SUPPLEMENTARY INFORMATION:

I. Executive Summary

Prior to January 21, 2025, the U.S. Department of Labor (the Department) administered and enforced Executive Order (E.O.) 11246, as amended. Issued in 1965, and amended several times in the intervening years, E.O. 11246, and its implementing regulations at 41 CFR part 60-1 et seq., prohibited covered Federal contractors and subcontractors ^[1] from discriminating against employees and applicants because of race, color, religion, sex, sexual orientation, gender identity, national origin, or because they inquired about, discussed, or disclosed their compensation or that of others, subject to certain limitations. Contractors were also required to take certain affirmative actions to promote equal employment opportunity in their workplaces, as specified in 41 CFR part 60-2 and 41 CFR part 60-4.

On January 21, 2025, E.O. 14173 revoked E.O. 11246. Accordingly, this final rule rescinds the regulations implementing E.O. 11246 and modifies the administrative enforcement proceeding procedures at 41 CFR part 60-30 to remove the E.O. 11246 components. The Department also determined that significant portions of the E.O. 11246 regulatory framework are legally vulnerable because they are inconsistent with constitutional principles, civil rights law, and statutory authority.

II. Background

A. E.O. 11246 and Development of Implementing Regulations

Issued in 1965, E.O. 11246 required Federal contracts to include an “Equal Opportunity Clause” barring discrimination and requiring affirmative action in employment based on race, creed, color, and national origin. 30 FR 12319 (Sept. 28, 1965). The Order has been amended in the intervening years: to add sex to contractors' nondiscrimination and affirmative action obligations, 32 FR 14303 (Oct. 17, 1967); to exempt certain religious employers with respect to religious nondiscrimination obligations, 67 FR 77141 (Dec. 16, 2002); to prohibit contractors from retaliating against employees who inquire about, disclose, or discuss compensation, 79 FR 20749 (Apr. 11, 2014); and to add sexual orientation and gender identity to contractors' nondiscrimination obligations, 79 FR 42971 (July 23, 2014).

Executive Order 11246 charged the Secretary of Labor with enforcing these nondiscrimination and affirmative action obligations and set forth specific sanctions and penalties.^[2] With respect to noncompliant contractors under E.O. 11246, the Secretary could publish the names of such contractors, cancel or suspend contracts, or debar them.^[3] Executive Order 11246 also authorized the Secretary of Labor to recommend that the Department of Justice (DOJ) or the Equal Employment Opportunity Commission (EEOC) bring appropriate civil and criminal cases in Federal court.^[4] In 1965, the Department created the Office of Federal Contract Compliance to discharge responsibilities assigned to the Secretary of Labor under E.O. 11246.^[5] The entity known as the Office of Federal Contract Compliance later became the Office of Federal Contract Compliance Programs (OFCCP). OFCCP promulgated its first permanent implementing regulations in 1968. 33 FR 7804 (May 28, 1968). Those regulations have since been amended and expanded through successive rulemakings. The following subsection describes the current regulatory provisions implementing E.O. 11246 and the obligations they impose on contractors.

B. Overview of Current Regulations

1. Affirmative Action Provisions

The affirmative action requirements for nonconstruction contractors are found at 41 CFR part 60-2. The Department first codified these regulations in February 1970. See35 FR 2586 (Feb. 5, 1970). As amended in 2000, by 65 FR 68042 (Nov. 13, 2000), these regulations prescribe the contents of nonconstruction contractors' affirmative action programs (AAPs) and standards and procedures for evaluating the compliance of those programs. 41 CFR 60-2.1(a).

Specifically, nonconstruction contractors with 50 or more employees and a contract of at least $50,000 must develop and maintain a written AAP for each of their establishments. 41 CFR 60-2.1(b). The $50,000 threshold was promulgated in 1968 and has never been updated for inflation.^[6] Any contractor that fails to develop and maintain a written AAP for each of its establishments violates E.O. 11246 and can be subject to penalties and sanctions. 41 CFR 60-2.2. These regulations also specify the purpose and contents of AAPs. 41 CFR 60-2.10. Nonconstruction contractors must evaluate the racial, ethnic, and sex composition of their workforce and compare it against the relevant labor market and internal availability. 41 CFR 60-2.10(a)(1), 60-2.14, and 60-2.15. If the percentage of minorities or women employed in a particular job group is less than expected, “the contractor's ( printed page 54445) AAP includes specific practical steps designed to address this underutilization.” Id. The regulations likewise mandate that, when the percentage of minorities or women employed in a particular job group is less than would reasonably be expected given their availability percentage in that particular job group, the contractor must establish “placement goals” that serve as objectives or targets that contractors must use to address disparities. 41 CFR 60-2.15(b). A placement goal must be “at least equal to the availability figure derived for women or minorities, as appropriate, for th[e] job group.” 41 CFR 60-2.16(c). Contractors effectively must affirmatively take action with the aim of achieving a representation of minorities and women in their workforce that reflects the estimated availability of minorities and women. 41 CFR 60-2.12-2.15. There is no corresponding requirement to address the “underutilization” of other groups.

The regulations set forth in 41 CFR 60-2.12 through 41 CFR 60-2.15 allow contractors to treat minorities in the aggregate, meaning the question is not whether a particular group is underutilized but whether minorities as a whole are underutilized. Likewise, a contractor may generally set placement goals for minorities as a whole so long as there are no substantial disparities in the utilization of certain minority groups. 41 CFR 60-2.16(d).

The affirmative action requirements for construction contractors are found at 41 CFR part 60-4. This part applies to all contractors, subcontractors, contracting agencies, and applicants, as defined in 41 CFR 60-1.3, that are party to or seek to enter Federal and federally assisted construction contracts in excess of $10,000, as well as certain nonconstruction contractors awarding construction contracts. The $10,000 threshold was promulgated in 1978 and has never been updated for inflation.^[7] Nonconstruction contractors and subcontractors are required to comply with these requirements if, as a part of their Federal contract or subcontract, construction work is necessary in whole or in part to the performance of a nonconstruction contract or subcontract. See41 CFR 60-4.1. Part 60-4 defines coverage, specifies clauses to be included in contracts, provides a procedure to ensure compliance by covered contractors, and specifies certain recordkeeping and reporting requirements.

Instead of “placement goals” that apply to nonconstruction contractors, the Department developed “participation goals” for females and minorities that construction contractors must use as affirmative action benchmarks.^[8] For females, the participation goal is set to 6.9% of the total hours worked by the contractor's construction workforce in each trade. For minorities, there are participation goals for each geographic area in the United States. These goals apply to minority groups in the aggregate and include those groups enumerated in the definition of “minority” at 41 CFR 60-4.3(a)(1)(d).^[9] Covered contractors are required to apply the goals to each construction trade in their workforce in the relevant geographic area. Section 60-4.6 outlines participation goals and timetables for minority and female utilization on construction projects. The participation goals and related requirements apply to all covered contractors, without regard to their utilization of females or minorities.^[10] The goals also apply to all of the contractor's construction work performed in the covered geographic area, whether or not it is Federal or federally assisted. Unlike placement goals applicable to nonconstruction contractors, there is no regulatory language forbidding government-set participation goals from being treated as quotas. Compare41 CFR 60-4.3 with41 CFR 60-2.16. The regulations nonetheless prohibit using “the goals and timetables or affirmative action standards to discriminate against any person because of race, color, religion, sex, sexual orientation, gender identity, or national origin.” 41 CFR 60-4.3(a)(10).

Section 60-4.2 requires all contracting officers and applicants for construction contracts to include a “Notice of Requirement for Affirmative Action to Ensure Equal Employment Opportunity (Executive Order 11246)” in solicitations for offers and bids on all Federal and federally assisted construction contracts or subcontracts. It further requires covered nonconstruction contractors to include this notice in all construction agreements that are necessary in whole or in part to the performance of the covered nonconstruction contract. The notice includes information on minority and female participation goals applicable to the contractor's workforce. Section 60-4.2 also provides that contracting officers, applicants for construction contracts, and nonconstruction contractors must notify the Director of OFCCP in writing within 10 working days of the award of a covered contract in excess of $10,000.

Section 60-4.3 further requires these entities to incorporate the “Standard Federal Equal Employment Opportunity Construction Contract Specifications (Executive Order 11246)” set forth in 41 CFR 60-4.3 into all nonexempt Federal contracts and subcontracts. These standards describe the female and minority participation goal requirements and outline specific actions covered contractors must take to ensure equal employment opportunity in their work sites. For example, contractors must maintain a working environment free of harassment, intimidation, and coercion at all sites and must establish and maintain a current list of minority and female recruitment sources. See41 CFR 60-4.3(a)(7)(a) and (b).

2. Nondiscrimination Provisions

Part 60-1 describes various obligations of contractors pursuant to E.O. 11246. One key provision is 41 CFR 60-1.4, which describes the equal opportunity clause that must be included in government contracts. This section includes the requirement that contractors state in all solicitations or advertisements for employment that applicants will receive consideration without regard to one or more of the protected bases and that contractors notify labor organizations of their obligations under E.O. 11246.

Contractors who meet the requirements set forth in 41 CFR 60-1.7 must file an annual Employer Information Report (EEO-1 Report) with the EEOC. In this report, covered contractors include information on their workforce demographics, including data by job category, sex, race, and ethnicity.^[11]

( printed page 54446)

Section 60-1.10 requires the contractor to notify the Department of State and the Director of OFCCP when an employee or potential employee is denied a visa of entry to a country in which or with which it is doing business and it believes the denial was due to one, or more, of the protected bases covered by E.O. 11246.

Section 60-1.12 outlines the record retention requirements that apply to covered contractors under E.O. 11246. These regulations require contractors to preserve any personnel or employment record made or kept for a period of not less than two years from the date of the making of the record or the personnel action involved, whichever occurs later. However, if the contractor has fewer than 150 employees or does not have a contract of at least $150,000, the record retention period is one year from the date of the making of the record or the personnel action involved, whichever occurs later. This section also provides that the contractor must be able to identify the gender, race and ethnicity of each employee for any record the contractor maintains. Where possible, the contractor must also identify the gender, race, and ethnicity of each applicant or internet Applicant, as defined at 41 CFR 60-1.3.

Section 60-1.20 outlines the investigative methods the Department uses to evaluate a contractor's compliance with the E.O. 11246 regulations. A compliance evaluation may consist of one or any combination of the investigative procedures listed in the regulations, i.e., a compliance review, an off-site review of records, a compliance check, and/or a focused review. This section also provides that if a contractor fails to submit an AAP and the supporting documents within 30 calendar days of the Department's request, the Department may initiate enforcement procedures. Section 60-1.40 requires the development and maintenance of an AAP under E.O. 11246. This section requires each contractor with 50 or more employees and a contract of $50,000 or more to develop an annual AAP for each of their establishments. Pursuant to these regulations, contractors must undertake the specific equal employment opportunity efforts set forth in 41 CFR part 60-2 (such as analyses of the contractor's employment processes) and document these efforts in a written AAP.

Part 60-20 sets forth the types of sex discrimination prohibited under E.O. 11246. This part interprets the Order's prohibition on discrimination “because of sex” to bar both disparate treatment and facially neutral employment practices that have a disparate impact on the basis of sex unless justified by business necessity. It addresses a broad range of employment practices, including recruitment, hiring, promotion, compensation, fringe benefits, training, layoffs, and terminations. The regulations specifically address sex-based distinctions related to family status; sex stereotypes; sexual orientation and gender identity; and pregnancy, childbirth, and related medical conditions.

3. Administrative Proceedings

The regulations at 41 CFR 60-1.26 were first promulgated in 1977 and authorize OFCCP to initiate administrative proceedings within the Department if OFCCP finds that the contractor violated E.O. 11246 or its regulatory requirements. 41 CFR 60-1.26(a)(1)(i)-(ii) and (b)(1). The proceedings are conducted under the supervision of the Solicitor of Labor and are adjudicated by a Department of Labor Administrative Law Judge (ALJ) and the Administrative Review Board. 41 CFR 60-1.26(a)(1)(i)-(ii) and (b) and 41 CFR 60-30.27-30.30. OFCCP is specifically authorized to seek back pay and other make whole relief for victims of discrimination. 41 CFR 60-1.26(a)(2). And it may refer matters to the DOJ for judicial proceedings. 41 CFR 60-1.26(c). Monetary relief is not referenced in the “Sanctions and Penalties” section of E.O. 11246, which authorizes the Secretary to publish a list of noncompliant contractors; cancel, suspend, or terminate contracts; and debar such contractors. E.O. 11246, sec. 209. The Order also authorizes the Secretary to recommend to the DOJ or the EEOC that appropriate proceedings be instituted under Title VII of the Civil Rights Act of 1964, which would allow these agencies to seek monetary damages in Federal court for certain violations. Id.

Administrative proceedings brought under 41 CFR 60-1.26 are governed by the procedural regulations at 41 CFR part 60-30. In such proceedings, a Department of Labor ALJ resolves motions, receives evidence and testimony, and holds oral arguments. 41 CFR 60-30.8-30.11 and 60-30.14. At the end of the proceedings, the ALJ “recommend[s] findings, conclusions, and a decision” as to whether the contractor violated the Equal Opportunity Clause and, if so, what sanctions to impose. 41 CFR 60-30.27. Either party may file exceptions to the ALJ's recommended decision and order with the Administrative Review Board, which issues a final agency decision based on the record created before the ALJ. 41 CFR 60-30.27-30.30. Part 60-30 also governs administrative proceedings authorized under Section 503 of the Rehabilitation Act of 1973, as amended (Section 503) and the Vietnam Era Veterans' Readjustment Assistance Act of 1974, as amended (VEVRAA).

4. Other Requirements

The Uniform Guidelines on Employee Selection Procedures (UGESP) are located at 41 CFR part 60-3 and 29 CFR part 1607. UGESP applies to “tests and other selection procedures which are used as a basis for any employment decision.” 29 CFR 1607.2(B). UGESP was jointly adopted by the Department of Labor, the EEOC, the Civil Service Commission, and DOJ. 29 CFR 1607.1. When a test or other selection procedure is determined to have an adverse impact on minorities or women, UGESP requires the contractor to validate the test or procedure and to retain the validation documentation. Under UGESP, each contractor must maintain records and other information for each job sufficient to permit analyses of the impact of its selection procedures on the employment opportunities of people based on race, sex, or ethnic group. Using this information, the contractor and the Department identify and evaluate the contractor's selection procedures for adverse impact. As part of the Department's proposed rescission of the E.O. 11246 regulations, the Department proposed to rescind the 41 CFR part 60-3 regulations, solely to the extent that they were codified in the E.O. 11246 regulations. This action does not impact other agencies' interpretation and application of UGESP, or the existence of UGESP more broadly.

Part 60-40 describes the rules and restrictions the agency has in place for providing public access to its records. Part 60-50 sets forth the Department's interpretations and guidelines for enforcing its religion and national origin discrimination protections.

Lastly, 41 CFR part 60-999 provides information on Office of Management and Budget (OMB) approved information collections relevant to the regulations. The information in this part is outdated and refers to regulatory provisions that the Department is rescinding through this rulemaking.

C. Notice of Proposed Rulemaking

On January 21, 2025, President Trump issued E.O. 14173, “Ending Illegal Discrimination and Restoring Merit ( printed page 54447) Based Opportunity,” ^[12] which, among other things, revoked E.O. 11246 in its entirety and directed OFCCP within the Department to immediately cease each of the following: promoting “diversity”; holding Federal contractors and subcontractors responsible for taking “affirmative action”; and allowing or encouraging Federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.^[13] On April 1, 2025, President Trump issued a memorandum directing agencies to repeal regulations that conflict with recent Supreme Court precedents, including West Virginia v. EPA, 597 U.S. 697 (2022) and Students for Fair Admissions v. President & Fellows of Harvard Coll., 600 U.S. 181 (2023) ( SFFA ).^[14]

Accordingly, on July 1, 2025, the Department published a Notice of Proposed Rulemaking (NPRM) that proposed rescinding the E.O. 11246 implementing regulations at 41 CFR parts 60-1, 60-2, 60-3, 60-4, 60-20, 60-40, and 60-50, all promulgated under the authority of E.O. 11246. See90 FR 28472 (July 1, 2025).

The NPRM also proposed modifying the administrative enforcement proceeding procedures at 41 CFR part 60-30 to remove the E.O. 11246 components. As these procedures also apply to VEVRAA and Section 503, the Department pursued separate rulemakings to incorporate these procedures directly into the VEVRAA and Section 503 implementing regulations. See90 FR 28485 (July 1, 2025); 90 FR 28494 (July 1, 2025).^[15] The Department also proposed rescinding the 41 CFR part 60-999 regulations, which include outdated information on OMB-approved information collections related to the regulations.

In addition to E.O. 14173's revocation of E.O. 11246, the Department identified several other reasons for rescinding the regulations, including eliminating legal vulnerabilities related to the affirmative action requirements, improving the efficiency of the Federal contracting process, decreasing employer burden, and providing regulatory certainty to contractors and other stakeholders by aligning the regulations with recent executive orders impacting the Department's enforcement. See90 FR 28472, 28474-28477 (July 1, 2025).

D. Executive Order 14398

On March 26, 2026, President Trump issued E.O. 14398, “Addressing DEI Discrimination by Federal Contractors.” 91 FR 16147 (Mar. 31, 2026). The Order requires Federal contractors to include a clause in their contracts affirming that they will not engage in “disparate treatment based on race or ethnicity in the recruitment, employment . . . , contracting . . . , program participation, or allocation or deployment of an entity's resources” in connection with the performance of work under the contract, and will furnish records necessary to verify compliance with this nondiscrimination obligation. Noncompliance may result in cancellation or suspension of the contract, and the contractor may be subject to debarment. Executive Order 14398 also directs the Federal Acquisition Regulatory Council to promulgate implementing regulations.

III. Discussion of Public Comments and Reasons for Rescission

As described above, on July 1, 2025, the Department published an NPRM in the Federal Register proposing rescission of parts 60-1, 60-2, 60-3, 60-4, 60-20, 60-40, 60-50 and 60-999, and revisions to part 60-30. 90 FR 28472 (July 1, 2025). The NPRM originally provided for a 60-day comment period, with the comment period scheduled to close on September 2, 2025. After receiving comments requesting an extension of the comment period, the Department extended the comment period until September 17, 2025.^[16] DOL received 917 public comments in response to the NPRM. Comments came from individuals and from a wide variety of organizations, including employer associations, law firms, legal organizations, policy and advocacy groups, political organizations, unions, educational and research centers, and governmental entities, among others.

Commenters addressed many topics, including the legal basis for the regulations implementing E.O. 11246, those regulations' consistency with constitutional and statutory civil rights principles, the scope of the Department's enforcement authority, and the potential effects of rescission. After considering the comments received, the Department decided to finalize the rescission of the regulations implementing E.O. 11246 and to modify the administrative enforcement proceeding procedures at 41 CFR part 60-30 to remove the E.O. 11246 components as proposed. As explained below, this determination is based on the following factors: (1) the revocation of E.O. 11246 provides a standalone and sufficient basis for rescinding regulations promulgated solely to implement that Order; (2) the affirmative action regulations conflict with the Constitution's equal protection principles and are inconsistent with Federal civil rights law, including Titles VI and VII of the Civil Rights Act of 1964; (3) significant portions of the E.O. 11246 regulatory framework—including the affirmative action requirements and the provisions authorizing administrative enforcement and monetary relief under the E.O. 11246 implementing regulations—lack statutory authorization; and (4) rescission will promote more efficient and economical Federal contracting, reduce unnecessary compliance costs, and will not result in increased discrimination. The Department anticipates that rescission will actually encourage fairer, more merit-based employment decision-making consistent with Federal civil rights law.

A. Revocation of E.O. 11246

On January 21, 2025, E.O. 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” 90 FR 8633, revoked E.O. 11246. Section 201 of E.O. 11246 delegated authority to the Secretary of Labor to adopt regulations and issue orders to carry out the purposes of that Executive Order and was the sole source of authority for the regulatory framework the Department is rescinding. Authority delegated by the President to the head of a department or agency is “revocable at any time by the President in whole or in part.” 3 U.S.C. 301. Once E.O. 11246 was revoked, the delegation of authority it contained necessarily terminated. As the NPRM explained, since the Department's regulations at 41 CFR parts 60-1, 60-2, 60-3, 60-4, 60-20, 60-40, and 60-50 were promulgated solely to implement E.O. 11246, the revocation of E.O. 11246 is an independent and sufficient reason to rescind those regulations. 90 FR 28474. As a result, OFCCP's implementing regulations no longer have operative legal force and cannot be maintained or enforced.

A commenter asserted that revocation of E.O. 11246 is not a sufficient basis for rescinding regulations promulgated under that Order. The commenter, National Nurses United (NNU), argued that Congress's recognition in 42 U.S.C. 2000e-17 that OFCCP may disapprove AAPs “gives [OFCCP's] affirmative action obligations statutory status,” and therefore those regulations cannot be ( printed page 54448) rescinded through executive action alone. As explained in greater detail in Section III(C), Congress does not confer statutory authority on agency action merely by acknowledging or referencing that action.

Further, as the Competitive Enterprise Institute (CEI) explained, “The wisdom of revoking E.O. 11246 is not at issue, however. The president has already made that decision.” Because the President revoked E.O. 11246, the Department has no authority to restore it or to implement it as if it were still in force. A labor attorney who supported E.O. 11246 agreed that “[f]ollowing the revocation of E.O. 11246, it is clearly appropriate for OFCCP to rescind those rules for which [E.O. 11246] was the sole authority and whose only purpose was to implement the executive order.”

Because the delegation of authority to the Secretary of Labor in section 201 of E.O. 11246 was duly revoked, there is, as the Ethics and Public Policy Center (EPPC) commented, “no longer any `illusion of authority' for the regulations.” The American Civil Rights (ACR) Project similarly recognized OFCCP for “undertaking the proper housekeeping of removing the Rescinded Regulations from the Code of Federal Regulations now that they are a nullity.”

The Department concludes that the revocation of E.O. 11246 alone provides an independent and sufficient ground for rescinding the regulations. Moreover, as explained in Section III(B) below, even if Congress had conferred statutory status on the affirmative action regulations in parts 60-2 and 60-4, as NNU suggests, those regulations would nonetheless be unconstitutional.

B. The Affirmative Action Regulations Are Unlawful

1. The Nature of the Affirmative Action Regulations

As explained in Section II(B) above, 41 CFR parts 60-2 and 60-4 require covered nonconstruction contractors to establish placement goals to address any underutilization— i.e., where the percentage of minorities or women employed in a job group is less than reasonably would be expected given their availability. The “central premise underlying [race- and sex-based goals] is that, absent discrimination, over time a contractor's workforce, generally, will reflect the gender, racial and ethnic profile of the labor pools from which the contractor recruits and selects.” 41 CFR 60-2.10(a)(1). If contractors do not take sufficient action to meet goals, they could be found “nonresponsible” for meeting affirmative action obligations, and further investigation and costly administrative enforcement may follow. See41 CFR 60-2.2. Construction contractors are subject to similar minority and female participation goals, the main difference being such goals are set by the Department.

In response to the NPRM, numerous commenters addressed the nature and operation of the affirmative action requirements contained in parts 60-2 and 60-4. Many commenters characterized these affirmative action requirements as governmental discrimination that seeks demographic balancing in contractors' workforces. Independent Women, along with more than a hundred commenters participating in a coordinated letter campaign, criticized OFCCP's employment goals as being effectively “quotas.” The joint comment of the Pacific Legal Foundation, Center for Equal Opportunity, and Defending Education (hereinafter collectively referred to as “PLF”) questioned whether regulations authorizing racially preferential contracting policies are even authorized by E.O. 11246. PLF's comment stated: “these regulations essentially require contractors to discriminate until they attain the government's desired demographics[.]” That comment further criticized the E.O. 11246 implementing regulations' underlying assumption that any statistical disparity in workforce composition should be corrected, agreeing with the NPRM that there are many non-discriminatory reasons why a group may be over- or underrepresented in a particular job at a particular employer. See90 FR 28472. In a joint comment, 22 state attorneys general likewise observed that the “mere fact that a disparity exists thus says very little about whether discrimination is the cause.”

The Center for Regulatory Freedom (CRF) cited 2024 data showing that the occupations of health care support, education, and office administration support are each between 70% to 85% female. Conversely, the occupations of construction or extraction, architecture, and transportation are each between 79% to 96% male. CRF added that there is no nationwide campaign to discourage women from going into construction. “Instead,” CRF wrote, “a plethora of data is readily available explaining that these sex-based disparities exist because the sexes tend to lean towards pursuing different professions than those of the opposite sex. Regardless of whether the reason for these trends is biological or environmental, the disparities that exist are not a consequence of discrimination, but of individual choices reflected on a macro scale.”

Some commenters, including NNU and Representative Robert C. Scott of Virginia, disagreed with the revocation of E.O. 11246, stressing its continuity with earlier executive orders regarding nondiscrimination in Federal contracting. But the continuity they asserted does not present a fully accurate comparison between E.O. 11246 and its predecessors. Unlike previous nondiscrimination executive orders, E.O. 11246 gave the Secretary of Labor enforcement authority over certain types of discrimination by governmental contractors. As the comment of America First Legal pointed out, as a result of regulations subsequently issued by the Secretary of Labor, E.O. 11246 “transformed the concept of affirmative action from an obligation to eliminate racial discrimination into a requirement to implement a new kind of race-conscious employment.”

Other commenters commended E.O. 11246 for protecting minorities,^[17] promoting jobs for women in construction ^[18] and, as E.O. 11246 was amended in 2016, for protecting workers from adverse action for discussing pay, thereby helping to uncover pay disparities.^[19] NNU characterized the revocation of E.O. 11246 as an attack on civil rights and equality for the working class. Nine members of the House of Representatives “encourage[d] the Department to reconsider this proposed rule and continue upholding the principles of E.O. 11246.” Rep. Scott likewise “ask[ed] the Department to withdraw this harmful proposal and restore [E.O. 11246].”

NNU disagreed that there could be non-discriminatory reasons for statistical disparities, countering that such disparities reflect “occupational segregation, an active process whereby government policies and employer practices create a concentration of a particular group in a workplace, workforce, industry.” The Department finds NNU's sweeping assertion that occupational disparities must be the product of “active” wrongdoing to be flawed. There is no reason to expect free people making free choices to distribute themselves evenly across every occupation by sex and along racial categories that “are arbitrary or undefined.” See SFFA, 600 U.S. at 216- ( printed page 54449) 17. Indeed, the Supreme Court has explained that “[i]t is completely unrealistic to assume that unlawful discrimination is the sole cause of people's failing to gravitate to jobs and employers in accord with the laws of chance.” Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 992 (1988). Treating uneven representation as presumptive proof of discriminatory design, as NNU suggests, is not serious analysis. Rather, it is a reflexive conflation of statistical disparity with unlawful discrimination, untethered from the evidentiary standards the law requires.

Other commenters defended the E.O. 11246 affirmative action regulations by denying that race- and sex-based employment goals could encourage race- or sex-based decision-making. For example, one employment attorney asserted that the Department “completely misconstrues” its race-based placement goals, explaining that they are intended only to identify and remove barriers, rather than act as race-based numeric goals. The joint comment of the National Women's Law Center and several other civil rights and worker rights organizations (hereinafter collectively referred to as “NWLC”) similarly argued that “the only requirement is to identify gaps between availability and utilization, and take steps to understand any barriers causing those gaps.” These commenters emphasized that the regulations state that goal-setting requirements may not be used to justify quotas or explicit preferences based on race or sex.

The Department acknowledges that it previously revised the regulations governing nonconstruction contractors to include an express disclaimer that placement goals do not justify quotas or discrimination. See41 CFR 60-2.16(e) and 41 CFR 60-4.3(a)(10). But the same regulations also expressly require the consideration of race and sex in employment practices through the establishment of race- and sex-based goals and the obligation to undertake efforts to meet them. In these circumstances, the Department concludes that, as a practical matter, the regulations require race- and sex-conscious employment decision-making.

Disclaimers do not alter the underlying premise of the regulations that, absent discrimination, “over time a contractor's workforce, generally, will reflect the gender, racial and ethnic profile of the labor pools from which the contractor recruits and selects,” 41 CFR 60-2.10(a)(1), which, if left unqualified, discounts “innocent causes” that may lead to disparities. Watson, 487 U.S. at 992. Nor does the disclaimer affect the structure of the regulatory framework, which requires contractors to classify employees and applicants by race and sex; to compare those classifications to external demographic benchmarks; to establish numerical goals where race or sex disparities are identified; and to implement “action-oriented programs” to address “underutilization.” See, e.g.,41 CFR 60-2.10(a)(1) (requiring nonconstruction contractors to “address [the] underutilization” of groups based on race or sex); see also41 CFR 60-4.3(a) (requiring construction contractors to consider utilization based on minority groups in AAPs). Through this regulatory scheme, “ `[a]ffirmative action' was . . . decisively transformed into a numerical concept, whether called `goals' or `quotas.' ” Thomas Sowell, “Civil Rights: Rhetoric and Reality” 41 (1984).

“The inevitable focus on statistics in disparate impact cases could put undue pressure on employers to adopt inappropriate prophylactic measures.” Watson, 487 U.S. at 992. OFCCP's reliance on statistical disparities and numerical goals have encouraged some employers to discriminate. Judge Silberman, for instance, expressed regret regarding the structure of OFCCP's affirmative action regulations, which he helped establish during his tenure as Solicitor of Labor and Undersecretary of Labor, observing that “[o]ur use of numerical standards in pursuit of equal opportunity has led ineluctably to the very quotas guaranteeing equal results that we initially wished to avoid.” “The Road to Racial Quotas,” Wall Street Journal (Aug. 11, 1977).

Although placement and participation goals are not denominated as quotas, they function as numerical targets that contractors must pursue. Contractors were at risk that OFCCP might subject them to intrusive and costly investigations and enforcement proceedings if they failed to make sufficient progress toward meeting their goals. In practical operation, as American First Legal recognized, “the existing regulatory infrastructure requires employers to take into account race and sex” when making employment decisions with the aim of correcting statistical disparities. Put another way, the regulations implementing E.O. 11246 are self-contradictory. In 2000, OFCCP added 41 CFR 60-2.16, which ostensibly prohibits quotas and prohibits discrimination based on race, sex, and other protected characteristics. Government Contractors; Affirmative Action Requirements, 60 FR 68022, 68046 (Nov. 13, 2000). Yet, the requirements that form the bulk of parts 60-2 and 60-4 actively induce employers to treat the goals as quotas and to take affirmative action that constitutes discrimination based on race and sex.

Having considered the comments, the Department concludes that the affirmative action requirements at issue extend beyond the removal of barriers to equal employment opportunity. They instead establish a framework of race- and sex-based workforce classification, demographic benchmarking, and numerical goal-setting that requires contractors to engage in sustained race-conscious analysis in employment practices.

2. Equal Protection Principles

Several commenters agreed with the Department that OFCCP's race-based affirmative action regulations raise serious constitutional equal-protection concerns and are vulnerable to legal challenge, particularly in light of the Supreme Court's recent decision in SFFA, 600 U.S. at 181. See90 FR 28474.

Citing Bolling v. Sharpe, 347 U.S. 497, 500 (1954), the state attorneys general and PLF noted that the Fifth Amendment's Due Process Clause applies the principles of equal protection to the Federal Government and argued that the regulations cannot be reconciled with those principles. The regulations, the state attorneys general asserted, require or incentivize the use of race and sex in employment decisions, use racial classifications that trigger strict scrutiny, and lack a logical endpoint. They emphasized that, like the admissions programs invalidated in SFFA, the regulations encourage race-conscious employment decision-making aimed at achieving predetermined numeric benchmarks and are not narrowly tailored to remedy specific acts of past discrimination by the entities in question against the individuals receiving the benefits of those measures. PLF and America First Legal similarly contended that the Constitution's equal-protection guarantee prohibits the Federal Government from conditioning contracting eligibility on race- or sex-based employment practices, and that SFFA reinforces the longstanding principle that government must treat individuals as individuals rather than as members of race- or sex-based classes. Independent Women and the ACR Project likewise supported rescission, asserting that race- and sex-based placement goals and related compliance mechanisms operate in practice as de facto quotas and pressure contractors to depart from merit-based hiring.

Other commenters responded that the Department misconstrued SFFA because ( printed page 54450) that decision arose in the narrow context of college admissions, not employment or Federal contracting. For example, the National Partnership for Women & Families (NPWF) asserted that “the decision in SFFA applies only to race-conscious decision-making in institutions of higher education,” and the Lawyers' Committee for Civil Rights Under Law (Lawyers' Committee) argued that SFFA “has no bearing on the affirmative action programs adopted by Federal contractors under E.O. 11246 and its implementing regulations,” which it characterized as “clearly distinguishable from the race-based admissions programs in that case.”

The Department agrees that SFFA arose in the context of college admissions, the decision rests on longstanding and enduring equal-protection principles that predate and extend well beyond the admissions context, confirming race-based governmental decision-making is presumptively invalid absent an extremely narrow justification. Indeed, the Supreme Court expressly relied on SFFA in the context of the Voting Rights Act to reiterate that “ `the Constitution almost never permits the Federal Government or a State to discriminate on the basis of race.' ” Louisiana v. Callais, 146 S. Ct. 1131, 1152 (2026) (quoting SFFA, 600 U.S. at 207). That is because “ `[d]istinctions between citizens solely because of their ancestry are by their very nature odious to a free people whose institutions are founded upon the doctrine of equality.' ” Id. at 1153 (quoting SFFA, 600 U.S. at 208). As Chief Justice Roberts explained nearly twenty years ago: “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.” Parents Involved in Cmty. Schs. v. Seattle Sch. Dist. No. 1, 551 U.S. 701, 748 (2007). In fact, the NPRM cited SFFA precisely to reaffirm those bedrock equal protection principles.

SFFA struck down race-conscious admissions policies as incompatible with “the `core purpose' of the Equal Protection Clause: `do[ing] away with all governmentally imposed discrimination based on race.' ” 600 U.S. at 206 (quoting Palmore v. Sidoti, 466 U.S. 429, 432 (1984)). See also Strauder v. West Virginia, 100 U.S. (10 Otto) 303, 310 (1879) (The Fourteenth Amendment's “aim was against discrimination because of race or color.”). That principle applies to Federal contracting no less than to higher education. Indeed, the Supreme Court has long held that racial classifications employed in Federal contracting are subject to the same equal-protection constraints. For example, in Adarand Constructors, Inc. v. Peña, 515 U.S. 200, 227 (1995), which SFFA cites as authority,^[20] the Court held that strict scrutiny applies to the Department of Transportation contracting program that employed racial or ethnic criteria.

Under the Constitution, “[g]overnment policies that classify people by race are presumptively invalid.” Vitolo v. Guzman, 999 F.3d 353, 360 (6th Cir. 2021) (citing U.S. Const. amend. XIV; Adarand, 515 U.S. at 234). Arguing that the Department's characterization of SFFA is inaccurate and unsupported, a coalition of ninety organizations asserted that “[t]he Court recognized that race-based action may be permissible in certain circumstances.” But those circumstances are extremely narrow: a racial classification must survive strict scrutiny, meaning it must be narrowly tailored to achieve a compelling governmental interest. SFFA, 600 U.S. at 206. Relying on SFFA, the Supreme Court in Callais explained that racial classification “triggers strict scrutiny, and [the Court's] precedents have identified `only two compelling interests' that can satisfy that standard.” 146 S. Ct. at 1152 (quoting SFFA, 600 U.S. at 207). The first is “avoiding imminent and serious risks to human safety in prisons,” id., which plainly has no application here. The second is “remediating specific, identified instances of past discrimination that violated the Constitution or a statute,” id., which also does not apply, as explained below.

Sex-based classifications likewise are “presumptively invalid” and may be sustained only if they satisfy intermediate scrutiny—they must serve an important governmental objective and are substantially related to the achievement of that objective. Vitolo, 999 F.3d at 364. For the reasons explained below, the Department concludes that the race- and sex-based affirmative action regulations in 41 CFR parts 60-2 and 60-4 are unconstitutional under these standards and therefore should be rescinded.

a. OFCCP's Race-Based Affirmative Action Regulations Are Unconstitutional

The state attorneys general, PLF, America First Legal, and other commenters argued that OFCCP's race-based affirmative action regulations constitute racial classifications that fail strict scrutiny and therefore must be rescinded. No commenter disputed that these regulations either classify individuals on the basis of race for purposes of equal-protection jurisprudence or are subject to strict scrutiny.

i. Race-Based Affirmative Action Regulations Trigger Strict Scrutiny

The Department concludes that the affirmative action regulations that require contractors to set placement goals where minority underutilization occurs and then make good faith efforts to address that underutilization create racial classifications that trigger strict scrutiny under settled equal-protection principles. Long before SFFA, courts repeatedly held that governmental policies pressuring or encouraging regulated entities to consider race in hiring, promotion, assignment, or other employment decisions constitute racial classifications attributable to the government. See, e.g., Monterey Mech. Co. v. Wilson, 125 F.3d 702, 710-13 (9th Cir. 1997); Lutheran Church-Mo. Synod v. FCC, 141 F.3d 344, 351-54 (D.C. Cir. 1998); MD/DC/DE Broadcasters Ass'n v. FCC, 236 F.3d 13, 19-20 (D.C. Cir. 2001).

Although some commenters correctly note that 41 CFR 60-2.16(e) disclaims the use of placement goals as “rigid and inflexible quotas,” that disclaimer is beside the point. The relevant inquiry is whether the regulatory scheme encourages, induces, or effectively requires employment decisions because of race. See Anderson v. Martin, 375 U.S. 399, 402 (1964). Where such pressure exists, courts treat the regulatory framework itself as a racial classification subject to strict scrutiny. Lutheran Church, 141 F.3d at 352-53; MD/DC/DE Broadcasters Ass'n, 236 F.3d at 19-20. And that is precisely what the regulatory framework does. The rules require “goals” not “quotas,” but for many regulated contractors, the two are synonymous. A quota, as the word is commonly used (particularly in sales), does not necessarily have a “rigid and inflexible” connotation. For equal protection purposes, it does not matter “whether a government hiring program imposes hard quotas, soft quotas, or goals. Any one of these techniques induces an employer to hire with an eye toward meeting the numerical target. As such, they can and surely will result in individuals being granted a preference because of their race.” Lutheran Church, 141 F.3d at 354.

The placement goal framework in part 60-2 exerts such pressure in at least two ways. First, OFCCP considers a contractor's underutilization of minorities when conducting compliance reviews of contractors. See41 CFR 60-2.16(e). If a contractor does not exhibit ( printed page 54451) underutilization, there is no predicate for finding a failure to undertake “good faith efforts” to remedy it; conversely, where underutilization is identified, the contractor's good faith efforts are subject to scrutiny and potential enforcement. In this way, the presence or absence of underutilization effectively determines exposure to liability. Since fiscal year 2020, OFCCP issued over 40 notices of violations against contractors for either failing to conduct the utilization analysis or failing to “execute action-oriented programs” to address underutilization of minorities. Contractors were subjected to these violations even where OFCCP did not allege that any underutilization was due to discrimination. The threat of enforcement based on knowledge of a contractor's underutilization creates a strong incentive to meet numerical race-based goals, thereby inducing race-based decision-making. An attorney who has represented many contractors commented, “I have observed first-hand several dozen major corporations just `hitting the numbers' by either setting hiring percentages at either their applicant flow percentages or the percentage availability they calculated in their AAP [for minorities and females].”

Courts have consistently recognized that the prospect of government enforcement exerts coercive pressure sufficient to influence regulated conduct. Lutheran Church, 141 F.3d at 353 (“No rational firm—particularly one holding a government-issued license—welcomes a government audit.”); MD/DC/DE Broadcasters Ass'n, 236 F.3d at 19-20 (“Investigation by the licensing authority is a powerful threat, almost guaranteed to induce the desired conduct.”).

Second, the regulations require contractors to undertake “good-faith efforts” and other affirmative actions to address minority underutilization. Requirements to take action to meet race-specific employment targets likewise encourage contractors to consider race and therefore trigger strict scrutiny. See Monterey Mech., 125 F.3d at 710-13.

The constitutional concerns are even more pronounced with respect to construction contractors' participation goal requirements under part 60-4. Unlike placement goals, there is no prohibition against treating participation goals as inflexible quotas in the regulatory text. To the contrary, construction contractors are expressly “expected to make substantially uniform progress in meeting . . . [their participation] goals.” 41 CFR 60-4.3(a)(4). Section 60-4.2(d)(2) further requires that hours worked by minorities and women be “substantially uniform throughout the length of the contract” and that contractors make good-faith efforts to employ minorities and women evenly across projects. These provisions directly encourage contractors to monitor and manage staffing decisions on the basis of race, even though contractors were ostensibly prohibited from “us[ing] the goals and timetables or affirmative action standards to discriminate” on that and other bases. 41 CFR 60-4.3(a)(10). These requirements operate in a context where compliance directly affects a contractor's eligibility for Federal work and exposure to enforcement action, including the potential loss of existing or future contract revenue. Such financial incentive structure can exert significant pressure on contractors to manage staffing decisions on the basis of race.

In addition, the affirmative action steps mandated by OFCCP's construction equal opportunity clause are facially race-based. The regulations require contractors to take specific preferential actions with respect to minority applicants or employees because of their race—or, here, grouping of their races as “minority” races—without imposing corresponding obligations with respect to non-minority individuals. See41 CFR 60-4.3(a)(7). As one example of mandatory preferential disparate treatment, construction contractors must annually conduct “an inventory and evaluation at least of all minority and female personnel for promotional opportunities and encourage these employees to seek or to prepare for, through appropriate training, etc., such opportunities.” 41 CFR 60-4.3(a)(7)(l). By contrast, there is no requirement to evaluate promotion opportunities for non-minority males, nor to encourage them to seek or prepare for opportunities through training. This inequality persists despite the Supreme Court's affirmation that equal protection applies “with equal force regardless of `the race of those burdened or benefited by a particular classification.' ” Miller v. Johnson, 515 U.S. 900, 904 (1995) (quoting Richmond v. J.A. Croson Co., 488 U.S. 469, 494 (1989)).

Ultimately, both the placement- and participation-goal frameworks rest on the premise that nondiscriminatory employment practices should yield workforces that approach proportional representation based on the labor pool, and that deviations from such representation warrant correction. Part 60-2 states that, absent discrimination, a contractor's workforce is expected to “reflect the gender, racial, and ethnic profile of the labor pools from which [it] recruits and selects.” 41 CFR 60-2.10(a)(1). Part 60-4 similarly defines participation goals as the percentages of hours of employment that a contractor “should reasonably be able to achieve.” 41 CFR 60-4.3(a)(4). As discussed above in section III(B)(1), there are often benign reasons for members of certain racial or ethnic groups being over- or under-represented in a particular line of work. And courts have squarely rejected the proportional representation premise as constitutionally suspect. In Lutheran Church, the D.C. Circuit explained that regulatory schemes “built on the notion that [employers] should aspire to a workforce that attains, or at least approaches, proportional representation” obligate employers “to grant some degree of preference to minorities in hiring” and, therefore, trigger strict scrutiny. 141 F.3d at 352.

ii. Race-Based Affirmative Action Regulations Fail Strict Scrutiny

OFCCP's race-based affirmative action regulations cannot survive strict scrutiny. The regulations do not serve a compelling governmental interest, and even if such an interest could be identified, they are not narrowly tailored to achieve that interest.

As the state attorneys general explained, the only potentially relevant compelling interest recognized by the Supreme Court in this context is the remediation of identified occurrences of past discrimination. See Croson, 488 U.S. at 497.^[21] Importantly, generalized assertions of societal or industry-wide discrimination are not enough; there must be specific instances of past intentional discrimination in which the Federal Government itself was an active or passive participant. Id. at 498-500; see also Vitolo, 999 F.3d at 361.

For the Department to impose a blanket requirement that all contractors nationwide address a general underutilization of minorities through race-based employment goals and other affirmative measures, the Department would need to identify concomitant discrimination—that is systematic, nationwide discrimination by all contractors nationwide against all minorities in which the Federal Government itself was an active or passive participant. See Wygant v. Jackson Bd. of Educ., 476 U.S. 267, 274 ( printed page 54452) (1986). The Department cannot meet this exacting standard. The rulemaking records underlying OFCCP's race-based placement and participation goals do not identify any discrete, contemporaneous instances of intentional discrimination by contractors, much less all contractors to which OFCCP's goals apply, in which the Federal Government participated or acquiesced .²² See Part 60-2 Affirmative Action Programs, 35 FR 2586 (Feb. 5, 1970).

Even assuming the Department could demonstrate widespread Federal governmental participation in discrimination that could be remedied with race-motivated policies, the E.O. 11246 regulations fail the narrow tailoring requirement for several reasons. First, narrow tailoring minimally requires serious, good-faith consideration of workable race-neutral alternatives. Grutter v. Bollinger, 539 U.S. 306, 339 (2003); Croson, 488 U.S. at 507. The rulemaking records underlying parts 60-2 and 60-4 reflect no assessment whatsoever of race-neutral alternatives to race-based affirmative action requirements. Second, race-conscious remedial programs must be limited in duration or subject to periodic review to ensure that they do not outlast their justification. See W. States Paving Co. v. Wash. State Dep't of Transp., 407 F.3d 983, 994 (9th Cir. 2005). None of OFCCP's race-based affirmative action requirements is limited in duration or subject to meaningful periodic review. Third, and especially problematic, the regulations apply collectively to all minority groups in the aggregate, regardless of whether a particular group was harmed by instances of discrimination or even experiences underutilization. By permitting race-conscious requirements untethered to evidence of discrimination affecting particular groups, the regulations lack the narrow tailoring required by equal-protection principles. See Rothe Dev. Corp. v. Dep't of Defense, 545 F.3d 1023, 1036 (Fed. Cir. 2008) (citing Croson, 488 U.S. at 506).

Under OFCCP's regulations, individuals of different races are treated interchangeably, as long as the races qualify as “minority” in the view of the agency. Paradoxically, even a contractor with a history of discrimination against black workers could “remedy” that discrimination in the eyes of OFCCP by hiring individuals of other minority races. Regardless, the interchangeability of individuals of different minority races under the regulations significantly broadens—not narrows—their scope. Ultimately, that breadth as well as the permanence of the affirmative action regulations related to E.O. 11246—as noted above, they apply across all industries, to all minority groups, and without temporal limitation—preclude a finding of narrow tailoring.

The overbreadth of the affirmative action requirements in parts 60-2 and 60-4 is underscored when compared against targeted remedial orders that preceded them. For example, the Third Circuit affirmed the 1969 Philadelphia Plan, an affirmative action order that applied only to six construction trades in the Philadelphia area and was based on the Secretary of Labor's finding that race-conscious hiring goals were necessary to remedy “obvious underrepresentation [that] was due to the exclusionary practices of the unions” in those specific trades. Contractors Ass'n of E. Pa. v. Sec'y of Labor, 442 F.2d 159, 171-72 (1971).^[23] By contrast, parts 60-2 and 60-4 require across-the-board, race-based employment practices on contractors nationwide, without regard to industry, trade, geographic location, history, or specific findings of discriminatory conduct. This stark contrast illustrates the absence of narrow tailoring in the current regulatory regime and reinforces the Department's conclusion that the regulations cannot be justified as remedial measures under equal-protection principles.

OFCCP's race-based affirmative action regulations are unlikely to satisfy the compelling-interest requirement and definitively fail the narrow-tailoring requirement. On these bases alone, the Department concludes that the regulations cannot survive strict scrutiny and should be rescinded.

b. OFCCP's Sex-Based Affirmative Action Regulations Are Likely Unconstitutional

The Department further concludes that the affirmative action requirements in 41 CFR parts 60-2 and 60-4 are sex-conscious regulations that are unlikely to satisfy intermediate scrutiny, which requires that the classification serve an important governmental objective and be substantially related to the achievement of that objective. Craig v. Boren, 429 U.S. 190, 197 (1976).

The Supreme Court has explained that “[i]n limited circumstances, a gender-based classification favoring one sex can be justified if it intentionally and directly assists members of the sex that is disproportionately burdened.” Miss. Univ. for Women v. Hogan, 458 U.S. 718, 728 (1982). As with race-based classifications, remedying specific instances of past discrimination may constitute a valid governmental objective. However, “general claims of societal discrimination” are insufficient. The government must show that the favored sex “actually suffer[ed] a disadvantage” caused by discrimination in a particular field or context that the policy is designed to remedy. Id. at 727-29.

The Department does not dispute that women have at times experienced discrimination in certain trades or occupations. The constitutional problem is not the existence of discrimination in some contexts, but the absence of any findings that the sex-conscious requirements in parts 60-2 and 60-4 are tied to discrimination by particular employers or even to discrimination within specific industries, occupations, trades, or geographic areas. The rulemaking records for part 60-2 do not contain findings of sex-based discrimination in specific nonconstruction trades. OFCCP's first issuance of goals and timetables for the construction industry contains a discussion of the state of female employment in the industry, citing comparative workforce participation data, testimony presented at fact-finding hearings, studies indicating that placement goals would increase the percentage of women interested in applying for construction jobs and the impact of a Maritime Administration goals program on the increased representation of women in that workforce. The discussion did not, however, include court findings or other concrete evidence of proven systemic discrimination against women across the industry. See Goals and Timetables for Female and Minority Participation in the Construction Industry, 43 FR 14888, 14892-93 (Apr. 7, 1978). Thus, these findings were not sufficient to justify imposing uniform, sex-conscious requirements across all covered industries and locations nationwide. Vitolo, 999 F.3d at 365.

Instead, the structure and text of the regulations indicate that their objective is not the remediation of identified, trade-specific discrimination but the ( printed page 54453) reduction of disparities between a contractor's workforce and the available labor pool.^[24] Part 60-2 expressly states that a contractor's workforce should “reflect the gender . . . profile of the labor pools from which [it] recruits and selects.” 41 CFR 60-2.10(a)(1). That formulation reflects a sex-balancing objective rather than a remedial one. But statistical disparities between workforce composition and labor-market availability, standing alone, are insufficient to demonstrate an important governmental objective. See Vitolo, 999 F.3d at 364 (citing Craig, 429 U.S. at 200-04). Absent evidence that women suffered intentional discrimination in each of the specific trades or occupations subject to regulation, sex-based classifications cannot be justified as remedial measures. Id. at 365 (“Without proof of intentional discrimination against women, a policy that discriminates on the basis of sex cannot serve a valid governmental objective.”).

Moreover, the means employed by parts 60-2 and 60-4 likely are not substantially related to the objective of remedying past discrimination, at least in the main. The regulations in part 60-2 apply broadly across industries and occupations without regard to whether discrimination occurred in a particular sector, job group, or geographic area. Although the regulations in part 60-4 are limited to construction, OFCCP established a uniform 6.9 percent participation goal for women nationwide, without accounting for regional variation, differences among construction trades, or evidence of past discrimination in particular local labor markets. See Construction Contractors, Affirmative Action Requirements, 45 FR 85750, 85751 (Dec. 30, 1980).^[25] The sex- and race-based placement goals for construction contractors were set by notices in the Federal Register in 1978. 43 FR 14888. Race-based goals were updated in 1980, while sex-based goals were never updated, even though industry practices have changed substantially.

By imposing a single nationwide participation goal untethered to specific findings of sex-based discrimination in particular trades or regions, the regulations reflect a generalized sex-balancing approach rather than a remedial program that addresses identified discrimination.

The types of sex-based classifications upheld under intermediate scrutiny are materially different from the broad, industry-wide requirements imposed by these regulations. For example, in Schlesinger v. Ballard, 419 U.S. 498 (1975), the Court upheld a statutory provision that directly compensated for specific legal barriers to advancement faced by female naval officers. By contrast, the regulations here impose uniform, sex-conscious requirements across industries and locations without findings that women face comparable, legally imposed barriers in the covered fields or that the requirements are calibrated to remedy such barriers.

While intermediate scrutiny is less demanding than strict scrutiny, the Department concludes that the sex-based affirmative action requirements in parts 60-2 and 60-4 raise serious constitutional concerns and are unlikely to survive constitutional scrutiny.

3. Federal Civil Rights Law

a. Conflict With Title VII of the 1964 Civil Rights Act

Some commenters, including the CRF and America First Legal, agreed with the Department's concern that OFCCP's race-based and sex-based affirmative action regulations conflict with Federal civil rights law—specifically Title VII of the Civil Rights Act of 1964—because they require contractors to address underutilization of minorities and women, but not other groups. See 90 FR at 28475 (citing Ames v. Ohio Dep't of Youth Servs., 605 U.S. 303 (2025)). Other commenters disagreed. NNU contended that the proposed rescission is “in direct conflict with Title VII,” but did not explain how. The ACR Project argued that the Department “seriously understates” the conflict because the E.O. 11246 affirmative action regulations “require employers to violate the Civil Rights Act” and urged the Department to acknowledge this conflict as an additional justification for rescission. Upon careful consideration of these comments, the Department generally agrees with the ACR Project and concludes that OFCCP's affirmative action regulations compel contractors to adopt employment practices that conflict with Title VII.

The Lawyers' Committee asserted that OFCCP has historically interpreted E.O. 11246's nondiscrimination provisions to be analogous to and consistent with Title VII. That assertion is largely correct with respect to OFCCP's nondiscrimination regulations at 41 CFR parts 60-1, 60-20, and 60-50. But the affirmative action regulations at parts 60-2 and 60-4 go further. They require contractors not only to establish employment goals for minorities and women but also to undertake specific employment actions with respect to those groups to meet those “goals.” These requirements conflict with the text of Title VII, which generally prohibits covered employers from making employment decisions because of an individual's race or sex. Title VII also makes it an unlawful employment practice to “classify” employees or applicants in a manner that deprives or tends to deprive individuals of employment opportunities because of race, color, sex, or national origin. 42 U.S.C. 2000e-2(a). The Civil Rights Act of 1991 broadened this prohibition by providing that an unlawful employment practice is established when race, color, religion, sex, or national origin was even “a motivating factor” for an employment practice, even if other factors also motivated, or even were the primary reasons for, the decision. 42 U.S.C. 2000e-2(m). The statutory text of Title VII thus adopts a broad prohibition on race- and sex-based employment practices that, on its face, bars affirmative action measures to meet numeric goals based on those characteristics.

As several commenters noted, the Supreme Court has construed Title VII to permit race- or sex-conscious affirmative action in extremely narrow circumstances. See United Steelworkers v. Weber, 443 U.S. 193 (1979); Johnson v. Transp. Agency, Santa Clara Cnty, Cal., 480 U.S. 616 (1987). Subsequent Supreme Court decisions call into question the continued viability of the Weber-Johnson framework. See, e.g., Callais, 146 S. Ct. at 1152-53 ; Ames, 605 U.S. at 308-310; SFFA, 600 U.S. at 181; and Ricci v. DeStefano, 557 U.S. 557, 579 (2009). However, even assuming that the Weber-Johnson framework remains good law and applies, the E.O. 11246 affirmative action regulations would still be inconsistent with Title VII.^[26]

( printed page 54454)

Under the Weber-Johnson framework, an employer may voluntarily adopt a race- or sex-conscious measure to address a manifest imbalance in traditionally segregated job categories, provided that the measure is remedial in purpose, temporary in duration, and does not employ quotas or inflexible goals or unnecessarily trammel the interests of non-beneficiaries. Weber, 443 U.S. at 208; Johnson, 480 U.S. at 638. Such programs must be designed to eliminate the effects of past discrimination or segregation, not to maintain racial or gender balance for its own sake. Johnson, 480 U.S. at 639-40. As the Eighth Circuit explained: “An affirmative action policy is valid [under Title VII] if the policy is remedial and narrowly tailored to meet the goal of remedying the effects of past discrimination.” Humphries v. Pulaski Cnty. Special Sch. Dist., 580 F.3d 688, 695 (8th Cir. 2009). It is often difficult for an employer to establish compliance with the strict limitations of Weber and Johnson; those who attempt such a path and fail necessarily violate Title VII with the practice in question.^[27]

To comply with the E.O. 11246 affirmative action regulations, a contractor must establish race- and sex-based employment goals and take other race- and sex-conscious employment actions. The Department does not believe such practices would fit within the Weber-Johnson framework—and certainly not generally across contractors. First, they are not voluntary: contractors are required, as a condition of obtaining and retaining Federal contracts, to adopt and implement OFCCP's race- and sex-based affirmative action requirements.^[28] Second, they are not remedial: the regulations require contractors to undertake good faith efforts to meet, achieve, or approach proportional representation in terms of race and sex, not to specifically remedy manifest imbalances in a traditionally segregated job category. Third, they are not temporary: they have existed for over half a century, and unless rescinded, contractors would continue to be subject to these regulations on an indefinite basis. Fourth, the regulations contain rigid goals. While placement goals for nonconstruction contractors must not be rigid quotas, a similar prohibition is missing from participation goals for construction contractors. Instead, for example, construction contractors must “make substantially uniform progress in meeting its goals” and “where possible, will assign two or more women to each construction project.” See41 CFR 60-4.3(a)(4) and (7). The Department is not aware of any authority where a court has upheld a similarly broad arrangement under the Weber-Johnson framework.

“[T]he existence of an affirmative action plan . . . when combined with evidence that the plan was followed in an employment decision is sufficient to constitute direct evidence of unlawful discrimination unless the plan is valid.” Frank v. Xerox Corp., 347 F.3d 130, 137 (5th Cir. 2003) (quoting Bass v. Bd. of Cnty. Comm'rs, 256 F.3d 1095, 1110 (11th Cir. 2001)).^[29] Many employment actions taken to comply with the E.O. 11246 affirmative action regulations would not fall within the narrow Weber-Johnson framework and would instead constitute direct evidence of unlawful discrimination in violation of Title VII. The Department concludes that OFCCP's placement and participation goals and related regulatory requirements—backed by compliance evaluations and enforcement consequences—compel regulated employers to adopt race- and sex-conscious employment practices that are, in many cases, unlawful under Title VII.

b. Affirmative Action Regulations Conflict With Title VI of the Civil Rights Act

The Department also considered the compatibility of 41 CFR part 60-4's affirmative action requirements as applied to contractors performing federally assisted construction projects with Title VI of the Civil Rights Act of 1964, which prohibits recipients of Federal financial assistance from engaging in discrimination on the basis of race, color, or national origin. 42 U.S.C. 2000d et seq. The Supreme Court has long held that Title VI's nondiscrimination mandate is coextensive with the Equal Protection Clause. See, e.g., Regents of the Univ. of Cal. v. Bakke, 438 U.S. 265, 287 (1978).

Under that framework, race-based affirmative action measures—even those falling short of explicit quotas—are permissible only when narrowly tailored to remedy identified, specific instances of past discrimination or, in limited contexts, to address imminent and serious threats to human safety. As explained above, the E.O. 11246 affirmative action regulations applicable to federally assisted construction projects would not pass this exacting test. They are not tied to identified instances of past discrimination by recipients of Federal assistance and apply broadly without regard to local conditions or historical findings. Accordingly, the Department also concludes that these regulations compel recipients of Federal financial assistance to engage in race-based conduct that conflicts with Title VI.

Like the unconstitutionality of the affirmative action regulations, those regulations' incompatibility with Titles VI and VII of the Civil Rights Act supplies independent reasons for their rescission. The Department agrees with the conclusion of the state attorneys general that the regulations' “requirements run counter to deeply rooted legal and moral principles enshrined in the constitutions of the United States and our states and state and federal civil rights laws.”

C. Lack of Statutory Authority To Maintain Regulations Implementing E.O. 11246

Several commenters, including the attorneys general of 22 states, the EPPC, New Civil Liberties Alliance (NCLA), and the ACR Project, questioned the Department's statutory authority to maintain regulations implementing E.O. 11246. These commenters contended that, regardless of E.O. 11246's status, the regulations the Department proposes to rescind are unlawful because Congress never authorized them. They argued that the E.O. 11246 regulations impose legally binding affirmative action and nondiscrimination obligations on contractors and therefore constitute legislative rules requiring a clear delegation of authority from ( printed page 54455) Congress. In particular, they asserted that the Federal Property and Administrative Services Act of 1949, 40 U.S.C. 101-1315 (Procurement Act)—the only statute the Department has cited in rulemaking as authority for the E.O. 11246 regulations—does not provide such authorization.

The state attorneys general and the EPPC invoked the major questions doctrine and argued that the Procurement Act's purpose of ensuring an economical and efficient system of procurement does not supply authority to impose broad employment mandates governing contractors' hiring and employment practices. NCLA further noted that the Department cited the Procurement Act as the source of authority for E.O. 11246 regulations only decades after the Executive Order's issuance, arguing that this delayed reliance undermines any claim that the regulations reflect a contemporaneous or longstanding interpretation of statutory authority. The state attorneys general and other commenters urged the Department to rescind the E.O. 11246 implementing regulations not only because E.O. 11246 has been revoked, but also because the regulations lack statutory authorization. These commenters encouraged the Department to acknowledge this lack of authority in the final rule to clarify the limits of agency authority with respect to the E.O. 11246 regulations.

No commenters defended the Procurement Act as statutory authority for the E.O. 11246 regulations. Several commenters suggested alternative sources of authority. Some commenters argued that the longevity of the E.O. 11246 regulations supports their statutory authorization. The AFL-CIO stated that generally applicable equal employment opportunity laws enacted by Congress require compliance with the regulations. NNU argued that Congress ratified the E.O. 11246 regulatory framework through enactment of section 718 of Title VII of the Civil Rights Act of 1964, as amended in 1972. See42 U.S.C. 2000e-17.

In light of these comments, the Department has reconsidered its authority to maintain the regulations implementing E.O. 11246 under the Procurement Act and the alternative statutory ground suggested by commenters. Upon review, the Department has determined that it lacks statutory authority for significant portions of the E.O. 11246 regulatory framework, including its regulations requiring race- and sex-based affirmative action related to E.O. 11246 and authorizing OFCCP to seek monetary relief in E.O. 11246 administrative proceedings against contractors. The Department further believes that the Procurement Act could authorize it to require contractors to follow Federal nondiscrimination law—but not to seek monetary relief for violations in E.O. 11246 administrative proceedings.

1. The Need for Statutory Authorization

An agency “literally has no power to act . . . unless and until Congress confers power upon it.” La. Pub. Serv. Comm'n v. FCC, 476 U.S. 355, 374 (1986). However, the sources of congressional delegation for the Department's regulations implementing E.O. 11246 have never been clear. E.O. 11246 identifies no specific statutory delegation and is purported to be authorized under the “Constitution and statutes of the United States.” ^[30] OFCCP's early regulations did not identify any specific statutory source of authority. In 1979, the Supreme Court recognized in Chrysler Corp. v. Brown that “[t]he origins of the congressional authority for Executive Order 11246 are somewhat obscure and have been roundly debated by commentators and courts.” 441 U.S. 281, 304 (1979).

NCLA pointed out in its comment that “Executive Order 11246 and the regulations promulgated pursuant to it might well be fine, if they did not seek to bind the conduct of anyone outside the Executive Branch.” But in fact, the regulations do extend beyond the Executive Branch by subjecting private parties to non-contractual legally binding requirements and to significant monetary loss. They are enforceable judicially as if they had the force of law. 41 CFR 60-1.26(a), (c)-(d). “But in order for such regulations to have the `force and effect of law,' ” the Supreme Court explained when considering OFCCP's E.O. 11246 authority, “it is necessary to establish a nexus between the regulations and some delegation of the requisite legislative authority by Congress.” Chrysler Corp., 441 U.S. at 304.

In Chrysler, the Supreme Court explained that “[t]he legislative power of the United States is vested in the Congress, and the exercise of quasi-legislative authority by governmental departments and agencies”—such as the E.O. 11246 regulations at issue—“must be rooted in a grant of such power by the Congress and subject to limitations which that body imposes.” Id. at 302. Applying that principle, the Court found no authority for OFCCP's regulations providing for public disclosure of information from its records in any of the statutes identified by the Federal Government, including the Procurement Act, Titles VI and VII of the Civil Rights Act of 1964, and the Equal Opportunity Act of 1972. Id. at 304-8. With regard to the Procurement Act, the Court said, “The Act explicitly authorizes Executive Orders `necessary to effectuate [its] provisions.' [Sec. 486(a)]. However, nowhere in the Act is there a specific reference to employment discrimination.” Id. at 304 n.34. The Court ultimately suggested that the Procurement Act may authorize nondiscrimination provisions that prohibit contractors from “excluding from the labor pool available minority workmen,” id., but held that it does not authorize the disclosure regulation at issue, id. at 304.

Despite the Supreme Court's clarification in 1979 that OFCCP regulations must be rooted in statutory authority, the Department continued to promulgate regulations implementing E.O. 11246 without identifying any statutory basis in rulemaking documents. For example, a 1982 rule confirming OFCCP's ability to seek back pay and other monetary relief in administrative proceedings against contractors asserted that “the Executive Order vests OFCCP with the legal authority to seek back pay for victims of discrimination,” without citing any statute. Government Contractors; Affirmative Action Requirements, 47 FR 17770, 17773 (Apr. 23, 1982).^[31] As NCLA noted, the Department did not identify a specific statutory source of authority for any regulation implementing E.O. 11246 for many decades.^[32] Indeed, it is our understanding that the first time OFCCP cited any statutory authority in a rulemaking document was a 2016 final rule revising sex-based nondiscrimination requirements relying on the Procurement Act. 81 FR 39108 (June 15, 2016).^[33] The Department's ( printed page 54456) 2023 revisions to its religious discrimination standards likewise cited the Procurement Act as statutory authority. 88 FR 12842. Those citations, however, addressed only nondiscrimination requirements; they did not purport to authorize affirmative action obligations or OFCCP's system of administrative adjudication awarding monetary relief. The Department has never cited statutory authority when promulgating those regulations, which renders them especially vulnerable to legal challenge. See Council for Urological Interests v. Burwell, 790 F.3d 212, 223 (D.C. Cir. 2015) (courts “cannot consider [an] argument” regarding an agency's authority that the agency never “articulate[d] . . . during . . . rulemaking”).

With this backdrop in mind, the Department turns to an analysis of its statutory authority for affirmative action, administrative adjudication, and nondiscrimination regulations implementing E.O. 11246, beginning with the Procurement Act and then alternative sources of statutory authority suggested by commenters.

2. Statutory Authority Under the Procurement Act

The Procurement Act authorizes the President to “prescribe policies and directives that the President considers necessary to carry out” the Procurement Act's purpose, which includes providing the Federal Government “with an economical and efficient system for . . . [p]rocuring and supplying property and nonpersonal services, and performing related functions including contracting.” 40 U.S.C. 101, 121(a). Courts interpreting this provision have generally required a “sufficiently close nexus” between the requirements imposed by an Executive Order and the Procurement Act's goals of economy and efficiency in Federal procurement.^[34]

In Chrysler, the Supreme Court doubted that the Procurement Act authorizes all aspects of E.O. 11246. The Court observed that “nowhere in the Act is there a specific reference to employment discrimination,” and characterized lower court suggestions that the Procurement Act independently authorized the predecessors to E.O. 11246 as “dicta and made without any analysis.” 441 U.S. at 304 n.34. The Court also noted a Third Circuit decision that concluded the Procurement Act's “economical and efficient” authority could support “at least some aspects” of E.O. 11246 because “it is in the interest of the United States in all procurement to see that its suppliers are not over the long run increasing its costs and delaying its programs by excluding from the labor pool available minority workmen.” Id. (quoting Contractor Association, 442 F.2d at 170).

More recently, the Supreme Court articulated the major questions doctrine, under which an agency must point to clear congressional authorization when asserting regulatory authority of vast economic or political significance.^[35] Under that doctrine, “a vague statutory grant is not close to the sort of clear authorization required” to sustain regulations with significant economic or political impact.^[36] Although these cases do not directly address OFCCP programs, multiple courts of appeals have applied this principle when analyzing the Procurement Act's “economical and efficient” provision, holding that it does not authorize the Federal government to impose vaccination mandates on Federal contractors.^[37]

Several commenters argued that the major questions doctrine applies to OFCCP's regulations. The state attorneys general argued that “[r]egulating the hiring practices of approximately one-fifth the U.S. workforce to require employers to engage in discriminatory affirmative action no doubt implicates decisions of vast economic and political significance.” (citing Louisiana, 55 F.4th at 1028). And EPPC claimed that “the lucrative nature of federal contracts and this onerous enforcement regime is surely a matter of `vast economic and political significance' that requires `clear congressional authorization.' ” (quoting West Virginia v. EPA, 597 U.S. 697, 716, 723-32 passim (2022)).

a. Affirmative Action Regulations

Part 60-2 applies to nonconstruction contractors and subcontractors with 50 or more employees and a Federal contract of at least $50,000. These regulations require contractors to analyze their workforce by race, ethnicity, and sex; compare workforce representation to labor-market availability; and, where minorities or women are deemed “underutilized,” establish placement goals at least equal to availability and take affirmative steps to meet those goals. Part 60-4 applies to contractors and subcontractors performing Federal construction contracts or federally assisted construction contracts exceeding $10,000. Those regulations require contractors to use minority and female participation goals established by the Department and to take affirmative action to achieve those goals.

In considering whether the Procurement Act authorizes Parts 60-2 and 60-4, the Department finds that the E.O. 11246 affirmative action regulations likely trigger the major questions doctrine because they rest upon an assertion of regulatory authority of significant economic and political consequence. The Department estimates that approximately one-fifth of U.S. workers are employed by contractors subject to OFCCP's regulations, and courts have found regulatory regimes of comparable scope to be economically significant for purposes of the major questions doctrine. See Louisiana, 55 F.4th at 1028. This economic overbreadth arises in significant part because Parts 60-2 and 60-4 apply not only to the employees who perform work on or in connection with Federal procurement contracts, but also to a contractor's entire workforce, including employees whose duties have no relationship to Federal procurement.^[38] The Procurement Act may authorize ( printed page 54457) contractual efficiency-enhancing provisions governing employees who work on or in connection with Federal contracts. But by extending regulatory requirements to portions of a contractor's workforce that have no connection with work performed under Federal procurement contracts, the regulations appear to sweep beyond the economy and efficiency of Federal procurement and may instead operate more like a form of economically significant employment regulation.

The Department also believes these affirmative action requirements to be politically significant within the meaning of the doctrine. Government-mandated classifications based on race and sex occupy a central place in contemporary public debate and have long been treated by courts as constitutionally sensitive. Although the constitutionality and consistency with Federal law of the E.O. 11246 affirmative action requirements are addressed elsewhere in this preamble, the Department concludes that the major questions doctrine independently requires clear congressional authorization for an agency to impose race- and sex-based employment mandates of this nature. By contrast, procurement contract conditions prohibiting discrimination and reinforcing compliance with existing Federal civil rights law do not represent the type of transformative assertion of regulatory authority that would implicate the major questions doctrine.

That clear statement requirement is especially strong here because the regulations mandate race- and sex-conscious employment practices that are “presumptively invalid” under the Constitution, Vitolo, 999 F.3d at 364, and that, on their face, could otherwise conflict with Title VII's general prohibition on race- and sex-based decision-making in employment. This is true even apart from the Department's independent conclusion that OFCCP's affirmative action regulations cannot survive strict scrutiny. Under the canon of constitutional avoidance, where a statute is susceptible to more than one plausible interpretation, the Department should adopt the interpretation that avoids serious constitutional questions. That canon therefore counsels against interpreting the Procurement Act to authorize regulations that trigger strict scrutiny in the first place by requiring race- and sex-based classifications in employment.

Similar concerns arise under Title VII. As explained above, compliance with OFCCP's affirmative action regulations encourage contractors to engage in race- and sex-conscious employment practices that would constitute direct evidence of unlawful discrimination under Title VII unless they fall within the narrow Weber-Johnson framework. See Frank, 347 F.3d at 137. Absent clear statutory authorization, the Department will not interpret the Procurement Act to empower it to promulgate regulations that induce conduct— e.g., trying to meet race- and sex-based employment goals by taking race or sex into account in employment decisions—that Title VII generally prohibits and that regulated parties must attempt to justify under a limited, judge-made exception.

In sum, without clear congressional authorization, the Department will not infer an intent to delegate authority to impose race- and sex-conscious employment mandates that raise serious constitutional concerns and that depart so sharply from the background principles of Federal civil rights law. The Procurement Act contains no such clear authorization for the broader affirmative-action framework implemented under E.O. 11246.

These concerns are reinforced by the Department's regulatory history. While the Department has cited the Procurement Act as statutory authority for its nondiscrimination regulations, it has not previously identified the Procurement Act—nor any other statute—as providing clear authority to promulgate affirmative action regulations that encourage race- and sex-based employment considerations in employment. An effort to locate such authority now would require reading into a long-extant statute an unheralded power to regulate a substantial portion of the national workforce, a circumstance that courts have repeatedly viewed with skepticism. See Utility Air Regulatory Group v. EPA, 573 U.S. 302 (2014).

The Department further finds application of the E.O. 11246 affirmative action regulations to federally assisted construction projects exceeds the Procurement Act's authority for another reason. These projects are distinct from Federal procurement. Under the Procurement Act, the President's authority extends to prescribing policies and directives necessary to provide the Federal Government with an economical and efficient system for “[p]rocuring and supplying property and nonpersonal services, and performing related functions.” 40 U.S.C. 101, 121(a). Federal financial assistance—where the Government provides grants or other assistance to third parties rather than procuring construction services for itself—does not constitute procurement of property or nonpersonal services and therefore falls outside the Procurement Act's core “economical and efficient” authority.

This conclusion is reinforced by the 1976 amendments to the Procurement Act, which expressly prohibited sex discrimination in “a program or activity carried on or receiving federal assistance under this subtitle[.]” 40 U.S.C. 122(a). Congress's decision to legislate separately with respect to sex discrimination in federally assisted programs confirms that Federal assistance is distinct from procurement and that conditions imposed on recipients of such assistance require separate and explicit statutory authorization, rather than reliance on the Procurement Act's general procurement-based “economical and efficient” authority.

The Department recognizes that Contractors Association upheld the Philadelphia Plan's racial employment goals by invoking the President's “general authority” to “analogiz[e] federally assisted construction to direct federal procurement.” 442 U.S at 171. The court further reasoned that, because no Act of Congress forbade the challenged race-based employment goals, they fell within the “implied authority of the President and his designees.” Id. But that reasoning cannot be readily reconciled with the Supreme Court's subsequent emphasis on the need for affirmative congressional delegation, specifically in the context of OFCCP regulations. Chrysler, 441 U.S. at 304. The pertinent inquiry is not whether Congress failed to forbid the agency's action, but whether Congress authorized it. Id. In any event, Contractors Association also upheld the Philadelphia Plan because it was designed to remedy “obvious underrepresentation [that] was due to the exclusionary practices of the unions” in specific trades. Id. at 171. By contrast, OFCCP's current affirmative action requirements in connection with federally assisted projects are not remedial.

Accordingly, the Department concludes that the Procurement Act does not provide congressional authorization necessary to support OFCCP's race- and sex-conscious affirmative action regulations related to E.O. 11246. As explained below, the concerns identified here arising from race- and sex-based affirmative action obligations do not undermine the authority under the Procurement Act to condition contracts on nondiscrimination requirements that are consistent with Federal civil rights law. ( printed page 54458)

b. Administrative Enforcement Regulations

The regulations at 41 CFR 60-1.26 authorize OFCCP to enforce its affirmative action and nondiscrimination requirements related to E.O. 11246 through administrative proceedings in which the agency may seek monetary relief, including back pay. Those proceedings operate with the force of law and are reviewed by Federal courts under a deferential standard. The regulations' creation of a quasi-judicial enforcement mechanism within the Executive Branch required a clear grant of authority from Congress.^[39] The regulations did not have one. As the NCLA commented, the absence of any clear statutory framework for enforcement of E.O. 11246 “stands in stark contrast to other enforcement and adjudication regimes that protect employees and were specifically authorized by Congress.” NCLA highlighted two statutory regimes enforced by OFCCP in which Congress expressly authorized the Department to conduct administrative enforcement of affirmative action or nondiscrimination requirements through clear, defined statutory limits. VEVRAA authorized the Department to receive and investigate complaints from qualified veterans alleging noncompliance by contractors and to take appropriate enforcement action consistent with the terms of the contract and applicable law. 38 U.S.C. 4212(a). Similarly, under Section 503, Congress required certain Federal contracts to include affirmative action provisions for individuals with disabilities and expressly authorized the Department to receive and investigate complaints and to take appropriate enforcement action. 29 U.S.C. 793(b). By comparison, the Procurement Act contains no language authorizing the Department to receive and investigate complaints of employment discrimination and to take appropriate enforcement actions.^[40] That silence is significant in light of Congress's ability to legislate administrative enforcement mechanisms within the Procurement Act when it chooses to do so. Congress amended the Procurement Act in 1976 to prohibit sex discrimination in programs receiving Federal assistance, and Congress expressly authorized administrative enforcement through “agency provisions and rules similar to” those already established under Title VI. See Sec. 8, Public Law 94-519, 90 Stat. 2456 (1976) (now codified at 40 U.S.C. 122). Title VI, in turn, requires the agency awarding Federal assistance to follow detailed procedural safeguards in enforcement proceedings—for example, pursuing conciliation before punishment, limiting relief to the specific program or activity in which the violation occurred, and restrictions on monetary relief—that are missing from Part 60-1.26.

Title VII's comprehensive and carefully calibrated framework for enforcing employment discrimination claims reinforces the Department's belief that it lacks authority to adjudicate employment nondiscrimination claims under E.O. 11246. See42 U.S.C. 2000e-4 through 2000e-6. Early proposed versions of Title VII proposed empowering the Department of Labor with authority to investigate discrimination claims and prosecute complaints before an administrative Equal Employment Opportunity Board, which would adjudicate claims and “issue broad remedial orders to remedy violations,” subject to judicial review of the final administrative decision. EEOC, Legislative History of Titles VII and XI of the Civil Rights Act of 1964, at 3070-71 (H.R. Rep. No. 88-914, at 14, 711(b) (1963)). Congress rejected that approach, opting instead to create EEOC and vest it with enforcement authority. The EEOC may investigate discrimination claims, issue subpoenas, and attempt informal resolution that can result in binding conciliation agreements enforceable in court, but it has no authority to conduct in-house adjudications or issue binding remedial orders for private employers. See Sec. 705-713, Public Law 88-352, 78 Stat. 241 (codified as amended at 42 U.S.C. 2000e-5). Where enforcement is pursued against private employers, the EEOC must bring suit in Federal court.

That statutory structure reflects deliberate legislative judgments concerning forum, process, and explicit authorization of relief for employment discrimination. It would therefore be inappropriate to presume that Congress implicitly authorized the Department to operate a parallel administrative enforcement system—empowered to adjudicate employment discrimination claims and award monetary relief against private sector employers—through the Procurement Act's general provisions, particularly where Congress affirmatively rejected that very model when enacting Title VII.^[41]

The Department concludes that the Procurement Act does not authorize OFCCP to bring E.O. 11246-related administrative enforcement actions against contractors to compensate alleged victims of employment discrimination.

The Department also received comments regarding its proposal to relocate the administrative enforcement proceeding procedures from the revoked E.O. 11246 regulations directly into the VEVRAA and Section 503 implementing regulations. Some commenters expressed their support for this proposal, asserting that the relocation is reasonable in light of the E.O. 11246 rescission. Other commenters recommended that the Department modify the administrative enforcement proceeding procedures because of recent case law in this area.^[42] Relying on recent case law, these other commenters asserted that OFCCP's practice of adjudicating investigations through proceedings before Administrative Law ( printed page 54459) Judges may not survive constitutional scrutiny.

The Department concludes that it is not necessary to address the constitutional question raised by these comments because E.O. 11246 has been revoked and, in any event, OFCCP's administrative enforcement of E.O. 11246 is not statutorily authorized. Moving regulations concerning procedural provisions will provide clarity about the administrative enforcement procedures applicable to VEVRAA and Section 503. The Department acknowledges that the case law in this area is evolving. To the extent that the Department determines that it may need to update these procedures in light of changing case law, such changes may be pursued in a separate rulemaking.

c. Nondiscrimination Regulations

The Department next considers regulations at Part 60-1 containing nondiscrimination requirements relating to race, ethnicity, national origin, sex, religion, sexual orientation, and gender identity. As explained above, the Department concludes that the Procurement Act's “economical and efficient” authority is limited to Federal procurement and does not extend to Federal financial assistance. That authority therefore does not delegate power to impose general nondiscrimination requirements on recipients or subrecipients of Federal assistance, nor does it authorize the Department to seek monetary relief through administrative enforcement mechanisms.

That said, the Procurement Act nonetheless authorizes the President to impose requirements through contract clauses designed to promote economy and efficiency in procurement. To keep such authority within the government's procurement powers, nondiscrimination requirements should be enforced through procurement-based remedies, such as cancellation or debarment, as opposed to back-pay or other monetary relief for nonparties to the procurement contract at issue. As noted above, the nondiscrimination requirements imposed under E.O. 11246 were not limited to conduct occurring in connection with the performance of work under a procurement contract but instead applied across a contractor's entire workforce, including employees whose duties bore no relationship to Federal procurement. This lack of a limiting procurement nexus contributed to the significant economic and political scope of the regulatory scheme. By contrast, limiting procurement-based nondiscrimination requirements to conduct occurring in connection with the performance of Federal contract work better ensures the requisite nexus to the government's interest in economy and efficiency in procurement. Such a limitation confines the requirements to the context in which the government acts as a market participant and helps avoid the type of broad assertion of regulatory authority over a contractor's general employment practices that could raise concerns under the major questions doctrine.

Properly limited, procurement-based nondiscrimination conditions applicable solely to work performed in connection with Federal contracts fall within the President's authority under the Procurement Act to promote an economical and efficient system of Federal procurement. The Federal Government has a legitimate interest in contracting with firms that do not exclude qualified workers on grounds unrelated to merit and that therefore draw from the full available labor force, reducing inefficiencies associated with unjustified exclusionary practices. See Contractor Association, 442 F.2d at 170. Conditioning Federal contracts on compliance with existing Federal civil rights law prohibiting discrimination reflects a conventional exercise of the government's discretion to determine the terms on which it will enter into contracts and to decline to contract with entities that violate applicable law. For instance, E.O. 14173 forbids contractors from violating Federal anti-discrimination laws, 90 FR 8634, and E.O. 14398 further prohibits contractors from racial discrimination in connection with work performed on contracts, 91 FR 16147. Unlike the E.O. 11246 affirmative action regulations being rescinded, these requirements are fully consistent with Federal civil rights laws. They forbid rather than encourage race-conscious decision-making. They do not create administrative adjudication schemes to award monetary relief. Executive Order 14398 is specifically limited to work performed in connection with procurement contracts. While E.O. 14173 may apply beyond a contractor's workforce that performs procurement functions, it merely requires contractors to follow Federal antidiscrimination laws. It is neither “transformative” nor “unheralded” for the Federal government to stop doing business with companies that violate Federal laws. Rather, such a sensible contracting practice bears a “close nexus” to the economy and efficiency of procurement and does not claim regulatory authority of vast economic or political significance.

By contrast, imposing nondiscrimination requirements under the Procurement Act that create substantive employment obligations beyond existing Federal civil rights law or that establish parallel regulatory enforcement regimes could raise serious legal concerns. The Procurement Act's “economical and efficient” authority does not supply sufficient authorization for transformative procurement conditions, such as a vaccine mandate applicable to contractors' employees. See Louisiana v. Biden, 55 F.4th 1017, 1026 (5th Cir. 2022). The creation or modification of employment nondiscrimination standards is itself a matter of substantial economic and political significance. Congress has addressed those questions through comprehensive civil rights statutes specifying the scope of prohibited conduct, enforcement mechanisms, and available remedies. The Department would expect Congress to speak clearly if it intended to authorize additional employment nondiscrimination standards, exceptions from existing law, or parallel regulatory regimes applicable to contractors. The Procurement Act contains no such authorization. Rather, its authority should be interpreted to authorize compliance with nondiscrimination standards that promote “economical and efficient” merit-based decision-making, and to enforce those standards with procurement-based remedies such as cancellation of contracts. Procurement-based nondiscrimination conditions may include reporting mechanisms necessary to allow agencies to assess contractor compliance with contractual nondiscrimination obligations, such as certification requirements, reporting obligations, and information-sharing provisions tied to contract performance.

An example of an E.O. 11246 nondiscrimination obligation not found in Federal discrimination law is the compensation-discussion anti-retaliation provisions promulgated pursuant to E.O. 13665's amendments to section 202 of E.O. 11246. See80 FR 54934 (Sept. 11, 2015); 41 CFR 60-1.4(a)(3), (b)(3). Those regulations prohibit contractors from retaliating against employees who inquire about, discuss, or disclose compensation information. They impose legally binding employment obligations that extend beyond merely requiring compliance with existing civil rights statutes. They apply to employees whose work has no connection with Federal procurement and are enforceable through monetary awards. In promulgating those regulations, the ( printed page 54460) Department said that economy and efficiency in Federal procurement requires contractors to compensate employees based on merit and that eliminating barriers created by pay secrecy helps ensure that contractors compensate employees based on merit. The Department also asserted that allowing employees of contractors to discuss their pay minimizes risks of enforcement actions that could result from pay secrecy policies. 80 FR 54934, 54937 (Sept. 11, 2015).

Upon reconsideration, the Department concludes that this speculative rationale does not satisfy the Procurement Act's requirement of a “close nexus” between procurement conditions and the government's interest in economy and efficiency. AFL-CIO v. Kahn, 618 F.2d 784, 793 (D.C. 1979). In Kahn, the en banc D.C. Circuit upheld an executive order limiting contractors' ability to raise wages and prices because the measure bore a direct and immediate relationship to contract pricing and likely savings to the Government. Id. at 793. The court cautioned, however, that the Procurement Act does not “write a blank check for the President to fill in at his will.” Id. The wage controls in Kahn had a close nexus to contracting efficiency: limits on wage growth directly enabled contractors to pass labor cost savings to the contractors. By contrast, the regulations promulgated pursuant to E.O. 13665's amendments to section 202 of E.O. 11246 rest on far more attenuated reasoning: that restrictions on compensation discussions may impede detection of discrimination; that undiscovered discrimination may persist; that such persistence may increase the risk of enforcement actions or labor disputes; and that those downstream effects may disrupt Federal procurement. The Department believes that this speculative chain is insufficient to establish the requisite close nexus to procurement economy and efficiency. See Chrysler, 441 U.S. at 304 (“But in order for such regulations to have the `force and effect of law,' it is necessary to establish a nexus between the regulations and some delegation of the requisite legislative authority by Congress.”). Accepting such logic would effectively convert the Procurement Act's limited procurement authority into a general license to regulate workplace practices whenever an indirect economic benefit is asserted, a position courts have rejected. See Nebraska v. Su., 121 F.4th 1, 10 (9th Cir. 2024); Louisiana v. Biden, 55 F.4th at 1031-1032.

Some commenters noted that the National Labor Relations Act (NLRA) protects certain workers from retaliation for engaging in “concerted activity,” including wage discussions, and argued that those protections do not extend to all categories of workers, such as agricultural workers and supervisors. These commenters urged the Department to extend such protection to all contractor workers. But the NLRA's coverage is a reflection of Congress's deliberate policy judgment. If Congress determines that the scope of anti-retaliation protections should be expanded, then it may do so through legislation.

The Department declines to rely on attenuated procurement-efficiency reasoning to expand such protections beyond the boundaries Congress established. Even where a procurement-based nondiscrimination condition would not independently trigger the major questions doctrine, the Procurement Act requires that such a condition be justified by a sufficient nexus to procurement economy and efficiency. Any additional nondiscrimination requirement must produce benefits to procurement efficiency that are not outweighed by compliance costs that are passed on to the government. Absent a demonstrated, cost-justified connection to procurement economy and efficiency, novel nondiscrimination requirements may exceed the Procurement Act's authorization.

Accordingly, the Department concludes that while the Procurement Act would support procurement-based nondiscrimination conditions that operate as contractual assurances of compliance with existing Federal employment discrimination law and that are enforceable only through traditional contract remedies, the Procurement Act does not provide authority under E.O. 11246 to impose nondiscrimination requirements on recipients of Federal financial assistance, to establish new or expanded nondiscrimination standards, or to authorize administrative adjudication or monetary relief outside traditional procurement remedies, such as contract cancellation or debarment. At the same time, the Department recognizes that the Procurement Act supports nondiscrimination requirements applicable to contractors, provided such requirements are enforced through contract remedies, consistent with existing Federal civil rights law, and have a close nexus to the economy and efficiency of Federal procurement. Thus, nothing in this rule limits or questions the President's authority under the Procurement Act to impose nondiscrimination requirements on Federal contractors through contract terms designed to promote economy and efficiency in procurement. To the contrary, properly tailored procurement conditions prohibiting discrimination in a manner consistent with existing Federal civil rights laws fall squarely within the traditional scope of that authority.

Finally, the Procurement Act delegates this power to the President, not the Department. See40 U.S.C. 121(a). In E.O. 14173, the President rescinded his sub-delegation to the Department. 90 FR 8634. Executive Order 14398 authorizes other agencies, rather than the Department, to enforce the contract clause prohibiting race-based discrimination. 91 FR 16148. The Department thus lacks authority to enforce these nondiscrimination requirements across any other Federal agency.

3. Alternative Sources of Statutory Authority

Several commenters advanced alternative arguments in support of the regulations' legality. The Department has carefully considered these arguments and for the reasons explained below is unpersuaded.

a. Longevity of the Regulations

Nearly all comments opposing the rescission stressed the sixty-year duration of the regulatory regime under E.O. 11246, implying or explicitly arguing that the duration of the regulations supports their statutory authorization. The Department disagrees.

Because legislative power is vested in Congress, exercise of quasi-legislative authority by executive agencies must be rooted in an affirmative delegation of authority from Congress and remain subject to the limits Congress imposes. Chrysler, 441 U.S. at 302. An agency cannot acquire regulatory authority through historical practice, acquiescence, or inertia. See United States v. Morton Salt, 338 U.S. 632, 647 (1950). Where Congress has not authorized an agency to impose legally binding obligations, the mere longevity of a regulation does not cure the absence of statutory authority. As the en banc Fifth Circuit explained when holding that an agency lacked statutory authority to approve race- and sex-conscious hiring requirements for corporate boards: “The Executive cannot acquire authority forbidden by law through a process akin to adverse possession.” Alliance for Fair Board Recruitment v. SEC, 125 F.4th 159, 184 (2024) (internal quotation marks and alterations omitted) (quoting Biden v. ( printed page 54461) Texas, 597 U.S. 785, 830 (2022) (Alito, J., dissenting)).

b. Titles VI and VII of the 1964 Civil Rights Act

Some commenters contended that generally applicable equal employment opportunity statutes—particularly Titles VI and VII of the Civil Rights Act of 1964—authorize or require compliance with the E.O. 11246 regulatory framework. For example, the AFL-CIO asserted that “EEO laws, which were passed by Congress, require compliance” with the regulations. However, neither Title VI nor Title VII “contain[ ] any express delegation of substantive lawmaking authority to the President [or the Department].” Liberty Mut. Ins. Co. v. Friedman, 639 F.2d 164, 172 (1981). As the Supreme Court explained, the relevant inquiry has “usually been put in terms of whether E.O. 11246 is consistent with these titles,” not whether they authorize the Order or its implementing regulations. Chrysler, 441 U.S. at 305 n.35.

As explained above, the Department's regulations requiring affirmative action are inconsistent with Titles VI and VII. Under existing precedent, which may no longer be viable in light of SFFA, Callais, and other recent Supreme Court decisions, race- or sex-based affirmative action is permissible only where it is remedial of identified past discrimination and appropriately tailored to that objective. As explained earlier in Section III.B.3.a, OFCCP's E.O. 11246 affirmative action regulations do not meet those requirements. Among other issues, the regulations do not require any finding or evidence of prior unlawful discrimination by the regulated contractor and instead mandate race- and sex-based employment measures on a non-remedial basis. Titles VI and VII therefore do not authorize such requirements.

Titles VI and VII likewise do not authorize OFCCP's nondiscrimination enforcement regime. Congress assigned enforcement authority under Title VI to the DOJ and to agencies administering Federal financial assistance, subject to specific procedural and remedial limits. Congress assigned private-sector enforcement authority under Title VII to the EEOC, which lacks authority to adjudicate claims or award monetary relief in administrative proceedings and must pursue enforcement through Federal court. Neither statute assigns any enforcement or adjudicatory role to the Department of Labor with respect to private-sector employment discrimination.

c. Ratification Under the Equal Employment Act of 1972

NNU argued that Congress ratified the E.O. 11246 affirmative action regulations through enactment of the Equal Employment Opportunity Act of 1972, pointing to 42 U.S.C. 2000e-17. As an initial matter, Congress's rejection of proposed provisions in the 1972 Act, which would have curtailed affirmative action efforts under E.O. 11246, does not constitute ratification. Friedman, 639 F.2d at 172. Legislative inaction or the failure to enact limiting amendments does not amount to affirmative approval of prior executive or agency action.

To effect ratification of prior agency action, Congress must recognize that the action was unauthorized when taken and must expressly ratify it in clear and unequivocal statutory language. EEOC v. CBS, Inc., 743 F.2d 969, 974 (2d Cir. 1984). Legislative acquiescence, awareness, or accommodation is insufficient. Even statutory provisions that explicitly acknowledge existing agency practices do not ratify the agency's underlying claim of authority unless they “expressly approved the agency's interpretation.” Tiger Lily, LLC v. HUD, 992 F.3d 518, 524 (6th Cir. 2021) (holding that congressional recognition and temporary extension of an eviction moratorium did not ratify the agency's unlawful imposition of the mandate); accord Alabama Ass'n of Realtors v. HHS, 539 F. Supp. 3d 29, 42 (D.D.C. 2021), aff'd, 594 U.S. 758 (“To [ratify], however, Congress must make its intention explicit.”).

Section 2000e-17, relied on by NNU, limits the circumstances under which a Federal agency may deny, withhold, terminate, or suspend a government contract where an employer has an affirmative action plan previously accepted by the Government, unless the employer is afforded a full administrative hearing. The provision is procedural and constraining in nature. It does not acknowledge that the E.O. 11246 regulations were unauthorized when adopted, nor does it confer authority to impose affirmative action or nondiscrimination requirements.

If anything, Section 2000e-17 restricts agencies' use of procurement sanctions to enforce equal opportunity law. While the provision reflects congressional awareness that some contractors maintained AAPs under executive orders, it nowhere authorizes the Department or any other agency to require AAPs, much less race- or sex-based employment goals. Nor does it authorize any agency to seek monetary relief in administrative proceedings.

Accordingly, neither Section 2000e-17 nor any other provision of the Equal Employment Opportunity Act of 1972 provides statutory authorization for the E.O. 11246 affirmative action, nondiscrimination, or administrative adjudication regulations.

Finally, even if Congress had purported to ratify non-remedial race- or sex-based affirmative action requirements of the type imposed by OFCCP's regulations, such ratification would not bind the Department, compelling it to retain regulations that raise serious constitutional concerns. After Congress has expressed approval of regulations, an agency “may well reach a different judgment given changed circumstances.” Motor Vehicle Mfrs. Ass'n, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 45 (1983). That is particularly the case with regulations at odds with recent constitutional jurisprudence. Because the regulations mandate race- and sex-based action without the findings and tailoring required under equal-protection principles, they would exceed the scope of constitutionally permissible affirmative action. Congress cannot ratify regulations that the Constitution itself forbids.

For these reasons, the Department concludes that none of the alternative sources of statutory authority identified by commenters authorizes the regulatory framework implementing E.O. 11246. The Procurement Act's goal of ensuring an “economical and efficient” system of Federal procurement does not authorize E.O. 11246 regulations requiring affirmative action or empowering OFCCP to seek monetary relief through administrative proceedings. The Department agrees with the state attorneys general and other commenters that those portions of the regulatory framework lack statutory authorization and would therefore require rescission even if E.O. 11246 had not been revoked. At the same time, the Department recognizes that the Procurement Act may support certain nondiscrimination requirements applicable to contractors, to the extent such requirements are enforced through contract remedies, consistent with existing Federal civil rights law, and have a close nexus to the economy and efficiency of Federal procurement.

D. Effects of Rescission

Some commenters supported the rescission of the E.O. 11246 regulations on the grounds that rescission would yield favorable economic effects, including reduced compliance costs and regulatory burdens. Other commenters who opposed rescission contended that ( printed page 54462) the regulations generated cost savings or produced broader social benefits. The Department notes, however, that it need not justify rescission by weighing the practical or policy effects of eliminating the regulations implementing E.O. 11246. The Department is rescinding these regulations because they can no longer be lawfully maintained following the revocation of E.O. 11246. Moreover, that substantial portions of the regulatory framework are unconstitutional, inconsistent with Federal civil rights statutes, and unsupported by any clear grant of statutory authority provides additional grounds, which on their own support rescission.

An agency must consider and respond to significant comments that it receives during the comment period. Perez v. Mortgage Bankers Ass'n, 575 U.S. 92, 96 (2015). “Significant comments are those `which, if true, raise points relevant to the agency's decision and which, if adopted, would require a change in an agency's proposed rule.' ” City of Portland, Oregon v. EPA, 507 F.3d 706, 715 (D.C. Cir. 2007) (quoting Home Box Office, Inc. v. FCC, 567 F.2d 9, 35 n.58 (D.C. Cir. 1977)). Comments on any other aspect of the merits of the regulations cannot require a change in the result ordained by E.O. 14173's revocation of E.O. 11246. Though not significant, comments related to the benefits and the alleged effects of rescinding the regulations will be discussed below.

Although not determinative of the result, the Department nonetheless concludes that rescission is ultimately beneficial. As explained below, rescinding these regulations reduces regulatory burdens and compliance costs for contractors, with resulting savings passed on to contracting Federal agencies and, ultimately, to consumers and taxpayers. Rescission also eliminates regulatory mandates that required or encouraged race- and sex-based decision-making, promoted racialized frameworks that divided Americans along immutable characteristics, and conflicted with the Nation's commitment to equal treatment under the law. Moreover, the Department finds that the regulations at issue produced no discernible benefits that could justify their continuation and, at best, duplicated existing statutory protections under Federal civil rights law and agency procurement policies. At worst, they impose costly, divisive, and unnecessary requirements that undermine meritocracy and drive social division.

1. Social and Institutional Effects

In evaluating the effects of rescinding the regulations implementing E.O. 11246, the Department begins by considering social and institutional consequences of government-mandated consideration of race and sex in employment decision-making and processes.

Beyond being at odds with the Constitution's equal protection principles, the Department is concerned that government policies that classify individuals by race foster resentment, erodes trust, and weakens shared civic identity that underpins a pluralistic society. Cf. Hirabayashi v. United States, 320 U.S. 81, 100 (1943) (“Distinctions between citizens solely because of their ancestry are by their very nature odious to a free people whose institutions are founded upon the doctrine of equality.”). The state attorneys general commented that the regulations' affirmative action requirements pit races against each other, instill in the benefited races feelings of inferiority or entitlement, and normalize the notion that race is a proper consideration. The notion that race is a proper consideration can become self-reinforcing. The Department concludes that affirmative action requirements imposed through the E.O. 11246 regulations contributed to these corrosive effects by institutionalizing race- and sex-based classifications in employment decisions across a substantial segment of the American workforce. Such governmental requirements pit groups against one another, intensifying racial tension,^[43] and they reorient workplace decision-making away from individual merit and toward group-based expectations. Rather than reducing racial consciousness, the E.O. 11246 affirmative action regulations heighten it by signaling that race is a relevant and appropriate factor in evaluating workers.

These problems are amplified by the arbitrary nature of racial and ethnic categories. See, e.g., SFFA, 600 U.S. at 216-17 (noting that racial categories such as “ `Hispanic,' are arbitrary or undefined.”). In SFFA, when the Supreme Court asked, “how are applicants from Middle Eastern countries classified,” counsel for the University of North Carolina replied that he did not know. Id. The Department would have likewise struggled to provide a well-founded answer to the same question, as individuals of Middle Eastern and North African ancestry were not included in OFCCP's regulatory definition of “minorities.”  ⁴⁴ See41 CFR 60-4.3.

The Department is also mindful of the stigma associated with race- and sex-based employment decisions. Employment systems that rely on numerical goals or benchmarks tied to race or sex may undermine confidence in merit-based outcomes and cast doubt on the achievements of women and minority workers by creating uncertainty as to whether their selections reflect job qualifications or race- and sex-based employment goals. Such goals “stamp minorities with a badge of inferiority.” Adarand Constructors, 515 U.S. at 241 (Thomas, J., concurring). Independent Women agreed that “the credibility of the very individuals those policies aim to support is put in question. Indeed, Americans are less likely to take women and minorities seriously when they believe those individuals were hired to fulfill a quota rather than because of their qualification or abilities.”

Taken together, the Department believes these considerations reinforce the Department's conclusion that rescinding the regulations implementing E.O. 11246 promotes equal treatment under law and advances social cohesion by rejecting race- and sex-based decision-making in employment. Moving away from government-imposed racial classifications and toward neutral, merit-based standards supports workplace fairness and reduces division and conflict. The proposed rescission therefore represents an overdue course correction toward individual dignity and equality under the law.

2. Efficiency of Government Contracting

In the NPRM, the Department noted that rescinding the regulations will improve the efficiency of the Federal ( printed page 54463) contracting process and decrease employer burden, as contractors will no longer be required to undertake the E.O. 11246 requirements. Some commenters disagreed with this position and asserted that the E.O. 11246 regulations facilitated the adoption of workplace practices that help contractors recruit and retain talent, boost their profitability, and reduce their risk, thereby resulting in efficient and effective performance of government contracts.

The Department disagrees with these comments. Rather than promoting efficient and effective performance of government contracts, the requirements imposed significant and unnecessary burdens on contractors. For example, the AAP requirements set forth at 41 CFR 60-2.10 alone required contractors to create an organizational profile, conduct a job group analysis, and conduct an availability analysis, among other requirements, on an annual basis. Further, resolving cases under E.O. 11246's framework often resulted in prolonged disputes about the legal sufficiency of the agency's findings and proposed remedies. With these disputes, an E.O. 11246 discrimination case would take, on average, over three years to resolve. Many contractors would also hire legal representatives, consultants, and statistical experts to help resolve these matters, which resulted in greater expenditure of time and money. Even a technical violation allegation—such as a contractor's alleged noncompliance with an affirmative action provision—would average over 14 months to resolve. Based on the cost-benefit analysis in Section IV(B) below, the elimination of these requirements will result in quantified annual savings and benefits of approximately $996.37 million per year.

Many commenters agreed that these burdens were significant and unnecessary. Commenters representing contractors, including Associated Builders and Contractors (ABC), generally agreed. ABC emphasized that the regulations implementing E.O. 11246 impose substantial compliance costs on contractors by requiring them to develop, implement, and continuously update detailed AAPs. These costs are ultimately passed on to the Federal government through higher contract prices. ABC further contended that these regulatory requirements operated as a barrier to entry for small businesses that lack the resources to hire specialized consultants, human resources personnel, or legal counsel to maintain compliant AAPs. According to ABC, increases in regulatory burden correlated with declining small-business participation in Federal contracting, reducing competition and driving up prices.

State attorneys general likewise commented that regulations implementing E.O. 11246 “create barriers to entry that newer or smaller market participants cannot surmount” because they “may simply not be sophisticated enough to make it through the complicated maze of affirmative action rules, plans, and audits or cannot afford the additional financial costs associated with compliance.” The Department finds persuasive ABC's evidence that the regulations impose disproportionate burdens on smaller firms, reduce competition for government contracts, and increase costs to the government. The Department expects that rescinding these regulations would increase competition, which could result in cost savings to the government and taxpayers. Other commenters took the opposite view. For example, NWLC asserted that E.O. 11246 and its implementing regulations improve contracting efficiency because they are “critical mechanisms” for ensuring that contractors access a wider pool of talent. The Department disagrees. Contractors have strong incentives to recruit and retain qualified workers from the broadest possible labor pool. The Department finds no persuasive basis for concluding that contractors would otherwise forgo qualified talent absent race- or sex-based employment goals. And commenters have not identified any.^[45]

To the contrary, the E.O. 11246 affirmative action regulations diminish the role of merit and job-related qualification in requiring contractors to consider sex- and race-based employment goals and related requirements. E.O. 14398 discusses the inefficiencies of consideration of race and sex as opposed to merit in Federal contractors' personnel decisions and the costs such inefficiencies pass on to the Federal Government.^[46] The Department received over 300 similarly worded comments arguing that the regulations “have long forced federal contractors to make hiring and promotion decisions based on race and sex rather than merit.” One woman who believes she was passed over for promotion based on her race stated that she has “seen many examples of incompetency and rampant costs simply because hiring and contracts were based on race or sex rather than qualifications.” State attorneys general explained that when government mandates require employers to prioritize characteristics such as race or sex—characteristics unrelated to skills or aptitude—the relative importance of merit-based considerations is diminished, with attendant costs to productivity and efficiency.

Some commenters, including labor organization and advocacy groups, argued that rescinding regulations requiring contractors to take action to meet race- and sex-based employment goals will result in fewer qualified minorities and women being hired or promoted. The Department disagrees. There are many talented, hardworking women and minority workers who succeed based on their qualifications and merit and would be hired or promoted regardless of whether contractors are subject to race- or sex-based employment goals. As noted above, the existence of race- and sex-based employment goals may undermine the standing of those individuals by calling into question whether their achievements are attributable to merit or to regulatory mandates.

NWLC relied in part on a General Services Administration survey purporting to show positive associations between diversity, equity, and inclusion efforts and workplace well-being. The Department finds this evidence unpersuasive. The survey is based on subjective self-reported responses, and it does not examine the specific regulatory requirements at issue here—namely, compliance with government-imposed race- and sex-based employment goals. It does not provide a reliable basis for evaluating the economic or competitive effects of the E.O. 11246 regulatory framework.

The AFL-CIO further warned that “[w]ith the removal of these procedures, contractors will have a much more complicated and potentially costly regulatory environment where they will need to be compliant with a host of state and local laws instead of the predictable federal requirements.” But E.O. 11246 did not preempt state and local anti-discrimination laws with a common purpose. See Colo. Anti-Discrimination Comm'n v. Cont'l Airlines, 372 U.S. 714, 725 (1963) (“It is impossible for us to believe that the Executive intended for its orders to regulate air carrier discrimination among employees so pervasively as to preempt state legislation intended to accomplish the ( printed page 54464) same purpose.”). The regulations implementing E.O. 11246 do not displace State or local employment and contracting laws that do not conflict with them, and contractors are required to comply with those laws regardless of whether Federal regulations remain in effect. Moreover, as several state attorneys general explained, the Federal regulatory framework has increasingly conflicted with state law. States including Indiana, Ohio, Florida, and Texas prohibit employers contracting with those states to have race- or sex-based hiring preferences of any sort. Those anti-discrimination provisions conflict with E.O. 11246 regulations that require employers to apply every good faith effort to satisfy race- and sex-based employment goals. As a result, it is the continued existence of E.O. 11246 regulations that creates needless confusion and tension with state law.

3. Effects on Employment Discrimination

Some commenters asserted that rescinding the regulations implementing E.O. 11246 will result in increased employment discrimination against minorities and women by contractors, contending that the enforcement framework established under Title VII of the Civil Rights Act of 1964 is insufficient to deter or remedy such discrimination.

In particular, these commenters argued that E.O. 11246 nondiscrimination regulations are broader in scope and applicability than civil rights laws enacted by Congress. For instance, they noted that Title VII does not apply to small businesses with fewer than 15 employees, whereas the E.O. 11246 nondiscrimination regulations apply to such small businesses, as long as they have more than $10,000 in Federal contracts. Commenters also noted that E.O. 11246 had additional protections compared to Title VII. For example, the E.O. 11246 regulations included more details about what constitutes sex discrimination under the regulations and included sexual orientation and gender identity as protected bases.

As some commenters noted, the E.O. 11246 regulations also prohibit contractors from taking adverse employment actions against applicants or employees who inquire about, discuss, or disclose information about their pay or their co-workers' pay, subject to certain limitations. The E.O. 11246 regulations' administrative enforcement mechanism is also more expedient than Title VII's enforcement framework through the Federal courts, where the defendant has substantially greater rights. These points, however, only reinforce the Department's determination that many aspects of OFCCP's nondiscrimination regulations conflict with Title VII. See Section III(B)(3)(a).

The Federal Government will continue to enforce nondiscrimination requirements outside the Title VII framework through the procurement process. For example, E.O. 14173 directs agencies to combat illegal private-sector DEI preferences, mandates, policies, programs, and activities. Executive Order 14398 requires procuring agencies to ensure that contractors do not engage in unlawful race-based discrimination, placing enforcement responsibility with the contracting agencies themselves rather than OFCCP. Violation of this clause can lead to contract cancellation or debarment. Further, Federal agencies have long enforced nondiscrimination requirements in analogous contexts, including under Title VI for recipients of Federal financial assistance. Agency oversight over their own programs has operated for decades and provides a familiar and workable mechanism for addressing unlawful discrimination. Accordingly, the Department concludes that rescission of the E.O. 11246 nondiscrimination regulations will not weaken protections against unlawful discrimination and will instead align Federal procurement enforcement with established statutory frameworks and principles of agency accountability.

Commenters also noted that while the EEOC investigates charges of discrimination under Title VII, the Department conducted E.O. 11246 compliance evaluations in addition to complaint investigations. During these compliance evaluations, the Department reviewed contractors' records and employment activity data ( e.g., pay and hiring data) to determine whether contractors were meeting their nondiscrimination and affirmative action requirements. The commenters believed that these compliance evaluations allowed the Department to uncover and remedy discrimination that would otherwise remain undetected.

The Department also received several comments which asserted rescinding the E.O. 11246 regulations' data collection and affirmative action requirements would weaken discrimination protections. Some commenters asserted that these requirements protected all workers, not just minorities and women. Commenters also believed that these requirements ensured that contractors were undertaking proactive, regular analyses of their workplace policies to identify and remedy discriminatory barriers to equal employment opportunity.

The Department carefully reviewed these comments and disagrees with these commenters. First, commenters' concerns about weakening protections and stopping E.O. 11246 compliance evaluations are unfounded. In addition to Title VII, contractors are subject to extensive employment discrimination laws at the local and state level. Further, while the Department conducted compliance evaluations pursuant to the E.O. 11246 regulations, it typically reviewed less than 2% of the contractor universe each year. As a matter of policy, the Department largely limited its compliance evaluations to larger contractors who already fall under Title VII's employee thresholds.^[47] Despite the extensive burden imposed by these compliance evaluations, the Department issued E.O. 11246 discrimination findings in 3% of cases. Even when discrimination was alleged, contractors often disputed the findings, asserting, for example, that the Department failed to adequately account for non-discriminatory reasons for hiring or pay disparities.

The Department also notes that one of the reasons for rescinding the E.O. 11246 regulations is to ensure that contractors are not using the E.O. 11246 requirements to justify illegal discrimination against workers. While the E.O. 11246 nondiscrimination obligations were designed to cover all protected groups, the regulations required affirmative action regarding only women and minorities. In effect, these requirements induced contractors to create policies and programs designed to account for race and sex in hiring and personnel decisions. In addition to being unlawful, using race- and sex-based preferences diminishes the importance of individual merit when making employment decisions. Several commenters agreed with this position, stating that the E.O. 11246 regulations conflicted with prohibitions against race and sex-based decision making or required contractors to prioritize demographic targets over individual merit and qualifications, ultimately undermining the ( printed page 54465) foundational American principle of equal treatment.^[48] By rescinding the E.O. 11246 regulations, the Department is restoring merit-based opportunity for the Federal contractor workforce and is ensuring that contractors are not engaging in discriminatory race- and sex-based preferences in their employment processes. Rather than weakening protections, the rescission is ensuring that civil rights protections extend to all workers.

4. Regulatory Alternative and Reliance Interests

The Department considered as a regulatory alternative rescinding the affirmative action requirements of the E.O. 11246 regulations while retaining OFCCP-administered nondiscrimination requirements that are consistent with Federal civil rights law and that could be authorized under the Procurement Act's authority to promote economy and efficiency in Federal contracting. Under this approach, OFCCP would have continued to enforce prohibitions on unlawful discrimination through the use of procurement remedies despite the elimination of affirmative action obligations. The Department also considered as an alternative modifying the regulations to state that the utilization goals are purely aspirational and contractors have no obligation to take action to meet race- and sex-based goals.

The Department concludes, however, that these alternatives are not available. Executive Order 14173 expressly revoked E.O. 11246 and withdrew the President's prior sub-delegation of Procurement Act authority to the Department of Labor for enforcement of nondiscrimination requirements in Federal contracting. Because the Department no longer possesses delegated authority under the Procurement Act to generally enforce contractor nondiscrimination obligations, it lacks a lawful basis to retain any piece of the OFCCP-administered nondiscrimination regulatory framework tied to E.O. 11246. Accordingly, partial rescission is not a legally viable alternative.

The Department also considered potential reliance interests implicated by rescission of the E.O. 11246 regulations. But E.O. 11246 has been revoked and there can be no legitimate reliance on authorities that are no longer in force.

To the extent employees and applicants of contractors have a legitimate reliance interest in continued protection from unlawful employment discrimination, that interest is preserved because Title VII provides a comprehensive and well-established framework prohibiting employment discrimination. In addition, E.O. 14173 directs Federal procuring agencies to ensure that contractors do not engage in unlawful discrimination, and those agencies retain authority to enforce nondiscrimination requirements within their respective procurement programs. The Department therefore concludes that rescission will not diminish protections against unlawful discrimination. To the extent any individual may claim a reliance interest in being hired or promoted because of the E.O. 11246 affirmative action regulations, the Department concludes that such an individual has no cognizable reliance interest in having his or her race or sex be a consideration in employment opportunities.

5. Other Comments

The Department received several comments that generally supported or opposed the rescission without providing substantive comments on the proposal. The Department also received a comment requesting guidance on how contractors can comply with E.O. 14173's requirement to certify compliance with all applicable Federal anti-discrimination laws as well as guidance on how to ensure that employment practices are non-discriminatory. In response, the Department notes that the E.O. 11246 regulations were not promulgated pursuant to E.O. 14173 and that, in any event, compliance with E.O. 14173 is outside the scope of this rulemaking.

Some commenters presented alternatives to the rescission, including modifying E.O. 11246 rather than rescinding it altogether or replacing E.O. 11246 with a new Executive Order. The Department also received a comment claiming that the severability clause located at 41 CFR 60-1.48 should allow the Department to maintain the regulations related to pay transparency, despite the Department's proposed rescission of the remaining regulations, as pay transparency is facially neutral on the subjects of race, color, religion, sex, sexual orientation, gender identity, and national origin. The Department declines to adopt these recommendations. With the revocation of E.O. 11246, the Department no longer has legal authority to enforce the E.O. 11246 implementing regulations. Therefore, the Department is rescinding the E.O. 11246 implementing regulations in their entirety. The pay transparency provisions at 41 CFR 60-1.4(a)(3), 60-1.4(b)(1)(3) and 60-1.35 are also part of this rescission, as they were issued as amendments to the E.O. 11246 regulations.^[49]

Alliance Defending Freedom (ADF) asserted that E.O. 11246 and its implementing regulations raised concerns for religious organizations seeking to serve as Federal contractors and subcontractors. Specifically, ADF asserted that many religious organizations' sincerely held beliefs precluded them from complying with certain aspects of E.O. 11246 and its implementing regulations, particularly those related to sex discrimination, sexual orientation, and gender identity. ADF believed that the Department's past rulemaking removed religious organizations' protections to exercise their religious beliefs when it came to personnel decisions and caused confusion about the scope of E.O. 11246's religious exemption provision. ADF also believed that rescinding the regulations would help address these concerns for religious organizations. Although the NPRM did not directly address these issues, the Department agrees that rescinding the E.O. 11246 implementing regulations will address confusion and uncertainty about the scope of the regulations and their alignment with other laws. It is the Department's view that the revocation of E.O. 11246 and the rescission of its implementing regulations eliminate the need for a religious employer exemption from E.O. 11246 in the first place. Since E.O. 11246 regulations no longer have the force of law, religious employers who are contractors do not need an exemption and may continue to exercise their sincerely held religious beliefs in the employment of individuals in their businesses, consistent with existing Federal civil rights law.

Another commenter also suggested that the Department revise its regulatory definition of “minority” at 41 CFR 60-4.3(a)1(d) because it believed that the criteria about who belongs in this group is unclear, specifically as to who belongs to a Hispanic minority group. In response, the Department notes that this definition will be rescinded, as it is part of the E.O. 11246 regulations. To the extent that this definition needs to be revisited in other parts of the agency's ( printed page 54466) programs, such changes will be addressed separately from this rulemaking.

The commenter also recommended that the Department conduct a review of all rules to ensure compliance with the policy objectives of the current administration. In response, the Department notes that it has and will continue to review its rules for consistency with the policy objectives of the current administration. To the extent that the Department determines that additional regulatory changes are necessary, those changes will be pursued in a separate rulemaking.

Another commenter suggested that the Department reconsider rescinding the UGESP provisions at 41 CFR part 60-3. This commenter believed that UGESP promotes meritocracy in hiring and promotions, as it provides guidelines for determining which practices are job related and consistent with business necessity. In response, the Department notes that 41 CFR part 60-3 will be rescinded in its entirety, as these guidelines are part of the E.O. 11246 regulations. However, as noted in the NPRM and in this final rule, this rescission does not affect other agencies' application and interpretation of the UGESP provisions.^[50]

IV. Procedural Issues and Regulatory Review

A. Overview of Executive Orders

Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (Oct. 4, 1993), requires agencies, to the extent permitted by law, to (1) propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits; (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public.

Section 6(a) of E.O. 12866 also requires agencies to submit “significant regulatory actions” to the Office of Information and Regulatory Affairs (OIRA) for review. In accordance with E.O. 12866, the Department has determined that this final rule constitutes a “significant regulatory action” because it would have an annual effect on the economy of $100 million or more. SeeE.O. 12866 sec. 3(f)(1). Accordingly, this final rule was submitted to OIRA for review under E.O. 12866. Below is an overview of the Department's regulatory impact analysis conducted pursuant to E.O. 12866.

Executive Order 13563, “Improving Regulation and Regulatory Review,” 76 FR 3821 (Jan. 21, 2011), directs agencies to propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; it is tailored to impose the least burden on society, consistent with achieving the regulatory objectives; and in choosing among alternative regulatory approaches, the agency has selected those approaches that maximize net benefits.

Executive Order 14192, “Unleashing Prosperity Through Deregulation,” was issued on January 31, 2025.^[51] This rule is considered a deregulatory action under E.O. 14192. Using a perpetual time horizon to allow for cost comparisons under that order, the Department estimates that the annualized cost savings amount to $996.37 million in 2024 dollars, using a 7 percent discount rate.

Pursuant to Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996, also known as the Congressional Review Act (5 U.S.C. 801 et seq.), OIRA has designated this rule as a “major rule,” as defined by 5 U.S.C. 804(2).

B. Review Under E.O. 12866

1. Executive Summary of Analysis

This final rule rescinds regulations implementing E.O. 11246, consistent with E.O. 14173's revocation of that authority. Executive Order 14173, issued on January 21, 2025, revoked E.O. 11246 in its entirety and provided a 90-day transition period for compliance with existing regulations. That transition period has now expired. The rescission eliminates compliance obligations that previously applied to 107,165 supply and service entities and 9,982 construction contractors, employing approximately 32 million workers. The benefits apply most directly to 9,982 construction contractors and a subset of supply and service contractors (101,850 entities) that meet the affirmative action thresholds (totaling approximately 111,832 contractor entities).^[52]

In the NPRM, the Department estimated annual cost savings of $996.37 million based on an estimated reduction of 9,875,221 hours related to the E.O. 11246 requirements ( e.g., recordkeeping, reporting, and compliance costs). See90 FR 28477. Commenters, however, identified additional sources of cost savings and related benefits not fully captured in that estimate. For example, some commenters, including ABC and several state attorneys general, asserted that rescission would increase participation among contractors, particularly small and medium-sized entities, thereby enhancing competition and generating downstream cost savings in Federal procurement. Other commenters emphasized difficult-to-quantify benefits, including improved hiring efficiency and productivity gains resulting from a renewed focus on merit-based employment decisions rather than efforts to conform workforces to demographic benchmarks. In light of these comments, the Department recognizes that the benefits of the final rule are likely broader than the quantified NPRM savings alone and, therefore, considers a wider range of economic and operational benefits as illustrative in its final analysis.

The Department maintains its estimate of $996.37 million in quantifiable annual cost savings from reduced compliance burdens, as set forth in the NPRM.^[53] At the same time, the Department believes that the overall cost savings associated with rescission are in all likelihood substantially greater. For example, commenters identified additional categories of economic effects not captured in the paperwork burden estimate, including (1) reduced litigation liability and risk; (2) improved hiring efficiency and labor ( printed page 54467) productivity; and (3) reduced Federal procurement costs through increased competition.

The Department lacks sufficient data to quantify these additional effects with a reasonable degree of confidence. Accordingly, the Department discusses these impacts qualitatively and, where appropriate, provides illustrative calculations based on stated assumptions to convey their potential magnitude.

The only cost of the final rule is rule familiarization, which is likely negligible because the Department has not enforced the regulations for over a year following the revocation of E.O. 11246 in January 2025. Regulated entities have already adjusted their behavior and have no need to review this final rule.

a. Need for Regulatory Actions

The rescission of the E.O. 11246 implementing regulations is necessary to implement President Trump's mandate in E.O. 14173, which revoked the E.O. 11246 authority. In addition to E.O. 14173's revocation of E.O. 11246, the Department identified several other reasons for rescinding the regulations, including legal vulnerabilities related to the affirmative action requirements, improving the efficiency of the Federal contracting process, decreasing employer burden, and providing regulatory certainty to contractors and other stakeholders by aligning the regulations with recent executive orders impacting the Department's enforcement. See90 FR 28472, 28474-28477 (July 1, 2025).

b. Regulatory Alternatives

This final rule imposes the least regulatory burden on contractors, as it rescinds all of the E.O. 11246 requirements ( see estimated cost savings below). Alternatives include maintaining the E.O. 11246 implementing regulations or rescinding the affirmative action provisions while maintaining the nondiscrimination provisions. The Department considered these alternatives but concluded that these alternatives were not permissible because E.O. 14173 revoked the underlying E.O. 11246 authority in its entirety. Executive Order 14173 also only provided for a 90-day period in which contractors could continue to comply with the current regulatory scheme. SeeE.O. 14173 at Sec. 3(b)(i). This 90-day period has since passed. For that reason, rescinding the E.O. 11246 implementing regulations is the most appropriate regulatory action, as it aligns the regulations with the agency's legal authority and will provide clarity to stakeholders about their current obligations.

c. Baselines

The baseline for this analysis assumes continued compliance with the rescinded regulations, including requirements to prepare and maintain annual AAPs, conduct demographic and statistical analyses, implement compliance-related practices across personnel processes ( e.g., hiring, promotion, compensation, and recordkeeping), respond to compliance evaluations, and bear associated legal and operational risks.

The entities affected by the final rule include supply and service contractors, construction contractors, and federally assisted construction contractors and subcontractors meeting applicable employee and contract dollar thresholds, across a wide range of industries. Compliance burdens are particularly significant for contractors operating multiple entities and for firms with limited administrative capacity relative to fixed regulatory costs.

Affected Universe: The affected universe includes 107,165 supply and service entities and 9,982 construction contractors. Employment at covered entities is estimated at approximately 32 million workers. These estimates are derived from available EEO-1 and USA Spending data.^[54] The benefits apply most directly to 9,982 construction contractors and a subset of supply and service contractors (101,850 entities) that meet the affirmative action thresholds (totaling approximately 111,832 contractor entities). While construction contractors do not develop written AAPs, they are subject to the affirmative action requirements at 41 CFR part 60-4. Our analysis assumes that implementing and documenting these requirements imposes similar burdens as developing and maintaining a written AAP.

d. Potential Effects on Contract and Employment Distribution

The rescission of the E.O. 11246 implementing regulations may affect the distribution of Federal contract awards across firms and, correspondingly, employment opportunities across workers. Reducing affirmative action compliance obligations may lower barriers to entry for some firms that were previously deterred from pursuing Federal contracting opportunities due to the costs, administrative complexity, or perceived litigation risks associated with the regulations.

These effects may be especially relevant for smaller firms and firms with more limited human resources, legal, or compliance infrastructure. As ABC and other commenters noted, preparing written affirmative action programs, conducting utilization analyses, maintaining documentation systems, and managing related compliance activities impose proportionally larger fixed costs on smaller entities. Such a pattern is consistent with empirical research finding that fixed regulatory compliance costs disproportionately reduce market participation by smaller firms.^[55] To the extent smaller firms previously elected not to compete for Federal contracts, or limited their participation in covered contracting markets, rescission may increase their willingness or ability to participate in Federal procurement. As a result, some contract awards may shift toward firms that were previously less likely to compete under the E.O. 11246 regulatory framework.

Any such shifts could also affect the distribution of employment opportunities among workers employed by participating firms. For example, because minority- and women-owned businesses are disproportionately concentrated among smaller firms, barriers that fall most heavily on small businesses may also disproportionately limit minority- and women-owned enterprises' participation in Federal contracting.^[56] The Department lacks sufficient data to quantify the magnitude of any resulting shifts in ( printed page 54468) contract awards or employment outcomes.

e. Benefits of Rescission

This final rule rescinds the regulations implementing E.O. 11246, consistent with the revocation of the underlying Executive Order. The Department has examined the economic effects of this action and concludes that the rescission will result in substantial cost savings for contractors, as well as downstream benefits to Federal procurement markets and taxpayers.

The anticipated benefits of the rule go beyond quantifiable PRA-based cost savings for contractors. By eliminating the regulatory burdens of affirmative action requirements, the Department expects to foster increased competition and participation among contractors, particularly benefiting small and medium-sized businesses. This shift is expected to lead to lower Federal contracting costs, improved contractor performance, and a more efficient labor market, ultimately enhancing value for taxpayers while maintaining adherence to essential nondiscrimination laws.

2. Quantifiable Compliance Cost Savings

The July 1, 2025 NPRM estimated that the regulations implementing E.O. 11246 imposed approximately $996.37 million ^[57] in quantifiable annual compliance costs, based on an estimated annual time burden of 9,875,221 hours. See90 FR 28477.

The Department retains this estimate in the final rule as a measure of direct, quantifiable compliance costs. Commenters did not dispute the underlying methodology or the resulting estimate. This estimate derives from case data covering FY 2022 through 2024 and reflects the estimated time burden for the regulated community associated with preparing and maintaining written AAPs, demographic and statistical analyses, recordkeeping and reporting obligations, third-party disclosure and data submission requirements, audit response and investigation costs, and monetary remedies associated with conciliation agreements.

In computing the value of contractor time, the Department generally used a fully loaded hourly wage rate of $99.11, which is consistent with prior analyses.^[58] A higher rate of $105.49 per hour is applied to the AAP certification and Functional Affirmative Action Program (FAAP) burdens, consistent with prior analyses.^[59]

a. Supply and Service Contractors

The final rule eliminates requirements applicable to approximately 101,850 covered supply and service contractor establishments.

Recordkeeping. Contractors are no longer required to develop, update, and maintain written E.O. 11246 AAPs. Prior to the revocation of E.O. 11246, first-time contractors (approximately 1,019 annually) spent an estimated 108 hours developing an E.O. 11246 AAP, while existing contractors (approximately 100,832 establishments) spent 47 hours annually updating their programs. All covered establishments also incurred ongoing maintenance burdens (47 hours annually). In addition, contractors with 1 to 14 employees incurred limited recordkeeping obligations under 41 CFR part 60-3 (approximately 1,019 establishments at 2 hours each). In total, rescission eliminates approximately 9,638,144 hours of annual recordkeeping burden, valued at $955,236,452.

Reporting. Historically, OFCCP conducted approximately 845 supply and service compliance evaluations each year. Each such compliance evaluation imposed an estimated 37.5 hours of burden on the contractor to respond to the scheduling letter. Applying a proportional attribution to E.O. 11246 requirements, rescission eliminates approximately 22,182 hours of reporting burden, valued at $2,198,458 annually.

AAP Certification. New contractors (approximately 1,019 annually) previously spent approximately 0.42 hours certifying their compliance with the AAP requirements, while existing contractors (approximately 100,832 establishments) spent approximately 0.13 hours annually recertifying. The final rule eliminates approximately 13,536 hours of burden, valued at approximately $1,427,913 annually (at $105.49 per hour).

Conciliation Costs. Contractors resolving compliance findings through E.O. 11246 conciliation agreements incurred monetary costs. Based on recent agreements, the Department estimates approximately $17,443,922 in annual conciliation-related costs associated with E.O. 11246 requirements that would be eliminated. Additional E.O. 11246 complaint-related conciliation costs are estimated at $104,059 annually.

Complaint Investigations. Approximately 15 E.O. 11246 complaint investigations annually imposed an estimated 192.4 hours of burden per case, resulting in 2,950 hours eliminated, valued at $292,408 annually.

Operating Costs. Paper submission costs associated with supply & service compliance evaluations (copying and mailing) are estimated at $9,603 annually.

Total supply and service contractor cost savings: $976,712,815 annually.

b. Construction Contractors

The final rule eliminates compliance requirements applicable to approximately 9,982 construction contractors.

Recordkeeping. Contractors are no longer required to maintain documentation demonstrating compliance with affirmative action obligations, including incorporation of contract clauses, solicitation notices, employment record retention, and compliance with equal opportunity specifications. These changes eliminate approximately 102,875 hours of annual burden, valued at $10,195,941.

Reporting. Compliance evaluation reporting burdens are reduced by approximately 3,660 hours annually, valued at $362,783. In addition, contractors are no longer subject to the construction award notification requirements at 41 CFR 60-4.2, removing approximately 18,125 hours of burden, valued at $1,796,369.

Operating Costs. Paper submission costs associated with construction award notifications and compliance evaluations are reduced by approximately $3,376 annually.

Total Construction Savings: $12,358,469 annually.

c. Functional Affirmative Action Program Requirements

The E.O. 11246 regulations at 41 CFR 60-2.1(d)(4) permitted contractors to establish an AAP based on functional or ( printed page 54469) business units rather than establishments, provided they enter into an agreement with OFCCP on the use of this functional AAP (FAAP) structure. Costs related to entering or renewing these FAAP agreements previously imposed approximately 1,160 hours of burden annually, valued at approximately $122,368.

d. Pre-Complaint Inquiry and Complaint Submissions

OFCCP estimates an average of 1,125 annual E.O. 11246 pre-complaint inquiry and complaint intake submissions and estimates that it takes an individual 0.26 hours to provide the intake information. This amounts to 295 total hours eliminated, valued at approximately $15,132.

e. Supply & Service and Construction Compliance Evaluations

Compliance Evaluation Investigations. Approximately 56 annual technical violation cases imposed 588.8 hours of additional burden per case, resulting in 33,090 hours eliminated, valued at $3,279,550. And approximately 32 annual discrimination cases imposed 1,238 hours per case, resulting in 39,203 hours eliminated, valued at approximately $3,885,442.

f. Total Quantified Compliance Cost Savings

Across all affected parties, based on the above analysis, the Department estimates that the final rule eliminates approximately 9,875,221 hours of annual burden. The 10-year quantifiable cost savings amount to $8,499,270,061 at a 3% discount rate or $6,998,112,173 at a 7% discount rate. Using a perpetual time horizon to allow for cost comparisons under E.O. 14192, the Department estimates that the annualized cost savings amount to $996,373,776 in 2024 dollars, using a 7 percent discount rate.^[60]

3. Illustrative Cost-Savings and Benefits

The Department also considered three additional categories of cost savings identified by commenters as illustrative of additional savings: (1) reduced litigation liability and risk; (2) improved hiring efficiency and labor productivity; and (3) reduced Federal procurement costs through increased competition. The Department does not have sufficient data to quantify these effects with precision but nonetheless believes they may be substantial. In the absence of comprehensive data, the Department relies on stated assumptions and provides illustrative estimates based on those assumptions to convey the potential magnitude of these beneficial effects.

a. Legal Liability and Litigation Risk Reduction

The affirmative action regulatory regime created exposure to private litigation risk under Title VII of the Civil Rights Act of 1964 and analogous state laws. The Department believes that the required use of demographic classifications, placement goals, and race- or sex-conscious decision-making create additional avenues for legal challenge since these types of actions have been subject to judicial scrutiny and litigation alleging discrimination against non-minority or male employees.

Recent legal developments further increase forward-looking exposure. In SFFA, the Supreme Court applied strict scrutiny to race-conscious decision-making, and courts and commenters have recognized that similar reasoning may be applied in employment contexts under Title VII and Section 1981. Early post- SFFA litigation and enforcement trends reflect increased challenges to employer diversity, equity, and inclusion programs and race-conscious employment practices. For instance, the Department of Justice filed a lawsuit against Minnesota's race-and sex-based affirmative action laws and regulations, which use similar underutilization analysis and employment goals. Complaint, United States v. Minnesota, case no. 26-cv-00273, Doc. 1 (D. Minn. Jan. 14, 2026).

Industry estimates further suggest that the typical U.S. firm faces approximately a 12 percent probability of being subject to an employment-related lawsuit each year.^[61] The Department lacks sufficient data to quantify the extent to which this rule would reduce litigation risk and costs. Nonetheless, the Department believes the rule may reduce certain categories of litigation exposure and legal uncertainty.

b. Hiring Delays, Labor Misallocation, and Productivity Effects

Commenters, including ABC, Independent Women, and CEI, reported that AAP compliance requirements lengthen hiring workflows by introducing additional procedural steps and documentation obligations, particularly in time-sensitive or deadline-driven occupations where managers would otherwise prefer speed. Commenters also reported that the requirements constrain managerial discretion in candidate selection and internal mobility.

These requirements may impose economic costs through three primary channels:

• Extended vacancies, resulting in foregone output or increased reliance on overtime;
• Delayed production or project completion, particularly in capital-intensive and project-based operations; and
• Labor misallocation, in which hiring frictions or procedural constraints lead to suboptimal worker-job matches and reduced productivity.

To estimate the scale of hiring subject to potential delay, the Department relies on data from the Bureau of Labor Statistics (BLS) Job Openings and Labor Turnover Study (JOLTS).

In 2024, the annual average hires rate (hires in a month as a percentage of employment) was 3.4%.^[62]

• Interpreted on an annual basis, this implies: 0.034 × 12 = 0.408 hires per worker per year.
• Applying this rate to covered employment yields: 32,000,000 × 0.408 = 13,056,000 hires annually.

This figure represents the baseline annual flow of hires at covered establishments potentially affected by regulation-induced hiring frictions.

Industry benchmarking indicates that median time-to-fill for non-executive positions is approximately 44 days, with average values above 50 days.^[63] However, AAPs tend to encompass substantive elements that alter contractors' hiring processes. Part 60-2 provides that an AAP is a “management tool” and is “more than a paperwork exercise;” it encompasses policies, practices, and procedures throughout the employment process. Proponents and opponents of written AAP requirements can generally agree that several commonly recommended AAP best practices tend to increase recruiting costs and often lengthen time-to-fill relative to a “post-and-select” process.

These practices include: (1) expanding outreach beyond passive job postings to additional sourcing channels ( e.g., targeted career fairs and recruitment programs at institutions with more diverse candidate pools, ( printed page 54470) including HBCUs); (2) relationship-based pipeline development with underrepresented communities; (3) assembling more diverse candidate slates, which may require additional sourcing when initial applicant pools or shortlists are not diverse; (4) increased use of structured interviews, panels, standardized rubrics, and related training for hiring managers; and (5) additional monitoring, self-analysis, and documentation steps associated with written AAP compliance. Each step can add calendar time to a standard hiring workflow.

Indeed, to comply with affirmative action obligations related to E.O. 11246 and prepare for potential OFCCP compliance evaluations, covered contractors are advised to undertake a number of time-intensive activities during recruitment. These include devoting additional time and resources to race-conscious recruitment efforts intended to increase the representation of particular demographic groups in applicant pools.^[64] Before a contractor can start recruiting for a vacant position, they are advised to establish and document basic qualifications for the position and train interviewers on compliance requirements.^[65] During recruitment, contractors are further advised to devote substantial time to tracking and documenting applicant information, consideration decisions, and disposition outcomes at each stage of the process, including for minimally qualified applicants who have little realistic prospect of being hired.^[66] Taken together, these additional steps delay the initiation of recruitment efforts, slow the progression of candidates through the hiring pipeline, and lengthen the overall time required to fill vacant positions.

The Department does not assume that any single practice is required in every hiring decision; rather, the incremental delay estimates reflect the combined effect of compliance-oriented recruiting, screening, documentation, and review practices that E.O. 11246 regulations describe as integral to AAPs, and that contractors report implementing in order to satisfy those requirements in practice. For illustrative purposes, if, in the aggregate, these practices result in just one additional calendar day to fill each of the 13,056,000 annual hires among the approximately one-fifth of the U.S. workforce covered by the E.O. 11246 implementing regulations, there would result in 13,056,000 employee-days of extended vacancies.

To contextualize the magnitude of potential hiring delays, the Department converts median earnings into an implied daily labor value. The median weekly earnings for full-time wage and salary workers are $1,235 in 2026.^[67] Assuming a five-day workweek, this corresponds to an implied daily wage of approximately $247. Under the Department's illustrative assumption that compliance-related hiring practices extend time-to-fill by one additional calendar day for each of the estimated 13,056,000 annual hires at covered establishments, the resulting 13,056,000 employee-days of extended vacancies would correspond to approximately $3.2 billion in delayed labor utilization on an undiscounted basis. This estimate is illustrative and is intended to contextualize the scale of potential delay, rather than quantify a precise economic loss. If hiring delays are shorter or longer than one day, this loss estimate would increase or decrease proportionally.

Earnings is an intermediate result toward the goal of estimating worker surplus, which is a net value amount that accounts for the opportunity cost of time and effort. Bartik (2013) ^[68] estimates such net value to range from 8 to 32 percent of earnings. Based on this finding, we assign a midpoint value of 20 percent to total earnings to quantify the social benefit derived from increased earnings. Applying the 20 percent estimate of societal value to the additional earnings increase of $3.2 billion yields a societal benefit of $654 million annually. Moreover, a benefit accruing to broader society, in the form of taxes collected on the additional earnings, is estimated as 17 percent of those additional earnings, or $548 million annually.^[69]

Beyond vacancy duration, commenters, including state attorneys general, claimed that hiring practices that do not focus on merit can reduce match quality. Economic research suggests that mismatches between workers and job requirements can impose meaningful productivity costs. Empirical research on CEO-firm matching finds that mismatches between a firm's needs and the skills of its chief executive officer are associated with large productivity losses: in a sample of approximately 4,800 manufacturing firms across 42 countries, firms that had leaders whose skills were poorly aligned with firm needs exhibited productivity up to 20 percent lower than well-matched firms.^[70] While such extreme outcomes are not assumed here, the evidence indicates that even modest distortions in hiring decisions can impose real economic costs.

Public comments similarly described perceived inefficiencies associated with employment decisions based on demographic considerations rather than qualifications. Although these accounts are anecdotal and do not provide systematic evidence, they reflect broader concerns that hiring processes that deemphasize merit may lead to suboptimal worker-job matches and cause productivity losses. The Department does not attempt to quantify these losses but believes that they will be mitigated by this final rule.

c. Reduced Competition and Federal Procurement Market Effects

Compliance obligations associated with AAP requirements impose fixed and quasi-fixed costs that do not scale proportionally with firm size. As ABC and other commenters noted, such regulatory costs tend to weigh more heavily on small and medium-sized firms, for which compliance expenses represent a larger share of revenues and managerial capacity. Economic theory and regulatory guidance recognize that such fixed costs can discourage entry and participation by smaller firms and may alter market structure over time.^[71]

( printed page 54471)

When OFCCP established the written E.O. 11246 AAP thresholds in the late 1960s and early 1970s, the $50,000 contract threshold and 50-employee threshold were intended to exempt small businesses from detailed AAP requirements while focusing enforcement resources on larger contractors.^[72] However, the E.O. 11246 AAP thresholds have never been adjusted for inflation. A $50,000 contract in 1968—when the contract threshold was first established—would be equivalent to approximately $450,000 in 2024 dollars.^[73] Similarly, a $50,000 contract in 1971—when Revised Order No. 4 formalized the written AAP requirements—would be equivalent to approximately $385,000 in 2024 dollars.^[74] This failure to index the thresholds to inflation has dramatically expanded regulatory coverage over time, bringing many small and medium-sized businesses within the scope of AAP requirements that would have been considered exempt under the original regulatory design.

Public comments submitted during the rulemaking process suggest that regulatory burden has contributed to a decline in the number of small business contractors over the past decade.^[75] The Department does not attribute this decline to AAP requirements alone but evaluates how fixed compliance costs may contribute to reduced participation and bidding intensity in Federal procurement markets.

A substantial body of empirical and theoretical research in auction theory and public procurement economics finds that reduced competition leads to higher prices, and that bidder participation is a central determinant of procurement outcomes. McAfee and McMillan (1987) establish in their foundational literature survey that increasing the number of bidders intensifies competition and reduces expected procurement costs across auction formats,^[76] while Klemperer (1999) provides a comprehensive review confirming this relationship holds across diverse auction mechanisms.^[77]

The Department cannot estimate a constant elasticity of price with respect to bidder participation because empirical studies reveal important nonlinear patterns in this relationship. Brannman, Klein, and Weiss (1987) demonstrate in their analysis of timber auctions that the price reduction from adding a second or third bidder substantially exceeds the effect of adding additional bidders beyond that point.^[78] Li and Perrigne (2003) find similar nonlinear competition effects in timber sale auctions.^[79] This body of evidence indicates that preserving competition has the greatest price impact when preventing bidder counts from falling to very low levels. Federal oversight bodies have similarly recognized that small business participation increases bidder counts and competitive pressure in procurement markets.^[80]

In recent fiscal years, total Federal contract obligations have averaged approximately $750 billion annually.^[81] Federal law establishes a goal that 23 percent of Federal contract obligations be awarded to small businesses.^[82] This yields an affected procurement volume of approximately $172.5 billion per year in markets where small and medium-sized firms are plausible competitors.

To the extent that fixed compliance costs reduce small business participation in Federal contracting, procurement prices may increase through reduced competitive pressure. Given the nonlinear relationship between bidder participation and prices documented in the empirical literature, even modest reductions in competition among marginal bidders can generate measurable price effects.

4. Costs of the Final Rule; Rule Familiarization Costs

The Department expects that Human Resources Managers or Management Analysts at each contractor establishment may spend time becoming familiar with the provisions in the final rule. The Department estimates that it will take one hour for a Human Resources Manager or Management Analyst to read the final rule. This estimate likely overstates the actual burden of rule familiarization. Since the revocation of E.O. 11246 in January 2025, the Department has ceased enforcing the regulations. As a result, this final rule largely maintains the status quo, and in many cases may not require any review by regulated entities.

The Department estimates an average hourly wage rate of $99.11 based on a 60/40 split between Human Resources Managers ($77.15) and Management Analysts ($55.15), resulting in an average hourly wage of $68.35. The Department applies a 45 percent rate for fringe benefits and overhead costs, leading to a total hourly wage rate of $99.11 (= $68.35 × 1.45).^[83]

Consequently, the estimated burden for rule familiarization is 117,147 hours (= 107,165 supply and service establishments + 9,982 construction contractors × 1 hour). The total estimated cost is $11,610,439 (= 117,147 hours × $99.11/hour) in the first year. Over the 10-year analysis period, the annualized rule familiarization costs are estimated at:

• $1.3 million at a discount rate of 3 percent
• $1.5 million at a discount rate of 7 percent

The Department does not anticipate significant adjustment costs beyond rule familiarization, as rescission eliminates obligations rather than imposing new requirements. Contractors may choose to maintain certain employment practices previously undertaken for AAP compliance, but such practices would be voluntary and presumably ( printed page 54472) maintained only where contractors judge them to be cost-effective.

5. Net Benefits and Distribution

The Department estimates quantifiable cost savings of approximately $996.37 million annually from reduced paperwork and compliance burdens. Over a 10-year period, these savings are estimated at $8.5 billion using a 3 percent discount rate and $7.0 billion using a 7 percent discount rate. As discussed above, this estimate likely understates total compliance-related cost savings. In addition, the Department provides illustrative estimates of further economic benefits associated with rescission.

Costs associated with this rule are limited to rule familiarization, which the Department estimates at a one-time cost of $11.6 million. Annualized over a 10-year period, these costs are approximately $1.3 million at a 3 percent discount rate and $1.5 million at a 7 percent discount rate.

Overall, the Department concludes that the rule will generate substantial net benefits, even when considering only quantifiable savings, with additional unquantified benefits reinforcing this conclusion.

C. Review Under the Regulatory Flexibility Act

The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires preparation of an initial regulatory flexibility analysis (IRFA) and a final regulatory flexibility analysis (FRFA) for any rule that by law must be proposed for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities.

The Department reviewed this final rule under the provisions of the Regulatory Flexibility Act. The Department has determined that a Final Regulatory Flexibility Analysis is not required because this rule is not expected to have a “significant economic impact on a substantial number of small entities” within the meaning of the Regulatory Flexibility Act. The Act directs agencies, where such impacts exist, to consider steps “to minimize the significant economic impact on small entities consistent with the stated objectives of applicable statutes,” 5 U.S.C. 604(a)(6), reflecting Congress's concern with regulatory compliance burdens imposed on small entities. Cf. Mid-Tex Electric Cooperative v. FERC, 773 F.2d 327, 343 (D.C. Cir. 1985) (explaining that “the costs of compliance with uniform regulations to small businesses were the focus of congressional concern”). “Congress envisioned that the relevant `economic impact' was the impact of compliance with the [agency's] rule on regulated small entities.” Id. at 348.

This final rule has no compliance impacts on small entities and instead rescinds existing regulatory burdens, thereby eliminating associated reporting, recordkeeping, compliance, and administrative costs. Small entities, including small Federal contractors and subcontractors, within the scope of the rescinded requirements may experience economic effects from this rule. However, those effects are expected to be beneficial due to burdens and barriers to participation being eliminated. Because the rule does not impose compliance obligations or associated costs of the type the RFA is designed to address and that agencies must take steps to “minimize,” the Department certifies that this rule will not have a significant economic impact on a substantial number of small entities. The Department will transmit this certification and supporting statement of factual basis to the Chief Counsel for Advocacy of the Small Business Administration for review under 5 U.S.C. 605(b).

D. Review Under the Paperwork Reduction Act

The purpose of the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., includes minimizing the paperwork burden on affected entities. The PRA requires certain actions before an agency can adopt or revise a collection of information, including publishing for public comment a summary of the collection of information and a brief description of the need for and proposed use of the information.

As part of its continuing effort to reduce paperwork and respondent burden, the Department conducts a preclearance consultation program to provide the public and Federal agencies with an opportunity to comment on proposed and continuing collections of information in accordance with the PRA. See44 U.S.C. 3506(c)(2)(A). This activity helps to ensure that the public understands the Department's collection instructions, respondents can provide the requested data in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the Department can properly assess the impact of collection requirements on respondents.

A Federal agency may not conduct or sponsor a collection of information unless it is approved by OMB under the PRA and it displays a currently valid OMB control number. The public is also not required to respond to a collection of information unless it displays a currently valid OMB control number. In addition, notwithstanding any other provisions of law, no person will be subject to penalty for failing to comply with a collection of information if the collection of information does not display a currently valid OMB control number. See44 U.S.C. 3512.

To comply with E.O. 14173, the Department modified OMB # 1250-0002, “Complaint Involving Employment Discrimination by a Federal Contractor or Subcontractor.” ^[84] The modifications removed E.O. 11246 elements from the agency's pre-complaint inquiry and complaint forms. The information collection still covers complaints under Section 503 and VEVRAA.

E. Review Under E.O. 13132

Executive Order 13132, “Federalism,” 64 FR 43255 (Aug. 10, 1999), imposes certain requirements on Federal agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. E.O. 13132 requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and to carefully assess the necessity for such actions. E.O. 13132 also requires agencies to have an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.

The Department has examined this final rule and has determined that it would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

F. Review Under E.O. 12988

With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of E.O. 12988, “Civil Justice Reform,” imposes on Federal agencies the general duty to adhere to the following requirements: ( printed page 54473) (1) eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; (3) provide a clear legal standard for affected conduct rather than a general standard; and (4) promote simplification and burden reduction. 61 FR 4729 (Feb. 7, 1996). Regarding the review required by section 3(a), section 3(b) of E.O. 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General.

Section 3(c) of E.O. 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether the applicable standards are met or if it is unreasonable to meet one or more of these standards. The Department has completed the required review and determined that, to the extent permitted by law, this final rule meets the relevant standards of E.O. 12988.

G. Review Under the Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and Tribal governments and the private sector. Sec. 201, Public Law 104-4 (codified at 2 U.S.C. 1531). For a regulatory action likely to result in a rule that may cause the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year (adjusted annually for inflation), section 202 of UMRA requires a Federal agency to publish a written statement that estimates the resulting costs, benefits, and other effects on the national economy. 2 U.S.C. 1532(a)-(b). The UMRA also requires a Federal agency to develop an effective process to permit timely input by elected officers of State, local, and Tribal governments on a “significant intergovernmental mandate,” and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect them.

The Department examined this final rule according to UMRA and its statement of policy and determined that the final rule does not contain a Federal intergovernmental mandate, nor is it expected to require expenditures of $100 million or more in any one year by State, local, and Tribal governments, in the aggregate, or by the private sector. As a result, the analytical requirements of UMRA do not apply.

H. Review Under the Treasury and General Government Appropriations Act, 1999

Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any rule that may affect family well-being. This final rule would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, the Department has concluded that it is not necessary to prepare a Family Policymaking Assessment.

I. Review Under E.O. 12630

Pursuant to E.O. 12630, “Governmental Actions and Interference with Constitutionally Protected Property Rights,” 53 FR 8859 (March 18, 1988), the Department has determined that this final rule would not result in any takings that might require compensation under the Fifth Amendment to the U.S. Constitution.

J. Review Under the Treasury and General Government Appropriations Act, 2001

Section 515 of the Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516, note) provides for Federal agencies to review most disseminations of information to the public under information quality guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002). The Department has reviewed this final rule under the OMB guidelines and has concluded that it is consistent with applicable policies in those guidelines.

K. Review Under E.O. 13175

The Department has examined this final rule and determined that it does not have any tribal implications under E.O. 13175 that would require a tribal summary impact statement. It does not “have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.”

L. Review Under Additional Executive Orders and Presidential Memoranda

This final rule ensures compliance with E.O. 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” which directs OFCCP within the Department to immediately cease promoting “diversity,” holding Federal contractors and subcontractors responsible for taking “affirmative action,” and allowing or encouraging Federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin. This final rule also ensures compliance with E.O. 14398, “Addressing DEI Discrimination by Federal Contractors.” E.O. 14398 prohibits contractors from racial discrimination in connection with work performed on contracts and places enforcement responsibility with procuring agencies rather than with the Department. This final rule is also consistent with E.O. 14168, “Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government,” which directs Federal agencies to modify regulations or policies that use the terms “gender” and “gender identity.” This final rule also aligns with E.O. 14281, “Restoring Equality of Opportunity and Meritocracy,” which directs Federal agencies to deprioritize enforcement of all statutes and regulations to the extent they include disparate impact liability. Further, it supports the objectives of E.O. 14192, “Unleashing Prosperity Through Deregulation,” E.O. 14275, “Restoring Common Sense to Federal Procurement,” E.O. 14267, “Reducing Anti-Competitive Regulatory Barriers,” and Presidential Memorandum, “Directing the Repeal of Unlawful Regulations,” ^[85] by alleviating unnecessary regulatory burdens, amending the Federal Acquisition Regulations to ensure they contains only provisions required by statute or are otherwise necessary to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security interests, and removing regulatory requirements that could have created barriers to entry for contractors who are new market participants. This final rule ( printed page 54474) is designated as an E.O. 14192 deregulatory action.

For the reasons stated in the preamble, and under the authority of E.O. 14173, 90 FR 8633 (Jan. 31, 2025), the Department amends chapter 60 in title 41 of the Code of Federal Regulations as follows:

91 FR 54444