  Department of Housing and Urban Development Restrictions on
   Grants to Religious Organizations That Provide Secular Social
                             Services

The Establishm ent Clause o f the Constitution does not require the Department of Housing and Ur­
  ban Developm ent to deny grants to religious organizations that engage in religion-based employ­
  m ent discrim ination or to deny grants for rehabilitation, reconstruction, or construction of facili­
  ties that are owned by religious organizations.
D epartm ent of H ousing and Urban Development prohibition on use of grant funds for religious coun­
   seling or use of grant funds to provide services in a facility in which sectarian or religious sym­
   bols are displayed is not more restrictive than the Establishment Clause requires.
                                                                                    September 14, 1988
           M e m o r a n d u m O pinion f o r t h e A s s is t a n t A t t o r n e y G e n e r a l ,
                                     C iv il R ig h t s D iv is io n

                                  Introduction and Summary
   This memorandum responds to your request for our opinion on whether cer­
tain regulations of the Department of Housing and Urban Development restrict
the participation of religious organizations in the Community Development Block
Grant (“CDBG”) and Emergency Shelter Grant programs to a greater degree than
is required by the Constitution. According to Mike Antonovich, Chairman of the
Board of Supervisors of Los Angeles County, these regulations are keeping the
Salvation Army from obtaining a Community Development Block Grant to pro­
vide emergency shelter and food to the homeless. In a memorandum (“Memo­
randum”) submitted to you last November, Frank Atkinson suggested that HUD’s
ban on religious counseling exceeds Establishment Clause requirements and may
transgress the Free Exercise Clause. The Memorandum therefore recommended
that the Legal and Regulatory Policy Working Group develop an administration
policy to enable religious organizations to participate in the delivery of govern­
ment-assisted social services to the maximum extent permissible under the First
Amendment.
   The restrictions to which the Salvation Army objects are generally not em­
bodied in formal rules, but rather are contained in an addendum that HUD re­
quires as part of its grant agreement with religious organizations. The addendum
states that the grantee agrees (1) not to discriminate against any employee or ap­
plicant for employment on the basis of religion in connection with the program
                                                     190
receiving the grant,1(2) not to discriminate on the basis of religion in the provi­
sion of funded services, (3) not to provide any religious instruction or counsel­
ing in connection with the program2, and (4) not to display any sectarian or reli­
gious symbols or decorations in any portion of the facility used to conduct the
program. The addendum further provides that no federal funds may be used to
construct, rehabilitate, or restore any facility owned by a religious organization,
except that “minor repairs” that are directly related to the provision of public ser­
vices and that constitute in dollar terms only a minor portion of the federal grant
may be made to a facility used exclusively for non-religious purposes.
   For the reasons stated below, we believe that HUD’s addendum interferes with
religious organizations’ ability to participate in the CDBG program in several re­
spects not mandated by the Establishment Clause. First, we believe neither the
Constitution nor the applicable statutes require religious organizations to refrain
from discrimination on the basis of religion in employment as a condition of their
receipt of funds under the Community Development Block Grant program. We
also believe that the restriction on the use of federal funds to construct, rehabil­
itate, or restore facilities owned by religious organizations is more severe than
current jurisprudence under the Establishment Clause requires. So long as reli­
gious organizations agree to dedicate facilities constructed, rehabilitated or
restored with federal funds to secular purposes in perpetuity, the strictures man­
dated by Establishment Clause jurisprudence are satisfied. Finally, the prohibi­
tions of religious instruction or counseling and religious symbols are acceptable
so long as they are reasonably interpreted in light of the facts of each case. See
infra note 17 and accompanying text.
   After analyzing these restrictions under current Establishment Clause ju­
risprudence we review the Supreme Court’s recent decision in Bowen v. Kendrick,
487 U.S. 589 (1988) and discuss its general implications for the participation of
religious organizations in secular social welfare programs.
                                                    Analysis
A. Amos Case and HUD’s Restrictions Prohibiting Discrimination in
Employment
   In Corporation of the Presiding Bishop of the Church of Jesus Christ ofLat-
ter-Day Saints v. Amos, 438 U.S. 327 (1987), the Supreme Court upheld against


    1 In addition to this provision of the addendum, HUD’s formal regulations for the Community Development
Block Grants program require grantees “to document the actions undertaken to assure that no person, on the ground
of race, color, national origin, religion, or sex, has been excluded from participation in, denied the benefits of, or
otherwise subjected to discrimination under any activity funded under this part.” 24 C.F R. § 570.900(c)( 1) (1988);
see also 49 Fed. Reg. 43,852, 43,899 (1984) (to be codified at 24 C F.R. § 570.904(a)) (proposed Oct. 31, 1984).
    2 The HUD addendum provides that the grantee “agrees that, in connection with such public services!,] . . . it
will provide no religious instruction or counseling, conduct no religious worship or services, engage in no religious
proselytizing, and exert no other religious influence in the provision of such public services.*'

                                                        191
an Establishment Clause challenge an exemption from title VII’s ban on religious
discrimination in employment for “a religious corporation, association, educa­
tional institution, or society with respect to the employment of individuals of a
particular religion to perform work connected with the carrying on by such cor­
poration, association, educational institution, or society of its activities.” Id. at
330 n. 1. Specifically, the Court held that exemption satisfied the three-part test
set out in Lemon v. Kurtzman, 403 U.S. 602 (1971), for determining whether gov­
ernment assistance to religion is permissible under the Establishment Clause. The
Court held that the law passed muster under the first prong of the Lemon test,
which requires that legislation serve a secular purpose, because its purpose was
to limit governmental interference with the exercise of religion. Id. at 335-36.
The Court held that the exemption did not have the primary purpose of advanc­
ing religion, and thus passed the second prong of the Lemon test, because it did
not increase the capacity of religious institutions to propagate their religion be­
yond that which the institutions possessed prior to enactment of title VII. Id. at
337. Finally, the Court concluded that the statute did not impermissibly entangle
church and state, the third prong of the Lemon test, because it effected a com­
plete separation between churches and title VII. Id. at 339.
   Amos establishes that the Constitution permits an exemption for religious or­
ganizations from an otherwise generally applicable prohibition on religious dis­
crimination in employment and therefore suggests that HUD is not constitution­
ally obligated to require grantees to refrain from religious discrimination in hiring.
Amos, however, does not conclusively resolve the issue of whether HUD’s reg­
ulation prohibiting religious discrimination in employment is required by the Es­
tablishment Clause, because Amos does not address whether an organization that
practices religious discrimination in employment is a “pervasively sectarian” in­
stitution and therefore more likely to be ineligible to receive government finan­
cial assistance under current Supreme Court caselaw.3 Although we have found

     3 We do not believe that Amos itself implies that there is an identity between the class of institutions that are
characterized as “pervasively sectarian” under the Establishment Clause and those that qualify for the exemption.
The exemption at issue in Amos applied to “a religious corporation, association, educational institution, or society
with respect to the employment of individuals of a particular religion to perform work connected with the canying
on by such corporation, association, educational institution, or society of its activities ” 42 U.S.C. § 2000e-l. Noth­
ing in the language of the statute suggests that the exemption is available only to those religious organizations that
are characterized “pervasively sectarian" as a matter of constitutional jurisprudence. See, e.g., Hunt v McNair, 4 13
U S 734, 743 (1973) (referring to “pervasively sectarian” institutions as those “in which religion is so pervasive
that a substantial portion of its functions are subsumed in the religious mission”). Indeed, since the only institutions
that have actually been held to be “pervasively sectarian” are parochial schools, equating “religious” with “perva­
sively sectarian” would appear substantially to narrow the scope of the exemption.
        The facts of the Amos case itself indicate that the exemption is available to religious organizations that are
not “pervasively sectarian.” The individual whose case was before the Supreme Court was employed as a building
engineer at the Deseret Gymnasium, a non-profit facility operated by the Mormon Church 183 U S. at 330. The
district court had specifically found that “there is nothing in the running or purpose of Deseret that suggests that it
was intended to spread or teach the religious beliefs and doctrine and practices of sacred ritual of the Mormon
Church or that it was intended to be an integral part of church administration. Rather, its primary function is to pro­
vide facilities for physical exercise and athletic games. Deseret is open to the public for annual membership fees
or for daily or series admission fees ."Amos v Corporation o f the Presiding Bishop of the Church o f Jesus Christ
o f Latter-Day Saints, 594 F. Supp. 791, 800-01 (D Utah 1984) (footnotes omitted), modified, 618 F Supp. 1013

                                                        192
no case in which this question is squarely presented, we believe the fact that an
organization practices religious discrimination in hiring does not preclude gov­
ernment financial assistance in a manner otherwise compatible with the Estab­
lishment Clause.
   There is no precise definition of a “pervasively sectarian” institution. In Hunt
v. NcNair, 413 U.S. 734 (1973), the Court referred to institutions “in which reli­
gion is so pervasive that a substantial portion of its functions are subsumed in the
religious mission.” Id. at 743. In Roemer v. Maryland Public Works Board, 426
U.S. 736 (1976), the Court defined a “pervasively sectarian” institution some­
what tautologically as an institution “so permeated by religion that the secular
side cannot be separated from the sectarian.” Id. at 759.4
   In practice, the concept of the “pervasively sectarian” institution has been ap­
plied only in the context of aid to church-related schools. Courts have generally
found that church-related elementary and secondary schools are “pervasively sec­
tarian,” while most post-secondary institutions have been deemed sufficiently
secular to permit government assistance. In making these determinations, courts
have looked at a variety of factors, including the degree of control by religious
organizations, whether the school or its curriculum has the purpose of teaching
and promoting a particular religious faith, whether there are religious restrictions
on admission to the school, whether there are required courses in theology or re­
ligious doctrine, whether participation in religious exercises is required, and
whether the school is an integral part of the sponsoring organization’s religious
mission.5 In particular, two appellate courts have considered restrictions or pref­



    3 ( ... continued)
(D. Utah 1985), rev’d, 483 U.S. 327 (1987). The Supreme Court never disputed these findings of the district court
Indeed, the only reference in the majority opinion to the religiosity of the Deseret Gymnasium was a quotation from
the Dedicatory Prayer offered at the opening of the facility “[may] all who assemble here, and who come for the
benefit of their health, and for physical blessings, may feel that they are in a house dedicated to the Lord.” 483 U.S.
at 337. Based on the evidence adduced by the Supreme Court, the Deseret Gymnasium does not appear to be a “per­
vasively sectarian” institution under Establishment Clause jurisprudence
    4 In addition to the lack of a precise definition of “pervasively sectarian” institution, members of the Court dif­
fer with respect to the significance of such a determination For example, Justice Kennedy, in his concurring opin­
ion in Bowen for himself and Justice Scalia, indicates some skepticism about the utility of the “pervasively sectar­
ian” concept. “The question in an as-applied challenge is not whether the entity is of a religious character, but how
it spends its grant.” 487 U.S. at 624-25. The separate concurrence of Justice O’Connor as well suggests that the
proper inquiry is whether any public funds have been used to promote religion 487 U.S. at 622. Even Justices
Blackmun, Brennan, Marshall, and Stevens in dissent in Bowen indicated that “the Constitution does not prohibit
the government from supporting secular social-welfare services solely because they are provided by a religiously
affiliated organization ” 487 U.S. at 640 Significantly for the matter under review, the dissent stated “[t]here is a
very real and important difference between running a soup kitchen or a hospital, and counseling pregnant teenagers ”
Id. at 641. Thus, the dissent suggests the importance of evaluating the substantive nature of the use of public funds.
Confusingly, the dissent also indicated that the label “pervasively sectarian” may serve in some cases as a proxy
for a more detailed analysis of the institution, the nature of the aid, and the manner in which the aid may be used.
Id at 633, see also Roemer v Maryland Pub. Works Bd , 426 U S. 736, 758 (1976).
    5 See, e g F elto n f Secretary, United States Dep't of Educ., 739 F 2d 48 (2d Cir. 1984), a ff d sub nom. Aguilar
v. Felton, 473 U.S. 402 (1985).

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erences in hiring as one factor that may be indicative of a “pervasively sectarian”
institution.6
   We do not believe, however, that these cases establish that any organization
providing social services that limits employment opportunities to adherents of a
single faith is “pervasively sectarian.” Again, the only entities which have been
found by the courts to be “pervasively sectarian” are parochial schools. In con­
trast, religiously affiliated colleges—even those that grant preference in admis­
sions or hiring to members of the sponsoring faith—have generally not been
deemed pervasively sectarian. See Roemer v. Maryland Pub. Works Bd., 426 U.S.
736 (1976); Hunt v. McNair, 413 U.S. 734 (1973); Tilton v. Richardson, 403 U.S.
672 (1971). Moreover, even those members of the Court more apt to find an in­
stitution to be pervasively sectarian have indicated that the Establishment Clause
poses fewer obstacles to the involvement of religious organizations when the ac­
tivity is not aimed at the “shaping [of] belief and changing behavior,” but “neu­
trally dispensing medication, food or shelter.”7 We therefore believe that the few
cases ascribing significance to discrimination in hiring by parochial schools in
determining whether such schools are “pervasively sectarian” are of limited rel­
evance when applied to the subject under review.8
   Nor does any statute require HUD to prohibit CDBG grantees from limiting
employment opportunities on the basis of religion. The statute creating the CDBG
program, title I of the Housing and Community Development Act of 1974, Pub.
L. No. 93-383, 88 Stat. 633 (codified as amended at 42 U.S.C. §§ 5301-5320),
does not require prohibition of religious discrimination in employment.9 More­

    6 The Second Circuit held that parochial schools receiving title 1 assistance were “pervasively sectarian” be­
cause, inter alia, they were part of a “system in which religious considerations play a key role in the selection of
students and teachers, and which has as its substantial purpose the inculcation of religious values.” Felton v. Sec­
retary, United States Dep’t ofEduc., 739 F 2d 48,68 (2d Cir 1984), a ff dsub nom. Aguilar v Felton, 473 U.S. 402
(1985); see also Cuesnongle v. Ramos, 713 F.2d 881, 883 (1st Cir. 1983) (attributes of a “pervasively sectarian”
institution include religion-based admission policies).
    7 Bowen v. Kendrick, 487 U S. 641 (1988) (Blackmun, J., dissenting)
    8 The Memorandum for John J Knapp, General Counsel, Department of Housing and Urban Development, from
Theodore B. Olson, Assistant Attorney General, Office of Legal Counsel (July 1, 1983) (“Olson Memorandum”)
which stated that “[A]n institution that grants preferences to members of a particular creed would by definition be
a pervasively sectarian organization,” Olson Memorandum at 19, is not to the contrary. That comment was made
in the context of religious discrimination among potential beneficiaries of government-funded social service pro­
grams. While that comment may at some point require re-examination, we need not here reach the constitutional
issue of whether discrimination among beneficianes makes an institution “pervasively sectarian,” because, as dis­
cussed below, the statute creating the CDBG program prohibits religious discrimination in the provision of ser­
vices. See infra note 10.
    9 Section 109 of the 1974 Act (42 U.S.C. § 5309) provides that “[n]o person in the United States shall on the
ground of race, color, national origin, or sex be excluded from participation in, be denied the benefits of, or be sub­
jected to discrimination under any program or activity funded in whole or in part with funds made available under
this chapter,” but does not forbid religious discnmination Section 104(b)(2) of the Act (42 U.S.C § 5304(b)(2))
further requires grantees to certify that their grants “will be conducted and administered in conformity with Public
Law 88-352 and Public Law 90-284 ” Public Law No. 88-352 is the Civil Rights Act of 1964, 78 Stat 241 (cod­
ified as amended at 28 U S.C. § 1447, 42 U.S.C. §§ 1971, 1975a-1975d, 2000a-2000h-6), and Public Law No.
90-284 is the Civil Rights Act of 1968, 82 Stat. 73 (codified as amended in scattered sections of 18 U.S.C., 42
U.S C , 25 U.S.C. §§ 1301 -1341, 28 U.S.C. § 1360 note). No provision of the latter act relates to discrimination in
employment.

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over, although title VI of the Civil Rights Act of 1964 contains a general prohi­
bition of discrimination in federally assisted programs on the ground of race,
color, or national origin, 42 U.S.C. § 2000d, religious discrimination is not pro­
hibited.10
   The only other arguably relevant provision of the 1964 Act is title II, the pub­
lic accommodations provision, which provides that “[a]ll persons shall be enti­
tled to the full and equal enjoyment of the goods, services, facilities, privileges,
advantages, and accommodations of any place of public accommodation, as de­
fined in this section, without discrimination or segregation on the ground of race,
color, religion, or national origin.” 42 U.S.C. § 2000a(a). Although barring reli­
gious discrimination by places of public accommodation, this section does not
apply to the employment practices of such establishments but only to their pro­
vision of services. Accordingly, it appears that the Housing and Community De­
velopment Act of 1974, whose certification provision incorporates by reference
the Civil Rights Acts of 1964 and 1968, does not require religious organizations
to refrain from religious discrimination in employment in connection with ac­
tivities funded under the Act.11
   We therefore conclude that the Constitution not only permits the granting of
an exemption to religious organizations from otherwise applicable prohibitions
on religious discrimination in employment, but also that it permits government
financial assistance to the organizations so exempted.12The act creating the block
grant program does not require a prohibition on religious discrimination in hir­
ing. Since HUD’s regulations flatly prohibit this form of religious discrimination
by grantees, they are more restrictive than required by law.
B. HUD’s Restrictions Prohibiting Rehabilitation, Restoration and
Construction Funds for Religious Organizations
   The HUD regulations that prohibit use of federal funds to construct, rehabili­
tate, or restore any facility that is owned by a religious organization are also more
restrictive than is constitutionally required. It is clear that there is no per se ex­
clusion of religious institutions from the receipt of government aid under certain
circumstances. As the Court has stated, “[r]eligious institutions need not be quar­
antined from public benefits that are neutrally available to all.” Roemer v. Mary­
land Pub. Works Bd., 426 U.S. 736, 746 (1976).
    10 Title VII of the 1964 Act does forbid discrimination, including religious discrimination, in employment, but
also contains the exemption for reltgious organizations upheld in Amos. 42 U.S.C. § 2000e~l
    11 The same is not true of religious discrimination in the provision of funded social services. Title II of the Civil
Rights Act of 1964, as indicated in the text, prohibits religious discrimination in places of public accommodation.
Shelters appear to be places of public accommodation under the statute, since they constitute an “inn, hotel, motel,
or other establishment which provides lodging to transient guests.” 42 U S.C. § 2000a(b)( I). Other types of social
service facilities may or may not fail under the statutory definition of places of public accommodation.
    12 It is also clear that mere receipt of government financial assistance will not transform the religious organiza­
tion into a state actor subject to constitutional prohibitions on religious discnmination. Rendell-Baker v Kohn, 457
U.S. 830 (1982) (fact that public funds constituted between 90 and 99 percent of private school’s budget did not
satisfy under color of law requirement of 42 U.S.C. § 1983)\ see also Blum v Yaretsky, 457 U.S. 991 (1982);/acjt-
son v Metropolitan Edison Co., 419 U S 345, 350-53 (1974).

                                                         195
   While the Court’s recent decision in Bowen casts some doubt on the breadth
or significance of the label “pervasively sectarian,”13 the Court has in the past
distinguished between those religious institutions that are “pervasively sectar­
ian” and those that are not.14Government assistance to a “pervasively sectarian”
religious institution has been generally thought to have the primary effect of ad­
vancing religion, Hunt v. McNair, 413 U.S. 734, 743 (1973), and therefore fail
the second prong of the Lemon test. However, as discussed above, not all reli­
gious institutions are “pervasively sectarian,” and the Court has sustained direct
financial assistance to church-affiliated organizations, provided the three-part
Lemon test is satisfied. Roemer v. Maryland Pub. Works Bd., 426 U.S. 736 (1976)
(aid to church-affiliated college); Hunt v. McNair, 413 U.S. 734 (1973) (same);
Tilton v. Richardson, 403 U.S. 672 (1971) (same); Bradfield v. Roberts, 175 U.S.
291 (1899) (aid to hospital operated by religious order).
   The seminal modem case on the permissibility of government assistance to re­
ligious institutions qua institutions is Tilton v. Richardson, 403 U.S. 672 (1971).
Earlier cases such as Everson v. Board ofEduc., 330 U.S. 1 (1947), and Board
ofEduc. v. Allen, 392 U.S. 236 (1968), had upheld the constitutionality of pub­
lic assistance in the context of parochial schools on the theory that the aid went
to the students, not to the schools themselves. “The State contributes no money
to the schools. It does not support them. Its legislation, as applied, does no more
than provide a general program to help parents get their children, regardless of
their religion, safely and expeditiously to and from accredited schools.” Everson
v. Board ofEduc., 330 U.S. at 18. “[N]o funds or books are furnished to parochial
schools, and the financial benefit is to parents and children, not to schools.” Board
ofEduc. v. Allen, 392 U.S. at 243-44. Tilton is the first modem case to permit
direct financial assistance to religious institutions.15
   In Tilton the Supreme Court upheld the constitutionality of awarding construc­
tion grants under the federal Higher Education Facilities Act of 1963 to church-re-
lated colleges and universities. The Act established a program, administered by the
Commissioner of Education, to provide grants and loans to institutions of higher
education for the construction of academic facilities. The Act specifically excluded

     13 See supra note 5
     14 This Office has already repudiated any inference from the Olson Memorandum that organizations such as the
Salvation Army, B ’nai B ’rith, and the Young Men’s Christian Association are “pervasively sectarian.” See Letter
for Stuart C. Sloame, Deputy General Counsel, Department of Housing and Urban Development, from Douglas W.
Kmiec, Deputy Assistant Attorney General, Office of Legal Counsel (Dec. I, 1986) (“Kmiec letter”), reprinted in
HUD's Proposed Regulations Denying Funds to Religious Groups for Sheltering the Homeless Hearings Before
a Subcomm o f the House Comm, on Government Operations, 100th Cong., 1st Sess. 111-12 (1987).
     15 An intermediate case bridging the student benefit cases and the direct aid cases is Walz v. Tax Comm'n, 397
U.S 664 (1970) There the Court sustained the constitutionality of a property tax exemption for property owned by
religious organizations. Although a tax exemption is the economic equivalent of a subsidy, as die Court has rec­
ognized in other contexts, see Regan v. Taxation With Representation o f Washington, 461 US. 540, 544
(1983)(“Both tax exemptions and tax deductibility are a form of subsidy that is administered through the tax sys­
tem. A tax exemption has much the same effect as a cash grant to the organization of the amount of tax it would
have to pay on its income.”), the Court in Walz clearly distinguished tax exemptions from subsidies for purposes
of legal analysis “The grant of a tax exemption is not sponsorship since the government does not transfer part of
its revenue to churches but simply abstains from demanding that the church support the state.” 397 U.S at 675.

                                                       196
from eligibility for federal financing, however, “any facility used or to be used for
sectarian instruction or as a place for religious worship.”
   The Court found that the Act clearly had a legitimate secular purpose, namely
encouraging and assisting colleges and universities to expand opportunities for
higher education. A more difficult question was whether the Act, despite its le­
gitimate secular objective, nevertheless had the primary effect of advancing re­
ligion. The Court noted that “[T]he simplistic argument that every form of fi­
nancial aid to church-sponsored activity violates the Religion Clauses was
rejected long ago in Bradfield v. Roberts, 175 U.S. 291 (1899).” Tilton v. Richard­
son, 403 U.S. 672, 679 (1971). The Court then proceeded to examine the use of
federal assistance by the recipient institutions to determine whether the program
had the effect of advancing religion.
   The Court found that the Act “was carefully drafted to ensure that the feder­
ally subsidized facilities would be devoted to the secular and not the religious
function” of the grantee. Id. at 679. The colleges whose grants were before the
Court had scrupulously observed these restrictions and presented uncontradicted
evidence that “there had been no religious services or worship in the federally fi­
nanced facilities, that there are no religious symbols ... in or on them, and that
they had been used solely for nonreligious purposes.” Id. at 680. On this basis
the Court concluded that the federally funded buildings were “indistinguishable
from a typical state university facility.” Id.
   Moreover, the Court found that, unlike elementary and secondary parochial
schools, religious indoctrination was not a substantial purpose or activity of
church-related colleges. Id. at 680, 681. Accordingly, “there is less likelihood
than in primary and secondary schools that religion will permeate the area of sec­
ular education.” Id. at 687. That in turn “reduces the risk that government aid will
in fact serve to support religious activities,” thereby diminishing the need for in­
tensive government surveillance and reducing to an acceptable level the entan­
glement between government and religion. Id.16 The Court therefore concluded
that the inclusion of church-related schools in the grant program did not violate
the Establishment Clause.
   Hunt v. McNair and Roemer v. Maryland Public Works Board involved similar
programs at the state level. At issue in Hunt was a South Carolina statute that pro­
vided for the issuance of revenue bonds by a state authority to finance facilities at
colleges and universities. The Court rejected a facial challenge to the participation
of church-related colleges in the program for the same reasons set forth in Tilton.
   In Roemer the Court upheld the constitutionality of noncategorical grants to
church-related colleges, so long as the grants were not used for sectarian pur­
poses. Justice Blackmun’s plurality opinion in Roemer is perhaps the most force­
ful statement of the propriety of allowing religious organizations to participate
in secular assistance programs. Recognizing the impossibility of any “hermetic
separation” between church and state, Justice Blackmun noted that “[i]t long has
   16 The Court also found that the Act did not violate the Free Exercise nghts of taxpayers who objected to the
grants to church-related schools 403 U S at 689.

                                                    197
been established . . . that the State may send a cleric, indeed even a clerical or­
der, to perform a wholly secular task.” Roemer v. Maryland Pub. Works Bd., 426
U.S. 736, 746 (1976). The Court not only rejected the notion that “a religious
person can never be in the State’s pay for a secular purpose,” it suggested that
exclusion because of religion would itself be unconstitutional. Id. at 746 & n.13.
Tilton, Hunt, and Roemer make it clear that a religious organization may partic­
ipate in public programs of a secular nature on the same basis as nonsectarian or­
ganizations. The determinative factor for Establishment Clause purposes is not
the religious nature of the facility’s owner but the uses to which the facility is
put. So long as a facility is used for secular purposes, and is permanently dedi­
cated to those purposes, the Constitution permits governmental aid, even though
the facility is owned by a religious institution. Roemer v. Maryland Pub. Works
Bd., 426 U.S. 736 (1976); Hunt v. McNair, 413 U.S. 734 (1973); Tilton v. Richard­
son, 403 U.S. 672 (1971); Bradfield v. Roberts, 175 U.S. 291 (1899).17

     17 HUD itself apparently now recognizes “the vital and unique role religious organizations play in providing for
individuals in need of shelter and other public assistance.” 52 Fed. Reg. 38,864, 38,868 (1987) In its recently pro­
mulgated regulations for the Emergency Shelter Grants Program, HUD announced that federal funds can be used
to renovate buildings owned by religious organizations if (1) the building or portion thereof that is to be improved
with HUD funds is leased to a wholly secular entity, (2) the HUD funds are provided solely to the secular lessee,
(3) the leased premises are used exclusively for secular purposes and are available to all persons regardless of re­
ligion, (4) the lease payments do not exceed the fair market rent of the premises before the improvements are made,
(5) the portion of the cost of any improvements that also serve non-leased areas of the building is allocated to and
paid by the lessor, (6) the lessor agrees that, unless the lessee or another secular successor retain the leased premises
for wholly secular purposes for at least the useful life of the improvements, the lessor will pay to the lessee an
amount equal to the residual value of the improvements, and (7) the lessee permits any payments for the residual
value of improvements to the State or local government agency that made the original grant, or to HUD in the case
of a direct grant. 52 Fed. Reg. 38,864, 38,870 (1987) (to be codified at 24 C.F.R. § 575.21(b)(2)).
        We believe that the leasing arrangement required by the regulations is not constitutionally necessary and
therefore should not be mandated by HUD. It is clear that religious organizations may participate on an equal foot­
ing with secular organizations in general assistance programs. The Supreme Court has recently reaffirmed this prin­
ciple, noting that “this Court has never held that religious institutions are disabled by the First Amendment from
participating m publicly sponsored social welfare programs.” Bowen v. Kendrick, 487 U.S. 589, 608 (1988). Leas­
ing arrangements under the terms specified in the HUD regulations might enhance the acceptability, however, of a
religious organization running a homeless shelter under the Emergency Shelter grant program within a highly sec­
tarian structure like a church building. The leasing provisions might be prudentially retained, therefore, but with
the qualification that they apply only where a religious organization wishes to utilize space within a highly sectar­
ian building of this variety.
       This is not to state that such leasing arrangements are constitutionally required even in this context. Given
the Court's newly-expressed preference to review Establishment Clause challenges on an as-applied, rather than
facial, basis, and the suggestion by even the dissenting members of the Court in Bowen v. Kendrick that “soup
kitchen”-Uke functions are more tolerably supplied by religious organizations, it may be that the Court would sus­
tain the operation of a publicly-funded emergency homeless shelter even, perhaps, in the Church proper, despite
the presence of permanently affixed religious symbols therein, provided the shelter was operated without religious
counseling or in a manner designed to inculcate the views of religious faith. The willingness of the Court to accept
the use of such a facility will likely depend, however, on the severity of the particular emergency housing need and
the willingness of the church to demonstrate clearly that only secular assistance will be provided. The point is sim­
ply that the Court has indicated that Establishment Clause principles ought not be applied in a sweeping, mechan­
ical fashion. Moreover, where a recipient of public funds has applied them in a manner inconsistent with the Clause,
“an appropriate remedy would require the Secretary to withdraw [grant approval for that recipient].” 487 U S. at
621
       Despite the somewhat more generous attitude displayed by HUD’s shelter regulations, we are informed that
HUD still requires grantees under both the Community Development Block Grant and Emergency Shelter Grant
programs to execute the special addendum to the grant agreement.
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C. HUD’s Prohibitions on Religious Counseling and Religious Symbols
   On its face, HUD’s prohibition on religious counseling and religious symbols
would not appear to be more restrictive than required by the Establishment Clause.
The Supreme Court’s Establishment Clause cases presuppose that government
is providing secular assistance to be used for only secular purposes.
   Although it is clear beyond peradventure that the government cannot subsi­
dize religious counseling by the Salvation Army, there is nothing precluding HUD
from subsidizing the Army’s secular program for the homeless (food and shel­
ter) if it can be meaningfully and reasonably separated from the Army’s sectar­
ian program (religious counseling). Constitutional difficulty only arises when the
secular component is inseparable from the sectarian component to permit gov­
ernment assistance.
   Thus, as a constitutional matter the Salvation Army cannot undertake religious
counseling with public funds; however, it can accept public funds to provide food
and shelter. If the facility used for the shelter program was not constructed, ren­
ovated, or maintained with public funds, it is theoretically possible for a portion
of the facility to be used exclusively for the publicly-funded secular purpose of
food and shelter and another portion to be used for the non-publicly funded sec­
tarian purpose of religious counseling. Beyond this physical separation, HUD
need only ensure that the Army’s privately-funded religious activities are not of­
fered as part of its shelter program and that the shelter program is not used as a
device to involve the homeless in religious activities.18 Assuming these condi­
tions were met, the Salvation Army could both participate in the CDBG or Emer­
gency Shelter Grant programs and fulfill its religious mission using a single fa­
cility.19
D. Bowen v. Kendrick
    The Supreme Court’s recent decision in Bowen v. Kendrick, 487 U.S. 598
(1988), upholding the participation of religious organizations in federally funded
counseling programs under the Adolescent Family Life Act, Pub. L. No. 97-35,
tit. IX, 95 Stat. 578 (codified as amended at 42 U.S.C. §§ 300z to 300z-10), re­
confirms the analysis set forth above. Specifically, Kendrick makes it clear that
religious organizations may participate in government-funded social welfare pro­
grams so long as they engage in only purely secular activities. Kendrick thus sup­
    18 The Court’s recent decision in Bowen v. Kendrick indicates that outside of the parochial school context the
monitoring necessary to ensure this separation will not entail excessive entanglement between church and state.
487 U.S. at 615-16.
    19 Moreover, we believe that HUD’s addendum on religious counseling may be construed to permit such use,
because if religious counseling is kept completely separate from the publicly funded services it is not “connected”
with those services within the meaning of the addendum. Of course, if the facility was constructed, renovated, or
maintained with public funds, then no religious activities could be permitted therein. However, it may be permis­
sible to use public funds to construct, renovate or maintain a separable portion of the facility that would be perma­
nently and exclusively devoted to secular activities. HUD’s regulations for the Emergency Shelter Grant program
contemplate this possibility. See supra, note 17.

                                                        199
ports our conclusion that the Salvation Army may receive federal funds for the
purpose of sheltering the homeless.
   At issue in Kendrick were grants awarded under the Adolescent Family Life Act
(“AFLA”) to religious organizations for counseling teenagers in the areas of ado­
lescent premarital sexual relations, pregnancy, and parenthood. The Court firmly
rejected the claim that the mere participation of religious organizations as grantees
under AFLA was unconstitutional. Relying on a long line of cases upholding gov­
ernment assistance to religious organizations dating back to 1899, the Court dis­
avowed the notion that “religious institutions are disabled by the First Amendment
from participating in publicly sponsored social welfare programs.” Bowen v.
Kendrick, 487 U.S. 589,609 (1988). So long as the assistance does not have the ef­
fect of advancing religion, religious institutions may participate in general social
welfare programs on an equal footing with secular organizations.
   The Court also disagreed with the claim that government funding of religious
organizations in activities, even though otherwise purely secular, that involved
fundamental matters of religious doctrine created a “symbolic link” between
church and state that violated the Establishment Clause. Id. at 613. The Court
noted that acceptance of this argument would always preclude any aid to reli­
gious organizations. Id. at 613.
   Moreover, the Court squarely rejected the argument that funding such organi­
zations under AFLA may lead to an “excessive government entanglement with
religion” and thus violate the third prong of the Lemon test. Id. at 615. Noting
that this prong of the Lemon test had been much criticized over the years, the
Court explained that cases that had found entanglement had involved aid to
parochial schools, which were “pervasively sectarian” and had “as a substantial
purpose the inculcation of religious values.” Id. at 616. In contrast, the Court
noted that there was no reason to assume that the religious organizations eligible
for AFLA funds are pervasively sectarian and thus no reason to fear that the kind
of monitoring required will lead to excessive entanglement. Id.
   The Court’s opinion in Kendrick thus stands for several important proposi­
tions. First, it makes clear that religious organizations may fully participate in
government social programs even when these programs include moral teaching.
A fortiori, religious organizations are eligible to participate in the provision of
government-subsidized care for the poor. Second, the Court’s opinion seems to
signal a relaxation of the entanglement prong of the Lemon test. Unless the in­
stitutional context in which the religious organization operates is so pervasively
sectarian as to be akin to a parochial school, the government will be permitted to
monitor religious organizations to assure that public money is spent in a consti­
tutional manner.20
   20 We believe that the Supreme Court’s conclusion with respect to excessive entanglement in Kendrick fatally
undermines the Olson Memorandum’s argument that, in order to avoid excessive entanglement, religious organi­
zations could participate in the section 202 program only through separate, nonreligious entities The memoran­
dum reasoned that participation by religious organizations in the section 202 program would require a degree of
“administrative oversight [that] would necessarily involve an excessive government entanglement with religion.”
Olson Memorandum at 13.

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   On the other hand, Kendrick did not address the degree to which and the means
by which organizations must keep separate their religious activities from the ac­
tivities funded by the government. Because the Supreme Court decided only the
facial validity of the statute, leaving the validity of the statute as applied to the
district court on remand, Kendrick provides little guidance on the issue of the de­
gree of separation required between the government-funded secular activities and
the privately funded sectarian activities of a religious grantee. It is clear, how­
ever, that at least some of the religious grantees did not maintain the constitu­
tionally required separation between their religious mission and their secular
function under AFLA. The Government’s brief in Kendrick conceded that there
were “departures from proper constitutional principles in individual AFLA pro­
grams,” Brief for the Appellant at 40, Bowen v. Kendrick, 487 U.S. 589 (1988),
and the Court explicitly acknowledged that “the record contains evidence of spe­
cific incidents of impermissible behavior by AFLA grantees.” 487 U.S. at 620.21
Accordingly, Kendrick does not in any way establish that religious organizations
may use public funds in connection with promotion of religious views or prac­
tices. The Supreme Court has ruled only that religious organizations may partic­
ipate on an equal basis in secular government assistance programs; Kendrick does
not suggest that the Court would be amenable to relaxing the degree to which
these organizations must separate their religious functions from their govern­
ment-funded secular activities.
                                                    Conclusion
   For the reasons set forth in this memorandum, we believe that HUD’s grant
prohibitions on religious discrimination in employment and its limitation on
grants for rehabilitation, restoration or construction of facilities owned by reli­
gious organizations but devoted to secular purposes are not required by the Con­
stitution. We do not believe that HUD’s addendum prohibitions of religious coun­
seling and religious symbols are more restrictive than the Establishment Clause
requires so long as they are reasonably applied. Finally, the prohibition relating
to discrimination against program beneficiaries is consistent with constitutional
and statutory requirements.
                                                                            D o u g l a s W . K m ie c
                                                                 Acting Assistant Attorney General
                                                                      Office of Legal Counsel
   20 (. . continued)
         Kendrick is clearly to the contrary. If the Court rejected an excessive entanglement attack in the context of
a program such as AFLA, which involved counseling of adolescents on secular matters which frequently coincided
with religious values, a fortiori it would not sustain such an attack in the context of a program that provided non-
pedagogical assistance with no religious connotation, such as food, clothing, and shelter. For a disavowal of an ex­
pansive interpretation of the Olson Memorandum's concept of “pervasively sectarian,” see the Kmiec letter at note
 15.
     21 The district court had found that at least one grantee had included “spirituaJ counseling” as part of its services,
that numerous grantees conducted their programs in facilities adorned with religious symbols, and that several
grantees had presented privately funded religious counseling immediately after the government-funded AFLA coun­
seling. Kendrick v. Bowen, 657 F. Supp. 1547, 1566 (D.D.C. 1987)

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