HUD Proposes Rule Clarifying Participation of Religious Organizations in HUD Programs

HUD recently announced that it’s issuing a proposed rule that would amend its existing regulations regarding the equal participation of faith-based (religious) organizations in HUD programs. The amendments are being undertaken to implement Executive Order (EO) 13559, Fundamental Principles and Policymaking Criteria for Partnerships with Faith-Based and Other Neighborhood Organizations, which President Obama signed in November 2010. EO 13559 sets forth principles clarifying that religious providers are welcome to compete for federal funding without loss of their religious identity, and providing protections for program beneficiaries, including a referral process for beneficiaries who object to the religious character of an organization that operates a program with direct federal funds.

HUD’s proposed regulations would amend HUD’s existing regulations to:

• Define the following terms to distinguish between “direct” and “indirect” federal financial assistance in applying the rule: direct federal financial assistance, federal financial assistance, and indirect federal financial assistance;
• State that decisions about awards of federal financial assistance must be free from political interference or even the appearance of such interference and must be made on the basis of merit, not on the basis of religion or religious belief;
• Replace the term “inherently religious activities” with the term “explicitly religious activities,” and define the latter term to include “activities that involve overt religious content such as worship, religious instruction, or proselytization”;
• Explain the responsibilities of intermediaries and define the term “intermediary”;
• Require faith-based organizations that receive direct federal financial assistance from HUD to carry out activities under a HUD program to provide written notice to beneficiaries and prospective beneficiaries describing certain religious liberty protections available to them; and
• Describe the steps that must be taken to refer a beneficiary to an alternative provider when the beneficiary objects to the religious character of an organization carrying out activities under a HUD-funded program.