Denial of loan guarantee for faith-based group remanded for consideration of constitutional issues

Howard Friedman, Religion Clause

In Care Net Pregnancy Center of Windham County v. U.S. Department of Agriculture, (D DC, Oct. 10, 2012), a Christian pregnancy resource center in Brattleboro, Vermont challenged the Department of Agriculture’s denial to it of a loan guarantee under the agency’s Community Facilities Loan Program. The agency sought to purchase and renovate property for it to use as its permanent facility. While faith-based organizations are eligible to participate in the program, inherently religious activities cannot be supported. Part of Care Net’s program included Bible study or Bible centered teaching.  The USDA’s Appeals Division Hearing Officer concluded that:

Due to the fluctuating nature of [Care Net’s] program and due to a lack of reliable classroom information provided by [Care Net], [the USDA] is unable to realistically separate the eligible activities from the inherently religious activities either by time or space, thereby creating an excessive entanglement between Government and religion…. [Care Net] has not satisfactorily shown that the amount of direct USDA assistance requested does not exceed the cost of the proposed acquisition and renovation attributable to eligible program activities.

The court concluded that this was a reasonable interpretation of the agency’s regulations. However the court remanded the case to the USDA’s Appeals Division for it to consider Care Net’s claims under the Free Speech and Equal Protection Clauses, the USDA’s defense under the Establishment Clause, and Care Net’s Fair Housing Act claim.