(Slip Opinion)

        Exclusion of Religiously Affiliated Schools from
                Charter-School Grant Program
A provision of the Elementary and Secondary Education Act of 1965 that excludes
  religiously affiliated charter schools from participating in the Expanding Oppor-
  tunity Through Quality Charter Schools Program discriminates on the basis of
  religious status in violation of the Free Exercise Clause.

                                                                 February 18, 2020

                     MEMORANDUM OPINION FOR THE
                  PRINCIPAL DEPUTY GENERAL COUNSEL
                      DEPARTMENT OF EDUCATION

   You have asked about the constitutionality of a statute that excludes
religiously affiliated charter schools from participating in the Expanding
Opportunity Through Quality Charter Schools Program. We conclude
that the restriction unconstitutionally discriminates on the basis of reli-
gious status under Trinity Lutheran Church of Columbia, Inc. v. Comer,

(2017).
   The charter-school program was added to the Elementary and Second-
ary Education Act of 1965 (“ESEA”), Pub. L. No. 89-10, 79 Stat. 27, by
the No Child Left Behind Act of 2001, Pub. L. No. 107-110, sec. 501,
§§ 5201–5211, 115 Stat. 1425, 1788 –1800 (2002). After further amend-
ment, the program statute now appears at ESEA §§ 4301– 4311, and is
codified at 20 U.S.C. §§ 7221–7221j. The statute defines a “charter
school” as a “public school” that is “exempt from significant State or
local rules that inhibit the flexible operation and management of public
schools,” but that is nonetheless “operated under public supervision and
direction.” 20 U.S.C. § 7221i(2)(A)–(B). A charter school must be both
“nonsectarian in its programs, admissions policies, employment practices,
and all other operations” and “not affiliated with a sectarian school or
religious institution.”

the program, the Depart-
ment of Education provides grants to entities such as state educational
agencies or charter-school support organizations.

entities in turn make subgrants to “eligible applicants” so that they
can create or operate charter schools.

“eligible
applicant,” or “developer,” can be “an individual or group of individuals
(including a public or private nonprofit organization).”

                           44 Op. O.L.C. __ (2020)

Thus, while a “charter school” is a “public school” operated under “public
supervision and direction,”

may be created or operat-
ed by an individual or private nonprofit organization.
   You have asked whether the provision of the ESEA limiting eligibility
for this program to schools “not affiliated with a sectarian school or
religious institution,”

the Free Exercise Clause
of the First Amendment. Under Supreme Court precedent, the framework
for analyzing that question depends on “whether the restriction is based
upon an institution’s religious status or whether it is based upon how
the federal support would be used.” Religious Restrictions on Capital
Financing for Historically Black Colleges and Universities, 43 Op.
O.L.C. __, at *6 (2019) (“Religious Restrictions”). That distinction de-
rives from the Supreme Court’s decisions in Trinity Lutheran, which
struck down a Missouri policy “of denying grants to any applicant owned
or controlled by a church, sect, or other religious 

, and Locke v. Davey, 

(2004), which upheld a Washing-
ton statute denying certain scholarship funds to “‘any student who is
pursuing a degree in theology,’”

(quoting statute). The Court
deemed the former restriction to be impermissible discrimination on the
basis of religious status, but the latter to be a permissible limit on the use
of public funds for explicitly devotional religious activity. See Religious
Restrictions, 43 Op. O.L.C. __, at *5–6, *16–19.
   As we have explained, the difference between status-based religious
discrimination (which is presumptively unconstitutional) and use-based
limits on allocating government benefits (which may be permissible under
Locke) is informed by the distinction the Supreme Court has drawn be-
tween funding restrictions that permissibly define the scope of a govern-
ment program and unconstitutional conditions on the use of federal funds.

While the government may “retain a legitimate interest in defin-
ing the program to exclude certain religious uses” of funds, it may not, as
a general matter, create a religious-funding restriction so broad that “it
sweeps beyond ‘defining the limits of the federally funded program to
defining the recipient.’”

(quoting U.S. Agency for Int’l Dev. v.
Alliance for Open Soc’y Int’l, Inc. (“AOSI ”), 

, 218 (2013)).
   In our Religious Restrictions opinion, we applied this framework to a
statutory funding condition that denied federal loan support to capital-
improvement projects at a university “‘in which a substantial portion of

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  Exclusion of Religiously Affiliated Schools from Charter-School Grant Program

its functions is subsumed in a religious mission.’”

(quoting
20 U.S.C. § 1066c(c)). We concluded that the restriction was status-based
religious discrimination. We reasoned that the condition denied federal
support to “projects that have no direct connection to the religious activi-
ties of ” a university “simply because of the religious mission of the
institution”—even to projects that had no “inherent religious character.”

This reasoning turned on the breadth of the restriction in ques-
tion and its tenuous connection to the purpose of limiting funding to
secular activities.
   The religious-affiliation restriction in the ESEA broadly prohibits
charter schools in the program from associating with religious organi-
zations. No charter school may be “affiliated” with any “sectarian school
or religious institution.” 20 U.S.C. § 7221i(2)(E). Generally speaking,
one entity is “affiliated” with another if the two have a close association,
such as when they have formally distinct business operations but are
under common ownership or control. See Black’s Law Dictionary 67 (9th
ed. 2009) (defining “affiliated,” with reference to a corporation, to mean
“related to another corporation by shareholdings or other means of con-
trol”); 1 Oxford English Dictionary 216 (2d ed. 1989) (“[t]o attach a
smaller institution to, or connect it with, a larger one as a branch there-
of ”); Webster’s Third New International Dictionary 35 (2002) (defining
“affiliate” as “a company effectively controlled by another or associated
with others under common ownership or control”); accord Satterfield v.
Simon & Schuster, Inc., 

, 955 (9th Cir. 2009). The restriction
therefore would not only prohibit a religious institution from owning
or operating a charter school but also preclude the owners or operators
of a charter school that otherwise satisfies federal requirements from
closely associating with a religious institution.
   That is discrimination on the basis of religious status. Like the pro-
vision discussed in our Religious Restrictions opinion, the categorical
prohibition on religious affiliation in the charter-school program sweeps
well beyond ensuring that the activities of the program in question remain
nonsectarian. A religious institution would have to divest itself of its
religious character before it could own or operate a charter school in
the program. The restriction would also preclude the owners or operators
of a secular charter school from expressing their religious beliefs through
closely associating with a distinct religious organization. All that would

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                           44 Op. O.L.C. __ (2020)

be true even if the religious institution and the charter school maintained
separate operations, took care to preserve the nonsectarian character of
the charter school’s curriculum and operations, and submitted to public
supervision and direction in operating the school. See 20 U.S.C.
§ 7221i(2)(E). The restriction therefore goes beyond assuring the non-
sectarian character of the charter-school program itself. Instead, it is
aimed at the religious character of individuals and organizations that seek
to create, own, or operate nonsectarian charter schools run under public
supervision.
   The conclusion that this statute discriminates on the basis of religious
status is underscored by unconstitutional-conditions cases involving the
right to free speech. The Supreme Court has observed that the possibility
of affiliating with other organizations sometimes permits “an organization
bound by a funding condition to exercise its First Amendment rights
outside the scope of the federal program.” 

. But
here that is impossible, because the charter-school statute proscribes
the act of affiliation itself. The prohibition on affiliation burdens the
exercise of religion: it prohibits a related, but distinct, religious organi-
zation from participating in the program, and it prohibits those who own
or operate charter schools from achieving a close association with such
a religious organization. Compare FCC v. League of Women Voters of
Cal., 

, 399–401 (1984) (striking down a provision of the
Public Broadcasting Act of 1967 that prohibited television and radio
stations from receiving certain grants from the Corporation for Public
Broadcasting if they engaged in editorializing, because the statute did not
permit a television or radio station to receive federal funds even if the
station set up “a separate affiliate” to pursue its editorializing activities
with non-federal funds), with Regan v. Taxation With Representation of
Wash., 

, 544 & n.6 (1983) (rejecting a constitutional chal-
lenge to a provision of the Internal Revenue Code that denied tax-exempt
status to a nonprofit organization that engaged in lobbying because the
nonprofit organization could separately incorporate an affiliate to lobby
and still be eligible for a tax exemption). It is one thing for the program
to require the curriculum of a charter school to be nonsectarian. Because
a charter school is under “public supervision and direction,” 20 U.S.C.
§ 7221i(2)(B), this requirement directly concerns how public moneys are
used. It is something else entirely to forbid a religious institution from

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   Exclusion of Religiously Affiliated Schools from Charter-School Grant Program

setting up or operating a charter school that otherwise meets federal
requirements, or to prohibit the developer or operator of such a charter
school from having an affiliation with a religious institution, which places
a burden on those of faith based on religious identity outside the charter-
school program itself. “[T]he Free Exercise Clause protects against indi-
rect coercion or penalties on the free exercise of religion, not just outright
prohibitions.” Trinity 

(internal quotation
marks and citation omitted).
   Government-funding “[r]estrictions based on religious status are pre-
sumptively unconstitutional.” Religious Restrictions, 43 Op. O.L.C. __,
at *6; see Trinity 

(applying the “‘most ri-
gorous’” scrutiny to a funding restriction based on religious status (quot-
ing Church of the Lukumi Babalu Aye, Inc. v. City of Hialeah, 

, 546 (1993)). It is true that “the need to comply with the Establish-
ment Clause may justify restrictions that would otherwise amount to
impermissible religious discrimination.” Religious Restrictions, 43 Op.
O.L.C. __, at *7. But the “Establishment Clause permits the government
to include religious institutions, along with secular ones, in a generally
available aid program that is secular in content,”

as the charter-
school program is here, see 20 U.S.C. § 7221i(2)(E) (requiring charter
school to be “nonsectarian in its programs, admissions policies, employ-
ment practices, and all other operations”). As we recognized in Religious
Restrictions, the Supreme Court has sometimes suggested that even a
religiously neutral government-aid program involving direct government
subsidies must have protections that “ensure that funds are not diverted
to a religious use,”

in order to comply with the Establishment
Clause. But even if that principle retains vitality today—and we have
our doubts, see

statute here has such a safeguard, be-
cause it mandates that a charter school’s programs and practices be non-
sectarian and be under public supervision.
   The status-based religious discrimination here cannot be justified by
the Establishment Clause concerns that sometimes arise when a govern-
ment singles out a religious entity to carry out a governmental function—
here, the operation of what the statute defines as a “public school.” See
Bd. of Educ. of Kiryas Joel Vill. Sch. Dist. v. Grumet, 

(1994); Larkin v. Grendel’s Den, Inc., 

(1982). In Kiryas
Joel, the Supreme Court invalidated a state statute that had drawn a school

                                        5
                           44 Op. O.L.C. __ (2020)

district around a village occupied almost exclusively by practitioners of
Satmar Hasidism, a strict form of Judaism, based on the Court’s percep-
tion that the statute in question was a “special and unusual” legislative
act intended to confer particular benefits on the Satmar 

; see also

(O’Connor, J., concurring in part
and concurring in the judgment) (viewing the law as “singl[ing] out
a particular religious group for favorable treatment”); Grendel’s 

, 127 (invalidating a state statute that allowed a church
to veto the zoning license of a liquor store within 500 feet of the church).
The program here, if it did not exclude religiously affiliated charter
schools, would raise no such concerns because it is otherwise neutral
toward religion. Religiously affiliated charter schools would receive
no special benefit or authority and would have to meet the same standards
as other charter schools to participate in the program. See, e.g., 20 U.S.C.
§ 7221b(f )(1)(A)(vi), (x), (2)(F), (G).
   ESEA’s charter-school program is not unusual in that regard. Many
federal statutes, including ones administered by the Department of Edu-
cation, allow a religious organization to partner with the federal govern-
ment on the same basis as a secular organization in carrying out a parti-
cular social service program. See, e.g., Exec. Order No. 13,279, § 2(g)
(Dec. 12, 2002), 67 Fed. Reg. 77,141 (Dec. 16, 2002), as amended by
Exec. Order No. 13,559, § 1(b) (Nov. 17, 2010), 75 Fed. Reg. 71,319,
71,320 (Nov. 22, 2010) (“Faith-based organizations should be eligible to
compete for Federal financial assistance used to support social service
programs and to participate fully in the social service programs supported
with Federal financial assistance without impairing their independence,
autonomy, expression outside the programs in question, or religious
character.”); 2 C.F.R. § 3474.15(b)(1) (“A faith-based organization is
eligible to contract with grantees and subgrantees, including States, on
the same basis as any other private organization, with respect to contracts
for which such other organizations are eligible.”). These kinds of ar-
rangements do not violate the Establishment Clause. See generally, e.g.,
Direct Aid to Faith-Based Organizations Under the Charitable Choice
Provisions of the Community Solutions Act of 2001, 

(2001).
   Forbidding charter schools under the program from affiliating with
religious organizations discriminates on the basis of religious status.

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  Exclusion of Religiously Affiliated Schools from Charter-School Grant Program

The mere “interest in ‘skating as far as possible from religious establish-
ment concerns,’” Religious Restrictions, 43 Op. O.L.C. __, at *17 (quot-
ing Trinity 

), cannot suffice to support such
discrimination. Accordingly, the religious non-affiliation requirement
in 20 U.S.C. § 7221i(2)(E) violates the Free Exercise Clause of the First
Amendment. Should the Department of Education establish a policy not
to enforce this provision, it should report that decision to Congress within
thirty days of establishing the policy. See 28 U.S.C. § 530D(a)(1)(A)(i),
(b)(1), (e).

                                     HENRY C. WHITAKER
                                 Deputy Assistant Attorney General
                                     Office of Legal Counsel




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