HHS to Restore Religious Exemptions for Faith-Based Foster Agencies on May 7, Officials Say

HHS Prepares Final Rule on Faith-Based Foster Care

The Department of Health and Human Services will announce on May 7 a final rule restoring federal conscience protections for faith-based foster care and adoption agencies, according to two HHS officials familiar with the plan. The 42-page regulation, finalized after a May 1 briefing at the Hubert H. Humphrey Building in Washington, will allow religious providers to resume placement standards consistent with their beliefs while retaining roughly $380 million in annual federal foster care grants, the officials said.

The rule reverses a 2024 regulation issued by the previous administration that required all agencies receiving federal foster care funding to place children with same-sex couples and unmarried heterosexual couples, regardless of religious objections. That policy, finalized in March 2024, led Catholic Charities USA, Bethany Christian Services, and several smaller evangelical agencies to withdraw from foster care contracts in Illinois, Massachusetts, Oregon, and Washington state.

Two pastors familiar with the case said their congregations received informal outreach from agency leaders over the weekend indicating the announcement was imminent. A religious-liberty lawyer involved in drafting the rule described the May 7 rollout as the most significant federal action on religious accommodation since the Supreme Court's 2021 decision in Fulton v. City of Philadelphia. The lawyer spoke on condition of anonymity because the rule had not yet been released.

One of the pastors said his congregation in Oregon had been told to expect a communication from the state Department of Human Services clarifying that religious agencies could participate in foster care referrals without endorsing placements that violated their beliefs. The pastor said the state notice could arrive as soon as May 8, one day after the federal announcement.

The timing places the announcement three weeks before National Foster Care Month observances begin and days before several state legislatures conclude their spring sessions. One HHS official said the administration wanted to resolve the issue before June budget negotiations begin in Congress, since foster care appropriations are likely to be bundled with larger spending legislation later in the summer.

Religious Providers Regain Contract Protections

The final rule centers on language inserted into the HHS Administration for Children and Families policy manual. Under the revised guidelines, states and localities must certify that they do not discriminate against faith-based providers when awarding foster care contracts. Providers that decline to place children in homes that conflict with their religious teachings must instead be permitted to refer cases to another licensed agency, according to a church administrator who reviewed an advance copy of the document.

The church administrator, whose denomination operates foster care programs in six states, said the 42-page rule includes a referral requirement modeled on the contract terms that Philadelphia refused to grant Catholic Social Services in 2018. That refusal triggered a six-year legal battle that ended with the Supreme Court ruling 9-0 that the city's nondiscrimination policy could not be applied neutrally to exclude the Catholic agency.

Three congressional aides briefed on the plan said the rule will be published in the Federal Register on May 8 and will take effect 30 days later, on June 7. The aides, two Republicans and one Democrat, said GOP lawmakers were notified of the timing during a late-April caucus meeting on Capitol Hill. None of the aides was authorized to discuss the matter publicly.

Funding data provided by the church administrator shows that faith-based agencies currently hold contracts worth approximately $380 million per year through the Title IV-E foster care entitlement and the Child and Family Services Review process. The new rule does not increase that funding, but it removes a clause that the previous administration used to threaten contract cancellation in four states. A religious-liberty lawyer who has advised Senate Republicans on foster care policy said the clause was the primary obstacle preventing Catholic and evangelical agencies from bidding on new state contracts.

The revised regulation also directs HHS to reopen applications from agencies that were disqualified under the 2024 rule. A church administrator in Texas said his organization had already submitted preliminary paperwork to resume foster care licensing in two counties where it had been forced to close programs last year. The administrator said the May 7 announcement would allow staff hiring to begin immediately, with the goal of accepting foster placements by early July.

The rule also instructs the Administration for Children and Families to publish within 60 days a list of best practices for states that wish to contract with multiple provider types. The document will include sample referral agreements and a model nondiscrimination certification that protects religious agencies, the church administrator said.

What to Watch for in the Next 72 Hours

Democratic state attorneys general are expected to challenge the rule in federal court within days of its publication, according to two former HHS officials now advising state governments. The likely venue is the U.S. District Court for the Western District of Washington, where a similar 2022 case produced a nationwide preliminary injunction against a prior iteration of the same regulation.

Opponents will argue that the rule violates the Establishment Clause by channeling federal money to agencies that exclude same-sex couples, two of the former officials said. Supporters counter that the 2021 Fulton decision and the 2023 Groff v. DeJoy ruling on workplace religious accommodation compel the federal government to offer robust conscience protections. The religious-liberty lawyer said at least three national religious organizations have retained counsel in anticipation of litigation.

The rule's immediate practical effect will be most visible in Illinois, where Catholic Charities lost its state foster care contract in 2011, and in Massachusetts, where the Boston branch of Catholic Charities ended its adoption program in 2006 after state officials demanded compliance with nondiscrimination laws. Both states receive substantial Title IV-E reimbursements that could be at risk if HHS determines they have discriminated against religious providers.

Announcement logistics are still being finalized, the HHS officials said. The May 7 event is tentatively scheduled for 10:30 a.m. Eastern in Room 505 of the Humphrey Building, with remarks from senior ACF officials and representatives from at least two faith-based agencies. No members of Congress are expected to attend. A press advisory could be distributed as early as Tuesday evening, one official said.

Major outlets including the Associated Press, Reuters, the New York Times, and the Washington Post had not reported the May 7 timing as of Monday afternoon. The Alamo Post obtained the information from three independent sources with direct knowledge of the rulemaking process.