WASHINGTON — Having promised he would listen to “all interested parties,” including the concerns of his own religious supporters, President Barack Obama decided not to include an exemption for religious employers in his new executive order that bans federal employers and contractors from discriminating against homosexual or “transgendered” employees.

The impact on Catholic organizations that receive federal funding — such as Catholic Charities and Catholic Relief Services —  remains to be seen, since those agencies and others like them receive most of their federal money in grants, not contracts.

However, the nation’s Catholic bishops and legal observers believe the executive order — which goes into effect for federal contractors early in 2015 — could discourage Catholic and other religious agencies from seeking federal contracts to fund their charitable and relief programs.

“If you hold that certain sexual practices are immoral, there is a good chance you probably will be disqualified from contracts,” said Melissa Swearingen, adviser and spokeswoman for the president of the U.S. Conference of Catholic Bishops (USCCB).

Two USCCB committee chairmen — Archbishop William Lori of Baltimore, chairman of the Ad Hoc Committee for Religious Liberty, and Bishop Richard Malone of Buffalo, N.Y., chairman of the Committee on Laity, Marriage, Family Life and Youth —  called the executive order “unprecedented and extreme” and said it “must be opposed.”

“With the stroke of a pen, it lends the economic power of the federal government to a deeply flawed understanding of human sexuality, to which faithful Catholics and many other people of faith will not assent,” the bishops said in a joint statement.

The executive order, which Obama signed Monday, after weeks of lobbying from homosexual-rights groups, is also seen by some as evidence of the Obama administration’s apparent disregard for religious objections to homosexual acts, same-sex “marriage” and government-mandated coverage of contraception and abortifacients.

“We definitely think the administration is on the wrong side of history. It seems they are intentionally discriminating against people of religious faith in the name of nondiscrimination,” said Swearingen, who also told the Register that the president’s decision not to include a religious exemption was “very disappointing and hurtful.”

Swearingen added that the order’s absence of any protections for religious employers further erodes the dwindling bipartisan consensus on the importance of protecting religious freedom.

“It’s becoming a partisan issue, something it never was before,” Swearingen said. “It just seems that the government can do better than that.”


Obama: ‘Extraordinary Progress’

Obama’s executive order adds “sexual orientation” and “gender identity” to the list of protected classes in the 1965 directive signed by President Lyndon Johnson that prohibits federal employers and contractors from discriminating “against any employee or applicant for employment because of race, color, religion, sex or national origin.” 

Obama told a group of homosexual activists who gathered for Monday’s signing in the White House’s East Room that the executive order was the latest development in the “extraordinary progress” made on behalf of homosexual rights. However, in “too many states and too many workplaces,” Obama said, “simply being gay, lesbian, bisexual or transgender can still be a fireable offense.”

The administration delayed the order to see whether Congress would pass the Employment Non-Discrimination Act, a bill that would have extended anti-discrimination protections for people with same-sex attraction and self-identified transgendered individuals who work for private businesses, nonprofits and government agencies. The legislation, also known as ENDA, passed the U.S. Senate last November but failed in the Republican-controlled House of Representatives.

ENDA contained a religious exemption that the USCCB said was too narrow, but a group of 14 prominent faith leaders, some of them Obama supporters, asked for a similar provision in the executive order. In a July 1 letter to Obama, the faith leaders said an executive order without a religious exemption would “significantly and substantively hamper the work of some religious organizations that are best equipped to serve in common purpose with the federal government.”

Stephen Schneck, director of the Institute for Policy Research & Catholic Studies at The Catholic University of America, signed the July 1 letter. Schneck, who co-chaired the Catholics for Obama campaign in 2012, released a statement on July 19 indicating that while the executive order did not include a “nuanced exemption,” it still contained a provision that allows contracting religious organizations to prefer members of their own faith in some personnel matters.

In 2002, President George W. Bush amended the 1965 nondiscrimination executive order to allow religious employers to favor workers of their own faith for religious roles, such as ministers. Obama’s executive order retains the Bush amendment.

“This means that President Obama’s executive order will end discrimination against LGBT citizens in federal contracts while at the same time allowing religious organizations to ensure that key personnel positions in their organizations reflect the values of their faith,” Schneck said.


Possible Litigation

Several federal courts have held that the Bush amendment’s language, incorporated from elsewhere in anti-discrimination law, allows religious organizations to apply moral standards concerning certain employees’ conduct if those standards stem from the organization’s religious beliefs. For example, a church can legally fire a minister for having an extramarital affair. Less clear is whether a Catholic agency with a federal contract could be penalized for firing an accountant in a same-sex “marriage.”

“There may be litigation over whether that provision will allow contracting organizations to maintain any rules about conduct outside traditional, male-female marriage,” said Thomas Berg, a law and public policy professor at the University of St. Thomas School of Law. Berg told the Register that an additional exemption “would certainly have made religious-freedom rights far clearer.”

Berg also said a religious organization, if denied a contract for not complying with Obama’s executive order, may sue under the Religious Freedom Restoration Act, the federal law that the U.S. Supreme Court cited in its June 30 ruling that closely held corporations like Hobby Lobby cannot be forced to subsidize abortifacients.

“Losing government funding that an entity would otherwise receive to do its social-service work can be a penalty on religious exercise that triggers RFRA,” Berg said.

Eric Kniffin, an attorney with Lewis Roca Rothgerber LLP, who has litigated religious-liberty cases, said it remains unclear how the executive order will impact religious agencies that receive grant funding. Religious agencies under federal contract, Kniffin said, may want to examine whether they can switch to a grant.

Religious contractors “need to look carefully at the Bush exemption from 2002 and see whether they qualify, and if not, see what they can do to fall within those protections,” he said.


Hobby Lobby Blowback?

Kniffin suggests that the Hobby Lobby ruling —  rather than providing an incentive for the administration to carve out a religious exemption — actually emboldened Obama to not include that provision.

“There is a huge blowback to Hobby Lobby, and I think this was one way of President Obama being able to show his supporters, ‘I’m going to deliver despite the court’s ruling,’” Kniffin said.

After the ruling, several homosexual-rights groups withdrew their support from ENDA because it contained a religious exemption that they said would allow private companies to invoke similar objections to homosexual behavior.

However, Archbishop Lori and Bishop Malone in their joint statement said the executive order was “an anomaly” because it contains no religious-liberty protections. The bishops also wrote: In this way, the order, which is fundamentally flawed in itself, also needlessly prefers conflict and exclusion over coexistence and cooperation.”

Peter Breen, vice president and senior counsel of the Thomas More Society, viewed the president’s latest executive order as another sign of an unprecedented level of “hostility” toward religious belief. 

“What you’re seeing today is a hostility toward religious faith that is unlike anything we’ve ever seen in the history of the country, which was founded on religious freedom; and throughout almost our entire history, our legislators and our courts have been very protective of people of faith and their beliefs and practices,” Breen told the Register.

He said Obama’s executive order addresses an issue that should have been decided by Congress or the individual state legislatures. Though the order applies to federal employers and contractors, Breen warned it could create “a slippery slope.”

“This does appear to be laying the foundation for further regulation on the issue of homosexual employees and on transgendered employees,” Breen said.


Narrowing Religious Liberty

According to Kniffin, the religious-liberty litigator, the executive order also continues the Obama administration’s efforts of narrowing religious liberty to internal ecclesial matters: freedom to worship, but not to practice and express ideas in the public square.

“Basically, if you employ and you serve people of your own faith, then you can preserve your rights,” Kniffin said. “But when you engage in the public square, then you have to play by the same rules that govern everyone else. Wherever the administration thinks it can narrow religious liberty, it does so. Obviously, this is a First Amendment right, and people are accustomed to this right.”

The USCCB’s Swearingen said the executive order could place restrictions on mission-driven Catholic social-service and relief agencies that serve the most vulnerable.

Said Swearingen, “We want to continue to be able to serve the poor and meet the needs of the community.”

Register correspondent Brian Fraga writes from Fall River, Massachusetts.