beneficiaries who
object to the religious character of a

PO 00000

Frm 00005

Fmt 4701

Sfmt 4700

56433

service provider have a right to an
alternative provider. These provisions
are straightforward and are sufficient to
protect the religious freedom of program
beneficiaries. Accordingly, we have
retained the language of the proposed
rule, which is based on Congress’s own
language. We reiterate, however, as
indicated in the rules at sections 54.4
and 54a.4, that inherently religious
activities are not to be made part of a
program that is directly funded by
SAMHSA. Inherently religious
activities, such as prayer and worship,
may only be offered to beneficiaries on
a voluntary basis and must be provided
separately, in time or location.
Comment: The commenters suggested
that we strengthen the provision in this
subsection so clients may not be
coerced, explicitly or tacitly, to
participate in religious activities, or feel
pressured to participate in such
activities. Individuals in need are not
always in a condition to make a
thoughtful and well-considered decision
whether or not to participate in worship
or similar activities offered by a
religious social service provider,
particularly when the individual is in
great need of the service.
Response: We believe that the
provision suffices as written. However,
we will use this opportunity to reaffirm
that a person’s participation in any
religious activities must be entirely
voluntary. Beneficiaries of directly
funded SAMHSA services have the right
not to take part in any religious
practices to which they object.
Therefore, they may, at any time, refuse
to participate in inherently religious
activities. We recommend that States
and organizations help to ensure that
clients and prospective clients have a
clear understanding of the services
offered by an organization by having
literature available to give to the client
which fully explains the services
offered, including any inherently
religious activities, as well as the
individual’s rights.
Comment: One commenter wrote that
the rules should clarify that individuals
who refuse to participate in the
inherently religious activities will not
be excluded from the program and will
not suffer any discrimination in the
administration of the program. Congress
specified that Federal funds may not be
used for religious purposes, but the
rules provide no enforcement
mechanism, so beneficiaries have no
administrative relief if violations occur.
Response: The SAMHSA Charitable
Choice provision explicitly prohibits a
religious organization from
discriminating against a participant on
the basis of religion, religious belief, or

E:\FR\FM\30SER4.SGM

30SER4

56434

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations

refusal to actively participate in a
religious practice. For example, if the
service provider is a faith-based
organization, that organization may not
discriminate against the individual on
account of religion or a religious belief.
In addition, the faith-based organization
may not turn away a beneficiary from
the organization’s program solely
because the beneficiary refuses to
participate in an inherently religious
practice. Hence, this provision ensures
the beneficiary’s right not to take part in
any inherently religious practices to
which he or she objects. The
individual’s participation in an
inherently religious activity must be
entirely voluntary. Likewise, it is well
established that government may not
compel an individual, through material
penalty or loss of public benefit or
advantage, to profess a religious belief
or to observe an inherently religious
practice.
Comment: One commenter wrote that
the proposed rule does not require a
secular alternative. Therefore, it lacks
constitutionally required safeguards for
beneficiaries. Another commenter
suggested that beneficiaries should be
referred to programs to which they have
no religious objection.
Response: The proposed rule
provided that if the applicant or
recipient objects to the religious
character of a SAMHSA service
provider, he or she is entitled to an
alternative provider to which the
individual has no religious objection.
This is in keeping with the SAMHSA
Charitable Choice provisions, which
require that the beneficiary be provided
assistance from ‘‘an alternative
provider.’’ The Charitable Choice statute
does not specify that the alternative
provider needs to be a secular
organization; it need only be a provider
to which the beneficiary has no
objection (unless, of course, the
beneficiary objects to the religious
character of all faith-based providers, in
which case he is entitled to a secular
alternative). We have chosen not to
adopt this suggestion for three reasons.
First, some beneficiaries may prefer an
alternative religious organization, rather
than a secular organization, and we
prefer to provide beneficiaries with as
many choices as possible. Second, the
Charitable Choice statute prohibits
direct funding of inherently religious
activities (which must also be
voluntary), and many faith-based
organizations in any case deliver their
services in a secular manner. As a
result, most beneficiaries do not object
to the religious character of these
organizations, and we do not want to
exclude them as potential providers of

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

service. Third, under the permissive
statutory language that we have
retained, State and local governments
may offer a secular alternative. We
believe States will implement this
requirement in a manner consistent
with their obligation to ensure
compliance with the Establishment
Clause of the First Amendment.
Comment: One commenter would like
us to recognize that religious
organizations and secular organizations
sometimes discriminate on the basis of
sexual orientation or gender identity.
The commenter suggested that we
develop a regulation banning religious,
sexual orientation and/or gender
identity discrimination with Federal or
other public funds.
Response: Religious and secular
organizations alike must follow Federal
civil rights laws prohibiting
discrimination on the bases of race,
color, national origin, gender, age, and
disability. However, the Federal civil
rights laws are silent on discrimination
on the basis of sexual orientation, and
we decline to impose such restrictions
by regulation.
Comment: Several commenters noted
that if religious organizations are
providing program services and
facilities, then they must be in
compliance with the Americans with
Disabilities Act (ADA).
Response: It is beyond the scope of
these regulations to address how various
civil rights laws might apply in all
situations. As noted previously,
organizations providing programs
services and facilities must comply with
Federal civil rights laws to the extent
those laws are applicable. We note that
section 307 of the Americans with
Disabilities Act of 1990 excludes
religious organizations or entities
controlled by religious organization,
including places of worship, from
coverage under the provision that deal
with public accommodations. On the
other hand, there exist a number of
other Federal prohibitions against
discrimination on the basis of disability.
For example, section 504 of the
Rehabilitation Act of 1973, and its
implementing regulations at 45 CFR part
84, prohibit discrimination on the basis
of disability in programs or activities
receiving Federal financial assistance.
Religious Character and Independence.
(Sec. 54.5 and 54a.5)
Sections 54.5 and 54a.5 of the final
rule clarify that a religious organization
that participates in the SAMHSA
program retains its independence from
Federal, State, and local governments,
provided that it does not use direct
SAMHSA funds to support inherently

PO 00000

Frm 00006

Fmt 4701

Sfmt 4700

religious activities. It may continue to
carry out its mission, including the
definition, practice, and expression of
its religious beliefs. Among other things,
religious organizations may use their
facilities to provide SAMHSA-funded
services, without removing religious art,
icons, scriptures, or other symbols. In
addition, a religious organization that
receives SAMHSA funds 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.
Comment: A number of commenters
expressed concern that a religious
organization in receipt of SAMHSA
funds does not have to remove the
religious art, icons, scriptures, or other
symbols. The commenters think that
this provision is too broad. It could
result in the organization providing
services in a setting that may well
constitute a ‘‘pervasively sectarian’’
atmosphere in which members of a
different religion may not feel
comfortable or welcome to receive their
SAMHSA-funded benefits. For example,
the organization could conduct the
government-funded program in a
chapel, leading to a reasonable
misperception of government
endorsement of or support for religion.
Response: The SAMHSA Charitable
Choice provisions impose on the
government a duty not to intrude into
the institutional autonomy of religious
organizations. Specifically, each
participating faith-based organization in
receipt of SAMHSA funds ‘‘shall’’ retain
its independence from Federal, State
and local governments. This
independence includes control over the
definition, development, practice, and
expression of its religious beliefs. In
addition, the statutes expressly prohibit
State, Federal, and local governments
from requiring a religious organization
to alter its form of internal governance
or remove religious art, icons, scripture,
or other symbols in order to be eligible
to receive directly funded SAMHSA
funds to provide services to
beneficiaries. And, it should be noted
that, if the beneficiary objects to the
religious character of the organization,
then he or she is entitled to receive the
service from an alternate provider to
which the beneficiary has no religious
objection.
Finally, as noted above, the Supreme
Court’s ‘‘pervasively sectarian’’ doctrine
no longer enjoys the support of a
majority of the Court. See Mitchell v.
Helms, 530 U.S. 793, 825–829 (2000)
(plurality opinion); id. at 857–858
(O’Connor, J., concurring in judgment,

E:\FR\FM\30SER4.SGM

30SER4

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations
joined by Breyer, J.) (requiring proof of
‘‘actual diversion of public support to
religious uses’’). Accordingly, the
Department (like Congress) does not
believe that the Constitution requires
exclusion of organizations that are
governed by religious organizations or
whose facilities contain religious
symbols.
Employment Practices. (Sec. 54.6 and
54a.6)
The NPRM restated the SAMHSA’s
Charitable Choice provisions, which
provide that a religious organization’s
exemption provided under section 702
of the Civil Rights Act of 1964 regarding
employment practices shall not be
affected by its participation in, or
receipt of funds from, a designated
program. To the extent that 42 U.S.C.
300x–57(a)(2) or 42 U.S.C. 290cc–
33(a)(2) imposes religious
nondiscrimination requirements on the
employment practices of program
participants, the NPRM clarifies that
such requirements do not apply to
program participants that demonstrate
that these requirements would
substantially burden their exercise of
religion.
Comments: Numerous comments
were received dealing with the
employment practices provisions in the
proposed rule. Nineteen out of 23
comments made about this provision
supported the removal of the provision
from the final rule. Many commenters
felt that the Religious Freedom
Restoration Act (RFRA) was an
inappropriate basis for the regulation
and did not provide the statutory
authority to overrule the broad antidiscrimination provision in SAMHSA’s
authorizing legislation for the Substance
Abuse Prevention and Treatment
(SAPT) block grant in the Public Health
Service Act. They argued that religious
groups would not be substantially
burdened by having to comply with
these requirements, and that, in any
event, the government had a compelling
interest in imposing the requirements.
Response: The Department does not
agree with the comments. We believe
that, in addition to being a reasonable
construction of the SAMHSA Charitable
Choice provision, the inapplicability of
the discrimination provisions of the
SAPT block grant program and the
PATH program, 42 U.S.C. 300x–57(a)(2)
and 42 U.S.C. 290cc–33(a)(2), to
religious organizations that demonstrate
a substantial burden on their exercise of
religion follows from RFRA. Under
RFRA, the government may not impose
legal requirements that substantially
burden a grantee’s exercise of religion
unless doing so is the least restrictive

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

means of furthering a compelling
government interest. 42 U.S.C. 2000bb–
1(b). Accordingly, where a religious
entity establishes that its exercise of
religion would be substantially
burdened by the religious
nondiscrimination provisions cited
above, RFRA supercedes those statutory
requirements, thus exempting the
religious entity therefrom, unless the
Department has a compelling interest in
enforcing them.
The Department’s rationale in this
regard is set out in the NPRM. See 67
FR 77350, 77351–77352 (Dec. 17, 2002).
Several points, however, merit
elaboration. First, the Department
recognizes that not all religious
organizations that might receive funding
under the SAPT block grant and PATH
programs would be substantially
burdened by the application of the
religious nondiscrimination
requirements of 42 U.S.C. 300x–57(a)(2)
and 42 U.S.C. 290cc–33(a)(2). For
example, some religious organizations
are concerned only with their
employees’ commitment to providing
social services, not with any profession
of faith, and thus do not consider
religion in hiring people to perform
such services. Such groups would not
likely be burdened by having to comply
with a religious nondiscrimination
requirement. Many other religious
organizations, however, consider
religious faith critical to all of their
employees’ activities, including those
that involve providing governmentfunded social services to the public. For
these groups, imposition of a religious
nondiscrimination requirement can
impose a particularly harsh burden. As
Justice Brennan explained:
‘‘Determining that certain activities are
in furtherance of an organization’s
religious mission, and that only those
committed to that mission should
conduct them, is * * * a means by
which a religious community defines
itself.’’ Corporation of Presiding Bishop
v. Amos, 483 U.S. 327, 342 (1987)
(Brennan, J., concurring). For groups
that deem religious faith an important
part of their self-definition, having to
make employment decisions without
regard to their faith would substantially
alter the charter of their organization.
In recognition that the religious
nondiscrimination requirements of 42
U.S.C. 300x–57(a)(2) and 42 U.S.C.
290cc–33(a)(2) would substantially
burden some but not other grantees, the
RFRA exemption is limited to those
organizations that are able to certify
that: (1) They sincerely believe that
employing individuals of a particular
religion is important to the definition
and maintenance of their religious

PO 00000

Frm 00007

Fmt 4701

Sfmt 4700

56435

identity, autonomy, and/or communal
religious exercise; (2) they make
employment decisions on a religious
basis in analogous programs; (3) the
grant in question would materially
affect their ability to provide the type of
services in question; and (4) providing
the services in question is expressive of
their values or mission. We disagree,
however, with some commenters’
assertion that no religious organization
would be substantially burdened by
having to make hiring decisions without
regard to their faith while participating
in the SAMHSA program.
Second, the fact that SAMHSA is a
funding program does not mean that the
Federal government necessarily
possesses a ‘‘compelling interest’’ in
imposing religious nondiscrimination
provisions upon the employment
practices of participating religious
organizations. To begin with, religious
organizations’ exemption from the
religious nondiscrimination
requirements of Title VII (the
availability of that exemption is
expressly clarified by the SAMHSA
Charitable Choice law, 42 U.S.C. 290kk–
1(e), 300x–65(d)(2)) reflects Congress’s
judgment that employment decisions
are an important component of religious
organizations’ autonomy, and that the
government has a much stronger interest
in applying a religious
nondiscrimination requirement to
secular organizations than to religious
organizations’many of whose existence
depends upon their ability to define
themselves on a religious basis.
Moreover, many federal funding
programs—including the discretionary
grant programs administered by the
Secretary under Title V of the Public
Health Service Act—do not impose a
religious nondiscrimination
requirement upon the employment
practices of grantees. Rather, Congress’s
application of religious
nondiscrimination requirements in the
employment context is quite selective,
which makes it difficult to regard the
government as having a compelling
interest in imposing such a requirement
in this particular context. Finally,
secular entities that administer federally
funded social programs generally are
not barred from considering their
ideologies in making employment
decisions. In this respect, allowing faithbased grantees to consider religious
motivation in hiring simply levels the
playing field, allowing them to consider
ideology on the same basis as other
organizations.
Comment: Several commenters agreed
that the proposed rule regarding the
Title VII exemption reflects a proper
understanding of civil rights law. When

E:\FR\FM\30SER4.SGM

30SER4

56436

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations

a faith-based organization receives
government funding and hires staff on a
religious basis, the Federal civil rights
law is not violated.
Response: We agree with these
commenters and have retained the
identical language in the final rule. This
statutory and regulatory provision of
Charitable Choice does not change the
status quo; it simply clarifies
applicability of the Title VII exemption
under the SAMHSA Charitable Choice
law.
Comment: Several commenters
believed that the proposed rule allows
employment discrimination in violation
of constitutional prohibitions and court
decisions that have struck down
government-funded discrimination. One
commenter explicitly stated that this
provision runs afoul of the ‘‘noreligious-tests clause’’ of the
Constitution under which ‘‘no religious
test shall ever be required as a
qualification to any office or public trust
under the United States.’’ Other
commenters stated that the exemption
from Title VII of the Civil Rights Act
was never intended to permit a religious
organization to favor co-religionists in
hiring when using Federal funds to pay
the salaries and wages of employees
who are carrying out governmentfunded social service programs.
Response: We do not agree that these
comments accurately portray the law. In
1972, Congress broadened section 702(a)
of the Civil Rights Act to exempt
religious organizations from the
religious nondiscrimination provisions
of Title VII, regardless of the nature of
the job at issue. The broader, amended
provision was unanimously upheld by
the Supreme Court in 1987 and, absent
a specific statutory repeal, remains
applicable even when religious
organizations are delivering federally
funded social services. Thus, although
section 702(a) of the Civil Rights Act of
1964 is permissive—it does not require
religious staffing—religious
organizations may consider their faith in
making employment decisions without
running afoul of Title VII. The effect of
the explicit preservation of the Title VII
exemption is no different from the rule
that applies in other programs that are
simply silent on the question of the
applicability of Title VII in the funding
context, and, as noted above, there are
many such programs. Concerning the
commenters’ suggestion that allowing a
federally funded organization to
consider faith in making employment
decisions would violate the ‘‘no
religious test’’ clause of the
Constitution, we would simply note that
it is well settled that the receipt of
government funds does not convert the

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

employment decisions of private
institutions into ‘‘state action’’ that is
subject to constitutional restrictions
such as the ‘‘no religious test’’ clause.
Comment: Several commenters noted
that the clause—‘‘nothing in this section
shall be construed to modify or affect
any State law or regulation that relates
to discrimination in employment’’—did
not address local laws and asked us to
clarify in the final rule that the
Charitable Choice provisions do not
preempt any State or local law that
relates to discrimination in
employment.
Response: This provision of the
SAMHSA Charitable Choice law
preserves a ‘‘Federal or State law or
regulation that relates to discrimination
in employment.’’ 42 U.S.C. 290kk–1(e).
In contrast, 42 U.S.C. 290kk–1(d)(1)
provides that a religious organization
participating in the program ‘‘shall
retain its independence from Federal,
State, and local government * * *’’
Congress thus was cognizant of the
distinction between State and local law
in drafting the SAMHSA Charitable
Choice statute, and we believe that the
existing language faithfully implements
the statute.
Comment: One commenter wanted
the Department to clarify under section
54.6(b) that the certification that is
required to show that its religious
exercise would be substantially
burdened by the nondiscrimination
requirements under the SAPT block
grant and PATH programs should be
submitted to SAMHSA.
Response: The Department does not
believe that it is necessary for the
subgrantees to provide such
documentation to SAMHSA unless
SAMHSA requests it, as indicated
previously in the proposed rule which
is now finalized.
Comment: One commenter pointed
out that oversight of the employment
practices would generate an
administrative burden on the States.
Response: The Department recognizes
this possibility of generating an
administrative burden on the States and
has included extensive flexibility for the
implementation of the provision by the
States.
Notice, Referral, and Provision of
Alternative Services. (Sec. 54.8 and
54a.8)
If an otherwise eligible program
beneficiary or prospective beneficiary
objects to the religious character of a
program participant, within a
reasonable period of time after the date
of such objection, such program
beneficiary must be referred to an
alternative provider that has the

PO 00000

Frm 00008

Fmt 4701

Sfmt 4700

capacity to provide the services, is
accessible, and is of at least equal value
as the provider to which the beneficiary
objected. Under SAMHSA’s Charitable
Choice provisions, the responsibility for
providing the alternative services rests
with the ‘‘the appropriate Federal, State,
or local government’’ that administers
the program or is a program participant.
The NPRM proposed that States provide
and fund alternative services for SAPT
block grant-funded beneficiaries and
PATH program beneficiaries who have
objected to the religious character of a
program participant. States may use
SAPT block grant and PATH grant
funding to provide and fund such
services from a provider to which the
program beneficiaries do not have a
religious objection, in a manner
consistent with State law and policy.
With respect to SAMHSA
discretionary grant funding, when
SAMHSA provides funding directly to
another unit of government, such as a
State or local government, that unit of
government is responsible for providing
the alternative services. When SAMHSA
provides discretionary grant funding
directly to nongovernmental
organizations, SAMHSA is the
responsible unit of government.
Comments: All thirteen States and
eleven providers that commented on the
NPRM urged more flexibility for the
States and providers in implementing
these provisions. Fourteen of these
commenters had concerns about the
administrative and fiscal burden
occasioned by this provision. Several
were concerned that an ‘‘essentially
duplicate system of care’’ would have to
be developed, ‘‘with the faith-based
community in charge of deciding, by
default, what services must be
duplicated in order to assure that the
beneficiary has freedom of choice.’’
Others appreciated the discretion we
had provided to States, but were
concerned that the expectation of
alternative services may expose States to
litigation based on availability and how
they define comparable services.
Finally, one State commenter
recommended that ‘‘[I]f SAMHSA is
interested in minimizing administrative
costs, I recommend that these
requirements be eliminated in lieu of
existing State requirements.’’
At the same time, other commenters
believed that the proposed rule left too
much discretion to States to define the
terms ‘‘reasonably accessible,’’ ‘‘a
reasonable period of time,’’
‘‘comparable,’’ ‘‘capacity,’’ and ‘‘value
that is not less than.’’ These commenters
asked that we either provide Federal
definitions for these terms, or establish
baseline parameters or guidelines.

E:\FR\FM\30SER4.SGM

30SER4

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations
Response: After carefully considering
these concerns, the Department agrees
that it is important to provide flexibility
to the States in determining how to
establish procedures for notice, referral,
and provision of alternative services. As
noted in the NPRM, the Department
recognizes that a range of methods that
fulfill these responsibilities is possible.
Therefore, the Department does not seek
to prescribe a single, inflexible referral
and alternative provider system that
States must adopt when States are the
responsible units of government. The
Department believes it is vital to any
effective implementation of these
provisions that SAMHSA, State and
local agencies, and religious
organizations work cooperatively to
develop systems to comply with these
provisions, monitor compliance,
identify compliance problems and take
necessary corrective actions.
SAMHSA’s Charitable Choice
provisions apply to three different
granting situations. The first is when the
State itself is the recipient of SAPT
block grant and PATH formula funds or
when the States receive a discretionary
grant from SAMHSA. Because of the
broad range of State circumstances,
coupled with the States’ proven success
in establishing systems to address such
circumstances, States may develop
referral and alternative service systems
that are compatible with the treatment
and prevention systems they administer,
including reasonably defining and
applying the terms ‘‘reasonably
accessible,’’ ‘‘a reasonable period of
time,’’ ‘‘comparable,’’ ‘‘capacity,’’ and
‘‘value that is not less than.’’ SAMHSA
will work with the States as they
develop their implementation plans,
providing technical assistance and
opportunities for the States to discuss
implementation approaches with one
another. Allowing the States such
discretion will not require the
development of duplicate systems and
will reduce regulatory and paperwork
burden.
The second situation is when
SAMHSA awards discretionary funds
directly to local governments. The third
is when SAMHSA awards discretionary
funds directly to faith-based nonprofit
organizations. The unit of government
responsible for providing and funding
alternative services in these situations is
defined at section 54a.8 as follows:
‘‘With respect to SAMHSA discretionary
programs, for purposes of determining what
is the appropriate Federal, State, or local
government, the following principle shall
apply: When SAMHSA provides funding
directly to another unit of government, such
as a State or local government, that unit of
government is responsible for providing the

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

alternative services. When SAMHSA
provides discretionary grant funding directly
to a nongovernmental organization,
SAMHSA is the responsible unit of
government.’’

Therefore, in the second
circumstance, when SAMHSA awards
discretionary funds to local
governments, local governments are
responsible for providing alternative
services for program beneficiaries who
may object to a faith-based program they
are funding with SAMHSA funds.
SAMHSA expects that local
governments will work with the States
and comply with the implementation
approach adopted by their respective
States.
In the third circumstance—when
SAMHSA provides discretionary funds
directly to faith-based organizations—
SAMHSA will work with those
organizations and consult with the
States to ensure that program
beneficiaries are provided alternative
services in accordance with the
statutory and regulatory requirements.
As provided in the rule in section
54a.8(e), if there are no publicly funded
alternatives available for the beneficiary,
these grantees must contract with an
alternative provider for the provision of
such services, and the grantee may use
the SAMHSA grant funds to finance the
services. Should a grantee incur
unanticipated additional costs as a
result of providing alternative services
beyond the discretionary grants
awarded, the grantee may request
reimbursement of those funds from
SAMHSA, as the responsible unit of
government, in the form of a request for
supplemental funds to cover
unanticipated costs. Based the past
experience of other HHS agencies in
implementing similar provisions,
objections to the religious character of
program participants have been rare,
which is perhaps unsurprising in light
of the fact that beneficiaries may not be
required to participate in any inherently
religious activities as a condition of
receiving services. Thus, SAMHSA
expects that such an occurrence will be
infrequent and only occur when the
referral is to a private provider. While
the specific circumstances will vary
from jurisdiction to jurisdiction, we
anticipate that in many cases, referrals
will be made to programs that are
funded, at least in part, from public
funds, and therefore the burden of this
requirement will not be substantial.
Comment: SAMHSA posed certain
questions to commenters in the Federal
Register Notice about what commenters
thought constituted ‘‘reasonable period
of time,’’ ‘‘reasonably accessible
services,’’ and what the best

PO 00000

Frm 00009

Fmt 4701

Sfmt 4700

56437

understanding of ‘‘services that* * *
have a value that is not less than the
value of [services that would otherwise
be provided].’’
Commenters provided the following
input in response:
• With regard to ‘‘reasonable period
of time,’’ commenters suggested this
would be anywhere from 24 hours after
a request for alternative services to 4–6
weeks after such request. Most
commenters reiterated that the States
should determine what ‘‘a reasonable
period of time’’ is.
• With regard to what ‘‘reasonably
accessible services’’ are, commenters
urged a focus on comparable level of
care and reasonable accommodation.
They noted that in large cities it may be
easy to effect a referral to an alternative
provider, but in smaller communities
and rural areas, there may be only one
existing licensed provider in the county.
• With regard to what constitutes
equivalent services, commenters
recommended that this phrase be
interpreted to mean the value of the
services themselves, without regard to
the administrative costs involved.
Response: Although commenters
made many good suggestions for
defining these terms, the wide variety of
responses to the questions SAMHSA
raised underscores the need for State
flexibility and the need for
Departmental restraint in defining terms
or regulating procedures for referral and
provision of alternative services.
Comment: Commenters asked for
clarification of ‘‘how these recipients
would fund and deliver services from
alternative providers.’’ Another
commenter offered the opinion that
States would need to establish formal
set-asides within discretionary grants to
cover alternative placements.
Response: As indicated above, the
regulation (consistent with the statute)
requires the ‘‘responsible unit of
government’’ to provide and fund
alternative services. With regard to the
suggestion for set-asides, Federal cost
policies do not permit grantees to have
set-aside/contingency dollars.
Comment: Several commenters were
concerned about the ‘‘excessive burden
on the treatment program to monitor the
action of an individual who has not
been admitted to its program and for
whom the program is not receiving
funding.’’ In particular, several
commenters noted ‘‘faith-based
organizations should not bear the
burden of securing and financing
alternative services.’’
Response: SAMHSA considered these
comments carefully in finalizing this
rule, and has concluded that, when
SAMHSA is the responsible unit of

E:\FR\FM\30SER4.SGM

30SER4

56438

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations

government (that awards discretionary
funds directly to a religious
organization), it will follow the rule that
applies to the other granting
circumstances—that is, the grantee
(which may be the State, the local
government, or in this instance, the
religious organization) will use grant
funds, if necessary, to cover the cost of
securing and providing alternative
services. As indicated earlier, SAMHSA
anticipates that in many cases, referrals
will be made to programs that are
funded, at least in part, from public
funds, and therefore the burden of this
requirement will not be substantial.
Comment: With regard to the program
participant’s responsibility to refer
objecting program beneficiaries to
alternative services, one commenter
recommended that a ‘‘gateway’’ referral
system that takes place before a
beneficiary arrives at any provider be
established and administered by the
government. In the same vein, another
commenter suggested that referral take
place through ‘‘coordination that
result[s] in referrals not requiring optouts.’’
Response: State and local
governments have the flexibility to
implement the requirement as they see
fit so long as they meet all of the
statutory and regulatory requirements.
The Department is not mandating any
one method.
Comment: Several commenters noted
that the requirement to provide
alternative services places additional
burdens on State agencies, when the
States are the responsible units of
government, especially in rural areas. A
faith-based organization may be selected
as the service provider for a particular
geographic area. Ensuring that an
alternative service provider is available
could require the State to make dual sets
of services available, and thus increase
costs. As a result, many of these
commenters suggested that the
requirement to provide alternative
services is unreasonable. Some
suggested that exceptions be permitted
or that the requirement should be
eliminated. Others noted that with this
requirement, some States may choose
not to contract out or provide
community-based services, especially in
rural areas.
Response: SAMHSA’s Charitable
Choice provisions impose the
requirement to provide accessible and
comparable assistance or services
within a reasonable period of time to an
individual who has an objection to the
religious character of an organization. In
the proposed rule, with the exception of
requiring notice and referral, we did not
expand or enhance the rights of

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

beneficiaries to assistance from an
alternative provider, but simply
clarified this statutory right. We also left
substantial discretion to the States to
define terms and carry out the statutory
objectives. We are not free, however, to
eliminate the statutory requirement to
provide alternative services.
We also believe that commenters may
have potentially overestimated the
impact and potential burden of this
requirement. Through the Department’s
Administration on Children and
Families’ TANF program, many faithbased organizations have a long history
of contracting with State and local
governments to address the secular
purpose of providing assistance and
services to needy families. In this
situation, few beneficiaries have
objected to the religious nature of these
providers, which is perhaps
unsurprising in light of the fact that,
under TANF’s Charitable Choice
provisions, any inherently religious
activities must be offered separately and
on a voluntary basis. We also do not
believe that States will decide not to
contract out or provide communitybased services in order to avoid this
requirement. Since the statutory
Charitable Choice requirements have
applied since 2000, we believe that
State and local governments are
providing alternative services, in
compliance with the law, and
discovering and enhancing procedures
that efficiently and effectively address
this requirement.
Comment: Several provider
commenters were concerned that faithbased programs receiving SAMHSA
funding ‘‘should conform to principles
of religious tolerance and
inclusiveness.’’
Response: All recipients of SAMHSA
funding are required to comply with
Sections 54.7 and 54a.7, dealing with
nondiscrimination toward program
beneficiaries.
Comment: One State commenter was
concerned about having to provide
notice and alternative services to
beneficiaries in SAMHSA-funded
substance abuse prevention programs.
Response: SAMHSA appreciates this
concern and recommends that grantees
contact their State’s substance abuse
agency to secure information about
alternative prevention services in the
State. Many States’ governors have used
SAMHSA State Incentive Grants (SIGs)
to coordinate their prevention systems,
and, as a result, will have
comprehensive information on
prevention services available in
particular areas.
Comment: One State offered
implementation suggestions, including

PO 00000

Frm 00010

Fmt 4701

Sfmt 4700

that ‘‘the provision of alternative
services could be addressed in contract
language through a requirement that
providers identify services available for
referral.’’ Several States noted that they
already provide beneficiaries a choice of
providers.
Response: The Department hopes that
States will work with each other to
identify effective implementation
approaches, such as those noted above.
We decline, however, to impose this
particular requirement across the board.
Notice
The SAMHSA Charitable Choice
provisions require SAMHSA-funded
religious organizations providing
substance abuse services, public
agencies that refer individuals to such
SAMHSA-funded programs, and the
appropriate Federal, State, or local
governments that administer these
SAMHSA-funded programs to ensure
that notice is provided to beneficiaries
and prospective beneficiaries regarding
alternative services. It further requires
the program participant to notify the
responsible unit of government of all
such referrals.
Comments: Several commenters
recommended that notice of availability
of alternative providers be given to all
beneficiaries at the outset.
Response: Below is a model notice
that grantees may wish to use:
Model Notice to Individuals Receiving
Substance Abuse Services
No provider of substance abuse services
receiving Federal funds from the U.S.
Substance Abuse and Mental Health Services
Administration, including this organization,
may discriminate against you on the basis of
religion, a religious belief, a refusal to hold
a religious belief, or a refusal to actively
participate in a religious practice.
If you object to the religious character of
this organization, Federal law gives you the
right to a referral to another provider of
substance abuse services to which you have
no religious objection. The referral, and your
receipt of alternative services, must occur
within a reasonable period of time after you
request them. The alternative provider must
be accessible to you and have the capacity to
provide substance abuse services. The
services provided to you by the alternative
provider must be of a value not less than the
value of the services you would have
received from this organization.

In addition, section 54.8(b) and
54a.8(b) of the regulation has been
changed to add the word, ‘‘all’’ before
‘‘program beneficiaries’’ as follows:
Program participants, public agencies that
refer individuals to designated programs, and
the appropriate Federal, State, or local
governments that administer designated
programs or are program participants shall
ensure that notice is provided to all program

E:\FR\FM\30SER4.SGM

30SER4

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations
beneficiaries or prospective program
beneficiaries of their rights under this
section. (Emphasis added.)

SAMHSA assumes that providers will
be able to provide such notice when
program beneficiaries can understand
their rights—which may be at the outset
of services.
Comment: Other commenters
recommended States should be given
latitude to comply with the Notice
requirements.
Response: The Department agrees.
SAMHSA is providing a ‘‘model notice’’
to the States and other grantees, but is
not requiring them to use this notice.
Comment: Another State commenter
recommended that program participant
notify the State ‘‘or responsible unit of
government’’ of such referral.
Response: The Department will insert
the suggested language, ‘‘or responsible
unit of government’’ in 54.8(c)(4).
Referral to Alternative Provider
If an individual objects to the
religious character of the substance
abuse treatment or prevention program
from which they are receiving services,
the religious organization (program
participant) must refer the individual,
within a reasonable period of time, to
another provider of substance abuse
services. The requirements regarding
referral are set out in sections 54.8(c)
and 54a.8(c).
Comments: Several commenters felt
that the government should require that
a non-religious alternative be available.
On this point, several asked whether a
program beneficiary had to be referred
to a religious provider if that is the only
alternative.
Response: The proposed rule at
sections 54.8 and 54a.8 provided that if
the applicant or recipient objects to the
religious character of a SAMHSA
service provider, he or she is entitled to
an alternative provider to which the
individual has no religious objection.
This is in keeping with the SAMHSA
Charitable Choice provisions at sections
582(f) and 1955–(e) of the Public Health
Service Act, 42 U.S.C. 290kk–1(f) and
300xx–65(e), which require States to
provide the individual with assistance
from ‘‘an alternative provider.’’ Hence,
the alternative provider could, but does
not have to be, a secular alternative
(unless, of course, the beneficiary
objects to the religious character of all
faith-based providers). We have retained
the wording of this provision.
Comment: One commenter wrote that
the proposed rule does not require a
secular alternative. Therefore, it lacks
constitutionally required safeguards for
beneficiaries.

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

Response: The Charitable Choice
statute does not specify that the
alternative provider needs to be a
secular organization. We have chosen
not to adopt this suggestion for three
reasons. First, the purpose of the statute
is to respect beneficiary choice, and
some beneficiaries may prefer an
alternative religious provider to an
alternative secular provider. Second,
many faith-based organizations deliver
services in a secular manner. As a
result, most beneficiaries will not object
to the religious character of these
organizations, and we do not want to
exclude them as potential providers of
service. Third, under the permissive
statutory language that we have
retained, State and local governments
may offer a secular alternative. We
believe States will implement this
requirement in a manner consistent
with their obligation to ensure
compliance with the Establishment
Clause of the First Amendment.
Comment: Others wanted a more
general requirement that the
government ensure the existence of at
least one alternative service provider to
protect the rights of beneficiaries; on
this point, several States and providers
noted the problem of the availability of
alternative services in a rural setting. In
contrast, one State stressed that the
regulations ‘‘must not require the
establishment of alternative providers
where none currently exist.’’
Response: The Department expects
States, local governments and other
grantees to abide by the statutory and
regulatory requirements with respect to
providing alternative services. We will
work together to ensure compliance. In
addition, we note that the statute
prohibits grantees from using direct
funding for inherently religious
activities, and that any such activities
must be voluntary. These requirements
are sufficient to protect the religious
freedom of beneficiaries.
Comment: Several commenters felt
that the referral responsibility should be
the government’s, rather that the
religious organization’s (as a program
participant).
Response: The Department is relying
on the close cooperation among
SAMHSA, States, providers and
religious organizations to develop
referral systems that are based primarily
on shared responsibility. Religious
organizations can look to the
responsible unit of government for
assistance, including access to
SAMHSA’s treatment facility locator at
http://findtreatment.samhsa.gov to
identify providers in the surrounding
area. See the regulations for further
detail.

PO 00000

Frm 00011

Fmt 4701

Sfmt 4700

56439

Comment: Several commenters,
mainly providers, underscored the
importance of ensuring that the
confidentiality protections, including
those provided in 42 CFR part 2 and
HIPAA, are complied with; others were
concerned, however, that confidentiality
rules would block information sharing
between religious organizations and
secular providers.
Response: The SAMHSA Charitable
Choice laws do not override the
confidentiality laws of 42 CFR part 2
and HIPAA. Therefore, the final
regulations will contain the same
provision from the NPRM in section
54.8(c)(3), as follows:
All referrals shall be made in a manner
consistent with all applicable confidentiality
laws, including, but not limited to, 42 CFR
part 2 (‘‘Confidentiality of Alcohol and Drug
Abuse Patient Records’’).

Comment: Two State commenters
were concerned that SAMHSA’s
Charitable Choice provisions confer a
‘‘special entitlement’’ to certain
beneficiaries to services, similar to that
of the ‘‘priority’’ set-aside populations
currently listed in SAPT block grant
law.
Response: With regard to a ‘‘special
entitlement’’ being created, SAMHSA
agrees with a State commenter who
stated that ‘‘[T]he States can assure that
steps can and will be taken to assure
protection of these rights without
granting religious objectors more
extensive rights than those of the
general population of beneficiaries’’.
* * * [Existing protections are
sufficient.]’’
Fiscal Accountability. (Sec. 54.10 and
54a.10)
The fiscal accountability section of
the regulation provided that religious
organizations receiving SAMHSA
funding would be held to the same
fiscal accountability requirements as
other organizations, including generally
accepted auditing and accounting
principles. Faith-based organizations
would also be required to keep any
federal funds in a separate account from
non-federal funds. Only the segregated
Federal funds are subject to audit by the
government under the SAMHSA
program.
Comment: The Department received
13 comments on the issue of fiscal
accountability. All of the comments
received on this section supported
segregation of funds and strict
adherence to Federal audit and cost
principles and requirements. There was
some concern about the ability of faithbased organizations to maintain separate
accounts.

E:\FR\FM\30SER4.SGM

30SER4

56440

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations

Response: The final rule provides that
religious organizations receiving
SAMHSA discretionary funds will be
subject to audit, just like any other nongovernmental organization receiving
such funds. The faith-based
organization is to use the funds in
accordance with the grant and all
applicable laws and regulations. For
discretionary grants, as provided in 45
CFR 74.26 and 92.26, SAMHSA grantees
are responsible for obtaining audits by
an independent auditor following
generally accepted government auditing
standards, in accordance with
applicable OMB circulars. When the
State is the grantee, the State is
responsible for the appropriate use of its
SAMHSA funds, so the organization (as
the subgrantee) needs to be able to show
to the State and the auditor that it used
the funds for the purpose intended by
the State. This must also be in
accordance with the Single Audit Act
and OMB Circular A–133.
Moreover, HHS is authorized to
conduct any additional audits or
reviews that are warranted, irrespective
of the amount of Federal funds
expended by the grantee annually, in
order to ensure compliance with
program requirements including the
restriction against funding of inherently
religious activities. HHS may determine
that such audits or reviews are
warranted based upon any information
received by the agency that raises an
issue concerning the propriety of
expenditures.
Comment: Several commenters were
concerned about religious organizations
operating as intermediary organizations.
One commenter notes that the
‘‘proposed rule creates the risk that
comparable religious intermediaries will
not act in a religiously neutral manner.’’
Another commenter believed using such
intermediaries has the effect of
advancing religion and noted that the
delegation of governmental authority to
a religious organization violates the
Establishment Clause. Another
commenter believed it would raise
questions about the accountability of tax
dollars and that it promotes religion.
Response: We do not agree that the
use of a religious organization as an
intermediate organization is
unconstitutional. Our review did not
disclose any precedents, legal or
otherwise, that would prevent a
governmental unit from selecting a
religious organization as an
intermediate organization. The purpose
of the regulations at sections 54.12 and
54a.12 is not to delegate authority to
organizations to carry out tasks that are
traditionally reserved for a
governmental agency. It simply

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

recognizes what has occurred in States
already—that is, States have used block
grant funds to contract with
intermediaries to manage programs and
make sub-awards to other organizations
as part of their substance abuse service
systems. Although such intermediary
organizations may be utilized, we
emphasize that the governmental unit
that procures such services is
accountable for Federal funds and must
assure that the intermediary abides by
all statutory and regulatory
requirements, including these
regulations, and must assure that the
intermediary acts in a religiously
neutral manner and that direct funds are
not expended for inherently religious
activities.
Educational Requirements for Personnel
in Drug Treatment Programs (Sec. 54.13
and 54a.13)
This provision, restated directly from
SAMHSA’s Charitable Choice laws,
seeks to redress ‘‘unduly rigid or
uniform educational qualification for
counselors and other personnel in drug
treatment programs.’’ States establish
such licensure and certification
requirements.
Comment: Of the eighteen comments
received on this section, sixteen stressed
that faith-based organizations should
have to meet the same licensing and
certification requirements as other
providers. One commenter noted that
language should be clarified that the
goal of this section is to ensure nondiscrimination against training
programs offered by religious
organizations, rather than to loosen
State requirements designed to ensure
quality of care to clients.
Response: The final rule restates the
statutory requirement of 42 U.S.C.
290kk-3, which provides that, in
determining whether personnel of a
program participant that has a record of
successful drug treatment for the
preceding three years have satisfied
State or local requirements for
education and training, a State or local
government shall not discriminate
against education and training provided
to such personnel by a religious
organization, so long as such education
and training is comparable to the
coursework or training provided by
nonreligious organizations or is
substantially equivalent to education
and training that the State or local
government would otherwise credit for
purposes of determining whether the
relevant requirements have been
satisfied (emphasis added).
In keeping with its approach to
provide States with wide flexibility in
implementing the alternative service

PO 00000

Frm 00012

Fmt 4701

Sfmt 4700

provisions, the Department is enabling
the States to determine whether the
education and training provided by a
religious organization is ‘‘substantially
equivalent’’ to that provided by
nonreligious organizations, and is in
accordance with applicable State
certification and licensure requirements.
States are encouraged to provide
simplified information about their
State’s certification and licensure
requirements to religious organizations,
highlighting, if appropriate, different
requirements for different stages of
treatment (e.g., outreach versus
medically-indicated treatment).
Comment: Two commenters felt that
faith-based organizations should be
provided more flexibility, with one
commenting that ‘‘[S]tates should
reconsider their existing certification
requirements to ensure that their
existing certification requirements do
not unnecessarily discourage alternative
treatment strategies and thus the
involvement of new providers.’’ The
commenter also suggested that
‘‘SAMHSA provide guidance on the
range of drug treatments that are
effective and on the range of educational
paths that prepare people to offer those
different treatment modalities.’’
Response: The Department urges the
States to work with their faith-based
providers to ensure that these providers
have clear information on licensure and
certification requirements, and to ensure
that new providers are encouraged and
supported. With regard to guidance
from the Department on types of drug
treatment, we refer interested parties to
the full range of SAMHSA’s Treatment
Improvement Protocols (TIPS), available
at www.samhsa.gov.
Comment: Several commenters noted
that substance abuse treatment is a
medical treatment, not a social service,
and that ‘‘prevailing models treat
addiction as a biopsychosocial
disorder,’’ not a social problem.
Response: The Department agrees that
certain aspects of substance abuse
treatment are medical in nature. State
licensure and certification systems
recognize this characterization as well.
SAMHSA encourages States to work
with their provider community to
clarify different treatment alternatives.
Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded
Mandates Reform Act of 1995 requires
that a covered agency prepare a
budgetary impact statement before
promulgating a rule that includes any
Federal mandate that may result in the
expenditure by State, local, and Tribal
governments, in the aggregate, or by the

E:\FR\FM\30SER4.SGM

30SER4

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations
private sector, of $100 million or more
in any one year.
Comment: Numerous States,
providers, faith-based organizations and
public interest groups stated that the
proposed rule constitutes an unfunded
mandate by SAMHSA and asked that an
unfunded mandate analysis be
completed. In the words of one
commenter, ‘‘there is a broad delegation
of responsibility to States for providing
secular alternatives without providing
corresponding resources to carry it out.
SAMHSA should provide ‘much more
specific regulation’ and resources
necessary to carry this out.’’
Response: The Department has
determined that this rule would not
impose a mandate that will result in the
expenditure by State, local, and Tribal
governments, in the aggregate, or by the
private sector, of more than $100
million in any one year. As provided in
sections 54.8 and 54a.8, States and other
grantees can use grant funds to
implement these provisions, and these
regulations impact only existing
Federal-funding streams, unless the
State or local governments commingle
other funds with Federal funds.
Assurances and State Oversight of the
Charitable Choice Requirements
The NPRM proposed that States, as a
standard part of their applications for
funding under each program, certify that
they will comply with all of the
requirements of the SAMHSA
Charitable Choice provisions and
submit to the Secretary a summary each
year of the steps it has taken to
implement this regulation.
Comments: Eight commenters felt that
the stated assurance for tracking
implementation and accountability was
not strong enough. One commenter
recommended spot-checks and
reporting requirements to make sure
faith-based providers and governments
were complying with the final rule.
Response: The Department believes
that signed assurances, plus existing
compliance and auditing standards,
provide the needed oversight and
guarantee that the States, localities and
religious organizations are
implementing the regulation properly
and that all beneficiaries’ rights are
being upheld as required.
Complaint System
Comment: One commenter pointed
out that no complaint, investigation and
resolution process was discussed in the
NPRM.
Response: For the PATH formula
grant and SAPT block grant, and for
discretionary programs, program
participants and beneficiaries can

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

contact the Administrator, SAMHSA.
Complaints and comments will be
addressed on a case-by-case basis as
needed.
Indirect and Direct Funding
In the Charitable Choice context, the
term ‘‘direct’’ funding is used to
describe funds that are provided
‘‘directly’’ to a participating
organization ‘‘i.e., based on the
government’s own decision and without
any intervening steps—by a
governmental entity or an intermediate
organization with the same duties under
this part as a governmental entity, as
opposed to funds that such an
organization receives as the result of the
genuine and independent private choice
of a beneficiary through a voucher,
certificate, coupon or other similar
mechanism.
Comment: One commenter wrote that
the indirect funding definition opens
the door to government-funded worship
and proselytization. This commenter
asked us to require that all governmentfunded services be free of religious
content. In addition, the commenter
thinks that ‘‘free and independent
choice’’ is a myth which incorrectly
assumes that people in need will be able
to shop for services. Social services are
not available on a scale that makes
‘‘choice’’ real. This commenter believes
people use the most geographically
accessible providers.
Response. With respect to indirect
funding, we find no basis to require that
all government-funded services be free
of religious content. Furthermore, we
disagree that funding services indirectly
opens the door to government-funded
worship and proselytization. The
Supreme Court has consistently held
that governments may fund programs
that place the benefit in the hands of
individuals, who in turn have the
freedom to choose the provider to which
they take their benefit and ‘‘spend’’ it,
whether that institution is public or
private, secular or religious. Therefore,
any consequential aid to religion having
its origin in such a program is the result
of the beneficiary’s own choice. In other
words, indirect funding means that
individual private choice, rather than
the government, determines which
social service provider eventually
receives the funds. As a general matter,
this removes involvement on the part of
the government in worship and
proselytization.
Comment: Several other commenters
were concerned that indirect funding
mechanisms would not be subject to the
requirements of this rule, giving way to
government funding of religious
activities. One commenter asked for

PO 00000

Frm 00013

Fmt 4701

Sfmt 4700

56441

clarification whether a faith-based
organization receiving indirect funding
from the government could require
active participation by a beneficiary in
religious activities. Some commenters
seemed to be confused as to whether the
rules applied to indirect funding.
Response: It is the Department’s
position that these regulations apply
only to direct funding and not to
indirect funding pursuant to vouchers,
certificates or similar funding
mechanisms. To the extent that religious
organizations receive Federal funding
indirectly through vouchers, certificates
or similar funding mechanisms, the
Charitable Choice regulations do not
apply.
Comment: One faith-based commenter
recommended that beneficiaries be
given the opportunity to choose to use
indirect funding for the religious
services provided to them.
Response: Making this a requirement
is beyond the authority of the Charitable
Choice statutes.
Vouchers
President Bush announced his
‘‘Access to Recovery’’ program in his
State of the Union Address in January
2003. This initiative will provided
increased access to services for the
Nation’s substance abusers while also
expanding the range of treatment
providers available. In short, the
voucher program will enhance
consumer choice and allow recovery to
be pursued in an individualized
manner.
Comment: We received approximately
15 comments about the voucher
program being developed by the
Department. Some commenters
recommended that requirements from
the Zelman case be included in the
Charitable Choice regulations. Other
commenters discussed their opposition
to the government use of vouchers while
others felt that vouchers would violate
the Establishment Clause. Also,
commenters questioned whether the
voucher program allowed for a true
‘‘genuine and independent choice.’’
Response: Neither the NPRM, nor the
final rule, create a voucher program.
Since these regulations in and of
themselves do not create a voucher
program, we do not believe these
comments are relevant to the regulations
at issue. As to the specifics of the
voucher program, such details are
beyond the scope of this regulation.
Furthermore, the Department disagrees
with the comments and believes that
voucher programs are a viable
mechanism for funding services and are
constitutionally permissible.

E:\FR\FM\30SER4.SGM

30SER4

56442

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations

We do not agree with the contentions
that vouchers for religiously based
services would violate the
Establishment Clause, force individuals
to attend ‘‘pervasively sectarian’’
institutions, or lack secular purpose, for
the following reason: the Supreme Court
has upheld the constitutionality of
mechanisms of indirect aid, such as
vouchers. Therefore, we think that it is
reasonable to conclude that neutral,
indirect aid to a religious organization
does not violate the Establishment
Clause.
Applicability of Charitable Choice to the
PATH Program
SAMHSA’s program, Projects in
Transition from Homelessness (PATH),
funds outreach and some substance
abuse services for homeless persons
with mental illness. The Department has
determined that the Charitable Choice
provisions apply to the programs under
PATH that provide substance abuse
services.
Comment: Several commenters were
concerned that the State PATH offices
have ‘‘no administrative capacity to
monitor such reporting of client specific
information.’’ They also commented
that, because the reporting burden
‘‘doesn’t seem to quite fit with the
PATH program, implementing the
Charitable Choice regulation for PATH
will require development of an entirely
new planning and accounting system.’’
Response: The Department
appreciates these concerns, but is
confident that, with sufficient
flexibility, States will be able to develop
client referral and monitoring systems
that will enable PATH grant officials to
comply with the regulation.
Executive Order 12866
Executive Order 12866 directs
agencies to assess all costs and benefits
of available regulatory alternatives and,
when rulemaking is necessary, to select
regulatory approaches that provide the
greatest net benefits (including potential
economic, environmental, public health,
safety distributive and equity effects).
We have determined that the rule is a
‘‘significant regulatory action’’ under
Section 3(f) of the Executive Order, and
the Office of Management and Budget
has therefore reviewed it under that
Order.

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

Paperwork Reduction Act of 1995
This final rule contains information
collections which are subject to review
by the Office of Management and
Budget (OMB) under the Paperwork
Reduction Act of 1995 (the PRA) (44
U.S.C. 3507(d)). The title, description
and respondent description of the
information collections are shown in the
following paragraphs with an estimate
of the annual reporting and record
keeping burden. Included in the
estimate is the time for reviewing
instructions, searching existing data
sources, gathering and maintaining the
data needed, and completing and
reviewing the collection of information.
Title: Regulations to Implement
SAMHSA’s Charitable Choice Statutory
Provisions—42 CFR Parts 54 and 54a.
Description: Section 1955 of the
Public Health Service Act (42 U.S.C.
300x–65), as amended by the Children’s
Health Act of 2000 (Pub. L. 106–310),
and sections 581–584 of the Public
Health Service Act (42 U.S.C. 290kk, et
seq.), as added by the Consolidated
Appropriations Act (Pub. L. 106–554),
set forth various provisions which aim
to ensure that religious organizations are
able to compete on an equal footing for
Federal funds to provide substance
abuse services. These provisions allow
religious organizations to offer
substance abuse services to individuals
without impairing the religious
character of the organizations or the
religious freedom of the individuals
who receive the services. The provisions
apply to the SAPT Block Grant, PATH
formula grant program, and to certain
SAMHSA discretionary grant programs
(programs that pay for substance abuse
treatment and prevention services, not
for certain infrastructure and technical
assistance activities). Every effort has
been made to assure that the reporting,
record keeping and disclosure
requirements of the regulations allow
maximum flexibility in implementation
and impose minimum burden.
Description of Respondents: Not-forprofit institutions; State, Local or Tribal
Government.
Response burden estimate: This rule
includes requirements for disclosure by
program participants to program
beneficiaries of their rights to receipt of
services from an alternative service
provider, for notification by program
participants to the applicable level of
government of referrals made to

PO 00000

Frm 00014

Fmt 4701

Sfmt 4700

alternative service providers, and
requirements for reporting of activities
to comply with these regulations. The
rule also requires that a program
participant under the SAPT Block Grant
and the PATH programs that believes it
would be substantially burdened by
application of the requirements of 42
U.S.C. 300x–57(a)(2) or 42 U.S.C.
290cc–33(a)(2) must sign a certification
to that effect and must maintain
documentation to support the
certification.
Comment: SAMHSA received three
comments related to response burden
estimates. One comment noted that
States would need to enhance their
current data systems to track an
individual’s choice of providers or
referral between providers.
Response: The regulations do not
require that States track individuals.
They require only that a religious
organization that is a program
participant refer a beneficiary who
objects to the religious character of the
organization to an alternative provider
and that the program participant notify
the State of the referral. Each State or
local government may determine its
own reporting procedures.
Comment: One State commented that
it believes the annual burden estimates
are not supported with reliable data.
Response: At the present 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. The Department believes that
less than one percent, the proportion
suggested by the commenter, of program
beneficiaries will make such requests.
Comment: A third State commented
that the burden of implementation will
depend on the number of objections
from beneficiaries.
Response: The Department agrees
with the State that this is true. However,
the Department believes that there will
be a minimal number of program
beneficiaries who request referral to
alternative providers and that the
flexibility provided with regard to
implementation will minimize
information collection burden.
Experience in the first several years of
implementing the rule will provide an
empirical basis for any adjustments of
burden estimates associated with the
information collection requirements.

E:\FR\FM\30SER4.SGM

30SER4

56443

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations
ANNUAL BURDEN ESTIMATES
Number of respondents

42 CFR citation and purpose

Responses
per respondent

Hours per response

Total hours

Part 54—States Receiving SAPT Block Grants and/or Projects for Assistance in Transition from Homelessness Grants
Reporting
54.8(c)(4) Program participant notification to responsible unit of government
regarding referrals to alternative service providers .....................................
54.8(e) Annual report by PATH grantees on activities undertaken to comply
with 42 CFR Part 54 ....................................................................................

40

4

0.33

53

56

1

2.00

112

1,000
100

275
170

.05
.05

13,750
850

54.6(b) Documentation must be maintained to demonstrate significant burden for program participants under 42 U.S.C. 300x–57 or 42 U.S.C.
290cc–3(a)(2) ...............................................................................................

50

1

1.00

50

Part 54—Subtotal ............................................................................................

1,156

Disclosure
54.8(b) Program participant notice to program beneficiaries of rights to referral to an alternative service provider.
SAPT BG ..................................................................................................
PATH ........................................................................................................
Recordkeeping

14,815

Part 54a—States, local governments and religious organizations receiving funding under Title V of the PHS Act for substance abuse
prevention and treatment services
Reporting
54a.8(c)(1)(iv) Program participant notification to State or local government
of a referral to an alternative provider .........................................................
54a(8)(d) Program participant notification to SAMHSA of referrals ................

25
20

4
2

.083
.25

8
10

54a.8(b) Program participant notice to program beneficiaries of rights to referral to an alternative service provider .......................................................
Part 54a—Subtotal ..........................................................................................

100
100

275

.05

1,375
1,393

Total ..........................................................................................................

1,256

Disclosure

In addition, the regulations for the
SAPT Block Grant (45 CFR part 96) will
be amended to include at 45 CFR

92.122(f)(5) a requirement to include as
part of the annual report a description
of the activities the State has undertaken
Number of respondents

45 CFR citation and purpose
96.122(f)(5) Annual report of activities the State undertook to comply with
42 CFR Part 54 ............................................................................................

The information collection provisions
in this final rule have been approved
under OMB control number 0930–0242.
This approval expires 09/30/2006. 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.
Regulatory Flexibility Analysis
The Regulatory Flexibility Act (5
U.S.C. 605(b)) requires the Federal
government to anticipate and reduce the
impact of rules and paperwork
requirements on small businesses and
VerDate jul<14>2003

23:01 Sep 29, 2003

Jkt 200001

Frm 00015

Fmt 4701

Sfmt 4700

to comply with 42 CFR part 54. This
reporting burden is estimated as
follows:
Responses
per respondent

60

other small entities. Small entities are
defined in the Act to include small
businesses, small non-profit
organizations, and small governmental
entities. This rule will affect primarily
the 50 States, the District of Columbia,
and certain Territories. It also does have
an impact on potential grantees, some of
which are small entities. However, the
number of small entities affected and
the size of the impact does not require
a regulatory flexibility analysis under
the requirements of the Act. Therefore,
we certify that this rule will not have a
significant impact on small entities.

PO 00000

16,208

1

Hours per response

2

Total hours

120

Comment: One commenter noted that
the ‘‘proposed rules will impact a large
number of nonprofit organizations, both
faith-based and secular, that wish to
partner with government in providing
SAMHSA services’’ and called for
SAMHSA to conduct a regulatory
flexibility analysis.
Response: While the commenter is
accurate in his assertion that nonprofit
organizations, some of which would be
considered small entities under the
Regulatory Flexibility Act definition,
will be affected by this rule, the
economic impact of this particular rule
on small entities will not be significant.

E:\FR\FM\30SER4.SGM

30SER4

56444

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations

The rule simply allows faith-based
organizations to compete for a wider
range of government funding on an
equal footing as other qualified
applicants. The economic impact stems
from the individual funding
opportunities, which are not included
in this rule. We have certified that this
rule will not have a significant impact
on small entities, and therefore a
regulatory flexibility analysis is not
required.
Executive Order 13132
Executive Order 13132, Federalism,
requires that Federal agencies consult
with State and local government
officials in the development of
regulatory policies with Federalism
implications. In the NPRM, we
specifically solicited comments from
State and local government officials.
Comment: Two commenters
specifically mentioned that we should
have consulted with State and local
officials before the issuance of a final
rule.
Response: We believe that our
solicitation of comments from the
public in the NPRM satisfied the
consultation requirement of Executive
Order 13132. SAMHSA provided a
comment period, during which time the
agency heard from many State agencies
and local providers, and the rules have
been drafted in a manner that provides
States flexibility.
Dated: September 22, 2003.
Tommy G. Thompson,
Secretary of Health and Human Services.

For the reasons set forth in the
preamble, 42 CFR chapter I and 45 CFR
Subtitle A are amended as follows:

■

42 CFR CHAPTER I
■

1. Part 54 is added to read as follows:

PART 54—CHARITABLE CHOICE
REGULATIONS APPLICABLE TO
STATES RECEIVING SUBSTANCE
ABUSE PREVENTION AND
TREATMENT BLOCK GRANTS AND/
OR PROJECTS FOR ASSISTANCE IN
TRANSITION FROM HOMELESSNESS
GRANTS
Sec.
54.1
54.2
54.3

Scope.
Definitions.
Nondiscrimination against religious
organizations.
54.4 Religious activities.
54.5 Religious character and independence.
54.6 Employment practices.
54.7 Nondiscrimination requirement.
54.8 Right to services from an alternative
provider.
54.9 Assurances and State oversight of the
Charitable Choice requirements.
54.10 Fiscal accountability.

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

54.11 Effect on State and local funds.
54.12 Treatment of intermediate
organizations.
54.13 Educational requirements for
personnel in drug treatment programs.
Authority: 42 U.S.C. 300x–65, et seq., 42
U.S.C. 290kk, et seq., 42 U.S.C. 300x–21, et
seq., 42 U.S.C. 290cc–21, et seq., and 42
U.S.C. 2000bb, et seq.
§ 54.1

Scope.

These provisions apply only to funds
provided directly to pay for substance
abuse prevention and treatment services
under 42 U.S.C. 300x–21 et seq., and 42
U.S.C. 290cc–21 to 290cc–35. This part
does not apply to direct funding under
any such authorities for activities that
do not involve the provision of
substance abuse services, such as for
infrastructure activities authorized
under Section 1971 of the PHS Act, 42
U.S.C. 300y, and for technical assistance
activities. This part implements the
SAMHSA Charitable Choice provisions,
42 U.S.C. 300x–65 and 42 U.S.C. 290kk,
et seq.
§ 54.2

Definitions.

(a) Applicable program means the
programs authorized under:
(1) The Substance Abuse Prevention
and Treatment (SAPT) Block Grant, 42
U.S.C. 300x to 300x–66, and
(2) The Projects for Assistance in
Transition from Homelessness (PATH)
Formula Grants, 42 U.S.C. 290cc–21 to
290cc–35 insofar as they fund substance
abuse prevention and/or treatment
services.
(b) Religious organization means a
nonprofit religious organization.
(c) Program beneficiary means an
individual who receives substance
abuse services under a program funded
in whole or in part by applicable
programs.
(d) Program participant means a
public or private entity that has received
financial assistance, under an applicable
program.
(e) SAMHSA means the U.S.
Substance Abuse and Mental Health
Services Administration.
(f) SAMHSA Charitable Choice
provisions means the provisions of 42
U.S.C. 300x–65 and 42 U.S.C. 290kk, et
seq.
(g) Direct funding or Funds provided
directly means funding that is provided
to an organization directly by a
governmental entity or intermediate
organization that has the same duties
under this part as a governmental entity,
as opposed to funding that an
organization receives as the result of the
genuine and independent private choice
of a beneficiary through a voucher,
certificate, coupon, or other similar
mechanism.

PO 00000

Frm 00016

Fmt 4701

Sfmt 4700

§ 54.3 Nondiscrimination against religious
organizations.

(a) Religious organizations are
eligible, on the same basis as any other
organization, to participate in applicable
programs, as long as their services are
provided consistent with the
Establishment Clause and the Free
Exercise Clause of the First Amendment
to the United States Constitution.
Except as provided herein or in the
SAMHSA Charitable Choice provisions,
nothing in these regulations shall
restrict the ability of the Federal
government, or a State or local
government, from applying to religious
organizations the same eligibility
conditions in applicable programs as are
applied to any other nonprofit private
organization.
(b) Neither the Federal government
nor a State or local government
receiving funds under these programs
shall discriminate against an
organization that is, or applies to be, a
program participant on the basis of
religion or the organization’s religious
character or affiliation.
§ 54.4

Religious activities.

No funds provided directly from
SAMHSA or the relevant State or local
government to organizations
participating in applicable programs
may be expended for inherently
religious activities, such as worship,
religious instruction, or proselytization.
If an organization conducts such
activities, it must offer them separately,
in time or location, from the programs
or services for which it receives funds
directly from SAMHSA or the relevant
State or local government under any
applicable program, and participation
must be voluntary for the program
beneficiaries.
§ 54.5 Religious character and
independence.

A religious organization that
participates in an applicable program
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. The organization may not
expend funds that it receives directly
from SAMHSA or the relevant State or
local government to support any
inherently religious activities, such as
worship, religious instruction, or
proselytization. Among other things,
faith-based organizations may use space
in their facilities to provide services
supported by applicable programs,
without removing religious art, icons,
scriptures, or other symbols. In
addition, a SAMHSA-funded religious

E:\FR\FM\30SER4.SGM

30SER4

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations
organization retains the 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.
§ 54.6

Employment practices.

(a) The participation of a religious
organization in, or its receipt of funds
from, an applicable program does not
affect that organization’s exemption
provided under 42 U.S.C. 2000e–1
regarding employment practices.
(b) To the extent that 42 U.S.C. 300x–
57(a)(2) or 42 U.S.C. 290cc–33(a)(2)
precludes a program participant from
employing individuals of a particular
religion to perform work connected with
the carrying on of its activities, those
provisions do not apply if such program
participant is a religious corporation,
association, educational institution, or
society and can demonstrate that its
religious exercise would be
substantially burdened by application of
these religious nondiscrimination
requirements to its employment
practices in the program or activity at
issue. In order to make this
demonstration, the program participant
must certify: that it sincerely believes
that employing individuals of a
particular religion is important to the
definition and maintenance of its
religious identity, autonomy, and/or
communal religious exercise; that it
makes employment decisions on a
religious basis in analogous programs;
that the grant would materially affect its
ability to provide the type of services in
question; and that providing the
services in question is expressive of its
values or mission. The organization
must maintain documentation to
support these determinations and must
make such documentation available to
SAMHSA upon request.
(c) Nothing in this section shall be
construed to modify or affect any State
law or regulation that relates to
discrimination in employment.
(d) The phrases ‘‘with respect to the
employment,’’ ‘‘individuals of a
particular religion,’’ and ‘‘religious
corporation, association, educational
institution, or society’’ shall have the
same meaning as those terms have
under section 702 of the Civil Rights Act
of 1964, 42 U.S.C. 2000e–1(a).
§ 54.7

Nondiscrimination requirement.

A religious organization that is a
program participant shall not, in
providing program services or engaging
in outreach activities under applicable
programs, discriminate against a

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

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
actively participate in a religious
practice.
§ 54.8 Right to services from an alternative
provider.

(a) General requirements. If an
otherwise eligible program beneficiary
or prospective program beneficiary
objects to the religious character of a
program participant, within a
reasonable period of time after the date
of such objection, such program
beneficiary shall have rights to notice,
referral, and alternative services, as
outlined in paragraphs (b) through (d) of
this section.
(b) Notice. Program participants that
refer an individual to alternative service
providers, and the State government
that administers the applicable
programs, shall ensure that notice of the
individual’s right to services from an
alternative provider is provided to all
program beneficiaries or prospective
beneficiaries. The notice must clearly
articulate the program beneficiary’s
right to a referral and to services that
reasonably meet the requirements of
timeliness, capacity, accessibility, and
equivalency as discussed in this section.
A model notice is set out in appendix
A to part 54a.
(c) Referral to an alternative provider.
If a program beneficiary or prospective
program beneficiary objects to the
religious character of a program
participant that is a religious
organization, that participating religious
organization shall, within a reasonable
time after the date of such objection,
refer such individual to an alternative
provider. The State shall have a system
in place to ensure that referrals are
made to an alternative provider. That
system shall ensure that the following
occurs:
(1) The religious organization that is
a program participant shall, within a
reasonable time after the date of such
objection, refer the beneficiary to an
alternative provider;
(2) In making such referral, the
program participant shall consider any
list that the State or local government
makes available to entities in the
geographic area that provide program
services, which may include utilizing
any treatment locator system developed
by SAMHSA;
(3) All referrals shall be made in a
manner consistent with all applicable
confidentiality laws, including, but not
limited to, 42 CFR Part 2
(‘‘Confidentiality of Alcohol and Drug
Abuse Patient Records’’);

PO 00000

Frm 00017

Fmt 4701

Sfmt 4700

56445

(4) Upon referring a program
beneficiary to an alternative provider,
the program participant shall notify the
State or responsible unit of government
of such referral; and
(5) The program participant shall
ensure that the program beneficiary
makes contact with the alternative
provider to which he or she is referred.
(d) Provision and funding of
alternative services. If an otherwise
eligible applicant or recipient objects to
the religious character of a SAMHSAfunded service provider, the recipient is
entitled to receive services from an
alternative provider. In such cases, the
State or local agency must provide the
individual with alternative services
within a reasonable period of time, as
defined by the State agency. That
alternative provider must be reasonably
accessible and have the capacity to
provide comparable services to the
individual. Such services shall have a
value that is not less than the value of
the services that the individual would
have received from the program
participant to which the individual had
such objection, as defined by the State
agency. The alternative provider need
not be a secular organization. It must
simply be a provider to which the
recipient has no religious objection.
States may define and apply the terms
‘‘reasonably accessible,’’ ‘‘a reasonable
period of time,’’ ‘‘comparable,’’
‘‘capacity,’’ and ‘‘value that is not less
than.’’ The appropriate State or local
governments that administer SAMHSAfunded programs shall ensure that
notice of their right to alternative
services is provided to applicants or
recipients. The notice must clearly
articulate the recipient’s right to a
referral and to services that reasonably
meet the timeliness, capacity,
accessibility, and equivalency
requirements discussed above.
(e) PATH annual report. As part of the
annual report to SAMHSA, PATH
grantees shall include a description of
the activities the grantee has taken to
comply with 42 CFR part 54.
§ 54.9 Assurances and State oversight of
the Charitable Choice requirements.

In order to ensure that States
receiving grant funding under the SAPT
block grant and PATH formula grant
programs comply with the SAMHSA
Charitable Choice provisions and
provide oversight of religious
organizations that provide substance
abuse services under such programs,
States are required as part of their
applications for funding to certify that
they will comply with all of the
requirements of such provisions and the
implementing regulations under this

E:\FR\FM\30SER4.SGM

30SER4

56446

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations

part, and that they will provide such
oversight of religious organizations.
§ 54.10

Fiscal accountability.

(a) Religious organizations that
receive applicable program funds for
substance abuse services are subject to
the same regulations as other
nongovernmental organizations to
account, in accordance with generally
accepted auditing and accounting
principles, for the use of such funds.
(b) Religious organizations shall
segregate Federal funds they receive
under an applicable program into a
separate account from non-Federal
funds. Only the Federal funds shall be
subject to audit by government under
the SAMHSA program.
§ 54.11

Effects on State and local funds.

If a State or local government
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 part 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.
§ 54.12 Treatment of intermediate
organizations.

If a nongovernmental organization
(referred to here as an ‘‘intermediate
organization’’), acting under a contract
or other agreement with the Federal
Government or a State or local
government, is given the authority
under the contract or agreement to
select nongovernmental organizations to
provide services under any applicable
program, the intermediate organization
shall have the same duties under this
part as the government. The
intermediate organization retains all
other rights of a nongovernmental
organization under this part and the
SAMHSA Charitable Choice provisions.
§ 54.13 Educational requirements for
personnel in drug treatment programs.

In determining whether personnel of
a program participant that has a record
of successful drug treatment for the
preceding three years have satisfied
State or local requirements for
education and training, a State or local
government shall not discriminate
against education and training provided
to such personnel by a religious
organization, so long as such education
and training is comparable to that
provided by nonreligious organizations,
or is comparable to education and
training that the State or local
government would otherwise credit for
purposes of determining whether the

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

relevant requirements have been
satisfied.
■ 2. Add a new Part 54a to read as
follows:
PART 54a—CHARITABLE CHOICE
REGULATIONS APPLICABLE TO
STATES, LOCAL GOVERNMENTS AND
RELIGIOUS ORGANIZATIONS
RECEIVING DISCRETIONARY
FUNDING UNDER TITLE V OF THE
PUBLIC HEALTH SERVICE ACT, 42
U.S.C. 290aa, ET SEQ., FOR
SUBSTANCE ABUSE PREVENTION
AND TREATMENT SERVICES
Sec.
54a.1 Scope.
54a.2 Definitions.
54a.3 Nondiscrimination against religious
organizations.
54a.4 Religious activities.
54a.5 Religious character and
independence.
54a.6 Employment practices.
54a.7 Nondiscrimination requirement.
54a.8 Right to services from an alternative
provider.
54a.9 Oversight of the Charitable Choice
requirements.
54a.10 Fiscal accountability.
54a.11 Effect on State and local funds.
54a.12 Treatment of intermediate
organizations.
54a.13 Educational requirements for
personnel in drug treatment programs.
54a.14 Determination of nonprofit status.
Appendix to Part 54a—Model notice to
individuals receiving substance abuse
services.
Authority: 42 U.S.C. 300x–65, and 42
U.S.C. 290kk, et seq., 42 U.S.C. 290aa, et seq.
§ 54a.1

Scope.

These provisions apply only to funds
provided directly to pay for substance
abuse prevention and treatment services
under Title V of the Public Health
Service Act, 42 U.S.C. 290aa, et seq.,
which are administered by the
Substance Abuse and Mental Health
Services Administration. This part does
not apply to direct funding under any
such authorities for only mental health
services or for certain infrastructure and
technical assistance activities, such as
cooperative agreements for technical
assistance centers, that do not provide
substance abuse services to clients. This
part implements the provisions of 42
U.S.C. 300x–65 and 42 U.S.C. 290kk, et
seq.
§ 54a.2

Definitions.

(a) Applicable program means the
programs authorized under Title V of
the PHS Act, 42 U.S.C. 290aa, et seq., for
the provision of substance abuse
prevention and or treatment services.
(b) Religious organization means a
nonprofit religious organization.

PO 00000

Frm 00018

Fmt 4701

Sfmt 4700

(c) Program beneficiary means an
individual who receives substance
abuse services under a program funded
in whole or in part by applicable
programs.
(d) Program participant means a
public or private entity that has received
financial assistance under an applicable
program.
(e) SAMHSA means the Substance
Abuse and Mental Health Services
Administration.
(f) SAMHSA Charitable Choice
provisions means the provisions of 42
U.S.C. 300x–65 and 42 U.S.C. 290kk, et
seq.
(g) Direct funding or Funds provided
directly means funding that is provided
to an organization directly by a
governmental entity or intermediate
organization that has the same duties
under this part as a governmental entity,
as opposed to funding that an
organization receives as the result of the
genuine and independent private choice
of a beneficiary through a voucher,
certificate, coupon, or other similar
mechanism.
§ 54a.3 Nondiscrimination against
religious organizations.

(a) Religious organizations are
eligible, on the same basis as any other
organization, to participate in applicable
programs as long as their services are
provided consistent with the
Establishment Clause and the Free
Exercise Clause of the First Amendment
to the United States Constitution.
Except as provided herein or in the
SAMHSA Charitable Choice provisions,
nothing in these regulations shall
restrict the ability of the Federal
government, or a State or local
government, from applying to religious
organizations the same eligibility
conditions in applicable programs as are
applied to any other nonprofit private
organization.
(b) Neither the Federal government
nor a State or local government
receiving funds under these programs
shall discriminate against an
organization that is, or applies to be, a
program participant on the basis of the
organization’s religious character or
affiliation.
§ 54a.4

Religious activities.

No funds provided directly from
SAMHSA or the relevant State or local
government to organizations
participating in applicable programs
may be expended for inherently
religious activities, such as worship,
religious instruction, or proselytization.
If an organization conducts such
activities, it must offer them separately,
in time or location, from the programs

E:\FR\FM\30SER4.SGM

30SER4

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations
or services for which it receives funds
directly from SAMHSA or the relevant
State or local government under any
applicable program, and participation
must be voluntary for the program
beneficiaries.
§ 54a.5 Religious character and
independence.

A religious organization that
participates in an applicable program
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. The organization may not
expend funds that it receives directly
from SAMHSA or the relevant State or
local government to support any
inherently religious activities, such as
worship, religious instruction, or
proselytization. Among other things,
faith-based organizations may use space
in their facilities to provide services
supported by applicable programs,
without removing religious art, icons,
scriptures, or other symbols. In
addition, a SAMHSA-funded religious
organization retains the 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.
§ 54a.6

Employment practices.

(a) The participation of a religious
organization in or its receipt of funds
from an applicable program does not
affect that organization’s exemption
provided under 42 U.S.C. 2000e–1
regarding employment practices.
(b) Nothing in this section shall be
construed to modify or affect any State
law or regulation that relates to
discrimination in employment.
§ 54a.7

Nondiscrimination requirement.

A religious organization that is a
program participant shall not, in
providing program services or engaging
in outreach activities under applicable
programs, discriminate against a
program beneficiary or prospective
program on the basis of religion, a
religious belief, a refusal to hold a
religious belief, or a refusal to actively
participate in a religious practice.
§ 54a.8 Right to services from an
alternative provider.

(a) General requirements. If an
otherwise eligible program beneficiary
or prospective program beneficiary
objects to the religious character of a
program participant, within a
reasonable period of time after the date

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

of such objection, such program
beneficiary shall have rights to notice,
referral, and alternative services, as
outlined in paragraphs (b) through (d) of
this section. With respect to SAMHSA
discretionary programs, for purposes of
determining what is the appropriate
Federal, State, or local government, the
following principle shall apply: When
SAMHSA provides funding directly to
another unit of government, such as a
State or local government, that unit of
government is responsible for providing
the alternative services. When SAMHSA
provides discretionary grant funding
directly to a nongovernmental
organization, SAMHSA is the
responsible unit of government.
(b) Notice. Program participants that
refer an individual to alternative
providers, and the appropriate Federal,
State, or local governments that
administer the applicable programs,
shall ensure that notice of the
individual’s rights to services from an
alternative provider is provided to all
program beneficiaries or prospective
beneficiaries. The notice must clearly
articulate the program beneficiary’s
right to a referral and to services that
reasonably meet the requirements of
timeliness, capacity, accessibility, and
equivalency as discussed in this section.
A model notice is set out in appendix
A to this part.
(c) Referral to services from an
alternative provider. If a program
beneficiary or a prospective program
beneficiary objects to the religious
character of a program participant that
is a religious organization, that
participating religious organization
shall, within a reasonable time after the
date of such objection, refer such
individual to an alternative provider.
(1) When the State or local
government is the responsible unit of
government, the State shall have a
system in place to ensure that such
referrals are made. That system shall
ensure that the following occurs:
(i) The religious organization that is a
program participant shall, within a
reasonable time after the date of such
objection, refer the beneficiary to an
alternative provider;
(ii) In making such referral, the
religious organization shall consider any
list that the State or local government
makes available to entities in the
geographic area that provide program
services, which may include utilizing
any treatment locator system developed
by SAMHSA;
(iii) All referrals are to be made in a
manner consistent with all applicable
confidentiality laws, including, but not
limited to, 42 CFR part 2

PO 00000

Frm 00019

Fmt 4701

Sfmt 4700

56447

(‘‘Confidentiality of Alcohol and Drug
Abuse Patient Records’’);
(iv) Upon referring a program
beneficiary to an alternative provider,
the religious organization shall notify
the responsible unit of government of
such referral; and
(v) The religious organization shall
ensure that the program beneficiary
makes contact with the alternative
provider to which he or she is referred.
(2) When SAMHSA is the responsible
unit of government, the referral process
is as follows:
(i) When a program beneficiary
requests alternative services, the
religious organization will seek to make
such a referral.
(ii) If the religious organization cannot
locate an appropriate provider of
alternative services, the religious
organization will contact SAMHSA.
They will work together to identify
additional alternative providers,
utilizing the SAMHSA Treatment
Locator system, if appropriate.
(iii) The religious organization will
contact these alternative providers and
seek to make the referral, in a manner
consistent with all applicable
confidentiality laws, including, but not
limited to, 42 CFR part 2
(‘‘Confidentiality of Alcohol and Drug
Abuse Patient Records’’).
(iv) In the event the religious
organization is still unable to locate an
alternative provider, it may again
contact SAMHSA for assistance.
(d) Referral reporting procedures. The
program participant shall notify the
appropriate Federal, State or local
government agency that administers the
program of such referral. If a State or
local government is the responsible unit
of government, it may determine its own
reporting procedures. When SAMHSA
is the responsible unit of government,
this notification will occur during the
course of the regular reports that may be
required under the terms of the funding
award.
(e) Provision and funding of
alternative services. The responsible
unit of government, as defined in
paragraph (a) of this section, shall
provide to an otherwise eligible program
beneficiary or prospective program
beneficiary who objects to the religious
character of a program participant,
services and fund services from an
alternative provider that is reasonably
accessible to, and has the capacity to
provide such services to the individual.
Such services shall have a value that is
not less than the value of the services
that the individual would have received
from the program participant to which
the individual had such objection. The
appropriate State or local governments

E:\FR\FM\30SER4.SGM

30SER4

56448

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations

that administer SAMHSA-funded
programs shall ensure that notice of
their right to alternative services is
provided to applicants or recipients.
The alternative provider need not be a
secular organization. It must simply be
a provider to which the program
beneficiary has no religious objection.
(1) When the State receives a
discretionary grant from SAMHSA, it
shall utilize its own implementation
procedures for these provisions and
shall use funds from the SAMHSA
discretionary grant to finance such
alternative services, as needed;
(2) When the local government
receives a discretionary grant from
SAMHSA, it shall utilize State
implementation procedures for these
provisions and shall use funds from the
SAMHSA discretionary grant to finance
such alternative services, as needed;
(3) When a religious organization
receives a discretionary grant from
SAMHSA, if a publicly funded
alternative provider is available that is
reasonably accessible and can provide
equivalent services, the religious
organization shall refer the beneficiary
to that provider. However, if such a
provider is not available, the religious
organization shall contract with an
alternative provider to provide such
services and may finance such services
with funds from the SAMHSA
discretionary grant.
§ 54a.9 Oversight of the Charitable Choice
requirements.

In order to ensure that program funds
are used in compliance with the
SAMHSA Charitable Choice provisions,
applicants for funds under applicable
programs are required, as part of their
applications for funding, to certify that
they will comply with all of the
requirements of the SAMHSA
Charitable Choice provisions and the
implementing regulations under this
part.
§ 54a.10

Fiscal accountability.

23:51 Sep 29, 2003

Jkt 200001

Effect on State and local funds.

If a State or local government
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 part 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.
§ 54a.12 Treatment of intermediate
organizations.

If a nongovernmental organization
(referred to here as an ‘‘intermediate
organization’’), acting under a contract
or other agreement with the Federal
Government or a State or local
government, is given the authority
under the contract or agreement to
select nongovernmental organizations to
provide services under any applicable
program, the intermediate organization
shall have the same duties under this
part as the government. The
intermediate organization retains all
other rights of a nongovernmental
organization under this part and the
SAMHSA Charitable Choice provisions.
§ 54a.13 Educational requirements for
personnel in drug treatment programs.

In determining whether personnel of
a program participant that has a record
of successful drug treatment for the
preceding three years have satisfied
State or local requirements for
education and training, a State or local
government shall not discriminate
against education and training provided
to such personnel by a religious
organization, so long as such education
and training is comparable to that
provided by nonreligious organizations,
or is comparable to education and
training that the State or local
government would otherwise credit for
purposes of determining whether the
relevant requirements have been
satisfied.
§ 54a.14

(a) Religious organizations that
receive applicable program funds for
substance abuse services are subject to
the same regulations as other
nongovernmental organizations to
account, in accordance with generally
accepted auditing and accounting
principles, for the use of such funds.
(b) Religious organizations shall
segregate Federal funds they receive
under applicable programs into a
separate account from non-Federal
funds. Only the Federal funds shall be
subject to audit by the government
under the SAMHSA program.

VerDate jul<14>2003

§ 54a.11

Determination of nonprofit status.

The nonprofit status of any SAMHSA
applicant can be determined by any of
the following:
(a) Reference to the organization’s
listing in the Internal Revenue Service’s
(IRS) most recent list of tax-exempt
organizations described in section
501(c)(3) of the IRS code.
(b) A copy of a currently valid IRS
Tax exemption certificate.
(c) A statement from a State taxing
body, State Attorney General, or other
appropriate State official certifying that
the applicant organization has a
nonprofit status and that none of its net

PO 00000

Frm 00020

Fmt 4701

Sfmt 4700

earnings accrue to any private
shareholder or individuals.
(d) A certified copy of the
organization’s certificate of
incorporation or similar document if it
clearly establishes the nonprofit status
of the organization.
(e) Any of the above proof for a State
or national parent organization and a
statement signed by the parent
organization that the applicant
organization is a local nonprofit
affiliate.
Appendix—to Part 54a—Model Notice
of Individuals Receiving Substance
Abuse Services
Model Notice to Individuals Receiving
Substance Abuse Services
No provider of substance abuse services
receiving Federal funds from the U.S.
Substance Abuse and Mental Health Services
Administration, including this organization,
may discriminate against you on the basis of
religion, a religious belief, a refusal to hold
a religious belief, or a refusal to actively
participate in a religious practice.
If you object to the religious character of
this organization, Federal law gives you the
right to a referral to another provider of
substance abuse services. The referral, and
your receipt of alternative services, must
occur within a reasonable period of time after
you request them. The alternative provider
must be accessible to you and have the
capacity to provide substance abuse services.
The services provided to you by the
alternative provider must be of a value not
less than the value of the services you would
have received from this organization.

45 CFR Subtitle A
PART 96—[AMENDED]
1. The authority for part 96 continues
to read as follows:

■

Authority: 31 U.S.C. 1243 note, 7501–7507;
42 U.S.C. 300w et seq., 300x et seq., 300y et
seq., 701 et seq., 8621 et seq., 9901 et seq.,
1397 et seq.
■ 2. Amend § 96.122(f)(5) by adding
paragraph (f)(5)(v) to read as follows:

§ 96.122 Application content and
procedures.

*

*
*
*
*
(f) * * *
(5) * * *
(v) A description of the activities the
State has undertaken to comply with 42
CFR part 54.
*
*
*
*
*
■ 3. Amend § 96.123(a) by adding
paragraph (a)(18) to read as follows:
§ 96.123

Assurances.

(a) * * *

E:\FR\FM\30SER4.SGM

30SER4

Federal Register / Vol. 68, No. 189 / Tuesday, September 30, 2003 / Rules and Regulations
(18) The State will comply with the
requirements of 42 CFR part 54.
[FR Doc. 03–24289 Filed 9–25–03; 12:15 pm]

FOR FURTHER INFORMATION CONTACT:
April Kaplan, Deputy Director, Office of
Family Assistance, ACF, at (202) 401–
5138. Deaf or hearing-impaired
individuals may call the Federal Dual
Party Relay Service at 1–800–877–8339
between 8 a.m. and 7 p.m. Eastern time.
SUPPLEMENTARY INFORMATION: On
December 17, 2002, ACF published a
Notice of Proposed Rulemaking (NPRM)
to implement the ‘‘Charitable Choice’’
statutory provisions of section 104 of
the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996
(PRWORA) (Pub. L. 104–193). 67 FR
77362 (2002). We provided a 60-day
comment period that ended on February
18, 2003. We offered the public the
opportunity to submit comments by
surface mail, E-mail, or electronically
via our Web site.

BILLING CODE 4150–31–P

DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Administration for Children and
Families
45 CFR Part 260
RIN 0970–AC12

Charitable Choice Provisions
Applicable to the Temporary
Assistance for Needy Families
Program
AGENCY: Administration for Children
and Families (ACF), Department of
Health and Human Services (HHS).
ACTION: Final rule.
SUMMARY: This final rule implements
the Charitable Choice statutory
provisions in the Personal
Responsibility and Work Opportunity
Reconciliation Act of 1996 (PRWORA)
as amended. The statutory and
regulatory provisions apply to the
Temporary Assistance for Needy
Families (TANF) program administered
by ACF. The statute and final rule
establish requirements for State and
local governments that administer or
provide TANF services and benefits
through contracts or through
certificates, vouchers, or other forms of
disbursement. The requirements and
protections also apply to organizations,
including faith-based organizations, that
provide services and benefits with
TANF funds and to the beneficiaries of
those services.
The TANF Charitable Choice
provisions of PRWORA were enacted to
ensure that low-income families receive
effective needed services, including
services provided by faith-based
organizations. In creating a Faith-Based
and Community Initiative, President
Bush has said: ‘‘* * * when we see
social needs in America, my
administration will look first to faithbased programs and community groups,
which have proven their power to save
and change lives. We will not fund the
religious activities of any group. But
when people of faith provide social
services, we will not discriminate
against them.’’ To carry out that
commitment and to implement the
statute, the final rules clarify the
protections for beneficiaries of services,
the rights and obligations of religious
organizations that provide TANFfunded services, and the requirements

VerDate jul<14>2003

19:18 Sep 29, 2003

Jkt 200001

and limitations of State and local
governments.
EFFECTIVE DATE: October 30, 2003.

Comment Overview
After accounting for duplications, we
received 38 comments on the NPRM.
We heard from faith-based groups and
associations, State welfare agencies and
social services departments, national
associations, advocacy groups, other
State-level organizations, and the
general public. Most commenters
addressed all aspects of the statutory
and regulatory framework and offered
extensive suggestions. Some comments
were generally positive, supportive of
specific provisions and appreciative of
our attempt to clarify the statutory
requirements. In general, many
commenters had mixed views on both
the statutory provisions and proposed
regulatory policies (where we had
exercised regulatory discretion),
supporting some provisions and
opposing others. We have summarized
the public comments and our response
to them throughout sections I through
XIII of the preamble of this final rule.
Table of Contents
I. The Charitable Choice Statutory
Framework
II. Regulatory Authority
III. Constitutional Issues—Establishment and
Free Exercise Clauses
IV. Equal Treatment for Religious
Organizations
V. Restrictions on Inherently Religious
Activities by Organizations that Receive
Direct TANF Funding
VI. Religious Character and Independence of
Religious Organizations
VII. Employment Practices
VIII. Nondiscrimination Against Beneficiaries
IX. Notice, Referral, and Provision of Services
from Alternative Providers
X. Fiscal Accountability
XI. Effect on State and Local Funds

PO 00000

Frm 00021

Fmt 4701

Sfmt 4700

56449

XII. Treatment of Intermediate Organizations
XIII. Regulatory Analyses
• Paperwork Reduction Act of 1995
• Regulatory Flexibility Analysis
• Regulatory Impact Analysis
• Unfunded Mandates Reform Act of 1995
• Congressional Review
• Assessment of Federal Regulation and
Policies on Families
• Executive Order 13132
XIV. Final Rule

I. Charitable Choice Statutory
Framework
Title I of the Personal Responsibility
and Work Opportunity Reconciliation
Act of 1996 (PRWORA) (Pub. L. 104–
193) sets forth certain ‘‘Charitable
Choice’’ provisions in section 104,
entitled ‘‘Services Provided By
Charitable, Religious, or Private
Organizations.’’ This section clarifies
State authority to administer and
provide TANF services through
contracts with charitable, religious, or
private organizations and to provide
beneficiaries with certificates, vouchers,
or other forms of disbursement, which
are redeemable with such organizations.
The provisions of section 104 are
hereinafter referred to as ‘‘TANF
Charitable Choice provisions.’’ In
addition to giving States the ability to
contract with a range of service
providers and use optimal funding
mechanisms, and giving families a
greater choice of TANF-funded
providers, section 104 sets forth certain
requirements to ensure that religious
organizations are able to compete on an
equal footing for funds under the TANF
program, without impairing the
religious character of such organizations
or diminishing the religious freedom of
TANF beneficiaries.
President Bush has made it one of his
Administration’s top priorities to ensure
that Federal programs are fully open to
faith-based and community groups in a
manner that is consistent with the
Constitution. It is the Administration’s
view that faith-based organizations are
an indispensable part of the social
services network of the United States.
Faith-based organizations, including
places of worship, non-profit
organizations, and neighborhood
groups, offer a myriad of social services
to those in need. The TANF Charitable
Choice provisions are consistent with
the Administration’s belief that there
should be an equal opportunity for all
organizations—both faith-based and
non-religious—to participate as partners
in Federal programs to serve Americans
in need.
This final rule implements the TANF
Charitable Choice provisions applicable
to State and local governments and to
religious organizations in their use of

E:\FR\FM\30SER4.SGM

30SER4