FR 2021-00207

The document details a final rule issued by the Department of Health and Human Services (HHS), which modifies existing regulations regarding how grants and awards are managed, particularly around issues of nondiscrimination and religious freedom. This rule is an amendment to the Department's Uniform Administrative Requirements, seeking to ensure that grant recipients follow applicable federal nondiscrimination laws and adhere to Supreme Court decisions. It is a complex reworking of previous regulations that had raised concerns, especially about potentially overreaching beyond what Congress has mandated, and the implications under the Religious Freedom Restoration Act (RFRA).

General Summary

The rule-making process involves reevaluating regulations that were perceived to impose excessive burdens, particularly on religious organizations involved in HHS-funded programs. The revised rules emphasize compliance strictly with statutory nondiscrimination requirements, as imposed by Congress, rather than any expanded interpretations. This move intends to align with Supreme Court rulings and address the potential legal conflicts with RFRA, which is designed to protect religious freedoms from substantial government burdens.

Significant Issues and Concerns

The document indicates several significant issues. Firstly, the complexities of ensuring RFRA compliance suggest potential legal intricacies that may not be entirely resolved, requiring careful monitoring. Secondly, the dynamic of balancing public-private partnerships in the allocation of federal awards needs attention to ensure fair practices without favoritism. Furthermore, the ongoing legal challenges hint at areas within these regulations that may still be contentious or vulnerable to further lawsuits.

Another critical concern includes the discussions surrounding exemptions and exceptions, as these may suggest inconsistencies in rule applications. Additionally, although the Regulatory Flexibility Act assessment in the rule attempts to gauge impacts comprehensively, it might need additional consideration for small entities and varying state-level implications.

Impact on the Public

For the general public, these rule changes emphasize HHS’s commitment to nondiscrimination within its programs, aligning grant policies with federal regulations and Supreme Court decisions. The new rule aims to prevent undue burdens on religious organizations while ensuring that the funds are used effectively without implicit discrimination.

Impact on Specific Stakeholders

Religious organizations stand to be positively impacted by these changes, as the new rule seeks to mitigate conflicts between their participation in federal programs and their religious practices. This change might allow these groups to continue providing vital services, such as foster care, without compromising their beliefs. On the other hand, fair service distribution without discrimination remains an important aspect, warranting close observation to ensure that non-religious stakeholders and those they serve are not adversely affected.

Moreover, the rule might result in heightened clarity and predictability for organizations applying for HHS grants, potentially reducing administration burdens and litigation risks. However, for entities relying on the specifics of old regulations, adjustments may be necessary, which could involve a learning curve.

Ultimately, this final rule reflects an ongoing endeavor to navigate the complex interplay of federal grant administration, religious accommodations, and nondiscrimination in a manner that respects both the established legal framework and the diverse needs of stakeholders involved.

The document outlines several financial references and considerations associated with the regulation of Health and Human Services grants, focusing on indirect costs, economic impacts, and government expenditures.

Spending and Financial Allocations

The regulations discuss allocations in the context of grant administration, particularly in limiting indirect costs on certain federal awards. For instance, it sets an indirect cost cap of eight percent for training grants, exclusive of major expenditures such as tuition and equipment, and extends this rate to international organizations operating entirely outside the United States. Specific exceptions are noted for entities like the American University in Beirut and the World Health Organization, which may negotiate different indirect costs.

Additionally, there are discussions related to the Affordable Care Act (ACA) penalties. Payments for non-compliance with the ACA employer mandate are explicitly deemed non-allowable costs under HHS grants. The document specifies that tax penalties for failing to maintain minimum essential health coverage are excluded from allowable costs before January 1, 2019, indicating past budgetary obligations rather than future allocations.

Economic Impact and Budgetary Considerations

The Office of Management and Budget (OMB) has determined that this new rule is not "economically significant," meaning it is not expected to impact the economy by more than $100 million annually. Moreover, it certifies compliance with the Unfunded Mandates Reform Act by ensuring that federal mandates do not lead to expenditures of $154 million or more by state, local, and tribal governments.

Further, the regulatory familiarization costs for grantees are projected to be around $1,080,609.12 (median) and $1,241,919.56 (mean). These figures account for the labor expense involved in understanding and implementing the new regulations.

Financial References and Issues

The document reflects community concerns about the use of taxpayer dollars in ways that could support discriminatory practices, particularly regarding the removal of nonstatutory nondiscrimination provisions. Commenters expressed worry that taxpayer funds might inadvertently endorse discrimination, potentially creating legal and ethical ramifications.

Additionally, the financial implications for small businesses in the health and social assistance sectors are considered, with these businesses categorized by SBA standards, hosting annual revenues between $8 million and $41.5 million. Commenters noted the need for a thorough cost-benefit analysis to fully understand the impacts on these entities, especially those reliant on grant funding.

In summary, the document provides a financial framework for the implementation of these regulations, addressing the economic impact, the specific allocations of costs, and broader legislative compliance. It seeks to balance grant management with fiscal responsibility while responding to significant public and stakeholder concerns about the ethical use of federal funds.