By Elliot Ergeson. Full Text.
The wall separating Church and State is at risk of collapse. The Religion Clauses of the United States Constitution act in tandem to en- sure that the freedom of religion is protected. Over the past three decades, however, the Supreme Court has steadily chipped away at the Establishment Clause while expanding the Free Exercise Clause. On the Establishment Clause side, the government used to be prohibited from providing monetary aid to religious organizations. Now, after the Court’s recent decision in Espinoza v. Montana Department of Revenue, the government may not exclude religious entities from public benefits even if those benefits may be used for religious activities. In other words, religious entities must be treated the same as secular entities. On the Free Exercise Clause side, however, religious entities are frequently exempted from generally applicable laws. In fact, after Tandon v. Newsom, government regulations may trigger strict scrutiny if religious exercise is treated less favorably than any comparable secular activity—that is, religious exercise may be treated better, but not worse than any comparable secular activity. Evidently, religion is special; it is treated equally when it comes to public benefits and given special treatment when laws burden it. While this specialness may be desirable, it has the potential to devolve into a preferred treatment regime when the Free Exercise Clause is given more weight than the Establishment Clause in funding cases. And, unfortunately, that is what happened when the Small Business Administration (SBA) implemented the Paycheck Protection Program (PPP) in 2020.
In response to the COVID-19 pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which included the PPP. The PPP offered loans to small businesses and nonprofits that would be forgiven if spent primarily on payroll costs. Under the equal funding doctrine, religious entities ostensibly could not be denied PPP loans if they qualified for them. Yet, many religious entities that did not qualify for PPP loans ultimately received them because the SBA waived the affiliation limitations after finding that the rules burdened hierarchically structured religious organizations. So, not only were religious entities ostensibly eligible for loans thanks to the equal funding doctrine, but they also received preferential treatment thanks to an exemption. As a result, the Catholic Church received over $3 billion in PPP loans—making it the single largest beneficiary of the program—while secular nonprofits like Planned Parenthood were unable to receive PPP loans.
This Note analyzes the Court’s new equal funding doctrine through the lens of the SBA’s faith-based organization exemption and highlights the doctrine’s propensity for devolving into a preferred treatment regime. In so doing, this Note outlines the history of the Court’s Establishment Clause jurisprudence in funding cases, the PPP and its faith-based organization exemption, and the dangers the equal funding doctrine poses to the Establishment Clause. Ultimately, this Note argues that the SBA’s faith-based organization exemption is un- constitutional and that the Court should uphold what is left of the Establishment Clause to ensure that any future exemptions in funding cases will suffer from the same constitutional defects.