ACLU Statement on the Unconstitutional or Otherwise Illegal Conduct Authorized by the Proposed Rule on Faith-Based Organizations Participation in HUD Housing Programs, Before the House Financial Services Subcommittee on Housing and Community Opportunity

AMERICAN CIVIL LIBERTIES UNION

Statement on the Unconstitutional or Otherwise Illegal
Conduct Authorized by the Proposed Rule on Participation by Faith-Based Organizations in HUD Housing Programs

Before the Subcommittee on the Housing and Community Opportunity
of the House Committee on Financial Services

Presented by Christopher E. Anders, Legislative Counsel[1]

March 25, 2003

The American Civil Liberties Union appreciates the opportunity to submit this statement expressing our serious concerns with the proposed rule on the participation by faith-based organizations in housing programs administered by the Department of Housing and Urban Development. We strongly urge the Subcommittee to use its oversight authority to prohibit HUD from replacing its existing rule that protects civil rights in federal programs, guards the religious exercise rights of participants, and prohibits the misuse of scarce federal housing funds for the construction of church building. The proposed rule would eliminate all of the safeguards in the existing rule.

As written, the proposed rule is inconsistent with constitutional requirements and does not sufficiently detail the scope of constitutionally prohibited religious activities that must be excluded from federal programs. Unless substantially revised, the proposed rule will likely result in grant recipients engaging in unconstitutional or otherwise illegal conduct.

The Proposed Rule Will Likely Result in Unconstitutional Employment Discrimination

The proposed rule abets unconstitutional employment discrimination based on religion as it repeals-without any authorization or approval from Congress-specific regulations prohibiting recipients of HUD funds from discriminating against their employees based on religion. HUD seems to be trying to apply to HUD programs “”charitable choice”” provisions that Congress enacted as part of the authorization or reauthorization of three specific programs administered by the Department of Health and Human Services.

Congress never authorized HUD to apply charitable choice to its housing programs. However, even if it had provided such authorization, the entire proposition that a religious organization can discriminate with federal dollars is unconstitutional. The charitable choice provisions authorized for the three HHS programs improperly allow a religious organization receiving funds to retain its exemption from the provision in Title VII of the Civil Rights Act of 1964 generally prohibiting religious discrimination in employment. For example, the employment practices provision for the TANF welfare reform program provides that “”the participation of a religious organization in, or its receipt of funds from, an applicable program does not affect that organization’s exemption under 42 U.S.C. 2000e-1 regarding employment practices.”” 67 Fed. Reg. at 77363. The referenced section of the U.S. Code is a provision in Title VII of the Civil Rights Act of 1964 that permits religious organizations to prefer members of their own religion when making employment decisions. Although the Supreme Court upheld the constitutionality of the religious organization exemption in Title VII, Corporation of Presiding Bishop v. Amos, 483 U.S. 327, 336-39 (1987), the Court did not consider whether a religious organization could discriminate based on religion when making employment decisions in programs that the government finances to provide governmental services.

Several courts have considered whether a religious organization can retain its Title VII exemption after receipt of indirect federal funds, e.g., Siegel v. Truett-McConnell College, Inc., 13 F. Supp.2d 1335, 1344 (N.D. Ga. 1994) (clarifying that its decision permitting a religious university to invoke the Title VII exemption is because the government aid is directed to the students rather than the employer), but only one federal court has decided the constitutionality of retaining the Title VII exemption after receipt of direct federal funds, Dodge v. Salvation Army, 1989 WL 53857 (S.D. Miss. 1989). In that unreported decision, the court held that the religious employer’s claim of its Title VII exemption for a position “”substantially, if not exclusively”” funded with government money was unconstitutional because it had “”a primary effect of advancing religion and creating excessive government entanglement.”” Id. The analysis applied by the court in Dodge should apply with equal force to the HUD programs that would provide direct federal funds to religious organizations.

In addition to causing the Establishment Clause violation cited by the court in Dodge, the employment provisions in the proposed rule may also subject the government and any religious employer invoking the proposed rule to liability for violation of constitutional rights under the Free Exercise Clause and the Equal Protection Clause. Although mere receipt of government funds is insufficient to trigger constitutional obligations on private persons, a close nexus between the government and the private person’s activity can result in the courts treating the private person as a state actor. Rendell-Baker v. Kohn, 457 U.S. 830 (1982).

It is beyond question that the government itself cannot prefer members of a particular religion to work in a HUD-funded program. The Equal Protection Clause subjects governments engaging in intentional discrimination on the basis of religion to strict scrutiny. E.g., United States v. Batchelder, 442 U.S. 114, 125 n.9 (1979); City of New Orleans v. Dukes, 427 U.S. 297, 303 (1976). No government could itself engage in the religious discrimination in employment accommodated and encouraged by the proposed rule’s employment provision. Thus, the government would be in violation of the Free Exercise Clause and the Equal Protection Clause for knowingly funding religious discrimination.

Of course, a private organization is not subject to the requirements of the Free Exercise Clause and the Equal Protection Clause unless the organization is considered a state actor for a specific purpose. West v. Atkins, 487 U.S. 42, 52 (1988). The Supreme Court recently explained when there is a sufficient nexus between the government and the private person to find that the private person is a state actor for purposes of compliance with constitutional requirements on certain decisions made by participants in the government program:

[S]tate action may be found if, though only if, there is such a ‘close nexus between the State and the challenged action’ that seemingly private behavior ‘may be fairly treated as that of the State itself.’ . . . We have, for example, held that a challenged activity may be state action when it results from the State’s exercise of ‘coercive power,’ when the state provides ‘significant encouragement, either overt or covert,’ or when a private actor operates as a ‘willful participant in joint activity with the State or its agents’ . . . . .

Brentwood Academy v. Tennessee Secondary School Athletic Association, 121 S. Ct. 924, (2001) (citations omitted).

The extraordinary role that the government has taken in accommodating, fostering, and encouraging religious organizations to discriminate based on religion when hiring for HUD programs creates the nexus for constitutional duties to be imposed on the provider, in addition to the requirements already placed on government itself. There is no doubt that HUD understands what it is doing in repealing its ban on religious discrimination in employment. The clear intent of the proposed rule is to encourage certain providers receiving federal funds to discriminate based on religion.

The proposed rule’s repeal of the employment protections are part of a growing pattern of congressional, presidential, and regulatory actions taken specifically for the purpose of accommodating, fostering, and encouraging federally-funded private organizations to discriminate in ways that would unquestionably be unconstitutional if engaged in by the federal government itself. The proposed rule was issued only a few weeks after President Bush signed Executive Order 13279, which amended an earlier executive order, which had provided more than 60 years of protection against discrimination based on religion by federal contractors. The Bush order provides an exemption for religious organizations contracting with the government to discriminate in employment based on religion. In addition, the federal government is simultaneously proposing to allow religious organizations to discriminate based on religion in employment for federal programs involving substance abuse counseling, welfare reform, and veterans benefits.

The Proposed Rule Ignores a Statutory Prohibition on Religious Discrimination in Community Development Block Grant Programs

The repeal of the employment protections in the CDBG portion of the proposed rule is a unilateral decision by HUD to refuse to enforce a nondiscrimination statute duly enacted by Congress and signed by the President. The authorizing statute for the CDBG programs contains a specific statutory prohibition on discrimination based on religion in those programs. 42 U.S.C. 5309. Because the statutory nondiscrimination provisions do not exclude employment decisions, as Title VI largely does, employment decisions are within the coverage of the nondiscrimination provisions. Thus, even if a religious organization receiving or administering CDBG funds can somehow escape Title VII liability for imposing a religious test on employees in the CDBG-funded program, the program-specific statutory nondiscrimination provision completely bars HUD from providing any federal funds to a provider that will discriminate based on religion in hiring persons to provide services with those CDBG funds.

The Community Development Block Grant (CDBG) Proposed Rule Exceeds the Scope of the Executive Order 13198 Pertaining Specifically to Faith-Based Organizations

On December 12, 2002 President Bush issued Executive Order (EO) 13279 to expand opportunities for faith-based and community organizations to address societal needs using federal dollars. EO 13279 specifically amends the application of EO 11246, which prohibits discrimination and requires affirmative action, to faith-based organizations. These changes pertained only to religious organizations.

Presumably in an effort to make HUD policy consistent with the Executive Order issued in December, HUD issued a series of regulatory modifications, including a change to § 570.607 that applies to CDBG recipients. This change exceeds the scope of the mandate of the President’s EO because it eliminates the fair employment and affirmative action reporting and compliance requirements that exist for all recipients of CDBG funding-religious and non-religious alike.

Such a change would result in permitting all recipients of CDBG funding to avoid the fair employment obligations imposed on all government agencies and those funded by them, and implies that discrimination by religion, race, or any other category by such recipients is now permissible. The faith-based initiative should not be issued as a proxy to ameliorate the equal protection guarantees under the constitution by allowing discrimination with public dollars.

The CDBG Proposed Rule Represents a Major Shift in HUD Policy Against Employment Discrimination in Federally Assisted Programs

The proposed regulation is a landmark change in HUD policy prohibitions against employment discrimination. In 1965 President Lyndon B. Johnson issued EO 11246 and this policy has remained unchanged through five Republican and three Democratic Administrations. EO 11246 not only prohibits discrimination in contracting and employment, but it requires vigorous record keeping to prevent future discrimination in hiring and to address racial inequalities apparent in workforces across the country. It specifically prohibits discrimination in employment on the basis of race, creed, color, or national origin. Persons who contract with the federal government must take specific measures to ensure fairness and equality in hiring and must document these efforts. Consistent with this longstanding policy, the current HUD regulation, in force since 1975, requires recipients of CDBG funding to comply with standards set forth in EO 11246 to prevent discrimination in employment. However, the proposed regulation makes it clear that recipients will no longer have to abide by the prohibitions and requirements of EO 11246.

Established in 1975, CDBG is one of the largest federal grant programs in the nation; it was appropriated about $4.4 billion in FY2003. The primary purpose for the program is the development of healthy communities “”by providing decent housing and a suitable living environment and expanding economic opportunities, principally for persons of low and moderate income.”” 42 U.S.C. § 5301(c). CDBG money is a critical resource for most state and local governments in assisting communities rehabilitate and build affordable housing, supporting small businesses in low-income neighborhoods and providing other important services. Many contracts flow from the funding allocated within the CDBG program, a large portion of which includes construction and human services contracts. Given the enormous amount of federal resources distributed under this program, it is particularly wrong that HUD would propose a regulation that removes vital protections against discrimination and relax requirements to ensure a diverse workforce.

The CDBG Proposed Rule Is Illegal and Moves Beyond the Stated Administration Policy

HUD’s description of the change in the CDBG regulation is legally flawed. According to HUD, “”by its own term, the Executive Order [11246] applies to government contractors and subcontractors, not grantees.”” 68 Fed. Reg. at 649. Section 301 of the Executive Order 11246 explicitly covers grants for construction contracts involving Federal financial assistance. Construction contracts are one of the many ways CDBG funding is used by state and local governments to revitalize their communities. CDBG construction contracts would be covered by the terms of EO 11246, but HUD is proposing a regulation that creates a loophole for recipients of CDBG funding. HUD is required to formulate its policy based on Executive Order 11246, and other executive orders issued by the President. In this case, HUD has not only proposed a regulation that goes far beyond its authority, but it is also offering a regulation that directly conflicts with an existing Executive Order.

It is not clear that HUD intended to make this change. When asked directly about the change to § 570.607 by Senator Corzine in a recent Banking, Housing and Urban Affairs hearing, Secretary Martinez said he was “”unaware of the issue.”” Moreover, Secretary Martinez responded, “”the faith based initiative attempts to break down barriers and bring more people into opportunities for partnership with the federal government. There’s nothing that I’m aware of in that particular regulatory change that would in any way either attempt or by design or accidentally limit participation by people from a broad spectrum of race and creed and other backgrounds.””[2] In this instance, the HUD proposed regulation not only limits participation, but also has the effect of excluding the very people the regulation was enacted to include and protect from discrimination.

We hope, as Secretary Martinez indicated, that this proposal was unintended. The ACLU urges HUD to withdraw its proposal to modify § 570.607. Discrimination in employment persists and this regulation is necessary to ensure fairness in employment practices, particularly when the funding is provided by public money.

The Proposed Rule Allows the Unconstitutional Misuse of HUD Housing Funds to Build Houses of Worship

The proposed rule unconstitutionally allows the use of public funds for structures used for religious activities. In seven of the eight HUD programs covered by the proposed rule, HUD funds may be expended on a structure that is used “”for both eligible and inherently religious activities,”” provided that the HUD funds do not “”exceed the cost of those portions of the acquisition, construction, or rehabilitation that are attributable to eligible activities.”” This aspect of the proposed rule is perhaps the most clearly unconstitutional proposal of all of the many constitutionally flawed proposals that the Administration has advanced as part of its faith-based initiative.

More than 31 years ago, in an opinion written by Chief Justice Warren Burger, the Supreme Court established a bright-line test on whether and how the government may finance “”brick-and-mortar”” construction for real property owned by religious institutions. In that seminal decision, the Supreme Court held that public funds may be used by religious institutions for capital improvements only when the structures are wholly and permanently dedicated to secular use. Tilton v. Richardson, 403 U.S. 672 (1971). The Court held that a public subsidy used to construct buildings at sectarian academic institutions was constitutional only if the buildings were subject to a permanent prohibition on religious use. Id. at 683. The Court struck down a twenty-year limitation on this prohibition, holding that the public funds would otherwise have the effect, at the end of the twenty-year period, of advancing religion.

The proposed rule would replace existing rules that apply Tilton in a manner that allows religiously-affiliated organizations to participate in HUD housing programs with a proposal that ignores one of the most central and lasting decisions in Establishment Clause jurisprudence. Indeed, perhaps one of the most clear signs of the carelessness in the drafting of the proposed rule is the HUD General Counsel’s own confusion on how HUD would apply this rule. In an article in the New York Times, the HUD General Counsel explained the formula for determining how much HUD funds could be used in the construction of a house of worship in spatial terms, i.e., how much of the space is allocated to HUD activities. The next day, the same HUD General Counsel explained the same proposed rule to an Associated Press reporter in terms of time, i.e., how much time the building is used for HUD activities. Under this constitutionally bizarre interpretation of the proposed rule, a church could presumably build its sanctuary with six-sevenths of the funding from HUD sources if it removed the pews and installed beds during the week and then reinstalled the pews for Sunday services. It is beyond any doubt that the courts will not allow such unconstitutional abuse of HUD housing funds. HUD should retain its current rules and not expose itself and religious institutions to liability for such unconstitutional conduct.

The Proposed Rule Raises Serious Establishment Clause Concerns

The proposed rule authorizes religious organizations to provide publicly funded benefits and services. Although the proposed rule indicates its intention to limit the role of faith-based groups to conduct consistent with the Establishment Clause of the United States Constitution, it falls far short of that goal.

The proposed rule also does not sufficiently detail the scope of religious content that must constitutionally be omitted from government-funded programs. It authorizes conduct-such as holding publicly funded programs in facilities adorned with religious icons and issuing invitations, during government-sponsored programs, to later prayer sessions-that will unconstitutionally convey the message that the government endorses religious beliefs. And, in express violation of binding Supreme Court precedent, it permits direct grants of public dollars to organizations whose religious mission subsumes all secular functions.

First, although the proposed rule specifies that no HUD funds may be used for “”inherently religious activities,”” it fails to clarify the scope of religious activity that must, by mandate of the Constitution, be omitted from publicly funded programs. The proposed rule defines “”inherently religious activities”” only as conduct “”such as worship, religious instruction, or proselytization.”” As further guidance, the Department of Housing and Urban Development states that “”inherently religious activities”” include “”for example, conduct[ing] prayer meetings, studies of sacred texts, or any other activity that is inherently religious.”” Such guidance is insufficient to ensure that grantees do not run afoul of the Constitution. The proposed rule must be clear:[3] Religious organizations using public funds to provide social services must provide those services in an entirely secular manner. The list of examples provided by the proposed rule does too little to prevent the unconstitutional inclusion of religious messages in government-financed programs.

For example, although none of the following scenarios falls clearly within the “”inherently religious activities”” barred by the proposed rule, each violates the Establishment Clause and therefore must be prohibited:

• A faith-based organization receives federal funds to run a vocational training program. The counselors running the program use Bible stories to help emphasize the importance of a good work ethic.
• A faith-based organization receives federal funds to run a welfare-to-work program. As one presentation for program participants, the organization puts on a skit in which Jesus appears as a character forgiving past sins and encouraging a fresh start.
• A faith-based organization receives federal funds to run a drug treatment program. The program’s counselors encourage participants to accept and trust in a higher power as one of many steps necessary for recovery.

These scenarios are based on actual conduct, by recipients of public funds, that have been held unconstitutional. For example, in a lawsuit challenging the state of Louisiana’s distribution of federal dollars to faith-based organizations in the context of abstinence education, the ACLU established (among many other constitutional violations) that one faith-based organization had used the story of Joseph and Mary and the virgin birth to teach teenagers the importance of abstinence; that others relied heavily on scriptural precepts to promote abstinence; and that others used theatrical skits with Jesus as a character to teach the importance of abstinence. The United States District Court for the Eastern District of Louisiana held that the use of public dollars for such conduct violates the Establishment Clause. ACLU v. Foster, 2002 WL 1733651 (E.D.La.)

The risk of the occurrence of such conduct is very real, and the proposed rule must be changed to make clear that it is impermissible. To ensure that the use of HUD dollars does not violate the Establishment Clause, the proposed rule must be changed to make clear that the government may not “”disburs[e] [public] funds to organizations or individuals that convey religious messages or otherwise advance religion in any way in the course of any event supported in whole or in part by [public] funds, or in any document or other resource produced . . . in whole or in part using [public] funds.”” ACLU v. Foster, 2002 WL 1733651 (E.D.La.)

Second, the proposed rule authorizes conduct that will impermissibly convey the message that the government endorses religious content. For instance, the proposed rule allows organizations to use their facilities for government-financed programs “”without removing religious art, icons, scriptures, or other symbols.”” The proposed rule also permits personnel running the taxpayer-funded programs to wear clerical garb and to invite participants to attend subsequent religious worship sessions. Yet allowing such intermingling of government financing and religious content impermissibly fosters the impression of government support for a religious mission. See, e.g., County of Allegheny v. American Civil Liberties Union Greater Pittsburgh Chapter, 492 U.S. 573, 592-93 (1989) (holding that government actions with the purpose or effect of endorsing religion violate the Establishment Clause); see also Mitchell v. Helms, 530 U.S. 793, 843 (2000) (O’Connor, J., concurring) (government-financed programs violate the Establishment Clause if “”the reasonable observer would naturally perceive the aid program as government support for the advancement of religion””) (emphasis in original). The proposed rule must be changed to remedy these constitutional deficiencies.

Third, the proposed rule allows the direct granting of public dollars to organizations, such as churches and religious seminaries, in which religious missions overpower secular functions. Proposed Rule, definitions of “”direct funding”” and “”religious organization”” (allowing direct financial grants to all nonprofit religious organizations). Yet binding Supreme Court authority forbids the direct grant of public dollars to such organizations. In Bowen v. Kendrick, 487 U.S. 589, 610 (1988), the Supreme Court held that the government may not issue direct money grants to institutions in which “”religion is so pervasive that a substantial portion of its functions are subsumed in the religious mission.”” See also Mitchell 530 U.S. at 819-20 (plurality opinion) (recognizing “”special Establishment Clause dangers”” when public dollars flow to such sectarian institutions); id. at 855 (O’Connor, J., concurring) (noting “”our continued recognition of the special dangers associated with direct money grants to [such sectarian] institutions””). The Court explained that the ban on direct financial aid to such institutions is necessary because “”there is a risk that direct government funding, even if it is designated for specific secular purposes, may nonetheless advance the pervasively sectarian institution’s ‘religious mission.'”” Id. at 610; see also id. at 612 (“”[I]n the context of aid to [such] institutions . . . there [i]s a ‘substantial’ risk that aid to these religious institutions would, knowingly or unknowingly, result in religious indoctrination.””). To meet constitutional mandates, the proposed rule must be changed to prohibit direct financial grants to such sectarian institutions.

The Proposed Rule Should Provide Clear Protections From Religious Coercion

The proposed rule prohibits a provider from discriminating against a beneficiary who refuses to “”actively participate in a religious practice,”” but allows the imposition of penalties for failure to passively participate. The Constitution prohibits the government from coercing persons, even subtly or indirectly, to undergo religious indoctrination or to participate (even as bystanders) in religious services. See, e.g., Santa Fe Independent School District v. Doe, 530 U.S. 290, 310-12 (2000); Lee v. Weisman, 505 U.S. 577, 592-96 (1992). This rule of law applies to government-funded social service providers, barring them from coercing or pressuring benefit recipients to take part in religious activity or to submit to religious proselytization. It would be unlawful, for example, for a religious organization to requir