Rescinding Portions of Department of Commerce Title VI Regulations To Conform More Closely With the Statutory Text and To Implement Executive Order 14281

[Federal Register Volume 91, Number 73 (Thursday, April 16, 2026)]
[Rules and Regulations]
[Pages 20326-20333]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-07477]



[[Page 20326]]

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DEPARTMENT OF COMMERCE

15 CFR Part 8

[Docket No. 260108-0024]
RIN 0605-AA70


Rescinding Portions of Department of Commerce Title VI 
Regulations To Conform More Closely With the Statutory Text and To 
Implement Executive Order 14281

AGENCY: Office of Civil Rights, Department of Commerce.

ACTION: Final rule.

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SUMMARY: By this rule, the Department of Commerce (Department) amends 
its regulations implementing Title VI of the Civil Rights Act of 1964 
(Title VI) to eliminate provisions concerning disparate-impact 
liability and affirmative action. These amendments align the 
Department's regulations with Title VI's original public meaning, avoid 
constitutional concerns, reduce compliance costs, and serve the public 
interest. In addition, these revisions implement changes directed in 
Executive Order 14281.

DATES: The rule is effective April 16, 2026.

FOR FURTHER INFORMATION CONTACT: Daniel Sweeney, Senior Counsel, Office 
of the General Counsel, at (202) 482-1395.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

    The Department is revising and rescinding portions of its 
regulations promulgated pursuant to Title VI, 42 U.S.C. 2000d-1, to 
more closely align its regulations to the language that Congress 
enacted in Title VI prohibiting intentionally discriminatory conduct, 
see 42 U.S.C. 2000d. The Department is cross-referencing and 
incorporating the reasoning of the Department of Justice (DOJ) final 
rule published in the Federal Register on December 10, 2025. 90 FR 
57141. There are serious statutory and constitutional concerns with the 
legality of the Department's Title VI regulations, which go beyond 
intentional discrimination to additionally prohibit conduct having an 
unintentional disparate impact. This rule accordingly rescinds those 
portions of the regulations that prohibit conduct having a disparate 
impact, which are in considerable tension with both Title VI and the 
Constitution and do not serve the public interest.
    The rule's revisions also conform to Executive Order 14281, 
``Restoring Equality of Opportunity and Meritocracy'' (Apr. 28, 2025; 
90 FR 17537). That Order states that ``[i]t is the policy of the United 
States to eliminate the use of disparate-impact liability in all 
contexts to the maximum degree possible to avoid violating the 
Constitution, Federal civil rights laws, and basic American ideals.'' 
Id. at 17537. Although the Department would take this action 
independent of Executive Order 14281, the Order supports this action.
    This rule makes clear that (i) the Department's Title VI 
regulations do not prohibit conduct or activities that have a disparate 
impact and instead prohibit only intentional discrimination, and (ii) 
the Department thus will not pursue Title VI disparate-impact liability 
against its Federal-funding recipients.

II. Discussion

A. Statutory History of Title VI

    Title VI of the Civil Rights Act of 1964, as amended, provides: 
``No person in the United States shall, on the ground of race, color, 
or national origin, be excluded from participation in, be denied the 
benefits of, or be subjected to discrimination under any program or 
activity receiving Federal financial assistance.'' 42 U.S.C. 2000d. 
Title VI also directs Federal departments and agencies that extend 
Federal financial assistance to ``effectuate the provisions of'' Title 
VI ``by issuing rules, regulations, or orders of general 
applicability.'' 42 U.S.C. 2000d-1. The section of Title VI that sets 
forth the prohibited conduct, 42 U.S.C. 2000d, prohibits intentional 
discrimination and makes no reference to unintentional disparate 
effects or impact. See Alexander v. Sandoval, 532 U.S. 275, 280 (2001) 
(``[I]t is . . . beyond dispute--and no party disagrees--that [Title 
VI] prohibits only intentional discrimination.''). The statute does not 
explicitly provide any Federal department or agency with authority to 
prohibit conduct having an unintentional disparate impact. And despite 
having ample opportunities, Congress has not amended Title VI to impose 
disparate-impact liability.

B. Regulatory History of Title VI

    The Department originally published these regulations in a final 
rule on July 5, 1973 (38 FR 17938). The rule was issued under Section 
602 of the Civil Rights Act of 1964 (42 U.S.C. 2000d-1). Its issuance 
was part of a coordinated effort among Federal departments and 
agencies, based on recommendations from the Interagency Committee for 
Uniform Title VI Regulation Amendments, to clarify and standardize the 
application of Title VI. Shortly thereafter, the Department published a 
correction notice on September 4, 1973 (38 FR 23777), to fix minor 
typographical errors in the original publication.
    In 2003, the Department added language defining ``program or 
activity'' and ``program'' to reflect the amendment of Title VI by the 
Civil Rights Restoration Act of 1987, Public Law 100-259. 68 FR 51334; 
see 15 CFR 8.3(g). Thus, beyond the required updating of the phrases 
``program or activity'' and ``program'' pursuant to the Civil Rights 
Restoration Act, the Department has not substantively updated its Title 
VI regulations since 1973.

C. Relevant Supreme Court Decisions

    The Supreme Court has found that Title VI, 42 U.S.C. 2000d, does 
not prohibit facially neutral policies that result in disparate 
outcomes when there is no discriminatory intent. Rather, it prohibits 
only intentional discrimination. In 1978, the Supreme Court found that 
Congress intended Title VI to prohibit ``only those racial 
classifications that would violate the Equal Protection Clause'' if 
committed by a government actor. Regents of the Univ. of Cal. v. Bakke, 
438 U.S. 265, 287 (1978) (Powell, J., announcing the judgment of the 
Court); id. at 325, 328, 352-53 (Brennan, White, Marshall, and 
Blackmun, JJ., concurring in part and dissenting in part); see also 
Students for Fair Admissions, Inc. v. President & Fellows of Harvard 
Coll., 600 U.S. 181, 198 n.2 (2023) (SFFA). Shortly before Bakke's 
Title VI holding, the Supreme Court held that the Equal Protection 
Clause prohibits only intentional discrimination and that ``a law or 
other official act'' that has a ``racially disproportionate impact'' 
alone does not violate that Clause. Washington v. Davis, 426 U.S. 229, 
239 (1976); see also Vill. of Arlington Heights v. Metro. Hous. Dev. 
Corp., 429 U.S. 252, 265 (1977) (``Proof of racially discriminatory 
intent or purpose is required to show a violation of the Equal 
Protection Clause.''). Taken together, these Supreme Court cases 
establish that Title VI's statutory prohibition, like the Equal 
Protection Clause, extends only to intentional discrimination.
    In 2001, the Supreme Court, in Alexander v. Sandoval, reaffirmed 
that settled understanding. See 532 U.S. at 280 (``[I]t is . . . beyond 
dispute . . . that [Title VI] prohibits only intentional 
discrimination.''). In Sandoval, the Supreme Court held that private 
plaintiffs lacked a private right of action to enforce DOJ's 
``disparate-impact

[[Page 20327]]

regulations.'' Id. at 285-87. Although the Supreme Court had previously 
found a private cause of action to enforce Title VI's bar on 
intentional discrimination, id. at 279-80, that conclusion did not 
extend to enforcing DOJ's ``disparate-impact regulations.'' Id. at 285. 
As the Supreme Court explained, it is ``clear'' that ``the disparate-
impact regulations do not simply apply'' the statutory prohibition, as 
the regulations ``forbid conduct that [Title VI] permits,'' so it is 
equally ``clear that the private right of action to enforce [Title VI] 
does not include a private right to enforce these regulations.'' Id. 
While the Supreme Court in Sandoval ``assume[d]'' without deciding that 
DOJ's disparate-impact regulations were valid, the Court explained that 
the then-current version of the regulations were in ``considerable 
tension'' with the Supreme Court's Title VI precedents. Similarly, the 
regulations did not ``authoritatively'' construe Title VI because the 
regulations ``forbid conduct''--namely, policies that unintentionally 
result in a disparate impact--that Title VI ``permits.'' Id. at 281-82, 
284-85; see also id. at 286 n.6 (``[Title VI] permits the very behavior 
that the regulations forbid.'').
    Finally, in 2024, the Supreme Court overruled Chevron U.S.A. Inc. 
v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). See 
Loper Bright Enters. v. Raimondo, 603 U.S. 369, 409-12 (2024). In 
reaching that result, the Supreme Court made clear that ``statutes . . 
. have a single, best meaning'' that is `` `fixed at the time of 
enactment.' '' Id. at 400 (quoting Wis. Cent. Ltd. v. United States, 
585 U.S. 274, 284 (2018)). Thus, Title VI's bar on discrimination can 
have only one meaning. And under Supreme Court precedent, the single, 
best meaning of Title VI is that it ``prohibits only intentional 
discrimination'' and ``permits'' facially neutral policies that result 
in disparate outcomes so long as there is no discriminatory intent. 
Sandoval, 532 U.S. at 280, 286 n.6.

D. Executive Order 14281

    On April 23, 2025, the President issued Executive Order 14281. This 
Order restated the ``bedrock principle of the United States . . . that 
all citizens are treated equally under the law.'' 90 FR at 17537. The 
Order explained that this ``principle guarantees equality of 
opportunity, not equal outcomes,'' and ``promises that people are 
treated as individuals, not components of a particular race or group.'' 
Id.
    That Order also explained that disparate-impact liability 
``endangers this foundational principle.'' Id. Disparate-impact 
liability, the Order reasoned, ``all but requires individuals and 
businesses to consider race and engage in racial balancing to avoid 
potentially crippling legal liability.'' Id. As the Order explained, 
disparate-impact liability ``not only undermines our national values 
but also runs contrary to equal protection under the law and, 
therefore, violates our Constitution.'' Id.
    The Order relayed that because of these problems, ``[i]t is the 
policy of the United States to eliminate the use of disparate-impact 
liability in all contexts to the maximum degree possible to avoid 
violating the Constitution, Federal civil rights laws, and basic 
American ideals.'' Id. Accordingly, this rule revises the Department's 
currently existing Title VI regulations, consistent with the Order's 
policy and purpose.
    In any event, the Department would have independently initiated 
steps toward making these changes regardless of Executive Order 14281. 
Even if Executive Order 14281 did not exist, in other words, the 
Department would have taken steps to adopt the policy to eliminate the 
use of disparate-impact liability under Title VI. The Order states, and 
the Department firmly agrees, that a ``bedrock principle of the United 
States is that all citizens are treated equally under the law. This 
principle guarantees equality of opportunity, not equal outcomes. It 
promises that people are treated as individuals, not components of a 
particular race or group. It encourages meritocracy and a colorblind 
society,'' not race-, color-, or national-origin-based favoritism. 90 
FR at 17537. And adherence to this principle, including in the issuance 
of grants, ``is essential to creating opportunity, encouraging 
achievement, and sustaining the American Dream.'' Id.
    Imposing disparate-impact liability endangers these policy 
objectives. Disparate-impact liability also raises serious 
constitutional concerns, is in considerable tension with the original 
public meaning of Title VI, creates confusion, increases the costs of 
compliance, and does not serve the public interest. After considering 
the relevant issues and factors and weighing the relevant 
considerations, the Department concludes that these reasons support 
eliminating disparate-impact liability from the Department's Title VI 
regulations. In any event, the Department concludes that each reason is 
a separate and independent basis for eliminating disparate-impact 
liability from the Department's Title VI regulations.

E. Need for Rulemaking

    The Department's regulation at 15 CFR 8.4, entitled 
``Discrimination prohibited,'' outlines the core prohibitions against 
discrimination and includes several provisions that go beyond the 
statutory text and constitutional requirements by prohibiting facially 
neutral policies that have a disparate impact. Specifically, Sec.  
8.4(a) establishes the general principle that no person in the United 
States shall, on the ground of race, color, or national origin, be 
excluded from participation in, be denied the benefits of, or otherwise 
be subjected to discrimination under any program to which the part 
applies. Section 8.4(b) enumerates specific discriminatory acts that 
are prohibited. These include, among others, providing different 
services or benefits, subjecting individuals to segregation or separate 
treatment, restricting the enjoyment of advantages or privileges 
afforded to others, and using criteria or administrative methods that 
have the effect of discriminating. This section also prohibits 
recipients from selecting sites or locations for facilities with the 
purpose or effect of excluding individuals on prohibited grounds. 
Furthermore, Sec.  8.4(b)(6) requires a recipient to take affirmative 
action to overcome the effects of prior discrimination. Section 8.4(c) 
addresses employment practices. It establishes that where a primary 
objective of the Federal financial assistance is to provide employment, 
a recipient is prohibited from discriminating in its employment 
practices. Even where providing employment is not a primary objective, 
the rule specifies that the same prohibitions apply if a recipient's 
discriminatory employment practices tend to exclude individuals from 
participation in or deny them the benefits of the federally assisted 
program.
    There are serious statutory and constitutional concerns with the 
legality of the Department's Title VI disparate-impact regulations. The 
Department also has serious policy concerns with its current disparate-
impact regulations, including that the disparate-impact standard 
creates confusion, undermines public confidence in the nation's civil 
rights laws and the rule of law, and produces burdensome litigation and 
compliance costs.
1. Serious Legal Concerns
    In accordance with the reasoning of the DOJ final rule, this 
Department recognizes that there are serious statutory concerns as to 
whether the

[[Page 20328]]

Title VI statute authorizes the disparate-impact provisions of the 
current regulations. As summarized above, the Supreme Court's Sandoval 
decision makes clear that Title VI prohibits ``only intentional 
discrimination'' and ``permits'' facially neutral policies that result 
in disparate outcomes when there is no discriminatory intent. Sandoval, 
532 U.S. at 280-81, 286 n.6. That is the ``single, best meaning'' of 
Title VI. Loper Bright, 603 U.S. at 400. Sandoval calls into serious 
doubt the legality of the Department's ``disparate-impact 
regulations.'' Sandoval, 532 U.S. at 281-82, 284-85 (noting that DOJ's 
substantially identical regulations were in ``considerable tension'' 
with the Supreme Court's Title VI precedents); see also id. at 286 n.6 
(``[Title VI] permits the very behavior that the regulations 
forbid.''). Although Sandoval resolved only the question of private 
enforceability, subsequent cases such as Loper Bright have made clear 
that the Department cannot extend Title VI beyond its original public 
meaning. See Loper Bright, 603 U.S. at 412-13 (holding that ``courts 
must . . . ensur[e] that [an] agency acts within'' its statutory 
authority). And even in the absence of Supreme Court precedent, the 
Department would have concluded that the best reading of Title VI is 
that it prohibits only intentional discrimination.
    Title VI authorizes agencies to promulgate regulations ``to 
effectuate'' the statute's prohibition of intentional discrimination. 
42 U.S.C. 2000d-1. The current regulations' extension of prohibited 
conduct to include conduct with an unintentional disparate impact 
reaches a vastly broader scope than the statute itself. This scope is 
too broad to be considered a simple prophylactic measure aimed at 
preventing intentional discrimination. See Sandoval, 532 U.S. at 286 
n.6 (``[Title VI] permits the very behavior that the regulations 
forbid.''). Thus, the disparate-impact regulations do not 
``effectuate'' Title VI. 42 U.S.C. 2000d-1.
    There are also serious concerns about whether the Department's 
Title VI regulations pass constitutional muster under the Equal 
Protection Clause. As the Supreme Court recently held in SFFA, ``the 
Equal Protection Clause . . . applies without regard to any differences 
of race, of color, or of nationality--it is universal in its 
application'' and the ``guarantee of equal protection cannot mean one 
thing when applied to one individual and something else when applied to 
a person of another color.'' 600 U.S. at 206 (internal quotation marks 
omitted) (first quoting Yick Wo v. Hopkins, 118 U.S. 356, 369 (1886); 
and then quoting Bakke, 438 U.S. at 289-90 (Powell, J.)). Despite the 
promises of the Equal Protection Clause, a funding recipient's risk of 
disparate-impact liability under the Department's regulations is 
triggered by unintentional disparate outcomes, which the recipient may 
not even know about without investigation. To evaluate and avoid this 
risk, the funding recipient must incur investigatory costs, such as 
conducting an impact analysis, and is coerced to proactively consider 
race, color, and national origin, and potentially use it to change the 
unintended disparate outcomes. In short, disparate-impact liability 
encourages and, in some cases, requires covered entities to engage in 
the intentional use of race and racial balancing to eliminate those 
disparate outcomes by treating certain racial groups differently from 
others--the exact conduct the Equal Protection Clause forbids. See id. 
The serious constitutional concerns raised by these perverse incentives 
further confirm that the best reading of Title VI is that it prohibits 
only intentional discrimination and does not authorize the Department 
to impose disparate-impact liability. See Edward J. DeBartolo Corp. v. 
Fla. Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 575 
(1988) (``[W]here an otherwise acceptable construction of a statute 
would raise serious constitutional problems, the Court will construe 
the statute to avoid such problems unless such construction is plainly 
contrary to the intent of Congress.'' (citing NLRB v. Catholic Bishop 
of Chi., 440 U.S. 490, 499-501, 504 (1979))).
    This encouraged or coerced use of race, color, or national origin 
violates the Equal Protection Clause unless it survives review under 
the ``daunting'' strict-scrutiny standard. SFFA, 600 U.S. at 206; see 
also Free Speech Coal., Inc. v. Paxton, 145 S. Ct. 2291, 2310 (2025) 
(``Strict scrutiny--which requires a restriction to be the least 
restrictive means of achieving a compelling governmental interest--is 
`the most demanding test known to constitutional law.''' (quoting City 
of Boerne v. Flores, 521 U.S. 507, 534 (1997))). The use of race, 
color, or national origin necessitated by the disparate-impact 
provisions runs into serious issues with the requirement of narrow 
tailoring to achieve a compelling interest. SFFA, 600 U.S. at 206-07.
    Similarly, the ``affirmative action'' provision authorizes and 
sometimes requires the intentional use of race without requiring that 
this intentional use be narrowly tailored to serve a recognized 
compelling interest. Instead, it encourages intentional racial 
balancing ``to overcome the effects of'' unintended racial disparities. 
28 CFR 42.104(b)(6). Thus, for substantially the same reasons as above, 
the ``affirmative action'' provision raises serious constitutional 
concerns.
    As summarized above, there are serious statutory and constitutional 
concerns with the Department's disparate-impact regulations. But even 
if the regulations were consistent with the statute, the Department 
finds that eliminating the potential constitutional concerns addressed 
above would independently justify the amendment of the regulations. Cf. 
U.S. Tel. Ass'n v. FCC, 188 F.3d 521, 528 (D.C. Cir. 1999) (concluding 
it was not ``arbitrary and capricious'' to adopt a certain policy in 
order to ``avoid[ ] raising a non-trivial constitutional question''). 
And even if the regulations did not raise serious constitutional 
concerns, the Department finds that eliminating the costs and confusion 
caused by the mismatch between the statute and the disparate-impact 
regulations would independently justify the repeal of the regulations.
2. Serious Policy Concerns
    The Department also has serious policy concerns with the Title VI 
regulations' imposition of disparate-impact liability. While the 
Department expresses its policy concerns with disparate-impact 
liability independent of Executive Order 14281, that Order sets forth 
many valid policy concerns with disparate-impact liability:

    On a practical level, disparate-impact liability has hindered 
businesses from making hiring and other employment decisions based 
on merit and skill, their needs, or the needs of their customers 
because of the specter that such a process might lead to disparate 
outcomes, and thus disparate-impact lawsuits. This has made it 
difficult, and in some cases impossible, for employers to use bona 
fide job-oriented evaluations when recruiting, which prevents job 
seekers from being paired with jobs to which their skills are most 
suited--in other words, it deprives them of opportunities for 
success.

90 FR at 17537. Moreover, the legal concerns identified above have 
caused uncertainty and confusion for Federal funding recipients as to 
whether and when they need to comply with the disparate-impact 
regulations and when they can or must consider race, color, and 
national origin. As explained above, Sandoval casts substantial doubt 
on the validity of the disparate-impact regulations that many Federal 
departments and agencies have promulgated pursuant to Title VI. See 532 
U.S. at 280-82.

[[Page 20329]]

    Additionally, in practice, and as explained above, disparate-impact 
liability leads covered entities to engage in racial balancing even as 
the underlying Title VI statute forbids intentional racial 
discrimination. This tension tends to create confusion and undermine 
public confidence in the nation's civil rights laws and in the rule of 
law itself, as the law seems to both forbid and require the same 
conduct.
    These problems are amplified by the arbitrary nature of the racial 
and ethnic categories typically used to measure disparate effects, 
which, by virtue of their arbitrariness, typically lack a meaningful 
connection to a compelling interest. See, e.g., SFFA, 600 U.S. at 216-
17 (explaining that the ``[racial] categories'' utilized by Harvard and 
University of North Carolina were ``themselves imprecise in many ways'' 
and ``the use of these opaque racial categories undermine[d], instead 
of promote[d], [their] goals'').
    The Department has considered, among other views, the view that 
looking at disparate effects can sometimes be useful in uncovering or 
deterring subtle discrimination or indifference to unnecessary and 
arbitrary barriers; the view that placing a focus on disparate outcomes 
can help undo the impact of prior instances of intentional 
discrimination; the view that placing a focus on disparate outcomes is 
critical for advancing the Department's goals of promoting economic 
development and creating conditions that facilitate economic 
opportunities for all communities; the view that covered entities and 
affected individuals have already structured their policies and conduct 
around the disparate-impact provisions at issue; the view that meeting 
certain racial and/or ethnic thresholds carries benefits regarding 
experience, knowledge, empathy, and cooperation; and the view that the 
elimination of disparate-impact provisions is a disruption to the 
status quo that places an unnecessary and inappropriate focus on race 
and ethnicity. But all these alleged benefits are outweighed by the 
other issues and factors the Department has considered.
    The Department has also considered the alternative of trying to 
adopt a modified version of disparate-impact liability, for example, by 
requiring covered entities to try to remedy disparate impacts and/or 
unintentional discrimination for only certain types of cases regarding 
education, housing, or employment; or by requiring covered entities to 
consider disparate impacts for special economic development and 
opportunity purposes. But any version of imposing liability for 
unintentional discrimination is inconsistent with Title VI's original 
public meaning, and even a modified version of disparate-impact 
liability would not sufficiently eliminate the Department's serious 
legal and policy concerns. The Department determines that any benefits 
from adopting alternative versions of disparate-impact liability are 
outweighed by the Department's legal and policy concerns. And even if 
possible, developing such a rule would not solve the confusion or rule-
of-law concerns expressed above, nor reduce the compliance and 
litigation costs that covered entities face. The Department believes 
that the better course is to avoid the complexities and litigation 
associated with this alternative, which ultimately would leave some 
parts of the problems unaddressed and others inadequately addressed.
    The Department also considered the potential reliance interests of 
funding recipients and others on the disparate-impact regulations. 
Sandoval, however, cast serious doubt on the regulations more than 20 
years ago. And Executive Order 14281 also directed all agencies to 
``deprioritize enforcement of all statutes and regulations to the 
extent they include disparate-impact liability,'' including 
specifically the Department's Title VI disparate-impact regulations. 90 
FR at 17538. The Department accordingly believes that any reliance 
interests should be minimal and do not outweigh the Department's legal 
and other policy concerns. Further, each of the Department's concerns, 
whether considered cumulatively or separately, outweighs any reliance 
interests.
    The Department notes that Sandoval has also led to a divergence 
between Title VI enforcement by private plaintiffs and enforcement by 
Federal departments and agencies. After Sandoval, private plaintiffs 
can enforce only Title VI's statutory prohibition on intentional 
discrimination, while the Department can continue to pursue disparate-
impact liability. Repealing the disparate-impact regulations would 
eliminate this incongruent enforcement.
    Overall, after considering the relevant issues and factors and 
weighing the relevant considerations, the Department finds that, 
regardless of the legality of the Department's disparate-impact 
regulations, the above summarized policy concerns, when viewed 
separately or cumulatively, independently justify the repeal of its 
disparate-impact regulations.

III. Regulatory Amendments

    This rule's regulatory changes address the concerns regarding the 
statutory authority supporting the scope of these regulations that the 
Supreme Court questioned in Sandoval and the other legal and policy 
concerns discussed above, harmonize the implementing regulations' scope 
with the original public meaning of Title VI, promote consistent 
enforcement among private plaintiffs and Federal departments and 
agencies, and provide much needed clarity to the courts and Federal 
funding recipients.
    For the reasons summarized above, the Department amends the 
following provisions in its Title VI implementing regulation that 
explain the particular types of ``Discrimination prohibited,'' located 
at 15 CFR 8.4.

A. Table Summarizing Amendments

    The table below indicates the exact wording changes. For each 
section indicated in the left column, the text shown in the middle 
column is removed and the text shown in the right column is added:

----------------------------------------------------------------------------------------------------------------
                 Section                                    Remove                                Add
----------------------------------------------------------------------------------------------------------------
8.4(b)(2)...............................  Full text of paragraph: ``(2) A recipient   ``[Removed and
                                           . . . or national origin.''.                Reserved]''.
8.4(b)(3)...............................  ``or effect'' from both places............
8.4(b)(6)...............................  Full text of paragraph (6), subparts (i)
                                           and (ii).
8.4(c)(1)...............................  ``(1)'' from ``(c) Employment practices.
                                           (1) Where a primary objective of the . .
                                           . .''.
                                          In revised, remove ``(c) Employment
                                           practices, ``Such recipients and other
                                           parties . . . , develop a written
                                           affirmative action plan.''.
8.4(c)(2)...............................  Full text of paragraph: ``(2) In regard to
                                           . . . of beneficiaries.''.
----------------------------------------------------------------------------------------------------------------


[[Page 20330]]

B. Section-by-Section Analysis

Section 8.4(b)(2)
    Section 8.4(b)(2) is the current regulation's general prohibition 
of unintentional disparate impact. This paragraph expands prohibited 
conduct from purposeful discrimination to Federal funding recipients 
who ``utilize criteria or methods of administration which have the 
effect of subjecting individuals to discrimination.'' Because this 
paragraph's only purpose is to extend the scope of the regulation to 
unintentional disparate-impact discrimination, this rule deletes this 
paragraph and thus amends the Department's Title VI implementing 
regulations to conform more closely to the scope of the original public 
meaning of Title VI. The rule replaces paragraph (b)(2) with a 
placeholder to maintain the numbering accuracy of previous citations 
and other references to parts of this section.
Section 8.4(b)(3)
    Section 8.4(b)(3) addresses a Federal funding recipient's or 
applicant's selection of sites or locations of facilities. The 
paragraph provides that a funding recipient may not make selections 
with the ``purpose or effect'' of discriminating, or ``with the purpose 
or effect of defeating or substantially impairing the accomplishment of 
the objectives of'' Title VI or the Department's implementing 
regulations. The paragraph's two references to ``effect'' extend its 
scope to unintentional disparate impacts. This rule deletes both ``or 
effect'' references to conform paragraph (b)(3) more closely to the 
scope of the original public meaning of Title VI.
Section 8.4(b)(6)
    Section 8.4(b)(6) deals with ``affirmative action.'' Paragraph 
(b)(6)(ii) authorizes affirmative action in programs even in the 
absence of a finding of prior discrimination in a program ``to overcome 
the effects of conditions which resulted in limiting participation by 
persons of a particular race, color or national origin.'' This 
provision points not to intentional discrimination, but rather to the 
unintentional ``effects of conditions.'' The provision consequently 
authorizes intentional racial classifications, racial preferences, and 
other race-based actions without the supporting compelling interest and 
narrow tailoring that the Equal Protection Clause demands. This section 
has long conflicted with the Equal Protection Clause.
    Paragraph (b)(6)(i) requires that a recipient ``take affirmative 
action to overcome the effects of prior discrimination'' if in 
``administering a program'' the ``recipient has previously 
discriminated.'' This provision goes well beyond the Equal Protection 
Clause, which permits in limited circumstances, but does not mandate, a 
government to take narrowly tailored action to remedy the effects of 
its identified past discrimination. See, e.g., Bakke, 438 U.S. at 307 
(Powell, J.). Moreover, even putting aside the mandatory language in 
the provision, this provision does not require sufficient narrow 
tailoring to the particular past discrimination, but rather simply 
``affirmative action to overcome the effects of prior discrimination.'' 
This provision accordingly promotes potentially illegal race 
discrimination to the extent there is a lack of narrow tailoring. 
Moreover, it problematically requires recipients to consider and use 
race preferences when the recipient may not want to consider or use 
race preferences. This is contrary to the Department's goal of 
promoting and defending a culture of nondiscrimination and is 
destructive of the public's understanding of, and faith in, the 
nation's civil rights laws. This rule, therefore, deletes paragraph 
(b)(6).
Section 8.4(c)
    Section 8.4(c) addresses prohibited discriminatory employment 
practices. Paragraph (c)(1) prohibits intentionally discriminatory 
employment practices when a primary objective of the Federal financial 
assistance is to provide employment. Paragraph (c)(2) extends the 
prohibition to employment practices of the recipient even when the 
financial assistance primary objective ``is not to provide employment'' 
if discrimination in the non-funded employment practices ``tends, on 
the ground of race, color, or national origin, to exclude persons from 
participation in, to deny them the benefits of, or to subject them to 
discrimination under the program.'' This paragraph prohibits not only 
intentional discrimination but also conduct that ``tends'' to have a 
discriminatory effect on a program without the primary objective of 
providing employment. Moreover, paragraph (c)(2)'s extension to 
employment practices where the Federal funding's primary objective is 
not to provide employment conflicts with the statutory limitation found 
in 42 U.S.C. 2000d-3. Section 2000d-3 states, ``[n]othing contained in 
[Title VI] shall be construed to authorize action under [Title VI] by 
any department or agency with respect to any employment practice of any 
employer, employment agency, or labor organization except where a 
primary objective of the Federal financial assistance is to provide 
employment.'' Id.; see also Johnson v. Transp. Agency, Santa Clara 
Cnty., 480 U.S. 616, 628 n.6 (1987) (citing the statutory limitation 
and noting Congress's intent that Title VI not ``impinge'' on Title 
VII, which prohibits discriminatory employment practices). The rule 
deletes paragraph (c)(2) so that the regulation more closely adheres to 
the original public meaning of Title VI. This rule amends the current 
text of paragraph (c)(1) to make a conforming edit to remove 
affirmative action requirements in accordance with the reasoning of the 
DOJ final rule and to implement a technical edit to reflect the removal 
of paragraph (c)(2).

C. Severability

    The Department's position is that each of these amendments serves a 
vital and related but distinct purpose. The Department also confirms 
that each of the amendments is intended to operate independently of 
each other and that the potential invalidity of one amendment should 
not affect the other amendments. The Department would adopt any of the 
amendments independently of the invalidity of a separate amendment.

IV. Classification

A. Administrative Procedure Act

    Pursuant to 5 U.S.C. 553(a)(2), the provisions of the 
Administrative Procedure Act requiring notice of proposed rulemaking 
and the opportunity for public participation are inapplicable to this 
rule because it relates to ``agency management or personnel or to 
public property, loans, grants, benefits, or contracts.''
    Title VI concerns non-discrimination conditions on the receipt of 
Federal financial assistance, and more particularly to the receipt of 
Federal ``[g]rants and loans,'' ``property,'' ``personnel'' and ``[a]ny 
Federal agreement, arrangement, or other contract which has as one of 
its purposes the provision of assistance.'' 15 CFR 8.3(f); see also 15 
CFR 8.5 (requiring funding recipient sign contractual assurance of 
compliance with Title VI); Cummings v. Premier Rehab Keller, P.L.L.C., 
596 U.S. 212, 217-18 (2022) (observing that Congress enacted Title VI 
``[p]ursuant to its authority to `fix the terms on which it shall 
disburse federal money' '' (internal citation omitted)). Cf. Education 
Programs or Activities Receiving or Benefitting from Federal Financial

[[Page 20331]]

Assistance, 82 FR 46655, 46655 (Oct. 6, 2017) (invoking the section 
553(a)(2) exception to amend Title IX regulations to ``promote 
consistency in the enforcement of Title IX for [the Department of 
Agriculture] financial assistance recipients''); Preserving Community 
and Neighborhood Choice, 85 FR 47899 (Aug. 7, 2020) (invoking the 
exception to repeal Housing and Urban Development rule regarding 
Federal grantees); Participation by Minority Business Enterprise in 
Department of Transportation Programs, 53 FR 18285 (May 23, 1988) 
(invoking the exception to expand coverage of Department of 
Transportation regulation regarding Federal Aviation Administration's 
airport financial assistance program); Nondiscrimination on the Basis 
of Handicap in Federally Assisted Programs--Suspension of Guidelines 
with Respect to Mass Transportation, 46 FR 40687 (Aug. 11, 1981) 
(invoking the exception to suspend Department of Justice guidelines 
regarding prohibiting disability discrimination in transportation 
programs and activities receiving Federal financial assistance).
    Indeed, invoking 5 U.S.C. 553(a)(2) is consistent with the Office 
for Management and Budget's (OMB) definition for ``Federal financial 
assistance'' under 2 CFR 200.1, which defines ``Federal financial 
assistance'' with the same categories as the Administrative Procedure 
Act's exception for rules ``relating to agency management or personnel 
or to public property, loans, grants, benefits, or contracts,'' 5 
U.S.C. 553(a)(2). With potentially limited exceptions not applicable to 
the Department, all the forms of Federal financial assistance set forth 
under 2 CFR 200.1 that the Department administers would fall under the 
``public property, loans, grants, benefits, or contracts'' exception.
    Thus, in accordance with the reasoning of the DOJ final rule, the 
Department issues this final rule without prior public notice and 
comment or a delayed effective date under 5 U.S.C. 553(a)(2).

B. Executive Orders 12866 and 13563 (Regulatory Review)

    This rulemaking is a ``significant regulatory action'' under 
section 3(f) of Executive Order 12866, 58 FR 51735, 51738 (Sep. 30, 
1993). Accordingly, this rule has been submitted to the Office of 
Management and Budget (OMB) for review.
    This regulation has been drafted and reviewed in accordance with 
Executive Order 12866 section 1(b), id. at 51735, and in accordance 
with Executive Order 13563 section 1(b), 76 FR 3821, 3821 (Jan. 18, 
2011), which supplements and reaffirms the principles of Executive 
Order 12866. These Executive Orders direct agencies to assess all costs 
and benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits. 
58 FR at 51735; 76 FR at 3821. Executive Order 13563 also recognizes 
that some benefits and costs are difficult to quantify and provides 
that, where appropriate and permitted by law, agencies may consider and 
discuss qualitatively values that are difficult or impossible to 
quantify. Id.
    As explained in the preamble, the regulatory modifications this 
rule makes are necessary to conform Department regulations to Executive 
Order 14281, address serious legal concerns regarding the Department's 
Title VI regulation that the Supreme Court raised in Sandoval, 
harmonize the implementing regulation's scope with the scope of conduct 
that Congress intended Title VI to prohibit, promote consistency in 
enforcement among private plaintiffs and Federal departments and 
agencies, provide much needed clarity to courts and Federal funding 
recipients and beneficiaries regarding the scope of the Department's 
Title VI regulations, and implement the Department's general policy of 
minimizing unnecessary attention to individuals' racial and ethnic 
background(s).
    Per USASpending data, the Department issued over 8,000 separate new 
financial assistance awards and obligated over $63 billion over the 
past four fiscal years (FYs 22, 23, 24, and 25). In FY2023 alone, the 
Department issued over 2,000 separate new financial assistance awards 
and obligated over $5.7 billion. The Department's Title VI-related 
active investigations regarding these funds and their recipients were 
traditionally coordinated through and conducted with other federal 
agencies, including the DOJ, due to the Department's External Civil 
Rights program being in its infancy and not having dedicated staff 
until recently. As a result, the Department does not have information 
about active investigations during that timeframe. Additionally, the 
Department does not track which of its investigations and compliance 
reviews involve solely allegations of disparate-impact discrimination. 
For enforcement actions that relate to both intentional discrimination 
and conduct having an unintentional disparate impact, the Department 
does not track and cannot reliably quantify the costs attributable to 
the varying disparate-impact portions of enforcement actions. That the 
existence of a disparate impact is sometimes a factor that is 
considered in determining whether discrimination is intentional further 
impedes monetizing costs and benefits. Therefore, the overall cost 
effect on the Department is difficult to quantify. This deregulatory 
action should decrease the Department's enforcement costs, however. It 
will also have the benefit, albeit difficult to quantify, of bringing 
the Department's regulations in line with the law. The Department is 
also unable to quantify how funding recipients will respond to the 
regulatory changes, but the deregulatory action should result in 
greater flexibility and lower compliance costs.
    Although funding recipients may receive additional Federal funding 
from sources other than the Department, the Department does not 
envision that this rule will appreciably increase administrative costs 
or compliance costs for funding recipients who must also adhere to the 
regulations of another department or agency. This deregulatory action 
does not create any new obligations for funding recipients. On the 
contrary, by eliminating disparate-impact liability from the 
regulation, it eliminates a source of regulatory confusion, narrows the 
conduct prohibited, and thus lessens the costs of compliance and 
potential liability. Moreover, recipients who receive funds for the 
same program or activity from more than one Federal entity already 
enter into separate contractual assurances with each funding entity; 
such assurances already impose varying requirements that each Federal 
funding source deems necessary.
    Based on the analysis of the practical qualitative costs and 
benefits noted above, the Department believes that this rule is 
consistent with the principles of Executive Orders 12866 and 13563, 
including the requirements that, to the extent permitted by law, the 
Department adopt a regulation only upon a reasoned determination that 
its benefits justify its costs and choose a regulatory approach that 
maximizes net benefits. See 58 FR at 51735; 76 FR at 3821.

C. Executive Order 14192 (Unleashing Prosperity Through Deregulation)

    Executive Order 14192 requires an agency, unless prohibited by law, 
to identify at least 10 existing regulations to be repealed when the 
agency publicly proposes for notice and comment or otherwise 
promulgates a new regulation. 90 FR 9065, 9065 (Jan. 31, 2025). In 
furtherance of this requirement, section 3(c) of the Order requires 
that ``any new incremental costs associated with new regulations shall, 
to the extent permitted

[[Page 20332]]

by law, be offset by the elimination of existing costs associated with 
at least 10 prior regulations.'' The Department expects this rule to be 
a deregulatory action under Executive Order 14192.

D. Executive Order 13132 (Federalism)

    This rule does not contain policies having federalism implications 
as the term is defined in Executive Order 13132. This rule will not 
have a substantial, direct effect on the relationship between the 
national government and the states, on distribution of power and 
responsibilities among various levels of government, or on states' 
policymaking discretion. States that choose to receive Federal 
financial assistance from the Department do so voluntarily and agree to 
comply with relevant statutory requirements as a condition of receiving 
such funding. This rule does not subject states or any other funding 
recipients or beneficiaries to new obligations. This rule amends and 
clarifies existing regulations that are required by statute. Therefore, 
in accordance with section 6 of Executive Order 13132, 64 FR 43255, 
43257-58 (Aug. 4, 1999), the Department has determined that these 
amendments do not have sufficient Federalism implications to warrant 
the preparation of a federalism summary impact statement.

E. Regulatory Flexibility Act

    Because a notice of proposed rulemaking and an opportunity for 
public participation are not required, see 5 U.S.C. 553(a)(2), the 
analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 
et seq.) do not apply. See Or. Trollers Ass'n v. Gutierrez, 452 F.3d 
1104, 1123-24 (9th Cir. 2006) (noting that the RFA does not apply when 
an agency validly invokes an exception to the public comment 
requirements of 5 U.S.C. 553). Further, the Department, in accordance 
with 5 U.S.C. 605(b), has reviewed these regulations and certifies that 
the rule's changes will not have a significant economic impact on a 
substantial number of small entities, in large part because these 
regulatory changes do not impose any new substantive obligations on 
Federal funding recipients. The rule amends and clarifies existing 
regulations that are required by Title VI. The rule merely brings the 
Department into compliance with the Equal Protection Clause and 
harmonizes the scope of its regulations to conform with the scope of 
Title VI, which does not prohibit conduct having an unintentional 
disparate impact. All Federal funding recipients have been bound by the 
existing standards that will remain in place after this rule since 
their initial promulgation. Accordingly, no regulatory flexibility 
analysis is required, and none has been prepared.

F. Executive Order 12250

    Pursuant to Executive Order 12250, the DOJ has the responsibility 
to ``review . . . proposed rules . . . of the Executive agencies'' 
implementing nondiscrimination statutes such as Title VI ``in order to 
identify those which are inadequate, unclear or unnecessarily 
inconsistent.'' Additionally, Executive Order 12250 delegated the 
President's responsibility to approve Title VI regulations to the 
Attorney General. See 42 U.S.C. 2000d-1. The DOJ has reviewed and 
approved this rule.

G. Unfunded Mandates Reform Act of 1993

    The Unfunded Mandates Reform Act of 1995 (UMRA), 15 U.S.C. 1532, 
requires agencies to prepare several analytic statements before 
proposing any rule that may result in annual expenditures of $100 
million by state, local, tribal governments, or the private sector. 
Section 4(2) of the UMRA, however, excludes from the Act's coverage any 
proposed or final Federal regulation that ``establishes or enforces any 
statutory rights that prohibit discrimination on the basis of race, 
color, religion, sex, national origin, age, handicap, or disability.'' 
Accordingly, this rulemaking is not subject to the provisions of the 
UMRA.

H. Congressional Review Act

    This rule is not a ``major rule'' as defined by the Congressional 
Review Act, 5 U.S.C. 804(2). This rule will not result in an annual 
effect on the economy of $100 million or more; a major increase in 
costs or prices; or significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
companies based in the United States to compete with foreign-based 
companies in domestic and export markets. The rule merely narrows the 
scope of the Department's Title VI regulations to conform them to the 
scope of Title VI and the Equal Protection Clause. Doing so does not 
impose any new obligations on any recipients of Federal funding.

I. Paperwork Reduction Act

    This rule will not impose additional reporting or recordkeeping 
requirements under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501, 
et seq.

List of Subjects in 15 CFR Part 8

    Administrative practice and procedure, Civil rights, Equal 
employment opportunity, Government contracts, Grant programs, Grants 
administration.

    Dated: April 13, 2026.
Paul Dabbar,
Deputy Secretary of Commerce.

    Accordingly, for the reasons set forth above, part 8 of title 15 of 
the Code of Federal Regulations is amended as follows:

PART 8--NONDISCRIMINATION IN FEDERALLY ASSISTED PROGRAMS OF THE 
DEPARTMENT OF COMMERCE--EFFECTUATION OF TITLE VI OF THE CIVIL 
RIGHTS ACT OF 1964

0
1. The authority citation for part 8 continues to read as follows:

    Authority: Sec. 602, Civil Rights Act of 1964 (42 U.S.C. 2000d-
1).


0
2. Amend Sec.  8.4 by revising paragraphs (b) and (c) to read as 
follows:


Sec.  8.4  Discrimination prohibited.

* * * * *
    (b) Specific discriminatory acts prohibited. (1) A recipient of 
Federal financial assistance, or other party subject to this part, 
shall not participate, directly or through contractual or other 
arrangements, in any act or course of conduct which, on the ground of 
race, color, or national origin:
    (i) Denies to a person any service, financial aid, or other benefit 
provided under the program;
    (ii) Provides any service, financial aid, or other benefit, to a 
person which is different, or is provided in a different manner, from 
that provided to others under the program;
    (iii) Subjects a person to segregation or separate or other 
discriminatory treatment in any matter related to his receipt (or 
nonreceipt) of any such service, financial aid, property, or other 
benefit under the program.
    (iv) Restricts a person in any way in the enjoyment of services, 
facilities, or any other advantage, privilege, property, or benefit 
provided to others under the programs;
    (v) Treats a person differently from others in determining whether 
he satisfies any admission, enrollment, quota, eligibility, membership, 
or other requirement or condition which persons must meet in order to 
be provided any service, financial aid, or other benefit provided under 
the program;
    (vi) Denies a person an opportunity to participate in the program 
through the

[[Page 20333]]

provision of property or services or otherwise, or affords him an 
opportunity to do so which is different from that afforded others under 
the program (including the opportunity to participate in the program as 
an employee but only to the extent set forth in paragraph (c) of this 
section);
    (vii) Denies a person the same opportunity or consideration given 
others to be selected or retained or otherwise to participate as a 
contractor, subcontractor, or subgrantee;
    (viii) Denies a person the opportunity to participate as a member 
of a planning or advisory body which is an integral part of the 
program.
    (2) [Reserved]
    (3) In determining the site or location of facilities, a recipient 
or other party subject to this part may not make selections with the 
purpose of excluding persons from, denying them the benefits of, or 
subjecting them to discrimination under any program to which this part 
applies, on the grounds of race, color or national origin; or with the 
purpose of defeating or substantially impairing the accomplishment of 
the objectives of the Act or this part.
    (4) As used in this section, the services, financial aid, or other 
benefits provided under a program receiving Federal financial 
assistance shall be deemed to include any service, financial aid, or 
other benefit provided or made available in or through or utilizing a 
facility provided with the aid of Federal financial assistance.
    (5) The enumeration of specific forms of prohibited discrimination 
in this paragraph and paragraph (c) of this section does not limit the 
generality of the prohibition in paragraph (a) of this section.
    (c) Employment practices. Where a primary objective of the Federal 
financial assistance to a program to which this part applies is to 
provide employment, a recipient or other party subject to this part 
shall not, directly or through contractual or other arrangements, 
subject a person to discrimination on the ground of race, color, or 
national origin in its employment practices under such program 
(including recruitment or recruitment advertising, hiring, firing, 
upgrading, promotion, demotion, transfer, layoff, termination, rates of 
pay or other forms of compensation or benefits, selection for training 
or apprenticeship, use of facilities, and treatment of employees). The 
requirements applicable to construction employment under any such 
program shall be in addition to those specified in or pursuant to Part 
III of Executive Order 11246 or any Executive order which supersedes 
it. Federal financial assistance to programs under laws funded or 
administered by the Department that has as a primary objective the 
providing of employment include those set forth in appendix A II of 
this part.

[FR Doc. 2026-07477 Filed 4-15-26; 8:45 am]
BILLING CODE 3510-BP-P