for Research at the University of Texas School of Law at Austin. Professor Laycock is a leading scholar on the law of religious liberty. He has argued many cases on religious liberty, including those before the United States Supreme Court. Professor Laycock is also a Member of the American Law Institute and an elected Fellow of the American Academy of Arts and Sciences. We welcome you also this morning.

Our third witness is Rabbi David N. Saperstein. Rabbi Saperstein is an Adjunct Professor of Law and Director and Counsel of the Religious Action Center of Reform Judaism at the Georgetown University Law Center. We welcome you here as well, Professor and Rabbi.

And our fourth and final witness is Ira C. Lupu, professor of law at the George Washington University School of Law. Professor Lupu's writings are primarily in the field of constitutional law with an emphasis on the religion clauses of the first amendment. Professor Lupu has also served as Professor-in-Residence on the appellate staff of the civil division of the U.S. Department of Justice, where he represented the government in a variety of cases in the courts of appeal.

We want to thank you all again for appearing this morning. And I would like to ask each of you to please try to summarize your testimony in 5 minutes or less, and, without objection, your written statement will be made part of the permanent hearing record. And we actually, as you probably all know, have a lighting system, and you have 5 minutes. When the yellow light comes on you have got 1 minute to kind of wrap it up, and when the red light comes up we would appreciate that you wrap up at that point. We will give you a little flexibility, but if you can keep within that, we would certainly appreciate it. And our first witness would be Mr. Esbeck.

STATEMENT OF CARL H. ESBECK, SENIOR COUNSEL TO THE DEPUTY ATTORNEY GENERAL, UNITED STATES DEPARTMENT OF JUSTICE

Mr. ESBECK. Thank you, Chairman and Members of the House. I do appreciate Mr. Nadler's opening remarks which I think sets that right tone that there is an exploration here where we do, I think, have several points of common ground and I want to touch on each one of those, at least as I see it.

First, it is easy to forget as we get into the constitutional issues that this is about people and, of course, people who are poor or have special needs. These faith-based groups are specially positioned to reach hard to reach people. I think that is because they have high access and high credibility. And by high access, I mean they are right there in the neighborhood. They are working with people who are their neighbors in that community. These are people that they cross paths with at their local grocery store. And by high credibility, I mean these are the leaders of that community in which the people in need are living and these leaders are highly trusted. They have experience with them. They are well known. Charitable choice provides an option to take into account these specially positioned faith-based organizations. Charitable choice doesn't claim to be the only way, or it is just another way.

Second, everyone here wants faith-based organizations to retain their religious character. No one wants to give them funding beyond their means and then raise hopes and have them dashed. No one wants to silence what they call their prophetic voice, which is their way of saying they speak out and criticize government and culture, and no one wants them to become dependent on government funding and lose their religious moorings. And that is why charitable choice spends a good deal of time surrounding these organizations with their protection for autonomy. If they can retain their freedom, then they will be free to continue doing their good work.

A third area of common ground, no one wants to use government money to force religion upon somebody else, least of all beneficiaries. The statute is drafted to take care of that.

Fourth, there is continuing interest, maybe growing interest, in exploring indirect forms of aid. And this is sort of like how the G.I. Bill works. There is interest in it because there are less constitutional restrictions as to how the faith-based organizations ultimately use those resources.

And fifth and last, no one wants to do harm to that venerable American tradition, the separation of church and State. But the question here is not choosing between separation of church and State and something else; instead, the debate is over what do we mean by separation. Charitable choice, as you know, says separation doesn't entail discrimination against those faith-based groups that have a high religious character; so it shifts the question.

No longer is it an exploration of those-their character, trying to ascertain are you somehow too religious, whatever that line means. Instead, the question is what can you do, can you do it, are you willing to do it in accordance with the statutory and constitutional parameters?So what are those-well, I am sure we will explore them in more depth in a bit.

But first, there can be no government aid diverted to sectarian activity; and second, no one receiving welfare benefits can be compelled to participate in sectarian activities against their will. Charitable choice funding is not for every faith-based organization. If there is a total integration of sectarian activities and delivery of social services, then surely they cannot participate in direct funding. But for those faith-based organizations that are able and willing to follow those rules, then charitable choice provides a valuable option, another option for raising people out of poverty.

Mr. CHABOT. Thank you very much Mr. Esbeck. [The prepared statement of Mr. Esbeck follows:]

PREPARED STATEMENT OF CARL H. ESBECK

INTRODUCTION

By letter of May 22, 2001, the House Subcommittee on the Constitution, Committee on the Judiciary, invited the views of the U.S. Department of Justice concerning statutory and constitutional issues raised by § 1994A (charitable choice) of H.R. 7, The Community Solutions Act of 2001. Thank you for the invitation. This document is the Department's response to the Subcommittee's letter.

Charitable choice is already part of three federal social service programs. The provision first appeared in the Personal Responsibility and Work Opportunity Rec

onciliation Act of 1996 (PRWORA),1 two years later it was incorporated into the Community Services Block Grant Act of 1998,2 and last year it was made part of the reauthorization of funding for the Substance Abuse and Mental Health Services Administration (SAMHSA).3 Each of these programs has the overarching goal of helping those in poverty or treating those suffering from chemical dependency, and the programs seek to achieve their purpose by providing resources in the most effective and efficient means available. The object of charitable choice, then, is not to support or sponsor religion or the participating religious providers. Rather, the goal is secular, namely, to secure assistance for the poor and individuals with needs, and to do so by leveling the playing field for providers of these services who are faithbased.

Charitable choice is often portrayed as a source of new federal financial assistance made available to-indeed earmarked for-religious charities. It is not. Rather, charitable choice is a set of grant rules altering the terms by which federal funds are disbursed under existing programs of aid. As such, charitable choice interweaves three fundamental principles, and each principle receives prominence in the legislation.

First, charitable choice imposes on both government and participating FBOs the duty to not abridge certain enumerated rights of the ultimate beneficiaries of these welfare programs. The statute rightly protects these individuals from religious discrimination by FBOs, as well as from compulsion to engage in sectarian practices against their will.

Second, the statute imposes on government the duty to not intrude into the institutional autonomy of faith-based providers. Charitable choice extends a guarantee to each participating faith-based organization [FBO] that, notwithstanding the receipt of federal grant monies, the organization "shall retain its independence from Federal, State, and local governments, including such organization's control over the definition, development, practice, and expression of its religious beliefs."4 In addition to this broadly worded safeguard, there are more focused prohibitions on specific types of governmental interference such as demands to strip religious symbols from the walls of FBOs and directives to remake the governing boards of these providers.5 A private right of action gives ready means of enforcement to these protections of institutional autonomy.6

Third, the statute reinforces the government's duty to not discriminate with respect to religion when determining the eligibility of private-sector providers to deliver social services.7 In the past, an organization's "religiosity," obviously a matter of degree not reducible to bright- lines, was said to disqualify providers found to be "pervasively sectarian." That inquiry was always fraught with difficulties. Now, rather than probing into whether a service provider is thought to be "too religious" as opposed to "secular enough," charitable choice focuses on the nature of the desired services and the means by which they are to be provided. Accordingly, the relevant question is no longer "Who are you?" but "What can you do?" So long as a provider is prepared to operate in line with all statutory and constitutional parameters, then an organization's degree of "religiosity" is no longer relevant.

Because they are a useful way of framing the most pertinent statutory and constitutional questions, we expand on these three principles below. Moreover, as will be discussed, the Department of Justice recommends certain amendments to § 1994A of H.R. 7.

142 U.S.C. §604a (Supp. 1996). Charitable choice appeared as § 104 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, Pub. L. No. 104-193, 110 Stat. 2105, 2161 (1996). Section 604a applies to two federal revenue streams: Temporary Assistance to Needy Families and Welfare to Work monies. Welfare to Work funds were made subject to PRWORA in the 1997 Balanced Budget Act.

242 U.S.C. §9920 (Supp. 1998). Charitable choice appeared as §679 of the Community Services Block Grant Act, which was Title II of the Coats' Human Services Reauthorization Act of 1998, Pub. L. No. 105-285, 112 Stat. 2702, 2749 (Oct. 27, 1998).

342 U.S.C. §300x-65 (Supp. 2000). SAMHSA concerns expenditures for substance abuse treatment and prevention under Titles V and XIX of the Public Health Services Act. The charitable choice provision pertaining to SAMHSA, signed by President Clinton on October 17, 2000, appeared as Title XXXIII, §3305 of the Children's Health Act of 2000, Pub. L. No. 106–310, 114 Stat. 1212 (2000).

SAMHSA substance abuse treatment and prevention expenditures were again made subject to a charitable choice provision in the Community Renewal Tax Relief Act of 2000, signed by President Clinton on December 21, 2000. See 42 U.S.C. §290kk (Supp. 2000). This Act was incorporated by reference in the Consolidated Appropriation Act of 2001, Pub. L. No. 106–554. 442 U.S.C. §604a(d)(1). The parallel subsection in H.R. 7 is § 1994A(d)(1).

542 U.S.C. § 604a(d)(2). The parallel subsection in H.R. 7 is § 1994A(d)(2).

642 U.S.C. §604a(i). The parallel subsection in H.R. 7 is § 1994A(1).

742 U.S.C. § 604a(b) and (c). The parallel subsection in H.R. 7 is § 1994A(c)(1).

I. THE RIGHTS OF BENEFICIARIES

9

In programs subject to charitable choice, when funding goes directly to a social service provider the ultimate beneficiaries are empowered with a choice. Beneficiaries who want to receive services from an FBO may do so, assuming, of course, that at least one FBO has received funding. On the other hand, if a beneficiary has a religious objection to receiving services at an FBO, then the government is required to provide an equivalent alternative. 10 This is the "choice" in charitable choice. Moreover, some beneficiaries, for any number of reasons, will inevitably think their needs better met by an FBO. This possibility of choosing to receive their services at an FBO is as important a matter as is the right not to be assigned to a religious provider. There is much concern voiced by civil libertarians about the latter choice, whereas the former is often overlooked. Supporters of charitable choice regard both of these choices to avoid an FBO or to seek one out-as important. If a beneficiary selects an FBO, the provider cannot discriminate against the beneficiary on account of religion or a religious belief.11 Moreover, the text's explicit protection of "a refusal to actively participate in a religious practice" insures a beneficiary's right to avoid any unwanted sectarian practices. 12 Hence, participation, if any, is voluntary or noncompulsory. When direct funding is involved, one recent court decision suggested that this "opt-out" right is required by the first amendment. 13 Beneficiaries are required to be informed of their rights.14

The Department of Justice recommends that § 1994A of H.R. 7 be strengthened by amending subsection (i) along the lines indicated in the note below.15 This proposal has a clearer statement of the voluntariness requirement. The provision on separating the government-funded program from sectarian practices is discussed in Part III, below. The suggested Certificate of Compliance has the purpose of impress

8 Charitable choice contemplates both direct and indirect forms of aid. 42 U.S.C. § 604a(a)(1). This is most apparent in H.R. 7 by comparing the subparts of § 1994A(g). If the means of funding is indirect, as with, for example, federal child-care certificates, then choice is intrinsic to the beneficiary's selection of a child care center at which to "spend" his or her certificate.

9 It may be that on some occasions no FBOs successfully compete for a grant or cooperative agreement. This is to be expected. Charitable choice is not a guarantee that resources will flow to FBOs. Rather, charitable choice guarantees only that FBOs will not be discriminated against with respect to religion.

10 42 U.S.C. §604a(e)(1). The parallel subsection in H.R. 7 is §1994A(f)(1). The alternative may be another provider not objectionable to the beneficiary, or the government may find it more cost efficient to purchase the needed services on the open market.

11 42 U.S.C. §604a(g) (FBOs may not discriminate against beneficiaries "on the basis of religion [or] a religious belief"). The parallel subsection in H.R. 7 is § 1994A(g)(1).

12 42 U.S.C. §604a(g) (FBOs may not discriminate or otherwise turn away a beneficiary from the organization's program because the beneficiary "refus[es] to actively participate in a religious practice"). Thus, a beneficiary cannot be forced into participating in sectarian activity. For reasons not apparent, § 1994A(g)(1) of H.R. 7 omits this right of beneficiaries to avoid unwanted sectarian practices. As will be noted below, the Department of Justice recommends an amendment to correct this omission.

By virtue of § 604a(j), any such sectarian practices must be privately funded in their entirety and, hence, conducted separate from the government-funded program. See Part III, below, discussing the need to separate sectarian practices from the government-funded program.

13 See DeStefano v. Emergency Housing Group, Inc., 2001 WL 399241* 10-12 (2d Cir. Apr. 20, 2001) (dictum expressing belief that it would be violative of Establishment Clause should beneficiaries of state-funded alcohol treatment program be compelled to attend Alcoholics Anonymous sessions, such sessions being deemed religious indoctrination).

14 The "actual notice" requirement first appeared in the SAMHSA reauthorization. See 42 U.S.C. §300x-65(e)(2). The parallel subsection in H.R. 7 is § 1994A(f)(2). Of course, nothing in prior versions of charitable choice prevents the government/grantor from ensuring actual notice of rights to beneficiaries. Moreover, while it may be prudent for the grantor to provide notice of rights whether required by the underlying legislation or not, the absence of a requirement in older versions of the law hardly rises to the level of a constitutional concern.

15 (i) LIMITATIONS ON USE OF FUNDS FOR CERTAIN PURPOSES; VOLUNTARINESS.— No funds provided through a grant or COOPERATIVE AGREEMENT contract to a religious organization to provide assistance under any program described in subsection (c)(4) shall be expended for sectarian worship, instruction, WORSHIP, or proselytization. IF THE RELIGIOUS ORGANIZATION OFFERS SUCH AN ACTIVITY, IT SHALL BE VOLUNTARY FOR THE INDIVIDUALS RECEIVING SERVICES AND OFFERED SEPARATE FROM THE PROGRAM FUNDED UNDER THIS SUBPART. A certificate shall be SEPARATELY signed by RELIGIOUS such organizations, and filed with the government agency that disbursed the funds, CERTIFYING that gives assurance the organization IS AWARE OF AND will comply with this subsection. FAILURE TO COMPLY WITH THE TERMS OF THE CERTIFICATION MAY, IN ADDITION TO OTHER SANCTIONS AS PROVIDED BY LAW, RESULT IN THE WITHHOLDING OF THE FUNDS AND THE SUSPENSION OR TERMINATION OF THE AGREEMENT. [NOTE: Italics represent Strike-through text & CAPS represent Highlighted text]

ing upon both the government/grantor and the FBO the importance of both voluntariness and the need to separate sectarian practices.

II. THE AUTONOMY OF FAITH-BASED PROVIDERS

Care must be taken that government funding not cause the religious autonomy of FBOs to be undermined. Likewise, care must be taken that the availability of government funding not cause FBOs to fall under the sway of government or silence their prophetic voice. Accordingly, charitable choice was drafted to vigorously safeguard the "religious character" of FBOs, explicitly reserving to these organizations "control over the definition, development, practice, and expression" of religious belief.16 Additionally, congressional protection for the institutional autonomy of FBOs was secured so as to leave them free to succeed at what they do well, namely reaching under-served communities. Finally, protecting institutional autonomy was thought necessary to draw reluctant FBOs into participating in government programs, something many FBOs are unlikely to do if they face invasive or compromising controls.

One of the most important guarantees of institutional autonomy is an FBO's ability to select its own staff in a manner that takes into account its faith. Many FBOs believe that they cannot maintain their religious vision over a sustained time period without the ability to replenish their staff with individuals who share the tenets and doctrines of the association. The guarantee is central to each organization's freedom to define its own mission according to the dictates of its faith. It was for this reason that Congress wrote an exemption from religious discrimination by religious employers into Title VII of the Civil Rights Act of 1964. And charitable choice specifically provides that FBOs retain this limited exemption from federal employment nondiscrimination laws.17 While it is essential that FBOs be permitted to make employment decisions based on religious considerations, FBOs must, along with secular providers, follow federal civil rights laws prohibiting discrimination on the bases of race, color, national origin, gender, age, and disability.18

16 Religious organizations often serve a useful role as moral critics of culture and, in particular, the actions of government. The mention of "control over. expression" in 42 U.S.C. § 604a(d)(1), prohibits government from using the threat of denial of a grant, or withholding monies due under an existing grant, as a means of "chilling" the prophetic voice of the FBO. 17 42 U.S.C. § 604a(f). The parallel subsection in H.R. 7 is § 1994A(e)(2). In order that these employment protections be more clear to all concerned, while still achieving the intended purpose, the Department of Justice recommends that the "Employment Practices" subsection to §1994A be amended as set out below:

(e) EMPLOYMENT PRACTICES.

(1) IN GENERAL.-In order to aid in the preservation of its religious character AND AUTONOMY, a religious organization that provides assistance under a program described in subsection (c)(4) may, notwithstanding any other provision of FEDERAL law PERTAINING TO RELIGIOUS DISCRIMINATION IN EMPLOYMENT, require that its employees adhere to the religious beliefs and practices of the organization TAKE INTO ACCOUNT THE RELIGION OF THE MEMBERS OF THE ORGANIZATION WHEN HIRING, PROMOTING, TRANSFERRING, OR DISCHARGING AN EMPLOYEE.

(2) TITLE VII.-The exemption of a religious organization provided under section 702(A), AND THE EXEMPTION OF AN EDUCATIONAL INSTITUTION UNDER SECTION or 703(e)(2) of the Civil Rights Act of 1964 (42 U.S.C. §§ 2000e-1(A), 2000e-2(e)(2)), regarding employment practices shall not be affected by the religious organization's OR INSTITUTION'S provision of assistance under, or receipt of funds from, PURSUANT TO a program described in subsection (c)(4). NOTHING IN THIS SECTION ALTERS THE DUTY OF A RELIGIOUS ORGANIZATION TO OTHERWISE COMPLY WITH THE NONDISCRIMINATION PROVI

SIONS IN TITLE VII OF THE CIVIL RIGHTS ACT OF 1964 (42 U.S.C. § 2000E ET SEQ.).[NOTE: Italics represent Strike-through text & CAPS represent Highlighted text]

This proposed amendment would ensure that FBOs may continue to staff on a religious basis. However, in this proposal religious considerations may not affect the terms of the compensation package. Hence, there is no intended "religious override" of minimum wage laws, or matters like social security or unemployment compensation. Additionally, under this proposal any employment nondiscrimination provisions imbedded in the underlying federal program legislation cannot affect an FBO's right to staff on a religious basis. Finally, the § § 702(a), 703(e)(2) exceptions in Title VII, while not broadened in any respect, are expressly preserved.

18 In addition to Title VII of the Civil Rights Act of 1964, see, e.g., Title VI of the Civil Rights Act of 1964, 42 U.S.C. §2000d et seq. (1994) (prohibiting discrimination on the bases of race, color, and national origin); Title IX of the Educational Amendments of 1972, 20 U.S.C. §§ 16811688 (1994) (prohibiting discrimination in educational programs and activities on the bases of sex and visual impairment); Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794 (1994) (prohibiting discrimination against otherwise qualified disabled individuals, including individuals with a contagious disease or an infection such as HIV); The Age Discrimination Act of 1975, 29 U.S.C. § 706(8) (c) (1994) (prohibiting discrimination on the basis of age).