The new battleground in the fight over religious liberty.

What counts as a church? Chuck and Stephanie Fromm recently found out.

After hosting several periodic Bible studies for up to 50 people in their home in San Juan Capistrano, Calif., the Fromms were fined $300 for violating a city ordinance that prohibits groups of three or more people from gathering without a permit. The couple appealed and city officials agreed last month to reimburse them and re-examine the ordinance, but the case created a stir in religious circles.

“It struck a deep nerve. Bible studies in people’s homes have been a long part of American culture and heritage,” says Brad Dacus of the Pacific Research Institute, which took on the Fromms’ case. “We’re concerned that other cities will try to get away with the same thing.”

Megachurches often dominate the news, but most religious institutions in America are small. The median church size is 75 regular participants on Sunday mornings, according to the 2009 National Congregations Study, which also found that about 60% of churches have an attendance between seven and 99 people. Just 0.4% of churches have more than 2,000 attendees, falling into the megachurch category.

Even those churches that eventually grow to a few hundred or a few thousand start small. Many churches originate as a Bible study in someone’s home before renting or buying more formal location. Saddleback Church began in 1979 as a small Bible study with one other family in Rick Warren’s condo. Seattle’s Mars Hill Church began in 1996 in the apartment of Mark and Grace Driscoll.

Megachurches have actually spurred more growth in small home gatherings, which include not only Bible studies but groups devoted to topics such as marriage support, parenting and personal finance. Half of megachurches used such small groups in 2000, while 80% use them now, says Scott Thumma of the Hartford Institute for Religion Research. A recent Lifeway Research study of 7,000 Protestant churches found that on average, half of those in their congregations participated in small groups. “Pastors are asking, ‘How do you get people from sitting in rows to sitting in circles?'” says Ed Stetzer, president of LifeWay Research.

But modern zoning laws haven’t caught up with this trend. What to do, for example, about the parking congestion caused by a regular gathering of several families for a Bible study? “Zoning laws and the ideas that lie behind them are so outdated that it’s going to take some time before they fully grasp the changes of the shape of American religion,” says Mr. Thumma.

Zoning issues have affected other small groups. In 2006, a synagogue sued and eventually settled with Hollywood, Fla., after the city initially denied its application for a zoning permit to operate in two residential homes. In 2009, San Diego County officials issued a warning (which they later withdrew) to a couple for hosting a weekly Bible study in their home without a permit. Miles Christi, an international Catholic religious order, challenged a 2007 ticket issued from Northville, Mich., for using a home for private daily masses and Bible studies. The order won on a technicality but its subsequent lawsuit to prevent the issuing of future tickets was dismissed by a federal court earlier this year.

[Editor’s note: This article is incomplete. The source for this document was originally published on online.wsj.com – however, the original URL is no longer available.]