Church Property – Part 4

A federal court in Tennessee concluded that a church was not engaged in commerce for purposes of a federal arson statute.

Church Law and Tax2002-07-01

Church Property

Key point 8-05. Congress has enacted a number of employment and civil rights laws regulating employers. These laws generally apply only to employers that are engaged in interstate commerce. This is because the legal basis for such laws is the constitutional power of Congress to regulate interstate commerce. As a result, religious organizations that are not engaged in commerce generally are not subject to these laws. In addition, several of these laws require that an employer have a minimum number of employees. The courts have defined "commerce" very broadly, and so many churches will be deemed to be engaged in commerce.

Labor Laws

* A federal court in Tennessee concluded that a church was not engaged in commerce for purposes of a federal arson statute. This case will be relevant in deciding whether several federal employment laws can be applied to churches. A Tennessee church was destroyed by fire. Its facilities included a sanctuary, a parsonage, and a garage. Before it was destroyed, the church paid monthly payments on its $70,000 mortgage. Its facilities were insured for $700,000. The church had acquired a recreational vehicle, a car, a truck, and a tractor. Though 6,000 persons are recorded as church members, about 1,000 actively attend services. Because the church is located close to state boundaries, persons come from Tennessee, Mississippi, and Arkansas to attend church. The church’s offerings average between $9,000 and $10,000 a week. Most of the money is spent on constructing new facilities, facility maintenance, charitable activities, church related events and the pastor’s income and personal expenses. The church broadcasts its services on four radio stations, one of which is located in Mississippi. Broadcasts reach the tri-state area of Tennessee, Mississippi, and Arkansas. The church also sponsored church picnics and hosted gospel programs open to the general public.

Fire department investigators concluded that the fire had been started by an arsonist, and that the arsonist was the pastor. The pastor was charged with committing arson to a house of worship in violation of a federal law making it a crime to damage, by means of fire, any building used in any activity "affecting" interstate commerce. The pastor’s defense was that the church building was not used in any activity "affecting" interstate commerce, and therefore he could not be prosecuted under the federal arson statute.

In deciding whether the church building had been used in an activity affecting interstate commerce the court applied the following rules, based on its review of a number of United States Supreme Court cases:

(1) Does the function of the building constitute an "active" rather than a "passive" activity affecting interstate commerce? If passive, there is no effect on interstate commerce.

(2) If a building is actively, rather than passively, being used for activities affecting commerce, a court evaluates whether the church’s activities are commercial or non-commercial in nature. If they are commercial then it is much more likely that they affect interstate commerce because the courts can consider not just the impact on commerce of the individual church’s activities but also similar activities by other churches across the country. In other words, "in evaluating commercial activity, the activity is viewed in light of similar activity across the nation. If that type of activity cumulatively has a substantial affect on the market, then it is subject to Congress’s commerce power."

(3) For Congress to regulate non-commercial activity, the activity, by itself, "must implicate economic consequences that substantially affect commerce." Non-commercial activity is not combined with similar activities by other churches across the nation. This means that it is much more difficult for a church building that is used entirely for non-commercial activities to directly and substantially affect interstate commerce.

The court concluded that some of the church’s activities affected interstate commerce actively rather than passively. It specifically mentioned radio broadcasts, picnics, and gospel programs. However, the court concluded that these activities were non-commercial in nature, and therefore did not affect interstate commerce unless they "implicated economic consequences that substantially affect commerce." The court concluded that this requirement was not met:

[The church’s] main function is to facilitate worship, and is therefore used for non-commercial activities. Unlike a manufacturer, or a retailer, it is not engaged in the production or the selling of goods …. [Its] activities are all integral to worshiping. Tithing is necessary to sustaining worship services and rooted in the Christian doctrine. Its radio programs do not sell goods or services, but instead broadcast its sermons. It’s gospel programs, although in one sense entertainment, are also worship-centered and part of the ministry of the church. Therefore, the court finds that the church buildings were used for non-commercial activities. The court acknowledges that these non-commercial functions have economic consequences interstate in nature. However, in today’s society, it is difficult to fathom a situation that would not have some interstate nexus. Therefore, to categorize the church’s activities that tend to congregants’ spiritual needs a commercial enterprise would be to obliterate the distinction between commercial and non-commercial activity …. An autonomous church engaging in non-commercial activity could be subject to congressional regulation under the commerce power if its operations were extensive enough to substantially impact interstate commerce. However, this is not one of those churches. [The government] has not shown the court that the church’s radio broadcasts, gospel programs, or picnics are anything but minor church centered events largely intrastate in scope. In 1997, about $15,000 was spent on radio related activities, $3,500 for food and flowers used at funerals, and $5,500 on groceries for picnic and breakfast buffet functions. The level of the church’s operation, and its subsequent impact on interstate commerce, is just too de minimus to substantially impact interstate commerce …. Although the line defining whether or not activities substantially affect interstate commerce is uncertain, the church’s activities do not fall within a gray area. Its activities undisputably have a minor affect on the national economy, more akin to the economic impact of a household on interstate commerce.

Application. Congress has enacted a variety of employment and civil rights laws that apply to some churches and religious organizations. These include Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Fair Labor Standards Act, the National Labor Relations Act, the Employee Polygraph Protection Act, and the Occupational Safety and Health Act. All of these laws were enacted by Congress under its constitutional authority to regulate interstate commerce. As a result, these laws apply only to employers engaged in a business, industry, or activity "affecting commerce." The importance of the commerce requirement cannot be overstated. If a church is not engaged in commerce, then it will be exempt from most of the federal employment and civil rights laws. The federal court’s decision demonstrates that: (1) Churches are not automatically engaged in commerce. (2) Churches that are not engaged in commercial activities must have a "substantial" effect on interstate commerce in order to be subject to federal laws based on the authority of Congress to regulate commerce. This case will be a useful precedent to churches that are sued for violating federal employment or civil rights laws. United States v. Rayborn, 138 F.Supp.2d 1029 (W.D. Tenn. 2001).

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