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On August 25, 2026, the U.S. Department of Justice’s (DOJ) Office of Legal Counsel (OLC) issued a 39-page legal opinion concluding that several federal restrictions on how faith-based organizations may use Department of Health and Human Services (HHS) grant funds and contracts are presumptively unconstitutional. We celebrate the DOJ’s defense of religious freedom. This opinion follows where the law has already been heading for years, but it is not the finish line. Here is what the opinion says, what it means, and what your ministry should know.
Before we dive into the substance, it helps to remember some basic civics, the kind you might have learned from a famous Saturday-morning cartoon. Congress writes and enacts statutes (i.e., laws). Courts interpret the laws and decide whether they are constitutional. The executive branch (headed by the president) enforces and administers the law. An executive branch memo, including an OLC opinion, is a formal internal legal document in which part of the executive branch explains its official legal position on a question, such as whether a statute is constitutional.
The Office of Legal Counsel is the Justice Department’s in-house law firm for the executive branch. When a federal agency like HHS asks, “Is this statute constitutional?” OLC provides the executive branch’s official legal answer. That answer is binding only on the executive branch (the president, executive agencies like HHS, and military departments). Importantly, this is not a court ruling. It does not bind Congress, and it does not bind any court.
An OLC opinion concluding that a statute is unconstitutional does not repeal or strike down that statute. The provisions remain as enacted law unless and until Congress changes the law or a court finds it is unconstitutional.
If the DOJ, the president, or any executive agency or military department establishes a formal or informal policy not to enforce, apply, or administer a statutory provision on the ground that the statute (or a provision thereof) is unconstitutional, it must report that decision to Congress within 30 days.
The report goes to a long list of congressional leaders, including the Senate majority and minority leaders, the Speaker, and the House majority and minority leaders. The report must include “a complete and detailed statement of the relevant issues and background,” including the policy’s reasoning.
No. Federal law provides only a reporting and notice mechanism for the executive branch’s policy. It creates no automatic legal consequence. It does not transfer the dispute to a court. It does not give Congress any direct power to compel the executive branch to enforce the law. It simply ensures Congress knows what the executive branch is doing.
If so, it has several options, though none of them allow Congress to require the executive branch to enforce the law. Congress can hold oversight hearings, challenge the executive’s reasoning publicly, or pass new legislation to narrow or amend the statute to address the constitutional issue.
To hear a case, the federal judiciary (a.k.a. federal courts) needs a justiciable “case or controversy,” meaning an actual, independent dispute that a court has authority to decide. First, this requires “standing” to sue. Someone must have suffered or been threatened with an actual, concrete injury. Second, that person must have a legal right to bring the claim. This can arise through a statute that expressly authorizes a lawsuit (a private right of action) or through a constitutional claim, such as a violation of the First Amendment. If the executive branch stops defending a law but keeps enforcing it, someone is still being affected by the statute, and that person can sue. And when the executive declines to defend the provision, Congress can step in to defend it instead. Comparatively, if the executive branch stops enforcing the law entirely, there may be a greater question of who is an injured plaintiff with standing and whether there is a cause of action. Even so, there could be someone injured by the non-enforcement.
For example, if HHS were to stop defending one of the religious-use restrictions discussed below in court but continued enforcing it, a faith-based organization denied funding under that restriction would arguably suffer a concrete injury and could sue directly, arguing the restriction violates the Free Exercise Clause. By contrast, if HHS stopped enforcing the restriction altogether, it may be harder to identify who has been injured and who has a legal right to sue over the change — though someone could still attempt to make such a claim.
An OLC opinion is an important signal about the direction of executive branch policy, but it is not the last word. A new detailed policy may still need to be adopted and reported to Congress. And Congress retains tools to push back. Most importantly, courts conclusively decide constitutionality. So the statute remains enforceable law until something more happens.
Several federal laws allow faith-based organizations to receive HHS grants and contracts on the same terms as secular providers but only if they keep religious activity out of the funded program. These restrictions have required ministries to burdensomely, and arguably impossibly, separate funded programs from religious activity.
Undercurrent law, these restrictions remain in place. But in concluding that they are unconstitutional, the OLC opinion offers vivid illustrations of what this has meant in practice for ministries.
Congress has enacted several statutes designed to involve faith-based organizations in public benefit efforts. Under the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), the Public Health Service Act (PHSA), and the Child Care and Development Block Grant Act (CCDBGA), religious organizations are eligible for government funding from HHS on the same basis as secular nonprofits.
But the PRWORA, PHSA, and CCDBGA have imposed religious-use restrictions on those funds. This means that a faith-based organization can receive a grant but only if it keeps its faith out of the program the grant pays for, prohibiting any religious activity from the funded program, including prayer, religious teaching, and sharing the Gospel. In practice, this has required organization stop run two separate operations under one roof: a “secular” program funded by the government and any religious activity “offered separately in time or location” on a purely voluntary basis.
The restrictions were designed to comply with the Supreme Court’s Establishment Clause precedent under Lemon v. Kurtzman, 403 U.S. 602 (1971). Under the Lemon test, a government action violated the Establishment Clause of the First Amendment if it:
For more than half a century, the Lemon test shaped and distorted religious liberty.
A related line of cases made things worse. Even when the Establishment Clause did not require it, states could choose to prohibit public funding for certain religious uses. Notably, in Locke v. Davey, 540 U.S. 712 (2004), the Supreme Court upheld Washington’s decision to deny public funding, such as scholarships, for a devotional theology degree.
Working within that framework, OLC issued an opinion in 2019 addressing a restriction on capital financing “for facilities that are predominantly used for devotional religious activity” at “historically black colleges and universities.” The OLC decided the restriction did not violate the Free Exercise Clause because the government had discretion to restrict funding based on religious use under the Establishment Clause.
But between 2017 and 2025, the Supreme Court issued a series of landmark decisions that dismantled the old framework.
In light of these decisions, OLC now concludes that the religious restrictions in the PRWORA, the PHSA, and the CCDBGA are unconstitutional.
Specifically, it finds:
OLC addressed three objections to its conclusion:
a. The Spending Clause argument. OLC rejected the claim that Congress may define these as secular programs as part of its Spending Clause power to condition funding. Allowing the government to relabel a restriction as a program’s “definition” would let it evade the Free Exercise Clause entirely.
b. The direct funding argument. The fact that these restrictions apply only to direct funding to a religious organization, as opposed to indirect funding like a voucher program, doesn’t save them. The Free Exercise Clause does not turn on whether funding is director indirect.
c. The Locke v. Davey argument. Although it could be argued “that, at least as applied to the bar on ‘sectarian instruction,’ Locke remains good law,” the narrow exception in that case applies only to exclusions for funding toward devotional theology degrees. Because the “sectarian instruction” bars in these statutes extend far beyond training ministers, OLC concludes they “cannot be justified by Locke.”
To the extent OLC’s 2019 opinion reaches inconsistent conclusions with the 2026 opinion, those views are no longer the position of OLC or the executive branch.
OLC also advises that if HHS establishes a policy not to enforce the religious restrictions in the PRWORA, the PHSA, and the CCDBGA, it should report that decision to Congress within 30 days of adopting the policy, as required unde federal law.
These restrictions apply to federally funded social services and programs, many of which flow to state and local providers.
“[Temporary Assistance for Needy Families]-funded services, covered by the PRWORA restriction, include child-care assistance, pre-kindergarten, job-preparation classes and vocational training, work subsidies, family-formation projects, youth-mentoring programs, abstinence and sex-education programs, homeless shelters, and emergency food programs like soup kitchens and food banks.”
“Subject to the PHSA, [Substance Abuse and Mental Health Services Administration] distributes competitive grants for ‘mental health services, substance us treatment, and substance use prevention activities’ . . . including adult suicide prevention; infant and early-childhood mental health; preventing youth overdose; and providing treatment, recovery, and workforce support.”
“[T]he CCDBGA funds child care for low-income families [through the Child Care and Development Fund] by providing grants to child-care providers or vouchers that parents may use to secure care.”
We applaud the Justice Department’s careful, thorough analysis. We agree that the religious restrictions in these statutes have “proven challenging to small faith-based organizations,” and we acknowledge they have likely discouraged or prevented some religious organizations from participating.
The OLC opinion correctly recognizes that the government may not force religious organizations to choose between their faith and participation in programs that serve everyone. The religious restrictions in the PRWORA, the PHSA, and the CCDBGA were based on legal foundations the Court has since overturned or abandoned. But the practical rules have not yet changed. The statutes and regulations remain enforceable. Grant terms still govern. And the legal process that could finalize this shift has not yet run its course.
We will continue to monitor developments closely and provide updates as the situation evolves.
Many faith-based organizations choose not to accept government funding. But if you have questions about how this opinion affects your ministry, or if you are considering whether to apply for federal funding in light of these developments, please reach out to the ADF Church & Ministry Alliance team. We are here to help you navigate this moment with both confidence and wisdom.
A new DOJ opinion finds federal restrictions on faith-based HHS funding may be unconstitutional.
