How Will Proposed Anti-Prostitution Rules Impact Nonprofits?

On Nov. 23, the Department of Health and Human Services (HHS) issued a proposed rulemaking [1] to revise its implementation of an anti-prostitution policy requirement for organizations that receive HIV/AIDS funding from the agency. The requirement currently compels speech by government grantees.

Presently, HHS grantees cannot engage in HIV/AIDS assistance activities unless they adopt a statement explicitly opposing prostitution and sex trafficking for their entire organizations. Affiliated organizations that do not adopt the pledge must be completely separate entities. The proposed rule slightly changes the current regulation, but it continues to be quite burdensome for nonprofits and leaves many terms undefined.

In 2003, Congress passed the United States Leadership Against HIV/AIDS, Tuberculosis and Malaria Act (the "Leadership Act" [2]). The Leadership Act contains the "anti-prostitution pledge requirement," mandating that "no funds made available to carry out the Act … may be used to provide assistance to any group or organization that does not have a policy explicitly opposing prostitution and sex trafficking." Therefore, all organizations receiving such funding are required to adopt an organization-wide policy opposing prostitution. This is troubling for some nonprofits working in areas where prostitution is legal and groups providing aid must work with the culture they are in. Those organizations believe that the service they provide is health-related HIV/AIDS education and treatment, not social and cultural intervention. For that reason, they believe that the prohibition is unwarranted. For an example of such concerns, see an August 2008 policy brief from the Center for Health and Gender Equity. [3]

The proposed rule will amend the regulation [4] that took effect on Jan. 20. Under the current rule, all funding recipients, including sub-recipients, are required to certify compliance with the anti-prostitution rule. It also establishes the standards for determining whether a grantee has sufficient independence from an affiliated organization that "engages in activities inconsistent with a policy opposing prostitution and sex trafficking."

The proposal issued in November would no longer require recipients to submit documentation certifying that they have a policy explicitly opposing prostitution. Instead, grantees would have to agree that they are "opposed to the practices of prostitution and sex trafficking because of the psychological and physical risks they pose for women, men, and children." HHS would be required to include in public documents that funding recipients must agree with this statement.

Currently, organizations that receive HIV/AIDS funding are forced to have "legal, financial, and organizational separation [...] between entities that receive grants [...] and another organization that engages in activities inconsistent with a policy opposing prostitution and sex trafficking." Organizations can establish affiliates that may operate free of the pledge requirement. However, the rules for establishing affiliates are very restrictive. The grantee must have an extraordinary degree of separation between itself and the privately funded affiliate(s).

Currently, separation is required from any organization that engages in restricted activities; the proposed regulation would only require separation from "affiliated organizations" that engage in restricted activities. However, there is no definition of "affiliated," and the proposed rule does not define which activities the agency considers to be "inconsistent with a policy opposing prostitution." Critics claim there are problems with the vague language throughout the proposed rule.

The proposed rulemaking also changes the method for determining whether there is sufficient separation between grantees and the affiliated organizations that engage in prohibited activities. It would change the list of factors taken into account when considering whether there is proper separation. Establishing different standards are meant to ease the burden on recipients.

To determine whether sufficient separation exists, currently there must be "physical and financial separation," while the proposed regulation requires "legal, physical, and financial separation" only "to the extent practicable in the circumstances," without definition. Legal separation, for example, could be one of multiple factors considered in making a conclusion about adequate separation.

The proposed rule states, "Mere bookkeeping separation of Leadership Act HIV/AIDS funds from other funds is not sufficient." Other than this, to decide if proper separation exists, "HHS will determine, on a case-by-case basis and based on the totality of the facts," with no single factor being determinative. Advocates say the proposed regulation is an improvement, in that it removes several explicit factors involved in the overbroad separation requirements (such as the use of equipment and supplies). However, HHS may still take those into consideration. HHS states it will use the following five factors, although it may also consider others that are unnamed:

• Legal separation
• Separate personnel
• Separate recordkeeping
• The degree of separation between the affiliated organization's facilities where restricted activities occur
• The extent of signs and other forms of identification that distinguish the recipient from the affiliate

OMB Watch submitted comments [5] in April 2008 before HHS issued the rule now in place. Some of the concerns expressed then still remain. For example, the proposed regulation continues to compel speech, in that organizations must still agree that they are opposed to prostitution and sex trafficking because of the psychological and physical risks they pose for women, men and children.

Groups would also still be required to establish a separate affiliated organization if they want to exercise free speech rights. Vagueness also remains a problem regarding factors considered in deciding whether recipients are "physically and financially separate." The draft regulation does not define prohibited activities, and therefore, organizations may not know when an affiliate is required. OMB Watch's 2008 comments stated, "The extreme vagueness of the rule, combined with broad proposed powers to enforce them on a case-by-case basis, leaves grantees open to inconsistent enforcement action at best, and political retribution at worst.

The anti-prostitution pledge requirement has been challenged in court by grantees who argue that the requirement violates their First Amendment rights. In Alliance for Open Society, Inc. v. USAID, a federal district judge in New York City issued a preliminary injunction in August 2008, prohibiting HHS and the United States Agency for International Development (USAID) from enforcing the policy requirement against U.S. organizations that are members of Global Health Council and InterAction. If that injunction is lifted, those organizations would be subject to the HHS regulation. Under a July 2009 agreement, the government suspended its appeal, but it may choose to restore it by Jan. 8, 2010.

The proposed regulation would apply only to organizations receiving Leadership Act HIV/AIDS funds from HHS. USAID will issue its own revised guidelines, which will probably be very similar to HHS' final regulation.

HHS is currently accepting comments on its proposed regulation, with a deadline of Dec. 23. Comments can be submitted electronically at www.regulations.gov [6].