Rescission of Implementing Legal Requirements Regarding the Equal Opportunity Clause's Religious Exemption Rule, 12842-12861 [2023-04150]

Agencies

• DEPARTMENT OF LABOR
• Office of Federal Contract Compliance Programs

[Federal Register Volume 88, Number 40 (Wednesday, March 1, 2023)]
[Rules and Regulations]
[Pages 12842-12861]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-04150]


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DEPARTMENT OF LABOR

Office of Federal Contract Compliance Programs

41 CFR Part 60-1

RIN 1250-AA09


Rescission of Implementing Legal Requirements Regarding the Equal 
Opportunity Clause's Religious Exemption Rule

AGENCY: Office of Federal Contract Compliance Programs, Labor.

ACTION: Final rule; rescission.

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SUMMARY: This action finalizes the proposal of the Office of Federal 
Contract Compliance Programs (OFCCP) to rescind the final rule titled 
``Implementing Legal Requirements Regarding the Equal Opportunity 
Clause's Religious Exemption,'' which took effect on January 8, 2021. 
This rescission removes the regulations established by that rule.

DATES: This final rule is effective on March 31, 2023.

FOR FURTHER INFORMATION CONTACT: Tina Williams, Director, Division of 
Policy and Program Development, Office of Federal Contract Compliance 
Programs, 200 Constitution Avenue NW, Room C-3325, Washington, DC 
20210. Telephone: (202) 693-0104 (voice) or (202) 693-1337 (TTY).

SUPPLEMENTARY INFORMATION: 

I. Executive Summary

    OFCCP enforces Executive Order 11246, which prohibits Federal 
Government contractors and subcontractors from discriminating against 
employees in a manner that would impair the economy and efficiency of 
work performed on government contracts and would allow Federal tax 
dollars to be used to deny equal employment opportunities. Section 202 
of Executive Order 11246, as amended, requires every non-exempt 
contract and subcontract to include an equal opportunity clause, which 
specifies the nondiscrimination and affirmative action obligations each 
contractor or subcontractor assumes as a condition of its Government 
contract or subcontract. Among other obligations, each contractor 
agrees, as a condition of its Government contract, not to discriminate 
in employment on the basis of race, color, religion, sex, sexual 
orientation, gender identity, or national origin.
    As amended in 2002, Executive Order 11246 includes a limited 
exemption for certain religious organizations that is expressly modeled 
on the religious exemption in Title VII of the Civil Rights Act of 
1964. Since 2003, this religious exemption has been included in OFCCP's 
regulations at 41 CFR 60-1.5(a)(5). For over 17 years, under the 
administrations of both President George W. Bush and President Barack 
Obama, OFCCP's policy was to determine the scope and applicability of 
the religious exemption, if invoked, by applying Title VII case law and 
principles to the facts and circumstances of each situation. In 
December 2020, OFCCP promulgated a rule that purported to clarify the 
scope and application of the Executive Order 11246 religious exemption 
(hereinafter ``2020 rule''). On balance, however, the 2020 rule 
increased confusion and uncertainty about the religious exemption, 
largely because it departed from and questioned longstanding Title VII 
precedents. Upon further consideration, OFCCP now believes that this 
could have the effects of diminishing the economy and efficiency of 
work performed on Federal contracts and weakening nondiscrimination 
protections for workers. With the present action, for the reasons 
explained below, OFCCP is rescinding the entire 2020 rule so that the 
agency can return to its longstanding approach of aligning the 
Executive Order 11246 religious exemption with Title VII case law as 
applied to the facts and circumstances of each situation. OFCCP remains 
committed to protecting religious freedom in accordance with applicable 
law and will continue to provide any needed compliance assistance on 
the religious exemption.

II. Background

    Executive Order 11246, as amended, and its predecessors reflect the 
Government's longstanding policy of prohibiting Federal contractors 
from engaging in discrimination that undermines efficiency and economy 
as well as equal employment opportunity. See, e.g., E.O. 8802, 6 FR 
3109 (June 27, 1941) (``reaffirm[ing] the policy of the United States 
that there shall be no discrimination in the employment of workers in 
defense industries or government because of race, creed, color, or 
national origin''); E.O. 10479, 18 FR 4899 (Aug. 18, 1953) (reiterating 
``the policy of the United States Government to promote equal 
employment opportunity for all qualified persons employed or seeking 
employment on government contracts because such persons are entitled to 
fair and equitable treatment in all aspects of employment on work paid 
for from public funds''); E.O. 10925, 26 FR 1977 (Mar. 8, 1961) 
(describing it as ``the plain and positive obligation of the United 
States Government to promote and ensure equal opportunity for all 
qualified persons, without regard to race, creed, color, or national 
origin, employed or seeking employment with the Federal Government and 
on government contracts''); E.O. 13672, 79 FR 42971 (July 23, 2014) 
(amending Executive Order 11246 to include sexual orientation and 
gender identity to ``provide for a uniform policy for the Federal 
Government to prohibit discrimination and take further steps to promote 
economy and efficiency in Federal Government procurement''). Presidents 
have long implemented this nondiscrimination policy, which also ensures 
that taxpayer funds are not used to discriminate, especially in the 
performance of functions for the Government itself and, thus, for the 
public, pursuant to the Federal Property and Administrative Services 
Act of 1949 (Procurement Act). See 40 U.S.C. 101, 121(a); Contractors 
Ass'n of E. Pa. v.

[[Page 12843]]

Sec'y of Labor, 442 F.2d 159, 170 (3d Cir. 1971).\1\
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    \1\ A civil liberties organization submitted a comment on 
OFCCP's notice of proposed rescission of the 2020 rule asserting 
that OFCCP is without power to issue or enforce regulations because 
neither the Federal Property and Administrative Services Act of 1949 
(Procurement Act) nor any other statute authorizes Executive Order 
11246 or OFCCP's regulations. Over the past 80 years, however, 
numerous Presidents have imposed antidiscrimination conditions for 
Federal contracts, invoking both statutory and constitutional 
authorities. See, e.g., E.O. 9346 (May 27, 1943); E.O. 10925 (Mar. 
6, 1961); E.O. 11246 (Sept. 24, 1965); E.O. 13279 (Dec. 12, 2002); 
E.O. 13672 (July 21, 2014). Moreover, courts of appeals long ago 
pronounced that E.O. 11246 ``is . . . firmly rooted in 
congressionally delegated authority,'' United States v. Mississippi 
Power & Light Co., 638 F.2d 899, 905 (5th Cir. 1981); see also 
Contractors Ass'n, 442 F.2d at 170-71; Farkas v. Texas Instrument, 
Inc., 375 F.2d 629, 632 n.1 (5th Cir. 1967); Farmer v. Philadelphia 
Elec. Co., 329 F.2d 3, 8 (3d Cir. 1964), and that regulations 
implementing that order ``embod[y] a longstanding, congressionally 
approved policy in government procurement,'' Mississippi Power & 
Light Co, 638 F. 2d at 906. In the many decades since those 
decisions, Congress has specifically reviewed E.O. 11246, see, e.g., 
Hearings Before the Subcomm. on Separation of Powers of the Senate 
Comm. on the Judiciary on the Philadelphia Plan and S. 931, 91st 
Cong., 1st Sess. (1969), and has repeatedly revised the Procurement 
Act, see, e.g., Public Law 107-217, secs. 1, 5(a)-(b), 116 Stat. 
1062, 1063, 1068, 1303 (2002) (recodifying relevant provisions of 
the Act while ``mak[ing] no substantive change in existing law''), 
yet has not taken any steps to question or limit the well-known 
judicial understanding of those authorities.
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    It is OFCCP's longstanding policy and practice, when analyzing 
potential discrimination under Executive Order 11246, to follow the 
principles of Title VII, which prohibits employers from discriminating 
against applicants and employees on the basis of race, color, religion, 
sex (including pregnancy, sexual orientation, and gender identity), or 
national origin. 42 U.S.C. 2000e-2; see OFCCP v. Bank of Am., No. 13-
099, Final Decision & Order, 2016 WL 2892921, at *7 (ARB Apr. 21, 2016) 
(``[I]n addition to relevant provisions of E.O. 11246, its implementing 
regulations, and Department precedent, we also look to federal 
appellate court decisions addressing similar pattern or practice claims 
of intentional discrimination adjudicated under Title VII. . . .''); 
OFCCP v. Greenwood Mills, Inc., Nos. 00-044, 01-089, Final Decision & 
Order, 2002 WL 31932547, at *4 (ARB Dec. 20, 2002) (``The legal 
standards developed under Title VII of the Civil Rights Act of 1964 
apply to cases brought under [Executive Order 11246]''). As amended in 
1972, Title VII contains an exemption for religious corporations, 
associations, educational institutions, and societies with regard to 
the employment of individuals ``of a particular religion'' to perform 
work connected with their activities. Equal Employment Opportunity Act 
of 1972, Public Law 92-261, sec. 3, 86 Stat. at 104 (codified at 42 
U.S.C. 2000e-1(a)). In the decades since the enactment of the Title VII 
religious exemption, a robust body of case law interpreting the 
exemption has developed.
    In 2002, President George W. Bush amended Executive Order 11246 to 
include, almost verbatim, Title VII's exemption for religious 
organizations. Sec. 4, E.O. 13279, 67 FR 77143 (Dec. 16, 2002) 
(codified at sec. 204(c), E.O. 11246). The amendment was intended ``to 
ensure the economical and efficient administration and completion of 
Government contracts.'' Id. The only substantive difference between the 
text of the Title VII religious exemption and that of the Executive 
Order 11246 religious exemption is that the latter includes an express 
proviso that, although a Government contractor or subcontractor that is 
a religious corporation, association, educational institution, or 
society is exempt from having to comply with section 202 (the equal 
opportunity clause of Executive Order 11246) ``with respect to the 
employment of individuals of a particular religion,'' it is ``not 
exempted or excused from complying with the other requirements 
contained in this Order.'' Sec. 204(c), E.O. 11246.
    In 2003, OFCCP published a final rule amending its Executive Order 
11246 regulations to incorporate this religious exemption.\2\ 
Affirmative Action and Nondiscrimination Obligations of Government 
Contractors, Executive Order 11246, as amended; Exemption for Religious 
Entities, Final Rule, 68 FR 56392 (Sept. 30, 2003) (codified at 41 CFR 
60-1.5(a)(5)). In the preamble to that rule, OFCCP explained that the 
religious exemption recently added to Executive Order 11246 was 
``modeled on'' the Title VII religious exemption. Id. In turn, OFCCP 
noted, the new regulation itself ``directly tracks the President's 
amendment to'' Executive Order 11246 and ``simply incorporates'' the 
amendment in the regulation. Id. The preamble and regulation did not 
provide further guidance regarding the scope or application of the 
religious exemption. OFCCP continued its longstanding policy and 
practice of applying Title VII principles and case law when analyzing 
claims of discrimination under Executive Order 11246. OFCCP provided 
compliance assistance on the interpretation and application of the 
religious exemption through hosting webinars and publishing guidance on 
its website. In doing so, OFCCP abided by relevant religious liberty 
authorities, including the Religious Freedom Restoration Act (RFRA) and 
the ministerial exception mandated by the religion clauses of the First 
Amendment; maintained a policy of considering RFRA claims raised by 
contractors on a case-by-case basis; and refrained from applying any 
regulatory requirement to a case in which it would violate RFRA. See, 
e.g., OFCCP Compliance Webinar (Mar. 25, 2015), https://www.dol.gov/ofccp/LGBT/FTS_TranscriptEO13672_PublicWebinar_ES_QA_508c.pdf; OFCCP 
Frequently Asked Questions: E.O. 13672 Final Rule (2015), archived at 
https://web.archive.org/web/20150709220056/http:/www.dol.gov/ofccp/LGBT/LGBT_FAQs.html. OFCCP recommended that contractors with questions 
about the applicability of the religious exemption to their employment 
practices seek guidance from OFCCP. See, e.g., Discrimination on the 
Basis of Sex, Final Rule, 81 FR 39108, 39120 (June 15, 2016).
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    \2\ Since 1978, OFCCP's regulations implementing Executive Order 
11246 have contained a second exemption allowing certain educational 
institutions to hire and employ individuals of a particular 
religion. See Compliance Responsibility for Equal Employment 
Opportunity: Consolidation of Functions Pursuant to Executive Order 
12086, 43 FR 49240, 49243 (Oct. 20, 1978) (codified at 41 CFR 60-
1.5(a)(6)). This exemption is modeled on Title VII's exemption for 
religiously affiliated educational institutions. See 42 U.S.C. 
2000e-2(e).
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    For over 17 years, under the administrations of both President 
George W. Bush and President Barack Obama, OFCCP continued this 
approach, applying the language of the religious exemption to the facts 
and circumstances at issue, in accordance with Title VII case law. 
Adhering to Title VII case law enabled OFCCP to conform to the 
President's original intent in modeling the religious exemption on that 
in Title VII, as noted above. This approach was also consistent with 
OFCCP's longstanding practice under Title VII more broadly, and 
moreover, it provided employers and employees with the efficiency and 
clarity of having a single standard for the religious exemption that 
applied under both Title VII and Executive Order 11246.
    In 2020, for the first time since the religious exemption was added 
to Executive Order 11246, OFCCP promulgated a rule purporting to 
clarify the scope and application of the religious exemption. 
Implementing Legal Requirements Regarding the Equal Opportunity 
Clause's Religious Exemption, Final Rule, 85 FR 79324 (Dec. 9, 2020). 
Shortly after it took effect on January 8, 2021, the 2020 rule was 
challenged in two Federal district

[[Page 12844]]

courts.\3\ The 2020 rule made no changes to the text of the religious 
exemption at 41 CFR 60-1.5(a)(5); instead, it defined the terms 
``particular religion''; ``religion''; ``religious corporation, 
association, educational institution, or society''; and ``sincere.'' 
Id. at 79371-72 (codified at 41 CFR 60-1.3). The 2020 rule also 
established a rule of construction for all of subpart A of 41 CFR part 
60-1, specifying that the subpart must be construed in favor of the 
broadest protection of religious exercise ``permitted by the U.S. 
Constitution and law.'' Id. at 79372 (codified at 41 CFR 60-1.5(e)).
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    \3\ New York v. U.S. Dep't of Labor, No. 21-cv-00536 (S.D.N.Y. 
filed Jan. 21, 2021); Or. Tradeswomen, Inc. v. U.S. Dep't of Labor, 
No. 21-cv-00089 (D. Or. filed Jan. 21. 2021). Both matters have been 
stayed, and the courts have not yet issued any substantive rulings.
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    The preamble to the 2020 rule accurately described section 204(c) 
of Executive Order 11246 as ``expressly importing Title VII's exemption 
for religious organizations'' and as ``spring[ing] directly from the 
Title VII exemption.'' Id. at 79324. The preamble continued that the 
Executive Order 11246 religious exemption should therefore ``be given a 
parallel interpretation.'' Id. (citing Northcross v. Bd. of Educ. of 
Memphis City Sch., 412 U.S. 427, 428 (1973) (per curiam) (``The 
similarity of language in [two statutes] is, of course, a strong 
indication that the two statutes should be interpreted pari passu.''). 
Nevertheless, the 2020 rule and its new definitions departed from 
OFCCP's longstanding reliance on Title VII principles and case law, 
disregarding the President's intent in Executive Order 13279 to 
incorporate the scope and application of the Title VII religious 
exemption into Executive Order 11246. Upon further consideration of the 
2020 rule, including its departures from Title VII principles and case 
law, OFCCP believed that a return to its traditional approach of 
applying Title VII case law and principles to the facts and 
circumstances of each situation would better promote clarity and 
consistency for contractors and their employees. OFCCP also believed 
that returning to its traditional approach would better support its 
mission to promote equal employment opportunity, as well as advancing 
economy and efficiency in government contracting by preventing the 
arbitrary exclusion of qualified and talented employees on the basis of 
characteristics that have nothing to do with their ability to do work 
on government contracts. In November 2021, OFCCP proposed rescission of 
the 2020 rule and sought public comments on its proposal. 86 FR 62115 
(Nov. 9, 2021).

III. Comments and Decision

    OFCCP received 761 unique comments and 4,464 form letter comments 
on its proposal to rescind the 2020 rule. State officials, members of 
Congress, labor unions, contractor associations, think tanks, advocacy 
organizations, religious and civil liberties organizations, and 
individuals submitted comments supporting OFCCP's proposal to rescind 
the 2020 rule, including a number of comments with similar template 
language. These commenters supported rescission predominantly because, 
in their view, the 2020 rule impermissibly expanded the religious 
exemption, both as to which employers qualified for it and which 
actions those employers were permitted to take. Commenters supporting 
rescission viewed the 2020 rule as departing from established legal 
principles, as well as from OFCCP's longstanding policy and practice, 
without reasonable justification, which many commenters asserted was 
arbitrary and capricious in violation of the Administrative Procedure 
Act (APA). 5 U.S.C. 706(2). Many commenters asserted that the 2020 
rule, by creating new standards that departed from precedent, increased 
confusion and uncertainty about the scope and application of the 
religious exemption. Commenters supporting rescission overwhelmingly 
criticized the 2020 rule for, in their view, reducing nondiscrimination 
protections for employees of Federal contractors, which commenters 
asserted conflicted both with legal precedent, including constitutional 
protections, and with OFCCP's stated policy of requiring Federal 
contractors to prevent discrimination and provide equal employment 
opportunity. Commenters also raised numerous other legal and policy 
criticisms of the 2020 rule, discussed in greater detail below.
    Members of Congress, religious colleges and universities, religious 
advocacy organizations, religious and civil liberties litigation 
organizations, and individuals submitted comments opposing OFCCP's 
proposal, also including a number of comments with similar template 
language. These commenters generally supported the 2020 rule for, in 
their view, providing helpful, clear standards, which they believed 
encouraged religious organizations to become Federal contractors while 
appropriately protecting employers' religious liberties. Many of these 
commenters expressed the view that OFCCP's proposal to rescind the 2020 
rule would have the effect of unduly narrowing the religious exemption, 
which they criticized on policy grounds or asserted was inconsistent 
with established legal principles. Commenters raised numerous other 
legal and policy arguments in defense of the 2020 rule and in 
opposition to the proposed rescission, discussed in greater detail 
below.
    Having considered the comments submitted in response to the 
proposed rescission of the 2020 rule, OFCCP has decided to finalize the 
rescission. OFCCP has concluded that the standards in the 2020 rule 
were not warranted to the extent that they departed, without adequate 
justification, from applicable legal precedents, creating inconsistency 
with the application of Title VII's parallel religious exemption. 
Furthermore, the 2020 rule, on balance, increased confusion and 
uncertainty because of its divergence from the approach to the Title 
VII religious exemption taken by courts, the Equal Employment 
Opportunity Commission (EEOC), and the Department of Justice, as well 
as OFCCP's past practice. In addition to increasing confusion, the 2020 
rule also weakened discrimination protections for workers, which was 
contrary not only to relevant legal authorities but also to the 
objective of Executive Order 11246, to ensure economy and efficiency in 
Federal contracting, and to OFCCP's policy goal of promoting equal 
employment opportunity. Moreover, OFCCP agrees with commenters that the 
2020 rule, as a whole, was unnecessary. The comments that OFCCP 
received from existing religious contractors confirmed that they were 
able to participate in Federal contracting while relying on the 
Executive Order 11246 religious exemption as delineated in Title VII 
case law. As explained below, OFCCP is therefore rescinding the entire 
2020 rule. OFCCP has determined that rescission of the entire rule is 
necessary to enable the agency to return to its longstanding approach 
of aligning the Executive Order 11246 religious exemption with Title 
VII principles and case law as applied to the facts and circumstances 
of each situation. OFCCP's responses to commenter feedback on specific 
aspects of the proposed rescission are also provided below.
    For the reasons summarized above and detailed below, OFCCP has 
decided to rescind the 2020 rule in its entirety. OFCCP nonetheless 
intends for distinct portions of this rescission to be severable from 
each other. The rescissions of the 2020 rule's religious

[[Page 12845]]

employer test, its other definitions, its inappropriately broad rule of 
construction, and its inappropriately categorical approach to RFRA 
analysis are distinct and function independently of each other.

A. Reasons for Rescission of the Rule

1. Unprecedented Religious Employer Test
    Under both Title VII and Executive Order 11246, an employer that is 
determined to be a ``religious corporation, association, educational 
institution, or society'' qualifies for the religious exemption. As 
OFCCP noted in its rescission proposal, there is extensive Title VII 
case law interpreting this term. The courts' tests are not uniform, but 
in general they weigh the following factors to determine whether the 
employer's purpose and character are primarily religious:

    (1) whether the entity operates for a profit, (2) whether it 
produces a secular product, (3) whether the entity's articles of 
incorporation or other pertinent documents state a religious 
purpose, (4) whether it is owned, affiliated with or financially 
supported by a formally religious entity such as a church or 
synagogue, (5) whether a formally religious entity participates in 
the management, for instance by having representatives on the board 
of trustees, (6) whether the entity holds itself out to the public 
as secular or sectarian, (7) whether the entity regularly includes 
prayer or other forms of worship in its activities, (8) whether it 
includes religious instruction in its curriculum, to the extent it 
is an educational institution, and (9) whether its membership is 
made up by coreligionists.

LeBoon v. Lancaster Jewish Cmty. Ctr., 503 F.3d 217, 226 (3d Cir. 
2007); see also, e.g., Garcia v. Salvation Army, 918 F.3d 997, 1003 
(9th Cir. 2019); Spencer v. World Vision, Inc., 633 F.3d 723, 724 (9th 
Cir. 2011) (per curiam); Hall v. Baptist Mem'l Health Care Corp., 215 
F.3d 618, 624 (6th Cir. 2000); Killinger v. Samford Univ., 113 F.3d 
196, 198-99 (11th Cir. 1997). Historically, this case law has guided 
both OFCCP and contractors in determining whether an employer is 
entitled to the Executive Order 11246 religious exemption. The 2020 
rule, however, adopted a religious employer test that no court has 
applied under Title VII. See 85 FR 79371 (codified at 41 CFR 60-1.3).
    In adopting this new test, the preamble to the 2020 rule 
characterized the multifactor approach described above as being among 
Federal appellate courts' ``confusing variety of tests, [which] 
themselves often involve unclear or constitutionally suspect 
criteria.'' Id. at 79331. It endorsed two concurring opinions in 
Spencer v. World Vision, which concluded that ``assess[ing] the 
religiosity of an organization's various characteristics[ ] can lead 
the court into a `constitutional minefield.' '' 84 FR 41681 (quoting 
World Vision, 633 F.3d at 730 (O'Scannlain, J., concurring), and citing 
World Vision, 633 F.3d at 741 (Kleinfeld, J., concurring)); see also 85 
FR 79361. The preamble asserted that courts' typical inquiry into 
whether a contractor is ``primarily religious'' requires a ``comparison 
between the amount of religious and secular activity at an 
organization,'' which the preamble asserted created constitutional 
problems. 85 FR 79336. The 2020 rule thus adopted a definition of the 
term ``religious corporation, association, educational institution, or 
society'' that departed from the longstanding judicial approach of 
evaluating whether the employer's purpose and character are primarily 
religious. The 2020 rule further provided that for-profit organizations 
could qualify for the religious exemption if they presented ``other 
strong evidence'' that they possessed ``a substantial religious 
purpose.'' Id. at 79371 (codified at 41 CFR 60-1.3).
    The 2020 rule's creation of a test that deviated from all 
established Title VII interpretations was the principal reason OFCCP 
proposed rescinding the 2020 rule. As OFCCP explained in its proposal, 
the religious employer test adopted by the 2020 rule cannot be squared 
with Executive Order 13279's incorporation of Title VII as the 
touchstone for the Executive Order 11246 religious exemption.
    Numerous commenters agreed with OFCCP's concerns about the 2020 
rule's religious employer test on both legal and policy grounds. These 
commenters overwhelmingly viewed the test as inappropriately broad; 
many commenters, including a group of state attorneys general 
(plaintiffs in one of the cases challenging the 2020 rule), a religious 
organization, and a lesbian, gay, bisexual, transgender, and queer 
(LGBTQ) rights advocacy organization, asserted that the 2020 rule's 
expansive test was inconsistent with both congressional intent and 
judicial interpretations under Title VII. Several of these commenters 
further asserted that the 2020 rule's departures from precedent, 
described in more detail below, were inadequately justified. Commenters 
including a contractor association, a civil liberties advocacy 
organization, an organization that advocates separation of church and 
state, and a think tank further asserted that the 2020 rule's religious 
employer test, in deviating from Title VII precedent, had increased 
rather than decreased confusion about the application of the Executive 
Order 11246 religious exemption. As the contractor association 
commented:

    Whether an employer is entitled to an exemption based on 
religion is determined by the statutory text of Title VII and case 
law interpreting it. The OFCCP must be guided by these principles in 
interpreting the scope and application of Executive Order 11246. The 
test created by the 2020 rule produces unnecessary confusion and 
uncertainty by departing from established legal principles.

    Some commenters observed that the 2020 rule deviated even from the 
World Vision opinions it commended. For example, a legal think tank 
stated that, rather than adopting the religious employer test from the 
World Vision per curiam opinion or the test from either concurring 
opinion, the 2020 rule ``instead forge[d] its own test that would 
qualify more types of contractors for the exemption.'' An LGBTQ rights 
advocacy organization noted that, despite the 2020 rule's praise for 
the test proposed in Judge O'Scannlain's concurring opinion, the 2020 
rule rejected Judge O'Scannlain's prerequisite that the employer be 
nonprofit--but, the commenter asserted, ``[o]mitting the requirement 
that an entity seeking a religious exemption be not-for-profit is not a 
minor alteration.'' Commenters also criticized the 2020 rule for, in 
their view, reducing the objectivity of the factors described in World 
Vision for determining whether an employer qualifies for the religious 
exemption. A civil liberties advocacy organization, for example, 
asserted that the 2020 rule relied ``only on the employer's own 
characterization of its activities, with no minimum, objective 
standards of evidence required,'' which the commenter asserted ``makes 
it easier for employers to claim the exemption.'' Similarly, a women's 
rights legal advocacy organization asserted that ``under the 2020 Rule, 
OFCCP had made clear that it would almost certainly not challenge a 
contractor's assertion that its sex discrimination was based on a 
religious belief, expressing a deference to any assertion of religious 
motivation that further tilted the scales towards allowing sex 
discrimination in federal contracting.'' An LGBTQ rights advocacy 
organization agreed that the preamble to the 2020 rule rendered certain 
factors--such as being organized for a religious purpose and holding 
itself out as religious--``essentially meaningless'' by lowering the 
standards by which organizations could demonstrate that they satisfied 
the factors.
    Many commenters, including a contractor association, an affirmative

[[Page 12846]]

action professionals association, and an LGBTQ rights advocacy 
organization, specifically criticized the 2020 rule's departure from a 
``primarily religious'' inquiry, agreeing with OFCCP's rescission 
proposal that the 2020 rule's rationale of avoiding so-called 
constitutional minefields contradicted decades of Title VII case law 
successfully applying a ``primarily religious'' test. A contractor 
association agreed with OFCCP's proposal ``that the intent of the 
religious exemption is to be limited to those organizations whose 
primary purpose is religious in nature and that the language of the 
2020 rule inappropriately expands the scope of the exemption to 
entities that are not primarily religious in character.'' Many 
commenters, including an international labor union, a legal 
professional organization, and a secular humanist advocacy 
organization, connected their criticism of the 2020 rule's departure 
from a ``primarily religious'' inquiry to their criticism of the 2020 
rule's treatment of for-profit entities. A labor union commented, for 
example, that under the 2020 rule, ``organizations whose purpose or 
character is not primarily religious (e.g., construction contractors, 
food service providers, security services) are now able to discriminate 
against workers without fear of penalty simply by stating that their 
for-profit business aims to promote their religious values.'' Several 
commenters, including a think tank, a national tradeswomen coalition, 
and a civil liberties advocacy organization, stated that there was no 
Title VII case in which a for-profit employer had qualified for the 
religious exemption.
    Other commenters, however, praised the religious employer test in 
the 2020 rule and urged OFCCP not to rescind it. Many of these 
commenters believed the 2020 rule's test set forth ``eminently clear 
and workable standards,'' as one religious advocacy organization put 
it. Commenters including a religious advocacy organization pointed to 
the 2020 rule's examples as helpful illustrations of the test's 
application and asked OFCCP to address them. In the view of several 
commenters, including a religious advocacy organization, a religious 
university, and members of the U.S. House of Representatives, the 2020 
rule's test was broad, but appropriately so.
    Several commenters, including two religious advocacy organizations 
and an individual attorney, believed that the 2020 rule test was 
sufficiently rooted in key elements of Title VII case law, particularly 
in that it incorporated some of the elements from one or more World 
Vision opinions. In the view of one civil liberties litigation 
organization, the 2020 rule's `` `purpose and character' test'' was 
appropriately based on World Vision in that ``it avoids subjectivity 
inherent in other tests.'' That commenter disagreed that the 2020 rule 
departed from Title VII case law because, it asserted, ``[t]here is no 
coherent line of `Title VII case law' from which departure can be 
measured.''
    Other commenters, including a religious advocacy organization and a 
civil liberties litigation organization, acknowledged that the 
religious employer test in the 2020 rule may have departed somewhat 
from Title VII case law, but they supported the departure because the 
multifactor LeBoon analysis, in their view, relies on 
``constitutionally suspect factors.'' Commenters including religious 
advocacy organizations, a group of four religious associations and 
religious legal organizations, and two individual attorneys agreed with 
the 2020 rule's preamble that it was appropriate to reject the 
``primarily religious'' inquiry because it raised constitutional 
difficulties. In support of this point, these commenters cited cases 
including McClure v. Salvation Army, 460 F.2d 553 (5th Cir. 1972), an 
early invocation of what is now recognized as the First Amendment 
ministerial exception to preclude application of Title VII's 
nondiscrimination requirements ``to the employment relationship between 
a church and its ministers,'' id. at 554, as well as non-Title VII 
cases such as New York v. Cathedral Academy, 434 U.S. 125 (1977), in 
which the Court invalidated a state law that authorized reimbursement 
to ``sectarian'' schools for expenses they incurred performing state-
mandated services ``because it will of necessity either have the 
primary effect of aiding religion'' or, if an audit were to be 
conducted ``to assure that state funds are not given for sectarian 
activities,'' would ``result in excessive state involvement in 
religious affairs,'' id. at 131, 133, and Colorado Christian University 
v. Weaver, 534 F.3d 1245 (10th Cir. 2008), invalidating a state 
scholarship-funding law because it ``expressly discriminates among 
religions, allowing aid to `sectarian' but not `pervasively sectarian' 
institutions, and . . . does so on the basis of criteria that entail 
intrusive governmental judgments regarding matters of religious belief 
and practice,'' id. at 1256.\4\
---------------------------------------------------------------------------

    \4\ A religious advocacy organization asserted that ``it would 
be arbitrary and capricious for OFCCP to not wait for further 
guidance from the Supreme Court's upcoming Carson v. Makin'' 
decision, based on the commenter's understanding that the opinion 
``will decide whether, and if so, how, a bureaucratic body can 
divine an organization's level of religiosity for funding 
purposes.'' The Court issued its decision in Carson on June 21, 
2022, holding that a state's requirement that schools receiving 
otherwise generally available tuition assistance payments be 
``nonsectarian'' violated the Free Exercise Clause. 142 S. Ct. 1987, 
2002 (2022). The Court was not presented with, and did not address, 
the issues that the commenter raised.
---------------------------------------------------------------------------

    A group of four religious associations and religious legal 
organizations asserted that the ``religious question'' doctrine 
prohibits the use of a ``primarily religious'' inquiry to determine 
which contractors are entitled to the religious exemption. The 
commenters asserted that this position was supported by cases including 
Thomas v. Review Board, 450 U.S. 707 (1981), in which the Supreme Court 
held that when reviewing a state's denial of unemployment compensation 
benefits to a claimant who left his job because of religious 
objections, a court's ``narrow function . . . is to determine whether 
there was an appropriate finding that petitioner terminated his work 
because of an honest conviction that such work was forbidden by his 
religion,'' id. at 716. The commenters also pointed to Our Lady of 
Guadalupe School v. Morissey-Berru, 140 S. Ct. 2049 (2020), in which 
the Supreme Court held that the First Amendment ministerial exception 
barred the employment discrimination claims of two Catholic elementary 
school teachers, id. at 2066, as well as National Labor Relations Board 
v. Catholic Bishop of Chicago, 440 U.S. 490 (1979), in which the Court 
held that the National Labor Relations Board (NLRB) did not have 
jurisdiction over lay teachers at two groups of Catholic high schools 
because exercise of such jurisdiction by the Board would give rise to 
``serious First Amendment questions'' and the Court did not find, 
either in the text of the National Labor Relations Act (NLRA) or its 
legislative history, a ``clear expression of an affirmative intention 
of Congress that teachers in church-operated schools should be covered 
by the Act,'' id. at 504.
    A few commenters, including religious higher education associations 
and religious universities, suggested that OFCCP could avoid what they 
viewed as the constitutional difficulties of a ``primarily religious'' 
inquiry by instead using the test for religiously affiliated 
educational institutions under the NLRA established by the D.C. Circuit 
in University of Great Falls v. NLRB, 278 F.3d 1335 (D.C. Cir. 2002), 
and adopted by the NLRB in Bethany College, 369 NLRB No. 98, 2020 WL 
3127965 (June 10, 2020). Under this three-factor test, the NLRB lacks

[[Page 12847]]

jurisdiction over an educational institution if it ``(1) holds itself 
out to the public as a religious institution (i.e., as providing a 
`religious educational environment'); (2) is nonprofit; and (3) is 
religiously affiliated.'' Duquesne Univ. of the Holy Spirit v. NLRB, 
947 F.3d 824, 832 (D.C. Cir. 2020). The preamble to the 2020 rule 
asserted that the factors it adopted for its religious employer test 
were similar to the test used in the NLRA context. 85 FR 79334. 
According to one religious organization, this line of precedent under 
the NLRA is relevant because it ``makes clear that it is not the place 
of government to determine whether an organization has religion as its 
`primary' or `central' purpose.''
    Some commenters, including an individual attorney and a religious 
advocacy organization, stated that OFCCP should not use the ``primarily 
religious'' language because it does not appear in either the Title VII 
religious exemption or the Executive Order 11246 religious exemption. 
Individual attorneys and two religious organizations also asserted that 
not all courts have adopted the ``primarily religious'' language, 
citing Hall v. Baptist Memorial Health Care Corp., 215 F.3d 618, 624 
(6th Cir. 2000), and Killinger v. Samford University, 113 F.3d 196, 
198-99 (11th Cir. 1997). Some of these commenters observed that the 
EEOC's 2021 Compliance Manual on Religious Discrimination states that 
``engaging in secular activities does not disqualify an employer'' from 
qualifying for the religious exemption. EEOC, Compliance Manual on 
Religious Discrimination, sec. 12-1.C.1. Commenters also criticized the 
``primarily religious'' inquiry because, in their view, it is of 
limited utility. One commenter, an individual attorney, acknowledged 
that the ``primarily religious'' inquiry ``derive[s] from the case 
law'' but argued that it ``unduly narrows the right of religious 
contractors to make employment decisions on the basis of religion.''
    A few commenters, including an organization of religious employers 
and a religious advocacy organization, believed that OFCCP's proposal 
implied that for-profit organizations could not qualify for the 
Executive Order 11246 religious exemption. Some of these commenters 
noted that for-profit status is not mentioned in the text of Title VII 
or Executive Order 11246 and asserted that OFCCP thus should not limit 
the exemption to nonprofits. An individual attorney pointed to a 
statement in the EEOC's Compliance Manual that ``Title VII case law has 
not definitively addressed whether a for-profit corporation that 
satisfies the other factors can constitute a religious corporation 
under Title VII.'' EEOC, Compliance Manual on Religious Discrimination, 
sec. 12-1.C.1. A religious advocacy organization agreed with the 2020 
rule's preamble that Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682 
(2014), ``demonstrates that for-profit corporations can exercise 
religion and supports that, in some circumstances, such for-profit 
organizations may be sufficiently religious to qualify for religious 
exemptions under Title VII and E.O. 11246.''
    OFCCP has carefully considered the comments received on this aspect 
of its proposal. OFCCP recognizes that many of the commenters opposing 
rescission viewed the 2020 rule's religious employer test as providing 
helpful clarity. However, OFCCP believes--and numerous commenters 
agreed--that the test the 2020 rule adopted created uncertainty and 
confusion rather than providing clarity because it departed from Title 
VII precedent. Moreover, even if a contractor obtained an exemption 
under the 2020 rule that it would not have received under OFCCP's prior 
approach, the contractor could still be potentially liable for 
discrimination under Title VII on the same facts. There is little 
practical benefit to gaining a broader exemption under one standard 
while being liable for discrimination under another. OFCCP concludes 
that, rather than fostering clarity, adopting a new test that no court 
had ever applied promoted confusion and departed from governing Title 
VII precedent.
    Regarding commenters' requests that OFCCP address the examples 
provided in the text of the 2020 rule, OFCCP notes that those examples 
were provided to illustrate the application of the 2020 rule's test. 
That test is expressly limited to consideration of only four factors 
(whether a potential or actual contractor is organized for a religious 
purpose, holds itself out to the public as carrying out a religious 
purpose, engages in activity consistent with and in furtherance of that 
religious purpose, and either is nonprofit or presents other strong 
evidence that its purpose is substantially religious). To address the 
2020 rule's examples following the typical approach followed in Title 
VII case law, which OFCCP believes is the correct approach, OFCCP would 
need information as to all of the relevant factors--(1) whether the 
entity is for-profit or not-for-profit; (2) whether the entity produces 
a secular product; (3) whether the entity's pertinent documents, such 
as its articles of incorporation, state a religious purpose; (4) 
whether the entity is associated with (owned by, affiliated with, or 
financially supported by) a formally religious entity, such as a church 
or synagogue; (5) whether there is a formally religious entity that 
participates in its management, such as by having representatives on 
its board of trustees; (6) whether it holds itself out to the public as 
secular or sectarian; (7) whether it regularly includes forms of 
worship, such as prayer, in its activities; (8) if it is an educational 
institution, whether its curriculum includes religious instruction; and 
(9) whether its membership is composed of coreligionists--to make the 
determination whether the example employers' purpose and character were 
primarily religious. See, e.g., LeBoon, 503 F.3d at 226. The 2020 rule 
examples, however, included information relevant only to the four 
factors contained in the 2020 rule's test. See 85 FR 79334.
    Moreover, OFCCP agrees with the many commenters who stated that the 
2020 rule did not provide clarity. As stated in a comment submitted by 
a state tradeswomen organization, a national labor union LGBTQ 
constituency group, and a national labor union (plaintiffs in one of 
the cases challenging the 2020 rule): ``Claiming that adopting an 
entirely new standard would resolve any uncertainty in the application 
of the religious exemption is irrational.'' A group of state attorneys 
general commented that, ``as a practical matter, the 2020 Rule subjects 
federal contractors to different sets of competing legal requirements. 
If these divergent standards persist, they will likely result in 
confusion, misunderstanding, and litigation.'' OFCCP agrees that the 
2020 rule created a troubling lack of clarity for employers, which 
could have pursued a course of action based on exemption under the 2020 
rule, only to then find themselves subject to a meritorious Title VII 
discrimination action.
    Furthermore, as commenters including an LGBTQ rights advocacy 
organization pointed out, ``[t]he 2020 Rule left [employees] with 
profound uncertainty about whether their employer could newly claim the 
exemption.'' OFCCP agrees with these commenters that the 2020 rule 
introduced significant uncertainty for employees of Federal 
contractors, including those who may have started their employment with 
an understanding that they were fully protected from the discrimination 
prohibited by Executive Order 11246 but may now be concerned about

[[Page 12848]]

diminished protections because their employers may now claim the 
religious exemption under the 2020 rule.
    OFCCP also recognizes that some commenters disagreed with its 
proposal to return to applying the religious exemption only to those 
contractors whose purpose and character are primarily religious, in 
accordance with the typical approach in Title VII case law. With regard 
specifically to commenters' assertions that a ``primarily religious'' 
inquiry raises constitutional concerns, OFCCP has carefully considered 
the issue, including reviewing the case law cited by commenters. As a 
threshold matter, although the 2020 rule's preamble asserted that the 
test avoided constitutional difficulties by using ``objective'' 
criteria--a claim echoed by some commenters--OFCCP notes that the test 
actually included factors that require subjective ``religious 
characterizations'' but simply defer to contractors' views of those 
factors. See 85 FR 79334. Moreover, OFCCP believes it is significant 
that most courts and the EEOC, as discussed next, have not viewed the 
constitutional concerns that motivated the adoption of the 2020 rule's 
test as preventing use of the traditional ``primarily religious'' 
inquiry.\5\ Commenters generally supported their points in this area by 
citing to non-Title VII case law (e.g., Thomas v. Review Board, 
Colorado Christian University v. Weaver, University of Great Falls v. 
NLRB), none of which addresses the well-established Title VII religious 
employer test, and employment discrimination cases in which courts 
applied the First Amendment ministerial exception (Our Lady of 
Guadalupe School v. Morissey-Berru, McClure v. Salvation Army). 
However, none of these cases supports the conclusion that serious First 
Amendment questions arise by following Title VII precedent to evaluate 
whether contractors' purpose and character are primarily religious.
---------------------------------------------------------------------------

    \5\ Courts have occasionally declined to apply Title VII to 
claims of sex discrimination where doing so ``would involve the 
court in evaluating violations of Church doctrine,'' such as by 
requiring the court ``to compare the relative severity of violations 
of religious doctrine.'' Curay-Cramer v. Ursuline Academy of 
Wilmington, Delaware, Inc., 450 F.3d 130, 141-42 (3d Cir. 2006). As 
discussed in the text, however, courts and administrators have been 
able to avoid inquiry into such doctrinal questions in determining 
whether a contractor's purpose and character are primarily 
religious.
---------------------------------------------------------------------------

    OFCCP also disagrees that this aspect of its rescission proposal is 
inconsistent with the EEOC's 2021 Compliance Manual, which provides 
expressly that the Title VII religious exemption ``applies only to 
those organizations whose `purpose and character are primarily 
religious.' '' EEOC, Compliance Manual on Religious Discrimination, 
sec. 12-1.C.1 (quoting Garcia v. Salvation Army, 918 F.3d 997, 1003 
(9th Cir. 2019)). EEOC's guidance then states that courts consider and 
weigh `` `the religious and secular characteristics' of the entity,'' 
quoting Hall, 215 F.3d at 624 (one of the cases some commenters 
asserted did not endorse the ``primarily religious'' inquiry), and 
citing, among other cases, Killinger, 113 F.3d at 198-99 (the other 
case some commenters asserted did not endorse the ``primarily 
religious'' inquiry). The guidance explains that ``[c]ourts have 
articulated different factors to determine whether an entity is a 
religious organization'' and then proceeds to list the exact same nine 
LeBoon factors that OFCCP laid out in its proposal and repeats above, 
as well as to cite the same cases OFCCP cited in support of the 
approach, including Hall and Killinger. EEOC, Compliance Manual on 
Religious Discrimination, sec. 12-1.C.1; see also, e.g., Bear Creek 
Bible Church v. EEOC, 571 F. Supp. 3d 571, 591 (N.D. Tex. Nov. 22, 
2021) (noting that ``[a]t least ten courts'' have adopted these nine 
factors), appeal pending, No. 22-10145 (5th Cir.).
    In this respect, then, EEOC's guidance is consistent with both 
OFCCP's proposal and comments from numerous commenters observing that 
there is a substantial body of case law in which courts--including the 
Ninth Circuit post-World Vision--have applied the traditional Title VII 
test to identify employers with primarily religious purpose and 
character without infringing on employers' religious liberties or 
assessing the validity of doctrinal questions. See, e.g., Garcia, 918 
F.3d 997; LeBoon, 503 F.3d 217; Hall, 215 F.3d 618; Killinger, 113 F.3d 
196. Only in a parenthetical description in a footnote does EEOC's 
guidance mention Judge O'Scannlain's ``constitutional minefield'' 
concern (i.e., that ``several of the LeBoon factors could be 
constitutionally troublesome if applied to this case,'' World Vision, 
633 F.3d at 730 (O'Scannlain, J. concurring)). EEOC, Compliance Manual 
on Religious Discrimination, sec. 12-1.C.1 n.59. OFCCP does not believe 
it is necessary to abandon the ``primarily religious'' inquiry, which 
courts have long applied while avoiding any constitutional minefields.
    OFCCP also believes the comments criticizing the rescission 
proposal as it relates to for-profit contractors are misplaced. For 
example, nothing in OFCCP's proposal is inconsistent with the statement 
in EEOC's guidance ``that engaging in secular activities does not 
disqualify an employer from being a `religious organization' within the 
meaning of the Title VII statutory exemption.'' Id. sec. 12-1.C.1. As 
noted above, both OFCCP's approach and EEOC's guidance require that a 
qualifying employer have a primarily religious purpose and character. 
Further, OFCCP agrees with the EEOC that ``Title VII case law has not 
definitively addressed whether a for-profit corporation that satisfies 
the other factors can constitute a religious corporation under Title 
VII.'' Id. As explained in OFCCP's proposal, Title VII case law gives 
weight to an entity's nonprofit status as one factor in a multifactor 
analysis but generally does not treat it as an absolute prerequisite. 
See, e.g., LeBoon, 503 F.3d at 226; Hall, 215 F.3d at 624; Killinger, 
113 F.3d at 198-99. In fact, Judge O'Scannlain's concurring opinion in 
World Vision was unusual in that it would have explicitly limited the 
religious exemption to nonprofit entities. See World Vision, 633 F.3d 
at 734 (O'Scannlain, J., concurring). As Judge O'Scannlain explained, 
when the Supreme Court upheld the Title VII religious exemption against 
constitutional challenge in 1987, it ``expressly left open the question 
of whether a for-profit entity could ever qualify for a Title VII 
exemption.'' Id. at n.13 (citing Corp. of the Presiding Bishop of the 
Church of Jesus Christ of Latter-day Saints v. Amos, 483 U.S. 327, 349 
(1987) (O'Connor, J., concurring)).
    Having considered all relevant comments, OFCCP believes that the 
2020 rule's adoption of an unprecedented religious employer test was 
unwarranted. Despite the 2020 rule's stated desire to provide clarity, 
the standard that the 2020 rule adopted departed from Title VII case 
law and principles, creating a lack of clarity as to the applicable 
legal standards. With this rescission, OFCCP will return to its 
previous approach, which makes the Executive Order 11246 religious 
exemption available to employers whose purpose and character are 
primarily religious, using the multi-factor LeBoon inquiry. OFCCP will 
consider the applicability of the religious exemption to the facts of 
each case in accordance with Title VII case law. This will provide 
contractors and potential contractors with the clarity of a single 
religious employer test under both Executive Order 11246 and Title VII.
2. Exemption of Unlawful Employment Actions
    Under both Title VII and Executive Order 11246, qualifying 
religious

[[Page 12849]]

organizations are permitted to make decisions ``with respect to the 
employment of individuals of a particular religion.'' The 2020 rule's 
definition of ``particular religion'' authorizes the contractor to 
require, as a condition of employment, the applicant's or employee's 
``acceptance of or adherence to sincere religious tenets as understood 
by the employer.'' 85 FR 79371 (codified at 41 CFR 60-1.3). As OFCCP 
explained in its rescission proposal, the weight of Title VII case law 
reflects that qualifying religious employers generally may make 
decisions about whether to employ individuals based on acceptance of 
and adherence to religious tenets, but only as long as those decisions 
do not violate the other nondiscrimination provisions of Title VII, 
apart from the prohibition on religious discrimination. See, e.g., 
Kennedy v. St. Joseph's Ministries, Inc., 657 F.3d 189, 190-92 (4th 
Cir. 2011) (stating that Title VII's religious exemption does not 
exempt religious organizations from complying with prohibitions on 
race, sex, or national origin discrimination, but holding that a 
Catholic nursing center's termination of a nursing assistant based on 
her non-Catholic religious attire was permissibly based on a preference 
for persons of a particular religion rather than on one of Title VII's 
other protected bases); Cline v. Catholic Diocese of Toledo, 206 F.3d 
651, 658 (6th Cir. 2000) (``[W]hile Title VII exempts religious 
organizations for `discrimination based on religion,' it does not 
exempt them `with respect to all discrimination . . . . [ ] Title VII 
still applies . . . to a religious institution charged with sex 
discrimination.'') (quoting Boyd v. Harding Acad. of Memphis, Inc., 88 
F.3d 410, 413 (6th Cir. 1996)); DeMarco v. Holy Cross High Sch., 4 F.3d 
166, 173 (2d Cir. 1993) (``[R]eligious institutions that otherwise 
qualify as `employer[s]' are subject to Title VII provisions relating 
to discrimination based on race, gender and national origin.''); Little 
v. Wuerl, 929 F.2d 944, 946-48 (3d Cir. 1991) (stating that Title VII 
bars, for example, race and sex discrimination against non-minister 
employees, but holding that a Catholic school's decision not to rehire 
a Protestant teacher based on her remarriage without validation by the 
Catholic Church was permissibly based on the employee's religion).
    There is nothing in the 2020 rule that expressly contradicts this 
understanding. Indeed, the preamble to the 2020 rule stated that 
``OFCCP ultimately does not need to answer'' the allegedly ``open'' 
question about whether Executive Order 11246 would permit a qualifying 
organization to take adverse action against an employee who fails to 
comply with the employer's religious tenets when the tenets themselves 
implicate another form of prohibited discrimination--such as the 
prohibitions on discrimination on the basis of race, sex, or sexual 
orientation, and the prohibition on retaliation for an employee's 
assertion of his or her rights. 85 FR 79350. Instead, the 2020 rule 
relied on RFRA to guide its approach toward such cases. See id. at 
79349-56.
    OFCCP nevertheless expressed concern in its rescission proposal 
that the 2020 rule preamble's suggestion that qualifying religious 
organizations might be exempt from Executive Order 11246's 
nondiscrimination requirements where their tenets implicate other 
protected grounds is in serious tension with the text of the religious 
exemption itself, which permits the contractor to discriminate on the 
basis of religion in favor of ``individuals of a particular religion'' 
while expressly not exempting or excusing the contractor from the other 
requirements of Executive Order 11246. Sec. 204(c), E.O. 11246. OFCCP 
further explained in its proposal that this aspect of the 2020 preamble 
was also contrary to well-established Title VII case law, as cited 
above; with Congress's intent when it amended the Title VII religious 
exemption in 1972, see 118 Cong. Rec. 7167 (1972) (Senate Managers' 
section-by-section analysis presented by Sen. Williams) (``The limited 
exemption from coverage in this section for religious corporations, 
associations, educational institutions or societies has been broadened 
to allow such entities to employ individuals of a particular religion 
in all their activities. . . . Such organizations remain subject to the 
provisions of Title VII with regard to race, color, sex or national 
origin.'') (emphasis added); and with an opinion of the Department of 
Justice's Office of Legal Counsel issued shortly before President Bush 
added the religious exemption to Executive Order 11246, see Memorandum 
for William P. Marshall, Deputy Counsel to the President, from Randolph 
D. Moss, Assistant Attorney General, Office of Legal Counsel, Re: 
Application of the Coreligionists Exemption in Title VII of the Civil 
Rights Act of 1964, 42 U.S.C. 2000e-1(a), to Religious Organizations 
that Would Directly Receive Substance Abuse and Mental Health Services 
Administration Funds Pursuant to Section 704 of H.R. 4923, the 
``Community Renewal and New Markets Act of 2000'', at 30-32, 31 n.62 
(Oct. 12, 2000), https://www.justice.gov/olc/page/file/936211/download.
    Commenters who supported rescission overwhelmingly agreed that the 
2020 preamble raised a serious risk that the rule would be implemented 
to permit contractors to discriminate against individuals based on 
protected classes other than a preference for persons of a particular 
religion. Commenters stated that this outcome could result not only 
from the discussion in the preamble but also from the rule of 
construction in Sec.  60-1.5(e) (discussed further below) and the 
application of the 2020 rule's definitions of ``religion,'' 
``particular religion, and ``sincere.'' \6\
---------------------------------------------------------------------------

    \6\ This rescission removes all of the 2020 rule's definitions 
from the regulations. With regard to ``sincere,'' OFCCP notes that 
the definition is being removed because the term does not appear in 
the regulations except in the 2020 rule's definitions of ``Religious 
corporation, association, educational institution, or society'' and 
``Particular religion.'' OFCCP is not removing the definition of 
``sincere'' because it questions any organization's sincerity.
---------------------------------------------------------------------------

    Commenters criticized the preamble's suggestion on both legal and 
policy grounds. A civil liberties organization, for example, noted that 
under Title VII, ``a religious employer's religious motivation for 
discriminatory conduct does not convert unlawful discrimination into 
permissible religious discrimination.'' Although many commenters 
acknowledged that some Title VII case law permits qualifying religious 
employers to fire or refuse to hire individuals for failure to adhere 
to certain religious tenets, they emphasized that that case law does 
not sanction such employment actions when such tenets themselves 
involve discrimination on the basis of a protected characteristic other 
than religion or where the employer applies such tenets in a way that 
discriminates on the basis of such other protected characteristics. For 
example, an organization that advocates separation of church and state 
observed that under Title VII a qualifying religious employer may 
lawfully require its employees to adhere to a particular religious code 
of conduct, but ```Title VII requires that this code of conduct be 
applied equally' to all employees regardless of sex'' (quoting Boyd, 88 
F.3d at 414).
    Numerous commenters expressed concern that these aspects of the 
2020 preamble and rule would increase prohibited discrimination against 
workers, which is a concern that OFCCP shares. A civil liberties 
organization stated that ``religious contractors may claim, based on 
their religious beliefs, that it is permissible to fire a transgender 
woman for transitioning, or they may claim the right to reject a male 
applicant because he is married to a

[[Page 12850]]

man or a woman applicant because she is an unmarried mother.''
    Some commenters further stated that such effects could 
disproportionately impact workers of color who may ``experience 
discrimination at the intersection of their race and gender, as well as 
other identities,'' and who therefore ``face greater barriers and fewer 
economic opportunities,'' in the words of a civil rights legal advocacy 
organization.
    With regard specifically to LGBTQ individuals, a religious 
organization and several other commenters cited a Williams Institute 
study that found widespread employment discrimination against LGBT 
individuals based on survey data collected in May 2021. Some of these 
commenters, including the Williams Institute itself, emphasized the 
study's finding that 57 percent of the LGBT individuals who experienced 
harassment or other forms of discrimination in the workplace ``reported 
that their employer or co-workers did or said something to indicate 
that the treatment that they experienced was motivated by religious 
beliefs'' (citing Brad Sears et al., Williams Inst., LGBT People's 
Experiences of Workplace Discrimination and Harassment 14 (2021), 
https://williamsinstitute.law.ucla.edu/wp-content/uploads/Workplace-Discrimination-Sep-2021.pdf). As an LGBTQ rights advocacy organization 
observed, ``[a]n employee who is fired for being in a same-sex marriage 
is equally harmed whether the employer did so based on religious belief 
about marriage or a non-religious bias.''
    With regard to women, a tradeswomen advocacy organization asserted 
that ``[w]omen workers have been subjected to a range of discrimination 
based on sex, justified by claims of religious beliefs.'' It continued:

    Women workers have been fired for their decisions about whether 
and how to start a family, including becoming pregnant outside of 
marriage or becoming pregnant while in LGBTQ relationship, using in 
vitro fertilization to start a family, or having an abortion.
    Some employers may refuse to employ women altogether based on a 
religious belief that women, or mothers, should not work outside the 
home. For instance, a religious school failed to renew a pregnant 
employee's contract because of a belief that mothers should stay at 
home with young children.
    Women workers also have been discriminated against in terms of 
pay and benefits and working conditions because of religious beliefs 
about the appropriate role of women in society. For example, a 
religious school denied women health insurance by providing it only 
to the ``head of household,'' defined to be married men and single 
persons, based on its belief that a woman cannot be the ``head of 
household.'' Some individuals hold religious beliefs dictating that 
women should not be alone with men to whom they are not married, 
which could unlawfully impede women's advancement and access to 
mentorship, training opportunities and senior leadership positions 
in the workplace.

Referring to the assertion in the 2020 rule's preamble that 
nondiscrimination obligations ``that pertain to matters of marriage and 
sexual intimacy'' may impose substantial burdens on religious 
contractors, a women's rights legal advocacy organization observed that 
all of the cases cited in direct support of that assertion ``involved a 
woman who was fired from her job because of an employer's objection to 
her pregnancy or intimate relationship. This is a telling indication of 
the kinds of harms federal contract employees may be subjected to if 
the 2020 Rule is not rescinded.''
    Some commenters also pointed to the facts of Herx v. Diocese of Ft. 
Wayne-South Bend, Inc., 48 F. Supp. 3d 1168 (N.D. Ind. 2014), to 
illustrate the harms they believed employers might inflict on women 
based on the suggestions in the 2020 preamble and rule that contractors 
can insist upon adherence to religious tenets even where such tenets 
themselves involve a form of discrimination on the basis of sex. Herx 
involved a language arts teacher's claim that a Catholic elementary 
school's application of the church's ban on in vitro fertilization 
discriminated against women because only women undergo the procedure. 
In dismissing the school's appeal of an order denying summary judgment, 
the Seventh Circuit observed that ``[t]he district court has not 
ordered a religious question submitted to the jury for decision'' and 
confirmed that the jury would be instructed ``not to weigh or evaluate 
the Church's doctrine regarding in vitro fertilization.'' Herx, 772 
F.3d 1085, 1091 (7th Cir. 2014). The jury ultimately found that the 
school had discriminated against the plaintiff on the basis of sex by 
firing her based on her in vitro fertilization, to which the school 
objected based on religious grounds. Herx, No. 1:12-CV-122 RLM, 2015 WL 
1013783, at *1 (N.D. Ind. Mar. 9, 2015). The resulting jury award, as 
modified by the court, quantified the harms that employment 
discrimination imposed on the plaintiff: more than $22,916 lost in 
income, $22,853 lost in health insurance benefits, and $7,500 lost in 
tuition for her son, as well as $299,999 to fairly compensate her for 
the mental and emotional pain and suffering she experienced as a result 
of her discriminatory job loss. Id at *8. A women's rights legal 
advocacy organization commented that ``Ms. Herx's story underscores the 
harm that stems from this discrimination, as she felt she was forced to 
choose between starting a family and preserving her economic 
security.'' And a civil liberties organization asserted that the 
plaintiff ``is far from the only employee to be fired because her 
employer expressed religious objections to her pregnancy.''
    However, other commenters, opposing rescission, commented that they 
approved of the 2020 rule's definition of ``particular religion'' and 
the approach described in the preamble to the 2020 rule. Comments from 
a religious association and a religious advocacy organization asserted 
that the Government's interest in equal employment opportunity simply 
did not extend to religious organizations' ``employment of individuals 
of a particular religion.''
    Some of the commenters who opposed rescission, including a 
religious association, two religious advocacy organizations, and a 
religious university, asserted that the Title VII religious exemption 
itself allows qualifying employers in certain situations to take 
employment actions based on sincere religious beliefs even where such 
actions constitute discrimination on the basis of a protected 
classification other than religion. A religious advocacy organization 
asserted that rescission ``would allow OFCCP to recharacterize 
employment actions based on sincere religious tenets as unlawful 
discrimination in direct contradiction of the text, history, and 
purpose of the statutory exemption.'' Many commenters, including 
religious organizations, religious colleges and universities, and a 
group of U.S. Senators, asserted that the plain text of 42 U.S.C. 
2000e-1(a)--providing that the ``title shall not apply'' to qualifying 
religious employers ``with respect to the employment of individuals of 
a particular religion''--when construed in conjunction with Title VII's 
definition of ``religion'' in section 2000e(j)--is properly read to 
provide a complete exemption to Title VII's nondiscrimination 
requirements in cases where qualifying religious employers insist upon 
employees' adherence to religious tenets in ways that would constitute 
discrimination on the basis of another characteristic protected by 
Title VII. Some of the same commenters, as well as others including a 
religious organization and individual attorneys, explicitly advocated a 
similar

[[Page 12851]]

interpretation of the Executive Order 11246 religious exemption. A few 
commenters acknowledged the legislative history of the Title VII 
religious exemption, discussed previously,\7\ but dismissed it.
---------------------------------------------------------------------------

    \7\ 118 Cong. Rec. 7167 (1972) (Senate Managers' section-by-
section analysis presented by Sen. Williams) (``The limited 
exemption from coverage in this section for religious corporations, 
associations, educational institutions or societies has been 
broadened to allow such entities to employ individuals of a 
particular religion in all their activities. . . . Such 
organizations remain subject to the provisions of Title VII with 
regard to race, color, sex or national origin.'') (emphasis added).
---------------------------------------------------------------------------

    Several commenters opposing rescission, including an organization 
of religious employers, two individual attorneys, and a religious 
association, asserted that OFCCP's proposal was inconsistent with the 
EEOC's 2021 Compliance Manual on this point. These commenters typically 
cited a sentence from the guidance stating that Title VII's religious 
exemptions ``allow a qualifying religious organization to assert as a 
defense to a Title VII claim of discrimination or retaliation that it 
made the challenged employment decision on the basis of religion.'' 
EEOC, Compliance Manual on Religious Discrimination, sec. 12-1.C.1. 
Several U.S. Senators asserted that Bostock v. Clayton County, 140 S. 
Ct. 1731 (2020), ``further counsel[s] that the religious exemption does 
not just apply to claims of religious discrimination, but to the full 
scope of discrimination claims under Title VII.''
    Some commenters opposing rescission raised constitutional concerns 
about OFCCP's proposal. Commenters including religious higher education 
institutions and associations cautioned that OFCCP's proposed 
rescission could lead to ``greater church-state entanglement regarding 
employment decisions based on sincerely held religious beliefs.'' A 
religious advocacy organization commented that ``no OFCCP bureaucrat 
can be lawfully empowered to determine what it truly means to be 
Catholic or any other `particular' religion without violating the Free 
Exercise and Establishment Clauses.'' A few commenters also mentioned 
the First Amendment's ``ministerial exception'' in this context. An 
individual attorney, for example, asserted that ``the Proposal attempts 
to limit the employment decisions of religious contractors to decisions 
concerning `ministerial employees'--which the Constitution itself 
protects--and essentially asserts that decisions based on sincere 
religious beliefs and tenets are immaterial.'' A religious advocacy 
organization insisted that ``[r]eligious organizations that exercise 
religious exemptions are not engaged in invidious discrimination. A 
Catholic church that only `hires' men as priests and women as nuns is 
not a den of bigotry as the OFCCP Proposal would suggest. It's a 
Catholic church.''
    After careful consideration of all these comments, OFCCP concludes 
that rescission is appropriate. The combination of (i) the 2020 
preamble's discussion of Title VII; (ii) the 2020 rule's adoption of a 
definition of ``particular religion'' derived from 42 U.S.C. 2000e(j); 
and (iii) the 2020 rule's rule of construction that this subpart be 
construed ``in favor of a broad protection of religious exercise, to 
the maximum extent permitted by [law],'' 41 CFR 60-1.5(e), could well 
be understood by contractors and contracting agencies to provide 
qualifying religious organizations a right to insist upon adherence to 
the employer's religious tenets in a way that would result in 
discrimination that Executive Order 11246 prohibits, which would 
thereby not only deviate from the Presidential directive but also 
decrease procurement efficiency. As one contractor association 
explained, the 2020 rule and preamble ``created uncertainty and 
implicitly sanctioned discrimination on other characteristics when 
based on a sincerely held religious belief.'' A state tradeswomen 
organization, a national labor union LGBTQ constituency group, and a 
national labor union likewise commented:

    [T]he 2020 Rule gave no consideration to providing clarity for 
employees of contractors who might invoke the religion exemption. 
Instead, the Rule left them with profound uncertainty about whether 
their employer could newly claim the exemption and whether they 
could be subject to new, previously prohibited discrimination, a 
matter of significant consequence for those employees.

    OFCCP emphasizes that, absent strong evidence of insincerity, OFCCP 
would accept a religious organization's own assertions regarding 
doctrinal questions. However, OFCCP believes it is important to clarify 
that it is not appropriate to construe the Executive Order 11246 
religious exemption to permit a qualifying religious organization to 
discriminate against employees on the basis of any protected 
characteristics other than religion. Executive Order 11246 itself 
expressly states that the exemption does not exempt or excuse the 
contractor in question ``from complying with the other requirements 
contained in this Order.'' Sec. 204(c). And when President Bush 
promulgated the religious exemption and section 204(c) in 2002, he did 
so in order to incorporate established Title VII doctrine that clearly 
precluded the broader reading of the religious exemption that some 
commenters espoused. Indeed, just two years before that amendment to 
Executive Order 11246, the Department of Justice had specifically 
described that case law and explained that it faithfully reflected 
congressional intent. See Memorandum for William P. Marshall, Deputy 
Counsel to the President, from Randolph D. Moss, Assistant Attorney 
General, Office of Legal Counsel, Re: Application of the Coreligionists 
Exemption in Title VII of the Civil Rights Act of 1964, 42 U.S.C. 
2000e-1(a), to Religious Organizations that Would Directly Receive 
Substance Abuse and Mental Health Services Administration Funds 
Pursuant to Section 704 of H.R. 4923, the ``Community Renewal and New 
Markets Act of 2000'', at 30-32, 31 n.62 (Oct. 12, 2000), https://www.justice.gov/olc/page/file/936211/download.
    Even in the preamble to the 2020 rule, OFCCP repeatedly stated, as 
it had in the preceding notice of proposed rulemaking (NPRM), ``that 
the religious exemption does not permit discrimination on the basis of 
other protected categories.'' 85 FR 79329; see also id. at 79347. The 
preamble, however, in conjunction with the provisions of the 2020 rule 
identified above, argued that it was unclear how to reconcile this 
basic, uncontroverted principle with the fact that the Title VII 
exemption also allows qualifying organizations to insist that employees 
comply with the employer's sincere religious tenets--tenets that may 
themselves incorporate a form of discrimination that Title VII 
otherwise forbids: ``The question posed here . . . is the interaction 
of those two principles[--][s]pecifically, the outcome when a religion 
organization's action is based on and motivated by the employee's 
adherence to religious tenets yet implicates another category protected 
by E.O. 11246.'' Id. at 79349. The 2020 preamble ultimately decided not 
to answer this question, id. at 79350, but it insisted that courts had 
``left the question open,'' id. at 79349.
    That was incorrect. As OFCCP explained in its proposal to rescind 
the 2020 rule, 86 FR 62119-20, at the time President Bush amended 
Executive Order 11246, and indeed until very recently, courts had 
uniformly held that a qualifying employer in such a case may not insist 
upon adherence to tenets that violate another ground of discrimination 
that Title VII prohibits. The 2020 preamble stated that some

[[Page 12852]]

courts ``have indicated that the religious exemption may be preeminent 
in such a situation,'' 85 FR 79350, but neither of the cases cited 
issued such a holding--or even an indication to that effect. And as the 
Department of Justice has explained, Congress's intent was to the 
contrary. See Memorandum for William P. Marshall, Deputy Counsel to the 
President, from Randolph D. Moss, Assistant Attorney General, Office of 
Legal Counsel, Re: Application of the Coreligionists Exemption in Title 
VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e-1(a), to Religious 
Organizations that Would Directly Receive Substance Abuse and Mental 
Health Services Administration Funds Pursuant to Section 704 of H.R. 
4923, the ``Community Renewal and New Markets Act of 2000'', at 30-31 
(Oct. 12, 2000), https://www.justice.gov/olc/page/file/936211/download; 
see also DeMarco v. Holy Cross High Sch., 4 F.3d 166, 173 (2d Cir. 
1993) (``As several courts have noted, the legislative history of Title 
VII makes clear that Congress formulated the limited exemptions for 
religious institutions to discrimination based on religion with the 
understanding that provisions relating to non-religious discrimination 
would apply to such institutions.'') (citing Martin v. United Way of 
Erie, 829 F.2d 445, 449 (3d Cir. 1987) and Rayburn, 772 F.2d at 1166).
    The principal counterargument offered by some commenters is that, 
notwithstanding Congress's intent and the holdings of many courts, the 
plain language of Title VII--and, by extension, Executive Order 11246--
affords qualifying employers a right to insist on employees' adherence 
to religious tenets even where that will result in another form of 
discrimination that Title VII otherwise forbids. This argument is 
predicated on two textual provisions in Title VII: (i) the religious 
exemption itself, 42 U.S.C. 2000e-1(a), which states ``[t]his 
subchapter'' (i.e., Title VII) ``shall not apply . . . 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 carrying on by such corporation, 
association, educational institution, or society of its activities'' 
(emphasis added); and (ii) the definition of ``religion'' that appears 
in 42 U.SC. 2000e(j), which provides that for purposes of Title VII 
``[t]he term `religion' includes all aspects of religious observance 
and practice, as well as belief, unless an employer demonstrates that 
he is unable to reasonably accommodate to an employee's or prospective 
employee's religious observance or practice without undue hardship on 
the conduct of the employer's business'' (emphasis added).
    Two judges in recent months have suggested, as did several 
commenters, that in light of these two provisions, ``when the 
[qualifying employer's] decision is founded on religious beliefs, then 
all of Title VII drops out.'' Starkey v. Roman Catholic Archdiocese of 
Indianapolis, Inc., 41 F.4th 931, 946 (7th Cir. 2022) (Easterbrook, J., 
concurring); see also Bear Creek Bible Church v. EEOC, 571 F. Supp. 3d 
571, 590-91 (N.D. Tex. 2021) (``Read plainly then, Title VII does not 
apply to religious employers when they employ individuals based on 
religious observance, practice, or belief. . . . The plain text of this 
exemption . . . is not limited to religious discrimination claims; 
rather, it also exempts religious employers from other forms of 
discrimination under Title VII, so long as the employment decision was 
rooted in religious belief.'').\8\
---------------------------------------------------------------------------

    \8\ In neither of these cases was the judge's reasoning the 
basis for rejecting a Title VII discrimination claim. The court in 
Bear Creek offered its analysis as a basis for denying standing to a 
plaintiff that tried to bring a RFRA claim. 571 F. Supp. 3d at 609. 
(As noted above, the case is currently on appeal to the United 
States Court of Appeals for the Fifth Circuit. No. 22-10145 (5th 
Cir. Feb. 14, 2022).) And the majority of the court in Starkey ruled 
in favor of the religious employer on constitutional grounds and 
therefore did not discuss the Title VII exemption. 41 F.4th at 942.
---------------------------------------------------------------------------

    After careful consideration, OFCCP has concluded that that is 
neither a common nor a compelling understanding of Title VII's 
religious exemption that should govern the interpretation of the 
cognate exemption in Executive Order 11246.
    Most importantly, this recent reading by two judges does not 
reflect the dominant view of the courts that have considered the 
question over the course of many years or the view of the Department of 
Justice just two years before Executive Order 13279 was promulgated.
    Moreover, this textual argument misidentifies the source of the 
conclusion of some courts that a qualifying organization not only may 
generally insist upon its employees' membership in a particular 
religious denomination but also ``employ only persons whose beliefs and 
conduct are consistent with the employer's religious precepts.'' 
Little, 929 F.2d at 951. Indeed, in the case where that proposition was 
first accepted, the court expressly rejected the argument that the 
definition of ``religion'' in section 2000e(j) bears upon the scope of 
the religious exemption in section 2000e-1(a). The section 2000e(j) 
definition of ``religion,'' the court explained, was designed ``to 
broaden the prohibition against discrimination'' on the basis of 
religion for the benefit of employees-- ``so that religious practice as 
well as religious belief and affiliation would be protected.'' Id. at 
950. The function of section 2000e(j), in fact, is to require employers 
under certain circumstances to accommodate employees' religion, 
including their ``observance and practice'' thereof, even where the 
employer is not expressly discriminating on the basis of religion. As 
the Supreme Court has explained, ``[t]he intent and effect of this 
definition was to make it an unlawful employment practice under 
[section 703(a)(1) of Title VII, 42 U.S.C. 2000e-2(a)(1)], for an 
employer not to make reasonable accommodations, short of undue 
hardship, for the religious practices of his employees and prospective 
employees.'' Trans World Airlines, Inc. v. Hardison, 432 U.S. 63, 74 
(1977); see also Ansonia Bd. of Educ. v. Philbrook, 479 U.S. 60, 63 n.1 
(1986) (``The reasonable accommodation duty was incorporated into the 
statute, somewhat awkwardly, in the definition of religion.''); EEOC v. 
Abercrombie & Fitch Stores, Inc., 575 U.S. 768, 775 (2015) (by virtue 
of the definition, ``religious practice is one of the protected 
characteristics that cannot be accorded disparate treatment and must be 
accommodated''). The section 2000e(j) definition has not historically 
been understood by courts to bear upon what it means for an employee to 
be ``of a particular religion'' for purposes of the section 2000e-1(a) 
religious exemption.\9\ See Little, 929 F.2d at 950 (``There appears to 
be no legislative history to indicate that Congress considered the 
effect of this definition on the scope of the exemptions for religious 
organizations.'').
---------------------------------------------------------------------------

    \9\ The definition of ``religion'' is being removed from the 
regulations in part to avoid this confusion.
---------------------------------------------------------------------------

    According to the court of appeals that first recognized it, a 
qualifying employer's right to insist on employee adherence to 
religious ``tenets'' or ``precepts'' derives not from that or any other 
textual command but instead from implications in the 1972 legislative 
history of the exemption, which ``suggest[ ] that the sponsors of the 
broadened exception were solicitous of religious organizations' desire 
to create communities faithful to their religious principles.'' Id. It 
was that legislative history that ``persuaded'' the court of appeals in 
Little ``that Congress intended the explicit exemptions to Title VII to 
enable religious

[[Page 12853]]

organizations to create and maintain communities composed solely of 
individuals faithful to their doctrinal practices, whether or not every 
individual plays a direct role in the organization's `religious 
activities.' '' Id. at 951. (The court in Little did not address 
whether the religious exemption applies when the religious tenet on 
which the challenged employment action was based directly implicates 
another of Title VII's protected classes.)
    The reading urged by commenters and recently suggested by two 
judges also would lead to results that are inconsistent with the 1972 
Congress's intent and President Bush's 2002 Executive order. For 
example, if a qualifying religious organization had a religious tenet 
prohibiting interracial marriage, that reading would permit the 
qualifying organization to refuse to employ an applicant with a spouse 
of a different race. An organization whose tenets provide that a 
husband is the head of a household and should provide for his family 
but that a woman's place is in the home could refuse to hire women or 
could offer higher benefits to male employees. But see EEOC v. Fremont 
Christian School, 781 F.2d 1362 (9th Cir. 1986). An organization with a 
tenet prohibiting congregants from seeking civil relief against 
religious authorities could dismiss an employee who had brought an EEOC 
claim for sex discrimination, in violation of the Title VII ban on 
retaliation. But see EEOC v. Pacific Press Pub. Ass'n, 676 F.2d 1272 
(9th Cir. 1982).\10\ There is no basis for concluding that that is what 
President Bush intended when he incorporated the Title VII exemption 
into Executive Order 11246.
---------------------------------------------------------------------------

    \10\ More recently, the Ninth Circuit held that if the original 
claim was for religious discrimination that is not prohibited 
because of the religious organization exemption, it is not 
prohibited retaliation for a qualifying religious organization to 
fire the employee for bringing that claim ``because the practice 
`opposed' is not `unlawful.' '' Garcia v. Salvation Army, 918 F.3d 
997, 1006 (9th Cir. 2019); see also id. at 1004-05 n.11 
(distinguishing its opinion in Pacific Press on that ground).
---------------------------------------------------------------------------

    This reading would also be inconsistent with President Obama's 
amendment of Executive Order 11246, which generally prohibits 
contractors from discriminating against applicants and employees on the 
bases of sexual orientation and gender identity, even when they cite a 
sincere religious reason for doing so.
    Not only would these results not be permissible under the 
longstanding judicial and executive branch readings of Title VII but in 
the context of government contracting they would also undermine 
efficiency and economy--something OFCCP recognized in the preamble to 
the 2020 rule. See 85 FR 79364 (``OFCCP continues to believe that 
discrimination by federal contractors generally has a negative impact 
on the economy and efficiency of government contracting.''). Indeed, 
the 2020 rule did not amend the regulations to expressly permit 
contractors to invoke the Executive Order 11246 religious exemption to 
insist upon adherence to religious tenets in a way that would result in 
forms of prohibited discrimination other than discrimination in favor 
of coreligionists. 85 FR 79350.\11\ OFCCP declines the suggestion of 
several commenters that it should do so now--an amendment that would be 
inconsistent with both congressional and Presidential intent.
---------------------------------------------------------------------------

    \11\ Instead, the preamble to the 2020 rule explained that such 
claims would be assessed under RFRA. See 85 FR 79349-56. We discuss 
below the 2020 preamble's approach to RFRA.
---------------------------------------------------------------------------

    OFCCP recognizes, as it did in its rescission proposal, that the 
Constitution might impose limits on the application of Executive Order 
11246. For example, as explained in the proposal, in assessing an 
employer's assertion of the religious exemption, courts and agencies 
must be careful not to interrogate the plausibility of the employer's 
description of its religious purposes, functions, and tenets. See, 
e.g., Curay-Cramer, 450 F.3d at 141; Miss. Coll., 626 F.2d at 485; 
Little, 929 F.2d at 948. OFCCP is fully able to exercise that caution, 
where constitutionally required, on a case-by-case basis, without 
unduly broadening the religious exemption. See, e.g., Curay-Cramer, 450 
F.3d at 142 (``Whether the proffered comparable conduct is sufficiently 
similar to avoid raising substantial constitutional questions must be 
judged on a case-by-case basis.'').
    OFCCP also recognizes that the religion clauses of the First 
Amendment require a ``ministerial exception'' from certain 
nondiscrimination laws, including Title VII, for positions of 
particular religious significance in certain religious organizations. 
See Our Lady of Guadalupe Sch. v. Morrissey-Berru, 140 S. Ct. 2049 
(2020); Hosanna-Tabor Evangelical Lutheran Church & Sch. v. EEOC, 565 
U.S. 171 (2012). As OFCCP explained in its rescission proposal, where 
the ministerial exception applies, ``judicial intervention into 
disputes between the [religious organization] and the [employee] 
threatens the [religious organization's] independence in a way that the 
First Amendment does not allow.'' Our Lady of Guadalupe Sch., 140 S. 
Ct. at 2069. There is not yet any case law assessing whether and to 
what extent the ministerial exemption might apply in the context of a 
government contract (particularly with respect to employees who are 
engaged in secular activities required by the contract), but OFCCP 
acknowledges that if the ministerial exception does apply, it would 
supersede the prohibitions of Executive Order 11246.
    OFCCP also acknowledges, as it did in the proposal, that RFRA 
``might supersede Title VII's commands in appropriate cases,'' Bostock, 
140 S. Ct. at 1754, although OFCCP also observes that RFRA's 
legislative history indicated that ``[n]othing in this bill shall be 
construed as affecting Title VII of the Civil Rights Act of 1964,'' 
H.R. Rep. No. 103-88, at 9 (1993).
    Finally, OFCCP does not agree that the EEOC's 2021 Compliance 
Manual on Religious Discrimination compels a different conclusion. The 
EEOC's 2021 Compliance Manual correctly states that ``[r]eligious 
organizations are subject to the Title VII prohibitions against 
discrimination on the basis of race, color, sex, national origin . . . 
, and may not engage in related retaliation,'' and in support of that 
proposition it cites cases including Kennedy v. St. Joseph's 
Ministries, Inc., 657 F.3d 189, 192 (4th Cir. 2011) (holding that the 
exemption ``does not exempt religious organizations from Title VII's 
provisions barring discrimination on the basis of race, gender, or 
national origin''); Boyd v. Harding Academy of Memphis, Inc., 88 F.3d 
410, 413 (6th Cir. 1996) (stating that the exemption ``does not . . . 
exempt religious educational institutions with respect to all 
discrimination''); DeMarco v. Holy Cross High School, 4 F.3d 166, 173 
(2d Cir. 1993) (stating that ``religious institutions that otherwise 
qualify as `employer[s]' are subject to Title VII provisions relating 
to discrimination based on race, gender and national origin''); and 
Rayburn v. General Conference of Seventh-day Adventists, 772 F.2d 1164, 
1166 (4th Cir. 1985) (``While the language of Sec.  702 makes clear 
that religious institutions may base relevant hiring decisions upon 
religious preferences, Title VII does not confer upon religious 
organizations a license to make those same decisions on the basis of 
race, sex, or national origin.''). All of the cases cited are 
consistent with OFCCP's view expressed in this preamble. OFCCP 
recognizes that the EEOC's 2021 Compliance Manual also states that a 
qualifying religious organization can ``assert as a defense to a Title 
VII claim of discrimination or retaliation that it made the challenged

[[Page 12854]]

employment decision on the basis of religion.'' EEOC, Compliance Manual 
on Religious Discrimination, sec. 12-1.C.1. In OFCCP's view, however, 
the cases cited in the EEOC's 2021 Compliance Manual do not support the 
proposition that asserting such a defense exempts the organization from 
the Title VII prohibitions against discrimination on the basis of race, 
color, sex, and national origin. Nor does the EEOC's 2021 Compliance 
Manual address the exemption in Executive Order 11246, which is 
properly understood to incorporate the established judicial 
construction of the Title VII exemption reflected in many cases, 
including those cited in the EEOC's 2021 Compliance Manual. For the 
reasons explained above, the exemption in Executive Order 11246 should 
be construed consistent with those judicial rulings.
3. Inappropriately Broad Rule of Construction
    The 2020 rule added a rule of construction at 41 CFR 60-1.5(e) 
requiring that subpart A of 41 CFR part 60-1 be construed ``in favor of 
a broad protection of religious exercise, to the maximum extent 
permitted by the U.S. Constitution and law, including [RFRA].'' See 85 
FR 79372. OFCCP proposed to remove this provision.
    A legal professional association, a coalition of organizations 
opposing religious discrimination, and a reproductive rights advocacy 
organization, among others, asserted that the rule's mandate to 
interpret the Executive Order 11246 religious exemption as broadly as 
law would allow is contrary to Title VII precedent that establishes the 
proper construction of the Executive Order 11246 religious exemption.
    A religious organization, by contrast, urged retention of that rule 
of construction on the ground that it ``reflected the very best of 
American traditions in that it gave religious exercise the special, 
indeed paramount, protection that constitutional text and history 
counsel.'' A comment from two religious higher education associations 
and two religious universities stated that ``[t]he OFCCP proposal to 
rescind appears to be an attempt to restrict the protections provided 
by Congress under RFRA.'' Another commenter that opposed rescission, a 
religious advocacy organization, asserted that if OFCCP does not 
incorporate RFRA's protections into the regulations themselves, OFCCP 
will substantially burden religious organizations by forcing them to 
choose between participating in a Federal contract and ``abandoning 
their faith.''
    A civil liberties litigation organization asserted that when an 
agency ``promulgates regulations concerning religious entities or 
beliefs, it must'' not only ``consider RFRA'' but also ``create 
appropriate exemptions to ensure religious beliefs are not unduly 
burdened,'' citing Little Sisters of the Poor v. Pennsylvania, 140 S. 
Ct. 2367, 2384 (2020). Another civil liberties organization asserted 
that a case-by-case approach ``inserts additional uncertainty in the 
government contracting process,'' thereby undermining economy and 
efficiency in procurement. Similarly, a religious university called the 
case-by-case approach ``cumbersome,'' predicting that it ``would 
require dedication of additional resources to carefully consider the 
mission of each religious entity'' and ``would doubtless result in 
disputes and litigation.''
    Having reviewed these comments, OFCCP finds that removal of the 
rule of construction is appropriate and consistent with law. A rule 
that would require the Executive Order 11246 religious exemption to be 
construed as broadly as the law allows would be inconsistent with the 
Presidential intent that that exemption should be construed consistent 
with the Title VII exemption on which it is based, and would be 
inconsistent with the broader objective of Executive Order 11246 to 
ensure economy and efficiency in government contracts.
    Contrary to the assumption of some commenters, the absence of any 
reference to RFRA in OFCCP's regulations does not mean that OFCCP will 
not apply RFRA. To the contrary, by its terms RFRA presumptively 
applies to the application of all Federal law, including Executive 
Order 11246 and its implementing regulations.
    Nor does the law require that the regulations themselves contain 
certain categorical or bright-line religious exemptions--something that 
most Federal regulations do not do and, notably, something that the 
2020 rule itself did not do. It is sufficient that OFCCP will comply 
with the law: OFCCP will apply the religious exemption of Executive 
Order 11246 and RFRA on a case-by-case basis, where applicable--a time-
tested practice that allows OFCCP sufficient flexibility to weigh 
governmental, claimant, and third-party burdens and interests and that 
ensures that exemptions are applied consistent with RFRA and Executive 
Order 11246. Attention to third-party harms, in particular, enables 
OFCCP to ensure that any exemptions do not extend beyond what the 
Establishment Clause allows. See Cutter, 544 U.S. at 722; Texas 
Monthly, Inc. v. Bullock, 489 U.S. 1, 18 n.8 (1989) (Brennan, J., 
plurality op.); Estate of Thornton v. Caldor, Inc., 472 U.S. 703, 709-
10 (1985).\12\
---------------------------------------------------------------------------

    \12\ Contrary to at least one commenter's suggestion, Little 
Sisters of the Poor does not require agencies to adopt regulatory 
religious exemptions--something that agencies do not do in the vast 
majority of rulemakings, even though RFRA applies to all Federal 
law. The Court there held only that, ``in the context of these cases 
[proceeding from the Supreme Court's decision in Hobby Lobby], it 
was appropriate for the Departments to consider RFRA.'' 140 S. Ct. 
at 2383; see also 80 FR 41324 (explaining that extending a religious 
exemption to closely held corporations ``complies with and goes 
beyond what is required by RFRA and Hobby Lobby'').
---------------------------------------------------------------------------

    OFCCP acknowledges commenters' concerns that the case-by-case 
approach to exemptions requires agency resources, but OFCCP believes 
that an individualized, fact-specific approach is an appropriate use of 
agency resources because it enables OFCCP to meet its legal obligations 
to evaluate a particular contractor's assertion that its religious 
exercise is substantially burdened by enforcement of an aspect of 
Executive Order 11246, as well as to assess OFCCP's possible compelling 
interests and narrow tailoring with specific regard to application of 
the burden to that contractor. See 42 U.S.C. 2000bb-1(b).
4. Inappropriately Categorical Approach to RFRA Analysis
    As explained in OFCCP's rescission proposal, the preamble to the 
2020 rule expressed views about RFRA's application that were both 
questionable and not pertinent to the proper construction of Executive 
Order 11246 or to the text of the 2020 rule itself.
    RFRA provides that when application of a Federal Government rule or 
other law would substantially burden a person's exercise of religion, 
the Government must afford that person an exemption to the rule unless 
it can demonstrate that applying the burden to that person furthers a 
compelling governmental interest and is the least restrictive means of 
doing so. 42 U.S.C. 2000bb-1(b). Prior to the 2020 rule, recognizing 
that ``claims under RFRA are inherently individualized and fact 
specific,'' OFCCP's express policy was to consider RFRA claims, if they 
ever arose, based on the facts of the particular case, and to refrain 
from applying any regulatory requirement that would violate RFRA. 
Discrimination on the Basis of Sex, Final Rule, 81 FR 39119; see also 
85 FR 79353; OFCCP Frequently Asked Questions: Religious Employers and 
Religious Exemption, https://

[[Page 12855]]

www.dol.gov/agencies/ofccp/faqs/religious-employers-exemption.
    The preamble to the 2020 rule, however, announced--apparently as a 
categorical matter for purposes of assessing future RFRA claims--that 
OFCCP ``has less than a compelling interest in enforcing E.O. 11246 
when a religious organization takes employment action solely on the 
basis of sincerely held religious tenets that also implicate a 
protected classification, other than race.'' 85 FR 79354. As discussed 
above in section III.A.2, the preamble repeatedly mentioned marriage 
and sexual intimacy as likely subjects of such religious beliefs 
requiring accommodation, see id. at 79349, 79352, 79364, which 
commenters rightly viewed as indicating that protection from 
discrimination on the bases of sex, sexual orientation, and gender 
identity in particular would be compromised under this analysis.\13\
---------------------------------------------------------------------------

    \13\ By contrast, the present Administration has committed to a 
policy of fully enforcing laws prohibiting discrimination based on 
sexual orientation and gender identity and protecting religious 
freedom. See, e.g., sec. 1, E.O. 14015, 86 FR 10007 (Feb. 14, 2021); 
sec. 1, E.O. 13988, 86 FR 7023 (Jan. 25, 2021).
---------------------------------------------------------------------------

    OFCCP explained in its rescission proposal that the categorical 
approach to RFRA reflected in the preamble to the 2020 rule is 
inappropriate both because it would extend exemptions more broadly than 
RFRA requires and because it fails to allow sufficient flexibility to 
weigh competing governmental and third-party interests against the 
interests of individuals asserting religious exemptions. Cf., e.g., 
Cutter v. Wilkinson, 544 U.S. 709, 720 (2005) (``Properly applying [the 
Religious Land Use and Institutionalized Persons Act, to which Congress 
carried over from RFRA the ``compelling governmental interest''/``least 
restrictive means'' standard], courts must take adequate account of the 
burdens a requested accommodation may impose on nonbeneficiaries . . . 
.'').
    Many commenters agreed with OFCCP's assessment that the 2020 rule 
preamble's categorical approach to RFRA was unsupported. These 
commenters, including a contractor association, LGBTQ rights advocacy 
organizations, reproductive rights advocacy organizations, and a 
women's rights advocacy organization, agreed that a case-by-case 
analysis of RFRA claims is appropriate.
    Citing both policy and legal grounds, several commenters agreed 
that the 2020 preamble's categorical approach to RFRA was problematic 
in part because it ``prevents the government from considering the harms 
that an exemption under RFRA may cause,'' as stated by an organization 
that advocates separation of church and state. In addition, as 
discussed above in section III.A.2, a wide range of commenters noted 
that the First Amendment requires the Government to consider burdens 
that granting an exemption or accommodation would impose on third 
parties. See Cutter, 544 U.S. at 722; Texas Monthly, Inc. v. Bullock, 
489 U.S. 1, 18 n. 8 (1989) (Brennan, J., plurality op.); Estate of 
Thornton v. Caldor, Inc., 472 U.S. 703, 709-10 (1985).
    Commenters also criticized the position taken in the 2020 rule's 
preamble that the agency's compelling interest in enforcing Executive 
Order 11246 categorically would not extend to religious contractors' 
employment actions based on sincerely held religious beliefs that 
implicate protected characteristics other than race. Commenters 
including a civil rights legal advocacy organization, an LGBTQ rights 
advocacy organization, and an organization that advocates separation of 
church and state agreed with OFCCP's proposal that treating protected 
classes differently conflicts with the text of the Executive Order 
11246 religious exemption, as well as with Title VII case law.
    Other commenters, however, also approved specifically of the 2020 
preamble's discussion of the extent to which OFCCP has a compelling 
interest in enforcing Executive Order 11246. A comment from religious 
higher education associations and religious universities asserted that 
the Government ``has no compelling interest in restricting a religious 
institution from employing adherents to its religion, including those 
who adhere to `all aspects of religious observance and practice, as 
well as belief,' as contemplated by Title VII.'' And a religious 
advocacy organization agreed with the 2020 rule that Bob Jones 
University v. United States, 461 U.S. 574 (1983), provides ``support 
for treating race discrimination as a special case.''
    Having reviewed all relevant comments, OFCCP reiterates its view 
that the categorical approach to RFRA recommended in the 2020 preamble 
would be inappropriate. The question of whether a particular 
requirement of a Government contract would substantially burden the 
religious exercise of an employer would necessarily be very fact- and 
context-specific. Significantly, in the context of contracting, 
entities are free not to bid on a contract where they would prefer not 
to adhere to its conditions--a common occurrence. Moreover, it is 
beyond dispute that the Government's interests in preventing and 
remedying the harms of discrimination, and in ensuring equal employment 
opportunity, are ``weighty.'' Fulton v. City of Philadelphia, 141 S. 
Ct. 1868, 1882 (2021). And the Government's interest in the economy and 
efficiency of government contracts--and therefore its interest in 
ensuring that skilled employees are not excluded from the workforce 
with respect to such contracts--is the same, regardless of whether an 
employer wishes to exclude certain employees on the basis of race or 
any other protected characteristic.
5. Insufficient Substantiation of the Need for the 2020 Rule
    OFCCP explained in its rescission proposal that it had applied the 
religious exemption in Executive Order 11246 for 17 years prior to 2020 
without needing to codify its scope and application in regulatory 
language beyond that contained in 41 CFR 60-1.5(a)(5). During that 
time, OFCCP's policy with respect to the religious exemption was to 
apply Title VII case law as it developed, with reference to relevant 
religious liberty authorities where appropriate. As recognized even in 
the preamble to the 2020 rule, comparatively few contractors and 
subcontractors are affected by the religious exemption. See 85 FR 79367 
(``[T]his rule will have no effect on the overwhelming majority of 
federal contractors.''). Given the relatively low number of contractors 
requesting religious exemptions, a case-by-case approach is not only 
preferable for the reasons addressed in the previous sections but also 
entirely workable and practical, as OFCCP's 17 years of prior 
experience attest.
    Numerous commenters who supported OFCCP's rescission proposal 
agreed that the 2020 rule was unnecessary and, moreover, asserted that 
the agency did not adequately establish the need for the 2020 rule in 
proposing or finalizing it. Many of these commenters, including a 
women's rights legal advocacy organization, an LGBTQ rights advocacy 
organizations, a think tank, and a civil liberties advocacy 
organization, noted that the preambles to the religious exemption NPRM 
and the final 2020 rule asserted that the rule was necessary to expand 
access to Federal contracting for religious entities reluctant to 
contract because the scope of the religious exemption was unclear, see, 
e.g., 85 FR 79328, 79370, but the preambles failed to provide evidence 
to substantiate that claim.

[[Page 12856]]

    For example, as stated in a comment from a state tradeswomen 
organization, a national labor union LGBTQ constituency group, and a 
national labor union, the 2020 rule preamble did ``not identify any 
organizations that lost contracting opportunities because of the 
nondiscrimination requirements lifted by the 2020 Rule, or any that 
previously desired to apply for federal contracts, but declined to do 
so because of those nondiscrimination requirements'' or because of the 
purported lack of clarity regarding the application of those 
requirements. A group of state attorneys general similarly stated that 
the 2020 rule did not ``present evidence that religious organizations 
avoided applying for contracts before the Rule, basing its assertions 
that they may have been `reluctant to participate as federal 
contractors' on three unidentified commenters, who are not themselves 
organizations that have been reluctant.'' A think tank asserted that 
the 2020 rule's ``vague statement that it received `feedback' from 
`some organizations' is . . . insufficient to establish any need for 
this dramatic shift in position, particularly in light of the 
tremendous harms articulated above.''
    Commenters who opposed rescission, however, asserted that the 2020 
rule was needed. Many of these commenters agreed that religious 
entities were only a fraction of Federal contractors but asserted, as a 
religious college put it, that ``[i]t is precisely because religious 
institutions are comparatively few that their constitutional rights and 
interests should be articulated and affirmed in this executive order.'' 
Many commenters who opposed rescission expressed concern that 
rescinding the 2020 rule would deter the full participation of 
religious organizations in contracting. One religious university stated 
that, in its view, ``the reason there are comparatively few federal 
religious contractors and subcontractors is because of the ambiguity 
and associated risks [particularly the ``penalties involved in being 
accused of impermissible discrimination''] that existed in the 
interpretation of religious exemptions for federal contractors prior to 
the 2020 rule.'' The university asserted that ``the increased level of 
certainty as to the interpretation of its constitutionally protected 
religious exemption offered by the 2020 Rule actually opened the door 
for [the university] to consider pursuing a federal contract.'' Several 
commenters asserted that religious organizations provide valuable 
services and therefore should not be discouraged from participating in 
Federal contracting. A few commenters, including U.S. Senators and a 
religious advocacy organization, asserted that the supplies and 
services provided by religious contractors, such as hospitals, were 
particularly important to the country and the economy during the Covid-
19 pandemic.
    Although the great majority of commenters opposing rescission did 
not assert that they themselves held Federal contracts, several 
religious colleges and universities submitted comments stating that 
they held Federal contracts and broadly asserted that such institutions 
rely on the religious exemption. For example, one religious university 
commented: ``Religious institutions need the exemption in order to 
become federal contractors and provide important educational 
opportunities to their students.'' Although it provided no specifics, 
the commenter continued that ``[r]eligious institutions have in fact 
relied on the exemption provided under Title VII, and rescinding the 
2020 rule would raise uncertainty about their ability to do so in the 
future.'' A comment from religious higher education associations and 
religious universities asserted that ``sponsored research on wide-
ranging subjects has been conducted by religious higher education 
institutions for the Department of Agriculture, Department of Defense, 
Department of Energy, Department of Interior, NASA [National 
Aeronautics and Space Administration], National Institutes of Health, 
U.S. Fish and Wildlife Service, and others.'' Another commenter 
identified itself as a religious university that had ``successfully 
performed under federal contracts in various academic and scientific 
areas.''
    One commenter, Brigham Young University (BYU), specifically 
commented that it was a Federal contractor that had invoked the 
religious exemption during past compliance evaluations. Attached to 
BYU's comment on the proposal were letters sent by its counsel to an 
OFCCP regional office on March 24, 2016, and June 18, 2010. OFCCP has 
confirmed that BYU has invoked the religious exemption. OFCCP's records 
reflect that, on at least two occasions, BYU was selected for a 
compliance review during OFCCP's neutral scheduling process. BYU 
responded to OFCCP's scheduling letter by asserting that it was exempt 
from Executive Order 11246 and requesting that the compliance review be 
administratively closed. OFCCP reviewed BYU's response and determined 
that BYU was entitled to Executive Order 11246 religious exemptions 
under two provisions, one as a religious entity pursuant to the 
exemption at issue here and also as a religious educational 
institution.\14\ OFCCP explained, however, that the religious exemption 
did not provide a total exemption from evaluation, emphasizing the 
proviso in 41 CFR 60-1.5(a)(5) that ``[s]uch contractors and 
subcontractors are not exempted or excused from complying with the 
other requirements contained in this Order.'' OFCCP conducted a desk 
audit of the documentation submitted by BYU, and OFCCP ultimately 
closed the review with a Notice of Compliance to BYU.
---------------------------------------------------------------------------

    \14\ Title VII's exemption for religious educational 
institutions, which allows qualifying institutions ``to hire and 
employ employees of a particular religion,'' was imported into 
regulations implementing Executive Order 11246 in 1978. See 43 FR 
49240, 49243 (Oct. 20, 1978) (now codified at 41 CFR 60-1.5(a)(6)); 
cf. 42 U.S.C. 2000e-2(e)(2).
---------------------------------------------------------------------------

    In its recission proposal, OFCCP stated that it had no record of 
any request for a religious exemption. See 86 FR 62118 n.3. OFCCP 
corrects this statement to confirm that, during the 20 years that the 
religious exemption has been included in Executive Order 11246, at 
least one contractor has invoked the religious exemption during a 
compliance review.
    OFCCP disagrees with a religious advocacy organization's assertion 
that OFCCP's rescission proposal assumes ``the participation of 
religious organizations in the federal procurement system is 
unimportant.'' On the contrary, OFCCP acknowledges that Executive Order 
13279 established the importance to Federal procurement of religious 
organizations, in part through ``the removal of barriers to faith-based 
organizations participating in procurements beneficial to the 
government,'' as a religious litigation organization put it. OFCCP also 
fully recognizes the importance of the Executive Order 11246 religious 
exemption for religious contractors. However, as discussed in the 
sections above, OFCCP believes that the 2020 rule impermissibly 
disregarded Executive Order 13279's intent to incorporate the scope and 
application of the Title VII religious exemption into Executive Order 
11246.
    Also, while acknowledging that one commenter asserted that the 2020 
rule ``opened the door'' for it ``to consider pursuing a federal 
contract,'' the comments that OFCCP received from existing religious 
contractors establish the importance of Executive Order 11246's 
religious exemption as delineated in Title VII case law, not as 
broadened in the 2020 rule. BYU's experience during OFCCP compliance 
reviews prior to the 2020 rule shows

[[Page 12857]]

that it was able to assert the religious exemption while complying with 
the other Executive Order 11246 obligations it agreed to as a Federal 
contractor. And another religious university commented that it had 
``successfully performed under federal contracts in various academic 
and scientific areas.''

B. Effects of Rescission

    OFCCP's rescission proposal stated that, if the 2020 rule were 
rescinded, OFCCP would return to its policy and practice of 
interpreting and applying the religious exemption in section 204(c) of 
Executive Order 11246, as codified in OFCCP's regulations at 41 CFR 60-
1.5(a)(5), in accordance with Title VII principles and case law. OFCCP 
stated that it would abide by relevant religious liberty obligations 
and would consider any RFRA claims raised by contractors on a case-by-
case basis and refrain from applying any regulatory requirement to a 
case in which it would violate RFRA.
    Many commenters who opposed rescission believed that rescinding the 
2020 rule would have negative effects. These commenters believed that 
rescission would undermine employers' religious freedom by revoking key 
religious liberty protections for their employment decisions. Some 
commenters, including several religious universities and a religious 
advocacy organization, asserted that OFCCP's rescission proposal did 
not adequately account for the constitutional protections for religious 
employers, which they stated extend further than the ministerial 
exception. Several of these commenters asserted that rescission of the 
2020 rule would impermissibly force religious entities to choose 
between maintaining their faith and participating in Federal contracts. 
Many of these commenters asserted that OFCCP was without authority to 
limit religious freedom protections. Commenters including U.S. Senators 
and a religious advocacy organization cited cases including Fulton v. 
City of Philadelphia, 141 S. Ct. 1868 (2021); Trinity Lutheran Church 
of Columbia, Inc. v. Comer, 137 S. Ct. 2012 (2017); and Thomas v. 
Review Board, 450 U.S. 707 (1981), to support their assertion that 
faith-based organizations cannot be forced to choose between exercising 
religion and participating in Government programs.
    Many commenters who opposed rescission also asserted that 
rescinding the 2020 rule, which they viewed as providing clarity and 
predictability to the regulated community, would lead to confusion and 
uncertainty. A religious university, for example, asserted that OFCCP's 
rescission proposal would remove helpful regulations and ``leave 
nothing in their place'' to provide ``guidance . . . as to the meaning 
and scope of the religious exemption.'' A few commenters expressed 
concern that OFCCP, in the absence of regulations to guide and 
constrain its authority, would simply indulge its ``policy 
preferences,'' such as by ``target[ing] religious groups and 
individuals that do not comply with their agenda,'' in the words of a 
religious organization. A religious advocacy organization asserted 
that, despite the administration's ``claims to promote diversity,'' 
rescission of the 2020 rule would entail ``simultaneously shunning and 
singling-out religious organizations and companies who represent 
Americans from incredibly diverse races, ethnic groups, backgrounds, 
and socioeconomic status.'' On a more neutral note, U.S. Senators 
commented that ``[i]t remains a basic principle of public policy and 
good governance that federal contractors deserve to understand at the 
outset of the contract how the terms of such contract will be 
interpreted and enforced.''
    OFCCP appreciates contractors' and potential contractors' desire 
for clarity and certainty regarding the scope and application of the 
religious exemption. OFCCP does not agree that leaving the 2020 rule in 
place would achieve clarity and certainty for all stakeholders. As 
discussed above and as asserted by many other commenters, the 2020 
rule's departure from Title VII case law and principles actually 
increased confusion among contractors and created uncertainty for 
workers about their protections from discrimination. OFCCP's rescission 
of the entire 2020 rule is necessary to achieve consistency with the 
text of Executive Order 11246 and with Title VII case law and 
principles, as discussed above in response to comments. As many 
commenters thus agreed, with rescission of the entire 2020 rule, 
religious contractors will no longer be subject to different exemption 
standards under Executive Order 11246 and Title VII, and workers can 
avail themselves of consistent protections. Furthermore, OFCCP is 
committed to promoting religious liberty, and there is simply no basis 
for any concern that OFCCP intends to target, shun, or otherwise be 
hostile to religious contractors. OFCCP fully intends to continue 
respecting contractors' religious liberty interests as well as the 
interests of other stakeholders, including the employees of religious 
contractors.
    OFCCP also notes that commenters who opposed rescission, although 
they predicted that rescission would have negative effects, did not 
claim serious reliance interests that would be harmed by rescission. 
This may be because, as a religious advocacy organization commented, 
the 2020 rule has not been in place long enough ``to affect the 
universe of potential contractors who submit their bids in cycles.'' 
Further, as noted in a comment submitted by a state tradeswomen 
organization, a national labor union LGBTQ constituency group, and a 
national labor union, the 2020 rule was challenged in court within a 
few weeks of its effective date, and the Department shortly thereafter 
confirmed in a public filing that it intended to propose rescission of 
the 2020 rule. Defs.' Unopposed Mot. for Stay, Or. Tradeswomen, Inc. v. 
U.S. Dep't of Labor, No. 21-cv-00089 (D. Or. filed Jan. 21. 2021), ECF 
No. 15. By contrast, as asserted by a group of state attorneys general, 
the 2020 rule harmed the reliance interests of employees of Federal 
contractors ``that will newly claim the exemption,'' given that those 
employees depend ``on the protections of E.O. 11,246 to shield them 
from their employer imposing its religious tenets in the workplace.'' 
OFCCP believes that rescission of the 2020 rule will create more 
certainty for employees.
    OFCCP also carefully considered commenters' concerns that 
rescinding the 2020 rule would impermissibly undermine employers' 
religious freedom. At the outset, OFCCP reiterates that rescission will 
simply return the agency to its longstanding approach to the religious 
exemption, which entails following Title VII principles and case law--
that is, interpreting and applying the religious exemption in 
accordance with precedents in which courts have not impermissibly 
undermined employers' religious freedom. OFCCP has also reviewed the 
cases that commenters cited in support of their concerns about 
employers' religious liberty, and OFCCP believes that rescinding the 
2020 rule is consistent with those decisions.
    As discussed above, OFCCP and some commenters view rescission as 
consistent with Fulton, which emphasized the inadequacy of a 
categorical approach to religious exemptions by noting that the 
relevant question ``is not whether the [government] has a compelling 
interest in enforcing its non-discrimination policies generally, but 
whether it has such an interest in denying an exception to [the 
particular religious claimant].'' 141 S. Ct. at 1881. With regard to 
Trinity Lutheran, a labor union commented that the Court's decision 
there ``simply affirmed that the Free Exercise clause ensures religious 
institutions are

[[Page 12858]]

protected from `unequal treatment' and prohibits targeting the 
religious for `special disabilities.' It does not condone a broad, 
religiously predicated exemption to nondiscrimination laws . . . .'' 
And a women's rights legal advocacy organization commented that ``the 
Court's narrow decision'' in Masterpiece Cakeshop v. Colorado Civil 
Rights Comm'n, 138 S. Ct. 1719 (2018), involving a baker asserting that 
compliance with a general nondiscrimination law would cause him to 
violate his religious beliefs, did not find that the baker was entitled 
to a religious exemption; instead, it ``found that statements made 
during a hearing suggested some government actors had hostility to the 
baker's beliefs, concluding that this hostility toward religion as 
manifested in the particular hearing process violated the baker's 
rights, not the law itself.''
    OFCCP agrees that these cases bar Government from expressing 
hostility toward religious institutions and require that religious 
institutions be treated on an equal basis with secular institutions in 
certain contexts. See, e.g., Masterpiece Cakeshop, 138 S. Ct. at 1729 
(invalidating a state civil rights commission's cease and desist order 
issued to a bakery that refused to sell a wedding cake to a same-sex 
couple because the commission's treatment of the case ``has some 
elements of a clear and impermissible hostility toward the sincere 
religious beliefs that motivated his objection''); Trinity Lutheran, 
137 S. Ct. at 2021 (invalidating a state's policy of denying grants to 
religiously affiliated applicants because it ``expressly discriminates 
against otherwise eligible recipients by disqualifying them from a 
public benefit solely because of their religious character''). These 
cases do not, however, support retention of the 2020 rule. There is no 
basis for any assertion that the present administration seeks to 
``impose regulations that are hostile to the religious beliefs of 
affected citizens,'' Masterpiece Cakeshop, 138 S. Ct. at 1721-22, or 
that OFCCP's approach following rescission will ``single out the 
religious for disfavored treatment,'' Trinity Lutheran, 137 S. Ct. at 
2020. On the contrary, with this rescission, OFCCP seeks to consider 
religious objections with neutrality, neither favoring nor disfavoring 
religion, consistent with the Court's direction in these cases. See, 
e.g., Masterpiece Cakeshop, 138 S. Ct. at 1722 (observing that, under 
the correct approach, the ``State's interest could have been weighed 
against Phillips' sincere religious objections in a way consistent with 
the requisite religious neutrality that must be strictly observed'').
    In addition, several commenters who supported rescission asserted 
that cases addressing religious liberty in the context of public 
benefits were not directly relevant in the context of Federal 
contracts, particularly in determining the proper scope and application 
of religious exemptions.\15\ In general, OFCCP agrees that procurement 
contracts are distinct as an area in which the Government has 
considerable discretion to impose conditions. See, e.g., Perkins v. 
Lukens Steel Co., 310 U.S. 113, 127-28 (1940) (``Government enjoys the 
unrestricted power to produce its own supplies, to determine those with 
whom it will deal, and to fix the terms and conditions upon which it 
will make needed purchases.''); Martin Marietta Materials, Inc. v. 
Kansas Dep't of Transp., 810 F.3d 1161, 1178 (10th Cir. 2016) (citing 
Perkins); John Cibinic Jr. et al., Formation of Government Contracts 
409 (4th ed. 2011) (relying on Perkins for the proposition that ``[i]t 
has long been recognized that the government has broad discretion in 
determining those firms with which it will enter into contractual 
agreements'').
---------------------------------------------------------------------------

    \15\ Notably, Masterpiece Cakeshop recognized that, ``while 
those religious and philosophical objections [to same-sex marriage] 
are protected, it is a general rule that such objections do not 
allow business owners and other actors in the economy and in society 
to deny protected persons equal access to goods and services under a 
neutral and generally applicable public accommodations law.'' 138 S. 
Ct. at 1727.
---------------------------------------------------------------------------

    Finally, OFCCP agrees with the numerous commenters who asserted 
that rescission would be consistent with the policy goal of promoting 
equal employment opportunity, which in turn enhances economy and 
efficiency in Federal contracting. A member of the U.S. House of 
Representatives, for example, asserted that the 2020 rule ``undermined 
[OFCCP's] mission by issuing a deeply flawed rule that significantly 
weakened anti-discrimination protections for employees who work on 
taxpayer-funded federal contracts.'' An international labor union 
commented that, given the negative effects of workplace discrimination 
on employee productivity and turnover, ``OFCCP, the federal agency 
whose mission is to `protect workers, promote diversity, and enforce 
the law,' should be working to enhance protections for vulnerable 
worker populations, not broadening permissible discrimination in the 
workplace.'' A national labor union commented that ``[c]ontractors that 
exclude entire classes of otherwise qualified workers from employment 
or treat such workers unequally based on irrelevant individual 
characteristics likely will underperform relative to contractors that 
do not discriminate.'' In support, the commenter cited studies showing, 
among other findings, ``that employers' unfair employment practices 
cost employers $64 billion per year in direct costs from unwanted 
employee turnover, not counting other hard-to-measure effects like 
reputational damage, which could further inhibit an employer's ability 
to attract qualified employees.'' \16\ And an organization that 
advocates separation of church and state commented that rescission of 
the 2020 rule ``would reverse the Trump administration's harmful 
expansion of the exemption, restore longstanding policy that actually 
provides equal employment opportunity for workers, and promote economy 
and efficiency in contracting.''
---------------------------------------------------------------------------

    \16\ Among other studies, the commenter cited the following: 
Brad Sears & Christy Mallory, Williams Inst., Economic Motives for 
Adopting LGBT-Related Workplace Policies, Williams Institute (2011), 
https://williamsinstitute.law.ucla.edu/wp-content/uploads/Mallory-Sears-Corp-Statements-Oct2011.pdf; Level Playing Field Inst., The 
Corporate Leavers Survey 2007: The Cost of Employee Turnover Due 
Solely to Unfairness in the Workplace (2007), https://www.smash.org/wp-content/uploads/2015/05/corporate-leavers-survey.pdf#targetText=Level%20Playing%20Field%20Institute's%20Corpora
te,women%20and%20gays%20and%20lesbians; Allison Scott, et al., Ford 
Found. and Kapor Ctr. for Soc. Impact, Tech Leavers Study: A First-
of-Its-Kind Analysis of Why People Voluntarily Left Jobs in Tech 
(2017), https://mk0kaporcenter5ld71a.kinstacdn.com/wp-content/uploads/2017/08/TechLeavers2017.pdf.
---------------------------------------------------------------------------

    With this rescission, nothing in the 2020 rule or its preamble may 
be relied on as a statement of OFCCP's interpretation or application of 
the Executive Order 11246 religious exemption or relevant religious 
liberty authorities. OFCCP remains committed to protecting religious 
freedom in accordance with applicable law and will continue to provide 
compliance assistance on the religious exemption, including issuing 
frequently asked questions, conducting webinars, and providing other 
compliance assistance requested by stakeholders.

IV. Regulatory Procedures

A. Executive Order 12866 (Regulatory Planning and Review) and Executive 
Order 13563 (Improving Regulation and Regulatory Review)

    Under Executive Order 12866, the Office of Information and 
Regulatory Affairs (OIRA) within the Office of Management and Budget 
(OMB) determines whether a regulatory action is significant and, 
therefore, subject to the requirements of Executive Order 12866 and OMB 
review. Section 3(f) of

[[Page 12859]]

Executive Order 12866 defines a ``significant regulatory action'' as an 
action that is likely to result in a rule that: (1) has an annual 
effect on the economy of $100 million or more, or adversely affects in 
a material way a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or state, local, or 
tribal governments or communities (also referred to as economically 
significant); (2) creates serious inconsistency or otherwise interferes 
with an action taken or planned by another agency; (3) materially 
alters the budgetary impacts of entitlement grants, user fees, or loan 
programs, or the rights and obligations of recipients thereof; or (4) 
raises novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in Executive Order 
12866. This rescission has been designated a ``significant regulatory 
action,'' although not economically significant, under section 3(f)(1) 
of Executive Order 12866. The Office of Management and Budget has 
reviewed the rescission. Pursuant to Subtitle E of the Small Business 
Regulatory Enforcement Fairness Act of 1996, also known as the 
Congressional Review Act (5 U.S.C. 801 et seq.), OIRA designated this 
rescission as not a ``major rule,'' as defined by 5 U.S.C. 804(2).
    Executive Order 13563 directs agencies to adopt a regulation only 
upon a reasoned determination that its benefits justify its costs; 
tailor the regulation to impose the least burden on society, consistent 
with obtaining the regulatory objectives; and in choosing among 
alternative regulatory approaches, select those approaches that 
maximize net benefits. Executive Order 13563 recognizes that some 
benefits are difficult to quantify and provides that, where appropriate 
and permitted by law, agencies may consider and discuss qualitatively 
values that are difficult or impossible to quantify, including equity, 
human dignity, fairness, and distributive impacts.
1. The Need for the Rescission
    As discussed in the preamble, OFCCP received numerous comments 
addressing the need for the rescission. Commenters who supported the 
rescission believed the 2020 rule impermissibly expanded the religious 
exemption, departed from established legal principles and OFCCP's 
longstanding policy and practice, increased confusion about the scope 
and application of the religious exemption, weakened nondiscrimination 
protections for employees of Federal contractors, and failed to account 
for the harm to employees who would face discrimination under the 
amended provisions.
    For example, a civil liberties organization stated, ``By allowing 
federal contractors to discriminate against employees who do not abide 
by the employer's religious beliefs, employees who follow dominant 
religious beliefs will have an economic advantage over employees who 
are secular, who follow a less popular religion, or who interpret a 
dominant religion differently than their employer.'' An LGBTQ rights 
advocacy organization noted the 2020 rule permitted increased 
discrimination against workers and, thus, ``leads to increased and 
extensive costs for those workers, their families, and society, 
including lost wages and benefits, negative impacts on mental and 
physical health and related out-of-pocket healthcare expenses, and 
costs associated with job searches.'' A civil rights legal advocacy 
organization noted the confusion and inconsistencies caused by the 2020 
rule, stating, ``[T]he discrepancies between the [2020] rule, OFCCP 
enforcement, EEOC enforcement, and federal court enforcement could 
result in federal contractors relying upon the OFCCP interpretation 
only to be later found liable for discrimination under Title VII.''
    As described in more detail below, OFCCP also received comments 
objecting to the rescission. Commenters who opposed the rescission 
supported the 2020 rule, stating that it provided helpful, clear 
standards, which they believed encouraged religious organizations to 
become Federal contractors while protecting employers' religious 
liberties. Some of these commenters also believed that rescinding the 
2020 rule would unduly narrow the religious exemption.
    After considering the comments received, OFCCP has concluded that 
the standards established in the 2020 rule were not warranted to the 
extent that they departed, without adequate justification, from 
applicable legal precedents and created uncertainty in the applicable 
legal standards. Rather than provide clarity, the 2020 rule increased 
confusion because of its divergence from courts' and the EEOC's 
approach to the Title VII religious exemption. Further, rescinding the 
2020 rule will not unduly narrow the religious exemption but will 
simply return to OFCCP's past practice of applying Title VII principles 
and case law. The 2020 rule also reduced discrimination protections for 
employees of Federal contractors, which was contrary not only to 
relevant legal authorities but also to OFCCP's policy goal of promoting 
equal employment opportunity.
    For these reasons, OFCCP is finalizing this rescission to enable 
the agency to properly apply and enforce Executive Order 11246 by 
returning to its policy and practice of interpreting and applying the 
religious exemption contained in section 204(c) of Executive Order 
11246 to the facts and circumstances of each situation consistent with 
Title VII principles and case law.
2. Costs
    OFCCP received comments from religious advocacy organizations and 
individuals disagreeing with the agency's assessment that the proposed 
rescission would not impose any new costs. The commenters stated that 
rescinding the 2020 rule would result in religious contractors dealing 
with a less clear standard, less certainty, and increased difficulty in 
determining whether they qualify for an exemption. For example, an 
organization of religious employers stated, ``The Proposal's 
contradictions of and inconsistencies with Title VII, EEOC Guidance, 
and Sections 202 and 204 of E.O. 11246, will decrease consistency and 
stability for religious contractors, resulting in self-exclusion of 
some qualified and talented contractors solely on the basis of their 
sincere religious beliefs.'' A religious advocacy organization stated, 
``The Proposal ignores the costs on religious organizations in 
determining whether they qualify for the exemption under its opaque 
standard, the costs of not being able to make employment decisions 
based on religion, and the costs associated with losing current and 
prospective federal contractors which may produce goods and services 
more efficiently, effectively, or at a lower price for the federal 
government.'' Other commenters asserted that religious contractors 
would be deterred from participating in government contracting and lose 
all of its benefits. For example, a religious association stated, 
``[T]here is a cost to the federal government and the American people 
with excluding qualified religious organizations from federal contracts 
based not on their ability to do the work required by the government 
contract, but solely on their desire to make employment decisions based 
on their sincere religious beliefs and tenets.''
    OFCCP carefully reviewed the comments received on the proposal's 
potential costs to religious organizations. In response, OFCCP 
emphasizes that the language of the

[[Page 12860]]

Executive Order 11246 religious exemption, as well as the original 
regulation implementing the religious exemption at 41 CFR 60-1.5(a)(5), 
remains unchanged. In rescinding the 2020 rule, OFCCP will simply 
return to its longstanding approach, in effect from the addition of the 
religious exemption until January 2021, of aligning the Executive Order 
11246 religious exemption with Title VII case law as applied to the 
facts and circumstances of each situation. Indeed, all contractors that 
are covered by Title VII have been required to be in compliance with 
Title VII throughout the period during which the 2020 rule was in 
effect, so there should be no additional compliance costs involved. In 
addition, OFCCP notes that none of the commenters who asserted that the 
proposal would impose costs on religious organizations and the 
Government provided additional information or data to support their 
claims.
    For these reasons, OFCCP maintains that the rescission does not 
include any quantifiable costs because it returns to the agency's prior 
policy and practice; adds no new compliance requirements for 
contractors; and the 2020 rule did not result in cost savings 
attributable to reduced risk of noncompliance and potential legal 
costs. The rescission removes the definitions of ``particular 
religion,'' ``religion,'' ``religious corporation, association, 
educational institution, or society,'' and ``sincere'' from 41 CFR 60-
1.3; removes paragraphs (a) and (b) from 41 CFR 60-1.3; and removes 
paragraphs (e) and (f) from 41 CFR 60-1.5.
3. Benefits
    Executive Order 13563 recognizes that some rules have benefits that 
are difficult to quantify or monetize but are nevertheless important, 
and states that agencies may consider such benefits. OFCCP received a 
number of comments on the benefits of rescinding the 2020 rule. For 
example, a civil liberties advocacy organization stated that the 
discrimination permitted by the 2020 rule creates intangible costs by 
``reducing equity, fairness, and personal freedom; impeding the ability 
of workers to make deeply personal decisions regarding expression of 
their gender identity or sexual orientation, relationships and 
families, or regarding medical treatment; eroding protections for 
employees' personal privacy regarding protected characteristics; and 
decreasing the dignity and rights of stigmatized minorities.'' A civil 
rights legal advocacy organization commented that female and LGBTQ 
workers of color ``face greater barriers and fewer economic 
opportunities'' as a result of multiple intersecting forms of workplace 
discrimination. A national labor union further noted, ``Discrimination 
leads to higher unemployment rates and lower wages among impacted 
workers, as well as lower investment in their education and training, 
resulting in lower overall economic performance for the country.'' 
Similarly, a group of state attorneys general asserted that ``the 2020 
Rule's likely effect of increased employment discrimination over time 
will have negative effects on businesses overall, including in lost 
revenue, recruitment, retention, and employee productivity.''
    Commenters including a religious organization agreed with OFCCP 
that the rescission will promote economy and efficiency in Federal 
procurement by preventing the arbitrary exclusion of qualified and 
talented employees on the basis of characteristics that have nothing to 
do with their ability to do work on Government contracts. The 
rescission will also ensure that taxpayer funds are not used to 
discriminate and that Federal contractors provide equal employment 
opportunity. Finally, the rescission will provide clarity and 
consistency for contractors and would-be contractors that are religious 
corporations, associations, educational institutions, and societies 
through a single religious employer test: those with a primarily 
religious purpose and character, that are eligible for the Title VII 
religious exemption, are also eligible for the Executive Order 11246 
religious exemption.

B. Regulatory Flexibility Act and Executive Order 13272 (Consideration 
of Small Entities)

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., 
establishes ``as a principle of regulatory issuance that agencies shall 
endeavor, consistent with the objectives of the rule and applicable 
statutes, to fit regulatory and informational requirements to the scale 
of the businesses, organizations, and governmental jurisdictions 
subject to regulation.'' Pub. L. 96-354, section 2(b). The RFA requires 
agencies to consider the impact of a regulatory action on a wide range 
of small entities, including small businesses, nonprofit organizations, 
and small governmental jurisdictions.
    Agencies must review whether a regulatory action would have a 
significant economic impact on a substantial number of small entities. 
See 5 U.S.C. 603. If the regulatory action would, then the agency must 
prepare a regulatory flexibility analysis as described in the RFA. See 
id. However, if the agency determines that the regulatory action would 
not be expected to have a significant economic impact on a substantial 
number of small entities, then the head of the agency may so certify 
and the RFA does not require a regulatory flexibility analysis. See 5 
U.S.C. 605. The certification must provide the factual basis for this 
determination.
    The rescission will not have a significant economic impact on a 
substantial number of small entities because it will not impose any new 
costs. Accordingly, OFCCP certifies that the rescission will not have a 
significant economic impact on a substantial number of small entities.

C. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 requires that OFCCP consider 
the impact of paperwork and other information collection burdens 
imposed on the public. See 44 U.S.C. 3507(d). An agency may not collect 
or sponsor the collection of information or impose an information 
collection requirement unless the information collection instrument 
displays a currently valid OMB control number. See 5 CFR 1320.5(b)(1).
    OFCCP has determined that no new requirement for information 
collection is associated with this rescission. Consequently, this 
rescission does not require review by OMB under the authority of the 
Paperwork Reduction Act.

D. Unfunded Mandates Reform Act of 1995

    For purposes of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 
1532, this rescission does not include any Federal mandate that will 
result in excess of $100 million in expenditures by state, local, and 
tribal governments in the aggregate or by the private sector.

E. Executive Order 13132 (Federalism)

    OFCCP has reviewed this rescission in accordance with Executive 
Order 13132 regarding federalism and has determined that it does not 
have ``federalism implications.'' The rescission will not ``have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government.''

F. Executive Order 13175 (Consultation and Coordination With Indian 
Tribal Governments)

    This rescission does not have tribal implications under Executive 
Order

[[Page 12861]]

13175 that would require a tribal summary impact statement. The 
rescission does not ``have substantial direct effects on one or more 
Indian tribes, on the relationship between the Federal Government and 
Indian tribes, or on the distribution of power and responsibilities 
between the Federal Government and Indian tribes.''

List of Subjects in 41 CFR Part 60-1

    Administrative practice and procedure, Civil rights, Employment, 
Equal employment opportunity, Government contracts, Government 
procurement, Investigations, Labor, Reporting and recordkeeping 
requirements.

Jenny R. Yang,
Director, Office of Federal Contract Compliance Programs.

    For the reasons set forth in the preamble, OFCCP amends 41 CFR part 
60-1 as follows:

PART 60-1--OBLIGATIONS OF CONTRACTORS AND SUBCONTRACTORS

0
1. The authority citation for part 60-1 continues to read as follows:

    Authority: Sec. 201, E.O. 11246, 30 FR 12319, 3 CFR, 1964-1965 
Comp., p. 339, as amended by E.O. 11375, 32 FR 14303, 3 CFR, 1966-
1970 Comp., p. 684, E.O. 12086, 43 FR 46501, 3 CFR, 1978 Comp., p. 
230, E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 258 and E.O. 
13672, 79 FR 42971.


Sec.  60-1.3  [Amended]

0
2. Amend Sec.  60-1.3 by removing the following:
0
a. Definitions of ``Particular religion,'' ``Religion,'' ``Religious 
corporation, association, educational institution, or society,'' and 
``Sincere.''
0
b. Paragraphs (a) and (b).


Sec.  60-1.5  [Amended]

0
3. Amend Sec.  60-1.5 by removing paragraphs (e) and (f).

[FR Doc. 2023-04150 Filed 2-28-23; 8:45 am]
BILLING CODE 4510-CM-P