In an apparent attempt to derail a constitutional challenge to a requirement that all grantees in an HIV/AIDS prevention program adopt formal policies against sex trafficking, the United States Agency for International Development (USAID) and the Department of Health and Human Services (HHS) have issued guidelines for grantees that allow affiliations with groups that do not adopt such pledges. The guidelines, issued July 23, are even more restrictive than similar requirements for legal services programs that are also the subject of a constitutional challenge. They require separate "management and governance" and complete physical separation "between an affiliate which expresses views on prostitution and sex-trafficking contrary to the government's message…" and the grantee. Four leaders in the House have written to USAID urging it to adopt the less restrictive standards that allow faith-based organizations to keep religious and government funded activity separate in time and place without the need for a separate affiliate. Although the guidance is already effective, HHS intends to publish the rule for public comment.

Alliance for Open Society, Inc. v. USAID is one of two constitutional challenges to what has become known as the "pledge policy," which required USAID grantees to pledge they oppose prostitution. USAID, HHS and the Centers for Disease Control and Prevention have appealed a May 2006 ruling of the United States District Court for the Southern District of New York holding the rule unconstitutional. In June 2007, the Court of Appeals for the Second Circuit heard oral arguments in the case and asked government attorneys for more information about the defendants' intent to develop guidelines for affiliates. The following week, DOJ sent a letter informing the court that all defendant agencies would develop such guidelines and follow up with a rulemaking and public comment process. On July 23, HHS and USAID published essentially identical guidelines that describe "the legal, financial and organizational separation that should exist between these recipients of HHS funds and an affiliate organization that engages in activities that are not consistent with a policy opposing prostitution and sex trafficking."

In 2003, Congress passed the United States Leadership Against HIV/AIDS, Tuberculosis and Malaria Act (PL 108-25) that funds prevention programs. 22 USC 7631(f) bars grants to any group that "does not have a policy explicitly opposing prostitution and sex trafficking." The new requirement, initially only applied to foreign grantees, has been controversial from the start, generating two lawsuits. A 2005 policy brief by the Center for Health and Gender Equity says, "The restrictions preclude recipients of U.S. funds from using the best practices at their disposal to prevent the spread of HIV among marginalized populations…The broad language of the restrictions increases the risk that organizations will self-censor or curtail effective programs for fear of being seen as supporting or promoting prostitution." Their timeline on the restrictions says, "The law is applied inconsistently."

The government's approach capitalizes on another federal appeals court ruling in DKT International v. USAID, in the U.S. Circuit Court for the District of Columbia. That March 2007 decision overturned a lower court's ruling voiding the pledge requirement, in part because DKT could have set up a subsidiary organization to adopt the pledge and accept the grant. In the DKT case, the appeals court found that because of the act's educational message, USAID has the right to discriminate based on viewpoint based on its interpretation of the U.S. Supreme Court case Rust v. Sullivan. In Rust, the Supreme Court said a clinic could provide abortion counseling "through programs that are separate and independent from the project that receives Title X funds." However, in DKT, the appeals court applied this principle beyond the government program. DKT has sought a rehearing. The parties in the AOSI case will file briefs on how the new guidelines affect the constitutional claims being considered. In the meantime, the lower court's injunction against application of the rule to U.S.-based groups remains in place.

A July 27 alert from the Brennan Center for Justice, which represents AOSI in the litigation, said, "The guidelines go further than the LSC model, as they also authorize consideration of whether the affiliated entity has separate "management and governance." The Supplementary Information in the guidelines says they are based on legal services standards that have been upheld in the courts. However, the Brennan Center noted that the challenge they brought against excessive separation requirements for legal services programs has been sent back to a lower court for further review, and the appeals court has not ruled on their constitutionality.

The Supplementary Information says a grantee can be affiliated with an independent organization that does not comply with the pledge requirement, and "the independent affiliate's position on these issues will have no effect on the recipient organization's eligibility for Leadership Act funds, so long as the affiliate satisfies the criteria for objective integrity and independence detailed in the guidance." The affiliated organization must be legally separate and receive no funds or subsidy from Leadership Act funds. There must be physical and financial separation. The definition of separation is general, and the guidance says the agency will determine whether there is sufficient separation on a case-by-case basis, based on factors that "include but will not be limited to":

• separate personnel, management and governance
• separate financial records and accounts, including timesheets
• the "degree of separation" of facilities, equipment and supplies and the "extent of such restricted activities" by the affiliate
• whether signs, printed materials and other public communications distinguish the grantee from the affiliate
• whether the U.S. government and project name are "protected from public association with the affiliated organization and its restricted activities" in the public eye.

Congress Weighs In

Before the guidance was released, four leaders in the House wrote to HHS Secretary Mike Levitt and USAID Administrator Henrietta Fore expressing concern about the upcoming guidelines, noting, "Groups working to address the causes and consequences of prostitution are concerned that the pledge requirement increases stigmatization and hinders outreach; and there is international public health consensus that effective outreach to marginalized populations is crucial to HIV prevention." The letter suggested the legal services model for separation is not the appropriate one, saying it "would require organizations to set up legally and physically separate affiliates, with separate staff, in order to use private funds to speak freely about prostitution and AIDS." Instead, the letter suggested the agencies adopt the less restrictive model used in the faith-based initiative, which only requires religious organizations to conduct government funded activity in a separate time and place. The letter was signed by Rep. Henry Waxman (D-CA), Chair of the Committee on Oversight and Government Reform, Rep. Tom Lantos (D-CA), Chair of the Committee on Foreign Affairs, Rep. Donald Payne (D-NJ), Chair of the Committee on Foreign Affairs Subcommittee on Africa and Global Health, and Rep. Barbara Lee (D-CA).