A proposed U.S. Agency for International Development (USAID) rule for international HIV/AIDS grantees has generated criticism and calls for change. If implemented, the proposed rule would force such grantees to choose between adopting government policy for their entire organizations or setting up completely separate affiliated organizations. Comments from OMB Watch, the Brennan Center for Justice, and two members of Congress contrast the harshness of the proposed separation requirements with the much more flexible standards the agency has adopted for its faith-based initiative.

The government proposed the rule after losing the first round of litigation challenging a provision of the United States Leadership Against HIV/AIDS, Tuberculosis and Malaria Act (the "Leadership Act"), which mandates that "no funds made available to carry out the Act … be used to provide assistance to any group or organization that does not have a policy explicitly opposing prostitution and sex trafficking." Alliance for Open Society, Inc. v. USAID is currently pending in the District Court for the Southern District of New York, which will assess the policy's constitutionality after a final rule is announced.

The plaintiffs argue that the requirement violates their First Amendment rights by forcing them to apply the government's viewpoint to their privately funded activities. They also say adopting the anti-prostitution "pledge" would make it difficult for them to provide effective outreach programs and stigmatize and alienate the people in need of HIV/AIDS prevention services.

The proposed rule purports to give grantees that object to the pledge requirement the option of creating an affiliate that could adopt the pledge in order to qualify for program funding. However, the degree of separation proposed is so severe that it is impractical to implement. As a result, as OMB Watch's comments noted, the proposed rule "is so overbroad that it would turn private, nongovernmental organizations into mouthpieces of government by imposing policy statements governing all activities, including those not funded by the federal government." The comment urged the Department of Health and Human Services (HHS), which wrote the proposal, to: "1. Withdraw the rule and allow the courts to decide the issue on the merits, or 2. Re-write the rule based on the superior framework provided by regulations and guidance adopted for the faith-based initiative."

The Brennan Center for Justice faulted the proposed rule on several fronts, saying it:

1. "does not even attempt to address the policy requirement's impermissible mandate that independent NGOs espouse the government's viewpoint;
2. "fails to define the most basic terms such as 'activities inconsistent with a policy opposing prostitution';
3. "does not afford recipients a means to speak freely through privately funded affiliates;
4. "imposes separation requirements so burdensome that recipients will not be able to set up affiliates;
5. "violates Congressional intent to promote efficiency in foreign aid;
6. "undermines Congress's desire to promote public-private partnerships in the delivery of HIV/AIDS services; and
7. "contradicts HHS's own acknowledgment in the context of the faith-based initiative that separation requirements of the sort it imposes here are excessive."

Two members of Congress, Reps. Henry Waxman (D-CA) and Barbara Lee (D-CA), sent HHS comments asking that the rule be revised, saying it "represents poor policy for public health, inappropriately restricts free speech of grantees, and undermines Congress' intent that HIV/AIDS funds be spend in an efficient and integrated manner." They go on to say that the legal, physical, and financial separation requirements proposed "would unduly burden the cooperating agencies participating in our AIDS program and introduce wasteful duplication of costs. This is of particular concern because many funding recipients operate in multiple countries, and registering separate entities in each may be difficult or impossible."